Interesting. Okay. You tied it in to dell and jpmorgan and everything else. Excellent. Larry, thank you. My pleasure. Join us tomorrow. Squawk on the street begins right now. Good wednesday morning. Welcome to squawk on the street. Im melissa lee with carl quintanilla, and jim cramer and david faber at the new york stock exchange. Stocks had a pretty nice day yesterday. The s p closed at fiveyear highs. We are looking to the down decide this morning. The dow looking to lose about 62 at the open. The picture in europe, a couple of downgrades for gdp forecasts from both the German Government and world bank. Italy is down by 1. 5 . Road map this morning starts off with the banks and earnings. Jpmorgan higher. Goldman sachs at 18month highs. Japan airlines grounding their entire dreamliner fleet. Dell shares falling this morning after david faber reports that a deal could be announced within two weeks, but at a price of 13. 50 or 14 a share, hes got the details. Rising food costs taking a bite out of fourthquarter earnings. Shares down there. Goldman sachs blowing past street estimates with 560 a share. Beating wall street frachts. Jpmorgan posting better than expected earnings of 53 . Jpmorgans board cutting Ceo Jamie Dimons compensation in half to 11. 5 million. This following an investigation of the banks 6. 2 billion trading loss. He respects the boards decision on this pay cut. Interesting stories for both of them. Of course, both of them a huge impact on the market this morning, jim. Goldman sachts sachs is a quarter from the old days. People didnt think they could have a big return on equity. This was dramatic. The stocks, tangible book value has been something that hasnt mattered for goldman for a while. I think its going to start mattering. Cash on hand, i think youll see a tangible book value. Compensation for people, really down dramatically. Goldman has reined in compensation, revenues gone up, thats how you make a lot of money. The compensation number was higher as their number because revenues were so much higher. But youre right, they took it down to 37 from 2. 4. I was surprised at that move down. Yesterdays news from Morgan Stanley not to be overlooked either. Stretching out basically giving people ious. An important way in the way wall street compensates. Well see if other firms follow through. Jpmorgan, you know it gets up behind you. Not going to dictate trading at all. I think we mentioned the its over with. When i hear whale now, its going to be star trek, what, 5 . Save the whale. This is the beginning, thinking about jpmorgan as a bank, theyre a bank, and they dont make as much money as they used to. Goldman said they would start hunkering down. It seemed like it was a very long time ago. Goldman once again, just like the old days, like you said, jim, doesnt have to run faster than the bear, as someone once said. They just have to outrun everybody else. I think they did it. If you go line by line, there are divisions that i kind of said, you know, everyone said, forget equities. Equity was very good. How many people do we currencies, commodities, thats going to be challenging. Investment banking revenues were up last year. Carrying high margins. Yes, they do. Credit products and mortgages. They must be trading a lot of mortgages over there. Theyre not packaging them up and selling them as securities. One of the ways they did it was to say, listen, your payout is going to be lower. Look at this year over year. Gary cohen, blankfein. They invite people to stay and blow them up if they you know, if you do a piece of business and it backfired a quarter later, huhuh, call it back. Everything gorman is doing is, i think, back to earth. It is a different firm than goldman. In the old days, if goldman put up a quarter like this morgan is up this morning. I dont know if theres a lot in the conversation there. They dont expect there to be a Morgan Stanley went to the ubs model. Interesting story here. I dont think theyre ready to do it. We brought up day one when we saw the ubs shares climb so high, when they pushed out the investment banking. Certainly not fixed income. What does Morgan Stanley do . Would they conceivably consider going that route . I dont know theyre ready to yet. But this comp plan in some ways theres a stream going through all these that people shouldnt be fooled at home about. Maybe theyre not miking as much as they used to. Theres still a tale of two cities in this country. I remember somebody yesterday saying warner is going to make more money. I was like, are you kidding me . Theyre not going to make what a thirdyear management director is going to make at Goldman Sachs. Its still a great opportunity. I know when you talk to young people, theyre like, jim, why did you work for Goldman Sachs . Like i worked for a chemical weapons company. Thirdyear m. D. , making a lot of money. 2 million, 3 million. I hope the third year guys are making that. Or more . Heres a question. A lot of discussion about whether or not the banks are in better condition because of the regulatory scrutiny in the last couple of years. If youre looking for a real view of the economy and how its doing, do we have to wait for ge on friday or are banks telling us enough . Their models are so different. But you know what, apropos of that, one of the things that we had when dodd frank happened, its going to kill them. You want to be mr. Goldman and mr. Sachs, theyre killing. Yeah. That return on equity was a big number. You were talking about 6, 7, you were talking about you were saying it was going to be the bank in the billion loans. It ended up being the potters pack. I like that. Mortgage apps today, the highest since 2011. The 30year fixed at 361. We havent seen numbers like that in a long time. Things are good. Somebody said to me, hey, jim, what is cnbc going to do after they solve the debt ceiling . You panicked on the election. Well try something. The country, the republic is in repeated crisis. You have a president saying he said, okay, what happens if the president doesnt have a crisis after the debt ceiling . What are you going to do if he says, listen, were just going to go back to being Like Washington . That was interesting. We can talk about fundamentals. The economy will be picking up. Housing likely to get in on it. Maybe were actually breaking maybe the valuations arent based on what . Come on, under wells fargo . Michael dell, and suddenly, mr. Skeptic overheated debt market, thats always a good sign for an economy. Thats always a sign that things are getting a lot better. Its been getting overheated since 1979. Big lbos. That worked out real well. No, im just theres housing, sales of pickups. Sales of cars in europe for 2012, not so good. Well talk about that. Germany, the bmw sales, volkswagen sales. One of my cousins in mexico is near a bmw, new plant. The germans are down. Theyre buying like crazy. Germany business, good. Rest of the continent okay. Ford cutting back very dramatically. Boeing, more problems related to the dreamliner. Japanese grounded their 787 for safety checks. The National Transportation safety board, faa are going to japan to assess that incident. When the first problems arose last week, week before, we said, well notice a seriousing when theres a grounding. We got one, times two. Yeah. By the way, goldman taking out conviction buy list. The likelihood there will be meaningful changes to the plan. The footage is really interesting. Forget the name of the company thats flying. It was the pride of the 787. Put 787 all over it. I think obviously this is boeing is standing by it. Its problematic. I know they can solve it. I keep saying to myself every day, i know they can solve this. But you first have to say, we have a real problem. These two carriers are the largest users of 787 dreamliners. You see 787 plastered on the side of the plane and people coming down the chute out of it, thats a risk. Youre right, you may love the stock, but it may be tricky to be in there. This stock has held at the 74 level for ages. I dont know. Remember, if you go look at the phil lebeau indicator, hes about to come on, unless hes with carl, forget it, lebeau coming in. Its still going. You have been pretty consistent in saying there are other ways to play this. You go with the koty company, honeywell, breaking out here clearly. They make the cockpit for everybody. Theres a lot of other planes being made besides the 787. Were talking about the 8400 planes being ordered. It may put a glitch in boeing. It will be interesting to see if they address this issue at all on thursday. Commercial regional and business jet coming on strong. What im trying to do is try to juxtapose the gloom with the fact that Business Jets are doing well. Maybe theres faux gloom. Remember donny deutsche, something something new bus, the gloomiest, i dont know, whatever its called. Gloomest of the new green. Im going to make a tshirt. Its like, actually, i think of it myself. Cramers hearing voices again. Wall street breaking for the last key economic report before the bell. Well get Industrial Production in a few moments. Also ahead, the buyout talks involving dell. One more look at futures after five straight up days, a little weakness here. Obviously concerning a few specific dow components. A lot more squawk on the street back at post 9 in a minute. Welcome back to squawk on the street. December Industrial Production rose, up. 3, exactly as predicted by many analysts and economists. The utilization rate, 78. 8. That is definitely stronger than 78. 5 expectation. Our last look was ramped up from 78. 4 to 78. 7. So that actually makes the move look only up a tenth. But its up more considering that revision. And we have National Association of home builders, Housing Market index yet to come at the top of the hour. We find equities under a bit of pressure. And Interest Rates, once again, moving a little bit lower. Melissa lee, back to you. Thank you, Rick Santelli. Shares of dell moving lower as more details emerging about the buyout talks emerging about the computer maker. Whats striking, david, is so many people on wall street have estimates at what 9 company can be done at. It is not going to be 15, at least based on conversations ive had. Details hard to come by until late yesterday. My sources indicating between 13. 50, lets call it, and 14. That could change. But i think 14 certainly seen as the ceiling amongst the people ive spoken to involved in various parts of a complex deal, one driven by both the private equity firm of silver lake and more importantly by the man himself, that is michael dell. Who will not only roll his 15plus stake into any leverage buyout, but i am told as well will access fresh cash that he has outside of dell. Not clear how much. To also aid in the equity raise, if you will. That equity raise had been a key question that i certainly had raised the math that it appeared they would have at least 4 billion, to 5 billion. Closer to 2 billion. Theyre going to be repatriating cash. People say, how can you do that . Youll pay a big tax. Well, apparently the repatriation is a lot more doable than theyre being given credit for. I dont know exactly what that means, well bring it back once we do the lbo. The big question is why current management considered buying back stocks. Theres a special committee here, of course. Well see whether they can get to a price that every side agrees on and that shareholders will approve. Yesterday, most of the day was spent poohpoohing this deal. Because of the repatriation. Because of the equity check. It seemed to be insurmountable because the club deals are frowned upon at this point. Then i want to ask you whether this is some sort of sea change. Because this is obviously a much smaller check. Yesterday we said it would be 8 billion. No, 4 billion to 5 billion. What im saying is, this is a rival departure from what weve seen from the little money put up. Given the size of the hlbo top line doesnt matter. This companys bottom line is larger than the top line. The other thing is, youve got credit markets that are incredibly generous right now. And in speaking to bankers involved in the moneyraising itself, roughly perhaps as much as 15. Theyre saying its not going to be a problem. Theyve been getting a lot of incoming phone calls. Weve got a lot of the money that we talked about moving to the high yield funds. They want to put it to work. Thats an important component of this as well. On both Fronts Yesterday where i was raising serious questions about how is it doable . In the equity check, by the way, silver lake is going to find another investor as well. But its a lot more doable. On the debt front it certainly seems that it will be will the shareholders revolt . That they demand that the deal be taken a look at . 80 80 to 90 of their cash is overseas and theyre willing to bring it back to this. Is there a chance they might say, you know what, this deal is a no go. And absolutely. My expectation is it will be put to a vote. Youll have a special committee negotiating on behalf of the shareholders with michael dell and his bankers and his private equity partners. Well see where they end up in terms of price. But you raise a good point. They will argue the unaffected stock price is 9. 50 a share. Thats where the stock was. Right. Theyll say, hey, 13. 50, 13. 70, i dont know what the numbers going to be, thats a big premium on 9. 50. Who has a great balance sheet. New management. Better than old management, with a lot of cash overseas. What is it selling for . I dont know. Yahoo oh. Why would yahoo not take a page from del. Yahoo should do the same thing. You have to make a change. People forget, this is a blueprint for other companies that have a huge amount of cash overseas with a very good balance sheet. They sort of lost their momentum versus others. Yahoo comes back and says, were the now facebook. I think yahoo listen to me i love when you talk transformational deals. Dont you love it . Earnings season is heating up, and so is cramer, as you can tell. Well see what he has to say about a couple of stocks in the mmad dash. And hotels, what you dont want to know about booking rooms. Squawk on the street back in a moment. At a dry cleaner, we replaced people with a machine. What . Customers didnt like it. So why do banks do it . Hello . Hello . if your bank doesnt let you talk to a real person 24 7, you need an ally. Hello . Ally bank. Your money needs an ally. [ male announcer ] how do you make 70,000 trades a second. Reach one customer at a time . Or help doctors turn billions of bytes of shared information. Into a fifth anniversary of remission . Whatever your business challenge, dell has the technology and services to help you solve it. [ male announcer ] dont just reject convention. Drown it out. Introducing the allnew 2013 lexus ls f sport. An entirely new pursuit. Lets get cramers mad dash. Cmg, and whether you want to talk margins or comp. Whats more important . No inflation in the system except for chipotle inflation. I did not like the gross margin. You can say chipotle is just another restaurant. And if thats the case, its cheaper. But keep in mind, this is really just a bad number. Its just a bad number. William blair said no credible evidence of new competitive pressures. Just people getting used to it . Yes. I think that the gloom is off. Not that i want to go on the blooming onion. Im not recommending a regular restaurant chain. You know what, the Restaurant Business is just okay. We see it over and over again. This is no longer the exceptional story. Lets talk facebook. Got discussed a lot yesterday. I thought this was a great idea. I use yelp, okay . When i use yelp, i feel like the top five recommendations are schils. That buddy is a buddy of the chef, or the inkeeper. What are your friends saying about going to the chipotle . I like this. This is the beginning of what i think is a terrific way to be able to find out where to stay. I was recently in puerto rico. And i would have loved to know where my friends and i should eat. You get these guidebooks . My friends are a better source. I think this was underestimated by wall street. I like the stock. Well talk more about yelp and linkedin and google later on. Yeah. Morgan and goldman, rivals because theyre making so much money. Keeping an eye an apple. Has the recent slide created a bargain hunters delight. The opening bell just a few moments away right here on squawk on the street. [ male announcer ] when we built the cadillac ats from the ground up to be the worlds best sport sedan. People noticed. The allnew cadillac ats 2013 north american car of the year. For a limited time, take advantage of this exceptional offer on the allnew cadillac ats. Nothing. Are you stealing our Daughters School supplies and taking them to work . No, i was just looking for my stapler and my. This thing. I save money by using fedex ground and buy my own supplies. Thats a great idea. Im going to go. We got clients in today. [ male announcer ] save on ground shipping at fedex office. [ indistinct shouting ] [ male announcer ] time and sales data. Splitsecond stats. [ indistinct shouting ] its so close to the options floor. [ indistinct shouting, bell dinging ]. Youll bust your brain box. All on thinkorswim from td ameritrade. Youre watching squawk on the street. Were live from the Financial Capital of the world. The opening bell set to ring in just a minute and a half here. Lots to watch around the world. The yen saw the biggest twoday gain against the dollar. Concern about the strength of the euro overall could be a threat. Undercurrent to the u. S. , which looks like to be a negative one. The big macro, everything out of japan, not so great. But the United States banking story, i think, is as you mentioned, carl, is it a real u. S. Economy, what is the read on it. People are doing better. And this is a section that was terrifically performing in the s p last year. And you could argue, wait a second, its run ahead. But its not selling off today. I thought people thought it would sell off. Were not getting that kind of judgment. A lot of up moves on the back of Goldman Sachs earnings. Take a look at the financials. [ bell ringing ] taking a look at the open here. No surprise. Oh, look, apple is higher by 1. 9 in todays session. Helping the nasdaq in an up trend. Cutting apple to set to perform. A lot of the reasons we heard before, but apple will have bottomed, either yesterday, or today. Calling the bottom in shares of apple. Remember, on the way up, in september, theyr