Welcome back welcome back to squawk. Lets get back to our guest host mark zandi who has the last word. All morning ive been talking about the next couple of quarters and i sound dark, and i dont mean to. I am very optimist being. What happened to the last two hours . You forced me. In the next couple of three quarters we cant look past that that i do think we have issues in the next few months, but ill give you one more last statistic. Every housing start requires five jobs for one year and Housing Construction will double in the next four years. Thats great news. Mark zandi, thank you for being here. Thank you. Steve. Thank you for being here. You dont look like joe kernen. I definitely dont look like joe kernen. Squawk on the street joins us right now. Good monday morning, good monday morning. Welcome to squawk on the street. Im melissa lee with, and lets see how well open for four Straight Record closes for the dow and it looks like the street may be pointing to a lower open. As for europe, news of the italy downgrade pressuring markets in todays session. We do have a loss in italy of. 6 pf data overnight in china also pressuring the global picture, lending and retail all slower than expected and we did have a loss there on the shanghai. Our road map this morning starts with the market. The Global Economy front and center with china and the italy downgrade. The s p is 1 away from the alltime high. Cnbc has the copy of the ge letter to shareholders. Jeffrey immelt, with less financial exposure and what the company is going to do with all of that cash from the nbc deal. A new development in the icahndell story. They have entered a confidentiality agreement. Is this a step closer to get the company to do a leveraged recap. Samsung is number one in china. Sales tripled to more than 30 million. Lenovo is number two as apple gets another downgrade, this time from credit agricult. The alltime closing highs and the s p 500 on a sixday winning streak, but futures are lower. Fitch downgrading italys Credit Rating due to the Political Uncertainty in that country and in china, data show inflation hitting a tenmonth high while Industrial Production and Consumer Spending came in below forecasts and jim, for Consumer Spending, at least in china, we had to come off the Chinese New Year holiday until you would expect spending would come in higher and the food prices typically spiked during that period, but is this simply an execute to lighten up as we are were on this hot streak here in the u. S. I think thats pretty much what it is. This has been a remarkable rally. We come in and were looking for something to do. I know that that sounds a little stupefying. Theres just not a lot of new names on companies that havent done well. Lets use the case of dicks, this is the chance to jump into dicks and you look at it, weather is not that good and what does that mean for vf . I guess what im saying is that everyone is looking for a reason to take something i dont know for a lot of people who are looking for reasons to add to positions right now. A downgrade of italy, david, by fitch, that wasnt a reason to sell necessarily. No. No, there arent many reasons to do much of anything this morning. Its relatively quiet for a monday. No deals and so you and i can keep going back and forth about this thing, but i will keep you in check of it on that. I saw someone that was reading thedeal. Com. Rumors of cit getting a bit and its, like, wow i could use that for ammo to sit down with david and say i told you. I dont have any ammo. I think youre right today. And something weve also spent a lot of time talking about and here is china and that does seem to be an influence on the markets and how and whether things are not quite as strong as might have been hoped forgiven the second half of last year. Right. I did hear overnight reports that was funny. Its an echo chamber. I heard that europe was doing better because our employment was better. Maybe we should buy our stocks. Theres this new Feedback Group that fitch tried to break the feedback loop. Fitch is great they issued this, hey, listen, lets do spain. You want to downgrade france on wednesday . Tt is the current rating on france . I dont know. Industrial production was a slight miss. The yields are 2. 09 and france is not too bad. Your point on friday was take your profits and go home. You thought the shorts covered in the morning ended up not closing down and i wondered if the dips will get bought in faster succession. I was wrong friday and i did not see the transports continue to be strong. I dont want to be short for monday and short for the deals that are supposed to happen that didnt. This market defies a lot of what mark zandi was saying on squawk. I thought it was interesting. I am hearing good things from the retailers and immediately what he said is jim, they dont know saying theres a lot of slowdown coming and there are a lot of cuts coming, and i struggle because what happens is im stuck with the facts, and the facts are good. The facts could change, but im stuck with them and all year ive heard that the payroll tax would kill us and the sequester is going to kill us and ive come out here and saying im waiting for it to kill us. In the interim the market is going up. Sure, one day it will kill us. Say were up 12 that will kill us. In the meantime that was the 12 that you had to make. You wouldnt have missed the rally had you invested in fear of sequestration and all of the fears that never seem to come to fruition, not to say they wont still, but you play the hand youre dealt with and this is what we have here. In 1987 the market crashed in october. If you had bought stocks the larger, most activelytraded stocks that friday before the crash, arguably, the most stupid day in history to buy, but if you listen to the commentary it was always that the economy was about to collapse because the stock markets always right. You know, i hear a lot of how the economy is about to collapse and this time the stock markets supposed to be wrong, but the economy is not fitting into the thesis of why people are buying stocks. They were buying the cloroxs, and they were buying the kimberlies and now theyre buying the steels and the down and out techs. Do you reach in to those people buying and say, listen, dopes, youre about to lose everything or do you say they have more money and firepower and they seem to be buying like on friday where i thought geez, this is a nice place for a breather and i thought theyd be on the canon ball up to the 405. There you go again with montauk. Theyre sitting there buy right until the the close. Did you buy property in montauk. Youre the mayor of montauk, you would know if he bought property. I would. Hes got a thing now every other day. Its only going to get worse. That is true. Robert shiller over the weekend writes this piece in the times that yeah, confidence is rising and i have no idea why. Isnt it nice . And at some point, jim, that doesnt matter anymore. It becomes selffulfilling and selfreinforcing. I said to mark zanned e what happens if we build 1. 2 million houses. Im beng facetious here. What im saying is the companies are telling you theres tremendous housing demand, but the figures have not moved up to reflect that. So once they start happening and we get 1. 2. I dont want to say, you know what . Thats why masco would go up. I dont want to be behind the buyers and yet, i think a lot of the economists who come on are behind the current facts. Speaking of the broad economy. Jeff immelts letter to shareholders is out to ge. It will make news later today and we have an advanced copy because we have that there. Something he takes very seriously and works on a lot by himself. He talks about ge as a big sale gas play, guys. A big order trend in sub Saharan Africa which is becoming a very big part of the world. In terms of the macro, the major source of volatility and Corporate Planning in the u. S. Is something i never thought i would see. It is hard to see that the u. S. Would return to its fullgrowth potential. He says were in unprecedented fiscal territory in this country which will keep a limit on growth in the short term and mentions the fiscal cliff, mentions sequestration and the number of regulations has exploded in the last few years, his words and the result has been an additional burden on business until we saw with these constraints it is hard to see that the u. S. Will return to its fullgrowth potential. Interesting take. It owns General Electric and they said its a downbeat look and it is all upbeat. Not to mention that theyre buying back a lot of stock and returning cash to shareholders. There is a macro take here which is interesting because immelt seems to be coming out fairly strongly. Washington cant get it together and well underperform on gdp and not never, it will be a while until we get to 3 to 4 unless you figure it out, washington, and the pace of regulation is constraining our business. We have a lot of money from nbcu and well send it back out. The top priority remains fwld building the dividend, andy hoo goes on to say in the second full screen, we plan to buy back shares to 10 billion to allocate the nbcu cache to rebfrp our shares and we plan to return 18 billion to investors through dividend and buyback. If things are tepid. If things are precarious which is the way i read it because of the federal government i would not buy a share of my companys stock and i wouldnt return capital. I would wait with until its either less precarious or it falls apart so i do find it a little counterintuitive to say all of these things after ive done the boilerplate issues im also going put capital to work. Why not conservative . Why not, dare i say, the apple . Its not like theyre spending all of their cash to repurchase shares and if you are repurchasing and thats part of your strategy, i dont think youre to be in a position to say im not going to this year or the year after. Youve just got to do it and we do look back and say why are you buying that stock back so high, but thats kind of part of the and then you go to the oil and gas. Oil and gas are the Fastest Growing business and earnings are up to 16. Last week we bought he partnered down. Thats right. 76. Why not go by halliburton and baker hughes which is the principal builder of rigs and oil and gas and who is it for me to tell will jeff immelt what to do. Why not put your money behind the growth areas rather than return the capital to shareholders. The stock action has been interesting. Mira cuts it today from neutral and there have each been technicians who say the action on ge versus the dow does not suggest the rally on the dow is sustainable because it has not popped the way that the dow has overall. I think youve got to raise those dividends to get it rolling a little more. Jeff immelt is right to say when shareholders want in General Electric. I think the stock has been pretty much a return on capital play. It has not been able to blow the numbers away. So at this point the valuation argument that they use to downgrade the stock that doesnt fly. You cant say trading at 18 right now and its rich compared to itself in the sxaft you want to lighten up on this. Ive seen the stock be much richer and ive seen the situation be much richer. I thought this downgrade was factuous and i look at how many times i could have downgraded disney. . Thats true. How many times i could have downgraded parkerhannifin. Home depot. A lot of these names that have had long bases for a long time and shot higher and all of the analysts were caught off guard and feel the need to downgrade. In the early 90s where analysts were so quick to downgrade, intel. Could intel go more than the 286 and the 386 indicated. There is the 486. Hold it. That was the pentium. There are things happening in the Corporate America that are better than what the analysts think because theyre all living in the last ten years. Any time the stock goes up someones got to downgrade it because its always been the right case. It has been. Ges stock was close to 60 a share in 2001. Right. Thats right. It was 40 a share in 2007. But not six, right . Oil and gas revolution. They put more money behind oil and gas. The oil and gas, it keeps coming back and we keep getting this is a great industry and theyre building compressed natural gas transfers and theyre looking at the engines and locomotives that can use natural gas. Theyre at the cutting edge of this and this is a very early comeback for energy in our country and theyre involved and thats a Good Business. Why shouldnt that grow faster than the gdp . It should, one would hope. When we come back well talk about news about dell and icahn and samsung topping the charts in china while apple gets hit with a downgrade and well dig deeper inside the cell foen wars and clara shih, whats her view on Cheryl Sandbergs views on women in the workplace. After four record dow highs last week, can we do it again . Mondays have not been good in general with a pretty flat open. Squawk on the street is back in a moment. announcer scottrade knows our clients trade and invest their own way. With scottrades smart text, i can quickly understand my charts, and spend more time trading. Their quick trade bar lets my account follow me online soct in realtime. Plus, my local scottrade office is there to help. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Voted best Investment Services company. Investor. Yeah, ibut im a busy guy. Or it used to be easier but now there are more choices than ever. I want to know exactly what i am investing in. I want to know exactly how much im paying. I want to use the same stuff the big guys use. Find out why nine out of ten large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. Dell dell shares moving higher. Billionaire investor carl icahn has entered into a confidentiality agreement with the computermaker in which dell will allow him to take a look into the companys books, they argued the 24. 4 billion buyout proposed by dell and silver lake partners. It confirms that icahn is on this track that hes doing something. Before we broke the story that icahn was involved in dell and before the letter was released by the committee that he had sent them proposing a 9 a share dividend saying it was worth as much as 221. He had indicated to the committee that he might sign a confidentiality agreement, but then he didnt. They were hoping he would saying hey, carl, play with us. If you submit a qualifying proposal under the go shop period which would expire march 22nd. It would supersede michael dell and silver lake. It will be highly unlikely that hell offer a proposal for the entire company which he might get and its still a big might is some sort of a recap under the go shop that would qualify meaning hed buy in a lot of the shares and hed leave the leverage stub out there in some kind. I dont expect it. That being said, hes at least taking a look. Why not take a look at confi confirmational like others and at this point, nobody expects that well end up with a higher offer for dell after the go shop expires and they can extend it if they find something that has merit, but well see. The tension is still there. The op position is still there n a significant way. That wont be out for another week and a half until the go shop expires and there will be a lot in that proxy that explains what managements thinking and what they felt behind what they were doing. David, one of the things that is throughout this process mystifying to me, business has to be getting worse if you look at any of the inputs. So how many deals can you recall because youve covered them for a long, long time where the business is getting worse and yet the bids go higher . It doesnt happen often. It can happen, but it doesnt happen often. The tribune corp . That was one. That was one where they were locked into a deal when it was done. Why it was funded by j. P. Morgan and was it a few months, which by the way is now unwound and its interesting, with a potential candidate and you dont see it un. We now have the journal article which basically confirms what we thought and that is the longer dell is entangled with this sort of leveraged buyout and leverage red cap tango. Customers are afraid of committing to dell. Think so. Thats what youre going do, certainly, hewlettpackard will tell you over and over again, people want to know who is there or not, private or public, youll still have the same guy selling to you or lady, but it does create uncertainty and hp, when they were going to split company. Why are your customers frozen . That doesnt help. A lot of the people who are purveyors of this tech and its been dell versus hewlettpackard. Is hewlettpackard going in and saying, listen, well give you half price right now or you dont know what will happen to dell . Dells private and dells public, it shouldnt matter. You can convince somebody, and there will abe lot of Different Things happening and were here and not going anywhere. Its intel. Its mott. Lets not forget mowhat dell spent on the enterprise. Its not just pcs. When we come back, what is the best way to ride the rally . Cramers mad dash is back. One look at futures and moderate weakness. Were off the lows after pretty moderately depressing macro data from all around the world. Back in a little bit. [ coughs ] [ angry gibberish ] [ justin ] mulligan sir. Mulligan. Take a mulligan. I took something for my sinuses, but i still have this cough. [ male announcer ] truth is, a lot of sinus products dont treat cough. They dont . 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