Transcripts For CNBC Squawk On The Street 20140409

3. 2 . Our road map begins with a 7,000 fine, every single day, thats what gm is paying because the Company Still has not provided enough answers about its ignition switch recall. Its not the only bad headline for gm this morning. More on that. Earnings season is officially under way after alcoa reported its results after the bell. What can the aluminum maker tell us about the rest of the quarter . We will have some answers. Instead of running from facebook, companies are willing to pay a lot more to advertise on the social network. But is that good news for the companys stock . First up, though, some tough news for the auto sector. Toyota recalling more than 6 million vehicles after uncovering five different faulting involving parts ranging from steering to seats and nhtsa fining gm 7,000 a day for missing last weeks deadline to provide information about its recall for defective ignition switches. Morgan stanley cutting gm to underweight today, 33 target, guys, and what is a tough note, talking about the capacity the industry has added, currencies, auto financing, deflationary forces, saying theres a lot of work to do for these guys. You either believe in the cycle or you dont when youre on the call for alcoa its clear that cycle is alive and well, that march was better than february, that february was not that bad. I think this is such a downbeat called. I have to disagree with it. Its too downbeat. You could say jim, Charitable Trust owns gm. I think its an inexpensive stock. David kostin was on yesterday. I think hes remarkably good, i have to tell you some of the work he does is that hedge funds own gm. They own aig, theres a kiss of death thing here. You have to get the hedge funds out before gm goes higher. We talked a lot in the last couple weeks, Hedge Fund Ownership the pain theyve been suffering and look at names where they are heavy in the ownership because they have been taking gross exposure down as a result of losses in different parts of the portfolio and that means, obviously, taking leverage down but also just taking the draw down so to speak, selling the stock. And you want to look at those names. Others look at those names to short them. People shooting against the hedge funds. I talked last night on mad money about time warner and cbs. One point i hadnt read coatues holdings, 7 billion to 5 billion. Theyre very well known. Hes been on with us, somebody i know very well represented, tiger cub. Tiger cub. Has done an extraordinarily good job. But yesterday, coatues letter, these letters by the way go around these days, do you remember in our day, a letter was something private between the Hedge Fund Manager you got my worst letter ever and you called me. Did i really . Yes, you did and you said oh, my god, its faber on the line. Like mike wallace calling. Faber on line one. I had a couple of those calls, i remember. Nobody on the other end ever forgets them. Its true that letter that you got, how did you get it . Well, you know, tnsa didnt get it and you got it. Everybody gets the letter. I knew tyicoatue was a tiger all im saying is yesterday at one point i turned to dave and said, do you think that cbs is down because of letterman . In the meantime no its down because of a letter. A letter from a hedge fund and people im like, desperate, like last time im like maybe there are too many commercials. No. Its a hedge fund. Do you believe in this Morgan Stanley fundamental analysis, though, that u. S. Replacement cycles coming to an end, right, tesla is getting all the engineers, theyre going to have to invest in a lot more cap ex to keep up. I dont believe it in at all. When you saw the inventory numbers, were back to 65 days. Thats we had 70s. I think were seeing theres going to be 16, 17, the build will be fine. You know what, let me say that theres if youve been recommending gm, the pain is so great, its almost like you just take that anvile and throw it away today. We used to call it at my Old Hedge Fund that you managed to come up with a bad letter, this is the maiden in the volcano. Like karen cramer used to say i dont care were throwing one of these stocks in the volcano. I cant take the pain. This is i cant take the pain call and you know what, sometimes those you have to go to the other side. Other people that have come on the air and said they cant take the pain, its lower. You have to take the other side of the people who cant take the pain. Gm, i think that gm is a buy not a sell. I like it. Now, of course, youre been a holder here through this. Ive been wrong. Hey, how about that. On twitter people are going to say, cramer, is an idiot. Even he admits hes wrong. Sometimes twitter is not the most accurate all three of us more or less the constant chorus, at least you get some people saying youre really brilliant. Periodically. You got one of those. Congratulations. I never have gotten one of those. He gets a couple of them. They feel down, bad for me after like five bad pieces including an attack on my restaurant, i get one guy that says i like cramer, i dont think cramer is the devil, sign of 666, but i think that gm, i was wrong, because i didnt really anticipate what i think turned out to be the greatest debacle in auto history since the pinto, but at this point, let the hedge funds liquidate, throw the maiden in the volcano and move forward. Talk about something youve been dead right on alcoa. Reporting First Quarter operating profits of 9 cents a share ahead of wall street estimates. Revenue did come in shy of consensus. Raising its Aerospace Growth outlook for the full year citing stronger demand for aircraft. Heres what klaus cline felds told jim cramer last night on mad money. I think hair row space is aerospace is ed dual and were standing on multiple jewels, i could also talk about the coming back of the building and Construction Market that was in a big slump but coming back now. Jewels. Sitting on some jewels. He didnt even talk about, you know yes, i like klaus cline felds, you make fun of me, used to be able to get your Wedding Dress cant return those. But yes, the larger people say yes to the smelter. You cant return those after theyve been worn. A heads up at home. The boeing call was very importantp in in other words thats my take away on the unbelievable seven to eight, goes to 8 to 9 . If anyone listened to the last Conference Call you heard a gasp on the previous one because he put a bullet through the head of boeing in the last call. Talking about an inventory correction. Now boeing, this is going to be it was the beginning of the boeing decline, im predicting the beginning of the boeing advance, 2. 1 increase, 5. 7 increase in air bus and by the way, the truck call was the best call and he didnt even talk about it on the Conference Call. Gigantic. Heavy trucks expected to gain 5. 9 . Very important. This is a i thought that they really delivered. By the way, the revenues were not weaker. Take out 8 to 10 of the capacity same time you have a decline in the price of aluminum and you absolutely have to have a incline in revenue. Any signs they missed on revenue that are out there you think are misleading . Yes, absolutely. You have to do the numbers. You have to go back over the amount of closures and the price of aluminum. Im getting heat, stock is down 15 since he came in and youre an idiot. Im tired of idiot call. Its not a bad revenue quarter at all. Thats good. And earnings per share did 9 cents instead of 5 cents and thats the downstream. A part which is taking share from steel and i like it very much. What happened . All right. We got a deal this morning. Really . Nothing mine 2. 9 billion it appears Procter Gamble is selling its iams. Pet food . In the major markets for 2. 9 billion in cash. Who did they go to. Mars pet care. Mars. Mars, the Largest Private Companies in the world. Hershey downgraded at goldman today. Pinnacle foods run been an exmars guy. To ber shah. Yeah. Its interesting, Procter Gamble is trying to focus more on its core business so it is getting rid of its pet care business. Mars pet care, most of us think of mars as a Candy Company, but their pet care company is good, employs more than 35,000 people across 50 countries and among their big brands are pedigree. They say adding iams and eukanuba will be a good fit for them and its their vegs of making a better vision of making a better world for pets. Huge growth business. It is. 50 billion industry. Look, every time i want to get negative on the pet business because zoatis, its more broad, you come back and say yes, as bertha said, huge amount of money spent on this. Procter gamble, ive been waiting for the big restructuring since laughly came back. Really rationalize the company, raise the dividend 7 . This is all good news for proctor because i think proctor needs to be a little more focused. By the way you get very Good Discount on proctor products. Other large potential businesses out there from Larger Companies, navartis Animal Health for sale potentially. Yes. And then, obviously, mercks consumer business. Thats for sale. A lot of offers from im hearing. An active potential auction. Could go for 11 to 12 billion. Are you serious . Bank kaiser the one im hearing on that. Thats why the stock is, thats a great call by you. Again just to this idea of the Larger Companies starting to part with some of the assets they dont see as strategic. Shoals too for merck have the Consumer Products business. B and g, small company, bgs, Conference Call recently, 4 yield, they have been moving very aggressively. Theres a lot of companies that want this space. They want this space. Meantime lets move to facebook. According to ad week this morning, brands are willing to pay more to advertise on the social network after their pages started reaching fewer fans with unpaid posts. Facebook coo Sheryl Samberg on the today show asked about her future. You have, i guess, unloaded about half of yer Facebook Stock and some read the tea leaves and say is she planning to leave facebook soon. Im glad you raised this. Theres been confusion. A good chunk of what was sold was for taxes. Theres confusion. I have plans to stay at facebook. I love my job. I love what we do every day to connect the world and being able to work on my personal time. You might be running for Political Office . Would you rule it out . Would you run for Political Office . Im not running for office. I really love my job an no plans to make any changes. Would you rule it out . I have ruled it out. I dont think thats for me but i really believe in what im cog. Moving the ball forward with Savannah Guthrie there. The ad week story pricing according to some ad buyers and partners up 10 . Quarter on quarter from q4. Yeah. My goto guy there is robert from sun trust, put out a terrific piece talking about return on investment, ad revenue 2. 17 billion, price increases of 80 . Everyone should read his stuff. Hes been so dead right. Jordan rolharohan, first guy ou the bunker went over the top recommended facebook. Pretty good call. I told you watch jordan hes been bloodied, they can come back and do the right thing. Today the twoyear anniversary of the purchase of instagram they bought for 1 billion at the time had 30 million users today 200 million users. And i got to tell you that people are going to not stop going to stop laughing soon. Thats why they have the confidence to spend 19 billion what it could come to if all that deal comes through in terms of the restricted stock for whats app or 2 billion for a Virtual Reality gogel maker. Place a lot of bets. Microsoft placed no bets. Right. I know. Weve talked about it many times and ill tell you keeping a lot of technology bankers very happy. Well, how come their stocks arent doing better . Whose . The bankers . Stocks are terrible. Have they . Youve taken a look at some of the prices. In the last day or two . Morgan stanley, Goldman Sachs, those names . Morgan stanley lost 10 . I regard that as consequence a. M. You have noticed the market has been tough lately, some tougher than others. When we come back, senator marco rubio will join us live. Hear what he has to say about the economy and more. Also ahead, la quinta going public today. A big week for ipos. Well talk to the ceo of the hotel chain. Ticker lq by the way. Take one more look at the premarket, this winss morning started on squawk on the street in just a minute. Public today. Oday. Weve been very clear in our conversations with our european friends that, you know, we think that particularly in surplus countries there is a need to boost demand. There is a demand problem in the world and theres a demand problem in europe. That was treasury secretary jack lew talking about earlier on squawk. Also out of europe jpmorgans Ceo Jamie Dimon tells the french newspaper european banks lag behind their u. S. Counter parts and say profits may still vary for different kinds of reasons but if you look at the equity outstanding loans, debt capacity you would see the u. S. Banking system is sound, it can do its growth, financing growth and employment, europe is not at that same stage. Lew had tough words for china, exchange rates, good interview. It was real good. A lot of things wrong right now. You can understand why Interest Rates are where they are, understand that the world is not that robust. Klaus cline feld mentioned almost everything positive. Whats the negative, nonresidential construction in europe. Barry talked about moving aggressively into spain, italy, uk, his boots on the ground, i actually trust a little more than what policymakers say. Interesting story in the times detailing what is a high rate of unemployment in the likes of a greece or spain or italy at 13 and the creation of the longterm unemployed, something weve been dealing with here and what that is structurally. We mentioned at the top of the show the greek ten years below six, when drogy said whatever it takes, it was 27. 6. It was. Now 5 and change. Thats insane. A malcolm x moment. It was. Thats who first originated that phrase, malcolm x. I think drogy has done a remarkable job, i think that these bank are replenishing. We used to joke about you know what bank, im not going to say it, its like a jeopardy question and your were king at jeopardy other than watson, there is a tremendous burgeoning move in the Spanish Banks and used to think they were the ones that were going to go under. The italian banks do not have necessarily the best balance sheets. We have to stop complaining. Now a threeyear Budget Approved by the cabinet. Government functioning things going on. Thats new. If you had you had gone back 2. 5 years ago this would be fiction. If you bought up a portfolio of sovereign european debt Allah Jon Corzine you might have been able to do well and hold it. Thats the key hold it. Not to buy it. You have to be able to hold it. Jon, just to be clear, did not hold it at all. No. Jon selling is always the problem. My boss at the old squid, giant squid, Goldman Sachs, corzine did a little work for him, hes very nice by the way. David tepper was the nicest guy ive worked with before. He lectured me how not to hurt clients. I wish he were on squawk more or on our show. He was another guy you learned a lot besides corzine. Absolutely. When he does speak its generally news. Hes so exciting. Well get cramers mad dash after the break, one more look at futures, dont go away. All right. Seven minutes, you know what day it is, i know you do. There you go with that hump day every week. Never get tired of hump day. You dont. Lets start off with isrg. Severe disappointment last night. Will the analysts back away . No. Almost as if they preannounce to the upside. Im going with herb greenbergs reality check, hes going to be on cnbc im sure, saying there is a problem in demand here. Its not just a gap in the new product coming because we didnt know a couple weeks ago there was a new product coming. I think hospitals have spent enough on this stuff. And the razor blade Model Looks Like the razor blades have decreased. I say stay away from isrg. It was up on the hype on the new product. Maybe, maybe demand has peaked. Interesting. Just like for razors, a lot of guys wearing beards. I still gillette, i still do the gillette. I know. I got them at harman, good price. One more were looking at. Once again, this is that budweiser am bev justice department. They buy corona extra and madela which happens to be the hottest selling beer. Actually on the breweries too. And they announce again and its even better. They raise this stock is still cheap. Why . Because theyre talking about numbers that are so, so big, double digit growth, raising numbers, raising their range, david, this is a story that you always have to watch. This was the big winner from Anheuser Bush ma della, this was the winner. These guys are nice guys. Its terrific for them. Upstate new york. Remember when they were just like a sleepy wine company and they didnt have money. Wine in a box. Those were the first few cnbc Christmas Parties back in the day as i remember, wine in a box in the hallway. Goldman during the bad year we had our Christmas Party at the corner of 42nd it was all fun. Young. La quinta to the ipo waters. Well talk to the ceo of that chain after it opens for trading. The opening bell just a few minutes away. Stay right here. Squawk on the street is coming right back. Right back. [ girl ] my mom, she makes underwater fans that are powered by the moon. She can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. [ bell ringing, applause ] five tech stocks with more than a 10 . Change in aftermarket trading. All the tech stocks with a market cap. Of at least 50 billion. Are up on the day. 12 lowvolume stocks. Breaking into 52week highs. Six upcoming earnings plays. That recently gapped up. [ male announcer ] now the world is your trading floor. Get realtime market scanning wherever you are with the mobile trader app. From td ameritrade. Youre watching cnbc squawk on the street live from the Financial Capital of the world. Opening bell in about 90 seconds. You see the balcony, la quinta going public today, pricing its ipo at 17 a share. That was below the expected range of 18 to 21. Offering values of the hotel chain at 2. 1 billion and david, another big move for blackstone and the hotel space. The gentleman in the center of maybe take it again, jon gray, who runs real estate at blackstone. Real estate is bigger than private equity and so youve got to remember that when you talk about blackstone and all their they have a large asset management, of course, restructuring, but real estate is the biggest. Don jay often talks about his successor at some point down the road to steven schwartzman. The fifth time hes rung the bell, so many Different Things going on blackstone during the course of the bell in terms of offerings. Its probably a record. Jonathan, not all managers are created equal. This guy is a smart guy and done a lot of right things. Buying stuff as they seemingly did at the top and yet being able to create multiple returns on it. La quinta one of them. Hilton they did dwight well on, not as well as la quinta. One of the most important things, the range. This is the beginning of the closing of the window of the ipos which is very positive for existing stocks. Very positive. All right. Good call too. Again, the s p managed to avoid four days down yesterday and the nasdaq recovers from those worst three days since 2011. Theres the bell. Look at the s p at the top of your screen and la quinta, celebrating its ipo. Well talk to the companys ceo in the next hour. Over at the nasdaq, ikang health care celebrating its ipo. Well speak to the ceo later in the program. Eventually we wont say celebrating their ipo every morning at 9 30. This is the biggest week theyre saying since 2006. Coupons. Com, down 31 in the after market, castlight down 55 , palocity, down 20 , qt holdings down 10 , amber road, this one is down 11 in the after market and border free is down 13 below where it came. These deals have been disasters if you buy them at the opening price. Disasters. Thats true. Thats the recap. Yeah. Disasters. Thank you, renaissance for helping me on that. Constellation reports tonight one of the big gainers today up 4 plus. Some research on it too. Constellation just blows away. A couple industries if you go over last night, im going to refer to alcoa, the beverage can is a major people are still drinking beer, okay, and drinking, would you get this call a beer can, bud lite, where you screw off the top. Really . Would you use that . Would you put it back . No. Once the beer is opened its gone. Its essentially gone. Is that innovation . I like the call. Maybe you would use it like at a game, you would cap it and then uncap it but i dont know if theres call for that but klaus has invented it. Innovation. Innovation. Yeah. I wanted to look at p g, not moving that much on todays deal, selling obviously, iams, couple other units as well to mars, one of the Largest Private Companies in the country, 33 billion in sales. You know them as a Candy Company but they also have a large pet care business. Interesting to note p g, gjim, bought iams for 2. 05 billion in 1999. Proctor has made a lot of mistakes. Not a good return. Proctor has not distinguished itself. Balance sheet, raises the dividend, does a buyback, travel test owns it, wouldnt back away from it from the world. Remember, this company was in the abyss not that long ago. And its really coming back. Was it in the abyss . Remember i told you about the disarray Conference Calls. You did. You were extraordinarily critical for some time and you did take the former ceo off your wall of shame. I did. I just think that proctor is still a Great American company. I know that they got taken to the woodshed in emerging markets. Unilever really came after them. I think theyre trying to get a little bit more aggressive. They it hasnt happened yet but theyre paying you to wait. Not a bad story that group by the way, the major drug stocks came down hard yesterday. Another rotation yesterday. Out of bristolmyers, out of eli lilly into the beginning of what i think will be a biotech move. Theres a ton of biotech ipos coming. You have to be careful. Hershey off more than 2 . This is going to take you back to basically early february prices as goldman takes it from hold to sell. Their reasoning is not wrong. They are saying that stock is priced for perfection. Its been a remarkable performer. Remember when hershey used to make everything in america and moved their manufacturing offshore and thats where their numbers came from. Thats a downgrade that hurts because it had been the bellwether in the group, the one that people said yeah, listenen, this is what happens if you rationale production and take sales up. That hurts. I like Pinnacle Foods run by a man who came from mars and has been a winner for yield and for price appreciation. Auto companies, gm, ford, in the red on that downgrade out of Morgan Stanley. You mentioned they cut the rating on gm and their numbers on ford, although the ford focus out today as the bestselling car of all of 2013. 1, 09,000 focuses. Ive been saying the ford is going to be stalled until europe turns around a little bit and latin america thats whats happening and now the guy doesnt like it . I dont know. To me, you sell this group at your own peril, honestly. This group has underperformed the market massively and i think you dont let them go here. Magna was up great. Big price target increase. A parts maker for the autos. Like i said, alcoa very bullish. Comcast in front of congress defending the plan to get together with time warner. How many pages . The journal said it was like 600 pages. The times said like 150. Can you resolve that for me . Is that a split the difference . The key filing was 150 page one if that was enough for you. It will be interesting to see the arguments they make. Its not about the doj. Simply very little you can say in terms of why competition would be affected since Time Warner Cable and comcast dont compete with each other. Its the fcc that will have a greater sway here. They can take some socalled Public Interest at the fcc and certainly one of the focuses will be on market power, particularly as it relates to broadband. And the fact that this combined company will have control of as much as 40 of broadband in the country thats a lot. I didnt know that. That being said, some of the arguments that were made in the brief that you referred to are interesting because they may play into the hands of masasan at soft bank who continues to mount his Charm Offensive if and when he ever does try to undertake a deal with tmobile, namely being if you give me the scale i need, i will bring speeds to you the likes of which youve never seen. Comcast seizing on some of that to say hey, weve been listening to massa talking about bringing 200ing mes into the home with a wireless broadband offering that i will be a competitor. Theres lots of things coming. Dish has a wireless offering, potentially broadband in nature. Things are changing quickly. Wireless speeds going up very fast or will conceivably if you listen to thes like of massa and therefore dont worry about market power with us. We have plenty of competition. Thats what comcast will be arguing. Verizon helps, doesnt it . Just a juggernaut right now. Fios obviously. Thats not near nationwide. I say like, i totally get and google. David cohens argument. I get it because i find that i can get the services a lot of different ways over the top, i can get it on my phone. Whoa. Right now where you can get your Broadband Services in your various homes, who can you get your Broadband Services from . Time warner, fios and. Right now cable vision. In the markets within each of your different home markets who can you go to as a competitive threat to the current broadband provider . No. There isnt any. Thats a quiz. Thank you very much. Whos bright . Its thats the point. To keep an eye on google and apple, rico with the story they both have considered making acquisition offers for square, the mobile Payment Company run by twitter cofounder jack dorsey, Kayla Tausche doing a good job reporting about the new revolving credit line theyve gotten, rumors about them headed towards the private markets thats interesting. I think square should be bought by starbucks and then starbucks breaks out its mobile processing payments plan. Watch paypal. Paypal, maybe this is one of carl icahns they got to get more focused paypal. People encroaching on them quickly. Do you think that if they were an independent company, they would be more aggressive not only defending their turf but expanding their market share. I had mallinckrodt on the other day, a different industry, lost in the shuffle of ka individualen. Now mallinckrodt spins off, stock higher. Why did mallinckrodt do it . The ceo says we didnt get the attention, kind of the love at a big company. I think paypal needs to have its butt kicked here. The way you do it, put it out there. So youre in favor of its funny because, of course, we follow the icahn donna who fight to personalize, ebay versus mr. Icahn, evolved into this important debate but nothing that had to do with separating paypal but having venture capitalists on public boards. I thought that was a shame. Thats interesting but not about arguing one way or the other. Ebay has been strong at firing back at mr. Icahn including why they dont think it makes sense. He hasnt articulated the arguments since early on about why it would make sense to separate them. Paypal, while doing okay, theres a lot of flux in that industry. I mean if verifone were to merge with starbucks, i know howard will email me and say thats not what were about, i understand, but in a dream world, opening the register is something that people want. They still call them registers. You need that mobile payments plan so when you go into the store, youre out immediately whether for the Kayla Tausche breakfast we references on twitter, panera needs this. I cant tell you how many restaurants need protection between 11 and tk. Chipotle. Chipotle theyre pretty good. Amazing. Never been. The lines too long. Like that yogi berra line, nobody goes there anymore, too crowded. I do believe by the way, that when you look at the 9 comp numbers, thats because theyre trying to deal and getting there. Not because theyre going to raise the price of gauc which theyre not. Theyre eating the gauk apocalypse. Dow up 53, s p up 5 and the domino in the house. Good morning. Speaking of burritos a lot of la quinta burritos floating around here right now. Trading right here, at least starting to trade trying to get an opening trade off. The indication is 16 on the bid, 17 on the offer. Remember this offer priced at 17, already below the expected range. They were expecting 18 to 21 before. They sold more shares than they initially indicated. The initial indication, 37. 25 million shares, instead selling about 38. 25 million shares. At this valuation if it does open up at 17, the value of the company is a little over 2 billion. Now remember, this is a smaller midscale type hotel, Hotel Room Rates in the new york area range from 75 to 175 for la quinta rooms and they operate about 800 properties throughout north america. What youre going to gauge here is an indication of whether or not there still is investor demand. With blackstone which is big private equity backer of this chain la quinta theyve taken Hilton Worldwide and extended state of market in the past six months, both of those stocks extended stay and hilton are above their ipo price. The question becomes whether or not these guys can open up at 17 level or maybe better and then see what happens. Remember, if you price at the lower end some traders expect maybe sometimes that allows some upside room for this stock to run a little to the upside. For right now looks as though this could, again, just the initial indication, could open up slightly below that 17 mark. These traders here are still working out their orders. Remember matching up, buy and sell limit orders until they can find an opening price that will clear most of those orders in the books. Again david, were still waiting. No indication just yet but again, 16 bids, 17 offered, sitting about 20 feet away from you, back to you. Thanks very much. Did want to come to one name, jim, we talked about earlier, a little surprise for you, something to come back to. In this case its American Airlines. 120 days since american or april 8th actually, so a day ago, 120 days since old amr equity holders received their distribution of new shares in American Airlines and this is something that just never happens. I thought it was worth pointing out, which is if you hung around through bankruptcy with that bankrupt equity which typically almost always is a zero, you actually made so much money, in fact, the current market cap accorded to that constituency is 17. 5 more than the old amr ever had at its highs if you follow what im trying to say here. You made a fortune. 10. 5 billion its worth. The old bankrupt equity. Simply worth mentioning given whats happened there. We talk often about the doj and what they did for airline shareholders there by agreeing to allow that deal to occur with relatively minimal divestitures after they challenged it with great fanfare only to cave. Yeah. Theres always been a political that stock has been up sharply. And its not done. 6 earnings power. Remember 18. 7 billion profitability according to klaus last night on the alcoa call for airlines. Can you imagine this renaissance in airlines. I like third best is united, second best is delta and then american. Of the nondiscounters. Theres some discounters i like. The move took place right after bankruptcy. When was it . It was the emergence december 13th and this stock, i mean again, it was a bankrupt equity, not only recovery, recovery of thes like of which youve never seen. Theres a recent have you flown i was talking about you got to go back. Have you flown lately. I have. I purchased a ticket the other day from United States to italy, 6,000. Right. 6,000. No competition to go to italy . 6,000. Did you shop online or calling . I like priceline. Ive been recommending the stock. I actually said listen i want to go to slovakia first. I got saved about 4,000. Fly to slovakia. People dont go there as much as they should. Ill keep that in mind. To the bond pit, Rick Santelli at the cme group in chicago. Rick . Hi, david. Well if you look at a twoday of fives rates are back up. But were testing levels we saw yesterday. And if you really want to know whats going on in the fixed income market, just think risk. Look at the Dow Jones Industrial average and still down what, about 115 points, from where it settled on the friday that we had the jobs report. It continues to be about risk and fixed income market, the yang or ying with regard to nervousness regarding the outlook of equities. How solid is the foundation . How much sand is in it . Thats what were trying to figure out. Year to date chart of fives were back under, said last year at 174, were back under and actually our yield with regard to fives, if you want to see a lower one, look at spain. Now you talk about fixed income, when i look at spains yield i look at our yield i think it is a bit fixed. Well talk about that on the Santelli Exchange today. Two day of tens and the year to date, we never were in the black with regard to the tenyear which settled at 303, havent seen anywhere near those yields as you see on year to date. Heres where it gets fascinating, year to date of five to tens on the spread, the same on five to 30s, the yield curves had dramatic flattening trying to steepen a bit. This is a small correction but we need to Pay Attention to it. Foreign exchange when you think risk, let me think, its got to be about the dollar yen. Look what happened. We understand they had their half year fiscal half year at the end of march. We see their tax is alive and well and probably taking a pacman bite out of their economy. This is an important chart to Pay Attention to. I think the carry trade and risk is a driving force that were going to have to digest and took its toll on the dollar index which is trading again down on the year. Back to you, carl. Good to have you back. Rick santelli in chicago this morning. We are on ipo watch. How will la quinta open . Well bring you the first trade and an interview with the ceo in just a moment. Capital to make it happen . Without the thinking that makes it real . Whats a vision without the expertise to execute it. And the financing to make it grow . Whatever your goal, it can change more than your business. It can change the future. Thats why, at barclays, our ambition is to always realize yours. Without standard leather. You are feeling exhilarated with frontwheel drive. You are feeling powerful with a 4cylinder engine. [ male announcer ] open your eyes. To the 6cylinder, 8speed lexus gs. With more standard horsepower than any of its german competitors. This is a wakeup call. The year. Year. We have an opening trade on la quinta, down to 16. 71, a decline of almost 2 , more than 38 million shares at a price of 17. They lowered the range, increased the distribution, jim. Yep. And some unkind things being said about it. This is it. I think this is the window closing. Weve had enough deals. These banks hers are trying to jam them in, the appetite is waning. People who paid up on the ipos when they come are down substantially. This has been a sucker play to pay up. This is the beginning. They did price it down a bit. Of course remember it was expected might come above 17, at 17 about 12 times this years eb da. You have decent growth into 2015. Those not particularly positive on the company would say its a small one brand niche limited service, others would say it has high Free Cash Flow growth or generation i should say. Trades, though, at a lower multiple than hyatt. I talked to one Real Estate Investor who pointed that out to me and said i would rather own hyatt at this price, although Free Cash Flow yield at 17 is about 7 , which isnt bad. Right. Hilton is like a good compare. I just think again, this is the ipo market on the wane and we see i have a list of the number of deals still to come and i im going to give you advice, stop it. Dont play the game. Is this the list right here . This is yeah. The list of deals on the way. Yeah. Do you think all of these will happen . No. Well yes, they happen because people have to lose money. Were at that moment where the bankers call and says listen, joker, i gave you some palocity, while palocity is still up, saying that, i gave you the great biotech ipos, you got its time to pay the piper, come in and start buy something bad ones or going to get cut off. Were in the bad phase. Bankers will say i happen that but i happened to be involved at one point and thats what happens. Blackstone did not sell shares here. Extended stay america and Hilton Worldwide coming from blackstone exits eventual exits from their large portfolio of real estate assets. I think king digital, rec ro pharma, these are all nurse at are all fail yours. Im not owned by these guys. Stop trading with jim in just a moment. Take a closer look at your fidelity green line and youll see just how much it has to offer, especially if youre thinking of moving an old 401 k to a fidelity ira. It gives you a wide range of investment options. And the free help you need to make sure your investments fit your goals and what youre really investing for. Tap into the full power of your fidelity green line. Call today and well make it easy to move that old 401 k to a fidelity rollover ira. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. And only national is ranked highest in car rental Customer Satisfaction by j. D. Power. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. Time for cramer and tstop trading. Maybe a chance to buy these after the fed minutes are released. I think that could cause volatility. Boeing, 10,675 plane, thats an 88 eight year backlog. You buy boeing. And then listen to this truck build, 35 increase in orders up to 90,000. Just go buy packar, right off this call, boeing from 144 down to 124, packarnot that week, the truck bull market lives, aerospace bull market lives, go buy the stock. Allegheny tech. You have to own titanium. Okay. P tonight on mad money. Controversial stock, krispy kreme down a lot, answered the call about when i said listen i have to find out whats going on. They want to come on, magnum hunter, a stock misunderstood. Big fines in ohio, mhr. We will stay tuned to find out if the bull market in oil and gas continues which i think is true. See you tonight, jim. Great show, guys. Fabulous show. Always fun. When we come back a live interview with senator marco rubio and la quinta is public again. Well talk with the ceo of the hotel chain. Dont go away. Why relocating manufacturingpany to upstate new york . I tell people its for the climate. The conditions in new york state are great for business. New york is ranked 2 in the nation for new private sector job creation. And now its even better because theyve introduced startup new york dozens of taxfree zones where businesses pay no taxes for ten years. Youll get a warm welcome in the new new york. See if your business qualifies at startupny. Com Beautiful Day in baltimore where most people probably know that geico could save them money on car insurance, right . You see the thing is geico, well, could help them save on boat insurance too. Hey okay. Im ready to come in now. Hello . Im trying my best. Seriously, im. Im serious. Request to come ashore. Geico. Saving people money on more than just car insurance. Welcome back to squawk on the street. Were seconds away from a february read on wholesale inventories and sales. Remember, still february so this data is really kind of the last of a litany of data that supposedly are going to have that weather impact. Lets see what it looks like. Were up half of 1 on inventories that matches expectations. With regard to wholesale trade sales, they were up 0. 7, a little lighter than expected. Look at how it compares to january, up 0. 5, on inventories, relates to 0. 8 on january which started up 0. 6 and down 1. 8 on the sales side and thats versus originally released at 1. 9. So the revisions are somewhat subtle, numbers somewhat close. I think when it comes to weather, we see manufacturing in autos and maybe planes were affected but seems the jobs reports that weve seen continue to demonstrate whether its weather or not, were still a little light in the jobs category and the risk trade, well is advertised by the dollar yen still seems to be ruling the roost. Back to you. All right. Rick, thank you so much. Rick santelli in chicago with that data. Speaking of all things economic, we start with a cnbc exclusive, treasury secretary jack lew speaking out about the state of the Global Economy and here in the u. S. , our senior economics reporter Steve Liesman has highlights from his interview this morning. Hey, steve. Hey, carl. Thanks very much. The treasury secretary in the exclusive interview with cnbc, which come ahead of the world bank imf meetings in washington, he had strong economic words for the rest of the world including china, jurp, japan and russia, but because of political deadlock in the u. S. Had less he could offer in terms of concrete actions that could be taken here to boost growth. His most strident comments aimed at china where theres concern that depreciating yuan is concern there is depreciating in bay jinx. Beijing. If they want the rnb to be a world currency some day, want it to be a reserve currency some day, they need to demonstrate that. And from our perspective, it is something that is very important to preserving a level Playing Field for trade in the world. Around the rest of the world he said europe risks deflation, should be doing more, not less. Germany should take steps to increase demand. Japan has yet to take actions on longterm reforms and worries about the near term with the recent tax increase. Russia he said should take actions not to invite greater u. S. Angions. Lew suggested that president obamas economic proposal such as increased spending on roads and airports, might have to wait until after the u. S. Elections. We have a plan to jump start spending on infrastructure. It would be to combine infrastructure with Business Tax Reform which would be a great thing for the economy and our business conditions. I havent given up on that and i think its an election year. Seems almost no prospect of that happening. Not everything gets done in the next six or nine months. Lew pointed out u. S. Growth is doing better than our trading partners. He said hes optimistic about passage of a highway bill and about Immigration Reform since he sees these as not strictly democratic or republican issues. Theres a web exclusive on lews thoughts on Immigration Reform that you can see only on cnbc. Com. Sara . All right. Thanks very much, Steve Liesman. A timely interview given the imf is saying the u. S. Is the driver of the Global Economy right now. Stay on that theme and talk about the markets. Stocks have had a rocky start in the Second Quarter but as earnings kick into high gear should you be rebalancing your portfolio into bonds. The director of global developed credit and Founding Partner of double line working with jeffery, good to have you here in new york. Thanks for having me. Bonny, u. S. Is in the drivers seat when it comes to global growth, the imf said it, treasury secretary jack lew said it, is it good enough, the u. S. Economy, to drive the World Economy and these stock markets even higher . Thats a good question and im not so sure im feeling that same sentiment. I mean look here we are, the First Quarter of the year, and bonds have outperformed stocks. Who would have thought . You know, when jeffrey predicted the ten year at 3 going down to 2. 5, people kind of snickered. What the bond market is telling us is that maybe growth isnt so rosy and with respect to the great rotation, i think it went in quite the opposite direction. What concerns us also, you know, stocks can stay healthy for a while, but certainly when you see Companies Start to ratchet down their earnings estimates like they have been, i think its like the highest ratio of down to up readjustment since 197 6 or even started. The Second Quarter since the financial crisis were expecting negative growth in terms of earnings. Thats concerning. When it comes to bonds, when it comes to the bond yields, 270 for the ten year whats it going to take to break out of the range, the weaker economy or talk from the Federal Reserve . You know, thats a good question. Now that the fed has embarked on the whole tapering exercise its kind of hard for them to say, oops, were going to skip this month. I can definitely see them lessening the taper, depending on how things shake out in the economy, but certainly when you look at the employment statistics, it was kind of funny to me how the market reacted last week. They got a jobs number they thought was pretty good and they dug into it more and the quality of the jobs created wasnt that great. We cant blame the other poor Economic Statistics in the First Quarter on the weather anymore. That seemed to really get the bond rally rolling and then you add in a little geopolitical risk via russia and ukraine and it gets worse. People have been looking at the socalled death cross on the ten year. Right. The intersection between the 50 and the 200, arguing that the push to lift yields higher is dissipating. Do you agree . I agree. You know, jeffrey basically said last week that if we see the tenyear dip below 250, it could go back to maybe touch the lows. Its not the most likely scenario, but its not impossible either. Look were in a brave new world. When you see the over valuation in a lot of asset categories, high yield debt, one of my sectors included tell me about high yield if i can stop you there. Why do you think its overvalued at this point, defaults at alltime lows and spreads decompressing. Defaults are at alltime lows, running around 2 right now. Typically is more like 4 to 5 . When you look at the low rate environment weve been in, its almost like weve deferred to the default cycle. Were not going to skip it, but weve deferred it. A lot of my colleagues on the street will tend to look in the Rearview Mirror to make predictions about the future. If you want to look at the low in spreads for high yield that occurred in june of 07 at 250 over. High yield spreads are about 350, 3600 over are they going to compress to 250 . What people forget its a much different environment and much different risk youre talking ate when the tenyear is at 5 versus 2. 7. Whats happening in europe . Today over the next 24 hours, greece is apparently going to go back into the market at a yield below 6 . People will be almost speechless to see the italy and spain borrowing at the sort of Interest Rates that the u. S. Government is borrowing at. What is going on there . Is that just because the Economic Situation is so bad or is the ecb, is it artificially supporting a market . In other words, is there a bubble there that could unravel . That is a very good question. Im not sure i have an answer, but i can certainly tell you that when you see the euro countries with the same structural issues that havent been rectified, borrowing at such low rates, it gives pause. I mean, greece defaulted on its debt, its going to come to market at 6 . I guess youre not buying . No. You have mario draghi talking about instilling a qe program in europe at the same time the imf said today, you know, basically everything is great, no more chance for recession ever. Could those prices plunge . Is this a major risk for everybody now that its got out of control and they could drop very suddenly and the ecb may not be able to support them . I think those markets are priced to perfection right now. Assuming everything stays calm, should be okay, but when you look at the kind of geopolitical flareups, economic flareups what if draghi does start a qe program. Hes been on record to say hes more likely to buy public than private assets because he doesnt want to be seen as financing anyones deficit. All right. Well, timely to have you here, bonnie, as always. Greece going to the market First Time Since 2010, how about that. Bonny not a buyer. Joining us from doubleline. It is estimated to be a 1. 2 trillion problem, Student Loan Debt has surpassed every other type of Household Debt excrept mortgage debt and a key economic issue for republicans and democrats. Florida senator marco rubio will introduce a bill to broaden access to private investors for students to fund their Higher Education costs in exchange for a percentage of their future earnings. Joining us this morning republican senator marco rubio joins us from the hill. Great to have you back. Good morning. Good morning. Thanks for having me. I want to talk about that bill. An interesting idea. We all remember you were one of the senators who questioned mary barra when on the hill from gm the other day, now news nhtsa is fining them a mere 7 grand a day for not answering their questions. Whats your thought on that . I think its important we have certainty about what happened there and a process be set up not just for victims to be compensated but hold accountable those individuals if there were some in that corporation that allowed things to happen. I think theres disturbing evidence gm knew about the problem and decided as a business decision not to correct it because they felt it would cost too much money. That cost benefit analysis is something not tolerable. I think we should move on evidence and facts. I commend them for bringing in someone to oversee all of this and to conduct an internal investigation with regards to it but were going to ultimately need answers sooner than later with regard to what occurred at gm. Going to be an interesting one to watch and a story were seeing the beginnings of. Talk to me about Student Loan Debt. We got some Consumer Credit numbers in the week and households are not spending on credit cards. Its about College Costs driving this up. Whats the solution . Well first of all let me say i come at this from a personal perspective. I owed over 100,000 the day i swore into the senate three years ago. So im keenly aware of and sensitive to it. At one point in my life the single highest expenditure in our personal budget. Whats happening now is in the 21st century, all of the higher and middleincome jobs will require some level of Higher Education but its become so expensive and so growing number of students are taking on Student Loan Debt and when they graduate not making enough money to make the payments and its deterring them or holding them back from starting a family, buying a home, getting on with their lives and limits flexibility in what jobs they can take or entrepreneurial activity. What other options to the Student Loans can we create . And here is an existing model that exists called income share agreements, a student goes to an Investment Group and says heres who i am, my resume, my transcripts, heres what i want to graduate in, will you invest in me . When i xwrauts i promise over a defined period of time to pay back a certain percentage of my income. For the invest group they may make more money than they invested in the student. They may lose. Thats the risk they take. For the student they may end up paying more than what they would have but may pay less. The bill is designed to create a Legal Framework so we can encourage more entities and Investment Groups to step into this field and help people with an alternative to the College Loans we have. So the danger that a student graduates and changes fields, i dont know, remains unemployed for a long time, sort of the risk the invest has to deal with at the front end . Thats no different than an investor that decides to invest in a company or idea and provide funding and capital for that to start up. Not everyone i think is going to be an ideal candidate for this. My guess is that you will likely see this more often than not in a graduate level, people going into the stem fields or medicine or some other profession where there is certainty for the investor that person is going to find a job and make sufficient money to make their payments. As i said like all Investment Decisions there is an element of risk here associated with it. But it creates an alternative to the traditional student loan system that we have in place which in my mind at its current pace is unsustainable in the long term. Senator, isnt it more likely youre going to those investors will cream off the best every year and the rest will be left to flounder as they are and you will reduce mobility within the system if anything . Im not sure thats the way it would play out. First i would say for what you describe as the best, the high gpa students and so forth, theyre probably already disproportionately getting their share of scholarship and private funding for their education. Second i think it will likely reward those who are going into fields that are highly compensated. And, in fact, will serve as an incentive for more students to graduate with degrees that are ultimately turned into employment. As opposed to large number of students now that are graduating in fields that dont lead to jobs. And thats a real problem in our country as well. I have another bill that deals with that called right to know before you go, and what it says is that before a student takes on a student loan the institution has to tell them, heres how much graduates from our school with this degree can expect to make when they graduate so that students have can make an informed decision about whether taking out that loan is the right thing to do. Well, we know its bad today and for those of us with young kids inflating out 16, 15 years, i mean its were just Getting Started on this inflation regarding College Costs. Thanks so much for your time. Well see you soon. Thank you. Marco rubio. All right. Meanwhile want to check in on another ipo, the parade continues, ikang has opened at the nasdaq for trading and you can see, with a pop up 17. 5 . This is a Health Care Provider from china, the largest private operator of medical exam and Disease Screening centers, up sharply, priced at the high end of the range, that was 12 to 14, offering almost 11 million shares, raising 153 million. Turns out Health Care Company in china is hot. Ikang. Were monitoring the story, developing going on just outside of pittsburgh this morning, 20 people were stabbed inside classrooms and hallways at a high school. Currently seven of the victims are suffering life threatening injuries. A suspect who is a student has been arrested according to local officials and we will continue to monitor that story this morning. Weve been watching shares of la quinta open this morning, trading lower after pricing below expectations. Ceo is going to join us on set after this break. Mine was earned in korea in 1953. Afghanistan, in 2009. Orbiting the moon in 1971. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation. Because it offers a superior level of protection. And because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance quote. Usaa. We know what it means to serve. [ male announcer ] when fixed income experts. Work with equity experts. Who work with regional experts. Who work with Portfolio Management experts, thats when expertise happens. Mfs. Because there is no expertise without collaboration. Hotel operator la quinta debuting on the big board. The trades sharing at 16. 95. The original price range 18 to 21 but priced at 17. Here is Wayne Goldberg the companys ceo. Good morning. Good morning. Before we get into the pricing and controversy there, lets explain whats happened to the business since 2006. This is a very different la quinta to the one blackstone bought out effectively. Yes. In 2006, we had 421 hotels. Today we have 830 hotels 834 hotels in the United States and if you include our pipeline of 187 hotels, were represented in every state in the continental United States, canada, mexico, honduras and colombia. Priced in the mid scale up toer which you believe is a growth area of the market. The other thing is youre very keen on technology as a differentiator to you. You gave out to data to people at the nyse this power bank. I dont know how relative that is. To you its more about connectivity in the rooms. Thats a differentiator. Used to be about giving the guests all of the technology. Today its about giving the guests the capability of leveraging the technology that theyre actually traveling with. Weve been recognized as Technology Innovators in the last several years for some of our cloud based computing capabilities and we continue to deliver unique technology solutionings to our consumers. Lets talk about the pricing. This is the third business that blackstone has bought to the brought to the market. You come into a crowded week, 14 u. S. Listed ipos. Ultimately you didnt get the price that you had anticipated. What happened . Well, again, we had a little air pocket in the market this week. We this is a great brand, this is a great company. We are excited about the quality of investors that have joined us and committed for the long term. This is about creating value for the long term for all of our employees, all of our shareholders, our sponsor, blackstone. Blackstone has been a great partner for the last eight years and helped us grow this business. They remain committed and are significant investors today. To those who would be critical or not buying today, this would be their take, the company is sort of a small one brand niche with a limited service. How do you respond to that. First, being in the select or limited Service Segment doesnt mean you provide limited service. Weve been recognized for service delivery, recognized for creative technological solution, recognized as one of the Fastest Growing, weve been recognized in many, many areas for our people, in dallas, many large markets. We feel great about this brand, great about this company and the longterm value were going to create for all of our shareholders. Those who would be positive talk about your opportunities overseas and franchise business growing outside the u. S. Do you see that as a potential. Yes. Weve seen very significant, very rapid growth in mexico, central and south america, again, our brand resonates, our brand translates. Weve been operating in the border towns with mexico, for example, for over 40 years. Its a natural for us to enter those markets. Weve been advertising in mexico for over 20 years and had an 800 number in mexico for over 20 years. Again, our success in mexico is reflective in how quickly weve been able to distribute our product and we feel great about the outlook. How would you characterize your customer . Your niche . Is it middle income . Yes. We have several different segmentations of customers, consumers. One thing that they all have in common and we focus on today is they all are optimists. While travel can be hectic theyve hence the coloring, lots of bright colors. Before we let you go, you guys, the hotel industry, has a love hate relationship with the Online Travel agencies. Today an article in the journal that google will try to strengthen its direct relationship with you guys and to extend cut extent cut out the likes of priceline and kayak. How do you feel about that. We focus making sure our brand is distributed wherever our consumer is and we work very hard to transition the consumer to our proprietary channel which is lq. Com. Would it be cheaper to embed directly with google than go via an Online Travel agency and pay commissions . We focus on making sure our brand is reflective and available wherever the consumer may book, may be booking, and then we work to transition them to lq. Com and weve seen Significant Growth in our program over the last number of years. Its always so great to see people transition a business to the market. Congratulations on your ipo. Thank you. Wayne goldberg, the ceo of la quinta. Thank you. Up next on the show, the man tasked with saving detroit. Hes been on the job for a little more than a year now, so will he be able to get the motor city back up and running by the target, october date . Detroits emergency manager kevyn orr joins us at post nine when squawk on the street returns. Aflac. Aflac, aflac, aflac [ both sigh ] ugh you told me he was good, dude. Yeah he stinks at golf. But he was great at getting my claim paid fast. How fast . Mine got paid in 4 days. Wow. Thats awesome. Is that legal . Big fat no. [ male announcer ] find out how fast aflac can pay you at aflac. Com. [ male announcer ] find out how fast aflac can pay you why relocating manufacturingpany to upstate new york . I tell people its for the climate. The conditions in new york state are great for business. New york is ranked 2 in the nation for new private sector job creation. And now its even better because theyve introduced startup new york dozens of taxfree zones where businesses pay no taxes for ten years. Youll get a warm welcome in the new new york. See if your business qualifies at startupny. Com the city of detroit has reached a settlement with bond insurers over the treatment of some bonds in the citys bankruptcy. The deal with these creditors, critical to the success of detroits chapter 9 bankruptcy case. Joining us now for a cnbc exclusive interview, kevyn orr, emergency manager for the city of detroit. Were surprised to see you here in new york. Good morning, sara. Not detroit. Big day for you. It is. A critical step. Yes, it is. Talk about what it means, this deal reached this morning. Great. Weve been saying for some time were trying to reach deals with our creditors, specifically the unsecured. On this one, the utgo unlimited Tax Obligation bonds frees up about 100 million for pensions and thats pretty good. Still has to be approved by the Bankruptcy Court . Absolutely. Going to be part of our plan, yes. You expect that to happen . We lope thats going to happen. Walk us through the terms of the deals, specifically the Unsecured Creditors and what kind of cuts theyre going to have to swallow . This class of creditors were supported by a millage, a dedicated revenue stream of about 388 million. Weve agreed with them and couldnt get it otherwise without their agreement, theyll give us about 24 of that millage and theyll keep 76 , freeing up 100 million for our pensioners. How big of an obstacle was this in achieving your october deadline . Its been going on for some time. This helps us get forward. Another component of the deal in bankruptcy is plan support, that theyll vote for our plan, so thats a good thing. 18 billion bankruptcy, of course, one of the largest municipal bankruptcies of all time. Where are we on the road to reemergens so to speak in terms of all the consti whensies youre dealing with including the unions . We have . Mile posts we have to go through, disclosure hearing, confirmation hearing in july, end of july, july 27th and hope to have an Effective Date some time in october. I said its halftime, its beginning of the Third Quarter now. With this settlement and hopefully the settlement that we have in front of the court this friday, the swap sfmettlement, will have a sufficient number of supporters to really push our plan forward. Were very optimistic. What about running the city itself and resizing, so to speak, the municipal work force for what is detroit today, which is certainly not what it was 20, 30 or 40 years ago . Theres a longterm plan for that called detroit future cities and the new mayor and i have a powersharing agreement more or less where he works to get the city running on time, weve got lights up, were paying our bills on time, not bouncing paychecks, were bringing down blythe, we have a blight plan, Infrastructure Improvement in place, buying new police cars and fire trucks, the city itself the central core downtown is thriving. Another 130 miles of city were huge, were the size of boston, new york, and San Francisco all together. The city is going to take a period of time but were getting at it right now. Have you seen everybody wants to talk about ambulance response times. Are those showing improvement . They are. Fire response times, Police Response times, year over year crime rates are going down. Im not going to say everything is perfect. All metropolitan centers and everything has problems. Were focusing on the simple things. If you pick up the phone and call we want the police to get in a reasonable period of time. One of the things im excited about our new garbage contract. Never thought i would be excited about garbage in my life. We have an outsourcing for solid Waste Collection and recycling program city wide. We will clean up the city too. There have been controversial aspects of the bond negotiations, not creating not handling all pensioners alike, for instance, the retirees, the general employees, not getting as much as the firefighters and the police and there are others. How do you respond to this co controversy that it sets a band precedent for the Municipal Bond market . The status, two things there, the status of treatment of pensers is a function of their own pension funds. Police and fire have two separate funds. The police fund was funded a little better than the general Retirement Fund and all were doing for benefits for those groups of retirees is reflecting how well they manage their funds in terms of the recovery theyll get now. There must be a tradeoff, paying 74 cents on the dollar today and further down the line . The reality 74 cents on the dollar paying today we couldnt get without the agreement of the bond holders. We get no cents on the dollar without their agreement. Thats why this settlement is a little different. A lot of nuances people have to appreciate but as far as a broader bond market the second half of your question, im doing this job. I dont have any philosophical bit, no ideological perspective about the bond market. Im dealing with a city that has 1 billion in general revenue and 18 billion in debt and trying to do four things, put the city in position to deal with fundamental services, return the city to a sustainable footing, provide for pensioners, and get a solution that is agreeable to all parties. Not going to be selling paintings out of the museum. I hope not. It is a great museum. It is a great museum. Doing the job until september, correct . I can get fired at the end of september and trying to get out of there before that. Do you think you will . If we keep going the way were going and i implore all parties, specifically our labor parties, please come in and do deals. Please come in and do deals. I do not want to do a cram down in this case. Kevyn orr making his case an also a deal today on the detroit bankruptcy filing. Good to see you. The emergency manager for the city of detroit. Okay. Lets hit the new york mercantile exchange. We have breaking news with jackie deangelis. Mixed signal in the emergency pits impacting prices. Oil prices are trading higher today despite the fact that the department of energy just reported a 4 million barrel build in crude oil supplies, more than traders were expecting. They were looking for about 2. 5 million barrels. What is keeping the price high right now . Ongoing tensions in ukraine is what theyre focusing on. Also some chatter that there was libyan supply that was supposed to come back online, it might not come back online as quickly as possible and its these geopolitical factors that traders are keying in on rather than the fundamental data. Let me tell you this, what this report is showing us we are well supplied. Refinery run rates decreasing because refineries are doing planned maintenance and unplanned maintenance, consumer demand is going down right now as well, that is seasonal and expected, but its these geopolitical tensions rising these prices up. Yesterday we popped more than 2 be hitting a one month high. Wti 102, spot 47. Back to you. Thank you so much. When we come back another ipo, this one at the nasdaq, ikang health care opens for trading. The companys chairman and ceo coming up on squawk. Dont go away. Away. Financial noise financial noise financial noise just want to say, i bundled home and auto with state farm, saved 760 bucks. Love this guy. So sorry. Okay, does it bother anybody else that the mime is talking . Frrreeeeaky [ male announcer ] savings worth talking about. State farm. The comcast time warner merger hitting washington today. Executives from both companies testifying before the Senate Judiciary committee. After filing that merger application with the fcc. Our Hampton Pierson live in washington with more on that. Hi, hampton. Hi, carl. This is the first public hearing since that 45 billion proposed merger of the number one and number two Cable Companies was announced back in february. Right now, weve had initial presentations from right now as we speak, arthur mention, Time Warner Cables chief financial officers, preceded by david cohen from comcast, they are arguing that bigger is better in this case, merging the two large Cable Companies. Time warner customers stand to get better and faster internet speed, better Cable Service, also that the two Major Companies do not directly compete in any major markets and in terms of the horizon out in the future, they now compete against competition from the internet and Video Markets from the likes of google, apple, et cetera. Those are the core arguments made in their filings with the sec and justice department. On the other side, a host of Public Interest groups really concerned about the kind of market power this combined entity would have on everything from basic Cable Service to content to distribution to rates, you name it, and thats really going to be the thrust of the hearing. Were just now getting into the question and answer session with Senate Judiciary chairman Patrick Leahy leading the questioning. First big public questioning on a controversial merger proposal. Back to everybody. Hampton, thank you for that. Of course, comcast the Parent Company of cnbc and nbc universal, and despite all the headlines about them having an uphill battle that filing, guys, 175 pages, argues that theyll bring super fast speeds to u. S. Households on wireless and theres still a lot of competition from web Video Companies and isps all over the place. And they talk about, of course, broadband which will be a particular area of focus and the fcc here is more important than perhaps the doj, the fcc with the Public Interest doctrine. They will make an argument about technology, having also increased speeds every year for the last 12 years when it comes to broadband and to the home. And the exfunnity platform being a strong one. Theirs is going to be were going to make life better for consumers at home. I wonder how thats going to go down, the changing technology landscape, netflix, apple and amazon are all players and how much that will resonate whether they get it on capitol hill. Does googles High Speed Broadband Service impede comcast or help them with their argument . It helps them with their argument but its in austin, kansas, not nationwide. But theyre saying this is a threat to us . What they will say this is a potential ket tore to our broadband offering if google were to roll it out nationwide. The costs of doing that would be prohibitive even for google. Theyre making the argument on the side of wireless and something weve talked about that masa son was talking about, the speeds he would bring in which would be multiples of what youre getting at home even though it would be wireless. Variety says amazon streaming traffic has tripled in the past year but netflix still 20 times as big as amazon. 35 of all traffic, Something Like that. Guys, were up 47 on the dow. A market flash from seema moody. Hey, a tough day for intuitive surgical, the stock taking a hit after the maker of the robotic surgery system said First Quarter revenue declined about 24 . The company shipped 87 row the bots in First Quarter compared to 164 a year earlier. The stock currently trading down by around 6. 5 . Last week the Company Announced that regulators cleared a new version of the robot sending its shares soaring. We see a lot of volatility in isrg. The robot roller coaster. Straight ahead former congressman barney frank will be joining us live to weigh in on High Frequency trading and what it means for the retail investor. You will not want to miss that interview. Back after a quick break. Er a qy today, we greet you. Treat you. Care for you. Today, you can come to Cleveland Clinic for anything, everything or just to get that thing checked out. Big, small, and yes, the best heart care in the nation. Its here everyday, for everyone. Thats the power the power, thats the power of today. Cleveland clinic. Call today, for an appointment today. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. And only national is ranked highest in car rental Customer Satisfaction by j. D. Power. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. Can you start tomorrow . Yes sir. Alright. Lets share the news tomorrow. Today we failrly busy. Tomorrow were booked solid. We close on the house tomorrow. I want one of these opened up. Because tomorow we go live. Its a day full of promise. And often, that day arrives by train. Big day today . Even bigger one tomorrow. When csx trains move forward, so does the rest of the economy. Csx. How tomorrow moves. [ male announcer ] when fixed income experts. Work with equity experts. Who work with regional experts. Who work with Portfolio Management experts, thats when expertise happens. Mfs. Because there is no expertise without collaboration. One of the Worlds Largest stock trading venues also known as a dark pool could be shutting down. The journal reporting that Goldman Sachs is thinking about closing its sigma x Trading Operations following glitches of its own and growing general criticism of dark pools and High Frequency trading. The report amid a divided wall street over hft and the controversy generated by Michael Lewiss book flash boys. Weighing in on this is barney frank, former congressman from massachusetts, who was chairman of the House Financial Services committee and now a cnbc contributor. Barney, welcome back to the network. Thank you. Do you welcome the idea that goldman could be shutting its dark pool . I dont know enough about the specifics. I think it is generally a good thing in that it shows a concern for balancing things and not simply making the most money. I regret the fact, look, i havent missed being the chairman because ive had a chance to relax, but i do regret the fact that the committee that i used to chair is not having extensive hearings on this. Had i in fact, had we not lost the house in 2010, if i had been the chairman of my last two years, my agenda item was going to be looking at this whole question of how trades are conducted in the modern technology. And both this, the dark pool, and the quick trading, they raise they reflect a very central issue. Obviously what the Financial Community does has benefit for the whole economy and the innovations have the promise to make it more efficient, but there are two questions that are raised by them. You know, first of all, its the old question, who benefits . I think that there is a serious question about whether very disproportionate share of any economic gain adheres to the people who are doing it and secondly, there is the question about the increased volatility and the increased possibility that this will cause some problems. People make mistakes. This magnifies the impact of a mistake. Yet, you know, congressman, i mean you make the inference yourself, this controversy is five or six years old, it would seem almost random now to some people, given its not that profitable anymore, suddenly because of one book on 60 minutes all the regulators go after them and you see people exiting dark pools. You could sigh okay, at least the regulators are sensitive to Public Opinion but white seem an odd it would seem an odd way to run a financial system. First of all, Michael Lewis is not just one more book writer. You know, going back to his first book and i think his book, the big short had enormous impact on me and others. You are talking about one of the most influential writers. If i were the Financial Community i would understand much of this is a sign there is still a lot of unhappiness with them, unease, i know politicians are not widely trusted by the public but if there is one group that may come in below politicians its the people in the financial industry. I agree people shouldnt pile on and shouldnt come to premature conclusions. On the other hand with regard to goldman im not aware anybody was pushing them to do this. I have no idea what their reasoning was except that and i guess this would be the final thing about the regulators. The regulators, dark pools and High Frequency trading, are the newer issue. One of the problems, one of the reasons we had a crisis is, there were innovations of 20 and 30 years ago of securitization and the financialization derivatives. As a country we were way too slow in taking a look at those and making rules. We have just finished as a nation and as a governmen government, making rules for those innovations. I think thats part of the answer, that the regulators attention was on the from dealing with the innovations from the 80s and 90s and its appropriate to look at these now, not in the sense of panic. We did get information in the past week that the percentage of rules under dodd frank that have been finalized is roughly half and i wonder all these years later if that timeline makes sense to you . I think its pretty good. Theres one reason they have been slowed down, two actually, the Bank Regulators are selffinanced. They control the currency, federal Deposit Insurance Corporation and the Federal Reserve have their own sources of funds generated by their activities. But the two agencies that got the newest, the biggest grant of new authority, mainly over derivatives, were the Commodities Future Trading Commission and the securities and exchange commission. They are both dependent on congressional appropriations and my former colleagues on the republican side when they took over the house in 2011 frankly most of them didnt like the new regulation but they knew it was too popular to oppose, thats why they havent tried to appeal the financial reform bill, the way they try to with health care, but much below the radar way, substantially reduce the budgets. The cftc and fcc have been hammered by inadequate budgets. Thats another reason by the way why people dont see something they dont like, which is the settlements with companies which they dont have to admit their guilt. Part of the problem is these agencies dont have the funds to carry on enough of those suits. The second thing is somewhat obscure. But you had a court in washington, d. C. , the Circuit Court for d. C. , which hears all these appeals, which had been very tough on the regulators and one of the central issues in this fight over the filibuster which harry reid won for the about the is that obama has now gotten the chance to appoint new judges to the Circuit Court of appeals and i can tell you from talking to the regulators they were held back in some cases because of the perception that there was this very hostile court and kind of a double bind. They had to could more work to please this court but werent given the funds to do it. The only thing i would say is this, i do not think anything has been a negative consequence. That is, no Financial Institution has said oh, those rules werent adopted yet, ill jump in. Why would you start or some activity that was going to be terminated within two or three years . True enough. Some, of course, have moved in advance. Mr. Frank, congressman, nice to see you again. Thank you for your time. Barney frank joining us there from washington. Cnbc contributor. And people still like the beard. They really do. When we come back getting longer. Theres a new massive security flaw that could leave more than half of the web at risk. How do you protect yourself . The vp of tum bler will join us with answers in a moment. Moment. Mine was earned in korea in 1953. Afghanistan, in 2009. Orbiting the moon in 1971. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation. Because it offers a superior level of protection. And because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance quote. Usaa. We know what it means to serve. The treasury yield at 2. 70, dollaryen stronger. Its time to get to Rick Santelli, and good to see you, rick. Its great to be back. And also great to have Charles Biederman as my guest today. Thanks for taking the time, charles. Good to see you. Theres a lot of issues going on. When you look at spanish fiveyear, our fiveyear, boone relationships, but you have a wrinkle to throw in. Its not only baseball season. Theres a seasonality with tax time and stocks. Explain, please. Well, ive been saying recently beware of the ides of april. And last april, 190 billion 189 billion was paid in taxes by individuals in april. And that was up from, like, 130 billion the prior year. This year, were expecting 250 billion to be paid. And a lot of that money is probably still in stocks. So historically, the week before april 15th, which is next tuesday, the markets week, its particularly weak when theres a huge gain. So one of the benefits of the wealth effect is weve had 500 billion more in taxable gains last year than we did two years before. Now, most of that is capital so let me stop you right there, okay . So if im looking to take a new position in equities, and i want to be long, according to your scenario, when would be the optimum day to jump in . Well, i plan on jumping in monday and tuesday. I gotcha. I gotcha. Now, that, of course, isnt going to change all of the thats because theres a huge amount of i. R. A. , 401 k money, going into the market in april, after the tax payments are made. So you have a downturn before april 15th, and an upturn after. Everything else being equal, which, of course, it never is but well, you know, being an Interest Rate guy first and foremost, so if i was looking to short Interest Rates, of course, id pay very close attention to that, because its hard to ignore the notion that Interest Rates are correlating with the equities, when equities go down, Interest Rates seem to go down. Do you have any thoughts on how a fiveyear in spain could be at the same price as a fiveyear in the u. S. . I mean, seriously. And im going to talk about that on the exchange today. Well, next, youll tell me greece was able to sell a bond at 6 . I mean, really . Well, i tell you what, charles, either the wall street journal said because investor demand is surging. True or false in your opinion . Final word. True or false, its investors clamoring for southern europes paper . Investors who dont believe theres any real risk as long as the qe is in place, theyre buying. I gotcha. Well, were going to touch on that topic in about a half hour. Charles, its always a pleasure. Thank you. Squawk on the street gang, back to you. Yeah, and good luck with the idea that the ecb will embark on qe. Is jack dorsey scare a takeover target . Find out which big players could be eyeing the company. And Jeff Steinberg will weigh in after this. E climate. The conditions in new york state are great for business. New york is ranked 2 in the nation for new private sector job creation. 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Call or click to open your fidelity account today. Announcer welcome to squawk on the street. Heres whats happened so far theres other people that have come on air lately and said they cant take the pain. It looks like its lower. You have to take the other side of the people who cant take the pain. Gm. I think that gms a buy, not a sell. [ bell sounds ] theres the bell. Theres disturbing evidence there that gm knew about the problem and decided as a business decision not to correct it, because they felt it would cost too much money, and that kind of cost benefit analysis is not tolerable. This is about creating the longterm value for all of our employees, shareholders, sponsor blackstone. Its been a great partner for the last eight years and helped us grow this business. Weve been saying for sometime that were trying to reach deals with our creditors, specifically the unsecured. So on this one, the utgo, unlimited Tax Obligation bond, frees up about 100 million. And thats pretty good. Good wednesday morning. Its 11 00 a. M. On the east coast, 8 00 a. M. Out west. Heres what were watching today. Is Jack Dorseys Square a takeover target . Well tell you which big name players could be eyeing the mobile payment provider. Plus, two good pieces of news for facebook. One has to do with ads and the other concerns the future of coo Sheryl Sandberg. Massive security bug threatening over half the internet, and your personal information could be at risk. Tumblrs head of engineers will tell you what you can do. Whats the most important social network for teens . The answer may surprise you. Thats coming up later this hour. Joining u. S. For the squawk feed, john steinberg, and cnbc contributor, and along with our own jon fortt. I know you guys are fired up about the topics. Very much. First up, potential big news in the mobile payment business. Well talk about this report, that square was considered by both apple and google as a takeover target. Of course, kaylas been doing great reporting about revolving credit facilities, the notion theyll be headed to the Public Markets instead. Ill ask you first, kayla, what did you think of the story . Its interesting, because they obviously have a coveted technology, square does. People are asking what does the future look like . In the story over the weekend, i did include one detail what the banks have been considering, about a decade ago they had a structure with visa where they coowned visa, and then took it public a couple of years later. But they basically had access to visas technology and their network. A lot of Bank Executives have been scratching their heads thinking, could we do Something Like this with square . Square doesnt want to be owned by the banks, i should note, but that doesnt stop wall street from figuring out or trying to figure out what they could potentially do to monetize. And theres starbucks. Howard schultz peculiarly stepped down from the board of square in october, and then has sort of recused himself from some daytoday operations at starbucks because he wants to focus more on mobile. The big question he got on that call when he made that move, are you guys looking at an acquisition . He said theres no particular company were looking at acquiring, but its safe to say a lot of people want to see what starbucks can do this this space. You dont have apple or google, but a whole lot of people circling this technology. And the starbucks piece. I suspect he stepped down from the board potentially because of the partnership underperformed what people wanted it to do. It didnt lift up square wallet, which is platform from the phone, the usage adoption they wanted there ultimately. And thats why i think it is a takeout target. If you look at itunes with 575 Million People who have their credit cards in, ready to buy stuff on iphones, it makes so much more sense for square to get that growth through being an acquisition. The story is interesting, because it says dorsey was cool on the idea of getting acquired by google, partly because of the interactions that square had with google around i mean, that twitter had with google around potential acquisitions. But this apple idea, apple doesnt do really big acquisitions, and you have to think acquiring jack dorseys company would come with some degree of risk. Hes got a big personality. Hes a big fan of steve jobs. He likes to be out there front and center. Giving his take on technology. Not exactly the typical apple executive under but you do a deal for 5 to 10 billion, 5 being the low end, put dorsey on the board, what zuckerberg did, and youre in mobile payments, which all of people want to be in. Thats what im saying. Im not sure if you are apple you want jack dorsey on the board. Why . Because hes too much like the guy who used to run apple . Theres similarities to john forstahl. Hes already on the board of disney, too. Absolutely. He would have to leave disney and go to apple, because weve seen how the dual Board Membership worked in the past. Bob iger has figured it out. Hes very much known by apples board members, too. This shouldnt it shouldnt be a public company. The margins are not there. Great parlor game, i tell you that. Yeah. Moving to facebook, according to ad week, more companies are willing than ever to pay more on the to advertise on the social network. Ad prices up 10 across the board compared to the previous quarter. Thats not the oebl good news for facebook today. On the today show this morning, Sheryl Sandberg gave her clearest indication yet that shes staying at the company for the long haul. Take a listen. You have, i guess, unloaded about half of your Facebook Stock, and some people read the tea leaves and say, is she planning to leave facebook soon . Im glad you raised this, because theres been some confusion, a good chunk of what was sold was all for taxes. So theres just confusion on that. I have really plans to stay at facebook. I love my job. I love what we do every day to connect the world. And i love being able to work on my personal time. The other big rumor is running for Political Office. Would you rule it out . Im not running for office. I love my job, and ive no plans to make any changes. Have you ruled it out . I have ruled it out. I dont think thats for me, but i do believe in what im doing. Jon, youre a partner with facebook, and you emailed us five seconds. Unequivocally she says shes staying at facebook. Every partner, every investor, always says, oh, shes going to run for governor. Sheryl is considered one of the best executives out there in technology. I would put her up there with eric schmidt. This is huge for the stock. This is huge for investors. I am more confident than ever in the company knowing she has made this declaration. And facebook seemed to pop soon after that interview. Its up around 4 right now. I mean, look, i think that was our take when the speculation was out here. Shes probably not doing this. The stock sale looks routine. Of course, in politics, when people say theyre not running, that means this next cycle, it doesnt mean ever. Even if they say theyre not running ever. Remember hillary . I have to give her credit for actually coming out and saying it the way she did. She didnt try word parsing. It would be hard for her to back herself out of it. Within the next five years. Leave the door open to some extent, but says, i have ruled it out. Yes. Absolutely. And she explained that lean in she does in her personal time. Another question people have, is it distracting her . Shes absolutely focused on her business. Those who dont know the company well, have been asking, what does she do . What has she brought . That sales force is exceptional. When i was at google, she was several levels above me. Ran the online sales organization. Has an amazing lieutenant in david fischer. Theyll do 11. 3 billion this year, up from 7 billion and change the prior year. Massive revenue growth. When you do an ebitda to ebitda adjusted growth, they trade at. 3. Google at. 95. This is a great economics story. Mark zuckerberg focused on the product, focused on engineering, i which he loves to do, and she can run it day to day. Shes a builder of armies. Ad week, 10 quarter on quarter . Based on performance. He talked about roi of 3 . Theyve confined inventory to 5 . Only 5 of what youll see in the feed is going to be ads. Its performing. And its better than having there just be tons of inventory worth nothing. You have to keep a good balance for consumers so they dont feel like theyre getting overwhelmed by ads. Can they hold at the 5 level for the long term . I dont know. It seems like theyve been very good at reading the data and getting the balance right. What theyve been doing on mobile hasnt been driving people away. Its been raking in money. Theyre still very good at converting those ads. So right now, theyre king of the hill. They have challengers coming up in pinterest and twitter. They will go through what theyre seeing in the ad load. The 5 level was set based on testing. It took them a while to get there. First, it was terrible, and now really good. Meantime, tv stations need to be more like netflix, so says kevin wheeler. Wheeler said station owners need to look to the future online, or they may find themselves trampled. In the speech, wheeler said, quote, your content represents far moore than the potential for retransmission fees. It can be the basis for a fixed and mobile delivered cablelike service. Interesting. Got a regulator looking over corners, beyond corners, jon. My sense is, a lot of the networks would love to charge seven bucks a month for their content. Its a matter of figuring out the transition to get there. I dont think theyre closed to this idea. But there are some consumer implications along the way of everybody having to pay up for this. One of the most interesting things to me in this speech is he pointed to yahoo at t, and verizon as companies that have realized their old models dont work. Right. Started embracing something other than the status quo. Are those three its totally unfair. Its a totally unfair comment. I like to say, having worked a little in local at google, local takes the scale of the internet and demolishes it. Everything you need lots of inventory to achieve, local takes that away. Local only works when theres lots of rolledup local, like yelp, like pandora. So to say to the station owners, you should go over the top with your local news, is hollow. Especially when the fcc is taking away the ability to do sidecar deals. So Work Together to negotiate rates with the cable and satellite providers. Its so hard to be small. You dont see any chance of it happening . No. Who will want to watch even if you do watch overthetop local news, how much revenue will they extract from that . I dont know. I went to a local news site yesterday, to try to watch a story, and there was a pay wall on the video. I didnt have an account, so i couldnt watch it. For a local station . Could you authenticate . No. Huh to sign up. Thats the point. How much revenue can they make . This is the patch story. You know . It just doesnt work. You would know having that back ground. Good to see you fired up today, john. Glad to be here at post 9. Up next, talking about a massive security flaw taking over the internet and a whopping 66 of the web could be at risk. So how can you make sure your personal information is protected . The Vice President of engineering at tumblr is here with some answers. First, Rick Santelli, you are back from a couple days off. What are you watch sflg. I wish it was a couple days off, because a couple of days on flat on my back. Well talk about a leadin in a story in the wall street journal, how investors have been flocking to the southern european Securities Market to buy things like spanish five year. I think im going to contest that a bit. Were also going to talk about how its impossible to figure out fair value in a world where theres only relative value, and even that is tenuous at best. All in about ten minutes. Some financial guidanceneedd so she could take her dream to the next level. So we talked about her options. Her valuable assets were staying. And selling her car wouldnt fly. We helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today. And tomorrow. So lets see what we can do about that. Remodel. Motorcycle. [ female announcer ] some questions take more than a bank. They take a banker. Make a my financial priorities appointment today. Because when people talk, great things happen. [ male announcer ] when fixed income experts. Work with equity experts. Who work with regional experts. Who work with Portfolio Management experts, thats when expertise happens. Mfs. Because there is no expertise without collaboration. Mfs. Female announcer its sleep trains interest free for 3 event. Get three years interestfree financing on beautyrest black, stearns foster, serta icomfort; even tempurpedic. Plus, get free delivery, and sleep trains 100day low price guarantee. Youll never find an Interest Rate lower than sleep trains interest free for 3 event, on now. Sleep train your ticket to a better nights sleep welcome back to cnbc. Im Michelle Carusocabrera. The greek debt, theyre hoping to raise somewhere between 2 billion and 3 billion euros, and were told by more than one source, demand stands at 11 billion euros, so multiple times oversubscribed. Yields somewhere between 5. 5 and 5. 25. Reuters is reporting something different. This can move around. U. S. Books will close at the end of the day today, new york time. And theres probably going to be some availability to change tomorrow morning depending on what happens in europe. So why are we showing you the german bond at five years . If you want to buy one, look what youll get paid when it comes to yield. If youre going to buy a greek fiveyear bond, youll get paid roughly 5 . This is denominated in euros. Youll also take currency risks beyond the other risks when buying greece. Right now, greece, we approach a milestone moment for the country that hasnt been able to borrow for years, restructured two years ago. Even though its still one of the most indebted countries in the world, will be able to borrow, looks like tomorrow, with heavy, heavy investor demand from all over the world, certainly in the United States and europe, from what i understand. Guys, back to you. Michelle, very indicative of Strong Demand, especially for investors who remember when the yields just a couple of years ago more than doubled that. 27 at one point. It was crazy, right. Big turnaround. Yes, definitely. Michelle, we know youll bring us the latest as the fluid situation continues. Thank you for that. We also want to take a look at the Health Care Sector. The markets are up ahead of the fed minutes. The Health Care Sector the biggest winner on the s p today. Seema has more. Health care leading the sector higher. The s p 500 higher, led by the rebound of biotech stocks which have sold off in recent weeks. Leading, regeneron and alvion. Carl, back to you. Thank you so much. A new bug is spreading aross the internet and could mean many of your passwords and data are available. It affects yahoo to amazon. What can we do to protect ourselves . Ken little is the vp for tumblr. He joins us to explain more about the bug. Hi, thanks for having me. Theyre calling this the most dangerous bug out there. In the long while. Its a pretty expansive bug, a wide effect on the internet. What essentially will it do . It opens up your data, right, exposes your data potentially to others . Absolutely. So the bug in essence is an accesscontrol bug. What that means it allows anybody who knows about this issue to access information on machines that are affected, that they simply should not have access to, and that can include Sensitive Information like passwords and user names and other types of data you consider protected. It doesnt leave much of a trace, right . No. Its not obvious its there. Right. Not obvious people have tried to use it or taken data out of systems that are affected. So this is when people see https on their browser, they see the lock, they think that everythings encrypted, going back and forth. Its like a lock defect, right, in the way this was written on the server side, neer do wells can tell what youre communicating with the site, passwords . Essentially, thats correct. It definitely is tied to the https that you see, the lock that you see, because the bug is an Encryption Library thats popular with Many Companies on the internet. But it isnt a bug in encryption. Its a bug with simply has access. Ken, we were talking during the break has this has to be fixed on a sitebysite basis. You said tumblr has moved to plug the gap. If companies can plug the gap, why didnt they spot it before the researchers . Unfortunately, the bug has been out there in the wild for a long time, without being without being caught. Once it was caught and once once it was announced early this week, all of the companies that were affected found out about it and started to take carest issues. I was talking to a security expert this morning who was saying no point in just changing your passwords right now, because you dont know if that particular site has patched the bug, if they havent. Even if they have and havent issued new security certificates, anything you do can still be seen. Is that the way you see it . Thats true. If the company has not patched the library thats affected, then any password change you make, that password is just as vulnerable as the one you had before. Once theyve patched the library, youre pretty good to go to go ahead and change the password. A rolling certificate key will take a couple of days and isnt something you need to wait on. Why are tumblr and yahoo more exposed to this than other sites like google . How does it decide who it will target . Yeah. So the companies that are affected are there are large number of them on the internet. Certainly not just tumblr and yahoo . In particular, we value openness and transparency with our community, though. So weve been very vocal about it and getting out in front of it and making sure people know its effective. If people are saying, like yourself, it doesnt really matter if you change your password if the site itself hasnt fixed it, what would you recommend consumers do in the meantime . A lot of people are saying, dont do any sort of commerce, banking transactions, any type of activity where youre worried about that information leaking out there. Yeah. So i would say for the Crucial Companies that you interact with, have the most Sensitive Data on you, definitely make sure you are keeping up with their website, on their blogs, to see whether they were affected at all. If they were, whether or not they patched. And then decide, you know, what risk youre willing to take. Because it is possible that if they are affected, that someone is sort of watching that information flow that you dont necessarily want watching. Especially now that its so public. Do we know much about the origin of the whole thing, wither it began . So this was very simply a bug that was written into the code. Once it was found by security researchers, a patch was put in place and the public was notified. Yeah. Somebody writing the equivalent of a runon sentence, right . Yeah. Ends up being a big Security Risk for the entire internet. Good thing grammar isnt as dangerous as this is. Thank you so much, ken. Ken little, Vice President of engineering over at tumblr. When we come back, the world of mobile payments is growing according to juniper. Mobile Payment Transactions will reach 507 billion. About a 40 increase over last year. As the business grows, where do the banks factor in . Well talk about that when we come back. Dow is up 38 points. Mine was earned in korea in 1953. 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Driven to preserve the environment, csx moves a ton of freight nearly 450 miles on one gallon of fuel. What a day. Cant wait til tomorrow. Welcome back to squawk on the street. Im seema mody with food for thought. We begin with proctor gamble, selling its pet food business to mars for 2. 9 billion. P g currently trading higher. And hersheys sharing melting as Goldman Sachs downgrades the stock saying the strong run is coming to an end. Hershey still near the alltime high, trading at 98. 93. Carl, back to you. Im take it from there, seema, thank you. Thanks to Companies Like paypal, square, the market for electronic persontoperson payments has been one of the fastest growth areas in mobile banking. Its also been one of the biggest disrupters to the traditional banking model. Banks have been striking back. They formed Clear Exchange, the largest p2p network in the u. S. Joining us is Clear Exchanges ceo and cofounder mike kennedy. Mike, thank you for joining us this morning. Thanks for having me. When this was founded in 2011, you hailed it as an innovative game changer, but to the naked eye, its harder to see some of the effects of this. What products do banking customers use now that Clear Exchange is responsible for . Its a great question. We are a white label solution where we sit in the background and the banks brand it independently. So, for example, wells fargo has done transfers under sure pay. Similarly, bank of america has it in their transfers. Well be rolling out with additional banks such as capital one, jpmorgan chase, and others. For the first couple of years, it was a loosely structured jv, no clear headquarters. You joined as ceo in september. Im wondering what size staff you have, what sort of capital youre working with. And just how big this network is that maybe a lot of consumers dont know about. So we are based in San Francisco, as you said, have about 35 employees. We see this as a huge market for us. Theres 900 billion in persontoperson payments in the u. S. Every year, most in cash and check, and thats what were going after in terms of the size. But when you think about the actual number of customers, as some of the banks, you have bank of america, wells fargo, chase, these are some of the biggest Financial Institutions, and i saw a stat you guys have 90 access to 95 million Customers Bank accounts through this system. What type of market do you have access to as Clear Exchange . Are we talking 200 billion, 300 billion . Its a great question. As i said, one of the hard things to monetize or to size is the fact that a lot of these are in cash and check today. You know, the market is, as i said, about 900 billion for p2p payments. We, as you mentioned, have over 95 im sorry, 95 million line banking customers, another 40 million mobile banking customers. And we think, through those, we can tackle a large portion of the 900 billion. Mike, if i already use paypal or square, whats my incentive to switch over to a provider you use . Im a bank of america customer, say. I have that option. Why would i use you instead of the others . It boils down to Customer Experience and security. Youre already going to your bank to conduct a lot of transactions. Youre checking your balances there. Paying your bills. Youre moving money between your accounts. From the safety and security of bank of americas online banking, you can also send money to me by going to putting in my email address, the dollar amount, and hitting send. From a security perspective, a lot of people know that the banks obviously already have your account information. Your financial information. They dont want to go give that to another third party. So they go to their bank, put in their online user name and password, and theyre able to do the transaction there in a safe, secure way. What do you consider the biggest competitive threat at this point in the game to the big banks . We talk about square, we talk about paypal, vinmo, and a lot of startups in the space. And im wondering which of those do you see as viable competitors and how much of a threat you think the banks will end up posing to them . Well, paypals been around for a long time. Theyve had time in the market. I actually think that the biggest threat is cash and check. The biggest threat is people use cash and check today and making sure they can realize that this is an alternative. They can go to their banks to do this, and its an easier way, a secure way. People arent carrying checkbooks, they arent carrying cash, but used to using those. Awareness that this even exists is probably the biggest competitor we have. Mike, i know that a lot of what you do is research and product building. Is there anything in the pipeline for any of these banks that you think we should be watching out for . So i cant talk about specifics, but i will say, you know, one of our focuses are about driving innovation and payments, and help to drive the innovation on behalf of the banks through the banks. So weve built the Clear Exchange platform so it can handle p2p payments and can handle things beyond that. Its very os tensible. In the future, you will see great things from us. Still a little bit of a black box, mike. Thank you for opening up what part of it you could today. Mike kennedy, the ceo of Clear Exchange. Thank you. All right. Lets bring in simon hobbs to talk about the european close in about 45 seconds. Simon . You will find it quite refreshing. Green on the screen today across europe after two days of losses. Weve been able to break away from that. Decent gains on the other side of europe. Clearly, a lot of the discussion is still about what is going to happen with the European Central bank. Will they move towards qe or not . Some would say that maybe the germans have been signaling more of a reluctance recently, and certainly the Swedish Central Bank didnt move on rates overnight. They argued there that maybe growth would be enough to remove the deflationary pressures. So there you go. Eventually, the close around europe. Green across the board. Its interesting, some of the automotive stocks have done relatively well today. Sanford bernstein is putting a buy recommendation on the likes of vw and porsche, and you can see those particular stocks are up 3 and 4 respectively. Also, some of the homebuilders are doing well today in the u. K. Deutsche bank suggesting that actually top picks would be these two, barrett and travis, and that perhaps weve overdone the view that the House Builders in the u. K. Were overextended on perhaps the fear that the bank of england would be raising rates anytime soon. But the big news, of course, coming out of the session now, and into tomorrow, is, as Michelle Caruso kah brcabrera reporting, the debt markets in greece, and the suggestion from michelle there was Strong Demand on the fiveyear note, and perhaps they could raise 11 or 13 billion euros as a result of whats going on. I would say this is very much an outlier as far as a lot of what is going on in europe at the moment. 80 of greek debt is actually held by the institutions the ecb or the governments. They dont have redemptions in 2016. So its a safe bond thats being written under english law so that there will be, guys, no fear of a haircut there. A lot is still the same in greece. Today, theres a National Strike in greece, still the germans are talking about the possibility of another bailout for greece further down the line. So when you see this moving through over the next 12 hours, lets not get too carried away. Back to you. No, after a fouryear exile, it says something about where we are right now in the trajectory of their economy. It says something really about where the greek debt situation is after so many haircuts, so much of it being held as a public debt and the fact that they actually dont need to come to the market, particularly over the next 18 months. I think thats i wouldnt say that this is a symbol of a major rebound in europe, no. Right. Although you dont want to do it when you really, really need it. The point is to do it when you dont. Also a story in the journal about how italian and spanish yields are near u. S. Treasurys as the market starts to rebound as well. And the question is, is that overextended . A what happens if the ecb cant launch qe, because it cant find the instruments . We know rick will hit on that later this hour. Yes. Shares of toyota taking a hilt after the Company Announced the massive recall, over 6 million cars for a host of potential defects. This is the eighth major recall for toyota since 09. Is it time to worry about quality at the automaker . More on that in a moment. [ male announcer ] legalzoom has helped start over 1 million businesses. If you have a business idea, we have a personalized legal solution thats right for you. With easy stepbystep guidance, were here to help you turn your dream into a reality. Start your Business Today with legalzoom. Make it happen with fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Roughly 800 million with u. S. Bank regulator, this time over credit card practices. The shed lines say it involves fines and refunds to kreds credit card customers. Bank of america not the first to run into problems over its credit card practices. Recently, jpmorgan settled as well as three other banks in that space. You can see the shares have gone slightly more negative in todays trade. We want to get to the cme group, Rick Santelli standing by with the Santelli Exchange. Rick, were glad youre feeling better. We know you wouldnt miss a tenday option. Thats right, kelly. Its a wonderful day to be back. I have one question to ask, and i dont mean to be facetious. Is europes fixed income market fixed . And i dont mean fixed like Michael Lewis kind of fix, or fixed because it used to be broken, or maybe fixed because this is where you want it so well fix it right there. I dont know the answer. But lets look at some of the facts, please. If we look at a 20year chart, 20year chart of spanish fives versus u. S. Fives, something jumps out at you, and that, of course, is the record breakneck pace that yields after the adjustment of the credit crisis came back in line. And the next chart is a tenyear chart of tenyear boones versus tenyear t notes, and the reason the two charts are interesting, because taken in contest, what we hear is that Global Fixed Income investors just are enamored with southern europes securities, and thats why this move has occurred. And heres what i think. I think that, of course, there are some investors that have been involved, but for the most part, you have Spanish Banks that come in, and they buy the auctions. And they buy it with euros that are printed by the spanish central bank, and then the ecb comes in, and they basically give full credit lines with no haircut to those securities. And what its created is this unique spiral. And maybe its a good thing. Maybe what was broke is fixed. But the problem then becomes, its hard to trade on fair value. You then try to trade on relative value, which is kind of the trade that you want to pay most attention to, in my opinion, is boones versus tens. But ultimately, its really margin value thats the story here. So what does it mean in english, santelli . Ill tell you what it means. That, in my opinion, it is almost virtually impossible to see a huge runup in u. S. Rates. Why . Because are world investors truly going to pay up to a lower yield on a southern european economy than on a tenyear note, it doesnt make any sense. If the world stays as it is on this kind of weirdvalue trade, it will be a stopper for any significant increase in u. S. Rates. So either u. S. Rates have to come down, or europes rates have to go up. Theres no other way to explain it. Carl, back to you. All right, rick, thanks a lot. Rick santelli in chicago. On to toyota. The Company Announced its recalling 6. 4 million cars for a variety of problems spanning 30 different models. Phil lebeau is live in chicago with more on that. Phil, the stock price almost 52week low today. Yeah, its getting a hit here. And thats because people are looking at this and theyre saying, wow, this is a huge recall. Secondlargest ever for toyota. Certainly the largest coming back in 2009 when there were, what, almost 10 million vehicles recalled due to unintended acceleration concerns. Lets run down exactly what were looking at. There are a number of recalls involved here. Two major ones. Altogether, number of vehicles impacted, 6. 76 million vehicles worldwide. 2. 3 million of those in north america. We should point out, some of the vehicles are named in both recalls. Thats why you see a number numbers that are flying out there right now in terms of total number. 27 models. The corolla, yiris, rav 4, and depending on the recall, were talking about vehicles made between 2004 and 2013. So what are the recalls involving . Well, toyota says there could potentially be faulty air bags, problems with the seat rails, or potentially the steering involved in some of the vehicles. But we should point out, toyota says there are no known accidents or deaths related to the recalls being announced today. Toyota is trying to determine exactly what the repairfix will be for the recalls. Remember, with a recall, you dont have to come out and announce the fix right away. You simply have to say there is a recall. Well get in touch with you when the fix has been identified. Again, the secondlargest recall ever in toyotas history. Carl, you mentioned the stock is trading close to a 52week low, down more than 1. 5 today. It really is starting to feel some pressure here as you its almost down, what, 1. 8 . Also, i want to look at shares of general motors. There was a callout from Morgan Stanley basically saying we moved our position on gm to underweight, because there are a number of issues here, just headwinds that will clearly be coming into gm over the next several months, and as a result, theyve moved it into an underweight position. An active day for the autos for sure. Guys, back to you. Thanks, phil, for watching that for us. Were also watching one of the big ipos this morning. Shares of Chinese Health provider iking rallying, and now the potential investment has some risk, so the question is, is it worth your investment . Well talk to the ceo in a moment. So i c an reach ally bank 24 7, but there are no branches . 24 7. Im sorry, im just really reluctant to try new things. Really . Whats wrong with trying new things . Look mommys new vacuum cat screech you feel that in your muscles . I do. Drink water. Its a long story. Well, not having branches lets us give you great rates and service. Id like that. A new way to bank. A better way to save. Ally bank. Your money needs an ally. At your ford dealer think . They think about tires. And what theyve been through lately. Polar vortexes, road construction, and gaping potholes. So with all that behind you, you might want to make sure youre safe and in control. Ford technicians are ready to find the right tires for your vehicle. Get up to 120 in mailin rebates on four select tires when you use the Ford Service Credit card at the big tire event. See what the ford experts think about your tires. At your ford dealer. Welcome back. Were seeing a bounce in the social names. Facebook in particular was up 5 in a moment ago. Of course, various stories in ad week about pricing strength going into the quarter. Sheryl sandberg on the today show, more explicit than ever that shes not leaving the company, and not running for office. Theres been a lot of discussion about how many growth guys, kayla, are hiding in facebook because of the recent carnage. You dont see a move like that on this name very often. They say theyre hiding in facebook, because facebook is actually profitable, its actually shown quarter after quarter it has the earnings to support itself. Some of the other names, they argue, like twitter maybe do not at this point. Right. Started the morning below 60, now 61. 08. Meantime, icane, the Fastest Growing private Preventative Health care market. Lee jung joins us this morning. Good morning to you. Good morning. Thanks for having me. Pretty good action, priced at 14, high end of the range. As we saw, doing well this morning. Walk us through what the environment is like in china regarding health services. You already serve basically threequarters of the biggest chinese companies. Yeah, the government want to provide universal health care system, but the focus for them is really on the treatment. For ikang, its on the preventative side. Its supplementary. Whats driving it from sort of a fundamental demographic level . Exactly. Actually, right now, this market is underpenetrated, about roughly 19 of population come to medical examinations. First in japan. Theres a growing awareness for the health condition, and more company willing to pay for this to keep employee healthy. Lee, this is not the first time youve taken a Company Based in china public here. There, of course, is a lot of focus on ali baba and the highprofile decision it made to list in new york instead of hong kong. Walk us through the environment of going public in china, and what some of the challenges are and why you ultimately keep making this decision. Well, for nasdaq is always on our top choice. Its innovation and technology. And thats what is ikang is looking, for innovation matters. For ikang, most of the business comes from medical examination services, but we want to be traditional kind of Health Care Service company, and if we want to merge technology, i. T. , and the latest discovery from lab, to bring to peoples life. Tell us about whats happened to Health Care Costs in china, and how they compare to the increases that were used to here in this country. Yeah, compare to u. S. , you know, its about 18 gdp total health care. In china, only roughly 5 of gdp go to health care. And actually, people waiting to spend more now to get healthy get a better life. So we are seeing the growth for health care faster than gdp growth in china. So actually, we think its a good sign, because people willing to spend more for that. And as you all know, most of the common plans in china cover basic services. People willing to pay out of pocket to get additional services. Finally, kayla sort of talked about, you know, your decision of where to list. Why new york and why the nasdaq, given all the choices you must have had . Yes, you know, as we just mentioned a while ago, i think nasdaq deliver good service, bringing more visibility for ikang. I spent seven years in the United States, and at graduate school at harvard university, so nasdaq is always on my top choice. Also, Previous Company i founded called elan. Com, one of the largest travel Service Company in china. That company is also listed on nasdaq. So for me, nasdaq had to be home for me to come home, you know. Yeah, sometimes its what you know. Lee, well watch it closely. Thank you so much. Thank you for having me with. Lee zhang, ceo. Laquinta ipoing, has made gains through the session, 1. 66 . And ian read, the chairman and ceo of pfizer and incoming chairman of phrma, with us, and a very rare interview you dont want to miss, 11 40 a. M. Coming up this hour, were getting a look at new medicare data for the first time in 35 years, and some of the numbers arent pretty. Well explain more behind that in a moment. [ male announcer ] when fixed income experts. Work with equity experts. Who work with regional experts. Who work with Portfolio Management experts, thats when expertise happens. Mfs. Because there is no expertise without collaboration. Afghanistan, in 2009. Orbiting the moon in 1971. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation. Because it offers a superior level of protection. And because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance quote. Usaa. We know what it means to serve. Bulldog i cant wait to get to imattress discounters good and early for the tempurpedic bonus event. Ill have first pick from the huge selection of tempurpedic mattresses. Then, ill get to choose 300 in pillows, sheets, and other free gifts. On top of that, up to 48 months interestfree financing. Its a Beautiful Day for mattress discounters tempurpedic bonus event. Mmm, some alarm clock you turned out to be. Mattress discounters welcome back. Were getting a new look at data from medicare for the First Time Since the 70s, and the numbers show a small amount of providers account for a huge amount of the costs. Sco scott cohn is back at hq. When you talk about medicare, everything is huge. You talk about the numbers involved in medicare and medicaid, and its a jawdropping experience. Weve been talking when the efforts to rein in fraud. Authorities acknowledge its a fraction of the total fraud, and even a smaller fraction of the 800 billionplus in u. S. Health care entitlements, most of which is billed legitimately. The centers for medicare and Medicaid Services is putting the data out there, doctor by doctor, for the first time in decades and jaws are dropping again. Meet the top medicare billing doctor in the nation, according to several analyses of the data. West palm beach opthamologist salomon melg emn who billed 20 million in 2012. Federal agents raided his office twice last year, but hes not been accused of anything and has denied doing anything wrong. So has his best pal in congress, senator robert menendez, has denied wrongdoing, but did reach out to an hhs friend. He says the billing was in accordance with the medicare rules and stands by his record of improving vision and quality of life of patients around the world. These are gross billing amounts, not profits. The numbers for him and thousands and thousands of doctors nationwide are bound to generate lots of discussion and perhaps some reforms. Carl . Scott cohn, just celebrated 25 years on cnbc, started when he was 5. Thanks, scott. Thank you. Lets send it over to seema mody for a quick market flash. Check out the cool sector. Ubs downgrading walter energy, alpha natural resources, to sell from neutral, citing lower Commodity Prices in the coal sector. Ubs lowering the price target on alpha and arch coal from 3 to 5, and from 5 to 8 on walter. Kayla. Thank you so much, seema. Coming up, what is the most important social network for teens in this country . The answer is important to your portfolio, and its up next. It might surprise you. vo you are a business pro. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. And only national is ranked highest in car rental Customer Satisfaction by j. D. Power. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. Could save you fifteen percent or more on car insurance. S Everybody Knows that. Well, did you know bad news doesnt always travel fast . clears throat hi mister tompkins. Todd . Youre fired. Well, gotta run. Geico. Fifteen minutes could save you fifteen percent or more. 6. Pfeiffer jaffrey has released its new teen survey. Jon fortt joins us with more. What do we know . Theres some data to put some behind impressions people might have. Lets start off with social networking. How many teens would you think rate facebook as their numberone most important social network . Close to last, right . Well, 23 . 23 . Not that bad. What do you think is the most important, kayla . I would guess instagram. Instagram, yeah. At 30 , yes. The spread not too bad, actually, when you think about it. Sevenpoint spread, but makes zuckerberg look brilliant, snapping that up before facebook went public. They had data on phones and watches, iphone gaining share apparently from fall to spring, around the survey around 7. 5,000 or 7,500 teens. 17 of teens eager to get an iwatch up from 12 six months ago. So apple, some good news here, even though samsungs marketing suggests apples for old people, teens still like it. I did a straw poll, much caller, two teenage cousins, and they said we like instagram because we dont have to listen to peoples political views, we dont have to see what our parents are posting, and hang out with our friends and post pictures. Fairly easy. I hear its positive. Clearly not as much snark as there are on some its hard to take a snarky picture. Right. Yeah, absolutely. Maybe that means its just a platform that will always be popular with teenagers, and maybe as their tastes graduate, they will move on to facebook or twitter. What do you think . Well, they will, i think facebook has become, for this generation, maybe a bit like email was. I was talking to a parent who was saying, my teen says facebooks not going away. We need it. Its bedrock, but we like to play with the other stuff, too. Well see what kind of staying power it has and whether facebook can tweak itself, particularly with photos and video, to stay relevant. Looking at the chart today, a 5 move on facebook. A lot of people taking refuge in it, having exited some other perhaps more volatile names, jon. Absolutely. Old folks like us trading facebook today, not a lot of teens accountable for that volume, i think. But still, you know, thats certainly a vote of confidence in Sheryl Sandberg and in this data we were talking about, showing theyre able to make money. A lot of momentum behind facebook. Jon, you posted a couple of days ago, i never hear people talk about snapchat anymore, and jane wells said, talk to my kids. Yeah, teens are still using it, particularly in high school. But theyve got to expand beyond that. If they want to become a company, a phenomena, something more than a feature thats there to get acquired by somebody. Whatsapp is very popular. Tomorrow, ian read, the incoming chairman of pharma, will be with us. It doesnt happen very often. Were glad to have him. Coming up tomorrow on squawk on the street. Meantime, for the afternoon session, lets kick it off with wapner and halftime. Scott . Carl, thank you so much. Going for two in a row here. You have some people buyers are finally showing up. Yeah, especially in some limited like facebook, because we were just saying. I was wondering if they would show up again. You guys have a great rest of the day. Welcome to halftime show. Heres whats in the playbook. Smallcap swoon. Is the worst performing major index this year about to turn, or burn . Holy crop. Why the next threat to the bull market could be in aisle three at your grocery store. The sysco kids. Lets meet the starting lineup. Its great to see you, great to ve