wants to get his savings rate up and has a debt overhang. how are you going to get gains of substance in these industries and if you don't have a manufacturing sector how are you going to get jobs there? >> let me give you two predictions from this white house economic report today. one is the white house expects the u.s. savings rate to stabilize somewhere between 4% and 7%. the second is that for 2010 they're looking at an average creation of 95,000 jobs a month. for 2011, 195,000 jobs a month. do you think those are realistic expectations and what will that mean for the broader economy? >> i think it's too soon to tell. i think the key point is that we shouldn't, number one, we shouldn't extrapolate the end of job losses to meaningful job gains. and the regulatory environment, the political environment is such that corporations really don't want to rush to hire at all. >> i want to interrupt. just because it's not going to happen the way it happened last time doesn't mean it won't

happen a different way this time. i just think there is a slight problem in the logic. there will be other ways we could potentially create jobs in this country, not in the ways of servicing the over consumption in the nation. >> we could have massive innovation like the internet was a decade ago, a decade and a half ago. that could provide a tremendous amount of job growth. remember, in the last cycle the job growth was in the small business sector. a lot of that was financed by venture capital. that's not there now. >> all right. david, we thank you very much for joining us today. steve and i will be back here with you tomorrow. that does it for us. right now it's time for "squawk on the street." live from the financial capital of the world, this is it, "squawk on the street." buckle your seat belts. i'm mark haines. >> i'm simon hobbs in for erin burnett. david faber is on assignment in sunny south florida with some of the nation's top business leaders, releasing a survey at

10:30. faber will have it. >> front and center right now weekly jobless claims. they fell by 43,000 last week to a seasonally adjusted 444,000. oh, i'm sorry. that one's yours. >> no, please do. >> realty. >> i insist. >> no, no. >> okay. reality check shows foreclosures dropping by 10% in january. more good news, mark. >> pepsi in line with estimates. bid and ask on pepsi looks like this. you know, might be up just a tad. >> as for the futures, let's see where we are at the moment. that might be a bit disappointing. markets up for a third day everywhere else. obviously news on greece. china inflation came through quite subdued as well which is good news overnight indicating perhaps china might get a softer landing than some had feared. >> you have to love it. everyone says oh, greece is weighing on the markets.

now it looks like greece is solved or at least helped. the market doesn't go up. then everyone says -- >> they said for three days they were going to do something. it's specifics, mark. >> then everyone says the labor market is weighing on the markets. big fall in jobless claims. market doesn't go up. let's hit the aforesaid irrational markets and we start with cool breeze. >> simon has it completely right. the markets believed for three days a deal was imminent. that's why the trade was largely several days ago. we got an accord. just don't ask us what it is. they believe it's coming. the jobless claims number a little better than anticipated. it reverses a trend. good news overall. pepsi was in line but look. north american volumes were down 5%. more disappointment there. asian volumes up 8%. we've seen this trend all throughout the reporting season. same with rio tinto, their asian business was huge. iron othre prices at record. they think the fact that drove the commodity prices up in 2009 will continue into 2010.

auto nation better than expected earnings. did you see luxury car sale numbers up 8%? pretty good. general u.s. brands up 6%. group one automotive also reported pretty decent numbers. at 9:30 i'll tell you why the economists are already arguing we should get a pass on the lousy economic news in february at 9:30 eastern time. bertha, how we looking at the nasdaq? >> pretty good. we've got acti dlgs vision up about 5.5%. the fourth quarter beat that that call of duty warfare game offsetting other weaknesses in other titles. they are offering cautious outlook. the street is looking at them pretty well. palm getting an upgrade over at citi to a buy from a sell. research in motion competitor is up fractionally. apple also up fractionally. apple is looking to price tv shows about a buck apiece for the i-pad. that would be half the price of the i-tunes. stay tuned for that. mercury computer service not moving this morning but also getting an upgrade so watch that at the open.

and take a look at ja solar. it posted results that beat the street handily and is also raising its outlook for shipments in 2010. the solar plays are all moving to the outside. i'll tell you about trade station at 9:30 right now. let's head down to the nymex and sharon epperson. >> oil prices have pulled back from the overnight high we saw right after the eu accord was reached on greece. they jumped to over $75 a barrel. we're also getting a little support here for oil prices from the latest report from the international energy agency. it follows the u.s. energy department in raising its forecast for world oil demand for this year saying that oil demand will be up by about 1.6 million barrels per day compared to a year ago. we're also keeping an eye on what is happening to the euro in light of this accord that has been reached but with no details. we are not seeing much action in the euro but of course that is what commodities traders are focused on. we're looking at gold prices higher as well. silver and copper, also

investment demand seems to be coming back to some of the precious metals. rick santelli, to you in chicago. >> thank you very much. as i pored through some of the nonseasonally adjusted and other categories of claims, for the most part we did see some improvement on most categories except for some of the extended but all in all not bad. and mark is right that the markets don't seem to move in intuitive fashion so probably because they see the size of the unemployed is so loomingly large that this really isn't necessarily job creation type news and as far as greece, pick your poison. if they bail them out, yeah, maybe it's good for equities but is it really good for the global economy at large? and maybe the most important story of the week gets put into deep pages and that is freddie and fannie are stepping up, the zombies are alive, and they're going to be buying some of those delinquent loans that they guaranteed. doesn't sound very good, does it? mark is not enamored with it.

simon, back you to. >> let's look at where we traded in asia overnight. mentioned that the china inflation came through lower than expected today. so you've got a good bounce right across the board. commodities currencies did well overnight. australia adding jobs for the fifth straight month. there we are in europe. oh, dear. let's get to london for the latest. why so mixed, rebecca? >> well, it looks like there is some debate still on what's happening with greece and the impact that it's going to have on the european outlook in general. this is where we stand right now though. interesting to see that in the uk markets we're actually moving higher but the other two major markets across the region are dipping. the cac is down by about 0.7% and across in germany as well. let's check on athens. at the moment all of the focus is here and trade is just a fraction higher. but we still don't have a great deal of information on exactly what's going on with the greek

potential bailout. certainly markets looking at it very closely and there's ban ee lot of volatility as investors have tried to digest exactly what the impact is. we should also note there are other economies across europe that are in similar situations where the economic outlook is a little uncertain. previously we've talked about ireland. they've made attempts to fix things up trading higher there. also watch out for spain and portugal because they've had their own fair share of problems, too. let's get out to brussels for the latest. [ stand by -- audio difficulty ] >> reporter: the european union has said there is a deal. they reached a deal. they will help greece. the german chancellor has said greece is in the european union. the european union is not going to leave greece on its own but in fact there is a lot of vagueness here. if you see the markets, the euro at the moment is trading down against the dollar and some people think it's because of this vagueness.

there's no details and, unfortunately, i was talking to some greek officials right now. they told me we should not expect more details about this help that the european union is going to give to greece today. these details are going to be decided next week between monday and tuesday when the european union finance ministers are going to be meeting here in brussels. so hopefully at the end of this meeting today of the european heads of state they will have a statement that will be a little bit stronger than only saying the european union is going to help greece. until then, the markets are not looking very, very happy. mark, back to you. >> thank you very much. what the heck was this? oh, that's the tease. first we go to warren meyers. good morning. how are you? >> good morning. how are you? >> official cnbc contributor which means he doesn't get a parking space but what's going on here? we've had 7% or 8%, is that it? >> i think we have a little more room to go on the down side but

we are going to see quite a bit of volatility certainly over the next few weeks. >> why? why is volatility back? >> volatility is back because of a lot of uncertainty both in the marketplace with equities and stocks and companies directly but i think more importantly with the political uncertainties and the, you know, global uncertainties. you have all the issues now with greece, with portugal, with italy, with spain. you have iran in the news again with their nuclear powers plus you have the whole political mess now with uncertainty in d.c. with getting anything done now. all of that uncertainty creates volatility, difference of opinions, and that's why you'll see a lot of up and down. >> you think we've got more to go on the down side. >> i think the trend is -- you'll see volatility but the overall trend will be on the down side for the next few weeks. >> thank you very much. >> my pleasure. >> have a great day. what's coming up you might ask? well, i've got it written down right here. pepsi matching fourth quarter earnings estimate. the bid right now, i can't see the bid. you can see it, though. unless you're listening on a radio. we'll go inside the pepsi numbers, next.

and how to play europe amid all that debt. we'll talk about that later on the program. which leads us to our street poll. what should the eu do about greece's debt troubles? nothing, bail them out, or kick them out of the monetary union? vote at squawk on the street.cnbc.com. whwhwhwhwhwhwhwh

17 minutes to trade. pepsico this morning reported

fourth quarter earnings. the company says its profit almost doubled on overseas strength and a booming snack business. pepsico has been higher in the premarket as you can see. joining us to go through the numbers is mark greenburg beverage and tobacco analyst with deutscha bank. good morning, mark. is it still your top pick, your top buy after you got the figures? >> pepsico delivered an in line result here in the fourth quarter. no surprise given the announcement in december. i think a couple of things are going to be positive catalysts for the shares this morning and out over the next couple of months. as you know, they had a large bottler transaction, which is now set to close at the end of the month. they've announced close to a $5 billion share repurchase and guidance of 11% to 13% in earnings for 2010. i think all of those things should come. investors that were concerned about deal delays, impacts of currencies, things like what's going on globally, the nonu.s.

businesses generally speaking performed very strong. i think in the u.s. especially on the frito lay side a lot of food and beverage companies are seeing pressure from retail as consumers trade down. i think you'll hear pepsico talk to a fair amount about value strategies in the market place and the need to meet consumer need there. >> we've seen also in deangeo's trading today that trading down factor. is a stock like this still defensive in that environment and particularly within snacks those products are bought by people who have typically unreliable incomes in the present economic environment. >> well, i think even within the staples curve there's relative safety. i think a ring on a bottle of smirnoff is a lot more than a bag of chips. and i do think that everybody's got to eat. i think it's a relatively affordable good. certainly on the soft drink side there's plenty of products at least in the take home supermarket aisle for beverages

that are very, you know, low in price in terms of the consumer take home. but, you know, not unlike a lot of companies they're feeling it to some degree. for example in both snack and beverages for pepsico convenience stores are very high margin, single serve business. and i think you're seeing a bit of a slowing football there because of the economy. >> what percent of pepsico profits actually come from peps cola? >> it's an interesting question. the old math was about 1/3 but as we close on the bottler deal it's going to be close to 50/50 between beverages and snacks certainly in the u.s. >> now, i assume pepsi-cola sells in both bottled and syrup forms just like coke. which is the bigger component? >> i think the bottle, what they call the bottle and can business. >> right.

>> is larger for pepsico and a lot of that's legacy. most of the concentrate syrup business happens in fast food. many of the larger accounts except for the yum brands which are affiliated with pepsico, are typically coke so mcdonald's, burger king, and the like. >> what do you think of management? >> i think management is excellent. i think the ceo has done something very strategic here in acquiring the bottlers and bringing them in. longer term the goal in north america anyway is to take costs out of the system. the system has become more complex over a period of years. a lot of the legacy things in place, direct store distributions very expensive. it doesn't make sense for everybody in every channel so this is a big deal. they more or less split the franchise on it. i think it's going to work well. >> what's the price target? >> $70 target price. quite clearly i think that's conservative given the way guidance has been laid out and the visibility on growth.

>> okay. there were a number of years when pepsico was a consistent double digit grower and there is no reason we can't get back to that. >> thank you very much for that and the details. >> thank you. next, the buzz beyond the big board on what you need to know for today's trading. and later the world's largest spirits group diageo has also posted earnings for the first half of its year coming in actually weaker than expected. the ceo will join us live on "squawk on the street." with fidelity, you can take your trading around the world, because now you can trade u.s. and foreign stocks online, in 12 markets, 24 hours a day, all from the same account, and settle in u.s. dollars or the local currency. plus, we'll guide you with international research and realtime quotes,

so you can diversify your portfolio, wherever -- whenever. and we'll be on call around the clock, while you trade around the globe. fidelity investments. turn here.

as we count you down to the opening bell here's a check on the futures right now. we're below fair value. gosh darn it.

looks like we'll lose 15 to 20 points on the dow at the open. everything is below fair value. minis, everything. >> let's get the buzz beyond the big boards. joining us now from mid manhattan, john donahue head of equities company. good morning to you. the futures don't look good. we've fallen for two of the past three days. what do you expect trading to be like today? >> i think somewhat mundane. we've seen a correction of about 7% to date from the highs, the s&p with a little bit of a bounce. you know, when we got down to close to 10% so i think it's going to be fairly side ways. i listened to the pepsi presentation and i think what we've seen over the last week or two is this progression back into the larger sort of multinationals and a little bit less performance obviously out of the smaller stocks. just sort of taking back in off the risk kauv little bit. >> how worried are you about the end of last week and that heavy down day that we had on big

volume and everything becoming a bit kind of desegregated? it wasn't orderly or a normal rotation. are you worried about the way the market is behaving at the moment? >> somewhat. i think when you see days like that it harkens back to march of last year. god forbid we get to that level again. part whaf's happened is this massive migration from the credit market to a lot of former equity participants. what you've seen is a much wider bid/ask spread move out and when you get moves like that it's more reflective of less participation than just a one shot move. >> so a lot of money that's moved out of equity into credit? >> it has over the last year so, mark, yeah, especially with a lot of the hedge fund participation if you talk to -- >> let me ask you this.

is this a flight to safety, flight to quality, or a feeling that that market is easier to figure out? what is it? >> i think part of it is what you just said. it was easier to figure out from the standpoint that there was probably easier money to be made even though the equity market, itself, rebounded from the lows in march. but i think what you're also seeing to some degree is a flight to safety where there is a payment, if you will, for owning an instrument as opposed to making an outright bet in the case of equities. >> and, therefore, you recommend to our viewers they buy or sell what? >> well, when i was on a couple weeks ago, mark, you and i actually spoke about casual dining stocks. >> i remember. >> part of the -- but part of that is based around the fact that unemployment seems to be stabilizing. people are getting possibly a little bit more confident in going out and spending.

but if you think about it they're not going to go out and spend at the high end. they'll get back to their patterns of maybe going out to dinner once or twice a week or if you take a look at some of the apparel stocks, things like limited and gap stores seem to be gaining a little bit of traction. i think if you want to think about how the consumer is behaving, that's where you'd want to look. i would still think about stocks like that. >> okay. thank you very much for that. thank you. >> we just want to make sure that you're plugged into the fact that the euro is falling. the dollar is strengthening. 13674 is where we are at the moment despite the fact we appear to be moving toward resolution on greece but it is about whether they'll lose sovereignty and get a tighter union. >> you said yesterday there is no way the euro can be a reserve currency like the dollar. >> did i say that? >> yes, you did. was that a fit of -- >> no, no. if they're not going to have a proper anticrisis policy that they can take some form of

centralized control, there is talk they might put the ecb vice president in greece to sort the whole thing out. if that happens it's very good news because it means they'll really tame them. >> yeah. >> the final countdown of the opening bell coming right up. futures pointing toward a slightly lower open. >> a big announcement expected in just over an hour when they break. we'll be live from brussels. should the eu bail out greece, ignore their troubles, or kick them out of the monetary union? vote squuk on the street.cnbc.com.

2:30 before the bell and here are the headlines at this hour. the euro taking a hit against the dollar. we may be getting close to a deal on greek debt but simon hobbs is expressing skepticism

about the euro's value and that is hitting it hard. pepsi reports in line with estimates. bid/ask slightly higher. weekly jobless claims fall 44,000 despite all of that futures point lower. >> okay. as we count you to the opening bells, let's bring in the president of trading advantage. why are we looking perhaps at a lower open then? >> we're looking for a lower open, it's interesting, there was a decent amount of volatility over the last couple days and i really think you have to pin it on that. not even much of a lower open. pretty much close to settlement in the s&p, simon. i will think that this volatility is really probably going to continue over the next couple weeks. i think even greece information today can really help push that volatility up even a little bit more. in the s&ps between 1040 and 1085 is where we've been, only in february, you know, ten days so far, so it really is pretty good action lately. >> all right. so is this volatility going to lead us higher or lower? >> well, you know, mark, to be

honest with you right now we're stuck in the middle and i think your last guest talked about a mundane type thing. >> not much i can figure out myself. we're paying you to come up with the answers. >> you got it. i'm going to look higher today and maybe 1085 is the very top you can be, i don't know if we'll get there. 20 points up in the s&ps but that's where i'd look if we start moving to the upside and where the least resistance is up. >> 1085. >> yeah. >> not exactly a resounding bullish call. >> well, you know, 20 points and 40 points higher than where the low was a few days ago. >> all right. thank you, sirp. >> sure. take care, mark. >> thanks, larry. >> all right. you're watching the opening bells which are about to ring. >> peel. >> resound. oh, now you've got me trying to think of -- >> nell? as in death nell? >> thank god po didn't go for

that one. he went for adulation. here at the big board, i love this one. it's hermes, but it looks like hermes. and given the attention being paid to greece these days i'm going to call it hermes, paris, celebrating the launch of its new men's store on madison avenue in new york city. and at the nasdaq, the "new york times" travel show is in town and folks from that are doing the honors. >> let's get to our market reporters standing by at the nasdaq, nyse, nymex, and the weekly call, bob pisani? >> reporter: already economists are talking about maybe giving a pass for february. there's going to be poor economic data due to the snowstorms and some people are arguing that's not really factoring in, you'll see lower estimates and lower earnings guidance from some companies as

well. we got an accord, don't know what it is with greece. the markets anticipated this three days ago and believed it was going to be some kind of deal reached so the deal was last, three or four days ago. jobless claims numbers better than anticipated. certainly a good sign. reversed a trend recently. tail end of earnings but the same story. growth in asia, flat to down in the u.s. look at three kmcompanies. pepsi volume up 8% in asia, terrific, down 5% in north america. marriott gave guidance for 2010, revenues per available room, flat to up 5%. outside of north america. flat to down 3% in north america. at rio tinto record iron ore prices. they were crowing about it this morning recovery and prices but it was all about china and india demand here. finally on a note here, alcatel is down here, they've lowered their margin commentary. i'll talk more about that at 10:00 eastern time. trader talk.cnbc.com. bertha, how we looking at the

nasdaq. >> starting off fractionally lower here although palm is holding up at this hour. palm getting an upgrade over at citi. it's not really so much a call about the fundamentals, they have a $10 price target. the shares are well below that. or a bit below that so they gave it a hold from a sell. activision getting a much nicer bounce after its earnings, that call of duty so popular really offsetting weaker titles though it's given fairly conservative guidance. the street very impressed. some of the other big caps trading to the down side, microsoft, apple opening lower here. expedia off 5% despite the fact that it did post better than expected earnings and is now offering a dividend. now down to sharon at the nymex. >> oil prices in london are getting a little better lift than here at the new york mercantile exchange but we are looking at higher oil prices on both sides of the atlantic. keep in mind that the international energy agency raising its forecast for world oil demand is doing it based on demand from emerging markets, almost entirely.

look at oil prices trying to hang on to the gains for the fourth straight session. we are looking of course also at the influence of the currencies on the market and in terms of natural gas, it's a very technical trade here. natural gas storage report will come out tomorrow due to the winter storm and the delay there. tomorrow at 10:30 a.m. and we are looking at this kind of tug of war between the weather that we're seeing and the large number of supply we're seeing as well. meanwhile copper prices are above $3. once again we are looking at speculative buying on the chinese demand story. rick santelli, to you in chicago. >> thank you. the world is preoccupied and maybe deservedly so with what's going on with the euro versus the dollar. i can tell you this, that at 1.3665 where it sits now if you want to make this easy and take into account chinese holidays, u.s. holidays, all the uncertainty once politicians get their hands on an idea which is what's going on in europe at the

moment, anything under 1.36 or anything above 1.38 is probably going to be something to pay attention to. many traders think anything in the middle at this point is just normal noise as many traders try to get an edge on what's going to or not going to come out of europe. in terms of interest rates, they're highly unchanged. last of the refundings with 16 billion 30, remember whether inclement weather or just the notion of holiday scheduling the dealer is a bit stuck with some of that ten-year supply. it's going to be hard to see a big rally today, so say traders. mark haines, back to you. >> rick santelli, thank you sir. a quick check on the markets. the dow right now down 32, a little weaker than expected but not too bad. the nasdaq down 6.75 and the s&p down about 4.5. your cnbc edge now with our guests.

ryan, i'll start with you in case our viewers don't know it, bernie shaffer's method is to study the method and options and define the larger market through that. and what is the option action telling you? >> well, right here when you look at the options we also focus on cinema very closely. we've had a 7% pullback but it seems like the cinema has turned extremely negative. coming into the year there was a lot of bullishness in the polls. now we're seeing levels the highest since the november and july bottom. you talk about the options and the vix. the vix of course is the volatility indirection, very big spike up on the vix last friday up to 29. that 30 level last year was the peak on the vix several times. they've reversed low on friday. we know it was a big volume day on friday so friday is a key day. i think it was a big reversal day. short term i think the market should move higher as there is just too much fear currently. >> okay. are you afraid? do you think we're going higher?

>> yes. i think we're going higher but it's going to take a while. it's going to take a catalyst whether it's march employment data, whether it's a big merger. there's going to have to be some catalyst to break us out of this trading range. i think we'll be higher by the end of the year but it's going to be choppy. we'll probably get to the 10% correction level, but i think ultimately earnings and the m & a activity will win out and i'd be a buyer of this market on dips. >> for sure. no question in your mind about that? >> i think when like across the other asset classes available -- cash, bonds, i think i'd rather take my chances with stocks, not to chase the market but when as ryan referred to the sentiment, as sentiment gets negative, as the market gets beat up i think that ultimately will be a better place to make money going forward. >> ryan, you believe, i hope you, assume you still believe we'll get a 20% gain for the year from the stock markets and i want to believe that. i'd love to make a 20% gain in

2010. what's that based snon what on? >> again, sentiment coming into this year, look at last year. they were net outflows on stock mutual funds about $400 billion put into bonds. for us with a 25% gain last year it shows a lot of people still don't believe in the market so we still think sentiment is negative overall. when we look at the economy, very steep yield curve. bond markets waived, saying things are turning around. look at leading indicators, manufacturing numbers and productivity is a very big number also, very strong. we think the jobs are going to come. this economy should continue to turn around real quickly. 2003 it went straight up. peaked in early 2004. went sideways for a while and then rallied the second half of the year. i see something very similar. rally last year. maybe a peak. consolidation, sideways for a few months, work off the over bought nature. economy turns around. second half of the year should be very strong. you want to keep being a buyer here i think. >> thank you both very much. appreciate the time. >> thank you. up next, an olympics boost

for retail sales. and some other factors pointing to short-term strength in the retail sector. >> as the east coast digs out of another major snowstorm, a very important look at how the economy is weathering the storm.

hi folks. welcome back to "squawk on the street." matt nesto checking on the markets. check out 3m. positive today on a week day up about 1% upgraded at bernstein. they think it will continue to raise guidance and is headed to $99. sounds like a sales pitch. boston sign tisks in a world of hurt and doing something about it i guess but the stock is down 7% this morning.

their earnings seem to be the least of their issues. the loss did shrink but the company is rebutting an article in the journal "heart rhythm." they call it unacceptable that they didn't contact the company before they rushed to publication about problems with one of their devices. also, they are combining a couple business units, they're changing management, cutting a thousand to 1300 jobs. that's about 8% to 10% of the work force so lots going on with bsx, the second worst performer. we're showing abercrombie. you can see it's up about 1.5% upgraded to out perform from perform at oppenheimer this morning. over to you. >> thank you very much, matt. today in commodities corner, changing relationship between gold and stocks. here is the three-year view. gold versus the s&p 500. clearly, the financial crisis led to market volatility and a flight to perceived safety into the precious metal gold.

>> really? clearly show that? >> i'm not sure it shows that at all to be honest with you. here is the comex and gold. that looks more coincidental to me than anything. anyway, gold is up about 15%. s&p up around 28%. so clearly you'd have been better off in the s&p for the last year or so. all right. the snow stopped but more may be on the way. here is your national map in the northeast, cold and windy.torms gulf area. you got it. that a snow in the northern half of texas. check this out. snow plows at reagan national

airport in washington. the airport is still closed. dulles now open. officials hope reagan will be running later today. >> washington shut down thousands of people stranded all because of wintry snow in the eastern part of the united states. the question now, what's the economic impact? cnbc's brian shactman is live in west new york, new jersey. hi, brian. >> it's an interesting address. thank you very much, simon. as we take a look at new york city just absolutely a beautiful shot. the mayor there michael bloomberg said every inch of snow costs taxpayers a million dollars which actually isn't a lot when you consider the estimates for washington, d.c. are $100 million worth of lost productivity for every day it's shut down. the weather channel says more than 100 people were affected by the storm and you can obviously see why if you take a look at some of the images. the eastern part of the u.s. absolutely slammed. places like washington, d.c., the second whammy in a very

short span of time and a record snowfall as we're going back a couple hundred years. as you might imagine municipal budgets absolutely strained by the cost of cleanup. i want to touch on costs for a second. because it's tough to pinpoint for you but i'll give you some nuggets. outside of hardware stores and supermarkets, retail was absolutely shut down, which should negatively impact retail sales data and with thousands of flights canceled it hurts businesses all across the country because no one can get anywhere. most importantly a lot of economists are coming out in the last 24 hours saying the february jobs number will be impacted by as much as a hundred thousand begging the question why such a negative impact? >> the reason the snowstorm is going to hurt perhaps more than in the past is it happened during the employment survey week. this is the week that the government goes and surveys businesses to see who was on their payroll. there may be a lot of people planning on starting work on monday who just simply could not get out of their homes, get to work, and therefore be count owned that payroll.

>> and the impact on the weekly jobless claims actually the opposite. if you can't get out of your house you can't file jobless claims. that number might have been improved by the storm so basically simon the takeaway from the economists i spoke with, you might want to just throw out a lot of the february data and wait for march. back to you. >> okay. thanks very much for that one. all the snow has delayed the release of retail sales data for january until tomorrow but despite the rough weather the upcoming olympic games in vancouver may have some analysts encouraged about sales for the month overall. our guest is chairman of a consumer research firm. why do you think it could be a spectacular weekend for the retailers? >> simon, there are a couple factors. first of all over the last five years more consumers are focusing their attention to holiday weekends sales and five years ago 63% of consumers said a holiday weekend was a big event.

now it's 81%. like we saw last year on black friday. so keep in mind, i think although the weather is going to impact part of the country, the rest of the country i think may see huge increases. >> is that extra sales overall or sales that come from other parts of the calendar? >> i think we watch, simon, some consumers out there starting to see mattress purchases in january because they know big sales are going to come in february so some of that is delayed but some is just the fact the consumer will now keep their interest now and you'll see people just actually wait in this last seven or eight days before the weekend to make the big shopping trip. >> will you hazard a guest as to who does best, upscale, downscale, electronics, software, what? >> people that are going to do well, you may see furniture retailers with 30% increases this weekend. you know, mark, the other factor

is with the olympics, you know, olympic apparel and logo items are the highest profitable items for retailers. you know, keep in mind with the olympics now starting you may see some retailers show some very high margins in sales in february and march because those are very profitable dollars. something like a dick's sporting goods for example can hit a home run because sporting goods stores always do better during the olympics. >> sports authority, dick's, okay. >> thank you. we'll watch with interest. >> thank you. >> speaking of the olympics, a quick programming reminder. the net works of nbc are your home for the winter games in vancouver. mark is saluting nbc, msnbc, and cnbc will be covering all the action starting tomorrow. with the opening ceremonies on nbc. they have a beautiful national anthem, "o, canada" a

beautiful national anthem. what's coming up next, simon? >> we're talking about this trading up trading down, a big issue for the largest liquor firm in the world diageo and we'll talk to its ceo, next. >> we'll hear from europe in about an hour on the deal to bail out greece. what do you think the eu should do? a, nothing, b, bail them out just like our banks, or, c, kick them to the curb? go to squawk on the street.cnbc.com to vote. 

first energy, buying allegheny energy for about $4.7 billion in stock. first energy will also assume $3.8 billion of allegheny's debt. the combined company will provide electric service to more than 6 million customers. "the wall street journal" reporting iran suspending

google's e-mail service, g mail. in a statement to cnbc microsoft, which has its own hotmail e-mail service says it is, quote, actively investigating the situation. things are not looking good for silicon valley according to the 2010 index of silicon valley report. the area lost 97,000 jobs from '08 to '09. the study found the number of patents declined last year as did the number of ipos. >> go to cnbc.com to play call the close. you have until noon eastern to give your best guess on where the dow will end up on the day session. >> just to put aut ease i'm making predictions myself. >> are there prizes if you win? >> i don't think so. the prize is the satisfaction of knowing you got a lot closer than i did.

yesterday my call was 9950. i missed by roughly 80 points. >> wow. >> so anyway, the world's biggest spirits group, diageo, trading lower this morning after reporting a 10% drop in profit, missing expectations in their semiannual report. joining us from london paul walsh ceo of diageo. good morning, sir. thanks for being with us. >> good morning. >> what happened? >> well, let's first all of get a few things straight. organic sales were down 2%. we have actually got underlying eps growth of 5%. and earnings are in line with the market. in fact, we've reiterated full year guidance. on the back of that, nene wheve what's been one of the most

turbulent economic periods we've generated free cash flow and have the confidence to increase our dividend by 5%. >> that's terrific but i'm sure your business model is not based on your sales declining 2% every year. >> it's not. i much prefer them to grow as they have been but actually the half year was made up of two quarters. the first quarter sales decline of 6% which we expected. because we were lacking numbers prelehman. the second quarter sales were up 2%. so i think when luke at overall in the quarter, sales down 2%, given the economic backdrop, we feel that's a pretty resilient performance and we hope that from this base we can build going forward. >> you know your figures much better than i do, paul. but just to focus, if we may, on the organic operating profit, that fell 3% in the first half and yet you're still maintaining your target. >> yes. >> for it to grow, low single digits for the year over all.

that means i believe you have to have 5% growth in organic profit in the second half. in an environment where you clearly are having difficulty raising prices, particularly in the united states. >> i think directionally your numbers are correct. what i would point to is that in the first half we did have some substantial one of costs that will not recur in the second half and we also do have momentum behind our business in asia, latin america, and in africa, which collectively those regions represent about 1/3 of our business. so that's why we're confident we can maintain our guidance for the full year. >> can i ask you briefly, obviously you're encouraging people to trade up. i mean, that is still alive in this environment where people are trading down?

>> it is certainly not as vibrant an environment as it was. however, all of the research that we conducted suggests consumers want to come back to them but they want more money in their pocket and they want more confidence. they will return to them when times get better. >> good to talk to you. thank you very much for joining us there live from london the ceo of diageo. trouble ahead for commercial real estate. a new report warning of the major impact on banks and the economy. national car rental knows i'm picky.

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live from the financial capital of the world in the heart of warm and cuddly lower manhattan. welcome to the second hour of "squawk on the street." i'm mark haines. most of the dow 30 in the red this morning. even though we're not down that much. 3m bucking the trend trading higher on an upgrade. allegheny energy up 9% on word it's being acquired by first energy for $4.7 billion in stock.

acti vision up 8% on better than expected earnings and a billion dollar buyout. >> bob pisani is live from the floor. >> the important thing here, what's going on here we're just talking about some of the changes on the flar here, generally selling to the news about the greek deal. that's what's going on here. let's look at some of the big things going down. i want to note the networkers have been weak. i mentioned lucent this morning here. their numbers, rather disappointing to the street. their guidance overall, their margin range they cited competitive pressures. this is a problem. there are supposed to be big investments at telecom equipment this year because they've been under investing for years. now they're talking about problems with pricing and price competition so the networkers are all to the downside. we've had a couple days where european banks have been moving nicely to the upside. that play is over. why? because there is some kind of deal announced. we don't have the details but all we know is something is coming. therefore a lot of people are simply selling right into the

news. so the big national banks are on the down side, deutscha bank, trading down 2% or 3%, 4%. on the earnings front earnings aren't bad but if you look at numbers the growth is in asia like pepsi and marriott but not any real growth in terms of volumes or in terms of revenues in north america. trader talk.cnbc.com. >> we are seeing a little pullback at the nasdaq and sell news as well. a couple traders telling me this week we just need another catalyst to move tech forward. microsoft and cisco are the biggest impact to the down side contributing to about a two-point drawdown on the nasdaq composite now off about nine points or so. palm, r.i.m. actually one of the impacts to the upside and palm getting an upgrade today over at citi has it up over 2% part of that really more of a valuation call because it's trading below ten bucks. acti vision as mark mentioned posted better than expected results on the call to duty volume game.

it's not having much of an impact on other gamers this morning. earnings losers, flir one of the biggest losers, disappoints on its earnings. expedia surprisingly also trading to the down side despite posting better than expected results. the best performers are the solar guys. ja solar beats and boosts its outlook and that is having good impact on some of the other players as well. let's head on down to the nymex and sharon epperson. >> a veteran trader here in the gold futures pit made an interesting point. with washington closed what do traders have to focus on? they have to focus on the markets and that's on the currency markets as well as stocks and how they're influencing commodities. today we're looking at gold prices right now basically flat as we've seen the euro fall to a new low on the session. pay close attention to that relationship. meanwhile look at crude prices. crude prices here also technically could, falling below the 200-day moving average, could retest the $73 level. a couple traders talking about

that as well so, rick, here we're looking at very technical trade focused very much on what's happening to the euro and the dollar. >> or what isn't happening. exactly. you know, sharon, i was talking to some people that are paying very close attention to this traders in europe and they say, you know, the best analogy they can give, it's a lot like health care. a lot of people in the u.s. agreed it needed to be tackled. the politicians really tackled it. that seems to be what's going on. lots of details and it isn't making things easy and the markets aren't patient. but, yes, we are at 1.3634 so getting very close to what many perceive to be an important area in terms of a breach. that would be 1.36 on the euro versus the greenback. you can see looking at the dollar index it's doing much better. it's well over 80 again and in about another hour as europe gets ready to close it up you'll probably see a whole lot more volatility as traders try to deal with all of that uncertainty. the interest rates? they're high inner the long

maturities, 30 years today, 16 billion, 1:00 eastern i'll be there to grade it. mark haines, all up to you now. >> thank you. three new reports this morning shedding new light on foreclosures and the state of commercial real estate. diana olick in washington with the realty check. >> that's right, mark. a lot to tackle this morning in residential and commercial real estate. first as you said to the foreclosures a new report from realty track actually has foreclosures dropping in january after a surge the month before. foreclosure filings which include default notices, auctions, and bank repossessions were reported on 315,600 u.s. properties during the month down almost 10% from the previous month but still 15% higher than january of '09. one in every 409 households received a foreclosure filing. now, top foreclosure states continue to be the four, nevada, arizona, california, and florida. but six states actually make up 60% of the national total. let's look at why we have this drop in january. this is the same thing that

happened last year, a big surge in december and then a dropoff in january. realty track ceo says if history repeats itself we will see a snurnlg t surge in the numbers over the next few months as lendors foreclosure on existing loans where the alternatives don't work. it's not just residential loans as we know that are in trouble going forward. a new report from the congressional oversight panel says members are, quote, deeply concerned that commercial loan losses could jeapordize the stability of many banks particularly the nation's mid sized and smaller banks and that as the damage spreads beyond individual banks that it will contribute to prolonged weakness throughout the economy. now, one more report. if you can take it at this hour. the national association of realtors quarterly metro report shows residential home sales increased nearly 14% quarter to quarter. as for prices, 67 out of 151 metro regions saw higher prices in q4 from a year ago, less than

half. media prices overall in the quarter down 4.1%. but the bright side is that is the smallest price decline in over two years. hope you got all that, simon. for more go to the blog realty check.cnbc.com. >> thank you. meanwhile citigroup announcing a new foreclosure program. the bank plan will let homeowners on the verge of foreclosure stay in their homes for six months. but they must turn over the deed to their property. the homeowner avoids a completed foreclosure, which results in a less severe hit to the borrower's credit score. the pilot program will launch tomorrow in six states. >> all right. still to come, will the commercial real estate losses you just heard about endanger the economic recovery or is the market strong enough to with stand that kind of pressure? we have a good old fashioned bull/bear debate. >> then, saving greece. euro's leaders say they will step in but details are still

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welcome back to "squawk on the street." there's been a development in the regulatory reform, a new sort of call it a bipartisan momentum. senator corcoran said on our air this morning that he was working with senator dodd on the democratic side to negotiate. chris dodd is out with a statement confirming what senator corcoran told us that he will be negotiating financial reform with senator corker. dodd calls corker a, quote, serious thinker and valuable as tote the banking committee and dodd said i'm more optimistic than i have been in several weeks. i asked senator corker this morning fe was replacing senator shelby and he said no i can't be. i am one republican senator saying this is a piece of legislation that needs to be passed. what was thought to be an impasse and maybe dead has new, it looks at least like some bipartisan momentum for regulatory reform in the senate. mark? >> thank you, steve liesman. >> sure. new video just in. gc. help is on the way. plows are action right now.

that looks like one of the airports. okay. reagan national airport still closed but hoping to have it opened sometime today. i think it was jack kennedy who first said, washington is a mixture of northern charm and southern efficiency. in fact i'm certain it was jack kennedy. we want to bring your attention to some stocks on the move. and actually i want matt nesto to do that. good morning, mark. >> let me talk more about this deal. these are some of the biggest movers in the market place. allegheny up over two bucks here today. the price based on the stock for stock deal in this merger if you will is 27.65, 31% premium. if you add in debt it gets you north of $8.5 billion. interestingly first energy one of the first perform ners ters

market today is a member of a much larger company than allegheny is acquiring so it is a big premium and 12 to 14 months to get the deal done. multiple states involved in this, ohio, pennsylvania, virginia, west virginia deal in the utility sector. dean foods is having another tough day. down about 2% again here today. it was down over 10% yesterday after that dicey forecast and what thanks do they get? they get cut to hold from buy at deutscha bank and they think it's headed to 17. maybe that's a silver lining. it's the only stock in the s&p at a 52-week low at last check. prologis the warehouse weak out with a weak forecast and a leasing renewal rate outlook it looks to be weak. they say the rental renewal rates will be negative for all of this year and won't improve until 2011 and the stock is getting hammered on the news.

back to you. >> thanks very much. obviously the markets very focused on what's happening at the european summit in brussels. let's go live there for the very latest on what is happening, the support, the promises, on greece. what can you tell us? >> reporter: simon, i can tell you that the european summit is finishing right now at this moment. we are going to have more news or maybe more details about how this plan to help greece is going to work in the next half hour. what i can tell you is that some half hour ago they published a statement, a very short statement as you can see with some of the idea of what this help for greece is -- how this help for greece is going to work and i have to tell you if you were expecting a lot of details and how much they are going to be paying in this bailout for greece, you're going to be extremely disappointed. the main line here is the euro member states are going to do a coordinated action if needed and

they finish saying that the greek government has not requested any financial support. the meeting is finishing now. we'll know more details. i'm afraid we won't know the details of the bailout we were expecting. in line with the comments of the greek officers i heard just sometime ago saying that there will not be a bailout announced here today. back to you, mark. >> thank you very much. so now that we know the eu will help greece, how should you play develop europe? joining me now the managing director at thornberg investments and the manager of the ridgeworth international equity fund. first let's start with chad. did you pull back from europe as a result of the greece problem? >> we've been a little under weight europe all year from an international standpoint but we did not pull back from europe here. we think this is a little bit overdone. we think there's a lot of great opportunities in europe

especially in the cyclicals or industrials in particular. we like some names like extrada, a global diversified mining name focused on gold and copper. this is a play on global economic growth, also on expansion of the emerging markets in china. >> so you would increase your exposure now? >> we're staying about the same. but we are taking advantage in going after some names that have been sold off in this correction and we think that there's a lot of opportunity to add to deep value names. >> but these are not plays on the european economy are they? this is a play on emerging markets and commodities that just happen to be registered, not even within the euro zone, actually in london. >> exactly. and other names we like, vinci is a construction and concession name in france. there's a number of names being

sold off because of the difficulty in the p.i.i.g. markets but that don't really have any exposure. we're actually under invested in those, the p.i.i.g.s. as everybody calls them and we like a lot of the core european names that have exposure outside of europe and are being sold off in relation with the difficulties that are going on with greece right now. >> do you hedge to currency and where do you see the currency to euro going? >> we do not hedge. it's an international fund and most people expect us to have exposure to the currency and that's the way we invest. in the short run we dooz the euro softer against the dollar. we see all the majors softer against the dollar but we see the currencies continue to strengthen against the dollar. in the mid-term the dollar, in eight, 14 months the dollar has the same problems to a large degree that the euro has. we're running a large deficit. there's a large debt to gdp around the world and this is all

part of the stimulus and we're also at the bottom of the economic cycle. as soon as the economy starts to pick up tax revenues will pick up. the deficits will go down than problem willing away. >> short term weak, long term you like the dollar. >> i think the dollar is strong. short term. but longer term is in a trading range against the other majors. >> i beg your pardon. i turned it upside down. thank you very much. appreciate it. >> make sure you vote today. should greece be bailed out, allowed to fail, or be kicked out of the monetary union? logon to squawk on the street.cnbc.com to register your opinion. >> although it does sound like the eu itself has opted for b. bail them out. >> no, they've opted for continue to pressure them, use speculators to scare them further, do nothing at the moment and maybe b later on. maybe b after the weekend. >> oh. >> they've not announced

anything. >> i misunderstood. i heard they announced it but didn't have any details which is the same as not announcing it. >> yeah, yeah. they've got a lot to it's very complicated. >> yeah. >> cnbc has a new way for you to get involved in today's market action, mark. >> yes, i know. i have been sparly unsuccessful so far at it but i will continue to play call the close. go to cnbc.com you have until noon eastern time to give your best guess on where the dow will close. on monday i nailed it and then tuesday and wednesday i stunk up the joint. right now we're unchanged. >> 10,037. have you made your mind up for the close yet? >> i'll say 10,060. >> 10,060. >> you're going to write this down? >> absolutely. i'm in tomorrow. >> i prefer everyone forget. >> i'm going to check it. >> just ahead, three reasons why you should be investing in muni bonds. >> later, on the one side decent

earnings and economic data. on the other, the european debt threat. which side will win out? a bull and a bear will battle it out before your very eyes on "squawk on the street." do watch "biography" on cnbc tonight. colonel sanders, mr. kentucky fried chicken. it's a great story. 10:00 p.m. eastern. on cnbc.

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as the market enters what could be another significant downturn investors might be looking at a different way to invest their money, protect their assets. if you're looking at municipal bonds, there are a few things you should know before you

invest. for more on muni bonds we go to the executive director of the municipal securities rule making board. good morning. presumably this is broadly about the tax breaks that you get. no? >> that's correct. the factor, the characteristic that distinguishes municipal bonds from other investments is generally that they are tax-exempt at the federal and in many cases at the state and local level as well. >> the problem is of course that the municipal finances and indeed the state finances as we all know are in a very tricky situation around america. quite similar to the euro zone in many cases. they can't actually inflate their way out of the situation. on the one side you've got these entrenched public sector unions. on the other side you have people who can actually move out if you cut spending too greatly or increase taxes. do you fear that actually this is a sector that could be riven with chapter 11 bankruptcys moving forward? >> you know, traditionally municipal bonds have been the

safest investment second only to u.s. treasury bonds. so during the depression, during other times of economic stress state and local governments have generally made sure that their municipal bond investors have been paid on time. that being said, you know, clearly these are very difficult situations and i think it's going to be a challenge for state and local governments going forward. >> so how would you advise people then to start dancing with this potential investment if they're not already? >> sure. well, there are over 50,000 different municipal issuers of bonds and so it's very important for a municipal investor to look at things like the source of repayment. are these general obligation bonds which are backed by the full faith and credit and taxing power of the government? or are they revenue bonds, which are backed by a dedicated revenue screen? what's the credit rating of the bond? that's the independent assessment of the credit rating strength and credit quality of the issuer and the project. so there are many different

factors to look at. >> the trouble is that on top of that you have to overlay this very tricky question of democracy. don't you? and what the people want and what the politicians decide. >> that's absolutely true. and again, it's going to be a challenge for state and local governments going forward. i can just point to other times of economic stress, including the great depression, where municipal bankruptcys really have been very rare and few and far between. >> i know you've got a free website, emma.rsb.org people can access. thank you very much for that. >> thank you. up next on "squawk on the street" what's keeping american business leaders up at night? do they have plans to boost hiring crucially? the results of a new survey are minutes away. don't forget, this morning's street poll. should the rest of the euro zone bail out the greeks? go vote squawk on the street.cnbc.com.

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10:29 on the east coast.

7:29 on the west. here are the headlines at this hour. the euro falling against the dollar over a half% after european leaders at their summit say they struck a deal with greece but there are no details given. senate democrat chris dodd said he is optimistic about moving forward with the financial regulation bill after negotiations with republican senator bob corker. and the 30-year fixed rate mortgage dropped last week to 4.97% from 5.01. cold, windy, and snowy up here. good thing david faber and his producers have managed to be again, mark, a step ahead of the rest of us. >> he proves once again that he's the smartest of all of us. >> yes indeed. >> they moved flights up a day in order to get there. they spared no effort to make sure they were in florida when we get buried. roughing it by the pool this morning with some of the nation's biggest corporate exec tifs a key survey comes out about now and david faber has it first. david?

>> thanks, mark. yeah. it was a very tough day down here yesterday for all of us. a lot of work to be done by the pool i would add. of course the ceos are down here kind of doing work, certainly they'll be discussing a lot of different ideas. this is another meeting of the business council that you know so well, mark. they do release their ceo survey right at this time and we have the results for you. very similar in many ways to what the survey said in october which was then a big divergence from the previous survey in may as you might imagine. in terms of confidence, in terms of what they see as an economic recovery. they're calling it better but not great. the february 2010 results very similar as i said to last october. a majority, 57%, reporting conditions in their industry have improved and about 61% expect the improvement to continue. that compares to 52% and 63% from october. so certainly improvement over

the last period but not that significant a jump from what they had foreseen back in october. overall in terms of global improvement, the ceo's survey still see europe as lagging. in fact, they actually see less growth in europe than they had previously. that has fallen. the recovery process they say should continue in most parts of the world but europe continues to lag. the share of responses expecting better economic times in the region dropped from what had been 48% in october to what is now a reading this february of 40%. and there you get a look as well as to what people are expecting over the next six months. again, you see the big jump from may versus february but europe certainly the lag erd, globally, though, 67.6% of the ceos do expect better business conditions. now, we all know of course that what the ceos think about the future is not necessarily a great indicator of what the future will be. many are too negative at the bottom.

many are too positive at the top. nonetheless, ceo confidence is certainly a very important component of economic growth. ceos and those who make the decisions at these companies to hire, to spend capital, to engage in an acquisition or a merger, all of that hinges very importantly on their own confidence in the future. and so we have seen that improve and increase but perhaps not as markedly as some would have hoped. they continue to be very cautious and i hate to use the term but i guess we'd have to say cautiously optimistic. nonetheless, as i said, better but not great is the way that they are characterizing the economy right now and the chances of a continued recovery. let me send it back you to, mark. >> thank you, david faber. let's take a look at the markets and their internals right now. we were to the plus side a moment ago but now we slipped back down. the dow down nine, nasdaq down 2.75. s&p down 1.75. all very small drops and you can

see here the advance/decline reflects that, only 130 more down than up. on the nasdaq a little stronger. about 300 more down than up. coming up, a new study says there's an expensive tax most americans support. we'll tell you what it is and who it will hit. >> will europe's debt problems and indeed that pret pooir survey from european ceos david just brought us increase the risk of a double dip in the u.s. economy? a bull and bear debate next on cnbc. and don't forget the street poll this morning.

i'm jeff morrow from the weather channel. here is a recap on our second big storm in less than a week. philadelphia a whopping 15.8

inches. baltimore almost 20 again. new york got in on the act this time the biggest snowstorm of the season thus far at 10. pittsburgh adding to snow totals as well as washington, d.c. about 11 inches. but things have cleared out nicely. now we turn our attention to the deep south. it's been snowing this morning, winter storm warnings in dallas, parts of louisiana, into mississippi. so we're just kind of shifting here from the north to the south. it looks like this will be spreading over the southeast over the next 24 hours, this long winter is continuing. mark? >> all right. thank you, sir. it is west coast waky-waky. julia boorstin, good morning. >> reporter: good morning to you, mark. management upheaval in newscorp's social network. the ceo of myspace resigned after less than ten months on the job as the site's users fall far behind facebook. replacing him the myspace chief operating officer will share the title of president. some good news out of california's government for a change. the state's receipts last month were nearly 19% above governor schwarzenegger's estimates with

sales tax receipts up some 80% year over year. the bad news is that state payments also exceeded expectations and california is still carrying a nearly $20 billion deficit. apple could start selling television shows for just $1. half its current i-tunes charge when the i-pad tablet hits stores. apple is looking at what kind of content pricing will ignite sales. and a new report finds the number of illegal immigrants in the u.s. plummeted by nearly 1 billion to 10.8 million last year the sharpest decrease in three decades. >> thanks very much for that. let's bring you some stocks that are moving at this hour. matt nesto is back at headquarters with your real time flash. >> call it what you will my friend it's all good. if you look at philip morris it's all good there too especially if you like your smokes. the fourth quarter earnings better than expected. the company also authorizing a $12 billion share buyback program that starts in may and will go for three years, about 13% of the market cap.

81 cents, two cents better than expected on 6.7 billion. their full year also looks to be benign at 375 to 385 versus a 382 estimate. southwest airlines at a 52-week high. it managed to break out of its funk with all the snow and all the problems. there is some technical resistance in the stock at 11.95, the intraday high. it is at a closing high level that it hasn't seen since november of '08. we'll call it a 15-month high. expedia came out with fairly strong earnings, 30 cents a share versus the 28 estimate. the revenues also top for the fourth quarter but there appears to be some pricing concerns out there. the stock is getting hit pretty hard today down about 6% or 7%. it's at a seven-month low. the domestic bookings were up just 1% and they see modest revenue growth for 2010 and just quickly home builders very hot here today. they have broken out of their funk. lennar leading the pack up 6%. back to you. >> thank you. markets have been down for two of the last three sessions plus

volatility on the rise. time now for a good old bull/bear debate. our bull, phil dow rbc wealth management, managing director and director of equity strategy. our bear, craig hemke, founder of biopension.com. larry kudlow may have said it best. should the markets really be so worried about greece? >> well, that's a good question, mark. good morning to you and to phil. sure they should be worried about greece. it's the effect of greece and also spain on the euro and the european union. i just think it's kind of funny that where those two countries only represent 6% of the gross domestic product of the european union, california as you just heard is in equally rough if not worse shape and they represent 13% of our gross domestic product. >> i think the fear is the greek as simon explained it to me and

i know everything -- everything i know i learned from simon, as simon has explained it, the fear is that they'll go after the weak countries one at a time if they can knock off greece, then italy, portugal, spain, etcetera. >> yeah. that's a valid concern, isn't it? let me ask you this. why should we care? a weak euro means a strong dollar. less inflation. cheaper perrier. what's the problem? >> it's only a strong dollar if you perceive the dollar to be some type of safe haven which was a fine way to look at it years ago but with our own domestic issues, california -- >> gentlemen, i'm sorry. forgive me. i have to interrupt you on the order of our producers. this is a live picture of european leaders in brussels discussing their pledge of support for greece. we're monitoring the conference and will bring you the developments. that's president sarkozy of france speaking in french.

we're going back to the desk. i'm glad we understood a lot is going on. phil, let me come back to you. sorry. let's talk about you've got the bull case here on the markets. it seems to me that a lot of the bull attitude at the moment is focused on the fact that everybody is so negative, almost a contrarian play. there is nobody who is look agt solid, certainly not the earnings and saying actually you'll get a big bull market out of where we are at the moment. indifference is important if you look at individual ownership levels it's at an historic low level. you compare that to the economic news which is marginally better, you just had the blue chip economic indicator group increase gdp growth to 3%, 3 or 4 next year. if we look back to last december earnings are up, december of '09, earnings are up about a

buck 30 on the estimate for 2010 to $29, a 14 multiple. i think you're going to have scary headlines, uncertainty, trading moves that probably 80% of the time are just noise that will keep us frightened but my guess is we're on the cussp of the synchronized global economic recovery that will help us solve many of the problems we have. it's going to take some faith and hope to get there. >> you don't see that there's been perhaps a change in particularly how retail investors view equities, that they got their fingers so badly burned over the last two and a half years with some rebounds since then that they may not ent ear er the market again in the way they did before? >> there is no question that's the case. look back at other periods, the federal reserve in 1993 did a study of wealthy people. they had only 19% of their assets in equities. only 19% viewed it as a viable asset class. most people didn't like them. for the next few years the market delivered the return of 19% so this is like 1982 in my opinion. like 1953.

a period of investor indifference. it doesn't necessarily mean the economic recovery is going to come quickly but my guess is that the best way to participate in a global economic recovery is as a stock owner and stock ownership is disrespected at this point in time. >> can i redirect for a minute? >> very quickly. we're out of time. go ahead. >> okay. we believe if you're going to take risk you need to take some risk, you need to have some guaranteed lifetime income which we can help people get but this oxy moron of a jobless recovery, i just think, i hear it bandied about every day and it's like jumbo shrimp. it doesn't make any sense. the government tells us the unemployment rate is 10% but also tell us in their u-6 it's actually more like 16 when you include the amount of people that have just given up or are working part-time. we have a 70% of our gdp is based on consumer spending. if 1 in 5 or 6 people are out of work they're not spending. >> lrlt, craig. i'm going to e-mail you a definition of "very quickly."

in the meantime, thank you. >> thanks, guys. up next on the program the increased tax that many americans might support. it's a big one. we'll have the proposals next on the show. but first, oh, melissa? >> hey, guys. coming up at the top of the hour a new poll out says 2/3 of all americans are unhappy with the federal government so in our calf the wild we'll ask has washington failed america? and the airlines trying to get back to normal after canceling thousands of flights from the latest snowstorm to hit the east coast. we have a live report from reagan airport. plus we'll discuss whether airlines stocks are worth investing in. it is our cnbc edge. all that plus the latest market news and reaction only on "the call" at the top of the hour. first "squawk on the street" is back right after this braechblgt break.

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the president of the european union is speaking in brussels, importantly, however, he has just said the eu's solidarity for greece is not necessary today. i would suggest to you that means that they are not going to come through with any measures at this time for greece, not now, maybe next week when the euro zone leaders all sit down.

this is a disappointment for the market because they have got all encouraged that there would be concrete measures today. he is sending a political message to greece which basically means you probably have got to cut wages and pensions to a greater extent. you can see that the euro is beginning to fall as the market begins to digest that. a lot of conflicting signals coming out today but if the president of the european union says it arguably that's the way it stands. shares of philip morris international jumping today. the cigarette maker has announced a new $12 billion share repurchase program. that will run over the next three years. it's also reported fourth quarter earnings of 81 cents a share,share, two cents above estimates, mark. >> is this some kind of brigsmanship? >> yes. it's to really hold their feet to the fire because if they do that then arguably they don't have to come in with more complicated mechanisms. do bear in mind that greece is in the euro zone because it lied

for six years about the state of its economy. >> whoa! >> it's official. the present prime minister's apologized. >> the campaign for tobacco-free kids releasing a report this week arguing more tax hikes on cigarettes could solve a big part of state's budget gaps. some state officials say if it's raise good higher there will be a lot fewer smokers and thus, less revenue. the old argument about the law diminishing returns. right now the tax for cigarettes is $4.25 a pack in new york city and 7 cents in south carolina. it's getting to the point where the difference will pay for the gas and the time it takes to drive to south carolina. daniel mcgoldrick is vice president of research for the campaign for tobacco-free kids. good morning, sir. thanks very much for joining us. >> good morning. thanks for having me today.

>> raising taxes, kids are tangential to that, aren't they? >> not at all. in these toughbudget tim times raising taxes -- raising prices always reduces smoking, particularly among kids. we estimate $1 tax in every state would keep $2 million kids from becoming smokers. >> i see the logic, but your answer also contains the seeds of its own destruction. you admit that raising taxes means fewer smokers, therefore, you know, do you really get anywhere in terms of revenue? don't you lose revenue from people stopping smoking? >> no. you're getting more per pack for less packs. the increase per pack way more than offsets the decline in smoking. every state that has increased its cigarette tax significantly has seen dramatic increases in

revenue even while tobacco consumption declines. so you produce new revenue, but you also keep kids from smoking and you save lives and the third win that we talk about is a political win. this is a tax that's doable. we're releasing a poll with the report. two-thirds of americans -- >> i admire your political moves. it reminds me of when we're going through the health care reform. the path of least political resistance meant that the only people that ended up paying a lot more outside the immediate concerns was the sun bed industry that would have a 10% tax and i'm amazed as a european coming here that unlike the european union, you don't have diseased -- or unlike canada where you don't have all of them packaged the same in some sort of brown, murky, unattractive packaging that nobody would buy. surely, if you really are a health campaigner, that would be a much better way to direct your energy. that would have a far greater influence over whether young

kids are attracted into smoking. >> the science shows that raising prices is the most effective way to reduce tobacco use. president obama signed a legislation passed by overwhelming margins in both houses of congress that will be on the cigarettes over the next couple of years. with all of the efforts of the tobacco company's $12 billion a year to addict new smokers, you have to reduce those things to reduce smoking. in these tough budget times this is a great opportunity for states to help their fiscal situations and have a huge public health win, all of the time doing something that the voters like. right, sir. thank you very much. i appreciate your time. i can't think of any arguments in favor of smoking, but if the tobacco industry wants someone to appear on our program to make the counter argument, fine with us. "six in 60" coming up next, plus the street poll. there's still time to vote. what should the rest of europe do about greece?

it turns out they've done nothing so far. go vote. squawk on the street.cnbc.com. >> we're almost 90 minutes into the session. more "squawk on the street" in two minutes on cnbc.

time for the street poll. >> what should europe do about greece in 4 % of you said kick them out. 35% of you said to nothing which is what they've decided to do at reeft until now. only less than one in four said bail them out. >> the eu president seems to be opting for do nothing. he has suggested that the european union will revisit the situation next month in march, that could possibly be because they're going to do something big, something structural and something that has big penalties and a big anti-crisis policy or it could mean that they can't make up their minds. you can see the way in which we've not had a great day in europe on the equity markets to say the least. >> the eu president's name is -- >> i think it's