knew that this -- i took the clothes off. this was what was going to happen. i will see you guys on monday. >> great job, andrew. >> i believe that "squawk on the street" begins right now. >> it does. good morning. welcome to "squawk on the street." i'm melissa lee with -- carl quintanilla is on assignment this morning. weaker than expected fourth quarter gdp reports sending futures into the red. right now the 3 1/2 year high that we saw yesterday, farther away on the dow. down about 57 points on the premarket. as for europe, certainly we are awaiting word potentially out of greece there. pretty much red arrows across the board there. >> here's our road map for the morning. fourth quarter gdp coming in at 2.8%, that was a bit short of expectations.

much of the growth came from inventory building. is the number a sign that we could be seeing slower growth in 2012? >> we have another busy day on the earnings front. starbucks disappoints investors raising only the bottom end of its full year guidance. not enough for analysts. howard schultz joins the $50 million club in terms of ceo pay. more details on that ahead. earn rgs reports are in for ford and procter & gamble. ford posted the biggest fourth quarter profit in history including an accounting change. it sees impact from europe and thai floods. p & g takes down its full year. europe remains on the radar. signs of stress coming out of portugal. yields soaring there and investors are waiting. still word of a debt swap deal out of greece which could come today or potentially over the weekend, but i feel like we said that even last week. today or the weekend. >> march is getting here slowly but surely. it's still aways away. that would be the ultimate default. hard to imagine they get to that

date but each week keeps going by. >> now we're looking at portugal. wait a second. the unicredit deal absolutely terrific home run. 65% gain. we've got this conflict. bnp selling really good bonds, energy bonds. cut the conflict between raising capital and selling off assets. the banks that raise capital beginning to do well. i urge people to look at santander. >> you keep pushing that. >> they are a survivor. after unicredit rallied on the rights deal, how can i be negative? i think this is an interesting moment for these european banks, the ones that are taking the medicine. >> of course, selling assets is in many ways dealing with the capital problem also. you reduce the top, you increase the bottom. >> i know. but they're selling the good stuff. >> that's a good point. >> whoever buys the bnp energy package -- >> $11 billion in energy related assets loans and the likes. >> this is where i want to see

jamie dimon come in and back up the talk. i'm only speaking positive. in the end a spanish bond auction went really, really well. we all want to think nothing can go right in europe other than hitting andrew with a couple snowballs. i think there's things happening in europe that makes caterpillar not seem too rosy by saying the last quarter of 2012 may not be -- these are big people saying things can get better. >> the thing is we have these data points out of corporate america that don't necessarily jive with what we're getting, at least today on the gdp front. so you as an investor are sitting here thinking, do i believe the gdp for the fourth quarter? where am i to go? you're here recommending european banks of all things even more strongly than u.s. banks. i've got a different message. >> i come back to the unicredit deal. why? unicredit raised capital. when they raised capital, you got the home run. any time i see one of these raise capital home run, i'm

reminlded of the 2009 period in this country where, david, we talked about this earlier when a lot of banks did equity. it turned out to be a pretty darn good thing to be in. i'm saying stay tuned. the banks that bite the bullet and raise equity which, of course, dilutes management, they take the hard medicine, it's a buy. >> there was a time when citi was 99 cents in march of '09. bank of america didn't have nearly the move many anticipated it would. only $7. >> i'm just saying don't -- >> don't be blind to -- i think we've all sat here and said the impact from the ltro, long term refansing operation, was far greater perhaps than we appreciated when it was first announced. it really did stave off what might have been a significant banking crisis in europe. it hasn't added a bid for these sovereign bonds. italy's yields fell below 6% yesterday on the 10-year. back above it a bit. all important data points that seems to push this story on europe out for a while

potentially. >> that's true. >> doesn't change the ultimate underlying dynamic unless these countries get gdp growth while also administering austerity. >> yes. absolutely. i'm just trying to balance it out. thank you. that's the other side of it. >> can we talk starbucks? >> why not? >> it's going to be a big mover today. this is one of these darling stocks investors had lauded doing everything right. 52-week high after 52-week high. one analyst was cute in terms of summarizing. they raised expectations to a grande but analysts were expecting vente. >> i want to say right now, this is the good, the bad and the ugly story. i don't see any ugly. i'm talking about blondie. yes. starbucks is a substantive company. they're talking about light roast. howard schultz, he is not an idle guy. i don't mind he's paid that kind of money. not at all. i look at the blond, the cpg.

consumer packaging. they did not talk about green mountain. china only in 41 cities. adding to cities. i come back and say on weakness, on weakness, i want to come right in and buy this stock. >> let's drill down a little bit on the cpg. the cpg includes the k-cups which are being sold in retail outlets, super markets. soon going to be sold out of starbucks retame as well. that segment although 12% of the total grew 62%. >> these are remarkable things. everyone seems to seize on disappointment. but look at this quarter. we have these disappointing numbers. then sure enough, by the end of the day, things are up or they're flat. this is a different tone. because of europe not providing that negative underneath. we're not getting that intraday selloff weakness. >> we're not. we're all in part because there has been a sense that the u.s. economy is picking up. >> do you believe it? >> even yesterday randall stevenson from at&t saying faint tail winds. still sluggish, but faint tail

winds. what does the gdp number mean today and what is that going to do to sentiment? anything? >> i'm going to take rear view. i'm going to talk about how the last month of our country, december, very strong. unfortunately last month of europe really bad for companies including ford. >> europe is only up 2% on same store sales. asia was up 20%. and north america, actually the americas, i should say, sales um 9%. we are seeing it play out even in a strong company. >> interesting. ticket price increase in china meaning that they put through -- they put through no increase in price in china. people are spending more and more when they go to a starbucks. i'm wondering whether starbucks won't turn out to be the third place of china, too. actually, second place. because all they have is work, right? we learned that from the fox con story of the week. they have work and maybe starbucks. taking a coffee break from work. >> they walk out of the dorm at fox con and go to starbucks to get a blond? >> wouldn't that still run them

a day's wages. >> if they went to get a blond? oh, the cost of it. >> interesting question. how much does a vente cost versus what they make? great point. >> good point there. schultz, $50 million club. >> you know i'm a big believer that you got to look at comp by what a stock does. i think schultz -- howard, i think you're worth 100. >> and a founder. it's a different story than the hedge fund guy, no offense, making 50 mill. i'm sorry. i think it's different. or a banker. or a guy who runs one of these companies. it's different. >> we find over and over again, look at the numbers that people got paid in bankruptcy in the story today in the journal. i look at howard schultz and i just say, like i look at tim cook from apple. i say, look, who am i to judge them? i want to judge angela mozillo. whatever he was paid is too much. >> tim cook makes $378 million.

that's everything. just by comparison. just by comparison. paul jacobs of qualcomm makes 50. ron johnson of jc penney makes 51.5. >> you're kidding. i did not know that. >> this is everything included, every bonus, stock options, things like that. >> it's a little early there. >> in lieu of the ad campaign. >> that's guaranteed or -- >> this is just all in. >> i don't know -- i don't like what johnson did. i'm going to go on record. >> really? >> i think he should have cleared the deck. if you go into your jc penney -- >> you're talking about the financial side. not necessarily on the merchandising retail side. >> he gave himself no room. he's got a really tired looking inventory that he's got to get rid of. and i don't think that -- yes, i love the idea they're going everyday low price. they've got some everyday ho-hum merchandise they've got to clear out. >> which you bought. >> i got a nice pair of slacks for 30 bucks. >> not a lot of excitement in retail these days.

>> thank you. >> a completely new concept. he's trying to reinvent it. give him a lot of credit. the guy is not focused i don't think based on at least having spoken to him a bit on the financial side of the equation per se. he did not give themselves a lot of breathing room by saying we're going to get operating margins up way above where they are. we're going to cut costs more than anticipated. why do that? >> i want to disagree with you excitement in retail. i usually where -- this is a kirkland tie. costco. look at this. it's all silk! >> it's a substantial tie. >> what is the point? >> my point is this is a $100 tie i got for $17 at costco. >> how do you know it's a $100 tie, though? >> well, the eye of the beholder. >> that's what they tell you? >> jc penney may not have excitement. costco is exciting. costco is just riveting. >> take a look at the pes. jc penney at a pe of 50. costco is trading at half that. >> i know. costco's big membership fees. do you feel like a member when

you go into penney. i belong to two clubs. costco and the elks. >> you can have short squeezes like that. based on news yesterday, no doubt about it, when they came out with a number for fiscal '13 that was above expectations. the other things we mentioned. not much of a float given -- >> he did say it was the biggest day in retail history. >> i thought that was a low key comment for him. >> when i was taking the s.a.t. i didn't know how to pronounce it. i got it right. hyperbole. >> hyper bowl. was that the doritos bowl was called the hyper bowl. >> did you see the ad, full-page pepsi ad the billion dollar brands. would you break up pepsi into snacks and soda after that? the answer is no. that was a full page ad that said that break-up is not coming. >> it's not. all right. coming up, a "squawk on the street" ceo hat trick. live interviews with the chief executive of dupont, newmont

mining and euronet. as we head to break, take a look at the futures. stay tuned. finds top performing stocks -- in three clicks. quickly scans the market for new trading ideas. it can even match options strategies to your goals and lets you see the potential risk and reward. and, it also comes with a dedicated elite service team. got it? get it. good. introducing new etrade pro elite. ♪

gold's had a great run so far this year. up by just about 9.5%. how is that helping the world's largest gold producer? let's go to davos, switzerland. richard, it's always great to speak with you. >> nice to be back, melissa.

thank you. >> i think a lot of investors out there might be a little confused about what we're hearing about the economy in the united states as well as the economies around the world. this morning we got gdp that came in a little bit lighter than what economists had been forecasting yet we're getting very different forecasts from the likes of caterpillar that sells equipment to industries like yours. what are you seeing? >> we're seeing big demand in the mining business. i think even though i couldn't disagree that the economy in the u.s. seems to be stumbling along in the mining business, we're still accelerating. i think it doesn't matter whether it's the gold segment or the copper segment. but we are seeing big investment. opportunities to continue to add production across the world. and to sell our products into meaningful, developing countries who are looking for infrastructure. >> sir, this is jim cramer. concern. i'm looking at a bank of america piece. they're talking about gold production modestly lower year over year. declining net asset value. this is the moment for a gold company. is it just too hard to find

inexpensive gold around the world these days? >> yeah, jim, i think it's very expensive to not only find it, but to permit it. so it takes us probably five years to find a good deposit. when we get the initial exploration rigs into the ground, ten years to permit it. once we start producing, we go very quickly. so it is a very intensive business. and it does deplete every day. so you're precisely right. gold production over the last decade has been down about 3% compounded annually till this year. starting to increase. at newmont we're seeing our production increase over the next several years. but flat for now. so it's -- this is a business which is having difficulty replacing its reserves. >> walk us through the slopes, richard, in terms of understanding your costs and your profits here. in terms of gold prices, are they increasing faster than the cost of production is increasing given that it's much harder and much more cost intensive to find golds these days? >> great question.

on the operating side, our margins are expanding as quick or quicker than gold price. when you just look at operating cost. cash cost today. but when you look at the capital cost to the business in addition to that, we're probably barely tracking gold. a good indicator, the gold high in 1980, $800. escalate it till today, $2,300. comps have been compounding about 15% a year. while gold price has accelerated to over $1,700, our margins on a total cast kosh basis plus capital have not doubled. >> let me go back to that permitting issue. people at home are thinking ten years? what happens? are there countries that are willing to accelerate it? because you could put a lot of people to work. what is the reason why it takes ten years? the fluids that you use? the refining fluid? arsenic? what is that about? >> well, generally when we go to a developing country, there are several things that happen. first, capacity building. a lot of countries are not

prepared to help permit big mines. they don't have the legal infrastructure. they don't have the people and the expertise. so one thing as a mining business we need to do is help build capacities so those countries can weigh in and assist. additionally, we do make sure that when we permit, full environmental impact statements take years and years to complete. why? the first thing we need to do is assess where we are. the conditions around those, what might be a mine. make sure we do our best to sustain those conditions throughout the full life cycle of the mine. baseline, come up with a plan, get approvals, get community involvement, get government involvement, it takes time. but it's worth it at the end of the day because we get more support and we get that support in ways where we can stay engaged with the local community. >> richard, last question. the fed this week introduced ang waj extending low rates through 2014. we've got a situation where around the world we have rates at historical lows. i'm wondering how important that is in terms of how you look at

the price this year for copper as well as gold given some other ceos are concerned that perhaps at any sign of growth, central banks will raise interest rates too quickly? >> yeah. i think it is a concern. i also think, though, that each of the central banks is trying to talk down inflationary pressure. so i think we'll see some stability. the fed said they're going to try to be stable for the next couple years. but this is where i think we are in gold price. in the cycle here. which inflation is already built in. we've already put more currency into the world. that currency is going to inflate. gold continues to be in a bullish environment, i believe, going forward. what it means to the infrastructure businesses themselves is i think it enables us to put capital to work. and as jim said, we do have employment opportunities, connecting that capital with employment and developing nations to help assist those economies. i think that's the -- those are the really goals for the mining business that we want to see succeed. we're going to put capital to

work in this environment. >> richard, great to speak with you. richard o'brien, ceo of newmont mining joins us from davos, switzerla switzerland. >> they're really rather remarkable. a lot of them are really in the game. you hear why gold can go higher. people underestimate the supply side. this guy is a fabulous miner. this is one of the greatest mining companies. and they can't find the stuff. it's in places no one wants to work other than rangold. i remember asking rangold, you're drilling for gold in a lot of places i won't go. he said to me, jim, gold miner, it's not for sissies. >> all right. let's get to our tweet question of the day fed chairman ben bernanke is going back to school in march. the former college professor is now scheduled to give four lectures to undergrads at george washington university. in today's squawk on the tweet, we're asking is there a better use of chairman bernanke's time? if so, what is it?

tweet us @cnbcsquawkst. we'll air your responses throughout the morning. >> should be a good one. >> fine. i have no problem with him going back four times, giving a couple of lectures. >> go back and sell fireworks south of the border. >> you're saying you want him to do that now? >> he's from dylan. i always like guys that go back home. >> we'll see what kind of responses we get. coming up next, cramer's mad dash ahead of the opening bell. as we head to break, take a look once more at u.s. futures. we are poised to open lower right now. stay tuned. while some fiber ads use super models, metamucil uses super hard working psyllium fiber, which gels to remove unsexy waste and reduce cholesterol. taking psyllium fiber won't make you a model

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♪ six minutes before the bell rings here on wall street. time for cramer's mad dash. something that we have not mentioned is a more than $3 billion deal in the chemical industry. eastman kodak with -- >> the acquirer stock. will it go up? looks like it will. the deal looks to be acretive very quickly. we haven't seen much m and a. we all know that. this year so far has not started at a level even that approximates last year, which the first half of which was very active. then we dropped off as a result of euro. >> we've got georgia gulf westlake. earlier arch chemical last year. these are performance chemicals. they really are terrific companies at this point in the cycle pch natural gas is at 20-year lows. that's fair feed stock.

at the same time, these are housing plays. georgia gulf is pvc pipe. d.r. horton with positive numbers today. take a look at the -- a lot is nonresidential construction in aerospace z ae aerospa aerospace. this defies the gdp number. these deals happen because the companies are far more optimistic about the united states than the gdp data. >> you know, we'll see if we get more deals. there's still some hope out there. i have to say, a lot of bankers i've been speaking to over the last couple of weeks have quieted a bit in terms of their optimism. >> really? >> which towards the end of the year seemed to be a little more upbeat. >> i thought they thought this could be the year. >> list it off. volatility quieted down. stock prices go up of the

acquirer. cash is there. incredibly low rates right now. you've got ceos who finally want to do something. does that mean we'll see a lot of activity in the first half? not clear at this point. >> we needed to maintain the fact we've got the best market for s and b since 1997. a bull market requires better earnings, a bull market requires low expectations, a bull market require -- >> get ready for a big day of trading. much more "squawk on the street" straight ahead. >> speak for yourself, rebecca. we'd rather be up on friday. which of these 500 stocks have you partying? the opening bell is next. we'll be right back.

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you're watching the opening bell at the cnbc realtime exchange from davos at the world economic forum. there you have maria. look, maria's up there. >> she is. >> over at the nasdaq, electronics for imaging maker digital printers and controllers. >> what a huge stock that used to be. >> i know. >> i have to tell you the oils are a drag on the market. chevron not that great a quarter. a lot of dow stocks in the last few days, proctor, just not blowing it away. you need the umph. we didn't get the blow away from at&t. >> what about p & g. >> it makes me think, guys, do you really know what you're doing? i like proctor so much. a great dividend record. it's beginning to get sad. i'm beginning to get sad about how proctor's doing versus -- >> what are you referring to? >> i keep waiting for the

earnings breakout. it keeps being kmcommodity costs -- >> procter & gamble and kimberly clark which you repeatedly give a free pass to. >> the market, not me. the yield. >> the yield differentiates knb versus pg. >> kimberly clark pays out a huge amount because they realize the individual investor likes dividends. proctor tries to pay out more but they're just not delivering. they're just not delivering. this is a great american dpaen. i'm trying to figure out whether they need, yes, i'm going to say it, whether they need to break up. a la kraft. in the long term we're -- proctor is not delivering, david. it's not delivering. >> shouldn't you give them a little more time? what is the benefit of break-up, per se? >> i mean, they're getting out of snacks. they're doing it piecemeal. rosenfeldt at kraft makes a big

acquisition and splits the company into fast and slow grow. that's what i want from proctor. >> what would be the fast growing prokt sner. >> the fast growing proctor? that's one of the problems, isn't it? >> that's why i don't know if a split would solve anything. >> i don't know what. >> how would the valuation be unlocked if there's no faster growing part of the business that's getting undervalued as a combined entity? >> they're not doing emerging markets. the colgate quarter yesterday was quite good. i don't want to slag all of proctor. i'm looking at colgate. i remember the old days when it was a chronic underperformer and proctor always delivered. it seems to have reversed. it's a shame. i want more out of proctor. >> should we talk about ford? ford's going to be a big mover in today's session. record profits for the fourth quarter but it was a miss. they did feel the impact of a slowdown in europe. >> they should have preannounced. >> they should have. >> historically when you have a material difference between a 25 cent number and a 20 cent number normally the company would preannounce.

the last few weeks were very bad in europe and asia. asia, thai flooding. the commodity costs are very high. they are talking about commodity costs being not material this year. i hope that's the case. you're talking about big increases in steel. plastic should come down. aluminum should come down. maybe they can get a windfall down from the $2 billion hit they took this year. >> europe could continue to be a drag for the automakers. moody's came out yesterday saying they expect new vehicle sales in western european countries to decline 6.2% year on year. the steepest decline is in france. >> united states, ford was looking for 13.5 to 14 build last year. for 2011. they're going up to 14, 14.5. you get a big build what you should be doing is buying magna, steely dan. and american axle, axl. >> it is important to step back and realize we're talking about ford. they've done so much to refl replenish their balance sheet.

at the end of the day, earning money, they did the accounting change to look better. they can do it because of their financial flexibility. >> they did the dividend. it's a value stock. how about that? can we call it a value stock? >> okay. i'll take that. >> thank you. >> all right. let's hit mary thompson here with what's moving here on wall street. mary? >> melissa, as you can imagine, of course, the fourth quarter gdp number certainly a factor in the early declines we're seeing on wall street. the top line number, of course, disappointing. also traders telling me that they are also looking at another number, that being real final sales. it was up only .8%. that excludes the impact of inventories. so because that was weak, that's a better suggestion of what really organic growth is. so they're very disappointed in that number. that's contributing to the 46-point decline we're seeing in the dow early on. of course, we want to talk a little bit about eastman chemical buying solutia.

you heard david talk about it before the bell. we could see gains. we are seeing them in early going in the acquirer and the company being acquired. this is a deal that's expected to take out $100 million in expenses and also be immediately acretive to'sman chemical's earnings. chevron impacting the dow. oil company coming in with earnings below expectations. its stock is down about $2.37 right now. the reason being weakness in its upstream operations. it actually had a loss there, refining, basically. that contributed to the weaker than expected earnings of $2.59 a share. you guys, we're already talking about ford. let's get past that. we're also watching transocean because it did win a legal judgment, federal judge saying it won't have to pay third party compensatory damages in the gulf oil spill, but it still could be liable for punitive damages. it is getting a lift. dows off the lowest levels of the session. down 37. s&p lower. nasdaq has just turned higher.

david, back to you. >> still on track for one of the best januarys at least since '97. thank you. let's shift to bonds now and the dollar for that. we go to rick santelli at the cme group in chicago. >> good morning, david. i always think that the best source i've ever had following the markets as a reporter is the market itself. look at intradays of our 10-year and europe's 10-year, you can see that rates moved downright around 8:30 eastern. what happened at 8:30 eastern? we had a positive gdp number. the best since the second quarter of 2010. but it didn't have a 3 in front of it. it was 2.8. indeed, the market thought that was light. if you really dig into it, there's a little something for everybody. if you are one of the people that i hang around with that say stop spending, well, the government did slow spending. good chunk of it was in defense. it was slowered spending. that put it a bit lower. the real elephant in the room was the notion that inventories were a significant chunk of the

t 2.8 number. that is for investors to digest moving forward. indeed, many are looking for some revisions a bit lower down the road. we'll have to wait and see. david, back to you. >> thanks for that. ben bernanke's getting ready to give it the ole college try by lecturing undergrads about the fed. is there a better use of the chairman's time? if so, what would that be? loaded question. tweet us @cnbcsquawkst. we've got your answers coming up. stay tuned. between listening to the numbers... ...and listening to your instinct duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services.

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that powers sound decisions. duff & phelps financial advisory and investment banking services. ♪ you saw eastman chemical there up sharply. other stories we're talking about. altria announcing chairman and ceo -- take a look at that name on the prompter. anybody want to -- >> he's such a great ceo. don't want him to retire.

>> i apologize. i have not followed closely. apparently you've decided to retire after four years on the job and 23 years at the company. he will be succeeded by vice chairman. federal prosecutors have decided to drop a tax fraud case against rigases and his son, timothy, saying it was unlikely both men would receive substantial prison time. that takes you back. they are already serving long prison terms for looting $1.9 billion from adelphia. carnival's costa unit has agreed to offer $14 million each to uninjured passengere es aboa the cruise ship for items lost and any psychological trauma suffered by those passengers. those are the unininjured. >> right.

>> i wonder how they came up with that figure. >> i don't know. let's go to davos, switzerland, joined by the ceo of nyse yeuronet. duncan, always great to see you. i have to ask you, after we hear that the deal is essentially dead -- is there something -- okay. >> we're getting a lot of other -- you know what, duncan. we have some audio issues here. we're going to iron that out and come right back to you hopefully as we get those fixed. sorry. we were having a lot of voices and things like that. >> i'm looking at a couple situations that i find are what's been going on in 2012 scene. honeywell. initially people think that's disappointing because he used the word challenging in his release. the macro is not so great. by the end of the day people say of course the macro's not that great. look at the number he's

delivering on a not great macro. i want to buy the stock. that has been a theme throughout this earnings season. in 2011 it was the opposite. oh, my, he mentioned macro. sell the stock. 2012, look at that. look how well he's doing. >> all right. should we give it another try? >> yeah, i think we've got those issues ironed out. again, dsorry for that. always great to see you. >> good to see you. >> in terms of the deal with deutsche borise, people are wondering how you misinterpreted so badly what regulators in europe said about the deal. how did that all unfold? why did you believe the deal would go through? >> i don't think it was so much -- it's hard to misinterpret something when the grounds on which it allegedly will be prohibited are saying in 2012 after all we've learned the last few years that markets aren't global and the otc market

has nothing to do with the exchange traded market. it's hard to anticipate something like that when it was so far afield and so disconnected from the realities of today's marketplace. >> duncan, let's assume that the deal is, as almost everybody believes, not going to happen. obviously you spent a year on it or more. but certainly a lot of time was spent thinking about it and contemplating consolidation in your industry. that consolidation doesn't seem to be coming. not just from your deal that's not going to happen, but others as well. what now for the global exchanges? >> i'll start, david, by saying i'm not giving up yet. we have next week still to work through. the deadline's still a couple weeks out. we're going to keep pushing and making our points. i think your question is the right one. if you look back on the last 12 to 15 months in an industry that absolutely should consolidate, the industry's going to be -- have seen three global deals not

get con ssummated all for vario reasons. >> duncan, this is something that i -- i know you care passionate about. you even declared it once for two quarters, the dividend. it's a reason why a lot of people own your stock. can you raise it? do you feel confident in it? i know you thought this deal was really important for the cash flow. it seems like you can make a lot of money still. >> right. i think we can do well standing alone, jim, you're right. i remember you telling me early on in this process, don't underestimate the ability of europe to do things very differently and maybe do things that appear counter to their own interests. i think we went into this thinking providing a large regulated and transparent market in the wake of the financial crisis would be well received here in europe. it remains to be seen whether that's the case. going forward, we already have a pretty healthy dividend. i think we've had a very good free cash flow year in 2011.

i love the stand-alone strategy. i think the investors can expect to hear from us pretty soon what our capital management approach will be, stand alone or as a merged company. >> you love the stand-alone strategy only because you can't do the other more global strategy, duncan. i mean, i'm curious to hear what those numbers are going to be as well. but i just wonder in terms of the growth characteristics of this business given how much you articulated, it was important to be global. and now you can't be. >> well, remember, david, we already are, right? >> i know that. i understand. >> this was -- right. this was going to make the company even more european and even more global, you're right. and i think some of the other services that we found attractive in the db portfolio, it'll be disappointing not to have those. but i think there's still a clear way forward. i think we delivered on all of our promises in 2011. sure, i'd rather operate as the merged company. that's why we spent the last year working on it. but i'm very comfortable with the stand alone strategy and while we might not see growth in some of the core transaction businesses in the immediate term, i think there's a real

opportunity on both the tech nothing side and post rate side to continue to grow our business the way we did in '10 and '11. >> there's already talk, duncan, as wall streets have it, thinking what the next step for you might be in terms of acquisition. lch clear net is one thrown out today by rbc. i'm curious if you see that as being a potential attractive target. would that have synergies with your business? >> it would be inappropriate to speculate on any of that now, melissa, given that we're still under the terms of the bca. i think to go back to the earlier question, consolidation in this industry appears to be challenging in the near term. i think all of us are obliged to look at other opportunities in the space that may be more bolt on or tuck under acquisitions. there's a few opportunities that will be presented to all of us in the near term in different regions of the world. i think it's incumbent on all of us to look at those, sure. >> duncan, always great to see you. >> good to see you guys. >> see you when you get back home.

ceo of nyse euronet. the bit about using capital, that was optimistic i would think for most investors who are in the stock. >> look, i think david raised really good point. this is a business that is an international business. i told duncan when the deal was announced, duncan, they're never going to go for this because they have so much pride. we're in a world right now, all these deals are being turned down because of national pride. so none of these companies can make as much money. >> except that in this case they were going to hold more of the company. then you can reverse it and say actually a lot of those shares -- the point is how can you not be allowed to be as efficient as possible? >> because these used to be clubs. they're not real companies. >> i know that's a naive question i just asked. we've seen it many times. certainly in europe. it does beg the question as to whether there's going to be any consolidation in this industry which does seem to need it. >> they need to lay off people, become more technological. it's not happening. >> all right. coming up, breaking news on

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simon hobbs is down on the floor. he's got a look at what is coming up on the next hour of "squawk on the street." >> we've obviously got to talk about ford's earnings. missing the street. of course, ford stock is already down about a third during the course of the year. so is it now a buy? starbucks beating the street this morn ing. like a latte left out in the slow, that stock is beginning to cool. is starbucks a buy or sell at this stage? also real interesting research on the winning and losing hedge funds for the big endowment and pension fund players. melissa, a david faber exclusive in the next hour of "squawk on the street." back to you. >> see you soon, simon. time for six in 60. six stocks, 60 seconds.

cabot oil. >> all nat gas. i don't want to own it. >> boyd gaming. >> wait to sell these casino stocks. i do like mgm. >> d.r. horton out with earnings. >> surprised at the positive. hgx going to continue to power higher. >> wendy's downgraded from neutral to buy at ubs. >> why was ubs recommending this at all? if a person downgrades mcdonald's there needs to be opportunity at 96, 97. tuch yield. >> kla-tencor. >> best quarter. when that merger with knis through, you've got a power house. >> american electric. >> it's fine. it's got a lot of coal. don't shoot the messenger. that's what they are. they were told to build that stuff by jimmy carter. now they're paying the place. 30, 40-year coal plants. epa wants to shut them. more on these stocks. a couple big movers on the networking space causing

ripples. report from juniper as well as riverbed. the current quarter was decent. guidance not good. juniper one of the biggest losers on s&p 500. riverbed also down sharply. and cisco is down as well, although some would argue that cisco is causing the pain. >> i think -- i know juniper well. i think k.j., kevin johnson, struggling here with a product line-up that was meant to appeal to at&t. at&t didn't spend a lot because of t-mobile. >> they said yesterday, they've got to ramp up cap x at at&t. they have to. given that they're not going to have t-mobile. they still need to transition to lte and 4g. >> those stocks are dead in the water. >> dead in the water. >> i keep holding because it's got six bucks in cash, decent balance sheet. you have to figure the cycle comes back. the cycle hasn't come back. premature. kind of like my mexican real estate holdings.

premature. >> one day they're going to hit big. one day, baby. we have some breaking news on consumer sentiment. we want to go to rick santelli out in chicago. rick? >> all right. 75 evens, y'all? all right. 75.0 is what my foreign exchange traders are telling me. they get a vantage point on a different layer service because -- there it is. it's confirming what i'm looking at. this is definitely better than expected. we were looking for a number around 74. remember, that was the preliminary. this is the final. 74.0 is the best number -- wow. what a coincidence. it's tied with the same number we had for a final last year. the last highest number was may of 2011 at 74.3. which was, of course, not the high water mark, but really the last major high watermark. this moves us right into that zone. better than expected. we saw about 55 points deterioration since preopening on the weaker than expected gdp. we'll have to monitor if this

boosts the market. back to you. >> thanks a lot, rick santelli, for that. not too much reaction in terms of the overall market indices to the consumer sentiment number. >> doesn't obama say, hey, listen. you see this happen last night on the debate. republican debate. they were all very gloomy about the economy. somebody's not that gloomy. >> no. >> who do you have tonight, jim? >> i've got cypress. in the grips of not having an apple product. >> they feed into automotive. >> they do the best touch screens. a remarkable company with a huge buyback. it's the apple have, apple have-not. i want to talk to t.j., also one of those people who's got a view about america. >> never a shortage of words from t.j. interesting words, i should say. >> in terms of battles that people win in -- he's a very leading, intellectual man who's been a great investor and a terrific company. one of my favorite ceos in america. >> there's semiconductor stocks

today. very interest ing. a tale of two semiconductor stocks. marvel versus lis. marvel feeds primarily into western dig. western dig has more problems with the thai flooding. the other feeds into seagate. the deskrepensy in their earnings tells the story. >> he thinks hard drives are going to come back this year after the thai problem. i think that, again, if you're selling into apple, you got to own it. if you're not selling to apple, you got to rethink. >> it's the apple taking it all. >> and the nonapple. >> it's winner take all, loser take none in that business. >> jim, we'll see you tonight 6:00 and 11:00 p.m. eastern time. coming up, three ceo friday with dupont's ellen kullman.

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dow jones down by a third of a percent. nasdaq the only one in the green. up five points or .2%. a quick check on the commodity markets this morning. we've got ti trading slightly higher. 117 slrs a barrel. meantime we do have copper and tus doll the u.s. dollar trading lower by .25% each. oil giant bp losing its attempt to shift over more than $15 billion in -- rig shares are trading higher on the back of this news by almost 4%. 'sman chemical agreeing to acquire specialty chemicals maker solutia in a cash and stock deal valued at nearly $3.38 billion. and altria group's fourth quarter earnings falling over 9%. the tobacco giant naming martin behrington to ceo. >> all right. for more on today's gdp number,

cnbc's senior economics reporter steve liesman. there's only one of them there. i'm yooused to seeing three of liesman. he's back at hq. give us a take on this number itself. >> check your contacts, david. despite the 2.8% rise in gdp, it was by the way the biggest gain in a year and a half. there is, though, widespread disappoint in the economy's performance in the fourth quarter. you'll remember there was a 3% forecast out there. consensus. here's what action economics saying. the gdp report reveemed a particularly large shortfall in growth across all the major spending components leaving a disappointing round of data over all. over at mizuho they're saying it's not a good gdp report for the growth bulls. only john rooiding had a contrarian point of view. we continue to argue that initial readings of gdp can provide a very misleading representation of the economy. here's what the story is on the surface. the performance of the economy

looks good. that steady bounceback from that decline we had in the fall. and in the first quarter. but it's the make-up of growth that has economists worried. what we're going to look at here is the contribution of each component to the percentage change in gdp. that's not it right there. but what you would see is a decline -- there it is. a decline in government spending took away almost a percentage point from growth. that was based by a sharp decline in defense spending. austerity by state local governments took a third a point off. net trade a slight negative. housing added about a quarter point. good news because it's the biggest gain since the second quarter of 2010. business investment, 0.4%. kind of below the average of the prior two quarters. not so great. consumer spending also just okay. responsible for more than half of the total growth. the big contributor there, that was inventory. it's up about 2%. and that is a game that's not expected to last. overall the data seems to back up fed chairman ben bernanke's downbeat economic view with a strong top line but the details are pretty weak and not very

convincing about a sustained economic recovery. only upside, guys, some of the lowest inflation numbers we've seen in about 18 months. simon? >> interesting, steve. thank you very much for that. let's recap the economy growing at a 2.8% clip and likely as steve said a slowdown to come. for more analysis on today's gdp data let's bring in two guests to help break it down. jim paulsen, chief investment strategist at wells capital management. and tom porcelli. let me kick off with you. if you have this very big component which is down to inventories, and without it we just have growth of .8%, what does that mean for the future? why is that not sustainable? >> i think actually if you look at 1.8% as stort of a sustainable outcome, then i think actually you're going to be pleasantly surprised. the problem for us, the report is a good thing, splashed cold water on a lot of optimism

that's out there. the economy cannot grow at 3% right now. it certainly can grow at 1.5% to 2%. that's been our call. the one thing people are getting bulled up on, this notion that the consumer is moving along at a decent clip. i think you have to understand why the consumer is zbrgrowing this pace. it's an increase in credit usage we've seen recently and a drawdown in savings. if you want to extrapolate that and say that's what the consumer is going to continue to do, yes, you could actually see 3% growth. we're not in that camp. we're looking for only 1.5% or 2% growth. >> jim, from an investment standpoint, let me pick up the other main feature of the figures that we've had which is this very benign inflation. the price index of personal spending up 1.7%. core inflation up 1.1%. people guying gold and silver earlier in the week on the fear inflation would come because what the fed is doing, what does this now tell us? >> well, i think that it's a good think that inflation is

moderated out. we had -- we had a bit of an inflation problem there mid-year with commodity prices and crude oil and everything roaring upward. and i think the fact that we've checked inflation a little bit is going to be good long term. let me throw an offset to the growth looking forward. i think inflation might be the biggest positive in this report. consumer price inflation when we started 2011 was about 1% year on year. it rose to almost 4% last year which just took 3 percentage points out of real disposable income growth for the household sector. what's happening now is the consumer price inflation rate is starting to decelerate. it might fall over 2012 let's say back to 1.5% or 2%. that's going to add 2.5% maybe to real disposable income which -- which could help fuel better consumer spending this year while it sub strakted last year. i think that could be a good thing here that we've checked inflation rather than looked at as a negative. >> steve? >> i think what jim says is interesting in that regard.

i mean, there's definitely a tax that's come from inflation. if it were to help out the consumer, interesting to see what'll happen to the savings rate on monday. i'm also interested here, my read here, simon, is that this clears the way for additional quantitative easing. i'm not saying it's coming. but the low inflation rates, the weak underlying growth and an inventory number that pushed up growth that's not expected to continue, i think if tom is right -- it's an interesting question. he says 1.5% to 2% is the real growth of the economy. i'm pretty sure the fed doesn't believe that, tom. to the extent that we get down into that 1.5% to 2% real growth numbers with low inflation, i think that's going to make bernanke believe he needs to do more. >> tom, do you agree? >> i do. i think if we're right -- just to be precise, our number for the full year is 1.8%. i think if we're right then absolutely. the odds of qe would rise even more than we already think they are. our general call is we're probably a little north of consensus with regard to the odds of qe happening this year.

if we're right, then i think bernanke and company definitely ushered another nf qe. it's on the table. no question about it. what's interest wk that press conference -- steve, i think it was you who asked that question of bernanke. what about the data? he's not buying into the beta. we are completely on board with an idea. yet we still ha lot of investors out there that want to be hopeful about the backdrop. the only thing we keep on saying is i can't build a forecast on hope. >> yeah, tom, you could see what they felt in the lack of change to the characterization of the economy in this statement. yeah. 200 k on the growth. decline in the unemployment rate. the fed statement that didn't really change at all in how to characterize the economy. i would just like to say that bernanke is not in the paulsen camp on the economy. >> what does this mean for the stock market, jim? your target here is 1,500 on the s&p which is about 13% higher than where we are now.

is that based on a qe assumption or not? >> no. >> will it change? >> no, it's not at all. they may do that. i don't understand it. look, we've had two quarters here of the last two quarters, if you average them out, we had an inventory drawdown, inventory build. average we're growing around 2%. consumption growth was 1.7%. right around 2%. i think we're at 2%. not 1.5%. i think we've had a lot of stimulus already, steve. the mortgage rate a year ago was over 5%. it's now under 4%. the m2 money supply growth rate in the summer was five and now it's ten. >> i don't disagree there's been stimulus. >> there's a lot of stimulus. we're ak celt rating up towards 3% this year. that's what's going to drive that stock market up. >> i'm just saying the bulk of the board as i understand it is not satisfied with the growth numbers as tom lays them out or even, jim, as you lay them out. >> i agree. the fed may act. i'm saying there's already a lot of stimulus in the pipeline. i'm not sure they need to act.

>> yeah. but i think you have to remember something. it doesn't matter how much money is sort of sitting on the banks' books. it doesn't matter how much money the fed has put into the system. all that matters is what money is actually flowing into the m is. we're not seeing any of that happen right now. i know a lot of people love to talk about this idea that the ms are rising. i don't care. what is actually flowing into the system? none of that money is making its way into the system. we can have a conversation -- >> consumption almost flat lined -- >> the lending data are still very sort of flat lining here. until that turns we're going to have a very difficult time making a bear case for -- for the economy at this point. >> last word, jim? >> i think that the economy is accelerating, not flat lining at 2%. i think it's accelerating. that's going to be a driving force. that confidence number that we saw is going to continue to rise this year. >> we'll leave it there, guys. great discussion. thank you. jim, tom, and of course steve liesman. thank you guys. we're breaking apart starbucks' first quarter earnings. before we get to that, take a look at the top four starbucks

drinks with the highest caloric count. eggnog latte. doesn't that sound like a cup of fat. >> peppermint white mocha. who knew? >> 700 calories. my goodness. number one, after this break. coming up, starbucks earnings are out. will the results percolate your portfolio or cause a latte problem. we'll discuss the results after this coffee break. [ thud ] ♪ [ thud ] [ horn honks ] ♪ [ car alarm deactivates ] [ crash ] ♪ ♪

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we promised you we'd reveal the top caloric drink at starbucks. you will not believe how many calories this is. you will not believe. number one, 730 calories. peppermint white hot chocolate. >> makes life simple, though, doesn't it? you just have to have one of those for breakfast, lunch and dinner. that's your caloric intake the entire day. >> if you were on a diet just one. >> one drink for $6 and that's it. >> couple of pretzels and you're good. let's stick with starbucks. stock trading lower this morning. first quarter results coming in better than expected. guidance was raised. it was still short of what analysts were expecting. jeffrey bernstein senior restaurant analyst at barclays capital. he just raised his price target to 45 from 42. i love, love, love the headline of your report.

result grande, but expectation vente. at the same time your outlook for 2012 is even more vente than the street even still. why is that? >> starbucks entering 2012 has tremendous fundamental momentum. the first half of the year is going to be a little slower in terms of growth. as we move through the year, when coffee cost pressures ease and start to look favorable, you should see an acceleration in earnings growth. it comes down to expectations. expectations are pretty high on this one. >> one of the stand-outs in terms of the business line is a consumer product group. granted a smart part of total revenues at this time, about 12%. but the growth of that business for the quarter was astronomical. i'm wondering what you would anticipate? how big of a percentage of the total will that be by the end of the year? are we seeing this initial uptake in k-cups because it's new and so we're seeing this growth and it's going to level off? what sort of slope are we expecting? >> to your point, right now it's a fairly small contributor to revenues and profits for the

broader consumer product group or cpg segment. but the first quarter did see tremendous growth. it's a little bit inflated to your point. they just rolled out the new kind of k-cups which a lot of people initially go shopping and fill their shelves. that's not necessarily representative of future demand. also important to know they brought in their distribution business that was formally held by kraft. that inflated the numbers in the first quarter. we don't expect it to sustain that level. management views that cpg business as one they're going to rival their core retail business. they have huge aspirations for the consumer products business. >> what would be the one thing that would concern you over the course of the year that would lead you to change your opinion? >> well, specifically, cpg. it's just very early days. obviously it's an entirely different platform. starbucks is very well known and very successful in terms of opening new stores in retail. so cpg is going to likely provide some hiccups along the way. i think management is doing

everything they can to prepare for them. we expect they'll be successful taking the starbucks brand to the consumer products business long term. >> in terms of the overall business, not just confined to consumer products, this stock seemed to be firing on all cylinders hitting 52-week high after 52-week high. a pe now of 28 or so. in terms of valuation in the marketplace there might be other less expensive on a valuation basis qsrs out there to invest in. why is starbucks the one still? or is it? you've got equal weight on it. >> we're a little more cautious. the results thus far have far exceeded our expectations. they're targeting a higher income consumer. they've proven more insulated than we thought to a tougher macro. right now you've got most investors anticipating they can sustain, you know, 8% to 10% comp which in the u.s. business is heroic in this environment. you wouldn't know talking to them that there's any kind of macro slowdown out there. >> when we take a look at the business lines by geography and we see same store sales were up 2% in europe, is that better

than you had expected or worse? i'm just trying to get a sense of ow this might be extrapolated to other restaurants who operate in europe as well. >> yeah. this is the first quarter that starbucks is breaking out europe and the asia business. so it was tough to really gauge. i think most people were thinking low single digits. those results were roughly in line with expectations. the only other company we have in restaurants that has, you know, significant exposure throughout western europe would be mcdonald's. they actually just reported. and they are seeing no negative impact from a more challenging macro environment. so it's been very impressive thus far. we haven't seen that real slowdown. starbucks low single digits. uk they said they got better. that's probably their biggest company operating market. they're equally as excited about or more excited i should say about asia and the china business where they're comping up 20% plus. >> thanks for your time. jeffrey bernstein. still to come, big interview. ceo of dupont will join us to

talk about material costs, tem cals and the overall state of business business. stay with us. this is cnbc.

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stocks to watch. exxon downgraded to neutral from buy at ubs. ericson upgraded to buy from hold at royal bank of scottland. lionsgate downgraded from neutral to buy at miller tabak. >> did i mention yesterday we had the new ceo of research in motion came to visit cnbc and sit down with everybody basically to try to drum up support for where they're going. he was there to preview some of the functions in the new play book upcoming. it was really interesting. what i would say is maybe that the margins here in the united

states could come under pressure. he says he's discovered that basically people who don't like blackberry are typically on the blackberry 5. he's now in talks with the tell con people to try to get everybody on to a blackberry 7 to try to hang on to those customers. i asked him whether he'd actually do that by selling at a loss. he was clear that will not happen. we may find margins do come under pressure. >> what about the basic idea being can they actually take any customers back that they have lost? i was not in that presentation yesterday. >> he was very much more focused on the fact that the market is not really giving him credit for the vast numbers of new customers they're bringing in abroad. he feels that that's -- there's a disconnect there. >> it's interesting. because that would seem to stem the losses of current customers if he is able to persuade people who have a blackberry to upgrade to the new one. >> that was the idea. >> that doesn't necessarily bring in new customers or bring back the customers, to david's point, that have already switched. >> yeah. >> you're stopping the bleeding.

but the patient's still dying. >> the other thing that came out of it was his exasperation at -- and almost anger at further negative comments or negative questioning. he seemed very almost wingy -- >> define that term for our u.s. audience. >> blaming the customers -- a paradigm shift. people no longer needed such longer battery lives. perhaps they weren't valuing the security of the e-mail systems blackberry supplied. >> but he admitted that there was a problem. that there was a turn in technology that the company missed. that was the first time that we actually heard that on the record. >> very clear that they dropped the ball here in the united states. but his point was, we dropped the ball here because we were so concentrated on expanding internationally and you're not giving us credit for that vast number of new sub vibers that we're taking on. >> he was demonstrating the playbook. i hear from people who were in the demonstration that there was an issue with that playbook that they were demonstrating to

medias -- to members of the media. >> yeah. we didn't mention it because he seem so sensitive. but, in fact, the clock stopped about half past 4:00 on the playbook. for half an hour it didn't move. there was some really good features. he's got a new proprietary social media feature where everything is basically on one platform. the ability to pause video. high definition video. he was saying the graphics ability of the new playbook is so good that it's really excited some of the video game makers and they will develop specifically for that. >> so it's fantastic unless you need to know what the time is. >> harsh. >> i still wear a watch. >> i know. i do, too. old school. old school. ford out with fourth quarter results this morning posting its biggest profit since '98 but missing estimates. how will the u.s. name fair as japanese automakers begin to reach their full capacity again? stick around. back in two. want more "squawk on the street"? no problem. talk to us any time. e-mail us at sots@cnbc.com.

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here are the stories we are squawking about 7:30 on the west coast. the university of michigan's consumer sentiment index rising to 11 month highs in january. up a full point from mid-month

levels. illumina's board saying it will review roche's unso liss tilled takeover offer. it says it intends to advice shareholders on the formal position on the offer within ten days. the company put a poison pill in yesterday. no big surprise there. you can see the nasdaq is doing reasonably well. the s&p 500, at least it's holding above 1300. quite a tight range. utilities are down today. a very mixed picture. let's have a look at where we are on the breadth of the move. should be relatively evenly spaced. the nyse. there you go. almost 1 to 1. the nasdaq, bearing in mind that that market is doing slightly better. it's only a marginal move, again, 1 to 1. ford missing estimates but posting its biggest profit in -- shares of ford right now are

trading, there we have it, down by about -- phil lebeau standing by in dearborn, michigan. >> reporter: the reason ford shares are trading lower is because this was a disappointment for a lot of people on wall street and for investors. take a look at ternings for the fourth quarter. they missed by a nickel. the street expecting 25 cents a share. ford coming in at 20 cents. the only encouraging news if you're looking for some in the fourth quarter, revenue. much stronger than expected by about $2 billion. but there are three things that people are focusing on behind the fourth quarter loss. first of all, ford is blaming rising costs. things like engineering, research and development, commodity costs and europe for the earnings miss. in fact, europe is the big bugaboo continually. alan mulally says we expect commodity costs to ease. they won't be as strong as they were in 2011. they'll ease in 2012. the other thing people focusing on, profit margins. take a look at ford at 5.4% profit margin compared to its

competitors. i want has set a target of getting up to 8% or 9% by mid decade. by 2015 they still expect to be there. alan mulally said absolutely. as you take a look at shares of ford over the last year, all of the auto stocks have been hammered in the last year. ford started to come back a little bit the beginning of this year but clearly today's news has the stock trading down a bit. we're going to be talking with ford ceo alan mulally coming up shortly afternoon on "the fast money halftime report." a lot of the questions like they were in the conference call that just wrapped up, mem liss is a, a lot of those questions are going to focus on commodity costs and europe. because those are the two issues holding back this company right now. let's get more on that ford story and bring in michael ward, auto analyst with stern agee. he has a buy on ford. joins us on the newsline. i assume you were on that call as well. >> yes, i was. >> commodity costs and europe. is that a concern? does that change your sense of ford's ability to have a good year in 2012?

>> no. i think one of the things you have to look at with those commodity costs, in 2010 the fourth quarter marked the end of ford's restructuring. now you start to go in another phase. in the fourth quarter it was countered by hedging logszs weih commodities. two years ago where you're going they would have put some of the hedging in place.third quarter h currentsy and fourth in commodities. about $1 billion with one time-ish type items in the second half of the year that were not called out in the past would have been called out. >> i want to apologize by the way. you made you the ceo of cfx. wrong michael word picture. >> that's happened before. i don't mind that. >> we wanted to make you the ceo of a railroad, michael. >> in terms of europe, phil had mentioned that's one major reason behind the disappointment in the quarter. moody's came out yesterday with

some new vehicle projections saying that for western europe specifically, western european countries, that vehicle sales will be down 6.2% with the sharpest decline seen in france. how does that get extrapolated to ford and what we can expect in this new year? >> well, i think when you look at ford and europe, they're in a much better position, for example, than general motors. actually, they made money in six of the last eight years in europe. they've been restructuring pretty successfully. europe you're talking a penny or two either way. it's not moving the needle. the problem is the concerns with the outlook and the overall economic outlook in europe. when you look to the two separate regions, northern europe and southern, ford is more concentrated in the uk and in germany, now in russia which is the second biggest market in europe. they've done well. when i look at the european exposure in 2012, i'm actually more optimistic than the overall market. ford's inventory is in good shape and their product line-up is in good shape and their costs have been restructured. >> mike, phil lebeau showed us a real interesting chart on the

profitability in the comparison between the various companies. why is vw and hyundai so much more profitable? why are their margins so much higher and how does that feed into which stocks you buy? >> well, when i look at the -- the u.s.-based vehicle manufacturers, one of the things they have not done successfully over the last several decades, they have not been successfully making profitable small vehicles. whereas other global vehicle manufacturers like volkswagen and now hyundai have done that very successfully. ford has transitioned. they are now making money building small vehicles in north america, in europe, in asia and south america. and so i think as you go out the next couple years as they've leveraged those platforms, you will see them catch up to some of those globals. look at ford's margin in automotive in 2011. there are a lot of one-time type issues included. when you take that out their margins are pretty darn good. >> ford the only of the major automakers not to go chapter 11. they've done a number of things this quarter in terms of a gain

of close to $15 billion from reversing deverse tax assets. they've got the pension obligation. are most of those issues behind them? >> i think so. the deferred tax assets is a statement -- more a statement going forward that they're going to be profitable. you can offset some of those assets. that's good news. it's not a secret to the market that the auto industry has heavy legacy costs. the pension, a lot of that increased from last year from 6.7 in the u.s. up to 9.4 because they lowered the discount rate assumption by 60 basis points. that's probably about $4 billion of the increase in total. their asset returns are actually pretty good. sounds like they're going to start to manage that more effectively with some of the surplus cash they're generating. one other thing that has been mentioned with ford, they improved their net cash position by $8.4 billion in 2011. that's $2.10 a share in cash earnings. that's a strong number. >> right. there's a lot of screaming on the floor of the exchange, michael. we just want to apologize. it has nothing to do with what you're saying.

rest assured about that. in terms of your top pick, would it be one of the automakers when it comes to playing the auto industry or perhaps a parts make sner. >> i think ford is my top pick for a lot of reasons. one is they're generating so much surplus cash, their balance sheet is restructured. it leaves room to improve their pension and other obligations for investment and then return a lot to shareholders. i think you'll see the company use some innovative ways to return cash to shareholders, possibly considering a year-end extra like you do with pacvar or some of the european vehicle manufacturers. that would make a lot of sense for a capital intensive and cyclical company like ford. the next phase, restructuring to investment. ford is the best position in the companies in my coverage universe. >> those cat cals you heard, apparently someone on the floor with a wes welker jersey.

a lot of giants fans on the floor. >> david faber exclusive next on the show. fascinating report on what pension funds and endowments are now looking in the hedge fund community. we'll be talking to ubs's global head of hedge fund distribution. we're back in two. [ male announcer ] let's level the playing field. take the privileged investing tools of wall street and make them simple, intuitive, and available to all.

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stocks to watch over an hour into triding. cliffs natural. best buy reinstated outperformed at credit suisse with a $32 price target. sherwin williams cut from neutral to buy. investors allocated $70 billion of new net capital to hedge funds in 2011. will the institutional investors keep putting money into the so-called smart money managers?

john, that is a good place to start. hedge fund performance not particularly good. yet assets continue to flow in. why? >> yeah. you know, david, the real opportunity people see in hedge funds is really for the noncorrelated returns. what you've seen is you've seen different markets. hedge funds are pretty nimble. they can go into the united states. they can move into em. they can move up and down the asset curve. they can really play bonds or they can play commodities. really, a lot of the hedge funds have done exactly just that. those are the ones that perform the best, the ones that were nimble. some of the multistrategy ones last year outperformed. those are the sort of things that i think people are looking for in today's market environment. >> and the pension funds continue to be willing to look for that and pay the fees associated with it despite what has been a lack of performance overall from the asset class? >> yeah. you know, if you think about it, the pension community is fairly underfunded. there've been some reports on that recently. in fact, i think you may have reported on that. the problem is, they've got to achieve this return hurdle, which is really pretty tough. so where are you going to get it?

are you going to just bet on the markets and roll the dice or are you going to find noncorrelated returns? you're going to find these opportunities in some of these smaller market environments. maybe some of the smaller stocks, some of the smaller bonds be a little more nimble in your ability to go both long and short and maybe not get caught up in the global macro surprises. >> you know, but, again, i come back to this point. actually, let's talk about where funds have gone. >> yeah. >> and where they are going. you know, the big funds seem to get bigger. >> yeah. >> even though their performance doesn't seem to be particularly good. depends on the fund, obviously. mr. paulson had a particularly bad year last year. is that still the case? are the big getting bigger or is there differentiation in terms of the size of the funds that are actually the recipient of new money? >> yeah. so last year we saw the biggest hedge funds get the lion's share of the assets. we just did a survey. and the survey basically said just the opposite is going to happen now. i mean, what you say is this trend. a couple years of trend where people focus on a the mega hedge funds. the returns as you just said for some of them really weren't

there. of course, this market's kind of crazy. so we see then institutional investors, both pensions and endowments and foundations really moving down the asset under management scale on the hedge fund side. for instance, they might have done a $5 billion to $10 billion hedge fund last year. really we see there's 50% of the pensions are saying, i want the smaller manager today. the $1 billion to $5 billion category is really what i'm after. >> why is that? >> that's because back to this whole issue of more nimble. okay? if you think of an endowment which they even want to go down to the 250 level of assets under management, why would that be? you get involved in an emerging market. stock, for instance, or bond that you may not be able to if, indeed, you were a larger manager. >> or are they actually diversifying? if you look, you note yourself in your report there's a very heavy disbergs of returns. if i'm a hedge fund manager, that's really quite dangerous.

do you assume that star performer will perform in a star way again? probably not if you look at some of the high profile ones. they're up one year and down hugely. >> yeah. >> what do you do? >> especially when they get bigger. that seems to be the curse. >> do you think last year was just erratic? last year was just a one off? >> i think what happens is, if you look at the broad base of managers, you have a couple of one offs where they're outsized. but a lot of the managers who have made money year after year after year, we've had some managers really in the office this week who have a ten-year track record of really no losing years. that's pretty impressive when you think about the opportunities set out there and how difficult investing has been in the overall markets. so those are the sort of things that i think, you know, pension plans will look towards. what's the long-term nature of the track record? are they too large? that's a very good point. let me think about re-evaluating some of the smaller managers. no, not talking tiny managers. but some of the smaller ones. >> is there a metric that you use to gauge what the potential is for pension fund in-flows?

how much are they underinvested, for instance, how much money could be coming in to the hedge fund industry? >> yeah. that's a great point. they're barely invested if you think about the grand scheme of things. what are they invested most in? they're invested in bonds and stocks. they are invested, then, in other asset management firms. the hedge fund community still is a relatively small slice of the overall asset allocation. >> you talk about correlations, within hedge funds as an asset class, there seems to be a lot of correlation. >> if you take it as a broad group, maybe that's, you know, that's what you come up with. but really when i talk to pension clients or some of the endowment clients, they're looking at maybe ten managers. okay? focused on those ten that really they have high conviction on who have done well year after year after year. and they're really delivering on expectation relative to their asset allocation mix that they're trying to achieve. and the volatility of that

manager is a really important driver for where they fit in the portfolio. >> john, we've got to leave it there. thanks for joining us. time now for squawk on the tweet. in march, fed chairman ben bernanke is scheduled to give four lectures to undergrads at george washington university. we're asking you if there's a better use of chairman bernanke's time. if so, what is it? jonathan tweets, no. most adults have no idea how monetary policy works. we need to eliminate treason comments from future public officials. skip the colleges. bernanke and liesman take broadway. bernanke as himself. liesman as the committee. >> as the entire committee. >> yes. >> raj tweets, have a conversation with some apple geniuses about how to stimulate the economy. william tweets, how about bernanke lectures the house and senate on budgets and resolving the debt problems? >> a lot of good responses. we'll get some more throughout

the show. all right. coming up next, we've got a sneak peek of a first-time advertiser in this year's super bowl sunday. "squawk on the street" straight ahead. later on "squawk on the street" -- >> our century 21 agents are the biggest tycoon in real estate? >> we'll find out soon enough. century 21 will be here to tell us all about that first ever super bowl ad. will their commercials embody the smaller, bolder, faster spirit of the brand? time will tell. we'll be right back. that is better than today. since 1894, ameriprise financial has been working hard for their clients' futures. never taking a bailout. helping generations achieve dreams. buy homes. put their kids through college. retire how they want to. ameriprise. the strength of america's largest financial planning company. the heart of 10,000 advisors working with you, one-to-one. together, for your future. ♪

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the countdown is on for super bowl xlvi between the giants of new york and the patriots next sunday. it will also be a huge day for real estate giant century 21, which is advertising the first time during the big game. beth thorne is chief marketing officer for century 21. $3.5 million for a 30-second slot. why spend the money? >> our agents are worth it. they have great capabilities we want to showcase in one of the

year's greatest opportunities for visibility with viewers. >> what is the message you want to send? >> clearly, what we want to send is capability of our agents, smarter, bolder, faster to help consumers in this economy purchase a home. >> you need a lot of other things in this economy to not just purchase a home, but sell one. it's not been the easiest environment over the last five or six years when it comes to housing. >> actually, we are pleased with the favorable reports in trending we've seen recently. yes, century 21 agents, we think, are well-equipped to help with that in this market. >> is this a statement where the housing market is in this point in time is? it worth spending the money this year as opposed to last year? >> it's a strong statement of support for the capabilities of our century 21 agents to help in whatever the economy is. >> you're giving me capability of our agents. yes, yes, yes, it's got to be also about the market.

if nobody wants to buy a home, nobody wants to buy a home. >> think about the conditions that exist. think about the fact for some people, this is truly a generational opportunity to purchase a home. low interest rates, recently good inventory. for those consumers for who it is a good time, it's a generational opportunity. >> as a foreigner, i'm trying to understand your industry. if i sell a house in the uk, i'll pay 1.5% to 2% in commission. if i do it here, it's 6% with cooperating brokers. is that because you and sotheby's are all owned by the same people is? it a closed shop here? >> think about this transaction. it's one of the largest financial transactions you'll ever make in your life. think about emotional. you want expertise. you want the services of a trusted advisor who you know can help you make certain that you don't fall into the position of not being able to stay in that home, not being able to afford it or making the wrong purchase. >> i get that for 1/3 of the

price in the uk. why do you charge so much here? are you owned by the same person? >> no. we are very competitive with the other brands. we believe we deliver services and capabilities than anybody else in the marketplace. >> this ad runs. people like it. what do you ultimately get for your $3.5 million after that? can you measure it in any way, shape or form? >> clearly, what we are looking to do is increase the number of conversations prospective home buyers have. ultimately that leads to more transactions. >> a lot of these ads are funny, irreverent, involve babies or talking animals. >> we are utilizing celebrities. >> celebrities, plural. >> we have donald trump, deion sanders and we have apolo ohno. the fun twist is each celebrity represents the characteristics i was sharing earlier, smart, bold, fast. the twist is the century 21 agent is smarter, bolder and

faster. >> last year the price of commercial got attention. is the pressure on for you creatives now? you've got to come out with -- the bar is high, is it not? >> i think that's fair. i think whether it's your first time advertising in the super bowl or your 15th time, you want to get it right. you want to be impactful and entertaining. >> you don't want the blogs saying, what a terrible ad that was. i'm sure that's not going to happen. >> no, no. >> thank you, bev thorne from century 21. >> we will talk rising material costs with the overallstate of big business with the ceo of dupont. a big interview around the corner.

all right. >> oh, yes. >> we're back. >> the dow is close to session lows, down by about 75 points. we've got interesting movers here. riverbed is down by 23%. it was a lead on its quarter report yesterday. guidance was terrible. juniper, same story there. that stock is down 7%. networkers are some stocks we are watching in today's session. what are you watching, david? >> actually, it's funny. i'm talking to banks complaining

about their compensation. >> what are they m&a bankers. >> you call and want to talk about shop and people want to talk about what did they get paid in goldman, morgan stanley, $125,000, when am i getting my stock? how am i going to support my lifestyle. that's what i've been dealing with lately. interesting though. question is whether it's a secular or change on wall street in terms of comp. i know in terms of stocks and options, everything else, you've got interesting stuff tonight. >> simon will be watching this throughout the day. >> we have an important meeting between the greek prime minister and the guy leading the negotiations on the private sector contribution. it starts in 11:30 eastern. there may be a result from that. >> it could move us. >> either way. jshs currency markets and i'll be focused for money in motion

and options action. we have a couple of big potential movers. amazon.com and green mountain coffee. green mountain up by 5.5% on the back of what starbucks said about its k-cup sales. it sold 100 million k-cup units. it reports earnings next week. we've got an options trade for those who want to use options instead of actual stocks. >> is carl in the house? >> carl has been on assignment. everybody has been watching "squawk on the street." carl was doing the "today" show and has come in for the 11:00 and is ready to go. >> loyalty is coming in for one show. >> thanks for the definition. >> let's get straight to it. third hour of "squawk on the street" starts right now.

we said get on your own resources and if we don't get on our own resources, we've got to be really stupid people. >> when you hook at overseas ford versus domestically, it's clear, overseas is where there is the drag on this company. it's not a huge drag, but is the drag. >> we need this bill passed because not only are we looking to reduce the network from a standpoint of the number of facilities we need to move from six to five day delivery and resolve health care issues. >> and the number is 2.8, up 2.8 quarter over quarter. >> i urge people to look at santadera. >> how can i be negative?

this is an interesting moment for the european banks, the ones taking the medicine. >> watching the opening bell. >> an industry that should consolidate, the industry is going to be, have seen three global deals and not get consummated all for various reasons. it does appear nationalism and protectionism are winning out over regional pride. >> the first half of the year is going to be slower in terms of growth. as we move through the year, when coffee costs pressures ease and start to look favorable, you should see an acceleration in earnings growth. it comes down to expectations and expectations are high on this one. good morning. welcome to the third hour of "squawk on the street." markets mixed after disappointing gdp data earlier today. positive consumer sentiment number. the dow down 57 points. s&p down almost three. nasdaq's positive to the tune of five points. tech is the best-perform yag

sector in the s&p right now. specifically chip makers. kla tencor boosting the sector after the quarterly results beat estimates. applied materials, lam research and novellus rising. juniper and devry big losers today on worse than expected earnings. devry experiencing lower student enrollments down, almost 8%. lobbying on the decline in washington. we've got details of who is lobbying less and why. plus, the latest in the class action suit against carnival cruise lines. we'll talk to one of the lawyers representing passengers here in the u.s. and what he is expecting from that lawsuit. less an half hour away from the close in europe. we'll find out if we are closer to a greek debt deal. new numbers revealing how americans really feel about the republican candidates, congress and more and it is not pretty. that's all coming up in the next

hour. let ihop over to rick santelli with a lot of numbers to observe. >> good morning, carl. you just said here are the numbers and they are not pretty. boy, oh boy, here are some numbers and they are really not pretty. yesterday basically, the senate overruled a challenge to raising the debt ceiling. $1.2 trillion. if you recall in august, we basically did a deal with that super committee. if it failed, the president got a couple of increase in debt ceiling that are virtually impossible to challenge. $1.2 trillion raised. population of the country's about 312 million. population of the world is just shy of 7 billion. for every man, woman and child, just the 1.2 trillion increase yesterday of the debt ceiling is $3,834 for every man, woman and

child. if you take the august increase $2.1 trillion, that is $10,545 for every man, woman and child in the country. those are just the last two increases. if you look at the total picture, the new debt ceiling is now $16.4 trillion. if you look at the global population, $2,346 for every man, woman and child on the planet gets you to $16.4 trillion. if you just look at the 312 million in the u.s. with the $16.4 trillion, that is $52,409 per man, woman and child. i can't even think of a clever way to close this other than a gulp. i don't know that my mike is that good. how much have we heard about this last debt ceiling increase? zero.

>> it's been buried by a lot of other news. you've got that right. that man, woman and child includes newborns, toddlers, you name it. >> we have a debt clock which is my favorite screen safer. we have a population clock, as well. those statistics right off the population clock, u.s. and the world ten minutes ago. >> unbelievable. thanks for bringing us that ugly, ugly math. we'll head down to washington where lobbying activity is actually slowing down. ahman javers has that information. >> the boone town in lobbying is in decline. $3.27 billion for the full year 2011. that's versus 3.51 billion in

2010. a modest decline, but a decline nonetheless. that is the first time since 1999 that lobbying spending has dropped, according to our friends at the center for responsive politics. there is a boom for some companies spending more on lobbying, talking about google that spent $11.4 million up from just $5.2 million the year before in lobbying spending. national association of realtors spent over $22 million. conocophillips paid out more than $20.5 million in lobbying spending here in washington. the thinking is all of this is happening in terms of the decline this lobbying spending because there's not all that much action on capitol hill. in 2010 we had the remnants of the health law, the dodd-frank fight. we didn't see that much as last year and i don't think we'll see that much this year going into

an election year. could be another sparse year for lobbyists in washington. >> it's i hard to lobby when it's almost a given legislation will be hard to pass. >> that's right. they are treading water. they don't like to do that. they like to have a major ball to push up that hill. >> i thought the economy might have had something to do with lobbying expenses being trimmed. paralysis is probably the bigger dynamic. >> the economy can go either way. if the economy is down, you can see an increase in lobbying activities if they think is there a way to generate profits here in washington. companies will spend money. if they don't think anything is going to happen, that's when you see the bills start to decline. >> i don't hear violins playing for those on k street. officials are getting closer to reaching a deal for the greek debt.

michelle, today they say they are close. >> pretty darn close. the prime minister of greek will meet with the finance prime minister, as well. we hope in the next few hours we might finally see some agreement when it comes to the interest rate greece would pay on its future debt. that's been one of the big sticking points. there have been legal issues, as well. the first time i'm hearing people on the ground say everybody's come to town ready to make a deal. let's see. that would echo what we heard ali wren say earlier in davos. >> we are already close to an agreement between the greek government talks are going on in athens. i expect we see a deal different today, maybe over the weekend. >> he is an eu commissioner. he is deeply involved. the european union, one of the

lenders of the last resort to greece. they have the right of first refusal on any deal that gets struck. there is also a big summit coming up on monday where maybe these issues will be discussed. first, remember back in december they came up with this idea they were going to finally have a fiscal compact among all members of the euro zone. that comes down to deciding whether or not the european justice will have some say on whether countries when they violate fiscal discipline rules what will happen to them. they are going to try to stabilize the european stability mechanism. this is the big fund which they'll pour money that works as a bailout mechanism for other banks and countries. the last one perhaps is the most important one. we are told angela merkel wants to work on growth-boosting measures instead of talking about just cutting measures. we have to see if there are

fireworks from david cameron. the last time he was the most exciting guy there. today he called it madness. >> we'll see if his political isolation continues, too. all these upcoming meetings haven't stopped some news organizations from reporting that greece is planning an ordinarily exit and return to a legacy currency. what do you make of those? >> i don't believe them at this point. lucas popodimos said that would be the worst thing possible. he is an economist. a lot say what is more expensive, to stay or to leave? leaving would be more expensive at this point. >> finally, some talk about opposition softening to a

partial payout? >> absolutely. we've been reporting that for more than a week now. a lot of other reporters are coming on board with that. they don't see it nearly as scary as it would have been, the net exposure isn't that much, et cetera. one of my predictions was greek would trigger a credit swap event. >> a lot going on. when we come back, latest developments of the costa concordia disaster. the cruise line is offering a settlement, but some passers are gearing up for a class action lawsuit. you won't just find us online, you'll also find us in person, with dedicated support teams at over 500 branches nationwide. so when you call or visit, you can ask for a name you know. because personal service starts with a real person.

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. >> interesting developments. roche coming out during the state of the union saying it was going hostile on illumina. you would think the rest is history, but i'm told roche will file a tender offer in the next few hours. we'll see interesting background to the deal when roche initially approached illumina in december. it was a friendly approach. they said we'll get back to you.

for illumina's board of directors, the deadline to nominate directors is the fwining of february. to do that process you would need to have an answer and know if that is a step you're going to take before that. roche said we are serious and we'll go hostile. they said publically we plan to nominate directors. i'm told that slate could be up to four directors. it's expected to come early next week. this is a deal to watch especially as we remember in the crisis. roche single-handedly opened the bond market with $45 billion offer when it was going hostile on genentech. this company knows hostile deals and has been successful. their shares were up on tuesday on the back of that deal. investors were receptive of that deal, as well as the eastman chemical deal. the market wants to see the corporates using their cash. it remains to see whether they'll get these deals done. >> this is not roche's first

rodeo. is four directors enough to make it happen? >> they have a staggered board so it could be. it could be enough to tip the tides. one scenario is the time between the december approach and where we are right now, they could have been trying to see if there is a white knight which case it would come down to whether they prefer the leadership of that company. the other option is it could come down to a price negotiation. illumina delaying results as the board is reviewing that offer. we'll have to see what they decide. it looks good. >> we'll keep an eye on it. obviously seemed to come out of nowhere. kayla tausche, back to headquarters. we are hearing applause. maybe someone's retirement. two weeks after the cruise shipwreck off the waters, they

may get money. offering $14,000 to those not injured in the crash. on the cnbc news line, marc bern is a senior pardon at napoli bern ripka which represents the lawsuit. >> good morning, thank you. >> talk to me about what you think you can get. i heard a range of anywhere from $164,000 to over $1 million. what figures are you looking at? >> clearly, we think the damages are tremendous, whether a person was, suffered bodily harm or death or fright and shock of this incident. we think the damages will range anywhere from $150,000 into the multimillions if there was a death involved. >> that is a wide range per person. >> clearly, death is the ultimate injury, but an individual who was fortunate

enough to make it off this ship, but may have witnessed horrifying, horrifying events has been potentially, they will suffer lifetime psychological damages. in that case maybe worth more than $150,000, $500,000, you name it. we need a jury, hopefully, that will tell us what that type of pain and suffering, that type of psychological injury is worth as a result of the type of reckless, wanton and horrendous conduct by the defendants in this case. >> meanwhile, you heard the figure they tossed out, costa, $14,000 to those not injured. i assume you think that's a joke. >> first of all, i don't know what they mean by not injured. everybody was injured. there isn't a person that did not suffer injury as a result of that boat going down. the compensation offered, that's

ridiculous. it's outrageous. it is a shameful slap in the face to every one of those individuals, but it's clearly within what is going on by carnival. isn't it ironic that it is carnival turning this into a three-ring circus? >> obviously, class action lawsuits, the term ambulance chaser gets tossed around in a disparaging way. how do you avoid looking like a cruise ship chaser? >> people have been coming to us. i haven't sought them out. there isn't such a thing as a cruise ship chaser. maybe, just maybe if the type of conduct would have been within the standard of care used by ship lines like this, by cruise lines, nobody would be talking about damages that could reach into the billions of dollars for such careless disregard of human

life and safety. >> marc bern, we'll be watching the course on that case. thank you very much for your time. >> thank you, any time. when we come back, we'll count you down to the close in europe and bring you the action live in ten minutes time. first our man in the midwest, rick santelli deep in the pits of the cme keeping track of the trades. one golden crown. come on frank how long have we known each other? go to e-trade. they got killer tools man. they'll help you nail a retirement plan that's fierce. two golden crowns. you realize the odds of winning are the same as being mauled by a polar bear and a regular bear in the same day? frank! oh wow, you didn't win? i wanna show you something... it's my shocked face.

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on a day where we got that disappointing number at the cme. >> there are so many people that are big fans of my guest here. this is jim bianco. he is here with us today. thank you for coming. 2.8 gdp quarter over quarter. what's your read? >> not a good number. we should have done better than that. we had big inventories. we had transfer payments, government expenditures that pushed that number up. in a perfect world the economy should grow at least potential, 2.5%. it hasn't done that in five quarters. all the stars aligned for the fourth quarter. we came in at 2.8%.

maybe revision saves it, but it doesn't look that high. >> we had an ex-fed official on today, mr. olson. he called the number okay. i called it remiss. he didn't agree with it. i was talking market expectations. is this amiss? >> i thing it is amiss. in general, if the economy grew at .8% for the next year, that would be okay, but everything aligned, just to get us to 2.8% and now we have to see what happens with europe and whether we can sustain this level as we move through 2012. if we can't, this is going to be height water market in a set of mediocre numbers. >> many economists sent me notes that the amortization that ended december 31st, you could write off 100%, many economists were e-mailing that that helped boost durables. another set said that's crazy. this stuff has to be in place and working by december 31. what is your take? >> my understanding is as long

as you do an order before 12/31, it would count in that number. durables is subject to tremendous revisions, but right now i think that that amortization would have been a boost through the last day of the year. >> we are out of time. they raised the debt ceiling. we are talking offcamera. you say if there are any of these programs or executive orders or home modifications that have been hinted that, could do what? >> push us to the debt ceiling before the election. they've got it lined up to go right at the election. anything that spends them more, we'll have a debt ceiling fight in october. >> considering the horrible politics that go on in washington, am i correct to assume don't look for any programs to be actually implemented, more talked about. nobody wants to have that fight before the election, right? >> absolutely. they'll push it through to november. >> we are out of time, but i'm glad i got that in. >> thank you very much, rick santelli. markets in europe four minutes away from closing.

>>. >> let's bring in simon hobbs as we count you down to the close this friday in the uk and across

continental europe. the speculation will begin going into the weekend about whether they can deliver a package in time for their summit on monday. >> literally in athens, we should start the meeting between the greek prime minister -- worth mentioning the united states is still the main engine for growth and still the leader when it comes to equity markets around the world. that's why you'll see europe is in negative territory as we head into the close. gdp data is always disappointment around the world. you can see the result there. it's interesting, france in particular, a lot of the stocks are down across the board there about 80% within the index. led actually by bmp paribas. italian debt below 6% there. over in spain now the yield down to a 14-month low apart from portugal which continues to rise.

they believe there could be a bailout coming back. >> the european markets are closing now. >> the big question is will we get a deal now? they are obviously inching toward some deal. michelle said it all within the last 20 minutes. we think that it will be below 4%. it will be convenient to get a deal now because there is a summit on monday. if there is a deal, they can start talking about the next bailout for greece with those, with that payment they have to make in march. this is all well-rehearsed territory. >> at that point does the conversation turn to portugal? >> increasingly, the bet is that portugal is going to have to have a second bailout from everybody else or they are going to have to do what greece has done. it will be interesting to see the degree to which the public sector among chiefly the european central bank is willing to go through debt forgiveness. huge amount of pressure on them now. never before to do something. the imf today which is

interesting. imf is pressuring the ecb to take losses. maybe they are knocking them down to the degree they assumed when they took on them as collateral. the imf isn't coming forward saying they are going to take a writedown on the money that the imf is owed because as one person put it, there would be riots on the streets of america if that were to happen. >> after everything we've done for them for them to toss it away. as jamie dimon said earlier in the week, we all want the same thing. let's bring in mary thompson. corporate earn wgs several misses or quarters troubling in different ways. >> right. if you look under the layers that's impacting the markets, but the story today is the gdp numbers. we do have a mixed market right now. tech is looking stronger. the dow and s&p 500 just barely for the s&p, both on track for a

weekly loss. nasdaq on track for its fourth weekly gain in a row. again, fourth quarter gdp, traders talking about the final sales number, up only 0.8 points. that was disappointing. that takes out the inventory. >> private real final sales. >> yes. sectors will give you an idea how the markets are moving. utility's weaker. energy under pressure because chevron came out with disappointing numbers. consumer staples, altria's earnings are better than expected. tobacco stocks are contributing to the decline. financials weaker. technology is a winner in today's session. earlier today was semiconductors leading the way there. within the dow components, procter and gamble, this is all with earnings. procter and gamble going to be impacted by the dollar in the year ahead, it says. that has its stock under

pressure. chevron had weak refinery results. a loss in its down stream operation. it will be interesting to see what happens with exxonmobil next week when it reports. cisco in response to the weakness we are seeing in rival juniper which was lower after its earnings. travelers is the weakest performer this week. earlier it reported earnings. it's down 7% for the week. positive news on the deal front with eastman chemicals buying solutia. they expect to take out $100 million worth of expenses by 2013. the deal is immediately accretive. buyer and seller are getting a pop on that. >> after ford missed, chevron missed, at&t miss, verizon was light. are traders trying to work that into one world view or do you think that's more company specific? >> i think it's company and industry specific. what's interesting is when you

look at procter and gamble and ford. obviously, it's the dollar or europe that have an impact there other companies continue to chalk up the fact they are benefitting from global growth. a lot of it might be their exposure, how big their operations are in certain parts of the world. >> for an earnings season, more mixed than it has been. >> and not as strong, meaning fewer companies are beating expectations. >> thanks, mary thompson. rick santelli in chicago. what's on your mind this morning? >> i'm not necessarily a fan of the long term financing operation they have in europe. there is no doubt it is stabilized the situation. if we look at that six-month bill auction in italy, i don't know that there is any country on the planet that could say between this auction and a month ago we are hundreds of basis points lower. the auction two months ago. 400 basis points lower. these are unbelievable.

believe me, i don't think this is a cure. i think as a market person we have to respect what's going on there. we have to respect how markets moving, how they price. traders need to have a position in order for it to show up on the tape. even if you believe that in the beg picture this is going to have a huge amount of negatives, what are you going to do hold that position while all these shorts are getting out of some of what was perceived to be horrible peripheral paper? when you think about how markets work, i think you have to give a thumbs up for the temporary nature of this. the dark side is as you squeeze the water balloon and take care of italy, you see spanish unemployment over 22%. that is new information. now you see the same anxiety that led up to the multiple bailouts of greece moving to portugal. the story just goes on. >> rick, thank you very much. jon joins us. >> solar goes back and forth on

almost a daily basis. you get even ner, they file for bankruptcy the next day. that is not a good thing. obviously, there are a lot of shorts in here. that's one of the things people feast on are shorts that are trapped. first solar fslr, herb greenberg talks about it a lot. that stock is making a nice upside pop today. how much because a competitor went out of business and how much is short squeeze and so forth? until energy costs more, these stocks will continue to struggle. >> do you think the first solar, the sears, netflix, last year's dogs, this year's darlings, how long does that trend go out, do you think? >> in particular when you've got a netflix and have a strong turnaround, they were bleeding subscribers out because of that mistake with quikster. when they actually address that

and go back into the gaining mode rather than bleeding out subscribers, that is a positive. another stock that was feasted on by the shorts and like you say end of the year terrible, but people were betting pretty strong on it to recover. they've been rewarded big time so far. >> this roche deal may be eating up and eastman chemical. m&a finally beginning to get some kick. >> whenever you see a company buying another, soa gets bought and eastman is rocking to the upside, that tells you obviously wall street likes the deal. that people crunching the numbers from the fundamental side like the deal, too. i think you'll continue to see that in the chemical space, in particular for stocks that are probably in that $1 billion to $3 billion market. >> have fun watching the pro bowl. >> thank you. when we come back, ceo of

dupont ellen cullman will join us live with her views on the state of business big, materials, costs and more. kullm us live with her views on the state of business big, materials, costs and more. across the golden state,my s where everyone has been unbelievably nice. mornin'. i guess i'm helping them save hundreds on car insurance. it probably also doesn't hurt that i'm a world-famous advertising icon. cheers! i mean, who wouldn't want a piece of that? geico. ah... fifteen minutes could save you fifteen percent oh dear...

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want to take to you davos, switzerland. maria standing by with ellen kullman. >> thank you so much. we are live with ellen kullman talking about business around the world. great to have you on the program. >> pleasure to be here. >> you reported earnings, the numbers showed volume declines, although pretty good numbers, nonetheless. i want to get your take on what's happening in the world today, the global economy. what are you saying? >> we had a great year. we had a good fourth quarter. we saw an agriculture, great results, latin american season

second half of the year was phenomenal and great positioning of our protection products. in electronics and automotive we saw destocking occurring and negative volume. i think it's conservatism. i think people are concerned about how strong 201 is going to start and they're answering that with destocking. >> i want to ask but 2012. let me ask you about this destocking in asia. we are talking about a region of the world that's been the engine of growth for the world, china and the asian region. do you see, do you feel china slowing down? what do you see in asia? >> i think you have to take it by sector. if you look at automotives, sequentially, you'll see lunar new year, chinese new year, things like that impact it. displays are down. solar is down. smart pads and smart phones and tablets are up. you have to look by sector to see what's going on in asia.

>> isn't it interesting solar is down? chinese have been producing solar panels, trying to sell this product to the rest of the world, yet you saw it decline. >> the installation of solar panels is on a pace of growth. the industry overbuilt the modules in the first half of 2011. they have to get that back in line. we've seen negative volumes in destocking in the solar industry coming out of 2011. probably extend through the first quarter of 2012, then beal see that pick up again. >> the best performer was agriculture. >> it's about creation, new seeds, innovative products for farmers to get higher yield. we've seen the power of our products of insecticides who are gaining momentum in the marketplace. with commodity prices high, farmersant yield. they are willing to put

excellent input into their fields so they get a great outdot-com springs and next fall. >> i've got to believe the population growth we are seeing around the world in asia and latin america is a positive for agriculture? >> it is. feeding the world will be a big issue. science can help that. >> at the same time, you're seeing increases in prices. you saw increase necessary raw materials. are you expecting that to continue this year? >> it's volatile. the one thing we've seen in agriculture is that it cycles. it's a different cycle be we see in industries like automotive. weather impacts it. what happens in latin america, soy, what farmers plant in north america this spring. you have to put all that together to understand the cycle of agriculture. >> you talk higher taxes. tell me about that. are you seeing higher taxes, a tougher environment, deal with different governments around the

world? is it becoming more hostile? >> it's a mix issue. the u.s. actually is, business is good. so a larger proportion of our revenue is in the u.s. that means higher taxes. the other thicks like u.s. government hasn't expended the tax credit. we can't put that in until the government acts on it. stronger performance and higher tax jurisdictions and that's just the way it falls. >> that's the way it is. let me ask you about the euro zone. that's been topic a in davos. how tough is it there? >> you listen to the politicians who are optimists and believe they can make it work. you listen to economists who aren't so sure. they are more pessimistic. when you add it up, it feels like it's going sideways. we have sectors doing quite well like agriculture and other places that are hesitating. i happen to be an optimist. i think it will work out, but will take a while.

it will not be a quick solution. >> that's what we were talking about this week because we were waiting on greece. if we see a greece default, does that impact your business? do you worry about what the happenings? >> anything that impacts confidence impacts our business. people vote that way. consumption goes that way. how people respond to buying automobiles and things like that are very much their confidence about their ability to earn and what's going on in their country. i think greece will impact the rest of europe and impact the globe. i think that is why there is the concern allowing that to go to default. >> 2012, what kind of year are you looking for if. >> i think the year will start out slow except in agriculture and will build through the year. economists overall think it will be an okay year, but willed throughout the year. >> what did you learn in davos? you are talking to lots of colleagues in business. what do you think you're coming away from in this conference? >> i think the message is

volatility may be a way of life. you've i got to be close to your customers and use science and innovation to differentiate your products from your competition. i think you have to connect. you have to connect in the world to understand what's going on in india, what's going on in brazil in order to be successful. that's a big part of why i've come here. >> what should shareholders expect from dupont this year? >> we are looking at earnings growth. we put out our forecast there of earnings growth around between 7% and 1% f2% for the year. strong agriculture, increasing performance in electronics and safety protection. at the end of the year, i think we'll be pleased where we end up. >> we'll leave it there. ellen kullman, chairman and ceo of dupont. carl, see you later with jean claude trichet on the closing bell. >> thank you, maria bartiromo in davos. in washington, the president unveils the task force fighting the mortgage crisis. >> we are looking at live

pictures of shean donovan, the hud secretary. behind him is the an enforcement director of the s.e.c. attorney general eric holder, following up on something the president announced during his state of the union address earlier, which is this financial fraud task force newly created. let me bring you a look who the members are of this. new task force, eric snyderman, department of justice criminal assistant a.g. lanny breuer, khuzami, john walsh and tony west. this got negative reaction from the banks. analyst jared seeberg says they are extremely aggressive and lil and the task force can look back

a decade. they are looking at mail, wire fraud, false claims and perjury and the goal is to bring criminal charges. that is why this is so negative for the banks. jamie dimon said this new task force has a good chance of derailing the foreclosure settlement talks between the banks and government that have been ongoing and seemed so close to fruition the past couple of weeks. now maybe not so much. >> we know how splintered the ags are. when we come back, the latest how america feels about the economy, markets and how the president is doing.

latest nbc/"wall street journal" poll says americans still have negative feelings about the republican party and congress as a whole. good morning, john. >> good morning. this poll is good news for obama. there is a rising sense of economic optimism among americans. obama ticked up in his own poll ratings. more importantly, the right track number has improved to 30% which is pretty low. then you've got the republican primary race where newt gingrich nationally is leading mitt romney by 9 percentage points, 37/28. rick santorum at 18 and ron paul at 12. what we see what lifted gingrich is the sense among republicans

he agrees with them more on the issues and republican voters value that more than the electability concerns rommy talks about. he's right to talk about it because the poll shows that romney trails obama only six points, gingrich, rick santorum well into the double digits. we are going to see how this plays out over the next few days. mitt romney has been rising in florida, pounding newt gingrich on television and in the debate last night. romney was especially sharp. he's got a chance to recover some of that lost momentum he suffered in south carolina. >> some have written that romney actually won the nomination last night for all intents and purposes. do you think that's true? >> boy, i don't think anybody would be smart to go too far out on a limb given the topsy-turvy race we've seen. i think he is going to be not knee and i think he is going to win florida. as you might see in this clip you're going 0 play in a moment. i wouldn't take that to the bank right now.

>> you're referring to an appearance by yourself on colbert as part of a panel discussion. >> it was what steven colbert called the great american panel. hannity recently had meatloaf on to do political analysis and playboy bunnies and all sorts of unusual people. the colbert panel was me, david cassidy from the "partridge family" and katrina vanden heuvel from "the nation." >> who takes florida? >> i'm in an open marriage with my political predictions right now. >> good man. that's appealing, evidently. >> i think the one i love the best is mitt romney, comes back, wins florida and wins the nomination. >> when you get your own laugh in colbert's house, that is a good move. >> you know what?

that is so much fun to do that show. i did jon stewart's "daily show" a few years ago. they are so different from what you and i do every day, it's a gas to work in a different format. >> yet they move the needle politically in this country. have a great weekend. >> you bet. >> don't forget to tweet us as bernanke embarks on a series of college lectures. might there be a better use of his time and what might that be? ? yeah, can i get a full-sized car?

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ben bernanke is going back to school. in march he is scheduled to give four lectures to undergrads at gw. we are asking is there a better use of his time and if so, what might that be? preston writes, no. it's better of him thinking about adding more money to the system and lowering rates. that is exactly what bernanke should be doing, inspiring the future. bernanke might want to highlight in his lecture the future lunor economics for newt's 51st state. rick santelli in chicago, you've got to have an answer to this.

>> i think my answer would be read more austrian economics. >> pay attention to austria and think about the other side of the equation. what are you going to watch this week? are you scanning headlines to see if this greek deal happens? >> i am definitely going to be watching that. i'm going to be watching what's going on with portugal and playing close attention to the following. if you recall, last adp was a whopper 325,000. next week we'll have another look at that. the expectations are much lower, around 180,000. a week from today, emolympian. last number, 200,000 on the nose in the headline. expectations for a week from today about 150,000. i think we move from gdp being a big number. sets a strategic framework for the rest of the year. you're going to see the same thing with the ying and yang of what's going on in the