is imploding across the pond, if we talk about the reason why we want a free enterprise system. >> thank you. >> a lot of fun. >> thank you. >> joe? >> make sure you join us tomorrow. >> i just want to make sure. >> paulson is on the show tomorrow. >> hank paulson 7:00 a.m. but we'll lead up to it at 6:00 which is important to anticipate him coming. "squawk on the street" is next. ♪ love ♪ love will keep us together ♪ think of me babe whenever the captain and tennille. i'm carl quintanilla with melissa lee and jim cramer. david faber is back at hq. market not taking too many worries to heart. futures down about 28 points. europe as well.

counting on this italian bond auction early today. 6 million euros worth of debt. maximum targets reached. yields lowest levels since march. adding to relatively good news out of the sovereigns. >> that brings us to our road map for this morning. we start off with consumer. retail soars. avon misses. >> big call on barnnks by citi. >> war of words between banks and paul volcker. defending the volcker rule. >> two market darlings, apple and mcdonald's fighting back over criticism on questionable business pras. at what point does either controversy take its toll on their respective stock prices. we begin with corporate news. avon reporting weaker than expected q4 numbers.

shares down 7% in the pre-market. company dealing with a short fallout from internal bribery investigation in china in 2008. if they were going add to their troubles this is one way to do it. >> tupperware and herbalite has had great success with this model. there's a big gap of leadership at the top. surprised that the board kept the dividend given the huge falloff in sales. this is one of those where i got caught up in. this is one of those situations where you could buy it because of the yield. can't buy yield at the fundamentals falling apart. this just a cautionary tale. >> why did you think you could buy this stock when there's an investigation going on. we don't know -- before the investigation. >> one of the things i've learned is that the moment you have that investigation just run, just turn tail. but there was a period where it just seemed like the problems here were going solved by a restructuring and then a second

restructuring and a third restructuring. here's a lesson. fourth restructure give up. >> fourth time not the charm. there were a lot of metrics that were troubling. average current neutral sales growth half a percent. decline in active sales representatives was 2%. that was worse than in a decade. it's not just the eps. a big miss. not just the revenue. take a look at some of the other, below the surface numbers and they were very troubling. >> herbalit search having an opposite tragedy. herbalite has become one of the most legitimate stories. you don't need to have those bad numbers. a lot of people want those jobs. avon is clearly, clearly the outlier here. >> as jim says keeping the dividend. latin america the only region that had top line growth.

showed you just how much trouble they are in all around the world. >> i want used to be one of the great stocks to attorney so many years. i think it's okay sometime to own that. >> there a catalyst in a potential management change. they are talk become a short list for ceos. they mentioned three executives, one from walmart, one from sarah lee, one from some place else as potentials, so there's three of them there. the question is i guess who andreas stay on as chairman. >> she must go. what does it take? does it and make the nuclear, does it take thermo nuclear war to be centered on avon to get her out? you mentioned sarah lee. terrific turn around sarah lee has had. walmart almost a perennial 52 week high candidate although i don't see the growth. >> hsn executive was another one. >> hsn? surprisingly good model. >> take a look at the stock. monster there. we want to go to the beauty part

of beauty in the beast and that's michael kors reporting a higher demand. his $39 million, 20 cents a share the stock made its market debut back in december. this is the first earnings report, first for michael kors. not just the obvious numbers. the etf. the gross margins were actually higher. 59.4% up from 47%. >> remarkable story. one. reasons why this stock has e eluded people so to speak -- it was the best we've seen from retail. great once. ralph lauren was a fantastic call. kors is the favorite of saks and

the outlet stores love kors. europe which had 35% comp. this is a remarkable growth story. >> north america comp 38%. just a blowout number. my question is this, even though the beat was so massive this quarter for q4 they see ten to 12, estimates 11. does the traj stop here? >> basil is looking bad. these guys underpromised, overdelivered and it still works in this market. >> you're making interesting comparisons against coach this morning. >> conch rs even though it's been public for a matter of weeks has one-third the market cap of coach, a company that has four times the revenue and obviously a lot more history doing this as a public offering. >> and i'm sure frank will

notice the disparity because of coach's tremendous expansion in china. >> we're talking about the forward pe in terms of multiples. forward pe for kors is 65. for coach is in the low 20s. so there's quite a disparity in terms of the valuation of kors. it seems like a momentum stock. it's number two in mark share in handbags behind coach. the more logo -- you know those logo handbags, the more they can sell those are much higher margins. >> one of the things that is very hard for people to one there's a lot of mutual funds out there. they will find the fastest growing stock and will pay irrespective of valuation. i've had a hard time getting my arms around that. i can see someone paying two-time comp store sales just to be able to say at any point highest growth. >> i interviewed michael kors yesterday. and it was interesting to talk

to him about how aware he is of what different products in the product portfolio have in terms of margin. what are the higher margin items. he work in retail so he goes into the stores and sees what consumers are buying. we'll have the full interview tonight on "fast money." >> bf is tethered to north face. hasn't been cold enough for north. >> can't wait to see that again. kors tonight with melissa on fast. citi analysts say headwinds of bank of america will persist. downgrading bank of america from neutral to buy. increased the price target up to 8.50. focus will shift from legacy issues to earnings which are weak and we don't see that change.

consensus too high. >> if you think there's a housing rebound, bank of america, other than fannie mae and freddie mac, one of the largest owners of homes. i don't like downgrades when they raised the price targets. i'm hedging my bet. i know the stock goes up. i'm raising my price target. >> this analyst says they are raising the price target. can you shed some light on that? that's the reason. just to defend. >> i'm going to talk about what germany says about greece. bank of america is an inexpensive stock if you have hope that housing comes back and it's very expensive if you think housing will stay in the doldrums. >> citi says difficult to fine value. only values are jpmorgan and goldman sachs. >> can i apply that to citi. >> pot calling the kettle black. >> i don't like the value in the group. citigroup has been a red hot stock. wasn't a lot of value at three.

>> i'm not into defending analysts but one reason why we want to listen to this is keith horowitz is rated for accuracy and estimates. he says he believes consensus eps estimates are too high. that's just food for thought. >> yesterday i pointed out that the bank of america bonds have been on fire. when you have one of these down and out situations and you see the bone on fire what that says is the capital structure is getting in line and warren buffett got a fabulous buy. i don't want to walk away from a company and i'm not a fan of bank of america, but obviously the bonds are signalling it's a stronger franchise than people realize and i would point out that when that happens it tends to leave the stock. >> in this case it lag the stock. can we put as much faith in the bond market for this market example. the bond have been telling you for so long the beginning of

2012, the end of 2011 that the company was not in good shape and on that basis you would have missed the rally in the stock. '81 to '96 pretty good. >> that's a whole other ball of wax. >> we have to point out stocks deviate from the fundamentals. when that stock was forced down by big redemptions. kept hitting the bid. bank of america capital structure not as weak. i like bank of america. if you like bank of america go buy wells fargo. wells fargo knows how to run a bank. u.s. bank corp double digit. bank of america has been up the most. >> slightly more macro level. raymond james noting a large jump in short positions by hedge funds is taking place. they say the smart money shorting $7.4 billion versus various indices. is that a sign of a rising

market. >> there's a lot of people who look at an amazon. that was a big disappointment. i'll stay short. google was a big disappointment. yet that's starting to levitate. they need germany to kick out greece. >> just interesting this comes out, you know, saying short interest is rising, smart money shorting the market. the day after we made so much of dow 15,000, the talk of the golden cross. things that tend to bring in the retail investor and here we are with this report that says the smart money out there, shorting the market. >> their performance was so bad i don't know if they are smart. individual stocks seem to make a lot of sense if you felt that the fulcrum of this decline last year was italian bonds and in this get italian lonbonds on fi.

>> let's move on. this is an interesting story. reports this morning say that fair labor association started auditing fox technology plants in china. they are a key supplier to apple. recent report in the "new york times" saying workers at the chinese plants are being forced to start shifts at all hours of the night and forced to live in dorms. things that in this country be considered unfair labor conditions. >> some california folks didn't like facebook because of the makeup of the board. wouldn't they feel compelled or some organizations feel compelled to sell apple off the idea that it's basically the equivalent of slave labor? >> good point. >> you think that's a catalyst to sell? >> not me. someone always out there that looks at these things. i got to take action. i got to dump apple. i don't like this human rights violation. i like apple because it sells at ten times earnings. >> money talks.

it's funny the collision between that and mcdonald's now asking their pork suppliers to not use the so-called gestat oimpb n hogs. a company with no criticism to that. >> it's beef. it ain't pigs. pigs are at the grammy awards. chipotle has worked to have all beef. mcdonald's has not made that level of progress. >> beef because for mcdonald's a bigger input is beef. >> gees, macdonalds you have to take the gross margins down dramatically. >> you think that's a reason to sell? >> to use the analogy, i think it's a reason to buy chipotle not a reason to sell mcdonald's. >> buying beef -- organic beef

is a reason to buy chipotle? why would that be? >> what they would tell you is the reason they are able to one raise price physician they want to and two have same store sales high sear whole foods. people believe it is healthier. not necessarily calorie wise. they believe chipotle has the seal of approval and makes them feel better spending money. >> a lot of buzz over their ad in the fwramy's. >> go to their website. they have a lot of other ones about farming. >> finally the volcker rule, of course, takes place later this year. big banks want big changes. deadline for comment was yesterday. in a big op-ed today in the "financial times", volcker says the following. i don't know if we got that. basically his point, jim, let us not be suede by the smoke screen of lobbyists dedicated to protecting the interests of some highly compensated traders and their risk-prone banks.

i regret that the effect if not the intent of much the lobbying has been to add complications rather than to alive the principles involved. >> did sorkin get blown off by the lobbyists. he lays it out about why this is bad. i come around and have come around to the idea that i want some limits on prop trading but prop trading is not what caused 2008. prop trading was not -- what made lehman go belly up, what made those places go belly up were the huge amount of leverage for portfolios they had. volcker -- this has never been the place i felt that caused the debacle. i understand what jaime diamond is saying when he criticizes volcker. i like the fact there's not been a lot of volatility. i wonder it's prop desk. selling the etfs.

buying the common stocks. i like this market without prop desk. >> well let's get the tweets started. get them started early. we want to hear from you this morning. on the valentine's day beat, appropriately. we're talking flowers, brains behind 1-800 flowers is here. his stock has been blooming. . you 22%. ten year bone take a look at them all over the world. you 22%. ten year bone take a look at them all over the world. ♪ and his, uh, retirement plan. 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. [ gasps ]

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♪ identify been put down ♪ identify been pushed around ♪ when will i find love welcome back to "squawk on the street." rick santelli live on the floor of the cme group. we had our retail sales number. certain aaspects of that number weaker than expected, revisions were weaker but it wasn't a horrible number, a bit disappointing. if you look towards the auctions in italy two year, 4 billion euros worth. look at this chart. the 340 today, how it stacks up with the old two year. that will change tomorrow when we include the new ten year. those 4 billion put that in the context of the hundreds of billions of euros of supply that are going to have to be put towards investors for 2012 and you start to get a better

picture. who bought you all the action. how much of the ltr might have fueled it. all one answered questions. our flight to safety ten year yields are going down. back to you. thank you very much, rick santelli in chicago. oprah getting a slap on the wrist from the tv rapistings people at nealson. she tweeted for viewers to watch her network own. neilson putting an asterisk. she apossible loo goized and took a tweet away. interesting collision between the ratings frir in this country and twitter which as we know changes games all over the place. >> oprah is a tremendous pro. maybe the greatest of all time. but i learned week seven never do this. people at home don't understand. this is a cardinal rule. can you never violate it. i got it, i understood early on

don't you dare try to reach out to people in the box. >> do people understand, do most people understand how ratings are form lated? >> probably not. >> there's a sample. >> 23,000. >> it's whatever those people watch, it's put into a formula and calculated. >> there's a margin of error. >> right. >> difficult for cnbc because we're on at a lot of different places. can't trick it. everyone knows you can't trick it. don't try. the call out is somewhat embarrassing. >> it is. it is tweet time. finish this one for us. dear wall street roses are red, violets blue, send your responses to us at squawksd. >> it is cramer time after the bell and then later on this "squawk on the street", gene simmons time, the front man for kiss pushing something new you

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♪ do you believe in love ♪ do you believe it's true ♪ do you believe in love jim prefers the captain and

tennille. >> i never break out. kind of a one hit thing. right? tennille. did you ever see tennille at the latin casino. >> few minutes before the bell. i won't debate you. quickly going into the session. moody's the downgrade not having much of an effect. >> coal versus natural gas. this country is switching out of coal faster. >> or is it the demand overseas that's falling off? >> 16 bucks overseas, 2.50 here, 2.40. >> head to break. bell is coming up after that. don't go anywhere. what if you l night-vision goggles,

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stores by citigroup. they gapped up from the 19, 18 level to low 20s. it's getting momentum. it's gotten momentum. i have to revisit this. there's too much positive stock action. >> s&p 500 taking shape. over here on the big board, jewelry, zale corporation. happy valentine's day. nasdaq still holdings. supplier of packaging for consumer products goods. yeah. the retail number, three months in a row now that headline has been iffy and people were looking for january to be a bounce back from the weakness we saw in december. >> the companies themselves seem to be ready for that. we're seeing nice gross margins in the business. citigroup called out bed bath not doing that well and williams sonoma doing better. i'm conscious. you know i look at the way

retail sales are shaping up. i'm worried about gasoline. i'm starting to think is gasoline seeping in? because it does cost more to go out. >> we have the gulf oil ceo on yesterday. $4 a gallon he thinks probably pretty likely by summer. >> this historically has been the level, $4 is the level where people start thinking i can stay at home. i have recommended mccormick, the spice company when gasoline goes over 4. >> why? >> classic, i'm cooking at home stock. >> good. very nice. talk to me about this white paper involving cisco. >> cisco, this is a white paper. they are talking about a level of expansion of wireless. i'm talking about an 18 fold mobile growth, 4g. david faber's comment that 4g isn't much of a pickup. 4g people were response for .02%

of the traffic. 4g, big careers support it well enough. apple is involved. i have 3 g. i can't wait for 4g because i believe that's the real alternative for people to a lot of tv watching. be careful. >> speaking of tech, a lot of apple news on multiple fronts. story in the journal looking at an eight inch screen with some suppliers. ipad is 9.7. >> how about that versus the kindle. apple said we're not letting amazon take share. apple is a very competitive company. they are a destroyer of other people's value for years and years. >> some comments from miller saying the stock has gone parabolic and injured a tenuous phase. we talk about valuation all the time. >> apple should have gapped up. apple as quarter was a blowout.

would you see that stock go from 460 to 520. maybe 550. because it's so liquid it's working it's way up. i do come back to the earnings. not expensive. >> melissa and rick santelli on the floor. >> we were just talking about greece. >> another day and another deadline. the greek cabinet is supposedly, supposedly meeting right now to talk about how they are going to find additional spending cuts, 325 million. and secondly the greek political parties, two main ones they are supposed to sign off on an agreement from miss that they will implement the austerity measures after the greek elections. so let's see if that actually happens. there's a eurozone finance ministers meeting tomorrow. they are supposed to go ahead and approve in general the 130 billion euro plan. we'll see if that actually happens. certainly not going any meeting tomorrow at the eurozone finance ministers if these two things don't happen today in greece.

you see this ongoing rolling situation that goes on with greece. going to go on and on and on. the big thing that was passed around yesterday, we were just talking about this was the comment from the greek political leader who said he wanted everyone to vote for the deal so they could have the possibility tomorrow to negotiate and change the policy that is being imposed on us. that's why nobody trusts the greek in europe. he already said he's going to try to fine a way. >> bob? >> don't you get the sense that when there's problems in italy we pretty much say okay look, they play ball, they are above board. problems in spain they are above board. don't you think the germans just think the greeks are liars? >> liars is a bit strong. let's say slippery is the right way to look at it. when you look at what's going on in greece right now, look at the rioting and 20% unemployment already little reason -- little wonder that the leading

candidate for the presidency of greece right now is trying to make it very slippery. i don't think the eurozone finance minute serious are going to allow that to happen. don't you think that at this point they are on to this game and unless they get a very clear written commitment it's not going happen. they won't vote on this thing tomorrow. it won't happen without a much tighter agreement. i think that's why this thing will slip again for another few days. next big deadline after this is march 1st. the eurozone leaders will meet and supposedly they are going cap the whole deal. make a final announcement on the thing. the only thing that's certain is we're approaching an end game with respect to that march 20th deadline when the greek debt deal comes through. they have to couple with a significant amount of money. 14 billion euros to pay for the greek debt deal coming up on march 20th. that will happen. greek elections will go on and on. let's move on and talk about

michael kors. i love watching masco. it's a major housing play. >> major supplier for home depot and lowe's. >> they reported numbers that were very spoipgt. plumbing was especially disappointing. bottom line, jim here is if you're looking for a housing recovery look no further than what masco said and it's not happening. >> i was let down because they have this great paint division not just kitchen and bath. i do think that masco has lowered expectation fusion get anything from housing, 600,000, 700,000 starts masco is a buy. >> going out the chicago to the cme. check in with kevin craney. you're expecting 3% to 4% for correction for the s&p short term.

>> short term is in the next month sore. we got a great system at the beginning the year. things are a little overdone. having a hard time to find momentum to break through this 1350 level on the s&p. headwinds are coming that could give us a little bit pull back. >> a lot of people who want to gripe about the run up we've had on the s&p 500 will point to anemic volumes. does that matter? >> you have to look at. there's a lot of cash sitting on the sidelines and you also have a lot of money in treasuries and you haven't seen that money come back in on the equity side or commodity side from a risk standpoint. i think you're looking for a little bit of a pull back. you'll see more volume. >> if we break above 1350 convincingly, kevin do, you change your thesis? >> you have to see a strong break above 1350. i think you have to see a break of about 55 up to the 60 levels and start to see the ten year treasury yields move higher to

be convinced that we're making that next leg higher. >> kevin, great to speak to you. carl, back to you. let's get to rick santelli in chicago. take a look at bonds and the dollar on a morning where we have debt auctions out of italy and more qe out of japan. >> 1% inflation target. the rush to liquifliquify. every vegetable and piece of leftover in the refrigerator and comes up with a blend that's good for your health. liquidity may grease the gears temporarily but doesn't address the longer term issues but i guess take it one step at a time. here at 195 looking at a 194 yield. that gives you the other side of the street as to what the safe harbor trades are telling you about the tip of the iceberg in terms of investors appetite and

demand for paper. yes it went well in italy. added hundreds of billions of euros. is there going to be a tipping effect? i can't tell you how many traders come up to me and say wow you brought it up. could be a record february going back to '04. we've seen more dmomg to the market today whether it's bank of torque yor of tokyo, mitsubishi. >> with this wall street pay model in flux will more business school grads start looking west? we actually have two of the biggest business school meetings coming up. speaking of a man that made amends, gene simmons. >> do you think he'll come in full makeup >> the front man for kiss with us to tell us about his new venture. some early movers on this tuesday. don't go away.

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♪ here's some of the stories we're squawking about at 13 minutes. citi downgraded bank of america to a neutral. michael kors reporting a higher profit. net profit coming in at $39 million beating revenue expectations. january retail sales come in up .4% and that's below estimates. >> "squawk" on the tweet is a fun one. because it's valentine's day we're asking you to finish this one for us. dear wall street, roses are red, violets are blue, this valentine's day -- and you finish. chris writes the sec isn't in love with you.

steven writes this valentine's day we'll see if zynga's revenue grew. and another tweet, give bears the flu. >> clever one. a lot of poets out there. i wonder if we change to it a limmerick. >> we couldn't show those. >> cramer is getting set up for another edition of six and 60. don't go away. >> coming up, cramer is in love. with stocks. six stocks in 60 seconds to be precise. will they break his heart or make his day? find out after this break. optionsxpress, where you can trade your favorite products,

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♪ love stinks ♪ love stinks ♪ hell yeah ♪ love stinks simon hobbs here sporting a beautiful fuchsia tie for valentine's day. >> coming up, the apple/fox controversy. we'll talk to one of the main critics behind the group that's been tasked with reassuring

shareholders what's going on with apple. future of business in america. we'll hear from two of the top business school deans in the land. gene simmons will be here on valentine's day. that's because he's a member of kiss. >> and a keen investor who has an insurance policy to explain to us. >> those earn $20 or $40 million a year. >> the question is well he come in full makeup. >> hope not. it's quite scary. >> see you soon. time for six in 60. six stocks in 60 seconds. boeing signing their largest commercial airliner. 230 jets worth $220 billion. >> year two. go with boeing. >> goodyear tire returning to profitability. >> nobody cares. if you want to play the autos play it with magna, play it with

dan. >> westport innovations. >> buy it. >> google >> android losing shares to apple. >> fossil fuel. >> remarkable. >> arch coal. >> coal is just, i don't know what will happen with it. i don't think it's any good in 2012. >> for more on those names go cnbc.com. sneers a mover that wasn't in our six in 60. cdr energy. ticker cdi. goldman sachs calling it neutral. karl icahn say there are three interested parties. he met with the energy ceo and has urged the company to sell it self. we're seeing the pop there of 2%

despite this goldman downgrade own the notion that cvi could be a takeout candidates and there are three potential acinquirers already. >> took a shot at chesapeake. sat down with chesapeake. >> keeping a close eye on xi jinping, the man who will be president of china coming to this country this week. not mooting only at the white house, pentagon, state department, later los angeles, maybe even going to a lakers game. the white house calling this an investment. >> world peace. >> investment in our relationship with china. so far his comments to the likes of the "the washington post" is we do not need to make our trade frictions any worse than they are. >> interesting perng meeting because they are spending a lot of money on defense. like to see that go down. >> be interesting to be a fly on the wall. a story in the "wall street

journal" comes out about nortel being the victim of chinese hackers over the course of time that these hackers were so embeded into the internal computer networks of nortel it was almost impossible to tell they were there. all they did is they siphoned information off of these computers from top executives including the ceo and just data dumped it back to shanghai. >> fntd have been able to i've. i want to emphasize china can be a major force of good if they lower rates and talk about dmoirng business with europe. obviously they are the growth engine and been stalling. >> it comes on a week where the reports of merkel going the chinese and going to cic and saying we would love four guys to buy some spanish or italian debt and cic saying no interest. >> they are all in. we tend to think, why don't they come in. they've been in.

so are the middle eastern countries. these countries have been on the hook for a while. >> the story for 2011 for the shanghai index how much i want has fallen. nice reversal in that trend. >> do you believe it? >> the data and the way people are trying to read tea leaves will they cut or not. will it remain an engine for global growth? >> it will be an engine. i'm looking for eight to nine to go from nine to ten. double digit would help europe. i would urge people not to lone chinese stocks. the only one i recommended is baidu. why? the fjs don't look like ours. any time you start deviating and say oil take the chinese financials you're foolish. particularly with solar stocks. stop buying the ying ling already. buy the beer. yengling is quite good.

>> damy apple check, 505.23. $608 billion in market cap. >> first tweet of push back someone said you talk too much about apple. that's like talking too much about the stock market as far as i'm concerned. you can't do enough. >> best stat i saw today the last five months of last year, half the time s&p traded up 90%. up or down. right. we talked about correlation all through the latter half of last year. has not happened once this year which i wonder if you think has go to be market positive. >> think it's terrific because what happened the market makes sense. witness michael kors you get a terrific move. fossil doesn't stay long very long. individuals are looking for bar begins. mutual funds are looking for bargains. maybe the prop desks are out. they would trade every single tick. it became tire some for retail. >> gold.

yesterday we talked about cme cutting margin requirements. first time in three years where they cut the margin requirements and gold did not go up as a result. just mixed results at the end of the day. >> we do have stability in currencies. gold could relates with currencies. i want to warn people in a strong dollar, weak dollar gold has gone hire. gold is a case where we don't have enough supply and more demand. india and china. >> 60-minute story was interesting talked about the rising middle class, need for gold at weddings. it's reached mainstream which makes me think we're at some sort of top. >> september has been the annual time for gift giving in india. china, the big buyers there because, look, when you have fiat currency, when you have paper currency people want to own gold. i recommend people buy gld or gold coins. not buy the stocks.

>> talk to us about what's coming up tonight. >> we've got a little valentine's day special. obviously. got to do breaking up is easy to do. >> anti-valentine's day. >> that's okay. then a stock i won't reveal but a stock you've been talking about. guy has been talk about on "fast money." we'll analyze it. that's a tease. >> there are some. >> he made a major focus yesterday. >> all right. >> see you tonight, jim. meantime you'll look live here at a picture of capitol hill where in a few minutes in the spirit of the great american way the debate will begin on the president's budget plan 302013. the ceo of 1-800 flower next. [ tom ] we invented the turbine business right here in schenectady.

without the stuff that we make here, you wouldn't be able to walk in your house and flip on your lights. [ brad ] at ge we build turbines that power the world. they go into power plants which take some form of energy, harness it, and turn it into more efficient electricity. [ ron ] when i was a kid i wanted to work with my hands, that was my thing. i really enjoy building turbines. it's nice to know that what you're building is gonna do something for the world. when people think of ge, they typically don't think about beer. a lot of people may not realize that the power needed to keep their budweiser cold and even to make their beer comes from turbines made right here. wait, so you guys make the beer?

no, we make the power that makes the beer. so without you there'd be no bud? that's right. well, we like you. [ laughter ] ♪ the dow is down by 24 points. s&p 500 a lot of people remember watching the 1360ish level. 1347 is our level down by four

and the nasdaq is down by six. we want to hit the commodity trade. gold even though the cme raised margin requirements lowered, we're seeing gold higher by just a touch. 1726. wti is making some gains above 100. 101.49. copper seeing a decline, 3.80 a pound. let's hit some squawk stories. u.s. retail sales rising less than expected in january. total retail sales increasing only .4%. goodyear tires first annual profit in more than three years earning $25 million in the fourth quarter. goodyear reporting it saw raw material prices increase by 5% compared to 2011. shares are trading lower by 6%. and the fourth quarter profit for marshall mclean jan rose by 26%. rick?

>> everybody is interested in any december inventory number because it can't play into potential future revisions to fourth quarter gdp which we looked at just a couple of fridays ago. up .4 of 1%. of course we'll continue to monitor as we go into the last friday of the month ultimately to see if that fourth quarter gdp gets a handle or not. revised weakness on some of the retail sales did take their toll on equities to some extent. interest rates although not down a lot are preach down from the three year out to the long bond. back to you. rick santelli in chicago. the president unveiled his 2013 budget yesterday. include within the statement are goals recommended by the president's deficit reduction

commission. here's what clint eastwood the man at the center of a lot of political attention recently thought about those recommendations. >> i was kind of amaze when they took simpson-bowles and assigned them to this research and then come back with a recommendation which was exactly stop spending, and that everybody said that's enough for you guys go home. i thought that's a waste of money, waste of time, waste of effort from everybody. it wasn't very spirited for the country. when people would see that. >> and on the cnbc news line retired wyoming alan simpson, former co-chair on the president's fiscal responsibility and reform. >> good morning. i knew clint would say that. he's a great guy. wonderful guy. great american. go ahead shoot the works. what do you want? >> i'll bring you back to his words. that's a waste of time, waste of

money, waste of effort for everybody. i want to get your take on the budget in a minute. sthapt the way you feel about the work you did? >> no, not at all because this is like a stink bomb in a garden party. it won't go away. how does anyone believe it's going to go away when you spend a buck and borrow 42 cents. how does anybody believe it will go away when today your country borrows 3,600 million bucks. how do you think it will go away when it heads to 2.6 trillion. if you spend a buck a second you wouldn't reach a trillion for years. >> you raised an issue that by default will not go away. how do you respond to the white house that now says look not the time for austerity, economy still in trouble and we need to continue to accommodate it before we address some of these longer terms concerns. >> that's just kplaik what we said in our report.

if everybody in america would read the 67 page report it's written in english. wasn't written for pundits or journalists. i want uses words like growing broke, sthard sacrifice. in there particularly we don't put teeth in the shark until 2013. we provide cut and invest. everything we have done is prattled about by everybody but they don't do it because it's so specific you raise hell with every interest group in the united states who are poised on the cliff to tear it to bits. >> so you think the budget has its priorities straight? >> it's a start. the sad part of it is to have a talk like that in a community college with young people sitting around and never talking about the solvency of social security when these guys go up to the window in 2036 or after

they will get a check for 23% less. now if that's -- if that's -- and the debt will eat them alive. what an irony. like the pied piper leading the innocents in to the mountain. >> do you think it's a mistake that it appears neither side will make deficit reduction a main theme? it robs people of the honesty that you speak about. it robs people of actually debating the choice which presumably during the course of the next presidency, during the course of the next congress will have to come through. >> well they will have to but at least there's some heart here. we're putting this commission report in legislative language. we got about 51 u.s. senators both parties looking at it very carefully. got about 150 house members looking at it very carefully. ready to go. but let me tell you. if we don't deal with this stuff right now don't forget who will pull the trigger. the markets will pull the trigger and they don't give a

wit about democrats or republicans or obama or romney or anybody. they care about money. and when they pull the chain it's going to create inflation, it's going to create interest increase and the guy that gets hurt the worse is the little guy that everybody always babbles. >> have we been fortunate in some ways you say the markets will determine what they think of the united states and our fiscal condition. at the same time given what's going on around the world we still look like the best house on a bad block. >> we're the healthiest horse in the glue factory. >> so we don't have to worry about that for now? >> well the trajectory of debt, deficit, interest, the trajectory of debt is exactly the same as the puerto rican iggs country, portugal, italy, ireland, agrees. except we're huge. the trajectory of debt, deficit and interest is exactly the same

as these countries that are floundering. >> how can you get a solution to the problem when so many people going through the election would have taken a tax pledge not to raise taxes. is it possible to solve the problem without raising tax? >> let me tell you, you don't have to quote raise taxes. you simply go into the tax code and start ripping out 1 trillion 100 billion bucks of tax expenditures which are tax earmarks which spending by any other name. when you see a good conservative like tom colburn going to rip 6 billion out there was on the basis ever taking away ethanol subcy decide and grover nor kwift calls that a tax increase let me tell you that the ludicrous and deceptive. but grover norquist is the most powerful man and if he's calling the shouts don't have a prayer. >> senator, do you still talk to

bowles regularly? >> we're on the witness protection program. leapt me tell you, we're not disappointed because i'll tell you what. we probably talked to 500,000 people. we go off together. we'll be together next week. we do a four night series on the bay. then back to new york. we go all over the country. we say pull up a chair. we don't do b.s. or mush. let's tell you where your country is. they get a standing ovation. >> stop beating around the bush. you and your wall flower style, senator -- >> there's a lot of bushes to beat. >> thank you for calling in. always good to talk to you. >> it's pleasure. >> senator alan simpson, wyoming. on the natural gas. >> we're looking at natural gas as the biggest mover right now in the commodities complex. up nearly 4%. a lot of it is technical trading. we've seen big volumes in natural gas recently and seen this morning a big spike in

volume as we saw prices break below the 20 day moving average. that was around $2.51 and we're higher than that. interday high of 2.56. fundamentally not much has changed. we're anticipating warm weather, mild weather for this time of year over the next coming weeks. we're seeing plenty much natural gas. what is happening in trade is that there's a lot of volume in here, a lot of open interest and a lot of longs and shores getting in this market. some of those shorts have been shaken out here as we've seen this run up in prices pap lot of traders say it's a lot of technical action, price action that's driving natural gas right now. >> tuesday morning on cnbc still to come. ♪ what is love coming up -- >> valentine's day is kind of a big day flower wise. >> it certainly is. we'll find out just how big a deal it is when the founder and ceo of 1-800-forces joins us.

>> it's valentine's day. you don't think. you just do. >> "squawk on the street" will be right back. [ male announcer ] we know you don't wait until the end of the quarter to think about your money... ♪ that right now, you want to know where you are, and where you'd like to be. we know you'd like to see the same information your advisor does so you can get a deeper understanding of what's going on with your portfolio. we know all this because we asked you,

and what we heard helped us create pnc wealth insight, a smarter way to work with your pnc advisor, so you can make better decisions and live achievement.

♪ i know you've been hurt ♪ by someone else ♪ love out of the way

♪ carry yourself ♪ if you'll let me ♪ here's what i'll do ♪ i'll take care of you take a check on shares. the ipo went public back on december 1st. earnings report since going public. had a big beat on eps. gross margins were higher versus the previous year and we see a nice big pop. up 19%. hitting a fresh all time shares for michael kors. now trading at forward pe of about 77 compared to low 20s for coach. >> 42. down 50. let's get some stocks to watch. williams sonoma upgraded to buy from neutral at city. stock gaining 2%.

athenna health. this valentine's day americans are seeing through rose colored glass as more than 5 million roses are shipped and delivered today alone. is the consumer back ins about? can we expect a rosy outlook from 1-800-flowers. the ceo from 1-800-flowers joins. is this the super bowl for your busy? is valentine's day it for you >> big important holiday fours not the biggest. there's still more moms than sweethearts. >> so in terms of revenues what percentage of revenues is this and which percentage is mother's day. >> may 13th but whose counting. this is such an important holiday fours. our business is really an every day business as a florist because it's the birthdays and nerves, get well, new baby.

simply those every day occasions that make us a business. this is a holiday that's 10 x in a normal week but it lasts five or six days. >> the logistic nightmare to get it planned, stock right, to try to maintain margins. talk us through how you've learned to deal with it. >> this holiday is responsible for my hairline. no. it's been a long time. we've been florist force 35, almost 36 years. it's like watching a sausage being made. we've been doing at it long time. staffing up, getting your regular people to come back, staging your product coming from farms all over the country. in fact all over the world. it's a nightmare. we're blessed this year with good weather. >> up buy in advance. >> for sure. >> how often do you advance do you contract people? >> we're about 18 months to 24 months out in our growing cycles because we use so much. we use 5 million rose just

today. we're planning with our growers around the world, probably two, two and a half year full lag time. for lilies it takes 14 weeks from the time we pinch a rose to cut and sold. 14 weeks from now be a good time to buy roses again. >> what are the dynamics that determine whether your costs are higher or lower because i assume are they greenhouse broken the? is weather a factor? >> there's a huge factor. we look at it on a global basis. last year we grow a lot of flowers this year in south america. last year there were floods there. while it's very busy it's a difficult holiday to make money during because it's otherwise a quiet quarter and then we have this one spike right in the middle. good holiday and introduces us to a lot of new customers. gives us a chance to strut our stuff. >> we've gotten some pretty reassuring same store sales from various retailers. your getting the sense that a

consumer is willing to go the higher price range or doing the minimum, doing less than they could? >> i'm starting to see the trn you hinted at. in 2008 and 2009 we got punched in the nose. we're seeing a good spike. people want to shake off the weariness of the bad news we've been seeing. when it comes, to we track through this company our connections monitor how people are feeling about events and occasions and it measures probably 6,000 different inputs that are digital. we see a real bump in the last three or four days as more and more talk about valentine's day, i guess it touches a point in our hearts about someone we care a lot about. so it's making people in general feel better and the weather is helping. >> i'm looking at a chart. do you ever think you'll get back to $10 a share. >> by later today.

if it doesn't move here what will? >> can i ask you, does it cost more money to send this bouquet today versus yesterday? >> used to be the case. not any more. because we're growing so much product so far ahead of time we're able to stage it. we can keep year round pricing at pretty much the same price. we'll do specials from time to time when we plan big volumes of inventory like roses three months from now. but we're pretty much year round pricing mode. >> in terms of the march fwins -- margins on the other -- >> chocolates are number two. that has a slightly better margin than flowers because of the fragile nature of the flowers. we have more. >> jim, thanks for stopping by on such a busy day. >> have all those trucks making deliveries here so we had to orchestrate the traffic. >> really good. founder of 1-800-flowers. >> assessments by the fair labor

association began yesterday and will last for more than two weeks. let's bring in the director of labor rights. jeff great to speak with you. fair labor association you think it's sort of the fox guarding the hen house. this is all for show here? >> well, they have a poor track record. nike that i follow most acidously, not a lot has changed after the fla started to inspect these factories. in fact we have numerous instances where workers have fought for restitution from factory owners that think fla didn't uncover or wasn't concerned about. >> what i thought was curious was that apple was the first tech company to join fla, fair labor association. does, in your view, does that make the fair labor association biassed in any way because some of its members are the companies who are contracting these

companies that are being audited? >> i think it's bias from the get go. the spin has already started. head of the fla gave an interview where he said unions had been at the founding of the fla. which is kind of technically true. when unions left that was one thing he didn't mention. unions got out of the fla when they saw what the inspection regime was like and there wasn't any enforcement power and from apple's side. apple says that they were admitted to the fla as if it was some kind of an honor but, you know, you pay your money and you're a member. >> so, in terms of who should then do the auditing of a fox, who would issue the most fair and objective report? >> well, you know, all this auditing takes the place of worker self organization and you can't do that in china. >> they should be unionized? given that can you not form a

union in china -- >> understand. but there are way, workers fine ways. in indonesia, between '90 and '95 through a combination of international solidarity workers raised their minimum wage 300%. there are things workers can do. but it takes the global attention. it takes solidarity with some international labor rights organizations to keep the focus on and that's what i'm hopeful for in this fox case that unlike the suicide flap that was, i thought would be a real lasting kind of pressure campaign it disappeared and you know i think in this case because the fla has this track record natural we can get some chinese groups based in hong kong to look over their shoulder as they are doing these audits and really hold their feet to the fire. >> don't you inevitably on these supply chain once a union is unionized wouldn't the supply

chain be switched somewhere else. it would go to latin america. >> in indonesia, as the wage was rising, 300%, foreign direct investment increased over that period. i can show you a study by berkeley economist that was in the american economic review that documents that. so i don't think that this race to the bottom is an iron clad kind of deal. china works very well for the tech industry and i don't think they are going to pick up stakes if you double or triple the wage, actually. >> jeff, i just wonder. we were talking about this issue that for any other company would be i think a little jarring, they are under a lot of public pressure. bad publicity you could argue. the stock is up today at $503 a share. is that dispiriting to those? >> not at all. there's a disconnect. it's a very successful company. i might point out that when nike was in the cross-hairs, their

sales in the u.s. fell '96, '97, '98 and '99 because of the controversy. i wouldn't expect in this case consumers will turn away from april p.m. with the addition of social media we'll find different strategies to put pressure on this company. >> do you see in any way the work you do returning jobs in america longer term? >> no. not in any great sense. but i am encouraged that some employers like new balance in the shoe industry, for example, found a way to get the china labor cost differential between massachusetts and china down to $2.50 a pair by using team assembly. so i think there are things that smart companies can do to have some manufacturing base here and i think it would, it would apply to the tech industry as well. >> we'll leave it there. thank you for your time. jeff ballinger.

when we come back in a bit we'll sit down with rock legend gene simmons. we'll talk about his new life insurance venture, kiss, of course, and the economy too. so stick around. ♪ >> there we have it. >> there we go. $500 a share. >> squawking, our mascot is going pick the stock most likely to break out. >> wow, that was fast. >> $5 haun sell sign00 a sell s? >> $500 right here on apple. i would be cautious about putting new known work. we had to create it. introducing the 2013 lexus gs, with leading-edge safety technology, like available blind spot monitor... [ tires screech ]

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apple $500 milestone but with emerging markets up around 14% year-to-date could the next technology boom be found there? it's time to go trading the globe. joining us is now ron shaw. thanks for joining us. >> good morning. >> what stocks in your view should rival people's attention to apple. >> there's a ton of stocks. first emerging markets tech is the way to go. there's a lot of concerns about industrial growth. chinese growth story. stay away from that. tech is the way to plate. i love the b to b play and b to c play. i like a company in india. back bone of innovation for these tech stories in the u.s. in china i like tsm.

taiwanese semiconductor company. going to get a lot of growth out of the tablet and smartphone. >> i was going ask you what extra return should i demand for fact that i'm buying a stock that's outside of the u.s. dollar that's not regular late by u.s. authorities and indeed be far less transparent than apple. >> i'm looking for companies that are large market cap companies. that's going have more pressure on them to make sure reporting and governance are on par. i assign a slight premium but that premium is diminishing as emerging markets gain weight. >> let me ask you about baidu. they are up 20% year-to-date and has had a phenomenal five year run. do i buy baidu. >> you have to buy baidu. if you're a tech investor in the global market, buy baidu. it's trading cheaper than google if you look at it from a growth rating. it's earnings growth will be around 40%, 50% or more.

you have to have baidu. >> thank you. ron shaw joining us. you can catch more global trades every week night on "fast money" and tuesdays right here on "squawk on the street." still to come this morning as wall street's financial powerhouse cutback on recruiting and look to lay off members are the street's prospects looking dimmer for mba students. we have two of the schools top deans coming up in a few minutes. ♪ (

health care is one area of the market that's doing well. apart we're down across the board. the moderate pull back continues. financials and materials leading us down. morgan stanley down. u.s. steel also in negative territory. let's look at the rest of the market. nyse we're advancing the decline 3-1 and downtown nasdaq. 3-1. >> apple stealing the headlines once again after crossing that key 500 level yesterday. taking on new record high in today's session. here's some food for thought. apple's shares up. in comparison, since mid-july eight different stocks on the s&p 500 tech sector and 12 stocks on the nasdaq 100 have outperformed apple. so that's an interesting look.

you think apple is the stock that prints money and here we are, some of the other stocks out there that have done better since apple crossed the 400 mark. >> apple did well all last year. it had a phenomenal last year and a phenomenal start to this year. >> that is true. >> oftentimes january is about catch up. >> who would have thought netflix and sears would outpace apple. it depends when you start the clock. clearly you look at a stock like seagate, cramer has said if you're looking for tech to top out you might want to look at names like seagate first because of the run they've had. >> we had this discussion how apple is so big it's masking the overall performance of the markets. the indices, if you look at the nasdaq 100, year-to-date with apple it's up 12.8%. without apple it's up 9.4%. so apple in and itself for the

nasdaq 100 is three percentage points of performance this year. >> that's a problem then. if there were a problem down the line with apple, consequences for the broader market. >> enjoy it on the way up because you'll feel it on the way down. >> starbucks clocking in as a target of a nationwide protest. will it impact the brand. we'll talk to the man behind the action in just a few. 0 wanna know the difference between a trader and an elite trader? it's this... the etrade pro platform. fast. beautiful. totally customizable. 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. ♪ in the works package, we change the oil we change the filter... tire rotation, suspension, we make suspension checks...

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$1.71 below where we are right now. and rackspace. wall street in general is losing a bit of its luster. there's the layoffs, the attrition, voluntary departures. are the jobs really moving out west? cnbc mary thompson has more. >> in battle for talent, the west isn't winning, it's more of a draw. rob sloan says working on wall street carries a little bit less cache than it did a year ago. >> the allure of wall street has diminished. the sexiness has diminished. it's a tough business. right now it's a brutal business to be in. >> as a result, sloan says wall street is working harder for less pay making it less attractive. profitable is squeezing pay. wall street's paychecks now tied

more closely to a firm or unit's long term than short term performance. of course this has bean hallmark of silicon valley where cash starved startups pay in stock and giving an edge to tech where an engineer may earn most of their $2 to $10 million in stock while a wall street million a year is split between cash and stock. if you're an engineering graduate in the top 1% you would be insane to go to wall street and that was probably not the case five years ago. people aren't fleeing finance. since 2002 employment has grown 2.2% contrafrting with a decline in nonmanufacturing tech jobs. recruiters say wall street and silicon valley aren't at odds. the industry jobs require different skills and attract different people. business schools say tech companies are stepping up their recruiting the most popular

destination for mbas remains wall street. want to get some perspective from two of the biggest business school deans out there. peter henry is dean of nyu school of business. gentlemen, good morning. good to have you. peter, i know you heard mary's report. is it much different for the kids you're seeing right now? >> there certainly is two perspectives. there's the market wide perspective and there's the perspective from the schools, specifically at stern. we're seeing a strong market for our students. a hird go to wall street. we're seeing that's about constant. we feel a big part of that is the industry right now is trying to get focus. and teach our students to think about,000 transform challenges. create value. that perspective i think is a perspective that companies are particularly liking at the moment because of the fact they have to focus on generating value. >> you wouldn't say they are giving up on banking or wall

street all together? a third of the grads go that direction? >> that's correct. it's important to understand that the change that's come about is the need to actually see what is the new chapter, what's the new story for finance. finance isn't going anywhere. but how do we get finance focused on the 21st century growth story. that's what we're trying to get our students to focus on. >> students have come in from the working world. i wonder if you're seeing a change, those students perhaps opting not to return to wall street and so, therefore, even though the percentages may be the same it's a different audience, different students actually choosing wall street now. robert? >> yes. thank you very much. we're seeing a great interest on the part of our students in wall street. we are placing it at about the same rate we've been placing in recent years. surely the recent news about wall street and pay is sending away some students who might have been interested in wall

street but the truth of the matter is there is still a very deep interest. and you know what? there's going to be an enormous amount of capital to be raised as this recovery gains pace and that's going to require new talent and well trained talent. so i expect it will continue to attract strong students from strong schools. >> but peter to the notion that perhaps the person who came from wall street, the classes that are coming out now, they probably sign up for business school, were applying for business school in the depths of the financial crisis and now they are coming out to a new wall street. the people who are on wall street are they going back? do you typically see that prior wall streeters going back? >> one of the thing you'll see, more students who come in from different kind of background from luxury, entertainment, immediate area technology. talked about technology being a big story in the emerging world. the key is who are the students who are going to use business to

transform themselves into the kind of all located capital that the world needs, right? think about turbanization story. we know roughly 3.5 billion people are living in the cities. who are the people who recognize the infrastructure investment opportunities. sanitation. health care. technology. that's what we're focused on. focused on getting students to see the bigger picture and see finance can create value but in order for value to be created in this new growth story it has to see what the opportunities are. >> indeed i wonder, i know nyu you added a technology secretary sthourn business plan competition. how within your curriculum dean your advising students who won't go through the traditional process of applying for a job on wall street. it's different when you look out west. >> we've discovered that as well. our school is money for developing general managers and leaders of corporations and those students are naturally drawn into entrepreneurial work,

technology work, consulting, brand marketing and the like. there is an enormous need for trained talent. i would say the need is practically infinite worldwide. our schools are enjoying a very strong appeal from applicants and i expect those applicant will find work in a variety of fields. the starting salaries that we're seeing for our students this year are at about the level of the past several years. >> we're out of time. could i ask you both briefly. if you had a 15, 16-year-old son or daughter now what would you tell them to go into? >> tell them to understand global growth. to understand what i would call cultural arbitrage. i would direct them to tuned rest of the world. understand not only economics but understand cultures. >> if you had to send a 15 or 16-year-old daughter or son where would you direct them?

>> direct them into creative arts and into leadership experiences of all kinds. i believe those two will generate the innovators we need. >> thanks guys. good to see both of you. >> straight ahead this morning -- ♪ coming up we got a whole different type of valentine's day kiss four. rock legend gene simmons will join us. we're going to rock and roll all night. or at least throughout this commercial break. we'll be right back. [ male announcer ] if you believe the mayan calendar,

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♪ ♪ ♪ i want to rock and roll all night ♪ gene simmons makes a good chunk from his reality venture. joining us on set today the iconic rock star himself gene simmons. >> good morning. it's a pleasure to see me. it's a thrill. here we are at the mecca of the financial world whether they are

doing it online or physically here. this is holy ground. look, people might be asking what's this weird guy sticking out his tongue out talking about life insurance. i'm not a life insurance salesman. all of us have a duty to our friends, financial, children to make sure there's a life equity strategy. in big words that means while you're alive and healthy you got to take care of your family and your children. whitney houston, poor whitney, i knew her when she was alive and her significant other and husband bobby brown. everybody is talking about the tragedy of the suicide. nobody is mentioning her children. her family. and her estate. no matter how you look at this tragedy just happened nobody is talking about whether or not she took care of business while she was alive. cool springs life.com is a life

equity strategy. our partners have been the ceos of transamerica for 16 years. and cover of "the wall street journal," president obama is going to punish the rich. i'm sorry, it's not punish. tax the rich. by the way, definition of rich per law is anybody who makes $200,000 a year, if you're single. that means then you have to pay taxes, mortgage, car loans, what's left? maybe you can pay your bills. when you pass away, you've already paid all your tax, there's inheritance tax. i forgot to tie my shoelaces taxes. all kinds of taxes on top of the fact that you've already paid taxes. you must plan now. and all i'm saying to all of you is coolspringslife has some of the richest clients in the country. and that means must of them are underinsured. you have to plan in advance for

charity, for your family, for your friends. how to take care of them when you're gone. do it while you're alive to make sure that they're well taken care of, and you have wonderful questions, because i'm a fascinating person. >> i want to cut to the chase, gene, and enough with the sales pitch. >> you guys sell every day. >> all right. so let me ask you, why do wealthy clients need loans to pay help pay for a life insurance policy? >> every dollar you put dawn is after-tax dollars. when you have a life insurance policy, and you're probably underinsured, you still have to have a life insurance policy that is a substantial amount to take care of your family and your friends once you're gone. you're going to be paying a yearly life insurance premium. premium for those of you that don't know, means cash. and it means after-tax cash. you have to earn twice as much, because you're rich. you have to earn twice as much to do that.

cool springs life dotcom loans you all the premium amount that you might pay, at a small banking fee. in the real world what it means is, there's a percentage that you can take that money, the arbitrage between the cost of the money, the loan amount, and what you can get in the wondrous wall street is all yours to take. those percentage points are all yours. in essence, you're not going to be paying any cash. >> okay. >> the loan amount is so small that the percentages you make, the arbitrage between the cost of money and what you can get on the street, even today, you've got fixed amounts for 30 years, you'll be making money on money -- >> how do you make money? how does cool springs make money? >> they don't pay us, we make money. let me give you a perfect example of what the secret sauce is. this is looking right under it. you're a wall street -- you're a las vegas hotel. what you want to do is you want

to attract the high net worth individuals to come and gamble, or just to have a good time and stay at your hotel. won't you send them a free jet? won't you give them preferential treatment? the real story here is that the people that we're in business with, aaa, and you can check them all out, go to coolspringslife.com. you'll know all their names. i'm sorry i said that for the third time, didn't i? >> well, we know you know how to sell. my last question,you must get pitches all the time. the old line about kiss condoms to kiss caskets, why this? why this business? >> well, because i want to take care of my family. i'm not just talking about a business here. i'm talking about something that's good for america. good for your family. and good for your children. you've got to plan. and i've always been about due diligence. i have an inferred fidish year duty to my life, a life equity strategy. and if you go through life like an idiot -- we all assume because you're rich or powerful or on wall street your life

insurance is taken care of, that you do have life insurance. that you have enough. and that on the day when you pass away the inheritance tax won't jump up to 55%. you're a fool. it will jump up to 55%. it might go to 60%. that's after you've paid all your 50% tax. yes. >> we're almost out of time. can i double back from when you started this interview. you said you knew whitney houston and you knew her significant other as well. you then used the word suicide to describe her death. is that your belief? >> well, i'm not a journalist. i'm saying that. they found her in a bathtub at the beverly hills hotel. she'd been high and drunk for a few days. that's sad. what about her family? her loved ones. her estate. her children. has that been taken care of? i don't know. i certainly hope so. but this is a wake-up call to all of you. you have families, loved ones, make sure you know your options. coolspringslife.com is an option. find out about it. >> gene, thanks for coming by. >> it's a pleasure for me to be

here. >> gene simmons. joining us to talk about some life insurance and some economy as well. get to john harwood today who is watching some comments we're expecting with the president. this time ostensibly, john, over the house republicans giving in on some demands regarding the payroll tax extension. and maybe some of these headlines on corporate tax reform out of the treasury secretary today. >> it's an interesting moment in this debate. because republicans decided, carl, that they'd taken quite enough punishment on the payroll tax in december, so as the negotiations over how to pay for an extension dragged on, they took the initiative yesterday, the house republican leadership did, to say, we're going to pass it without paying for it, and separate it from the medicare doc fix and the unemployment insurance extension which are both other costly items that the congress wants to pass. interesting to see whether the president addresses that move by the republicans in this event to keep the pressure on for action. this has been a very good issue for the president, coincided

with the rise in his approval ratings. one of the questions about unemployment benefits, carl, is that now that the economy is getting a little bit better the unemployment rate is dropping, will there be the same impetus to work out a deal on unemployment benefit extension? will republicans feel that same pressure? >> what do we know about the corporate tax framework that the treasury secretary is promising, john, saying it's going to add some sense of permanence to the corporate income tax structure in this country? >> well, he's been saying that for a long time. remember we talked about this throughout 2011 in january of that year, he initiated a process to try to figure out how to get the corporate rate down by removing some loopholes and he engaged american business in that discussion. that ended up getting sidetracked with the debt crisis and the debate over the budget last year. we then thought the treasury was going to release some sort of a white paper or a proposal in november or december. didn't happen. now we're getting to that time, still don't know yet whether it's going to be one singular

proposal, or a set of options, because we know that consensus has been difficult to achieve among the various business constituencies, manufacturers have different interests from wall street on that issue. but this is one potential area of common ground between republicans and democrats, although i wouldn't expect it to be reached until at least a lame duck session after the election or perhaps 2013, carl. >> all right. thank you very much, john. we'll have more on that later. more squawk from the streets, next. slip-on's the way to go. more people do that, security would be like -- there's no charge for the bag. thanks. i know a quiet little place where we can get some work done. there's a three-prong plug. i have club passes. [ male announcer ] now there's a mileage card that offers special perks on united, like a free checked bag, united club passes, and priority boarding. thanks. ♪ okay. what's your secret? ♪ [ male announcer ] the new united mileageplus explorer card. get it and you're in. our machines help identify

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all right take a look at michael kors up 24%. this is a fresh all-time high. this company just went public back in december and we have got an interview. an exclusive interview tonight with michael kors on "fast money." so we've talked to him about what the spring line looks like and what he thinks about in terms of business when he designs his collections. again that's tonight at 5:00 on "fast." >> melissa, the third hour of "squawk on the street" starts right now. >> welcome to hour three of "squawk on the street." here's what's happening so far. >> the biggest day. people will be in our stores in department stores, specialty stores, looking for godiva.

>> you get modern economies, they tend to be more social democratic, more socialist as time goes on and unless people who believe in free enterprise as a moral deal, unless people stand up and say we have to defend this thing, even though it requires some sacrifice it won't be defended. >> retail sales, pass expectations up 0.4%. >> there was a period where it just seemed like the problems were going to be solved by a restructuring and then a second restructuring and a third restructuring. here's a lesson, on the fourth restructuring, give up. >> fourth time's not the charm? >> no. definitely not. maybe these guys have done the ultimate, of course, they underpromised. they overdelivered and it still works in this market. >> s&p 500 taking shape at the top of your screen. >> up 0.4%, so exactly as expected on business inventories. >> how do you think it's going

to be when we're going to head for 16.2 trillion. what's a trillion? nobody knows. but if you spend a buck a second from now you wouldn't reach a trillion for 23,500 years. wake up. good grief. this is absolutely absurd. >> good morning, welcome to the third hour of "squawk on the street." get a check on the markets on this tuesday morning. the dow hanging on to some moderate losses here after a day that started basically in the red and has hung in there pretty much most of the morning. dow is down 37, almost 38. s&p down 6 and the nasdaq down 15. the home builders, some of the biggest losers today. d.r. horton and ryeland getting hit. other stocks following suit after another rise in delinquencies. natural gas surging giving a boost to some nat gas companies. ultrapetroleum, southwestern energy and devon energy talk spiking today. time for the road map the president's budget under review on the hill. tim geithner along with members of the senate finance committee

meeting to discuss those numbers and a member of the committee will step out of the hearing, give us a live update on the progress. plus the company that's luring away top talent from wall street and what that means for big business as a whole. controversial chinese supplier fox con now being investigated by the fair labor association. we'll talk to the man in charge of those inspections, see what he thinks he's going to find. and michael kors feeling the love on this valentine's day. the stock is up big after a third quarter results beat expectations. but can the luxury retailer hold on to the gains? that's all coming up in the next hour. start though this morning with "squawk on the beat." we could be looking at data that might cause a change in u.s. gdp. for that we go to steve liesman who is back at hq. >> interesting number crunching going on. economists plugging today's numbers into those estimates for growth, including the economy's a couple ticks weaker than originally thought. and skwiet a bit weaker than the optimists had hoped. inventories rising 0.4 in

december. but this was less than estimated by the government in the fourth quarter gdp report. macro economic advisers says this will shave about 0.4 off their fourth quarter gdp forecast. that's a pretty big swing. together with the downward adjustment from retail in december, macro now sees the fourth quarter coming in at 2.7%, originally reported 2.8. more and more folks this looks like a 2% to 2.5% economy, not the 3% to 3.5% some had hoped for. the first quarter looks to be in the 1. % to 2% range. you wonder whether what we saw today a falling inventory-to-sales ratio if that means more inventory in coming quarters. let's look at january retail sales. the computer a bit more active than the headlines suggest. but hardly drong. general merchandise up 2%. inside that department stores up 1%. eating and drinking up 0.6%. gasoline taking a lot of consumers' income, 1.4%.

core sales that's a pretty strong number there, 0.7%. autos 1.1%. the big question mark, the industry reported sales were up 4.6%. and that was less than had been expected there. key question for the consumer, will improving job growth show up in better incomes and better spending as the year wears on? or will higher gas prices sap what strength there is in the consumer's pocket? want to show you one measure of computer comfort here. eating out is up 8% year over year. the best increase since 2006. the folks are pointing out that dining out and going to a restaurant one of the most discretionary items in a constumer's budget. so this could be a sign of people feeling a little more comfort in their wallet. >> yeah. and steve we're sort of back to the wealth effect as we see the effect of a rising stock market on spending. and whether or not that's enough to offset gas prices. >> i think there's a lot of things pulling at the consumer. i think what we want to know is there these incomes -- are these

jobs for real? are they creating income that will be spent? and will the consumer feel comfortable enough to spend it and on the way to spending at the department stores do they shell out too much for gasoline? so i think it's a big question mark here on the consumer in the coming quarters. >> we'll see if we get to $4 this summer. thanks, steve. let's get to our capital markets editor gary kamensky who we just got a nice view of. >> you got that back shot of me. i want to say something about what steve was just talking about. there is a belief out there that this unusually warm weather, back here in the northeast, it's been two or three days this entire winter where you've had to really bundle up. the lack of money that's had to be going into home heating oil in terms of what we've had may, in fact, be the other side of the arbitrage with why you're seeing more people use discretionary money for dining out. that's just one school of thought. that was pointed out to me last week. the stock market has not had this sort of next leg up that a lot of people anticipated it would have after last thursday.

one of the reasons is that the european credit markets, the financials, have not had the type of action. i want to bring in rick santelli, as well. rick, i was sent this very complicated but clear picture to take a look at this. it clearly shows you what has happened since last thursday. now you're getting the financial stocks catching up to the credit. and, in fact, if you look at some of the u.s. financials you're seeing a similar sort of downdraft. this is not -- this is not -- we haven't had this long enough to draw the comparisons to some of the things we saw last year. but rick, the european credit markets have been suspect ever since last thursday, and it is strange, is it not, as we pointed out to you and i, that the u.s. financials are starting to catch up to this right now? >> yeah, you know, if you look to europe, it almost gets easier to understand why. the ltro, you can say that it's a stigma effect for these banks borrowing. you could also say there's kind

of a subordination effect going on as well. we all know that the ecb doesn't ever want to take things like haircuts and the more involved these banks get with using three-year cheap money to buy, for example, securities at some of the wounded countries like whether it's italy, spain, greece, the more they're on the hook for a full face even though the money they're borrowing and the positions they have might deteriorate. i think no matter where you look, we received some of this information from tim, is absolutely correct, and it has implications for something as simple as investment corporate supply that we've soon seeing come to market. >> again, the credit markets, you know, if you look at the past in terms of what were over the last two years the beginning of where the european issues became concerns here, it always began in the credit markets followed by the equity markets and crossed over here to the pond. if you look at morgan stanley back at america, goldman sachs,

citigroup over the last couple of days, you see the equities are having somewhat of a downward move. note necessarily the correlation of arbitrage that we saw in the past but something we will have to continue to keep our eyes on. because it has been a very good tell in the past. >> interesting stuff on a day where we're seeing more activity out of italy and more debt auctions too. we'll talk to you soon. rick santelli in chicago and gary kaminsky at hq. the senate finance committee is reviewing the president's budget right now with the treasury secretary tim geithner. take a listen to what geithner said earlier about the payroll tax cut. >> congress must extend the payroll tax cut and emergency unemployment insurance by the end of this month. if congress fails to act, 160 million americans will immediately pay more in payroll taxes, and 5 million people looking for work will lose or be denied unemployment insurance benefits over the rest of the year.

>> senator from maryland stepped out of the hearing to join us this morning. senator, good to see you. >> good to be with you. >> give us a sense of how the dong up the is being received on the hill as these hearings get under way. >> well, i think the president has presented a balanced approach to deal with the deficit. i think that's what we're looking for. allows us to invest so that we can be competitive in job growth. it helps the middle-income families. that's where we need to be. but it also puts us on a glide path to continue to reduce our deficit as a percentage of our economy. so, i think when you take a look at it, it's a balanced approach, it's a credible approach, it allows us to move forward without the automatic cuts that are scheduled to take place next year. if we can't continue deficit reduction, it builds on the progress we made on the debt ceiling compromise. and i think there's a lot there to look at and say, look, hopefully we can come to agreement and move forward with building america, creating jobs, and putting us on a path to

reduce the deficit. >> you call it a balanced approach. you also say that after an initial review, quote, i do have some concerns about how the president reaches some of his specific goals. are you referring to what some on the right would call gimmicks using, for instance, savings from the withdrawal out of the middle east? or what do you mean by that? >> well, i had some specific concerns, the way that he handles our federal workforce, what he does at the national institutes of health. i think there are areas that i would like to see different priorities, and i think we'll a chance to talk about that during the budget deliberations in congress. but the overall framework that the president has presented, i think, is fair. i think it is a balanced approach. it allows us to create jobs, but also to be mindful that we have to bring our debt into better control. >> do you wish the president or the white house had been more aggressive on long-term tax reform? i mean we're getting just a nibble here of news from the treasury secretary today about corporate taxes.

but i wonder if you think they could have been more aggressive in the budget itself. >> i think we're all looking forward to reforming our tax code. it desperately needs major reform. i serve on the finance committee and i know democrats and republicans alike would like to get together and see whether we can't significantly change our tax code, make it less complicated, more predictable, but yet produce the revenues we need in a fair way. yes, we got to do that. >> we had alan simpson on the show earlier today, and we asked him about whether or not he felt his time on the commission withers skin bowles was time well spent given the fact we're still talking about these issues much, much later. he called it like a stink bomb at a garden party. that the issues they raised are not going to go away and as a result it was not a waste of time. do you think this budget reflects what they were trying to do? >> oh, absolutely, the simpson bowles proposal wanted to reduce the deficit by $4 trillion over the ten-year window. the president's budget does

that. actually a little bit more in deficit reduction. i think the work of the simpson-bowles commission was extremely valuable. i think america's coalescing around that general approach. i think that's what we need to do. >> finally, i wonder how much -- i understand the payroll tax is a tiny piece of everything we're talking about. but the house republicans giving in on some of these demands. how much does that move the ball forward? >> well, obviously i thought it was hopeful. i think we will extend the payroll tax. we need to do it. it would have a major impact on working families if we did not. so i am more optimistic today than i was two days ago that we'll get this done before the end of the month. >> senator, good to talk to you. thanks for your time. senator ben cardin of maryland joining us from the hill. when we come back, another blow to the housing market. we'll see why now data might mean the recovery might be further away than thought.

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some new data shows mortgage delinquencies increasing for the second time since 2009. diana olick is live in washington with more details. are we going in reverse? >> it appears that way, carl. it's not what we expected. we knew the pipeline of troubled loans of big but new

delinquencies had been going down. now not so much. the number of loans at least 60 days past due rose nearly 2.25% to 6.01% of all loans in the u.s., that according to transunion. the good news is down from a year ago, but again we had been seeing quarterly drops. now there is some seasonality to the number. but transunion still cites negative equity that might be affecting people's willingness to pay their mortgages. florida, nevada and new jersey. states with the biggest jumps in dateline kwenty rates, new jerseys, vermont and south dakota. i want to note another story that we're also following. moscow shares down 13% after reporting wider than expected losses. masco sells a product used to rebuild and remodel homes. we have two new reports showing home remodels on the rise.

masco's exposure in europe and increasing commodity costs in the u.s. are hurting the bottom line. carl? >> thank you very much, diana. your point on masco is well taken. when we come back, wall street, and the great talent migration. are the smartest financial minds being lured away from big business? and we're counting you down to the close in europe. only about 12 minutes to go. are you still sleeping? just wanted to check and make sure that we were on schedule. the first technology of its kind...

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♪ l is for the way you look at me ♪ ♪ o for the only one i see >> our next guest is being called the crusader of the financial services industry. his company is attracting top talent away from wall street. elliot is the ceo and founder of hightower and he's joined this morning by gary kaminsky. >> elliot, let's get right into it. we were just chatting. may be a bit old-fashioned, wire houses, stock brokers. talk to me about what the industry is, if i work at one of these firms, the firms that i call wire houses give me the pitch right now why it makes sense for me to join an independent investment advisory type business to move my clients to a firm like yours. >> sure. so those businesses are fully

integrated manufacturing distribution sales and servicing type businesses. the problem is that there's so much money being made on the manufacturing and distribution part of those businesses, that what gets compromised is the integrity down in the service and sales part of the business. so the advise remembers are leaving, and coming to a firm like ours where they can just be fiduciary advisers and not have a conflict of what's going on sort of in the manufacturing side of the business. >> when you joined me in the past, you've been on air here, a number of brokers and wealth advisers who work at these firms say that's not the case, we get tremendous benefits by being a fill yated with the larger institutions. by having that distribution. by having that manufacturing. >> yes. >> you say that's not the case. why not? >> well, i think it is sort of the case. because, having infrastructure, and access to wall street is very powerful. so what we've done, and nobody else has done this, is we built a platform that allows our financial advisers to access goldman sachs, to access merrill

lynch, to access morgan stanley. when you have those firms competing for your business it's better than if you were simply an adviser inside one of those businesses. >> if i am an adviser inside morgan stanley, i use that as an example since you mention them, i can have my clients continue to access the morgan stanley product through hightower. >> there are some of the large wire houses that allow their products to be distributed out to firms like ours. but the fixed income desks, for example, we access the fixed income desks across the street so they're doing business with us the same way they would do business with an inside financial adviser. the big difference is that now those firms have to compete for our business. they don't have a captive relationship with the adviser inside their firm. so competition, as you might imagine, drives up the level of service, and it drives down the cost of the particular products. >> talk to us about the growth of hightower. i know you've got some big lift houses as it's called in the industry. who are the people of people, what are the type of teams that

are leaving these firms and what are the reasons why they're leaving right now? >> the best and the brightest teams across the industry are basically looking at their options. and we're in dialogue across the country, and every major city, with the best teams that are usually referred to as the corner office advisory teams. they might run a billion dollars or more. they my generate millions of dollars of revenue. and they're tired of the conflicts of interest that exist inside of these integrated models. so they're talking to us and we're lifting, you know, teams up. a couple times a month. >> has anybody left one of these firms come to hightower and subsequently went back because they felt that they missed the comfort of the larger firms? >> no. as a matter of fact the advisers at one of my jobs as i travel around the country and meet with their advisers and clients, what i hear time and time again, i'll use the expression one of the advisers used with me a few weeks ago, if you really care about your client's interest, hightower is the only business that you should be considering if you're leaving one of these

big, enteg rated wall street models. i took that to be very complimentary because here was somebody who had done years of due diligence, joined us, and was basically confirming to me as the ceo that it was better for his clients now that he was at hightower. carl this is one of those interesting subjects because every time we do something like this we will hear from those at those bigger firms saying that, you know, we get a lot of comfort from the big firms. but i think it's interesting, as i asked elliot just now, nobody who's left has had to go back. and i think that's the sort of key metric to think about whether or not this is one of those wall street disrupted sentiments that's going to continue for some time. >> yeah. and the disruption we're talking about all day long. >> yeah. >> happens on all sorts of different layers. thanks a lot. >> you got it. >> a couple minutes here from the close in europe. we will bring that to you live. talk about the impact this afternoon.

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wow, well there's no lack of news if you're looking to the close in europe today. a little more than a minute away. simon hobbs here to bring it all

to us. we've got german investor sentiment, moody's downgrades. portugal, gdp. >> yeah. and we've still got that meeting in greece importantly. let me show you closing out. what's interesting since we came on air that the markets in europe turned into negative territory and that's basically been led by the banks which weren't showing big moves earlier. look at where we are in paris at the moment and you'll see some of those big investors around peripheral europe have been hit. that's also true of, for example, rbs and lloyds in london, deutsche bank is also down over in frankfurt. so there you go. you can see those, as well. what is interesting, we had, of course, you had carl mentions downgrades, one notch from moody's on italy, two notches on spain. that has been overwritten by relatively successful auctions today. so we haven't seen any great upward fresh pressure on the yields. there is an issue with spain. the other one i want to show you is the uk, that it has been moved to negative watch by

moody's. particularly as the tax receipts there are actually quite buoyant. and are also believe they might be able to -- >> european markets are closing now. >> in other words according to some of the people i've spoken about it isn't really warranted. and of course the uk has been able, in the last couple of years, to go from negative watch to positive or to have it put back to a normal watch if you like quite successfully. that is where we are at the moment, then. importantly, carl i think we need to mention where we are on this meeting in greece. if everything is going to plan in greece, we are now 3 1/2 hours through this meeting which we need two things to happen. in advance, and this is to unlock the bailout money in advance of the big finance minister's meeting in brussels tomorrow. the first thing we have to do is they have to fill in greece that 325 million euro gap, according to reuters, they are intending or discussing doing that by splitting it now 125 million from defense, 200 million from advancing up the pay cuts and

the public sector. the other thing, and the real attention is on samarantz for this. will you get those party leaders signing up to maintain austerity past the election? since he's the guy who said going into sunday's vote, look vote now with me, and we will be in a position to renegotiate that bailout further down the line, it is a really open and interesting question with the samaras call is planning to sign on the dotted line. >> don't go too far. bob is here. i can't get over this flash estimate that greek gdp for the quarter down 7%. i mean, shows the dire straits they're in. >> we're in a catastrophic free-fall here. arguably now greek gdp is down 20% to 25% since the peak about 2008. i mean, that is by any means, i don't think catastrophic is too strong a term. as the comment simon noted from samaras is the one being passed

around the most yesterday where he said we want everyone to vote for this deal on sunday night but then said we want the power to later come back and negotiate perhaps a better deal. that's got everybody in europe up in arms. that was the number one thing i was e-mailed from trading desks sunday night and monday morning. that particular comment. so they're meeting now the cabinet ministers. hopefully they're going to come up with ways to cut as simon noted. eu finance ministers are meeting tomorrow and without a letter from the two party leaders and without clearing that $325 million or detailing where it's going to come from, euro's own finance ministers are not going to sign off on this. it's very clear now. there is a lot of drama continues. there's a lot of brinkmanship going on. you want to see how cynical things have gotten, de la rue is a british come. they print all the money. where does money come from? de la rue prints the money for dozens and dozens of countries around the world. i believe they are the largest printer of money in the world.

they trade over in london. the stock has gone up maybe 20%. it was 800 pence back in september or so. now it's 1,000. this is a multiyear high today. i got notes on it again because it hit another multiyear high. this is a cynical play on perhaps the fact the eurozone will break up. guess what's going to get a lot of business printing a lot of new bank notes. >> oh, come on. >> i'm not making an argument for it. >> where's the counterargument? >> simon i'm not making an argument for it, i'm pointing out the stock chart since this came out. >> people are buying de la rue because they think the european union single currency is about to break apart and they're going to be printing notes and coins? >> there is speculation that they would be a beneficiary should something like that happen. yes. correct. >> good for business. >> obviously let's say that's absurd. but, pointing out that's the only business they're in. they're not selling tires or anything else like that. that's the business that they're in. i pointed out somewhat cynically

myself. >> bob i'm going to come to your defense. it doesn't sound that crazy. i heard stories like this year after year in terms of second and third derivative plays. so the fact that people are contacting you on that, believe me that it may not actually materialize, simon, into anything detrimental to the company. but a lot of money -- simon hold on. a lot of money can be made on these third derivative plays when they sort of catch a little bit momentum. >> before we disappear down a rabbit hole and find ourselves facing a hall of mirrors, if that was really where the market was we would not have yields -- >> why do you think caterpillar is up so much? you can dig rabbit holes with those machines. >> that will probably come up on the program in a minute. if that was really where the market was we would have had the bond yields blowing out. and that is exactly not what is happening. that's where the real serious -- de la rue. >> no, no, no.

simon, simon -- i never even heard of de la rue prior to bob's report right there. but my point is you cannot minimize the fact that these things do get traction and believe it or not, they can go on for several weeks. >> thank you. correct. >> i know, i am not making the argument that that is going to happen. i'm pointing things out. two things quickly, two companies very negative comments today, goodyear tire, they're a very good company to watch. very globally diversified. all over the world they sell tires. there was a disappointing comment from them. they have not seen big rebounds. the other is in masco and the building materials group. here's a company that sells primarily in the united states, primarily housing. it's a great company to watch for the housing industry, plumbing and cabinets and paint and their commentary was disappointing even though they said they were cautiously optimistic. the numbers still are not there supporting a housing notable housing turnaround. >> should we get santelli's take on this? >> go right ahead. >> de la rue, buy, sell or hold?

>> you know, listen, we know, we all know, that there's a lot of foreclosures that have been in a bottleneck while the government tries to put pressure on the same banks that saved, you know, think last week's foreclosure agreement. there's going to be more, and i thought diana olick's story in many ways was the most depressing story of the day. >> delinquencies not what you expect, especially what housing stocks have done so far this year. >> supports the general idea we're still not seeing the numbers that support the turnaround. >> correct. finally are you surprised by some of the downgrades that bank of america, citi saying there's not much value in the group, bob? >> no. listen the problem is when you get 50% runoffs in these stocks, masco is up 50% in december entirely on the play of the housing recovery in 2012. we better start getting data. the spring home buying season is absolutely critical because there's 20%, 25% increases in

sales built in. >> gary, you going long with that? 13.50 was a short term ceiling here? >> i'm glad bob brought up the issue with the home selling season. remember at the top of the program we were talking to sieve about this sort of impact on the casual dining businesses as it relates to the warmer weather. weather is typically an excuse, if, in fact the spring selling season for home buying is not off to a very strong start. i think we could put to bed that that won't be an issue right now. because that selling season i think is going to start in about two or three weeks. so you can put that one to the side. and as far as the overall equity market, a question called, it feels as though, and i mentioned this yesterday, right now, the fear of being out of the market, or holding cash, if you're a professional investor, seems to be simply that becomes the first thing you think about in the morning. but it could change very rapidly. and i think we have to keep

paying attention to the impact on the european financials, as i mentioned earlier, because the correlation was very, very strong for a long teerd period of time. it's just not there right now. we know it's going to sthap back soon. >> and rick one last comment from you. are you getting that feeling as well? i wonder what you make of the comments some made today that ratings agencies have lost their capacity to shock the market? >> well you know if you give up on rating agencies, give up on every forecaster that ever walked the face of the earth because, you know, who's the glass house inhabitants in this scenario? is it the treasury? the fed? ben bernanke, don't worry about subprime. i think it's a dumb argument. i think that the rating agencies like everybody else are trying to get on the right path. and i think that their downgrades moody yesterday might not be a surprise to the markets. but i look at what's going on in greece and i'm surprised that people think it's because they're trying to address the problems, whether it's really two decades or generations of their problems finally catching up with them. >> but just on the subject of

the uk, isn't it exactly the same as we had here in the united states. somebody put it to me, at ubs, the bank of england has proved that it is perfectly capable of finding the photocopiers in the basement and printing as much cash as it needs to. therefore, why would you -- why would you put the uk on negative watch when it's clearly going to be able to pay its debts because it will just print more money exactly the same as the united states. it's calmed cuckoo land? >> my opinion is the assumptions that the uk economy or the u.s. economy is going to enjoy some of the same things it does today, like foreigners just fueling their 38 cents of every dollar they spend or the notion that their banking system is going to get profitable, or that things like the volcker rule aren't going to take huge swaths of income out of banks. i think that the world is always changing and the assumptions that i think simon you're indirectly making are, that the good things are going to continue and the bad things are going to go away. i disagree.

>> thanks, guys, gary, bob pisani who is already off. bob, also some news out of valentine's day news out of europe. barbie is celebrating the one-year wedding anniversary, of course, of the royal wedding by introducing the william and catherine royal wedding gift set. the gift set features two dolls wearing outfits inspired by their wedding day. will sell for $100. when we come back the man in charge of expecting foxkon n technology plants in china. how will this reflect on apple? first a look at some winning and losing stocks.

next up on the halftime report, fears of a falling market. time to protect yourself. why dennis gartman is turning less bullish on stocks. anti-amazon, how retailers are taking on the internet giant. and zynga earnings ahead of those numbers. >> thanks, scott. apple's big chinese supplier foxconn now under scrutiny by an outside monitoring group. the fair labor association. fair labor was created by

universities and nonprofits along with nike, liz claiborne, several other american apparel companies. this morning on squawk on the street labor rights group press for change said having fair labor monitor foxconn wasn't enough. we are now in a "squawk on the street" exclusive the president of the fair labor association live in china and visited foxconn earlier this week. mr. van heerden thanks for being with us. >> you're very welcome. >> i guess first things first, just reflections from you on what you've seen over there, and whether or not you think improvements can be made. what have you seen? >> actually seen just about everything. but incredible cooperation from the owner of foxconn. he's taken me for tours of the facility. they've had unfettered access, and i really do believe we can

do something there. i think we have an opportunity to reset the bar. >> what do you make of the accusation that -- that you're not quite up to snuff. that a real watchdog will have better teeth than your group has. >> right. i appreciate the criticism. it will push us to do a better job. the response today is the fact happen the facts will speak for themselves. our work is always current. we publish the results of our investigations. and anyone is welcome to go to our website and look at those reports, and they will see that we generally report serious violations of labor law and labor codes and obviously companies would not allow us to do that if they were actually able to influence our work.

so our reporting is the best guarantee. >> i think a lot of people are coming to this apple story sort of unfamiliar with how manufacturing in china works. and i'm wondering, given what you've seen at foxconn, can you put it in some kind of perspective relative to other violations or alleged violations you've seen? how bad is it in the framework of how business is done in china overall? >> well, you're quite right to raise that point. the abilities are very large, modern, state-of-the-art facilities. the workforce is a very --

[ inaudible ] -- all the time. -- sustained the work. and the workers have demonstrated that they're not willing to put up -- so a lot of the features contradict the image that you have of a chinese factory. you really have to peel the onion. you really have to roll back the curtain, and analyze these issues in a lot of depth. a lot of detail. and this is what we are doing now. we have 30 people on the ground, we will introduce tens of thousands of work eers which paints a very detailed picture of the work. >> thank you for your time. obviously the controversy not going away. we hope you'll come back and talk about it at some future

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getting some pictures in this morning of a remarkable meeting between president obama and china's leader in waiting xi jinping.

they're at the oval office talking about, among other things, the importance of balanced trade flows between china and the united states. the president said he would once again raise with xi the issue of human rights. which, as we know, is a pretty delicate topic for the chinese. also emphasizing that the president welcomed china's peaceful rise as a world power. this just happening moments ago, and of course part of a broad visit to the u.s. taking xi to the white house, the pentagon, and again later to the west coast. meantime, shares of michael kors surging as much as 20% after its third quarter profit and revenue beat estimates. joining us this morning on the cnbc newsline, the senior retail analyst at piper jaffray. jeff, good morning. >> good morning. >> pretty blowout numbers. yet the guidance for the coming quarter doesn't suggest more numbers like this. are they doing as much as they can? how long does this last? >> yeah, i think that's an important point.

you know, the go forward guidance certainly would appear conservative given the results they posted this morning. i think that's pretty standard operating procedure for companies, particularly newly public companies, make sure to keep expectations in check. but all signals would suggest that the trends are continuing into the spring season. and you know, we'll likely continue for several quarters. this is a very strong accessory cycle that we're experiencing in the marketplace and we don't see that slowing any time soon. >> some of the comp store sales out of north america, 38%, europe, 34%. i mean they seem like numbers that given the law of averages, larger numbers over time, will have to come down. >> absolutely. all of these metrics will moderate over time as they do for every company. i think the question is, is this a large large enough category for them to continue gaining share for several years. is this a strong accessory cycle we're experiencing? the answer is yes to both of

those. i think they're positioning as an aspirational brand, but also more affordable than a lot of luxury brands, really provides them with a very large marketplace and a large number of consumers. we think this is great positioning for a multiyear growth story. >> everybody remembers the ipo at 20. and looking at a $41 price today, i mean, how much of a pullback would you insist on before you argued that we should buy more, or are you even -- do you think it's a solid buy at these levels? >> you know, it's a great question. you know, we are continuing to review our model, post the conference call this morning and we'll take a look at this as well. long-term valuation pret ricks. i think the key for companies like this as they come public with very strong growth rates is what is the long-term potential here? are they gaining share at a faster rate than their competitors? are there a number of things that can provide extra margin support over time which will result in accelerated earnings? we think the answer is yes to all of those, so we do expect

this to be a multiyear, very successful brand run for michael kors. >> but short-term, you're not willing to step in and say it's overbought yet? >> you know, we'll continue to take a look at our model today. and monitor that relative to the valuation, and other valuations importantly of other growth stocks in the marketplace, and certainly come out with our updated thoughts later today or tomorrow. >> okay, jeff, appreciate that. jeff klinefelter joining us talk some retail over at piper jaffray. don't miss michael kors the man tonight on "fast money" with melissa, 5:00 p.m. keep those tweets coming. we're asking you to finish this people for wall street, dear wall street, roses are red, violets are blue, this valentine's day -- and the rest is up to you. our handle @cnbcsquawkst. uh oh.

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interesting. frank writes roses are red, violets are blue, this valentine's day get a gift for your wife or she might downgrade you. hal writes, if they had any brains they wouldn't hate you. and that does it. we've got a bunch of colorful responses, gary kaminsky. in addition we should mention you're watching some other news as we're talking about wall street being disrupted. more headlines out of goldman tonight. >> absolutely. we talked about george madison from the investment bank division retiring. jeffmy maslow is also going to be retiring. had been a managing director 18 years investment banking on the operating committee. the capital commitment committee. the transition continues, another senior investment banker, major producer from the firm, announcing he'll be retiring from goldman sachs. >> the disruption over talent on wall street say big theme for us all day long. do you think the bigger story is

veterans leaving or younger mba's not going in the first place? >> i think the industry has gone through just dramatic change. when i think back over the last 20 years there was times where many people told you, the stock market crashed. the tech bubble. the ipo. the research. what happened in 2008, that is the pivotal event that will change this industry. most journalists and most people that talk about the regulators, what they don't understand is the pivotal change on wall street, and i tie it to one thing and one thing alone, paul. when these firms were partnerships and the partner's capital was at risk referee day, they didn't have permanent public money, they weren't public companies, they did not have that permanent capital, that changed the culture. that's the one thing that is the key change for the disruption on wall street. >> big story out of media today, gary, i know you're watching, kate upton the new swimsuit model on the cover of sports illustrated. there are two covers. the other cover is and you'll appreciate this having been in the game over the weekend, that's right. jeremy lin. >> yep