"halftime report." don't forget to catch "fast money" at 5:00 tonight. now, 1:00, it's time for "power lunch." >> thank you, simon. three hours to go in the trading day. a few bumps on the road to a greek debt deal derailing what might have been a solid rally. good news, china will continue to buy eurozone government debt. bad news, more delays about questions if, when and how a deal can actually be done. can we blast through dow 13,000 and beyond without settling all this? >> and the fed's pulling the plug on phil falcone's plan for a national wireless broad band network. he's pumped billions into the project. what's the damage to the empire? >> and home builder confidence in new homes hit a four-year high. but mortgage applications are down. are things getting better or not? >> we're going to try to answer that. tyler's off. i'm here with the whole gang.

a special edition of "power lunch" begins right now. >> this is a full house. big shoes to fill for tyler mathisen. mixed markets. just point out if you are just joining us we are down 86 and falling in the dow. keep an eye on it. nasdaq down about .2%. pulse of the markets, look at the euro. the daily peng lumbar. you have iran and bullish inventory numbers. midday movers, dean foods up on better earnings. 10.5%. comcast, our parent company,

4.5%. abercrombie & fitch 10.5%. earnings plunged but they warned earlier this month and took their bidding down and margins are improving. on the downside fmc technologies, deere earnings beat but guidance not great. zynga getting crushed. a little too sketchy for the street on 14 of 15 and a lot of details need to be flushed out. we're going to bob pisani at the nyse. we had a major move in the dow in the last hour. can you explain it? >> yeah, i can. apple. i know the first sort of move is to look at the euro. the euro did hit new lows on that. but i have to say the market leader is apple. when apple goes from 525 down to 511 and then all the sudden again here drops down into negative territory on the day, that gets the market attention. why? because it's a huge waiting in all the tech indexes. look at the qqqs here. nasdaq 100, it's about 15% of

the market cap of the nasdaq 100. there you see the power shares, qqq moving into negative territory. this effected other stocks in the tech group as well. look at amazon for example. same situation. moved down to the lows of the day. it was negative for most of the day as you can see. but it moved down to the lows. if you look at some of the other big names in the tech group moving forward, seagate another one. just kind of moved down. all down as we saw apple move to the downside. a group consistently hitting new highs. that's the home builders index. we had some hopeful comments from a couple building materials companies like maasco and owens corning. results they posted not that great. bottom line, a lot of optimism and hope on the spring home buying season. better turn out to be a good one. >> you're right. thank you very much, bob. let's switch on the "power

lunch" power surge and drill down on the stories driving the day. a lot of them are moving parts right now especially considering there's a lot more uncertainty about greece following a report of a possibly delay in a second bailout package in the country, this after the market got a boost earlier news that china would continue to invest in eurozone debt. the euro fallen to lowest level in more than a week for the dollar. let's bring in mark chandler from brown brothers. good to see you again. welcome back. >> thanks, sue. >> you said in your note today that it appears the brinks manship has pushed greece over the edge and now you think eu ministers are being pushed over the edge. how is this going to resolve itself? >> i think that's the point. it's not going to be resolved any time shortly. in fact, i think the european finance officials are really weighting, betting, that the next long-term repo operation where the ecb lends money for three years, next one at the very end of february. and i think that is going to be the liquidity cushion that allows the eurozone countries to

weather the storm, which it could possibly be a hard default in greece. >> you also say that the reasons to fear a lehman-like event right now still seem quite compelling. why? >> i think that some people there's many economists and many you've had on the show that greece should drop out of the union and think that will somehow solve the problem. i worry if greece drops out, it just shifts the problem. one, i would say greece is not really the problem. it's a symptom of the problem and that there's some kind of structural dysfunction of the eurozone itself. greece dropping out releases a symptom but does not solve underlying problem. in addition, i think if you had told me that greece would for sure be pushed out of the club, i would think that portugal could very well be next. i think that's another reason why it doesn't really stabilize the situation. >> so is portugal your biggest worry at this point then? a lot of people think greece technically already is in a default situation and that the market has factor that had in.

but it's spain and portugal that are the bigger worries. >> right now, you know, back in early january i thought spain was going to be a bigger problem than italy. the spreads have really narrowed. that is that italian premium has narrowed. but i think you're right. right now i would say the most immediate thing is after we resolve these, what happens with portugal and spain? the point really is that greece is a part of the story. it's not the whole story. and solving greece is not really solve the whole story. >> marc, thank you. >> more pressure on the euro. >> okay. thanks very much, marc. appreciate it. kayla. >> there's hope for housing. home building stock through the high and refis through the roof. diana olick is in silver spring, maryland, with more on what's fueling the optimism. diana. >> kayla, the home builders say that buyer traffic is running higher and current sales are doing better and that's leading them to improved expectations going into spring. take a look at just how far the home builder sentiment index has come since september. it's doubled.

it was virtually stalled for over a year. still, the builders warn that the market is fragile and low appraisals and foreclosures continue to strain the market. and there is reason to be cautious. just take a look at the weekly mortgage application numbers. rates on the 30-year fixed are hovering near record lows and yet applications to purchase a home are tanking. down over 8% for the week and down over 4% on the four-week moving average. investors need a mortgage to get in on the housing market. now, on the flip side, refis are on a roar hitting highest level in more than six months. they now make up 81% of all mortgage applications. this is in part thanks to the new government program, aka harp 2 that lets deeply under water borrowers with fannie mae and freddie mac loans, but this program is two months old but it's exceeding expectations. they say the banks are reporting over 30% of their mortgage application pipeline is from this refi program.

and they say they're at max capacity or looking to add capacity. we've got plenty more on the builders and refis on the blog real realtycheck .cnbc.com. >> they're cutting these jobs as a mortgage origination business. they're taking a long-term view that that's slowing. refis still up. obviously that's good for the borrower, but who else gets to benefit from that? >> it's like you say, the mortgage originators. fbr looking for an additional $140 billion to $200 billion in refinancing just in the first half of this year. and that's all going to the likes of bank of america, wells fargo, jpmorgan, pnc. and, again, it's also good for the greater economy because the more money you get from refis puts money in consumers pockets. and guess what they do? they spend. >> hopefully you're right. thanks so much, diana. >> meantime, a major battle brewing between two of tech's titans. cisco system approving microsoft's acquisition of skype.

jon fortt is in silicon valley with some of the fallout on that. hi, jon. >> hey, sue. what cisco wants is the commission to promise that skype will be inoperable with other video calling systems. it's easy to see that cisco has a dog in this fight. it has a high-end telecom for business, the video conferences systems also appear at smaller businesses. cisco's fear that it hints in a blog post is that microsoft could try to control the future of video communication with skype. what i've been puzzling over for the past couple hours is what does this mean for the stocks involved? one analyst i spoke to said this will probably slow microsoft's efforts to integrate into the platform. there are others apple with facetime, google with google talk. will this move from cisco have an impact on how those systems grow? the head of the skype business unit, tony bates is a former top

exec in line for the ceo seat after shane steps down. and cisco itself hasn't always been open with its video systems. the ec had to force them to do that when they bought tanberg not long ago. >> very good point. jon, thank you very much. to breaking news now. philip lebeau, it concerns gm. what you got? >> sue, a couple pieces of news from general motors. we await them to report fourth quarter earnings tomorrow. the bonuses salaried workers will be receiving at general motors, those are going to be down because the company did not hit the financial targets that it set. even though we'll see close to a record profit for tomorrow for the year for general motors, therefore the bonuses that the salaried workers will receive will be lower by some degree. also, the company announcing it's going to be shifting its 19,000 u.s. employees, those hired before 2001, 19,000 of them, going from a defined benefit pension to a 401k. they're going to sweeten the pot for those workers by throwing in

an extra week's vacation. this is the first of several moves we're going to see, sue, in terms of general motors addressing its pension problems and the fact that it's underfunded on the pensions. the fact that they're going to shift these 19,000 to a 401k, first of many steps we'll see from them. >> thank you, phil. gm is down on the trading session. shares of kellogg is soaring. moving beyond cereal and striking a deal to buy pringles from p & g. >> i don't know quite how to call him, first proctor & gamble makes a cash deal with diamond foods but the x comes up, diamond foods loses top executiv executives, the deal is off. now, kellogg had wanted it before but couldn't complete -- compete with that tax advantage deal pg cut with diamond. $2.7 billion in cash. the net might be a little less

than the previous deal, but proctor & gamble will still get $1.5 billion in the end and that's where it lands with kellogg. here's what's worth noting. first for kellogg, it will be delude of this year and slowdown in stock buybacks, but long-term a global snack brand worth about $1.5 billion in annual sales. ubs analyst david palmer says pepsico can now consider kellogg a competitor. the stock up 5%. proctor & gamble been gjifting foods. and give earnings a nice near-term pop with about 47 to 50 cents after taxes. it's up basically flat for the day. now, the 1700 workers at pringles just expected to trade jersey colors. kayla, over to you. >> john, transformational deal, second chance of sorts for kellogg. we turn now to politics.

president obama getting ready to speak about the economy in about half an hour ahead of a new poll showing popularity is on the rise. john harwood has details. john. >> kayla, the president's in wisconsin. a state he carried in 2008. very much wants to carry this time. he's been greeted by scott walker, the conservative republican governor there. but he's riding a wave of increased optimism about the economy. look at the numbers from this "new york times" cbs poll just out today. his job approval rating up to 50%, that's up 3 points from the previous poll. the proportion saying the nation's on the right track is also up several points. so are the proportions saying the economy is getting better. still, weak numbers but improving. and that's the point. the president is rising as that economic optimism rises. he's expected to go to master lock, a company he praised in his state of the union address, as one that was insourcing jobs, an example of what he's trying to encourage with american business. and he is going to be making those remarks knowing that at

this moment at least a lot could change. the wind's at his back, sue. >> thanks, john. appreciate it. straight ahead, the stock market dropping just in the last hour. we're down about 90 points right now. even apple slipping. and the markets have been pretty much teflon. are we headed for trouble though? we're going to kick that around on the other side of a very quick break. weight loss programe expensive. so to save some money, i just got the popular girls from the local middle school to follow me around.

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welcome back to "power

lunch." rick santelli here on the welcome floor of the cme group in chicago. and everybody's talking about foreign exchange. let's bring a chart all the way back to '02 for the euro versus the dollar. let's try to be objective. if you look at the highs in '08, '09 and '11. we have higher highs and lower lows. and here we sit. traditional technicals will tell you that this market's december tin today take the 120 level and put it to the test eventually. now, if you look at a november 1st start date on 10-years, we're in a 25-basis point range no matter how you want to slice it. and look in the backyard of the european issues regarding greece and some other countries, you can see that their credit market is moving lower in yield of two-week lows. so i contend when you stretch that chart out a bit, it's hard for me to get excited whether there's a bailout check or not that these credit market charts

are telling you that we're in for everything very much different than we've been in for. sue, back to you. >> you were listening in to the morning meeting, weren't you, rick, that we had on "power lunch"? that's exactly what we're going to talk about right now. market a leg lower down about 82 points on the dow jones industrial average. still up more than 20% since the october lows. surprisingly some of the technicals that normally cause a pullback, you know, the question is whether or not they're going to work this time. and, gary, you've been taking a long look at this this morning. >> yes. >> a lot of people are blaming the selloff on apple turning around. i would argue we bumped up against some key technicals -- >> we did. when the nasdaq was up almost 1%, 90% gain wasn't apple mostly like i say an asset class itself. i get to sit with the "power lunch" team every day. a lot of people don't know. we do talk about the markets and the stuff i'm seeing and getting every day. if you look at some of the things showing up technically earlier this morning, the fact that you basically had a

massively overbought market, the fact that short interest was the lowest since march of 2009, the fact that insider selling had become increasingly more aggressive since february 1st. all the type of things, sue, that historically would have led to at least a short-term correction had not been the case up until now. and rick pointed out something you and i talk about every day. the fact that the credit markets have been saying for several weeks now that the equities needed to pullback and had not been the case. >> but you have two technical levels. the dow at 12,900 and the s&p we've gotten close but never cracked through that. what happens once you get through that? do you fall straight off? >> kayla, most of -- why the dow is so widely watched, most of the technical trading is related to the s&p 500. so there's very few technical moves. the dow will sort of follow in the case of what happens with the s&p, but i felt this morning, i said to the team earlier that we've had this slow and steady grind higher. and what typically will happen is if these things don't take place and we don't get this type

of correction, that's how you get the 300 or 400 plus day because you get people that essentially throw in the towel. we're at this levels right now. again, if you look at treasuries, something i know you pay close attention to -- >> the bond market's been telling you all week. >> the equity markets were sort of in its own world because that correlation completely broke down. and, again, copper, another thing. if you really believe in this equity move and that it had significant sort of legs to go behind it and, again, this is statistical trading, copper should be trading closer to 4.25. >> my question is also though whether or not we have fed minutes coming out later today. you put the technicals aside and you focus on the fundamentals, a lot of people are worried about what's going on in those fed minutes. do you buy that argument or not? they're taking some money off the table just in case those minutes have something in it we don't expect? >> i would be surprised -- >> personally, i don't buy that.

>> the fed has been in this really strange verbal dialogue for some time now saying they're concerned, cautious and have easy money until the end of the world. so i don't think the fed can really say anything that would be a huge shock. >> move it in any specific direction very sharply. >> yeah. sue, the only thing that could really change is that for some reason something out of the fed has a dramatic impact in terms of what the credit markets are pricing in because they've clearly priced in nothing now for some time. >> last night jeff held his conference call with investors, which i listened in to an hour and a half. >> unbelievably smart. >> unbelievably smart guy. he says he expects a major event in greece before the end of the month. >> is he still long treasury sns. >> he doesn't like treasuries right now at all. basically getting a negative return on treasuries. he also doesn't think that interest rates have bottomed. and i think he might be right about that. he doesn't think we're going to penetrate the 250 level on the long-term side of the yield curve, but what do you think?

>> -- i think -- >> come close to a bottom or not? >> you have this huge demographic shift in terms of fixed income, so i'm in his camp and have been for some time that i think rates are going to continue to stay at very low levels. and if i had to take a guess we would see 3% or 1% on the 10-year first, i'm going with 1%. but the comments about greece, you know he's in the minority. most people believe there will be an orderly default. jeffrey obviously saying doesn't believe it. kyle bass another one saying there can never be a default. the biggest issue is can there be an orderly default. >> even jamie dimon saying on cnbc if greece defaulted, it doesn't matter. a lot of people agreeing with him. >> i think it would be the session that would follow that would probably hit the banks. one thing that i think we might want to watch that just hit the wires just a few minutes ago is that the spanish regulator has lifted the short selling band on

spanish financials. overconfident? i don't know. we'll see. those are the stocks i'm going to be watching tomorrow to see whether or not we see a selloff in those financials because the short sale's been restricted for so long. >> we'll see very shortly. straight ahead, a huge outdoor farm show is underway in california. the biggest names in agriculture from deere to ago coare there and so is our jane wells. jane. >> this is a wind rower. $165,000 but i'm told i can take it off the lot for $140,000. a farm economy booming but equipment sales are slowing. we have the outlook after the break. ♪

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we continue to follow apple as bob pisani pointed out earlier, the stock took a bit of a dip. right now it's popped back into positive territory. up $2 on the day at $511.85. >> it's one of the biggest farm shows in the world with power players like deere attending. cnbc is there. jane wells is live at the event in california. jane, you met all of our expectations and you're in front of a tractor. >> well, and it's red. how cool is that? farmers like rain, kayla. so the rain has come. equipment sales though in north america slowed in january.

in fact, combines plummeted by 50%. deere is down today due to a miss on the top line though it raised guidance b of a merrill lynch called the conservative. equipmentmaker shares have not done well over the last 12 months though they've done well year-to-date. this farm economy has been booming, the future is on the minds of those here. 100,000 people could attend the world ag expo here in the heart of the central valley. no matter what happens, farmers have less debt and don't need to borrow much to buy. >> what we see customers bottom line are in the best shape they've ever been versus the 1980s, i don't know if you remember that but there was a downturn in the cycle and farmers were very highly leveraged as our customers at that time. we have seen none of that right now. >> one of the things being reflected in the sales is that equipmentmakers have been keeping inventories tight. overall inventories in december

were the lowest in 15 years. case ih tells us "we're building to order." and new inventory controls. >> we have a planning tool with our dealers that allows us to plan the right amounts of inventory at the dlealership. in the end that results in the farmer paying less. less carrying costs and expenses and so forth. >> now, on "closing bell," newt gingrich stopped by here. we're going to ask him about proposed cuts in the president's farm subsidies. but favorite thing i saw here is the road nater. it blows up everything from the roots up. i want one even though i only have a single gopher, i need bill murray for this. >> jane, are you going to get to take one of those home with you? >> well, i'll have to see if i can bargain for that one. like i said, i could knock off

about $25,000 on this thing. i don't know how much i can knock off on the rodent ator. >> farmers have less debt, but how's real estate for them? >> it's doing fantastic. in fact, there's a lot of talk around here that land values are in a bubble, but they don't know when it's going to pop. they're still staying strong. in fact the kansas city fed survey said that in the 10th district farm quarters were up 25% from a year ago. they're very big. we'll see how long it lasts. >> thank you, jane, very much. and if you do manage to bring home a tractor, i want to see that expense report. straight ahead, he's one of wall street's maximum power players. he's head of america's equities for deutsche bank and co-head of global prime finance, barry bausano is in the house and ready to sort out the risks and rewards. can't miss that. "power lunch" and the team back in two. [ male announcer ] the draw of the past is a powerful thing. but we couldn't simply repeat history.

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welcome back to "power lunch." i'm brian shactman. let's reset the market quickly here for you. we are holding above 1.9% on the 10-year. the dollar is flat. talk about gold in just a second. i want to point out the nasdaq is slightly positive. the dow down 80 off the lows but

still negative and vix up 8% plus. so much talk about apple today was heading toward a $500 billion market cap still up more than 25% year-to-date but see the slip in the middle part of the day. think about this when it comes to technology dominance, here is the entire s&p 500. a lot of names, a lot of big names. but just five names, all tech, make up 10% of the weighting for the entire index. apple the biggest at almost 4%. incredible. and beyond apple it's ibm, microsoft, google, intel. and if apple was in the dow would be well over 14,000. ibm and apple the only ones in positive territory today. now, i want to go to gold. other metals getting ready to close, bertha coombs at the nymex. >> thanks very much. i'm in the gold pits in the final trade here. well off of the day's high but gold breaks a three-day losing streak. and issue for traders is they say the continuing uncertainty over how this greek situation will be resolved and the growing

rhetorical tension between iran and now europe as iran says it's going to cut off oil exports to europe. you can see that in just how much bigger the trade was today and the move was today in gold in euro terms. that's something that dennis gartman watches and a number of traders watch now. we saw the move up in precious metals breaking the three-day losing streak but we did not see it in copper. copper in fact a fourth down day despite the fact we had the bullish builder sentiment, sue. a lot of folks say the fundamentals in china continue to be the big drag. >> bertha, thank you very much. global hedge fund assets off to a good start this year. the global median is up 1.52%. our next guest is considered one of the most influential players in the hedge fund world. let's meet today's power player, barry bausano, deutsche bank's head of equity and global prime finance. here to tell us how investor sentiment is shaping out and the

outlook for 2012. good to see you again. welcome back. >> nice to see you. >> how is it shaping up? last year was a tough year for investors and managers alike. >> the hedge fund industrial #industry pretty robust coming out of last year into this year. i think there's a secular reason for that which is continued demand for alpha across the alm mismatches we have in the pension side. and the end of what has been a big season of risk aversion. we end up with new highs over $2 trillion in assets. $70 billion in inflows in 2011 versus only $55 billion in the preceding year. and a though performance was rocky, there was a big dispersion with big winners in the mattress space and relative value relative to some of the tougher sectors like long, short equity. >> goes to the active management argument as well, does it not? the fact you need a good manager? you want to reach for alpha certainly outperformance, but you really need to pick a

manager who's nimble regardless of macro, long, short, whatever it is. you need that nimble manager to really make the portfolio perform. >> right. well, i think one of the interesting issues last year was you had big dispersion. this year you had a big dispersion amongst managers with any given strategy. i think if you think about the volatility of the experience particularly in the long-short space in terms of performance, guys buying undervalued assets and looking for aversion to the mean. so a place where correlations were high and beta unstable, the precise manager, sophisticated, ended up being short gamma for a lot of volatility in august and november. >> you talk institutions in pension plans that were going to up their allocation to alternative investing, hedge funds at the beginning of this year. part of the reason was the fact they can't generate any kind of returns out of the fixed income part of their allocation pie.

so how important will it be for the growth of the hedge fund assets under management this idea that fixed income cannot provide any kind of -- forget alpha, they can't provide any kind of return for the most part within these plain institutions trying to generate total return. >> right. i think there's a couple pieces. one is the move to institutions. that's been a long-term trend. we went from 90% high net worth individuals in the early '90s to now 85% of the new money coming in is institutional. i think it's important in terms of the industry because they're very systematic, disciplined and investing throughout the cycle. you're right, the drive to alternatives is driven very much by the fact you have 2% 10-year notes almost globally. and you've got flat to negative passive equity returns over the past decade pushes people into the alternative space. whether that's specific to the fixed income market isn't so clear. we've had good returns in some of the credit strategies. and we have good returns in fixed income relative value. so the passive owning of 2%

notes doesn't help you much. but it doesn't mean you have to shy away from fixed income strategies in the alternative space. >> there was a point in the post-madoff world where investors looked at hedge funds and wanted to know who was the prime broker, what did the prime broker do in terms of protection. if i'm going to invest in a hedge fund, should i care who the prime broker is? >> the answer is yes, you should. and the major differentiating points what is the credit worthiness of your counterpart, what is their statutory access to central bank facilities, how deep and broad it is their balance sheet in terms of pure funding. and second thing that's important is how well they connect to the rest of their franchise across what kind of ecm product do they offer, how good is their research, how can you maneuver your portfolio with them? that's a very connective value chain. >> you look across the globe and we have the problems going on in europe, we have china hopefully engineering a soft landing. we would love to have their growth rate, but nonetheless given where they were, that's one of the worries in the

market. do you have a sense of where the big managers seem to be having the most success? i know that's a tough question because it all depends on their strategy? are there areas of the globe providing more alpha, more return, for the large players in the market? >> yeah, i think it's clear that the best performance this year has been in the emerging markets. look at the brics and brazil and india roughly 25% in local currency. you have russia up 20% in local currency. china up 7%. within asia you've had outperformance in taiwan up 14% to 16%. i think that's natural. when you look at europe, people are expecting a slowdown based on bank deleveraging and fiscal austerity. in the u.s. we're going to have strong but really sub trend growth, something in the 2.5% or 3% range. enough to buoy the global economy and to be a good destination to earn capital from the emerging markets.

but the emerging markets are the growth space. the size of those markets, can you deploy capital effectively in the emerging markets. guys have had a great success doing that so far. >> the large global macro plays i think the biggest trade on january 1 was short the euro. >> right. >> have you read through the quarterly letters, year end letters, everybody wanted to be short the euro. do you get a sense that's the big sort of global one-off trade? >> it's easy off and performance of ect index which includes macro players suffered relative to other strategies in january because of the trade-off in the dollar and the rally in the euro. i think the real turning point in europe, there's two. one was political. i think major shifts in the last quarter of last year. and to the second to the ltro. major -- >> that's the line of credit for -- >> yeah. for the banks. to $486 billion taken up in the first run. we expect another one next month. that's a real game changer in

terms of the performance of the banks and liquidity function there. and it removes a lot of tail risk that exists right now. >> that's what ifrs going to ask you. tail risk? are you worried about a default in greece? or have you moved past that as you look around the globe? it seems to me the market's factors in to a certain extent a default in greece. they're more worried about spain, italy, portugal. >> i think there are two things. i will copy who pointed out a few weeks ago there's consistent feature over the decades has been sovereign defaults. that's less important than the banking and financial sector default. i think what the ltro has done has addressed that. addressed that in terms of better situation. i think the more important issue is not whether it's going to be a difficult and rocky trajectory, because we all believe it will be, but we're in a much better place than we were with the leadership in a couple of countries changing, the

leadership in the ecb being quite strong, and this new liquidity facility being put into place. >> all right. pleasure to have you with us. thanks so much for joining us. come back soon. >> thank you. >> we're going to take a quick break. and tomorrow's power player, more than half a trillion dollars worth of investment advice will be right here. t.rowe price brian rogers will tell us where he's putting all of that money to work in this market. kayla, over to you. >> up next on "power lunch," the fed pulling the plug on phil falcone's plan for a national broad band network. what's the damage to the hedge fund billionaire's financial empire? we'll have that story up next on "power lunch." [ woman ] my boyfriend and i were going on vacation,

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a new headache for billionaire hedge fund heavyweight phillip falcone. the fcc blocking a plan by his project to build a new wireless network saying there's concern that it would interfere with gps devices. he joined "power lunch" for his first-ever tv appearance in august of last year. here's what he had to say about these same worries over light squared back then. >> it all comes back to what we were granted and the orders that were given to us by the fcc back in 2003, 2005 and 2010. we were mandated to build this network. and now that we're prepare today ed to build this network, everybody's saying time-out, light squared is interfering with us. that's not the case. >> falcone also telling us he invested billions in the company. so what would a failure of light squared mean for him personally and for his future ventures? joining us it is senior writer

at "the wall street journal." welcome to the team. great to see you again. i think you said in your note to me that there are very few investors out there today that has a headache as big as phil falcone. >> he's a bit of a head scratcher on wall street. he had built up a firm with $26 billion in assets by 2008 he made a great trade betting against sub prime mortgages and he was on top of the world. instead sort of milking that for what it was worth and the fees and doing conservative-type investing, he decided to plow $3 billion into this new network. in some ways it's impressive he's taken this big shot, but it really hasn't worked. and his investors are really unhappy. it's not clear he can raise much money at this point. the s.e.c. is on his tail with different investigations going on. and then add this to the series of headaches. >> well, greg, this is kayla tausche. good to see you. i wanted to ask you about $26 billion he had in 2008 that

number came down to less than $5 billion in october. i want to talk about how much he actually has in assets and what percentage of that is made up by lightsquared. what are investors saying their concerns with that? >> it's an odd situation because even his own clients, his own investors, didn't support -- or many that i've spoken to didn't support and were trying to get out. so for the past few years a lot have tie etried to get out. even talking to his own investors and clients, they're not necessarily supportive. i've talked to some people who think it's a good idea, but probably wasn't the best idea to do it in a hedge fund structure. down to less than $5 billion in assets. this is a huge chunk of it. and it's not clear whether investors will line up and give him more money. he could fight the government, but he has to have capital to do that. >> gary, he's known for making big bets. that's what a lot of these guys do out there. he's not alone in that. he made a big bet on sub prime. >> right. >> this time he saw an

inefficiency in the market, for lack of a better word, and try to capitalize on that. >> this isn't an investment. you brought up a great point. so many of these funds when they get to the size they can get to, you can make so much money generating fees that you can sort of invest closet index to some extent don't necessarily have to take crazy risks. why did he do it? and what was the market-to-market here for the limited partners? >> that's a very good point. frankly, it's somewhat impressive that he took on risk and he just sit on his cash and milk the assets and fees -- >> he told us he really saw a need for it. >> right. >> he wasn't just doing it. when he was on with us in august he said i wasn't just doing it for the investment, we need to have this work. country needs to have this work. >> very ultraistic of him. he's also trying to make a lot of money, obviously.

it was just the wrong vehicle. as you mentioned it's ill liquid. he marked it down at the end of last year. you think about it that's a quarter when it comes to private equity or hedge funds, you can get away with stuff. i'm not suggesting that he did, but it's a little bit vague or how you mark things, but when you get an auditor at the end of the year, it's a little tougher. you have to mark things more seriously. not saying that he did that whatsoever. but an interesting case where he got marked down severely at the end of last year and a crippling blow here for a network that some people actually think is a pretty smart idea. >> greg, who else on wall street will see downside on this? when the debt was at 40 e cents, carl icahn was buying it. where's the debt trading and who else has exposure? >> some of the bigger names in the past have. it's not clear who holds it anymore. it was a relatively small

investment for some of these people. some of the smartest guys actually thought he had a good strategy here. just a bad vehicle. think about what happened the gps network is extremely sensitive. it's not really the fault necessarily of falcone's network. just so happens that they're very important members of that community, the gps dependent community including the defense department. and we cater to those people often. >> all right. we should know that we reached out to mr. falcone and asked him for some comments today. we hope he gets back to us. and we of course invite him back on "power lunch" as well. if he does get back to us, we will pass those comments on. coming up, the student debt bomb. parents borrowing at record rates to help pay for their kids' sky high college fees. how is this going to impact their retirement? coming up next. he house. right. but... home security systems can be really expensive. so to save money, we actually just adopted a rescue panther.

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you're looking at a live picture. president obama's in milwaukee this hour speaking about jobs and the economy. he's at a master lock plant. a company he praised during his state of the union address last month for bringing jobs back from china. we're monitoring the speech. we'll bring you any headlines that cross. kayla. >> higher education means higher

debt. parents are exacerbating a growing student loan crisis and ravaging their retirement savings at the same time. sharon epperson joins us with expert suggestions on how to combat the prices in the new retirement, sharon. >> kayla, student loan debt massed by parents is growing faster than by the student. it's doubled in the decade exceeding $100 billion. that's 10% of all student loan debt. >> parents of every income level are increasingly borrowing for their children's college educations. it doesn't matter whether the parents are low income, middle income or upper income. there's been dramatic growth in the percentage of parents who have been borrowing. >> for many parents their need to borrow has grown as their savings have declined and home values plummeted. many households can no longer tap what was once a common financial resource and that's the equity in their homes. parents have about $34,000 in student loans on average.

and that figure rises to about $50,000 including interest over a stan standard 10-year loan repayment period. the federal parent plus loan is fixed at nearly 8%. so the return on parents' investments needs to be at least 8% just to break even. >> parents should borrow no more than they can afford to repay in ten years because they have to worry about their own retirement. by the time they retire, they should have no debt remaining since they will have no income to pay that debt. >> every dollar borrowed costs about $2 to pay back when you look at the mix of loan programs and repayment terms parents generally use. the parent plus loans repayment will cost about $2.08 for every dollar borrowed. it's really important to look at being able to pay that off quickly. >> staggering interests there.

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the nasdaq back in positive territory. tech showing some leaders. not a lot of industrials in the dow, but it's down 70. industrials are the weakest sector in the entire s&p. >> you know, this was a lot of fun. covered a lot of different stuff. >> we have to do this again. >> all right. keep your eye on the spanish banks tomorrow. we'll see whether or not the ban on the short sale which is lifted effects them. fed minutes coming out in just a few minutes. that does it for us on "power lunch." we will all see you tomorrow. have a great afternoon. "street signs" begins right now. >> welcome to "street signs" where in seconds we get the minutes. the minutes of the fed's last meeting. plus, more on the home builder revival. why are they buying up so much