>> why do you think he wouldn't stay left once he was re-elected? >> i think he'd want to worry about legacy at that point and try to get some things done vis-a-vis entitlements and things like that. >> that does it for us today. wilbur, thank you very much. it's time for "squawk on the street." happy birthday to duran duran guitarist. just got a bunch of data 30 minutes ago. jobless claims fall. housing starts rise. core ppi jumps by its largest in six months. of course, a day after the wall street selloff of yesterday, biggest selloff so far this year. some 97 points. futures today looking to get a little bit back of that. we've been flirting with the flat line pretty much all morning long. then europe, the selling continues to raise questions about the future of the greek bailout ahead of some big events coming up in the next week.

>> after the worst selloff of the year, the road map sees perhaps some more red as moody's says it may cut ratings of 114 financial institutions around the world. >> adding to the worries, concerns about the greek bailout ahead of a finance ministers meeting on monday. and foreign direct investment in china down again for the third straight month. >> meantime, the chart on apple raising some eyebrows again today amid more reports about ipad disputes in china. meantime, a big downgrade of amazon over at morgan stanley. >> gm despite telegraphing a strong quarter just days ago misses expectations, declines to give a forecast for when its european unit will return to profitability. first, though, want to get to this story. fed chairman ben bernanke getting ready to address the fdic's community banking conference. mary tamp son is at that event in arlington, virginia, with details. good morning, mary. >> good morning to you, carl. in his speech bernanke addresses a number of issues that are of concern to community bankers. keep in mind, community banks

make up 99% of the banks in the u.s. though they only hold about 10% of the assets. bernanke starts off with basically defending the fed's low interest rate policy. community bankers have complained. that's squeezing their net interest margin. he points out it's being maintained in order to improve the economy and the improving economy also improves the underlying assets at the bank. so essentially the low rate policy is a net positive for banks. also he did acknowledge that the slow recovery which he called frustratingly slow, a term we've heard before, has basically limited the number of profitable lending opportunities for community banks, however despite all this economic uncertainty, he said their condition is improving. he also addressed regulation which, of course, you might recall last year sheila bair was greeted with hisses when she talked about dodd/frank. he said the fed and other regulators are working to clarify for community banks what parts of dodd/frank actually apply to them and what parts don't so they don't have to waste valuable legal and compliance resources. then addresses the supervisors

that go into the banks and look at their lending, there's been a complaint among community banks that the supervisors are being too tough. he said the supervisors, their main date is to maintain high lending standards here in the u.s. now, coming up later on "squawk on the street," i'm going to be sitting down with an exclusive interview with the acting fdic, mar marty broomberg at 11:15. the top story, where the market's going to go after yesterday's 97-point drop. the worst tumble for the blue chip index so far this year. does the 2012 bull run still have legs at this point? it's a confluence of vents in today's session. between uncertainty in greece, price action in apple, moody's downgrade. all of this feeling concern about this run we've had so far. >> we've been up a lot. i always feel like that it's healthy. i know people at home don't want to hear it's healthy when the market goes down. we had a lot of talk about a par bollic move in many different

stocks coming into this week. looks like people are taking some profits. i don't think there's really anything fundamentally wrong. the actual major cords of this market, unemployment, housing, seem to be going in the right way. at least for second half for house ing. i don't think there's anything that is another leg down. employment's good. if employment's good, it's very difficult to suddenly decide, you know what, moody's is right. you know what? i feel like apple could be a terrible stock here. there's a lot of hot money in apple. i think it has to be shaken out. then it goes back. >> you sort of gloss over the term minor cord. that's how you equated the market yesterday. like a concerto. a lot of times the minor cords are in there. they're going to end eventually. there's going to be a major cord. >> i believe europe is on the end. i think many positives are still unrecognized about europe. the banking problems seem to be at least -- let's say they're skating. didn't have to raise any equity. there's not a lot of down beat stories coming out of europe right now other than greece. i think that's important. if you can corden it to greece

that does matter. employment and growth in this country is still on target. and that makes me feel that, yes, you're going to have some down days but you're not going to have a down market. i don't think we're back to where we were at this time last year. >> we should mention this moody's news is they're warning they may downgrade 17 global banks due to the eurozone crisis adding it might cut the long term ratings of -- goldman, jpmorgan chase, citi and america also under review. >> stupid downgrade. these companies all raised an e m nor mouse amount of cash. this morning there's research out about how goldman sachs, raising numbers at goldman. morgan stanley, every time you get off the desk and talk to them, seems like they've raised more capital. moving more into retail which is doing well. we like to focus on moody's and sap

s&p. i don't like to say they're jokes. that's harsh. i do want to say they're not worth taking your cue from other than the day they make their call. >> it's based on whether or not the greece situation is really contained. not that long ago, maybe last week we were talking about portugal as well. why sit we can take portugal off the table today and we couldn't take porch gal off the table -- >> the greatest trade of the last two weeks was to buy portuguese short-term paper. when you have a 12-month piece of paper that goes up dramatically in value over a period of months what that says is this is the long-term refinancing working once again. take anything off the table, we took italy off the table. we took it off. because the bond rates went from 7 to 5.5 on the 10-year. because it was a great trade. there's still a lot of people bho refuse to recognize that the germans got a word that printing a lot of money. it's better over there. it's okay to say it's better. >> better, i mean, david, better is a relative term. >> it is. >> even as the trade on portugal has been good, today jobless up to 14%.

biggest increase since they joined the euro. >> i'm glad you mentioned that. we say the jobs market is better, and it is. the labor market is better. but it's not good here in the united states. listen, i'll look at the other side of things for a minute here. greece is still not done. we are kind of saying it's gotten ridiculous. we want to ignore it. but i will tell you if there's a disorderly default in greece we're going to be sitting here talking about it and probably see some sort of dislocation in the market as a result. we'll be talking a lot more about portugal. after that ireland. revisiting a lot of our fears. that being said, we all know that different things that were done late last year to help stabilize the financial system in europe. i'll also come back to our economy. oil prices, they continue to rise. gas at the pump, i know we're sort of saying, hey, it really doesn't seem to be playing that big of role in terms of limiting consumers and their ability to spend money. but it could. and it may. and it's certainly something that also bears watching. may have been one reason why we reversed yesterday. >> look, gasoline does matter. i i've always used because of clarence otis, ceo of darden,

darden look at things. stop going to red lobster as much as you would. stop going to olive garden as much as you would. here's ubs raising estimates today darden. there a bizarre lack of confluence between the price of gasoline and the consumer. it's also, of course, by the way, there's a lot of oil being found. you have to wonder how much of it is iran, israel. i know i had the largest oil tanker company yesterday. he says a lot of people are just hoarding oil. they're just hoarding it. betting that it's going to go up in value when the iran/israel war starts. >> more people are getting jobs. that also helps, doesn't it? more people being employed means more people are willing to spend more money sfwl growth krurs a lot. we don't have growth in europe. yesterday we were focusing on china maybe helping out. what i don't want to do is come in and say, you know what? today everything that was good is now bad. because the futures are down. because that's been a terrible way to look at 2012. it was a good way to look at

2011, though. >> we've got to talk about apple. maybe apple's not looking so good at least today. a huge reversal we saw in yesterday's session after hitting all-time highs, about 526 a share, right in the middle of the trading session the stock then fell below 500 bucks, finished on the lows of the day. pretty heavy volume on the way up. pretty heavy volume on the way down as well. a lot of chartists out there will take a look at the trend channel. apple broke above decidedly above the upper end of that trend channel. now it's destined to fall back into it. healthy pullback? >> what we need to see this china resolution, david and i were joking yesterday how important is it. because there was only 48 ipads that were pulled. now we've got this notion, david, of amazon and apple and pulling out of the chinese market. that would actually hurt numbers. >> oh, yeah. come on, how much of the apple growth story recently is built on the chinese appetite for all things apple. >> first quarter is supposed to be china is where the upside is. >> that would be bad. when you're dealing with china, all bets are off. you simply don't know.

if the government is behind it and they want to limit apple's ability to sell products there, they're not going to sell products. >> it is amazing to see. the cost to do business in china and the rather remarkable 15% to 20% increases that labor is getting there, i wonder how -- the chinese have to be careful. chinese have to be -- work is fungible. it can move back to mexico in a flash. the current trends -- if it weren't for the cartels, it would be over there now. i think the current trends in china and cross-currents in china are very confuse ing. we need to them out in europe. if you read romney today in the paper he's saying wi, listen, ca is the world's enemy and we've got to build up -- >> the op-ed by romney in the journal today talks about how day one he would declare them a currency manipulator. now people wonder if -- i mean, would a trade war or a possible trade war weigh on the market now? >> i think so. >> you do? >> i don't think romney -- well, you know, i don't want to --

romney doesn't look that well in the polls right now. but i do believe that china is the ongoing story of great and horrible. not good and bad. but it's almost as if the dichotomy, the binary nature of china, we either think they're going to kill apple as they killed google or we think they're the great savior of the world. i wish it were somewhere more gray than so black and white. >> do you really believe it was the china story that took apple down from 526 to 425 in a matter of hours? >> i think there's a lot of hot money in apple. i think you need an earnings basis or at least an earnings rumor to get a reversal started. the momentum in apple, traders that have come in between 500 and 525 are not your friends if you own the stock. >> this is what was going around the trading desk yesterday, worries about a nasdaq 100 rebalance. we saw the rebalance taking apple's weight down last year in april from 20% down to about 12 and change. what is apple's weight at its height of the nasdaq 100? about 20%. we called the nasdaq, i called

the nasdaq, they couldn't comment obviously on this specifically. they did send me a highlighted portion of the rules saying 24% would definitely trigger a rebalance. but they did it last year at 20%. >> that would be an opportunity if that's the case. that's artificial versus the earnings, which are not artificial. right? >> true. but certainly a confluence of concerns when it comes to apple. meantime, general motors missing street expectations wits fourth quarter earnings, hurt by a $600 million loss in europe for 2011. gm posting a record profit of $7.6 billion. up 62% from the previous year. in the premarket it does look like gm is going to open higher here. why are we so forgiving? >> i think there's a lot of problems with gm that stem from the way they communicate with wall street. carl was tweeting earlier about how they go out to the journal and they say things are great. then things aren't great. i just wonder at a certain point when we just don't look at the sheer profitability of the enterprise and say if they get

it right, it could really be a monster. because they do make a lot of money. >> yeah. still not willing to lift the kimono with regards to europe. they say they have a lot more work to do. a lot more work to do in south america. >> they haven't made money in europe in years. why don't they just close europe? you want to get -- >> even here, in north america, the mix, more car sales. fewer truck sales are hurting -- weighing on margins overall, too. >> i also don't like the fact that toyota's stock goes up. toyota stock has been a phenomenal predictor of toyota taking on share. almost trades 1 for 1 with share points. toyota has been on the move upward. >> are you willing to use gm as a proxy for the broad economy right now? >> i think that gm for the united states, not bad. i don't want to be like -- they may have the wrong mix but they're selling a lot of cars. it's clear we have a robust car market in general here, but you can't see it because europe is so important for these companies. we tend to be very u.s. centric.

we don't realize how much money they can lose there and how it can wipe out any profitability here. >> all right. when we come back this morning, zillow on a tear this year after becoming one of 2011's high-profile internet ipos. we'll talk to the ceo on how he plans to keep things clicking for the real estate website. don't go away.

♪ j. welcome back to "squawk on the street." rick santelli on the floor of the cme fwrgroup. we had data points. fresh 4-year low on claims down 13,000. housing better than expected. we all know it's going to be -- mr. paulson, ex-treasury secretary words. one fly in the ointment is that the ppi core at 3% year over year, well, you have to go back to june of '09 to find a higher year over year than that. though you'll find a couple 3% that equal it along the way. why do i say you don't just have to worry about it, it's not the fed's favorite indicator that's going to be benched to that 2% target. don't want to have to change the target. it's only been the target for about a month. interest rates, look at what the 10-year did after some of the better than expected basis i was talking about.

popped up a few basis points. that's significant. there was a little delay, you can clearly see the bund correlated highly, it also popped audiotape bipop ed up a bit. we're all in this together on a multitude of issues. >> rick santelli is out with a study on the health hazards of being an investment banker. what warning label would you put on that profession? tweet us. we'd love to hear what you have to say @cnbcsquawkst. some of the side effects include stress, heart problems, weight gain. >> insomnia, alcoholism, heart palpitations, eating disorders and an explosive temper. i don't know where they get this stuff. it's junk science. explosive temper, come on. >> i would point out that people are starting at wage levels that are below law firms. it's the first time since the mid-'80s that this is happened.

when kravath and davis poll were the places to work. i think that's a tough life, too. i do point out it is remarkable, remarkable moment where people would rather work at google or kravath than they would at goldman or morgan. >> send the responses along. meantime, on your mark, get set and go with cramer. his mad dash is ahead on the opening bell. that's next. as we head to break, we'll take a look once again at u.s. futures. it has been a mixed bag. looks like we are strengthening a bit with the dow looking to open with a 14-point gain. with a new view of the market, you could see an investment opportunity you didn't see before. fidelity's next generation ipad app lets you see what's trending around the world, as well as what over a million fidelity customers are trading throughout the day. and advanced charting lets you customize your views and set up your own comparisons. our ipad app can help refine your strategy or even find a new one. i'm velia carboni, and i helped create fidelity's next generation ipad app. it's one more innovative reason serious investors are choosing fidelity.

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right now we are seeing oil prices mixed overall this morning. we've got wti coming off of the lows after the better than expected tay ta at 8:30. overall we're seeing some of the fizz come out of the oil markets after iran talked back that claim that they were going to stop exporting oil to europe. nat gas bouncing necknically off of that 2.40 mark off of inventories this morning. expecting a drawdown. in the metals, it's mixed. mostly the issue is the stronger dollar here. we're seeing some profit taking. back over to you, melissa. >> thank you, bertha coombs. about 7 1/2 minutes before the bell rings. time for cramer's mad dash. let's talk amazon.com. poised to open about ten bucks lower on the morgan stanley downgrade to equal weight. price target cut.

decelerating sales growth. >> it's making less money per sales, too. one of the things that has dogged amazon is that they have blowout revenues. but it's not falling to the bottom line. morgan stanley is now questioning whether the problems are apple related, meaning apple taking some share, kindle not doing that well. but really talking about the idea that this is a slowing growth stock. so it's very difficult to put a multiple on it. think the stock can go lower still. >> tough stock to trade because their guidance, they only give you a quarter out. >> right. >> part of morgan's complaint is once the other quarterly guidance does arrive, you're not going to like what you see. >> this stock did -- it went down a lot. and then it slowly -- like google, another one that disappointed. then started going back slowly. this is part of what i regard as this moment in the market where people are saying, wait a second. not everything should bounce back. some guys did not do a good job. it was a bad quarter for amazon. i think there's a kindle backup. i also think that this story that is dogged down from

bloomberg about how amazon prime may have far fewer members. until we get clarity on amazon, i think the stock goes lower. >> wow. in terms of some of the other stocks, a lot of tech names out after the bell yesterday in terms of earnings. >> entop was good. a classic enterprise storage play. big data has been a good theme in this market. nvidia very disappointing. any time you do poorly you tend to want to blame the thai flooding. disk drives. i think nvidia is a situation where the company, i know they -- they've hiked themselves and they're not delivering. >> we're going to talk to eric wiseman, head of vf corp. later on in the show this morning. >> revenues. >> very popular ceo. popular stock. but a rare guide down. >> one of the things that made vf corp. so exciting was how they're doing with timberland. i love what they're saying with timberland. terrific organic growth in europe. that's not the problem. i want to know, carl, what is the deal? if everything's going so well why are they guiding down

revenues? certainly not commodity costs which in the second half are going to be very good. in other words, they're going to have to raise price again. i don't know. i think that wiseman interview is going to determine the direction of the stock. >> at the same time, earnings out from hanes brands after the close. cotton inflation could be a problem for v zblrks a lot of these companies locked in cotton prices when they were higher. that was something pbh talked about. cotton prices have plummeted year over year. once nose are over i do believe -- by the way, if you look at the deere downgrade by wells fargo, i do believe crop prices are coming down across the board. that's one of the reasons why he felt deere would be bad. good for the consumer particularly at a time when gasoline is going over $4. i continue to think it's a mixed picture, not a negative picture. mixed is not great if you're momentum oriented. but not bad. >> get ready for another big day of trading. we'll kick off the opening bell in about four minutes when "squawk on the street" comes back.

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you're watching cnbc's "squawk on the street" live from the financial capital of the world. opening bell set to ring in about a minute's time. this moody's warning of a downgrade, jim, sort of caught some by surprise today. not having much of an effect. it comes after earlier some moves by agencies didn't have much of an effect. >> bank stocks have had a bit of weakness. maybe they were anticipating it. bank of america, remember, peaked at 8 and change. 8 and higher change. now come back under 8. i want to emphasize i think that 2012 we've decided maybe the ratings agencies shouldn't have as much of an impact globally. because long-term refinancing has had just a remarkable impact. and moody's seems to not recognize it as a positive. >> yeah. it really is the sugar that's helping the medicine go down. >> i think so. look, it's great that europe is

not on a daily basis controlling us. when you get a day where am zon's not good and apple's not good, it turns out the vacuum is filled by tech stocks that people don't seem to care for. i do continually want to point out there's some areas that have been very disappoints. high end jewelry. blue nile. gold stocks. can't seem to find enough gold. a mixed picture. some guys on an earnings basis aren't doing well. >> opening bell, you can see that on the left side of your screen. malakai. pekingese winner of the westminster dog show. >> people love dogs. i've been recommending petm. pet smart. trying to find a good dog food company. difficult to find. >> also, nasdaq, a biofou biopharmaceutical company. what's number one?

>> i'm going to focus on apple. i think one of the things you don't want in this market is the hot money to come in and feel confident. and when you get that, then you begin to get the disappointments that make it so you don't look at the housing starts number which shows, perhaps, 15% growth in house ing. you don't look at the employment number which is a good number, carl. we were talking about what's the major minor cord. the major cord is improvement in the health of the united states economy. minor cord is like a smuker missing the numbers. hanes brand. >> that's okay with you. you're not just talking sideways motion. >> i really -- when you go through those charts, carl, you see all the stocks go straight up. what you want to avoid is what happened last year where the year started off very strong. we tend to forget that because this year started off very strong. we tend to forget year to year. then it became a disaster. i like the fact that the market could cool here. if we get expectations up huge, we could have a repeat of last

year, carl. we can't have that. >> last night you saved some tough words for the likes of a zynga, abercrombie, weight watchers, companies that told you one thing, a few weeks later the story was different. you said sell them. >> when you have abercrombie telling you 14 days ago that business is bad and they come out yesterday and say business is good, when you have zynga coming out of the ipo shoot disappointing as per, let's say, michael kors which was fantastic. weight watchers, massive terrible quarter, terrible guidance. these are things that make people upset at home. people at home are so beaten, carl. they're so beaten. we've got to get them back in. we can't get them back in if it's a sucker's game. >> you want some consistency from some of these companies. >> yeah. i saw some real retail interest at the beginning of this year, carl. you can tell from the way it would bubble up. suddenly it seemed like, well, wait a second. have we gone too far too fast? professionals taking in -- professionals saying wait a second. apple 525. i'm not backing away from apple

being an earnings story. i don't mind a little selloff, carl. i just don't mind it. >> yeah. earlier this week, gas prices, lead story on nbc nightly news. is that the function of an improving economy or is it something that derails an improving economy? >> the inventories were lower. but i think there's a budding sense that there is going to be a strike by israel of iran. iran can pull out a lot of oil. iran still a very important producer. we have knocked out enough to make us energy self-sufficient. in this country we're not take advantage of the natural gas prices at 2:47. not taking advantage of the keystone, that canada had a lot of oil. we have an opportunity to change the gasoline dynamic in this country and we haven't done it. >> interesting that even as iran tries to show off its would be nuclear capabilities, it's also inviting some countries back to the negotiating table. >> yes. something to watch, definitely. something to watch to my right side here, carl. i've got a dog. >> we've got a pekingese here. we're going to get him set up

and have a chat in a moment. first to melissa and bob on the other side of the floor, guys. >> we were just talking about the next step for greece. that would be monday. >> yeah. and the big question is, they're going to have the eurozone finance ministers meeting. are they going to approve this $130 billion bailout. what do you think? you've been following this. >> my guess would be no. >> yeah. the europeans are looking really hard line on this. this letter from samarus where he pledged support but said we're going to renegotiate afterwards was a death nail yesterday. everyone was passing this around. all the european leaders saw it and said, i'm sorry. this deal is not going to go through this way. we need better assurances. are they going to get it? the best outcome clearly is if they approve the deal even with the escrow. it's certainly not going to be approved without some kind of escrow. will the greeks get along with that? if they don't, is there some way to salvage some part of this deal? what part is the most essential? some people are floating the idea maybe the psi, private sector involvement deal, can

sort of be broken off here. you know why? you keep talking and i keep talking about this march 20th deadline. >> right, yeah. >> that's when $14.5 billion in debt comes due. >> right. >> it's the sort of -- that's been holding over greece for months now. what if you could get as part of the private sector deal a pose poenment of that? >> let's just postpone all of these. >> look, this is very risky and very complicated. but there may be some way to do that to buy them a little bit more time to get past the greek elections. that's obviously what they don't want to deal with. they don't want -- the european leaders want a greek election and clear greek leadership they can negotiate with. not what they've got now which is an interim government. >> what did -- given we're coming off the worst 2012 selloff yesterday, what are traders saying about that if it is postponed till april after the greek elections? >> risky strategy. everybody keeps saying we've got firewalls built around europe.

i'm not so sure about that. ask the stock market yesterday and the bond market. they seem not to agree there's this enormous foolproof firewall built around it. that's why i think the whole thing is a little bit risky at this point. look at what's happening to the overall market. up a little bit today. it's not just apple. you guys had very good comments. >> transports. >> just on apple, 54 million shares yesterday. the highest volume we've seen in more than a year. >> in the options pits the equivalent of 100 million shares, equity shares traded in the options pits. call activity only not even counting puttage activity. >> this from an expert in the options business who knows her game very well. that's a fwood point. here's a good point i want to make sheer. transports down 3.6% in the last few days. we've got materials down 3.5%. home builders down about 5%. i'm not saying it's rolling over. it's looking toppy right now. for certain very key components. the euro, same situation. five big market movers including apple look a little toppy. finally, january housing starts. everybody said hoo ray! we're finally seeing some signs.

remember how warm it was in january? seasonally adjusted annual rate. sar. likely boosted very much so because more starts than normal because of the warm weather. >> good point there, bob. thanks for that. carl, back to you. >> thank you. talking about all that economic data. let's get to rick santelli over at the cme. we've had a lot to watch about 45 minutes ago, rick. >> absolutely. we have a lot to watch. we still have important data coming up. i like philly fed. i think that's a fairly realtime aggressive indicator to pay attention to. in 23 minutes we'll be parsing that. if you look at the world conditions with greece, portugal, spain, you know, many traders down here continue to say it's really about the banks. to that end, of course, i'm not watching banking stocks as closely as some. but it certainly looked like the second largest bank in france, their fourth quarter net, off by just a whisker shy of 90%. that pretty much says a lot.

it underscores why something the size of delaware is going to have an impact. it's not really about greece. it's about greece's wonderful paper and which vaults around europe it's stashed in. if you look at rates, we're at 1.95. we were close to 1.97 after some of the better than expected data. if you look at credit markets it's telling you maybe equities are going to deteriorate. same dynamic as early yesterday, so say trader. back to you, carl. >> thank you very much. fresh from ringinging the opening bell about eight minutes ago and also fresh from celebrating his win as best in show at this year's westminster kennel club dog show, malakai of the pekingese breed. we're joined by him this morning along with his owner. thanks for being with us. what's it like ringing the opening bell if you only have paws instead of hands? >> it's a little trickier. he handled it well. >> what have the last 48 hours been like for you? >> it's been a whirlwind. we've only had a couple hours' sleep.

we've been on every television show. this is a culmination of an exciting couple days. >> you've done, i think you told me, 4,000 dog shows. >> in my lifetime. not malakai. malachy has been to about 300 dog shows. >> not the first pekingese to win. >> the fourth pekingese to win best in show at westminster. >> he's been called -- i real some of the descriptions from various writers. an ewok toaster. cousin it's pet. a slow moving hairball. in fact, he could only do half the circuit because he moves relatively slowly, right? >> beauty is in the eye of the beholder. we're happy that he -- the judge found him beautiful. >> how can he be this calm? right? there's a lot of excitement here. >> he takes it in stride. he's been around a long time. been to a lot of shows. >> what qualities -- i think we got a shot of him. what qualities do you think put him over the top? >> judging is a matter of taste. it's just like if you're judging a beauty contest and you have blonds, brunettes, redheads.

everybody's got their own preference. they're all beautiful dogs. the judge found him to be his preference. >> i have a long haired chihuahua. if i hold him more than four or five minutes, he gets a little antsy. he doesn't seem to mind. >> he's good to be held. he's good to walk. he goes with the flow. >> you doept need a roller -- maybe you do need a hair roller afterwards. >> i definitely need a hair roller. >> finally, you were -- you'll probably be the last dog to go to the traditional sardy's visit, a big restaurant here in new york city. the mayor, since you can't bring dogs into restaurants, saying that's it. >> that's a shame. because we were in a private room. there were no customers in there. malachy really enjoyed the food max prepared for him. >> you met trump finally. >> yes. he got to meet mr. trump last night. >> his hair was being compared to malachy. >> yes. mr. trump held him. he looked good with a pekingese. >> thanks for coming by. congratulations once again. >> thank you. thanks so much. a money management firm is

teaming wup a man behind aig's restructuring. on their radar of disstressed investing. david faber has an exclusive with the heavy hitters. as we head to break, take a look at this morning's early movers here on wall street. [ male announcer ] the draw of the past is a powerful thing.

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the partnership is born. third avenue management making an equity investment and a restructuring advisory firm run by the treasury's former chief restructuring officer. together the companies will create investment products and strategies focused on companies experiencing financial distress. david faber joined by the heads of both those firms in an exclusive interview. >> ceo of third avenue, a fund roughly $12.5 billion under management. yesterday you guys announced a partnership. you've started up your own deal. he's investing in it. you know, i'd love to start off sort of with both of your views of the world right now. we've decided, well, europe maybe not going to be that big an issue. i would think, though, in your world europe is still a very big issue. >> thanks for having us. yeah, europe i think still is the big macroeconomic question

mark. it's important for the states as well. obviously the recovery here is taking root. i think if you look at the numbers in the united states, it's really the government who have been refrenching. the private sector is looking pretty healthy right now. job growth is up. except in the government sector. but big influence on the financial sector is what happens in europe. you know, without financing, this economy has proven like every other economy to be hurting. europe right now is really the question mark for the financial industry. >> there are a number of banks, of course, looking to shed assets. that is european banks, david. many of them are selling things over here. does that create opportunities for you or are you looking at all this from afar as well? >> no. certainly opportunities for third avenue and potentially for distressed opportunities down the road. but we're very conscious of the price that's paid for investments. just being available to purchase in the market doesn't necessarily make it attractive. the opportunity really comes

when the pricing sets to a point where we think we can make a reasonable return on that investment. so we're watching carefully right now. i think jim's comment about the european effect will be more relevant to what's happening domestically. because if that macro event happens, if the fear of what some people -- >> our own markets seem to have pulled back from great concern there. particularly after a number of things occurred last year in europe that seemed to at least stabilize the financial system. is that unwarranted? should we still be very concerned? >> no. you have to distinguish between liquidity and insolvency. so what the europeans have now done is they've provided the banking system liquidity. there are not going to be fire sales of assets which is what people were fearing in the fall. >> or a failure, frankly, of a bank. >> there may still be failures. the point is that they've got enough liquidity through the ecb now to forestall any fire sales. fire sales affect asset pricing away cross the board as we saw right after lehman filed. so there's liquidity in the system. but you still have highly

leveraged financial institutions in europe that have to deleverage. >> much more highly levered than ours are. >> much more highly leveraged than ours are and much more highly dependent on a different asset klaas. here the banking system was highly dependent on real estate. there the banking system is highly dependent on sovereign debt. the sovereigns there are weak and retrenching and restructuring. the issue is, are they going to let anyone default? greece is about to go through a restructuring. maybe orderly default. but it is going to impair bank assets. now, they've had a year and a half to get out in front of this and avoid any kind of catastrophic event. but, you know, it is still a default. >> right. >> it's still an impairment of a large part of some banks' balance sheets. >> we talk a bit here, not as much as perhaps we're used to about the strength of our capital markets. particularly the ability of large corporations, even up and down the scale of investment grade to below investment grade

to access those capital markets, repair their balance sheets. where are you guys then focused at third avenue in terms of where the investment dollars are best spent? >> again, we're looking at individual securities, right? and we're trying to find those that are priced the best. where are those opportunities? today they're more prevalent in the middle market. >> which is defined as what? >> we look at sort of a billion dollar capitalization as a bogey, if you will. >> why is that? >> they're just having more difficulty accessing capital. big banks don't want to take a lot of risk. it's very easy to lend to big companies. you get lots of syndications of those loans. there's lots of interest. it is driven in part by flows. flows have been strong. for the first time, actually, this week we saw flows into equity funds. you know what blackrock said about that just a little while ago. first time in a long time we're seeing flows in domestic equity funds. flows are still very strong into fixed income funds, high yield

funds funds. that's drive ding demand for th big deals. >> there's an interesting thing about the evolution of capital markets. one of the consequences of the crisis of 2008 is -- this goes to the middle market -- that the middle market companies are largely dependent upon, as are small caps, on bank finance. when the banking industry is retrenching and deleveraging there's less of that available to them. large cap companies, some middle cap companies can access the bond market which has been incredibly strong since the crisis. that's been really where you've seen the greatest of credit availability. so for smaller companies, the -- and we've heard this from the administration. you know, the credit formation in the small business sector is really the problem facing the country when the banking industry -- >> is that where you're going to be focusing your practice in part? on those companies that are unable to vaz capital efficiently and there are are in distress? >> it's probably where the greatest opportunity lies is where -- where the credit system has withdrawn from providing continuous credit to a given

sector of the economy. that's where you're going to find the greatest opportunity. >> david, how are you finding things macro when you look at the u.s. this year. >> you've had me on your show before. it's a great question to ask me because you know i'm not going to give you an answer. >> it's not that tough of question. >> here's one of the long teachings of marty whitman, right? there are three sins to investing. when you focus the primacy of the income statement, the prime city of top down and primacy of macro. it's stuff we don't focus on. we're going to figure out where opportunity lies. we're going to price it right. we have great people now, intellectual capital that is now part of our organization with this transaction we're doing with jim. i think we'll make some fantastic investments for our clients. >> jim, final question to you. aig, still a significant stake by the u.s. government. you aided, of course, in that restructuring. what's your advice at this point? should they get out or do they wait for a proper exit? >> you know, the stock is back trading right around where the government breaks even on it.

you know, i'm -- i'm very bullish on the company and the management team, i think, has done a great job. the government has a lot of shares to sell. >> yes, they do. >> my advice is, sell early and often. take advantage of any opening in the window when you can. because you're going to be there for a long time no matter when you start selling. you're going to be selling for a long time. >> billion is a lot no matter how you slice it. jim millstein, david barse, thank you both for being with us. carl, back to you. >> thanks, david. a lot more "squawk on the street" still ahead. >> coming up, we've got a 6 and we've got a 60. put them together and you get jim cramer. six stocks in 60 seconds. it'll make sense. when "squawk on the street" returns. with all the opinions about stocks out there,

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time for six in 60. six stocks, 60 seconds. qualcomm top pick at cowen and company. >> the bellwether of semiconductor company. perfect to see it stabilize. it could lead to a small turn after a big downturn. >> directv adding few subscribers than expected in the third quarter. >> i felt tv did pretty well this quarter. i might be focused on the fact that comcast, our parent has had such a blowout number. >> up today again.

ralph lauren upgraded from buy to hold at argus. >> i'm more focused on vf corp. not delivering. vf corp. going up which therefore means that perhaps people think vf was just being cautious in their guidance. >> smucker results. >> the run is over there. they got the big gain from the buy of the division from proctor. that's about it. >> cvs out with earnings last night. >> i think tv is better than mobile advertising. i think those people who rode on tv are making a big mistake -- >> finally, pulte group. >> these stocks have had a remarkable ride. profit taking seems in order sfl for more on the stocks go to sots.cnbc.com. >> tonight on mad. >> bombardier.

the other one beside boeing and airbus. gold companies have been doing quite badly. the one that's been able to find gold is gold corp., gg. a good story even though bar rack doesn't. "mad money" 6:00 and 11:00 p.m. eastern time. coming up, breaking news on a potential market mover. philly fed survey. also zillow ceo spencer rascoff. 

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welcome back to "squawk on the street." february philly fed manufacturing index increased more than expected. 10.2 is the number. 7.3 last look unrevised. this is better than the 8.5 to 9 that we were looking for. 10.2 is the best number since october of last year when this index reached 10.8. this morning seemed very similar to yesterday. the stronger moves that we saw in the euro currency really affecting the market and also affecting, obviously, the dollar index. equities up. euro seems to be moving up as well. we're going to pay close attention to what's going on in europe and digesting what has been, for the most part, a 75% day. pretty much three-quarters of the day better than expected. back to you. >> thank you very much, rick santelli in chicago. want to bring in senior

economics reporter steve liesman who's still looking at some of these headlines and the internals on the philly fed, too, steve. >> yes, i am. doesn't look too bad here. right off the bat, inventories take a step down. that's a sign of business confidence. prices received went up. number of employees went down, too. we watch this as a gauge of manufacturing. so that's a negative. average number of employees went up. that's the number of people who are -- i'm sorry. the workweek went up. overall the index is higher. new orders also went up. internals kind of mixed is how i would probably describe that. but still it goes along with a bunch of data that we've had out this morning, carl, that has been better than expected. i want to show you some of the commentary that we've gotten over the past hour or so from the economists looking at the 8:30 data. joel marott saying the housing starts, unemployment numbers believe the economy is shifting gears. chris rough ski says the fed policy looks more and more at

odds with a brightening economic outlook. barclays saying the jobs data reinforces our view that the labor market recovery is building momentum. take a look at what we have. ppi up less than expected on the headline but more than expected on the core. some pharmaceutical raw materials and tobacco and some other stuff playing with the core there. housing starts, best number since 2008 along with jobless claims. real quickly, guys, i want to show you, if we have it, the claims versus unemployment. some folks suggesting that, yeah, we do have it. how great is the graphics department there today? look at that. unemployment claims shifting downward. david faber, what does this chart tell you? maybe we're a little bit light on where the unemployment rate should be and suggests maybe the claims data, one is a sign of firing. >> right. i mean, is that typical of a deep recession that you get that kind of a spread? and that doesn't resolve itself at some point? >> it's totally disjointed from the normal relationship. you can see that very simply by

looking at that chart. hopefully, it's the green line will catch up downward with the blue line. that's official economic speak for we hope that the unemployment will act more along the way it used to act when it came to initial claims. i think if we keep down at these levels, guys, i think further downward pressure or downward movement in the unemployment rate is entirely possible. >> steve liesman, one question. >> yeah? >> just to play the devil's advocate. >> you? >> if what we are experiencing is structural issues with employment -- and you know what? i've heard our smart guest this morning, i can't remember the young lady's name that was on squawk box. >> con stance hunter. >> as a taxpayer, citizen, as a person that loves my country it doesn't matter who caused it or why. it's a long-term trend and it's real. isn't it just possible that the structural issues that are inhibiting hiring as reflected

in your chart might not go away considering the medicine that we are currently applying? >> there are definitely structural issues out there, rick. when it comes to that participation rate story, the work i've done trying to break it down, the demographic component to it. there's also a cyclical component to it. you have older people who work. they're working in greater numbers than they did. but in general, they work less than when they were younger as a percentage of their total population. that's the participation rate issue. you have younger people who are going back to school. using this time of the weak job market to get an education. that's kind of a long-term good, a short-term bad. yes, there are structural issues. for example, skills mismatch. people can't sell their homes to move to jobs. i tell you, if you read the minutes of the fed yesterday of their january meeting, there is a robust debate going on inside there of what exactly is going on and how much of this is structural as in the fed can't do anything about it and how much is cyclical, which means

the fed ought to push more on the accelerator. >> more breaking news. diana olick in washington. >> two different reports. let's start with the one breaking at this hour. 7.58% of all u.s. mortgages were delinquent in q 4, down almost after a percentage point from q 3. according to the mortgage bankers association loans in the foreclosure process also improved to 4.38% of all loans but just barely. down just five basis points from q 3. still near record highs. add it up and 12.64% of all u.s. loans in some kind of trouble in q 4. that's down ten basis points from the previous quarter. on the other side, though, is a new report from realtytrac today that hones in on just the foreclosure issues. not new delinquencies. foreclosure filings in january, the month after the mortgage bankers report range, were up 3% from december. one in every 624 households receiving a foreclosure filing. this is a turn as banks post robo get the system moving again. big jumps in bank repossessions. the final stage. big jumps in foreclosure activity in certain states, especially where you need a judge in the process, called judicial. that is florida, illinois,

indiana and pennsylvania saw foreclosure activity jump annually for the first time in over a year. carl? >> diana olick in washington. thank you very much for that. a lot of interesting numbers coming out of housing today. meantime, some news out of moody's as well, warning it may cut the credit ratings of 17 global and 114 european financial institutions. on the list, b of a, goldman, citi, jpmorgan, morgan stanley, barclays, bnp, deutsche, hsbc and sof gen. i've heard a couple elements of the rationale. one is profitability concerns and investment banking and the like. the other obviously wide reaching effects of the debt crisis. which is it? is it a mix of everything? >> i think it's a combination of them all. i mean, moody's does a good job here, i think, of kind of laying out the macrorisks facing the banks and kind of painting what they think the worst case scenario is as far as ratings

go. there's really not a lot of new things here. we've been worried about regulation for a while. we've been worried about a weak capital markets environment for a while. so, i mean, i don't think there's a lot of really new news here. actually, moody's is kind of forecasting they'd be doing this. it sounds as though they're looking in some of the secular trends and regulation and kind of the operations of the markets and say that these companies aren't maybe going to be as strong as they historically had been. >> surprising with surprise. you see it more in terms of them getting their ducks in a row, maybe playing a little bit of catch-up as opposed to trying to get ahead on some new dynamic? >> it's kind of the way it seems. the markets seem to be a bit ahead of this. you know, credit spreads really widened out late last year. they've come in a lot. they went out yesterday, i think, kind of anticipation of this, some of the brokers. they've been coming back in again this morning. i think the market's been thinking about this stuff for a while. the real question, though, is not what are the risks. they have been clearly identified and well known. it's how can a company like goldman sachs and morgan stanley manage those risks?

i think that's where we may not see as big a downgrade as some of the reports are suggesting. i think they're getting pretty good at managing some of these risks. >> let's assume, let's just say that moody's does go ahead with some of these downgrades. i'm thinking in particular morgan stanley, jeff. morgan stanley in today's session is down by more than 3%. if it does see a three-notch downgrade, does that impact morgan stanley's business, its ability to raise capital, its ability to conduct business? >> yeah. i mean, it would have a direct impact. depending on whether it's long term or short term, it would hurt their cost of funding. it would hurt how credit worries are viewed by counterparties to have to post more collateral. it would clearly not be a positive to get downgraded, let alone three notches. i do think the three notches is kind of a worse case scenario here. i think when moody's digs more through some of the things morgan stanley's done we'll see what less of a notch reduction. really, a one-notch reduction, even a two-notch reduction i think is pretty manageable. three gets a little scary. >> jeff, can i take you to europe and what the implication

will be of if they follow through on this there? because, of course, moody's is a trigger within the feedback loops that operate there. if, indeed, it does reduce so many of these banks and their securities to noninvestment grade, certain people will not be able to hold those securities and arguably it will affect whether the european central bank can take them as collateral for them to access the ltros. can you just speak to that for a moment? how serious potentially are the implications there? >> the implications of big downgrades are pretty serious. look, s&p has already kind of made the macro move. moody's hasn't yet. i would expect to see downgrades from this. i just don't think we're going to see the three-notch downgrades necessarily that really kind of put some things at risk. at the end of the day, the central bank in europe or here in the u.s. can change their mind and take noninvestment grade securities if that's what it takes to keep liquidity in the system. >> on those pressure points, spain, portugal. i mean, it will only surely

accelerate what's happening and the difficulties? >> it certainly wouldn't help. but, i mean, let's look at where europe was two months ago before the ltro came out and how banks were viewed. i don't necessarily think we're going to see things go back to that level. i mean, they've made a lot of progress since then. i think that's been reflected in some of the spreads. >> i don't need to tell you about some of the hedge fund managers with letters out there to investors. in some cases saying not only is greece going to default perhaps as early as next month, but if it does happen, in their words, it could bring a greater shock to the system than lehman. where are you in terms of disagreement, agreement with that notion? >> i would not expect it to cause a lehman brothers type shock. looking back in the rear-view mirror is always easier to look through. we knew lehman had some issues. i don't think we knew how bad it was or how quickly it would go downhill. people have been worried about greece for a long time. literally, i mean, i've mentioned this before, my

11-year-old daughter has asked me whether if, you know, something happens to greece, is that bad news for jpmorgan. i think it's very widely understood right now. it would not be a fwood thing. but i don't think it would be catastrophic. we start moving to a portugal, a spain, an italy, then we're talking a different story. >> all right. we've got to leave it there, jeff. thanks for coming in. good to talk to you again. >> nice to be on. >> it's precisely because of that view that the politicians are pushing it as far as they are. >> if you feel like you have fortified the room to where you can let the bomb go off, then, yeah. let the bomb go off. >> right. >> all right. coming up next, zillow's ceo, plus more breaking news. we're getting key numbers on nat gas. nat gas really moving this week. now we'll get a bead on its next direction coming up at 10:30 on the dot. stay tuned. coming up, no, not godzilla.

it's zillow. you know, the online real estate database. we'll talk to their ceo about their rocking squawk. "squawk on the street" will be right back. [ male announcer ] the draw of the past is a powerful thing. but we couldn't simply repeat history. we had to create it. introducing the 2013 lexus gs, with leading-edge safety technology, like available blind spot monitor... [ tires screech ] ...night view... and heads-up display. [ engine revving ] the all-new 2013 lexus gs. there's no going back.

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later on, the health downsides of big time banking jobs. there's a new study that's out that says if you're banker you're likely to suffer from alcoholism, eating disorders,

anxiety. we're going to talk to the woman behind that study. in the meantime, we're asking you to tweet us. if banking jobs came with a health disclaimer, what would it say? our twitter handle is @cnbcsquawkst. we'll get to responses later. stocks to watch this thursday morning. lorillard. $139 price target. marriott's fourth quarter results coming in a cent below estimates with revenue on the short side as well. the stock slightly low ner a market that's gaining. deere downgraded to market perform from out perform at wells fargo. you mentioned where we are on apple. 492.96 is where we are after yesterday's big moves. again, trending slightly lower there. all right. shares of zillow trading higher on record fourth quarter full-year results. actually, it's turned lower since. the stock also off to a good start in 2012, up more than 50% since going public last july shares are up more than 75%. first on "squawk on the street,"

spencer rascoff, ceo of zillow. spencer, great to see you once again. >> thanks for having me. >> i want to ask you about the website traffic numbers. staggering, up 102%. do you get a sense of who is going to the site? what, in fact, is driving that traffic, that increase? >> sure, yeah. 31 million visitors in january. a lot of that growth is coming from mobile where zillow is the clear leader in real estate on a mobile device. around 30% of our uses during the week and 40% of our usage on weekends is coming from a smartphone or tablet. mobile has been a huge boon to our business. that's driving a lot of that overall traffic rate. >> in terms of the revenue mix and the margins, when you have that shift to mobile, for instance, does it matter in terms of the advertising that you sell? does it matter in terms of what margins you see? >> yeah. the shift towards mobile is great for our business. because we have a montization

scheme on mobile when works beautifully. when you're out shopping for a home looking on your zillow app for a smart phone, you can click to call a premier agent or send an e-mail from our smartphone. a third of contacts to advertising premiere agents are coming from home shoppers using zillow on a smartphone. this mobile migration is a huge tail wind to our business. not just from a usage standpoint but from a revenue standpoint. >> mr. rascoff, good morning. there's a huge debate as you know better than i know industry now whether about when you take a listing from a broker, you should actually put an add vert from a rival broker next to it. i understand some brokers have withdrawn their listings in certain parts of the industry as a result. i know you've taken in a big gun to try and deal with that within the business. is this a potential major flaw in the business model? >> the concept of dual agency, which is to say that a buyer should be represented by one agent and a seller should be represented by another is pretty well understood and well appreciated in the real estate industry. this is how the real estate industry works. no. this is not a big issue.

literally a couple dozen listings out of our over 4 million listings have left zillow. it's important to remember zillow has property information on about 100 million homes. we're about a lot more than listings of homes for sale. this hasn't been a major issue for us. >> in terms of competitive threats, obviously you have some rivals who approach the model in a slightly different way. which ones concern you the most? which ones do you envy the most? >> well, zillow is still relatively small from a revenue standpoint. we have less than 1% wallet share of what real estate agents spend advertising every year. so 99% of what agents spend is spent elsewhere. yet we're the largest real estate website. there are competitors out there who have more revenue than us. we're gaining share quickly. but we still have a long way to go. we've just scratched the surface of the beginning of the opportunity. >> you didn't answer carl's question about competitors. look at the landscape. facebook is out there and could at the turn of a dime go to the

real estate business. >> google had a real estate product. they withdrew saying that companies like zillow were innovating so well on behalf of the consumer they didn't need to compete in real estate. google had a mortgage product. they withdrew just two weeks ago, again, saying innovators like zillow were doing a great job innovating on behalf of the consumer. so far our focus on this particular vertical very formidable to keep the big boys away or scare them away once they entered. >> the staggering amount of cash for the size of the company, $70 million, what will you spend that on? i know technology is clearly key here. what is the cutting edge from your point of view? >> we entered the quarter with around $90 million in cash. we're continuing to invest in the business. we're making bets on things like mortgages, rentals, mobile. these are things -- these are bets that will pay off in future quarters. now, mobile is already paying off. but that's like rentals and mortgages are things where we're

creating these marketplaces which are not monetizing in the near term. but over time are going to end up being significant revenue drivers for us. that's what we're continuing to invest our capital in. >> spencer, good to see you. thanks for your time. spencer rascoff of zillow. semis have shown some big gains since the beginning of the new year. what's driving that and which names should be on your list? we'll talk about the chip trade in just a moment.

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speaking of technology stocks, the semiconductor index has been soaring since the beginning of the year, up about 18%. if there are many more dips in the days ahead, should you buy in? vija rakesh with stern agee. patrick wang also joins us. before we go further, we should talk about nvidia which is down today, scaling back sales expectations and saying it's got -- what's your view? >> we think they probably have issues for a couple more quarters here. they have this yield issue which

obviously can't be solved overnight. probably take a couple of quarters to solve it. it's key. because in the key design period when new notebooks ramp into june, summer months, they're kind of missing that here. they have some catalysts coming up with handsets. but that kind of gets overshadowed with the issues in the core business. >> let's pull back and talk about semiconductors in general. it says in the notes here, patrick, potentially you're in a very sweet spot. because you are a very lonely bear. you think there's a potential for a large amount of money to be made on the short side here. >> yeah. you know, i think what we want to do is take a look at what's happened here. semis have moved up 30% from the bottoms. what we've seen is that we've seen the stocks really trade at a mid to late cycle multiple. when the fundamentals are finally inflecting right now. so semis have moved really, really fast. i think what we have to ask right now is, you know, the question at hand is, will demand continue to improve? i think we're at a proverbial fork in the road.

i think when you look at demand out there, outside of that, in all the iphones and ipads out there, visibility is really, really bad. talk to nine out of ten chip companies and ask them how they feel demand is going to be in q 2 and q 3. they'll tell you they think it's good but they don't know. we're on the dark side of the moon. >> you would short, then, from what you're saying? >> i think it makes sense to for some profit taking. i think it's -- right now it's tough to be short in size for semis. i think in general, there is investor demand to want to move into the semi space. i do think we have moved quite a bit here. i think investors should start looking at profit taking. really start locking in some of those profits as you see right now. >> vijay, what's your view? >> i agree with what patrick said. the stocks have had a pretty good run. we would be selectively bullish. i think there are names in here which are still pretty fairly valued. at least a 30% discount to the peer analog or semi group.

kwal kom, avavo. also names like nxp. there are names where you can go in. memory names haven't moved a whole lot. sandisk still sitting there. i think there are names, being selective on the names you pick. >> thank you for sharing analysis. when we come back, gm's conference call is on right now. phil lebeau is on that and will update us after the break. plus, nat gas. we'll get some numbers when "squawk on the street" continues. don't go away. ♪

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i'm bertha coombs at the new york mercantile exchange. numbers from the natural gas inventories from the government. 127 billion cubic feet drawdown. that's closer to the high end of the range of expectations. although still about half of what we saw a year ago for this week. right now we've got natural gas continuing to rise. we'd seen a bit of a technical bounce this morning. it seems as though the price at 2.40 is an area of support. we bounce there. now we are moving higher. as far as the rest of the energy complex, that's starting to draw up crude as well. crude has been flat to the downside this morning while brent has been strong. as investors here continue to monitor the tensions with iran. carl? >> bertha coombs, thank you very much. some of the stories we're squawking about. 7

7:31 on the west coast. signs of expansion in mid-atlantic factory activity. philly fed index up by almost three points in february to 10.2. home of north face and timberland scaling new heights. shares of vf corp. hitting all-time highs on expectations of stronger earnings. we will hear from vf's chief executive in the next hour. freddie mac says the average rate on the 30-year fixed mortgage remains a record low 3.87%. simon, we should also mention steven roach, nonexecutive chairman of morgan stanley asia, their long standing chief economist, stepping down after 30 years at morgan stanley. >> heading for ak deem ya. >> yes. >> we're well on to our way of raising yesterday's 97 point loss on the dow. as you can see, all sectors are higher. indeed, all but two members of the dow jones industrial average are also higher. the breadth in terms of the advance decline line. 2-1 advance to decline down here at the nyse. over at the nasdaq this thursday

morning, there you can see the ratio is 2-1. >> general motors posting a weaker than expected quarterly number. it's blaming a bad situation overseas while scoring big here in north america. shares are higher right now by just about 4% or so. phil lebeau has been following the conference call. he's got the latest for us. phil? >> melissa, we are just about to begin the question and answer session of that conference call. by the way, cfo dan amened about two minutes ago said we know the situation in europe is bad. we're going to talk more about that in a bit. but we don't have any details as of right now. let's go through the numbers of general motors this morning. it was a miss in terms of what wall street was expect ing. the company reporting a gain of 39 cents per share for the fourth quarter. street was expecting 41 cents. revenue, roughly in line with expectations coming in at 38 billion versus 38.2 billion. and it was the most profitable year ever for general motors. $7.6 billion is how much money the company made in 2011. a $3 billion improvement over

2010. but europe continues to be a problem for general motors. it reported a loss of $600 million in the fourth quarter. this morning on squawk box, here with cfo dan amond had to say about how quickly gm needs to move in terms of restructuring europe. >> the deadline is now we're working on this aggressively. we've put in a number of senior managers into europe, made a number of changes in the team over there. we're in discussions with our unions and other stake holders about ways to get this business back to profitability. >> as you take a look at this chart, this really says it all about general motors. yes, they raked in $7.6 billion in profits. but it's the profit margin. this is the target that dan akerson has said time and again, they're slightly better than ford. better than chrysler. but way far away from hyundai at 10.4%. that's the profit margin. they would like to get up to 9% or 10%. that's the goal from general motors. quickly take a look at shares, up about 4% on the day. not surprising given the fact that, you know, this is an

improvement over last year. $3 billion. guys, when we put out this note earlier today about the improvement in the bottom line from gm, put it out on twitter, immediately i got a flurry of tweets and comments from people essentially saying, you know what? how come these guys aren't giving more money back to the government? they've already repaid the government in terms of the bailout. but look at some of these comments that we're getting on twitter after gm posted its most profitable year ever. one man wrote, great, now time to give back. bailout. someone wrote, what about taxpayers? what do they get? mike reiten wrote, more hard earned american taxpayer dollars down the drain. guys, that's just a flavoring of what i saw on twitter today. once people saw the earnings from general motors. so it shows you just how emotional people are about this issue of gm getting bailed out a couple of years ago. >> and their earnings are going to carry that -- that anchor around their ankles for a long

time because of what happened a couple of years ago, phil. >> yep. absolutely. >> thanks a lot. when we come back, the ceo of orbits. a lot happening in the travel and online travel industries. that's a little bit later on this morning. plus, banker stress. how bad is it? brings us to our tweet today. if banking jobs came with a warning label, what would it say in all those 100-hour workweeks and stress and you've got bosses over your shoulder, you've got to make your number. >> unlike everybody else in the economy, of course. bankers, poor bankers. my heart bleeds. poor bankers. >> also, who's making money off jeremy lyin? a check of msg shares up 22% in three months. darren rovell is going to show you who else is cashing in. with a new view of the market, you could see an investment opportunity you didn't see before. fidelity's next generation ipad app lets you see what's trending around the world, as well as what over a million fidelity customers are trading throughout the day. and advanced charting lets you customize your views and set up your own comparisons. our ipad app can help refine your strategy

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take a look at shares of microsoft. unusual strength in that it is outperforming the rest of its peers in the tech sector along with the broader market. 30.68 the last trade there up more than 2%. this is just about 12 cents away from a fresh 52-week high in today's session. >> we'an hour and ten minutes i. stocks to watch. general mills. masco currently trading at 11.78. a little pop. discovery communications fourth quarter profit topping estimates. the stock also trading close to an all-time high this morning. i guess that's what they call the oprah effect. >> if you live in manhattan and you've got time warner cable, you still can't watch them. but in case you couldn't watch them last night, the knicks did meet sacramento. 100-85. just about all the attention, of course, being focused on jeremy

lin. >> did you see that? >> did i see it? i've got time warner cable. so i can't. >> were you at the game? unbelievable. the seven-game winning streak, of course. ten points. but a career high 13 assists. >> 13 assists, yeah. unbelievable. >> as he continues to work his way into the paint and then give the ball to someone who's in a good position to make a basket. let's bring in darren rovell who can talk about not only linsanity as it stands but the jersey sanity, darren, that's working its way through the city. >> carl, as melissa knows, because we had mitch model on "fast money" yesterday, it is unbelievable to see what exactly is going on. guys cutting open boxes and fans just waiting, buying these jerseys. you see the video behind me. it was unbelievable last night. mitch model of model sporting goods, they have 96 stores in new york and new jersey. telling me he bought 168,000 lin items. talk about someone taking a risk. also if you can take a look at

the ticket sales, these are secondary ticket prices according to tick iq. the average home ticket price before jeremy lin started starting seven games ago was $229. it's up about 20%. then if you look at individual games, obviously they're going to play the new orleans hornets on friday. that ticket price is up big time as well as the mavs. yes, you are reading that right. the mavericks' average listed ticket price right now in the secondary market for mavs at knicks on sunday, i think it's at 1:00, is $704. how about that, guys? >> that's a huge figure. >> for a -- it's -- listen. simon, it's -- it's obviously a regular season game. it is against the defending champs. but the average listed price. that doesn't mean you're going to get it. >> exactexactly. >> that doesn't mean you're going to get it.

that does mean for a regular season game if the average is $704, that is outrageous. >> at least it's on espn. not msg. darren, when is time warner cable and msg going to figure this thing out? come on! i'll bring dolan, britt, we'll get it done. >> supposedly can be, david, they went back to the negotiating table or at least had a meeting. but yesterday time warner was on wfan. a spokesman said that they're not close because they want the 6% increase that msg originally proposed. msg wants the 53% increase. and they really haven't been able to make a move. the question is, because, as you mentioned, so many games are now going to be on national tv, especially with lin. there might be even more games. is there enough to move? but realize, the rangers are playing well. so if this is not an impetus to get together, what is? >> right. one would imagine. msg stock as we pointed out has moved up sharply on linsanity. there's no other explanation for it. again, for those out there in

the rest of the nation we're talking about new york city. specifically time warner cable, the main provider. no longer carries msg because of the dispute we're referring to here. so that knicks fans aren't able to watch the game from home. >> melo says he's not a selfish player and that no one who's ever played with him would say he was. >> jeremy lin was on the radio this morning. he said the funny thing about that whole debate was that carmelo was the one who always supported him and told mike d'antoni, coach of the knicks, to put him in the game. i don't know. i think when carmelo handles that rock, he's used to something. you look at the denver nuggets and what they became after he left and how good they are. carmelo's really getting it right now. but we'll have to see. everyone cheering last night, you know, lin for mvp. quite amazing. actually, sportsbook.com had lin at 100-1 to win the mvp. they told me yesterday it was 50-1. yesterday morning. yesterday afternoon, they said

they got $12,000 worth of bets on 50-1 and now it's 25-1 this morning. >> oh, my god. >> it's crazy. >> ridiculous. i like people who went last night who were upset that he got a rest. he leads them to a blowout, then they rest him. people are mad because they want to see him play more. >> we want lin. we want lin. he only played 26 minutes instead of his usual, what, 42? i got to tell you, the knicks, just from him dishing -- look at this alley-oop. the knicks look better than they have looked in ten years. this is just such an amazing story. it doesn't seem to stop. there's more and more bucks every day. by the way, tomorrow on squawk ton the street at 9:45, we're going to have his agent, roger montgomery, who only has only one other nfl or nba client. he's kind of like the jeremy lin of agents. we'll have him on and we'll talk about endorsement deems and how they're going to cash in on the business. >> i love that. i love it. after the lebron humiliation, it

couldn't be sweeter for those of us in new york. talk to you later, darren. thanks. when we come back, just how unhealthy is banker stress? the money sometimes comes with a price. also ahead, steve rad ner talking about some of these gm numbers today. he's up in the next hour. then rick santelli is in chicago getting ready for the next hour as well. what's coming up, rick? >> all right. let's see. let's talk greek rollovers, sm listened crisis, and lehman and drexel. we should have learned lessons by those three examples. life lessons. what are they? if you want to know, you're going to have to tune in, top of the hour. see you then. [ leanne ] appliance park has been here since the early 50s.

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insomnia, alcoholism, heart palpitations, eating disorders, explosive tempers. according to one professor, those are the trade-offs for many investment bankers. alexander michelle is a professor at the university of southern california. just completed a study and is here to share what she found. dr. michelle, good to have you with us this morning.

good morning. >> good morning. >> this study actually goes back a few years. almost ten years, in fact. i think you actually tracked or shadowed some of these bankers as they made their way into life on wall street. in short, what are your findings? >> that's right. i did track them for ten years. and my findings are, perhaps, not surprisingly, that when you work under 20 hours a week, something snaps. the interesting finding is, what exactly snaps. it's not technical accuracy. the bankers were quite accurate in what they were doing. but what snapped was creativity and judgment. that's really important in our new knowledge-based economy. because we now compete on innovation. i mean, if you look at apple, for example, they outsource everything that has to do with manufacturing. but what stays here are the creative aspects. so i think we need to listen to this. >> we're looking at a graphic here of what happens in the first couple of years. obviously they're fresh. they can work long hours.

they can neglect their families. what happens in years three to five, three to five, five to seven and up until ten? >> the positive effect for the organization, the high performance, lasts about four years. that's how long your body can take this approximately. in year four, there are signs of decline. there are physical breakdowns. you can't sleep. some severe health issues, some emotional problems. but if you are a high cheever as these bankers are, what do you do? you just push harder and that exacerbates the problem. and so starting in year four, you saw these break down cycles and in year six, for some bankers, they exacerbated to such a level that they needed to adopt a new strategy. 60% of the bankers just kept going, but 40% needed to adopt a new strategy, actually had to listen more to their bodies. and that's when creativity

increased again. >> dr. michelle, what is the control group in this study? i'm just curious. if you you took anybody who worked 120 hours a week, would you see the same result or is it unique to investment banking? >> i think that is the important aspect of the study. the study is a qualitative study, so it does not have a control group. and the purpose of the study is to discover patterns that then hopefully will be tested in about pe experiments. but your question will this will happen to everyone and my answer is yes. we have a lot of people in our knowledge based economy, lawyers, doctors, engineers, who work really hard. and also in more traditional industries that are now competing because of fast paced technological change. so the study asks what are the consequences for these individuals, but also for the

companies and society as a whole. >> you say there is at the center a paradox of control. what is the paradox? >> in our knowledge wabased economy, people cherish autonomy. they want to work when they want to work and they would like to feel that they're not controlled by an organization. so what you see that in professional service firms, many of the traditional controls fall away. there is no manager. professionals manage themselves. no supervise or breathing down your neck. you can take vacation when you want. people come and go to the gym as they please. never the less, the paradox is people work as if they were being controlled, they work 120 hours per week. so i set out to study why do these people work so hard when there doesn't seem to be any organizational necessity to do so. and the other aspect -- >> because they're type a

personalities. >> well, that's what the bankers would like to say. they say i work so hard because that's who i am and because that's how i want to work, but the study uncovered that there are organizational controls that are invisible. and the interesting thing is some of these invisible controls are actually designed to increase work life's balance. so they give bankers free meals and secretary aerial suppo secr cars, but it keeps bankers even longer at their jobs because it's now so convenient. >> i don't believe anybody works 120 hours a week. i'm sorry. that's 20 hours a day for six days? maybe they get sunday off? i mean, come on. i know a lot of bankers p about i would assume a lot more than you do. and they work hard and they travel hard, but they don't work 120 hours a week. >> you're right, so if you look at the paper, there is a range of working hours. and the analysts are working

quite hard. and i would say the average working hours are about 80 hours a week and of course it declines -- >> which is an enormous amount of work. many who are successful can retire. we've seen senior bankers in their late 40s being able to retire. i guess then they can kind of repair their health to a certain extent. >> yes, the average age in these banks is 35 years. and that's another question we need to ask as an economy. do we want these talented resourceful individuals to retire at age 35. >> before we let you go, how much of the stress do you think actually comes from david's point and that is keeping track of how much money they're making, whether or not they are he's making more money than the trader who sits next to them? >> so i studied investment bankers which is a little

different. >> caller: culture and investment bhankers are oriented primarily toward the client. and i do think money matters of course, but i think these people work hard because they care about their clients. they want to do a good job for their clients. >> interesting stuff. appreciate your time. thank you. brings us to our tweet question today. if banking jobs came with a health warning, what would that be? beware, right? >> of all the money you'll make. >> tweet to us. responses in just a moment. people with a machine.

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thanks. ♪ okay. what's your secret? ♪ [ male announcer ] the new united mileageplus explorer card. get it and you're in. there's been an accident at the world trade center site. a large column has fallen 40 stories from a crane at the construction site, at least one vehicle has been crushed. one minor injury reported. we're working on getting more details. but so far we know a large column falling 40 stories at the world trade center site. squawk on the tweet, we talked about this research out of usc about all the

investigation that investment bankers are under in this country. so we got a bunch responses. our question was what warning label would a bank job need to come with. jonathan writes caution, beware of falling objects like securities, bosses, bonuses, and overall life enjoyment. jay writes caution, membership in the 1% can cause severe disassociation and loss of judgment. and jerry tweets, misplaced populous anger may be hazardous to your livelihood. and balances in accounts may be smaller than they appear. man, people are smart. i got to say. very nice. >> they are. it was a fascinating segment, i thought, in terms of the study. >> until you juxtapose it in the fact that a column has fall un40 stories and construction workers are under a greater deal of stress. >> much tougher work. what's coming up tonight? >> we'll be all over the baidu earnings. also microsoft's mysterious 2% move. what could it be.

it might have to do with index rebalancing. >> thanks, guys. we'll see you later. stocks in the green, of course. mostly on the economic data. here's what you missed if you're just tuning in. here's what's happening so far. >> the economy is much better equipped to handle a greek situation now than it would have been a year ago. >> this is a misfor the fourth quarter for general motors. reporting 39 cents a shash. the street was expecting 41 cents a share. >> initial jobless claims moved from 361,000 down to 348,000. >> we have an opportunity in spite of the president's budget to act responsible and hopefully over the next few days we will do that. >> i know people at home don't want to hear it's healthy when the market goes down, but we had a lot of talk about a parabolic

move. so it looks like people are taking some profits. i think that you need an earnings basis or at least an earnings rumor to get a reversal started. the kind of traders who are come into apple are not your friends if you own the stock. >> let's get a look at the opening bell. what's it like if you only have paws? >> it's a little trickier, but he handled it well. >> manufacturing index increased more than expected. 10.2 is the number. >> i think when they work through some of the things morgan stanley has done, somewhat less of a notch reduction and really a one notch reduction, even a two notch reduction i think is pretty imaginable. three gets a little scary. >> welcome to the third hour of "squawk on the street"s. a quick check of the markets.

dow, s&p and nasdaq all with gains today, trying to make up for yesterday's losses on the dow. of course the worst so far from the year. a lot of the dow strength coming today from jobless claims. 348, a four year low on claims. meantime jm schmucker down sharply after the food company missed estimates, cut its outlook for the year. tech stocks moving upward despite a pull back in apple. microsoft, cisco and emc in the green. so let's get to the road map. online travel company orbitz has earnings today. can it get back on track. the ceo is with us live. and then acting fdic chair. we'll see what he has to say about the state of banking in the u.s. and the economy as a whole. plus the company responsible for wrangler jeans and north face jackets beating fourth quarter estimates. ceo is with us for an exclusive

interview for his forecast for the rest of the year. and former car czar steve radner is here with his take on gm's number today and where the company goes from here. that is all coming up in the next hour. we'll start with squawk on the beat. communications beating the street thanks to big advertising growth. analysts still worried about oprah's flagship network own. good morning, julia. >> reporter: good morning. discovery, the company behind hit shows including dirty jobs, myth busters and deadliest cash reported strong viewer ship and distribution revenue growth with a positive outlook for 2012. net income last quarter grew 76%. but the stock traded down earlier this morning. wall street focused on lower than expected margins and the fact that the beat came primarily from a lighter tax bill pl on the earnings call this morning, david zaslav

stressed the next growth will come from overseas. on the earnings call, analysts drilled down into the ongoing weakness at own. the company does not comment on individual networks profitability, but cfo brad sinker deflected some questions by saying the channel has good advertiser support and is focused on growing a meaningful audience. the key to own's success this year lies with the talk show queen herself. they stressed several times she has afternoon greater on air presence this year which is already boosting ratings. it seems the pressure is on for oprah to deliver ratings, advertising as well as new did distribution. >> a lot of attention paid to the success of that. thanks very much. let's bring in our capital markets editor gary kaminsky who is taking a look at the fallacy about the lack of volume.

>> every day it's really actually somewhat annoying you get these equity strategists. they and you can about the fact that the move in january, the move in 2012 has really not been on a lot of volume. a very savvy trader pointed out to me and we ran the numbers, let's take a look at the actual volume and then let's look -- this is the average dollar volume. if you look at 2010 and 2011, what you you see is as the price of stocks go up, you would expect the volume to go down. it's very simple. it shouldn't be that complicated. let's say you're a hedge fund, you have $100 million in capital. if you're going to trade a certain amount of capital every day, that dollar amount, and as the price of shares go up, you're going to trade less number of shares, thus less volume. lower volume has been attributed to things like retail investors, lack of interest, so on. but if you take a look, and this

is the way i think it really kind of is well explained, go back to 2009. take bank of america and citigroup. remember where those stocks were trading in terms of dollar price back then and the huge volume. if you take a look, those were trading at on a daily basis, and then look at apple and google today and there's about 60 million shares trading per average today in an apple and google, but the value trade in 2012, the dollar amount being traded, is close to $7.5 billion today. if you take bank of america and citigroup january of dwou 9, it was basically $5.6 billion. what's the bottom line here? if you hear anybody come on air and tell you that volume is a reason to believe or not believe, they don't they what they're talking about. these numbers confirm the fact that you want to see lower volume -- >> as the market rises about. >> -- with higher stock prices.

there's a pofollow-up question. what it could mean is that the discount brokers who are charging their clients it trade, obviously less share, less revenue, if in fact the clients are pays and trading on a cents per share. but this is the volume fallacy. throw it away. >> is there might go to this a learned from volume hen? >> it's one of those things where you can dive into these numbers and take out what you want. what i say is volume should not be an indicator in terms of market direction given the fact volume is up. >> we talk about it all the time. we'll hear -- you'll be down here the whole hour, which i like. >> yeah, i like it, too.

>> we'll have more with gary in a bit. and we're getting video of that crane accident. again, a crane dropped a load 40 stories injuring one worker. those are the latest details that we have. and a look at some of the activity in the lower manhattan right now. we'll get you more details as they become available. in the meantime, we'll go to the cme group and check in with rick santelli and get today's santelli exchange. a lot of numbers to look at today. >> a lot of numbers to look at today and sometimes there's strategies. we'll talk about a particular strategy today. if you look at the world, there's lessons to be learned by these three examples. greek rollovers. just think about it. what's the big issue with greece? that they have all of these mismatches with liabilities that they have, promises that they need to fund, and what happened to their short rates and why? they went up. they can't get funding to pay some of these long term liabilities. that's pretty messy s and l crisis, as well.

think back. what put the savings and loan banks in a ox itoxic situation? one issue is they were making boat loads of fixed rate mortgages and they were aing in short term deposits to fund them. what happened was when interest rates started to go up, they were locked on money at the lower rate that they lent on and the borrow, they kept goosing how much they were giving people for their savings accounts and all that didn't end well. drexel, lehman, i could add merrill, bear stearns, when they went out of business, were they broke some no, they had boat loads of dough. i remember drexel, and i was at drexel, state street took them years to clean it up and there was a lot oney. they just couldn't finance the firm. so what do you think is under the question mark? come on, we all know the answer. borrowing short, lending long. i know it is an axiom of the banking industry. but like anything, you can't overdo it. the first thing told to me be

careful about borrowing short to lend long. is there a lesson the government can learn some of course. think of underfunded 4r50ib89s and think about all the auctions we have and think about a what happens if you come to that day where like greece all of a sudden it takes a lot more to bring in the money in terms of borrowing costs and your long term liabilities, they just keep going up. back to you. >> got that right. thank you very much, rick. as air travelers get squeezed by a growing number of extra fees and rising fuel costs, how can online travel companies keep customers coming back for more? orbitz shares are in the red after bookings in the fourth quarter did slip. revenue fell 3%. the company ceo joins us this morning. good morning to you. >> good morning. >> looking at the quarter, the revenue, gross bookings or at least domestic bookings, what's causing the weakness and do you see that turning anytime soon? >> we actually feel pleased with the results that we reported for

q4 in which we exceeded the top end of our guidance range for revenue and we're in the top half of our guidance range on ebidida. we provided guidance for the full year. we expect to increase high single digits to low double digits. and this is a sign of our excitement and positive out llo. we achieved one platform two weeks ago. it's been five years in the making. we now have one common pratt form which will allow us to focus our resources on innovation, delighting the customer and building the business. >> does focusing resources reverse the 3% gldrop in domest

bookings? >> we absolutely believe the future is growth across a variety of our different channels and we're make investments to drive that. key areas that we're really excited about are mobile, for example. we launched a beautiful hotels by orbitz iphone app that allows to you book a hotel securely if just three taps. and that builds on the success we've had with an ipad app to do the same thing. mobile is representing 12% for the searches and we think this is a big growth channel. other things driving us in 2012, we'll be launching a number of private label partnerships. >> how concerned are you about gas prices in this country and a lot of people saying you're under renewed pressure on some of these local deals and some of the bargains people are able to get without ever going to and online travel site. >> with regard to fuel prices,

it's certainly the case that airfare increases a significant challenge for consumers. however, we have seen a moderating in airfare increases recently this quarter in particular in february and so i think that's a positive indicator. the early results for us that we just talked about, we're seeing 14% growth in our orbitz and cheap tickets booked hotel room natures for the first six weeks of the year. so we see ourselves actually off to a good start. now, with regard to special deals, there are a number of local deal sites that are trying to get into travel. but we think that as orbitz, we really understand the consumer and supplier opportunities and we have our own version of special deals. you can tap into the orbitz insider deals. they are e-mail only rates available to our subscribers every week. and anybody booking on orbitz

through a mobile application can tap into special mobile steals, rates that are only accessible through a mobile application. >> whole sector under pressure today, but a lot of attention will be paid to you guys throughout the year. thanks for your time. >> thank you. when we come back, the acting chairman of the fdic, his first division interview since he's been on the job. we'll talk to him about markets, the economy and a lot more. [ male announcer ] technology accelerates at a relentless pace. anything not moving forward... is moving backward. [ tires screech ] [ engine turns over, tires squeal ] introducing the 2013 gs, with the lexus enform app suite -- the most connected information and communication technology available in an automobile. [ engine revs ] the all-new 2013 lexus gs. there's no going back. see your lexus dealer.

gathering to discuss new rules. mary thompson is there live. >> as you said, we're having an exclusive interview with marty gruenburg, acting chair of the fdic. there's a report out this morning that the community bankers basically are advocating for a five year extension of insurance being placed on transaction accounts. is the fdic on board with this. >> that was a measure enact the by the congress to provide unlimited deposit insurance for noninterest bearing accounts during the crisis. that authority expires at the end of this year. so that's really a judgment for the congress to make. it's a legislative matter.

they'll have to decide. we expect certainly to be asked our you views on it. we're actually undertaking an analysis now of how the program is working and the demand -- >> so you don't have a view to share with us? >> we expect to be asked by the congress and we'll certainly be responsive when they do. >> and this is a conference about the future of community banking, a future you say is in peril by a misperception about community banks. what is that? >> i wouldn't say -- community banks play a very important role in our economy. they provide a large part of the small business lending that the banking industry provides. a lot of small towns and rural communities, they're the only banks around. so they really fill a very important role in our financial system. there's been some questions about the cal thichallenges the face. since the fdic is the lead federal supervisor, we feel a responsible to try to identify the challenges going forward and be of assistance if we can. this conference is the starring

point for a series of initiatives we're undertaking including a research effort as well as looking at our supervision of community banks to see how we can be helpful to them and ensure we have a strong community bank sector. >> earlier today, ben bernanke spoke to the group and he said the condition of community banks is improving. what are you looking at as far as failures go some i know the number of bank failures have declined significantly over the last two years. is this a continuation, do we expect a continuation this year? >> yes, we come actually. the trends for the banking system as a whole have been positive the past year. bank failures are down. the fdic maintains a list of problem banks. that list has also started to come down. so as we've had economic recovery, we really have seen some steady improvement in the banking system. >> jpmorgan ceo jame jamie dimod

big banks have an easier time lending. is that what you're hearing? >> i think community bank, and we have nearly 7,000 in the united states, most are actually doing quite well. they're well capitalized, they have strongly liquidity and they're more than holding their own. i think the big challenge for them, a couple things. one is the underlying economy, strengthening the economy would be helpful to them, and longer term challenge this is terms of technology, attracting good people. those are the longer term issues that we want to lock at to see if we can be helpful to make sure community bank is part of a good financial system going forward. >> i want to switch to your role as a regulator. specifically about the volcker rule. a 200 page proposal. some people called it a mess and it suggested a lack of cohesion between the four regulators writing it it. would you agree? >> no, i wouldn't. >> why not? >> i think the regulators

actually worked quite cooperatively in developing the proposed rule making, the comment period on that proposed rule just concluded, so we'll now be reviewing the comments. it was a clab bra i have effort, there was agreement among the regular hate tors. we did ask a lot of questions becauses it's complicated. we wanted to get feedback. . but i would generally say the regulators have worked well together on it and we anticipate working true to a final rule making on that. >> do you think it will take the same form that it has right now or do you think that the comments that were overriding a and, do you see it changing? >> that's really the question. we're just starting now. we'll be looking through the comments. i think we'll review them very carefully. we've gotten a lot of comments. and then we'll see how we decide to proceed. >> i want to thank you for joining us today. marty is the acting chairman of the fdic. carl, back to you.

mary thompson, thank you very much. only about eight minutes to go to the close in europe. ftse has been down. we'll see how it closes today. [ tom ] we invented the turbine business right here in schenectady.

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a lot of the giddiness over apple is taking a breather today. back to 491 after jumping up to 520 and change. obviously multiple concerns about their ability to sell ipads under the ipad number in china. swrae various reports about amazon. amazon one of the worst performers after more fgan stan cuts it. the bell about to ring across europe today. we'll get the action today and the details on the impact here and what it might mean for

greece come monday with this finance minister's meeting. coming up, are european markets making moves some we'll have all the details when "squawk on the street" continues. [ male announcer ] how do you trade?

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the news out of europe has a

little bit for everybody. we got some debt auction from france and spain, we got some economic data out of portugal, and then of course the war of words between greece and germany continues. >> we have cut the losses. wall street up 62 points. so as we head to the european close, with the exception of the turquoise line there, which is spa spain, today the spanish regulator lifted the ban on selling. so the spanish banks have fallen as a result of trying to better price in the sort of share issues that they'll have to make. the other thing people are talk about in europe, there's two things. one is the way perhaps the equity markets are more resilient to what is going on. have a look at the itrax index. see how that's just beginning to rise will.

and after the break i'll show you where we are on the italian market, as well. >> european markets are closing now. >> you'll sees most of the markets are either side of the flat line with spain a noticeable faller in the bottom hand left. i was going to show you on the italian market, the market demands to hold italian paper over benchmark german bonds. it's actually beening recently. a lot of focus on growth in the second half of the year from a lot of proves fessionals in eur. can you turn it around, can you make the assumptions that you would normally make. that's a decision going on quite aggressively in europe. >> what will happen on monday? >> we don't know. there's news coming out, snaps coming from everywhere as to what's going on. fins have said they believe there is a better environment than 24 hours ago, but the greeks have been briefing in

athens, they have got now a deal with the rest of europe on the extra 325 million. but that central question as to whether will they are going delay the local bailout on monday -- >> after the elections. >> and gujust go for bridging loans or whether the local thing is just a bluff, a grand bluff from the germans. but it is creating nervousness particularly in the credit markets. >> bob pisani, it is creating concerns. thankfully we have things like jobless claims here to neighboring make it go down easier. >> we are decoupling from europe and the better housing starts numbers is encouraging. definitely a theme u.s. economic situation is getting better and certainly far better than europe. but i just want to go back to greece a little bit. i thought it was interesting the greek far right party said we're not supporting the austerity deal even after the elections because everybody is trying to parse what's going to happen

after the greek elections and a lot of people have been arguing we should make a deal now or we should wait until after the elections. very interesting series of polls that came out that indicate about 40% would vote for far left parties that are not in the coalition and have made it clear they won't support it. >> and that's exactly why it is argued the germans and dutch and fins are playing the game take they're playing. they want to tie everybody in as concretely as they can now. >> that's the point. the laos party won't do it, the left party want do it, so now you're at a real game of brinkmanship. given everybody is bluffing to a certain extent, the big question is does the eu actually want a

deal to conclude? >> do the germans want a deal or -- >> notice at every point while the greeks have been slippery, additional terms have constantly been added on the european side. so whether it's 325 million or insistence to sign a letter -- >> can i make a political point? did you see the comments that came from the greek president yesterday? who are the germans to tell us how to run the country? at the heart of what goes on is solidarity, a word that is in all the treaties. and i think the solidarity between nations is beginning to break down. and that is very dangerous for europe. >> in fact from monti, prime minister, made exactly that point. and that's a very good point. if you look at the markets, i'm not overly impressed. could you argue there's a rally going organization but take a look at the sectors.

you have very little support from your big leadership groups. utilities are up, consumer staples are leading, telecom is leading. that does not impress me very much. materials moving up in the middle of the day, that's a little bit better. energy moving up a little bit. the one thing i would say that is important is financials have been a little bit stronger here today. i think that's the major source of strength that anybody can point to. >> bob, i want to get to you on the markets in a second. but simon, as far as europe is concerned, so many people tell me daily that at the end of the day, if you just dumb it down to the simple facts, and you hit both of them, its wh's what ger wants and whether an orderly or disorderly default. everything else is interesting and informative, but at the end of the day for hose that are catching and trying to understand what are the pivotal ept events, it's those two. >> the germans may have pushed it so far that they will lose support around the rest of

europe. >> then all the viewer needs to know as it results to their own portfolio is what will that then, whatever happens in the german election, is it disorderly or orderly default. >> in the french election. >> no, if the french election has a result in terms of sentiment in germany -- >> it would change the french president and he wouldn't be this bed with merkel because he said he wants to renegotiate -- >> once they get elected, they tend to change some of the things they say. watch what happens in this country. bob, you you mentioned not being impressed in the market. i have to ask you this question. a great annual list at thompson reuters points out if you look at what happens late day, moves up higher in terms of the s&p over the last several weeks, he

believes that it's been the fact that short interest, hedge funds out there are probably the most net long that they've been, so this late day in the tape, do you buy into that thesis? >> the two situations you talked about is generally considered bearish for the market. market has been looking tired for the last several days. that's certainly true. we talked yesterday about apple, about the euro, about material stocks, about home building stocks and about the transports. all not having a lot of energy. the fact that apple traded four times normal volume as it was moving down indicates -- >> just for the record, as i said it yesterday, apple -- the correlations between the overall market and apple, i don't buy it. apple is -- it's irrelevant. if you look at the correlation

with copper and where copper should be trading right now given the levels in the s&p, copper should be north of 4 ths and it's not. and that tells a lot of people to look at the industrials. apple is a separate situation. maybe we'll up that a little later in terms of my own thoughts. >> copper was at a four week low earlier today. thanks, guys. let's hop over to rick santelli in chicago. >> i'm impressed. i brought up yesterday many traders had good day on this floor because they saw that despite a lot of issues going on globally, we saw yields dropping and pretty soon more deterioration in equities. today it's the opposite. it really did withstand a test of rates elevated, we see the euro stronger and many times equities go up. when we look towards europe, we see a lot of unfinished

business. art nolan is my guest. and i like art because he always has a view and he trades short term interest rates. his big beef is pretty similar to charles schwab -- >> low interest rates have basically served to be a no confidence vote on the u.s. economy. and i really wonder whether they're helping grow the economy. >> give me a concrete example because this is a tough one to understand. you believe the fed ought to slowly raise rates. what do you think that will accomplish? >> i think you have to look the banking industry back on a profit motivation. instead of setting the rates -- >> they have trillions at the fed now. >> they are trillions because the fed is paying them for their balances. >> so we at 25 basis points, we don't get it. now what happens? >> the banks will look if a new

place to lend the money, hopefully to the economy. >> i can hear the counter arts now. but there's no demand for loans. >> i think there's no demand for loans because a lot of people realize they're not going to qualify. all the advertisements talk about people qualifying. >> but we came through a crisis. shouldn't we have tougher lending rules? >> there should be tougher rule, but if you want to grow the economy, you still need a banking industry that's a for profit have i, not an entry that's living more in fear rather than thinking about making a profit for their investors. >> thanks, art. back to you. >> when we come back, vf corp seeing big gains so far this year. the ceo of the company responsible for brands like north face, wrangler and lee jeans will join us with his take on the company's earnings and the business plan for the rest of the year.

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the biggest misses in his career. even as the market continues to make up for the losses of yesterday, apple now down to 489. >> we're saying down from 489. it's like to try to draw these correlations is kind of silly. because apple is its on asset qulas. i think it's a healthy correction. remember what happened last quarter. a lot of people that did it found a reason to buy it and people that have to put it in the portfolio will buy it. needed an excuse. it's 10% off the high, so you get new buyers. >> we're probably a few weeks

away from an ipad 3 launch which had been catalyst for the stock. >> and i'm not the expert here, but these typically trade up in advance of an announcement. but anyone who has not owned the stock, professional investor, has been in the penalty box for not owning it. only question clients ever ask is why don't you own apple. and i know that to be a fact. >> they must love hearing that. meanwhile vf corp beating the streets. the stock of course is up more than 65% over the past year. trading at an all-time high of 145-25. joining us in an exclusive interview, eric wiseman. good to see you. >> thanks for having us. >> yches twhy was the warl weat which was the nemesis of all kinds of retailer, why was it less of a factor for you guys?

>> we got a lot of questions in the last 60 days and this in the north face brand in particular. and as we reported, north face grew 22% and, yes, it was affected by the warm weather. the fact is it would have been slightly better than that had we had a colder and wetter winter. but it's such a strong brand and we have such innovate of it products and still so much room to grow in a brand internationally that overall the brand held together, grew 24% in the united states. it grew 12% in europe. 41 in asia. >> you're looking for 930 this year in terms of earnings per share. this morning one of the twitter accounts said it was a rare guide down. why is it happening? >> most of that difference can be accounted for by one thing. we changed our currency translation rate from the euro to the u.s. dollar from 130 to

125. you'll recall the euro slipped below $1.30. had we stayed at $1.30 in our assumption for the full year, our guidance rate would have been 18 cents higher right at around the $9.50 mark. we think it's prudent to run our model against $1.25 euro and if the euro is stronger, for every nickel gets stronger, we earn 1 cents more share. >> we're trying to kill a lot of fallaciey ies out there today. tell us with the idea the warm weather. when you have inventory and they basically bought a certain amount of inventory, can they put that back to you somehow does that work in terms of most of your arrangements with your largest customers? >> our situation with the north face, most of the products ultimately are selling through, so we don't have a big inventory overhang at vf or with our retarls. there was some promotional activity that happened to help

the product move through, but our brand is so strong and our products are so compelling, our stuff did check out. >> second half margins you're saying should be better, some of these high product costs may subside. how much of a tail wind will that turn into? >> that's really about the cotton dimension of our corporation. a big part of our business is denim. everybody knows that cotton went up in price a lot last year and it's still up right now at this time. the denim was purchased when cotton was high. so we actually have inflation headwinds in term of costs. take will subside substantially second half of the year and that will result in some combination of a little bit of activity reducing prices to consumers, but also if you look at our numbers last year, our jeans were a business lost 400 gross margin points and the reason for harks we chose not to pass all of that price along. we knew it was a timp area btem

bubble in cotton prices so we thought the strategy was to gain share and we're in a good position for fall. >> always good to see you. look forward to talking again. >> thanks so much. >> the stock at a new high. when we come barks former car czar steven hrattner gives us hs take. ♪ ♪ [ male announcer ] offering four distinct driving modes and lexus dynamic handling, the next generation of lexus will not be contained. the all-new 2013 lexus gs. there's no going back. see your lexus dealer. librarian there's no going back. emily skinner, each day was fueled by thorough preparation for events to come.

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general motors posting a weaker than expected quarterly number. profits grew on strength of north american operations, but the company still lost $747 million in europe. steven rattner helped oversee the auto industry bailout as the car czar. he joins us this morning from washington. welcome back. good to see you. >> thanks for having me. >> we spoke when the journal ran the story talking about 10% margins and multi-billion dollar profits for the year. why then come out with a number that missed by a couple of cents? >> i think what they did in that story in the journal that you say spoke about was the right thing, it was aspirational, it was trying to say this company can get to that place. i don't think they were trying to predict what the fourth quarter earnings were or to signal what the fourth quarter earnings were. i think the earnings are fine. there are places where it is not what you would hope particularly in europe, but the company is

making great progress. it had its largest profits since 1999. all the important metrics of market share, of average transaction price, are holding up well. it does need to work on their margins and they were candid about that yesterday. >> they won't give a forecast for europe and guess it's hard to blame them. do you have an idea when it might go back in the black? >> i don't see europe going back in the black anytime within a forecast period. europe as a continent is going into a recession. car sales are depressed. there are too many carmakers in europe. with too many factors just like what we found in the u.s. in 2009. and solving the problems of gm is not cutting a few workers or tinkering here and there. this needs to be a fundamental restructuring of the european car industry and all the

european car executives understand that. >> steve, let me go back to something i asked you once before and i assume your answer will be the same, but if you bought this company, if you invested at the reipo level, you may have asked yourself should the company have waited. europe was obviously a problem. should the company come with these european problems not solved yet? >> i think there's always a balance when you have a government involved if these kinds of decisions. the government felt strongly and interestingly whitaker who was the chairman of general motors felt more strongly that having government control of yen mot g motors was hurting their business. so the company could never perform as well as they hoped because of consumer resistance. so the decision was made which i supported that to have the government lighten up half of

its holdings would take that stigma away from the company. the ipo was in 309 plus range, so the government got a fair deal for its shares and i do believe they made the right decision. >> the bailout will color their results probably for years. and i don't need to tell you even on a day like today record profits, the outrage about what they still owe the american taxpayer iks what do they oat taxpayer at this point? what do they owe the government? >> they owe the government whatever their 30ish percent of the company is worth. if the question will the government lose money on the rescue of general motor, the answer is almost certainly yes. but when i look at that money, let's say it might be $10 billion or some number like that, i don't know what the number would be the president saved the midwest from economic

devastation. when you you compare all the number that's been spent on stimulus, everything the fed has done, i would argue that this $10 billion or $15 billion for the whole rescue program, to save this industry was money well spent. >> steven, always good to talk to you. interesting quarter. we'll see you late later. >> thanks so much. >> keep the tweets coming. we told you about this new study on the alleged health risks that are involved in working at an investment banker. all kinds of maladies. so if working on wall street did come with a warning label like the kind you see on cigarettes, what would it say? we'll get issue of the warnings after a short break. laces? really?

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we talked about the study involving investment banking and the health hazards. our question what warning label would you put on an investment banking job on wall street. julian tweets please do not feed the bears. pun not intended i'm sure. scott tweets wall street warning label, regulators in mirror are closer than they appear.

and chris tweets warning, may contain nuts. rick santelli, i'm sure you go along with that sentiment. >> absolutely. and if your losses are up for more than five hour, make sure you you call anchored medical official and a regulator. >> hey, we're seeing action in the euro midday. what's going on? >> i think once again this relationship between how the euro is going and i'm looking at the futures, they're up about 46 now. so goes the dow on many days especially when the dynamic is what's going on in greece. but i still think it's very asymmetric argument. i think the market responds to things flailing with regard to this bail squoout or the default could occur. it might give us more down side than up side when it stabilizes and i think all the equity viewers that are out there trading need to be cognizant it might not be an equal