joining us today. we hope you'll come back again soon. >> becky and joe, andrew, thank you very much. my pleasure. >> have a great weekend, everybody. make sure you join us on tuesday. right now it's time for "squawk on the street." good friday morning. welcome to "squawk on the street." i'm melissa lee with carl quintanilla live from the new york stock exchange. david faber at headquarters. jim cramer is off today. a 96-point move today would take the dow above the 13,000 mark. let's take a look at how we are setting up here. dow is looking to add about 21 points at the open. the nasdaq looking a little bit flat. cpi we should mention coming out at 0.2%, a little less than expected. the core came in in line. as for europe, expectations for some sort of resolution from greece helping to buoy the markets. european banks in particular showing some strength there. dax up by 1.3% as is the cac 40. >> that's right. our road map for this friday, the rally for the year continues for now. we're on dow 13 k watch after

the dow closed at levels not seen since may of 2008 yesterday. s&p closed at nine-month highs and the nasdaq finished at an 11-year high. helping to fuel the optimism today, expectations for a resolution out of greece. when euro finance ministers meet on monday. simon hobbs is here. shares of gilead getting smacked this morning. a drug may not be as effective as expected. apple staging a comeback yesterday. poised to rise once again in today's session. technical take on that stock as well as microsoft, which closed at 4.5-year highs in yesterday's session. >> that's right. first, the dow 13,000 watch is on. we're less than 100 points from the magic number as melissa just said. if we can pass that mark, it will be the first time since may of 2008. let's bring in richard burnstein who joins us this morning from 30 rock. let's talk about why at this point bears are nervous about

being too short but bulls are nervous about being too long. >> that's actually probably good, carl, the way you describe it there. bull markets usually end with euphoria. although i think there's clearly some more enthusiasm towards the stock market, it's hard to say that investors are euphoric about -- let's put it this way. about u.s. stocks. maybe about some areas around the world. certainly for u.s. stocks it's hard to claim there's euphoria. >> at the same time, rich, it's a good point about euphoria. is it simply that investors have nowhere else to go? barclays had a note out this morning that was interesting. they said part of the reason why investors are so focused on u.s. equities is simply because other assets, nonrisk assets, the returns there are quote, unquote, punishingly low. so it's really there are few choices out there when you want return. >> well, i'm not quite sure i'd agree with diversifying asset classes have punishingly low returns. you know, certainly if you look at something like treasuries, when the stock market does sell off, treasuries rebound quite

well and balance out the portfolio nicely. so i'm not sure that that's quite true. however, that being said, you know, my basic feeling is and my firm's basic feeling is that u.s. assets will become increasingly attractive over the next 12 to 18 months as what we're seeing in europe, you know, goes around the world. this is not the end of anything. it's really we're in the midst of the deflation of the global credit bubble. you know, cycles very clearly show the u.s. goes first, which we did in '08. now we have europe. next will be the emerging markets. >> richard, we love to talk about the stock market. but i'd like to turn your attention, you mentioned a bit, to the treasury market. what does all this say, then, about your view for the 10-year that we see hovering right around 2%? >> david, we view diversification as kind of a seesaw. some assets go up. some assets go down. right now the treasury is not performing very well. all would what people like to call risk assets are performing well. one has to remember the point of diversification is to try to

reduce the volatility of your portfolio. i think treasuries have done that quite effectively over the past five, six, seven years. nobody ever wants an asset that goes down. which is why investors usually habitually under diversify. because of that. what's going on right now think we should all be very happy. the fact that the treasury is selling off and stocks are rallying is telling us that the u.s. economy and potentially the global economy is getting stronger. that's good news. >> your favorite play right now, rich, is what? small cap u.s. banks, right? >> that's right. small cap u.s. banks. we know employment is improving. that's good for the asset quality of these small banks. we know that the housing market is gelling. i'm using my words very carefully there. i didn't say it was solid. i said it's kind of gelling a little bit. that's good for the credit quality of these banks. these banks have very conservative balance sheets now, and they have no exposure to the global credit bubble that's still going on in places like china and brazil and india and around the world.

so when those deflate, these stocks may be much more defensive. they're basically a pure play on the resurgence of the u.s. economy. >> we're getting a little more clarity on what congress is going to be like this year. this payroll tax vote may actually happen today in the house. we'll see. but the senate, would you argue the biggest possible impediment right now is the hill? or is it iran? or is it something else? >> i'm not sure that the hill is new as being an impediment. i think a pox on the mall if you ask me. but i think if you're looking for wild cards and you're looking at things to worry about, of course you could look at the middle east. if you want to look domestically here, you look at the end of the year and you look at the end of the tax cuts. i don't think people appreciate how monstrous the bush tax cuts actually were. and if they were to come off in matter of december 31st versus january 1st, that could be quite devastating to the economy. what might be better is if they phase them in. i would certainly argue we need revenue enhancement. i think it's foolish to think we could actually balance the

budget without that. but you don't want to do it on one day. that's probably not good. depending on what happens in november, you could have a lame duck congress. a lot of weird things could happen. >> where do you stand on technology with nasdaq at an 11-year high? we've seen out size moves from the likes of apple. over all, tech, is it still in favor in your view? >> yes. i think you should still look at tech. i'll tell you two things about tech if you want to be concerned. we're still overweight tech. number one is the dollar. if the dollar appreciates, tech is the most exposed sector. number two, people are claiming how evaluations are cheap. we're seeing all these ipos. ipos don't come to the market when stocks are cheap, right? we have to realize tech is pretty expensive when we've got the dollar. if you're looking for capital spending cycle or something like that, tech will benefit. but it's not a year ago or two years ago. >> rich, have a great weekend. >> thanks, carl. >> see you think time, rich burnstein. also on wall street's radar,

key week enend for the european crisis. simon hobbs is here, has been following the latest developmentings out of europe. >> good morning to you. i can run you through the timetable. it's very intense for the next two weeks if you like. i think it's perhaps more instructive to just describe the two camps that appear to have emerged and the analysis of what's going on. one says europe is very deeply divided. germans are very deeply divided. fear of the unknown will probably mean that they will do a deal on monday. however, a disorderly default from greece is probably on the cards over the next few weeks or months because the situation is so poor with their finances and because europe is so split. the other side of the argument says, look how we are buying the equity market on the dips. we don't have a problem here because we don't need to get cheap -- with what is going on in europe. we simply know there is a french election and they need to hold it together through that and we know angela merkel is riding higher in the polls and she needs to hold that situation together through to september. and maybe in the middle of the

year they'll bum portugal cheap money as well to keep the lid on the whole situation. you have deeply divided analysis on what is going on at the moment. >> does it matter the the german president resigned, that angela merkel has canceled a meeting with monte? >> it doesn't. people are saying it's a ceremonial role. it really won't make any difference at all. however, there are very deep divisions within the ruling parties in germany and, indeed, it would appear between merkel as to whether greece should be let go or not. >> interesting op-ed today. the transformation of europe is being made possible by crisis. conventional wisdom today holds that europe is doomed. to the contrary it is bravely starting on a supply side revolution. >> there are right wingers. don't forget the eurozone came about by common consent. there were always people on the right who believed this was exactly what europe needed so

people couldn't devalue and would have to restructure in the way that you're now seeing. the question is, in the case of greece, is that restructuring so negative, so destructive that the system can't hold it together. >> finally this notion of the ecb bonds being switched for new bonds that would basically subordinate other debt holders, not setting a good precedent for the rule of law going forward. >> for sure. there will be people that will be very angry about that. there's still a question over what the national central banks will do. but it does indicate, and that's why the market rallied yesterday, that something is happening. the ecb wants to get out in front. the other thing that we're expecting before that meeting on monday is that the greeks will vote for the extra 320 billion euros of cuts over the weekend. >> so last friday a lot of traders are going into the weekend saying it's going to be a binary event. nothing really happened. it was not a binary event. is that more so the case going into this weekend? >> of the people that i have spoken to, they all think a deal will be done on monday for different reasons. they take a very different

stance. you may have huge caveats to it. 24 prior actions required from greece over the next two weeks. you may have the money go into an escrow account that the greeks will be hopping mad about. most people, certainly everybody i've spoken to, seem to think a deal will come on monday. that may not have been the case two or three days ago. it's been a moving feast during the week on the assurances that they've had from the greeks. >> and, david, that 14 billion due in a month, right? march 20. >> we're really getting there at this point. you can argue the 27th if you want. because, actually, you're not in full default until a week goes by and you haven't made the payment. but to your point, carl, we're a month away. we're still not there. so we will see. you know, it almost becomes extraordinary difficult to really follow every single up and down in this saga. it kind of is a greek tragedy in some ways, isn't it? >> puts you mind a little bit of

odyss odysseus. maybe not. >> absolutely. everything but the chorus. >> that's just what i was going to say. who would the chorus have been? journalists? pundits. >> i would think it would be the journalists, the media. >> yes. the chattering classes. >> wow. >> such an erudite discussion this morning. let's move on. gilead science, shares taking a beating. biotech firm says some patients treated with a hepatitis c drug experienced a relapse. 6 out of 10 patients, in fact, gileal acquired the drug in its $11 billion deal with pharm asset. kayla tausche is here with much more. >> this is really gilead's first stumbling block in developing oral hepatitis c treatments. it is the first big test for the deal. the company saying this morning 6 out of actually 8 patients being treated with their two-drug combo relapsed within a

month after treatment. it's also -- as we said, the first big test for this deal. the drug called gs 7977 was the crown jewel of that $11 billion price tag. at the time, david and i sat here and talked about how if these results had come out before the january close date, the deal would have been in jeopardy. a lot of investors sold when the deal closed. a lot of investors, though, still hanging on to gilead shares. they're still in it taking it on the chin today. pharmaset shareholders -- the company just finished a conference call this morn ing. the stock is coming off its lows. it was down about 20%. now it's down about 15%, 16%. executives were taking questions about how there's still data set to come out this month. the fact that the patients in this group, in this study, were those who had been treated unsuccessfully before. they were patients viewed as some of the most difficult to actually overcome this and how maybe the test period needed to be longer. if you look at a note that came

out this morning, they said if the stock opened in the low 40s, it would see oversold. where you see it right now, 46 bucks, it does look right at the bottom of his price range. other companies we're seeing today, bristol myers skib, other companies developing hepc treatments, they're benefitings a little bit. vertex. interesting thing, david, this was a phase 3 drug. the reason why gilead paid so much for this company was because this was seen as the closest to approval by the fda. a lot of the other deals and a lot of the other companies people are looking at and saying maybe they could be next in the hep c space, they have drugs in earlier development stages. why are those stocks going up when they're actually at higher ris reque risk? >> this was an astounding deal

when it was done. no earning strength. it is on the prospects for this oral treatment for hep c which they believe will come a much, much larger treatment for a base of patients that is enormous. that is key for gilead. some applauded gilead for saying, hey, we need to take this risk to move into a new area where we can grow in an important franchise. a number of analysts coming out and tempering the concern here. certainly it's not a good thing. to your point, if we were sitting here on a day when this deal was still out there, gilead shares would be down. this would be down. people would be talking about either a deal breaker or significant price cut. >> right. >> that is to be sure. but it is still early days for the test. >> right. >> or for the testing, we should say. >> and the big point they did make in the conference call -- >> perhaps a temporary setback is what some are saying. >> the big point they were saying in the conference call, these were patients in the gino type 1 so called in the pharma world. people viewed as the very

difficult test group. the people who had already been tested before unsuccessfully coming back and doing this four weeks of treatment. so maybe it should have been longer that they were taking this two-drug combo. we don't know. the company says more data will come out next week. it certainly will cause a stir in the hep c space. >> gilead shares lost more than half a deal value itself already today. we'll watch it close. kayla, thanks. >> thanks for having me. when we come back, linsanity reins supreme. how will the new york knicks jeremy lin capitalize on sudden fame? stick arnold for a live interview with his agent who darren rovell calls the jeremy lin of agents. take a look at futures on this friday morning, dow set to open up almost 30. ♪

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on a week where we've heard a lot of saber rattling from iran, cruel oil at 103.35. that is a fresh five-week high and is one reason why a lot of people are calling crude and energy at large one of the biggest threats to the economy at least here in the states as we see economic improvement in the overall data. speaking of which, we did get data earlier this morning. rick santelli over at the cme watched some of that. rick? >> traders are saying the inflation data was a little tamer than expected. i guess that's true by a tenth. but i think if you look at the

core year over year up 2.3%, that's something to pay attention to. maybe even more important, a 2-day of ten years or 24 hour chart we've traded above 2%. we've only had a handful of times we've closed above 2% for 2012. as you can see as we open up the chart. is this important? yes. we don't want to make too much of it because the top of the range is around 2.08. also we have our hermetically sealed deficit reduction training facility being constructed. hope everybody tunes in at 11:20 to see us put it to the test. back to you. >> can't wait, rick. thank you very much. starbucks has opened its first ski-in ski-out coffee shop. it is in squaw valley, california. it's up there 8,000 feet above sea level. wow. look at that. this morning the tweet asks you where else will starbucks put a shop? that should be interesting. >> yeah. i like that a lot. although it's going to be kind of hard to ski with the coffee in your hand, you know what i mean?

once you've gotten -- >> good point. i'm sure they'll sell different acutemen acutements. coming up, something you'll find quite smashing here on "squawk on the street." later on "squawk on the street" -- >> you explain to me why it is when you write a check that bounces, the bank charges you more of what they know you don't have any of! >> that's right. that makes no sense. which is exactly why we'll be smashing the deficit with comedian gallagher and rick santelli. stay dry. we'll be right back. how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity.

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i'm bertha coombs at the nymex. oil extending gains this morning on optimism that we will see a deal done over greece over the weekend. we are watching the technical levels, though, at 103.74. we will reap a resistance level if we can get above that. a number of traders saying it will be very bullish and we could actually see a move up to around the $114 range. brent this morning giving up a little bit of gains after topping an eight-month high at $120 a barrel. overall, fairly quiet trade. we've got gold has been slightly up this morning. extending gains from yesterday. if we close higher with gold today, it will be the third straight day that we close higher. back over to you, melissa. >> thank you very much. about six minutes before the bell rings this friday on wall street. let's bring in cash director floor operations at ubs

financial services. art, we can't forget it's expiration friday. >> the 30 dow stocks, 29 are pretty steadily to the buy side. only bank america seems to be a seller here. that's helping out. continuing hope in europe. >> continuing hope. at the same time, people don't want to be short going into the weekend on expectations that there will be some sort of a deal coming out on monday. at the same time, do they necessarily want to be long going into the weekend considering how things have fallen apart in the past? >> the friday before a three-day weekend has a natural prejudice to the upside. interestingly enough, the friday before president's day is probably the weakest of the lot. i don't know the reason for that. there's also some -- i think you're dead right. we're going to be closed monday. if there is an answer monday, shorts are going to be terrified so they're pressing hard to reduce their risk. but it's starting to look that the ecb swap may have just been a technicality. the bonds that they all have have something called a

collective action clause. if you two voted to take a 70% haircut, i would have to go along. if i were the ecb, i'd have to go along. they're looking to exchange for bonds that don't have that clause and that'll get the ecb out from under the problem. >> would you give draghi credit for busting through some of the log jams? >> yesterday i thought he was busting through. now that i've looked at the fine print and seen this clause, i think it's an escape clause and a employ to avoid them getting in the middle of the debate as to why are you preferred when we voted to do this, then you're going to have to take our deal. it raises that trigger question again about the credit default swaps. hopefully we'll hear more on that as the day goes on, but that problem's nowhere near solved. >> we've got the resignation of a german president to worry about. a side show, but another distraction for a key player in germany. >> but the good news is, it looks like iran has called off their military exercise. so things cooled down a little

bit there. >> thanks, art. >> thank you. coming up, the agent representing jeremy lin, the new york knicks' superstar. we'll talk to him and get ready for our friday session when "squawk on the street" comes right back. hey, slow down there, fred! the day's just beginning. you've got a whole day of trading ahead. which of these 500 stocks have you excited? "squawk on the street" will be back after this. lu all over you?

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as well as the euro. >> here's a look at the s&p 500. quite a bit of green. the big board, tortoise pipeline and energy fund. the nasdaq, bright co. provider of cloud content services celebrating its ipo today. we'll talk a lot about greece throughout the course of the morning. got to mention big cap tech names. old school. >> mike -- like microsoft. it continued to power higher closing at 4.5-year highs. there was a note from morgan stanley. obviously there are a lot of catalysts this year like the launch of windows 8. beta version rolls out next week. morgan stanley was pointing out a potential s&p rebalance to reflect the changing float, publicly traded float of the company because bill gates is selling about 20 million shares per quarter. the float is increasing. that will have to adjust higher the weighting on the s&p 500 when it does rebalance in

september. microsoft's weight could go up to 2.09% from where it is right now, which is 1.86%. that could certainly help lift the shares, obviously. >> a lot of forced buying as managers have to get into the name. it coincides with the windows 8 catalyst. analysts like rick sherylen has said is going -- >> yesterday with all the chatters about windows 8, apple lets it out of the bag they're working on a new update to its operating system calmed mou ecan lion. sounds like a nickname for somebody. it will theoretically compete with windows 8. be more competitive on the mobile side of the things. also some interesting reports out today about apple continuing to lose market share in the smartphone market in china. this is the second straight quarterly decline there. it is actually number five in china. >> interesting. baidu out as well.

>> the ceo was talking about the tremendous number of internet users in china. 530 million internet users in china and growing. that is more than two times the u.s. internet user population. so we have shares of baidu trading right now lower by about 2%. but it had as you saw there spiked higher ahead of its earnings on thursday. >> a bunch of consumer names out last night and this morning. nordstrom $1.11. beats by 2 cents. their fiscal year or full-year guidance came in below consensus. they also say gross margin is going to fall for the year even though other retailers like vf corp. yesterday said gross margin would actually get better in the second half. >> the other concern about nordstrom for the full-year guidance is not only is that it's short of assessment but also include additional selling week. 53rd selling week. still below analyst expectations. that's not good. though some analysts out there are still saying it's the best in the space. you're talking about some other consumer names, heinz came out and beat eps as well as revenue

growth. gross margins were a little bit weaker also because of higher food cost. we see the stock rising in today's session. campbell foods in the midst of a turnaround seeg higher commodity costs and competition on the soup front which has been weak there. that's one we are watching. also higher by about 4%. general mills, the forecast for the third quarter was disappointing. that's a problem for general mills. it is seeing, again, higher food inflation costs. that is a running theme. >> really quickly, as art cashin said, most of dow trading higher. bank of america lower. interesting piece in the journal today. they secured this paper they had sent to regulators saying what they would do in case of an emergency, basically. what would you sell. how would you raise assets in a hurry. largely involved selling retail operations in texas. company says there's no plans to actually follow through on this. it was an interesting window into some of the in case of emergency break glass scenarios that these banks all have around the country. >> that's true. let's check in with courtney

reagan on the floor in for bob pisani today. >> i know we're all talking about dow getting closer and closer to 13,000. but take a look at the s&p 500. we're about a point away from the 52-week high of 1363.6 #. still a ways off of where we were when the dow hit 13,000 on the s&p about 5% lower because of the drag on financials. we're going to watch that closely because we're very, very close to that 52-week high right now. moving on, european indices all higher across the board on this improved confidence that, perhaps, we will get this funding agreement gap moving closer to possibly the second round of the greek bailout. that's making markets happier across the pond. as you can see, the european indices are higher. so are these european banks. take a look. deutsche bank among others. some of those names trading higher today. we'll see if that bleeds over into our financials today. as you mentioned, some consumer names on the move. earnings reports from general mills, heinz and campbells soup. it appears that around the world

folks are eating. i don't know about here in the u.s. we've got some weakness here in the u.s. from some of those names. nordstrom did report after the bell. interesting notes there, they beat on their estimates. however, they worry that that gross margin could narrow and are issuing very cautious and reducing their guidance going forward. i'm afraid that's what we could see from a lot of retailers that report next week. a big slew of them. a nice little fore shad doushad we go into next week. you mentioned the s&p. down jones unearths this really good statistic. year to date s&p up about 8%. getting another four points or so today. the tenth best start ever. >> really? >> for the year for the s&p. now, in seven of the other nine times in that top ten, it added to gains after this point. >> really? but i bet last year was one of those times and we did not add to gains afterwards. >> sure. because we had a terrific january, great spring, ended the year basically flat. some people are using that

numerology to possibly spin some tales for what the year may bring. gilead a stock certainly tumbling on the back of a disappoints study showing there was a viral relapse in some of the patients taking its hep c drug. shares were indicated to open sharply lower. they are down by about 14.5%. there are a couple of other hep c drug makers out there which are feeling sort of the benefit if this drug doesn't go through. they've got drugs in the pipeline that might actually go through and might benefit from the gs-7977 drug having stumbling blocks. vertex is one. vrtx is the symbol. we saw that move higher in the premarket session. i believe it's trading higher right now. also akillon is one to watch. ticker achn. there we have it. vertex higher by 6% on the back of that news. >> david and kayla mentioned some of the analysts coming to gilead's defense. deutsche bank reiterating its buy, reiterating $66 price target, saying that not only will the company continue to take a share, but that some of the data, even though it is a

phase three trial, some of the data will get better as time goes on. we'll see. 14% still. you'll notice that in your portfolio. let's get to chicago. get their take on some early trading action. mark sebastian, chief operating officer of option pit venturing consulting at the cme this morning. good morning, mark. >> morning. >> happy friday. you say one of the big stories, one of the untold stories lately has been the disconnect between the s&p and option prices. can you explain that? >> yeah. i mean, it's really interesting. realize volatility since the beginning of the year has been in the toilet. going nowhere. over the last 30 days, the s&p has moved at an annualized rate of about 8.5%. that is crazy like 2004, 2005 low. and the vix is trading at close to 20%. in between 18% to 20%. that is a major disconnect in between option prices, which in many ways are kind of a form of insurance, and, you know, the

product they're insuring. to me, it shows that there is still a lot of real fear about what's going on over in europe and the u.s. economy. >> at the same time, mark, i'm curious, when you look out on the curve for vix, because obviously the vix we quote every day is spot vix. when you look out on the curve, what are you seeing? what does that indicate about people's concerns about what's going on in europe? >> yeah. i mean, if you go back, we're currently vix futures are in contango. you've got long-term futures priced higher than near-term futures. but, you know, that points toward continued fear. there is, you know, a lot of people buying insurance. i was talking to bob pisani about this last week. car insurance, right now the market is moving like a 45-year-old mother of two. driving safe, nice. really not doing a lot. option prices are charging that mother of two like a 16-year-old new driver with a "d" average in school. it's really creeping me out.

and it tells me that, you know, there might be a lot more to this story than we realize or there's another shoe to drop out there. >> all right. mark, thank you very much. enjoy the long weekend. although i'm sure you'll be working most of it. mark sebastian out in chicago. bonds and the dollar, rick santelli at the cme group. rick? >> good morning, melissa lee. it's fascinating. i just talked to a couple of my guys that work with the primary dealer community. you know, they turn in their positions periodically. we now see the longest dealer long position in 3-year notes going back at least a decade. it really is by a wide margin. you know, we know that many investors and primary dealers are hunkered down into the short maturities. we see how stubborn some of these maturities have been. and while i'm saying that, we're dabbling at 30 basis points on a 2-year note yield. there's a lot of curve anomalies going on. of course, we still have some

data in the form of indicators. maybe the most important thing is, which side of 2% the 10-year closes on. if you're really a good technician, it's probably more about closing above the top of the range. so give it a little slippage. we're probably talking around the boiling temperature of water. around the 2.12 yield many believe will get things moving on the south side. melissa, back to you. >> thank you very much, rick santelli. let's head back to headquarters. david faber is there with the faber report. more on this analyst who has now been arrested by the fbi, david? >> that's correct, melissa. yeah. time to check in once again on that very long running insider trading investigation that has already netted scores of arrests for the u.s. government. i should say convictions at this point. today, news of a minor arrest if you will of an independent research analyst named john kinnucan. he did make quite a splash sometime back when he was first approached by the fbi. that being mr. kinnucan who is a technology analyst, again, at a

relatively small shop. we haven't seen the indictment at this point to see specifically where the allegations are about why he was in possession of material, nonpublic information. nonetheless, he was arrested at his home last night. again, about a year and a half ago i had an opportunity to talk to mr. kinnucan right after he was approached by the fbi. >> a couple suits jumped out of the sedan in front of my house, and they weren't portland suits. they were definitely new york suits. so it was a little bit like a flying saucer landing in the hood. they identified themselves and said they wanted to talk to me, so i invited them into my kitchen. and they immediately started rattling off a bunch of my research. and insinuating that it was improper. >> kinnucan chose not to cooperate with the fbi. didn't wear a wire. wouldn't try to help them in terms of the investigation of some of his clients. ultimately, though, his business has suffered and one has to question his judgment as well

given some of the e-mails and the like and the threats, perhaps, that he has brought to bear against other people in the judicial system. that's not part of the charges from last night. it is simply an arrest on securities fraud. this is what he had to say about a year and a half ago. >> i have done nothing wrong. my clients have done nothing wrong. and i just felt it was the right thing to do. you know, i've -- i've -- i guess i've been dragged along the pavement a few hundred feet underneath a bus and lost a loan at 40 below in the brooks range. to me this is just another chapter and i'm just trying to do the right thing. >> all right. mr. kinnucan has finally, because it does take a long time, those wheels of justice move quite slowly. we'll have more, perhaps, as we get it. back to you, melissa. >> did he essentially close the shop down after that interview? i would imagine nobody would want to do business with him at that point? >> business became

extraordinarily tough for him to do. he was talking about representing himself in terms of the ongoing investigation. as you might imagine, he was getting an enormous amount of paperwork coming his way. not clear, lost touch with mr. kinnucan over the last number of months. there's also an element, it seems, of his behavior that became particularly erratic, at least sending threats and the like to a number of people. we haven't really checked in on this situation in a while. did want to update it given he did take a fairly large profile for a brief time because he would not cooperate with the fbi. >> david, thanks a lot for that. coming up next, managing a new sports sensation and the talk of the nation. how many endorsements can jeremy lin score? we've got a live interview with his agent. that straight ahead. as we head to break, take a look at this morning's early movers on this friday, led by first solar up 10%.

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welcome back to "squawk on the street." we're getting a little more detail on this unbelievable story about the italian police seizing about $6 trillion in fake u.s. treasury bonds in switzerland. we are told italian anti-mafia officials have ordered their seizure. the bombs were found hidden in false compartments in safe deposit boxes. they had been transferred from

hong kong to zurich in 2007. eight arrests have been made. we have a bunch of calls out to some of the u.s. officials to see if they have any comment on this. by the way, there were three such incidents of fake u.s. securities found in italy in 2009. the biggest one that i saw there was a seizure of $116 billion. and this takes it to a whole new order, carl. $6 trillion is the number. we keep double-checking that. now we've got a bunch of wire stories that are confirming that. like i said, we're trying to get some u.s. official comment. but it is the number that is out there, carl. >> it's going to get a lot more interesting, steve. thank you for that. incredible. steve liesman back at headquarters. he's all the sports world is talking about. he's jeremy lin, the kid who went undrafted and was tossed aside by two teams. now the king of new york boosting msg stock, network ratings and causing a frenzy for anything lin. darren rovell is back at headquarters with a first on cnbc interview with lin's agent, roger montgomery. >> thanks so much, carl. if you thought the tim tebow

story was unbelievable, i'm pretty sure this jeremy lin story has it beat. he's come out of nowhere to average more than 24 points a game in his seven starts. fans are clambering to get in linsani linsanity. one man knows the business of jeremy lin better than any other. roger montgomery, agent forriermy lin and the montgomery sports group. first of all, your phones, how many you got? how many chargers? what's it been like the last week? >> it's been very eventful in a good way. obviously with the good comes the bad. but in a good way it's been very good. i have two phones. >> you have two phones. okay. you probably have to recharge both of them. let's talk about the endorsement opportunities. how many companies are calling you? are we talking movies? are we talking book deals? what have you been approached with? >> we're talking a little bit of everything. categories, all the big ones. small, intermediate. everybody's interested in jeremy lin. >> also, i assume it's very international as well, getting -- do you speak

mandarin? >> i'm working on it. >> so you're getting calls from taiwan, taiwanese companies and u.s. >> we are. >> this is an amazing story. you would know this answer better than anyone. he was cut by the golden state warriors. he was cut by the rockets. how close was he to gets cut by the knicks. >> i think if he didn't get an opportunity in that new jersey game, there's a real possibility that he probably would have waived. >> would have been cut. >> yes. >> what is the possibility that he wouldn't have signed with another team maybe ever again? another nba team. >> there's a possibility that could have been the case, too. it's really hard to obtain an nba opportunity. there are only 30 teams. it's tough to play in the nba. it could have been an opportunity there for him. we don't know. i'm glad we don't have to find that out. but at the end of the day, you know, it was tough. it was a tough call. >> yesterday arnie duncan, secretary of education, said to espn.com, i think he has been frankly discriminated against, underappreciated and

undervalued. this is not an overnight success story. so my question is, he's -- you think that he was discriminated against in some way, either racially or imagewise? and how much is that -- is the harvard factor or the asian factor negative against him? >> under appreciated, yes. undervalued, yes. discriminated against? i'm not sure. i think that the image is what people were having a challenge with. because the image is when you talk about an nba player, you're talking about somebody that's 6'10", 6'11", a yao ming phenomenon. had he went to georgetown or kansas or kentucky or somewhere like that, this story probably wouldn't be as big. >> people want me to stop tweeting about it, but i can't. because it's the greatest sports business story i've ever seen. >> it's an awesome story. >> and so, you know, you're obviously on the inside. there's a card on ebay, a rookie card on ebay right now going for

$14,000. >> right. >> so is it strike while the iron's hot endorsementwise or wait? agents always say i'm going to sit around and wait. isn't there a factor here while he's so hot right now, what happens if -- what's your philosophy? what's jeremy's philosophy? >> this is unprecedented. there's no precedent for this unique situation. what we're going to do is take our time. we're going to use balance in this process. we're not going to rush out the gate and try to accomplish the world in one week's time. >> no deal's done yet, right? >> no deal's done yet outside of the deal he already had with nike. but to that end, you know, just like coach d'antoni said, he said he's riding secretariat. secretariat got out the gate kind of slow and he finished strong. right now we're going to take our time out the gate, vet out every good opportunity, make sure those opportunities are in line with jeremy, who he is, what his story is all about, resonate with him so he feels comfortable, not overwhelm him, not put him in a position where he's torn. because the engine is basketball and the new york knicks.

the biggest opportunity and the biggest endorsement that he has to date is being starting pointguard for the new york knicks. >> you are a boutique agency. >> correct. >> you got jeremy lin because you believed in him. you only have one other nba player now in mo evans. >> i have another nba player, sunny williams. he's in europe. i have another one after that. his name is deme tree yus -- he'll be there. >> you think this will change the scouting services and stuff like that. >> probably. they get paid to do what they do. people say they don't make mistake, but they do. it's a great opportunity for players like jeremy who if they get an opportunity they can showcase their skill set and hopefully they can have a great story as well. >> roger montgomery, thanks so much for joining us on cnbc and good luck fielding all those phone calls. david, he's a boutique agency but he told me he talks to jeremy lin every day. i doubt many guys in the imgs and the big places in the world talk to their client every single day. >> i hope he'll be loyal to you and you be loyal to the new york knicks and stay in town, all

right? >> okay. >> a long-time fan. thanks very much. on this topic, thanks to that stand off between madison square gardens and time warner cable, many of the fans in the new york metro area can't watch the knicks and their star point guard jeremy lin. i'm inviting msg chairman james dolan and time warner cable ceo glen rit to come to "squawk on the street" in an effort to resolve this dispute. i like that p p that's me in the little referee suit. we'll call it faber's court. i can have you both here. forget christine quinn. you know, the speaker of the city council or eric schneiderman. they don't know anything about your business. i know you both. i understand what you do. let's bring it right here. let's bring it right here to ec. to update everybody as for the knicks, you saw that. aiming for their eighth straight victory tonight when they take on the hornets tonight. carmelo anthony returning to the line-up. >> maybe not. >> thank you, darren. maybe not returning to the line-up tonight. but if he does, of course, that will raise that key question of

chemistry. i do need our sports reporter when i do these. if you have time warner, by the way, you're going to have to find it on the radio. i had to go out and by an a.m. radio. 48 days, 17 games so far missed by fans of the knicks. we should point out the rangers who are having a great season. you're taking a look there at madison square garden shares and time warner cable shares. neither one of which seems to have suffered from this dispute. it is just long suffering fans of the knicks who once again somehow are left to suffer. all right. james dolan, glen britt, right here, baby. back to you, melissa. >> david, where do you buy a radio these days? radio shack? >> yeah. you can go to radio shack. you've got to go back into the back room. >> dust them off. cobwebs. >> 1980s, 1990s inventory. time for this morning's upgrades and downgrades. chesapeake energy upgraded to a buy from a hold at stifel nicolaus. leaf wireless downgraded to a neutral from a buy at collin stuart. pf chang's upgraded to

outperform from market perform at rbc. dell getting downgrade. blue nile upgraded to an outperform from market perform at rbc capital. blue nile selloff yesterday. so perhaps a valuation call on this. net koe health getting a downgrade from equal weight to under weight at morgan stanley. for more on the stocks, go to sots.cnbc.com. in the meantime, we'll watch a market that you would expect not to take a big position either way. having no idea what's going to happen in greece over the weekend. for the time being, we have seen the market hold almost exactly still from premarket. futures were up about 30. dow holding on to about a 33-point gain. we'll continue to watch oil today again at a three-month high. >> it's actually the highest levels we've seen since may. >> since may now at 103. considered widely to be one of the biggest threats to the rally. then the yen, which down 4% for february alone. we got more qe out of the bank

of japan just this week. >> these are big moves for the currency markets, 4%. tremendous. >> which you don't see very often. >> no. >> the dollar against the yen at a 3.5-month high. incredible moves in currencies. when we come back right now, are the debt money days over for microsoft stock? we'll talk about mr. softy in just a moment. ♪ [ kareem ] i was fascinated by balsa wood airplanes since i was a kid. [ mike ] i always wondered how did an airplane get in the air. at ge aviation, we build jet engines. we lift people up off the ground to 35 thousand feet.

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welcome back to "squawk on the street." we have january's leading indicators out, up .4%. very close to expectations. very close to last month's originally released .4%, upgraded a bit to one-half 1% or 5 cents. the market doesn't seem to be paying a lot of attention to this number. in all we've had some better than expected data, ail bit maybe some slightly higher inflation data as well. we will continue to monitor the only handful of days the 10-year note in the u.s. has closed above 2% for 2012. but we may be adding to that short list. back to you. >> rick, thanks a lot. talk to you in a little bit. rick santelli in chicago. let's get a check on the markets right now as the dow tries to inch at least a lit bit closer to 13,000. here with insights on the trading day is tom lee, chief u.s. equity strategist over at

jpmorgan. tom, always good to see you. welcome back. >> thanks. thanks for having me. good to be here. >> you're not alone in looking for some kind of pause in this rally although it's hard to get a sustained one. when and how do you think it comes? >> well, you know, i think that, you know, we're dealing with a market where i think the foundations, like the sort of 12 months, 6 months have really strengthened. employment's improved. we've got good housing data points. in italy we've seen improvements in liquidity. at the same time, the market does have to digest those gains. we'll look for a weakening of the early leaders. when the basic materials and semis no longer respond to news, that's when you start to think the market's going to pause. i don't think it's a pullback. it's more we might be flat and just rotate into other cyclicals during that time. >> have you seen any signs that that lack of sevennsitivity is taking place? >> will is. take tech, for instance. semis were materially leaders in the fall. it's now really being taken over by tech hardware, which is

really apple. but also software. then when you look at basic materials, you know, that group has actually in the last couple of weeks really been urnds performing the market. it looks like there's a rotation. that's the kind of rotation where the market stays flat but you're seeing investors get into other cyclicals. by the way, we did a study this morning. 42% of long only large cap managers are underweight cyclica cyclicals. these guys have to get more cyclical exposure. >> when you read through these filings and you are taking a look at long eer term, longer oriented investors, you believe if they're underweight there needs to be a reversion back to the means. you believe they're going to be buying cyclicals at some point? >> that's right. only 20% managers are overweight technology now. financials, number three, 65% are underweight by 100 basis points. what you have is these guys are really underperforming year to date. 25% of the managers that are

overweight defensives are trailing the market by 250 basis points. these guys have to add cyclical exposure. i think the market's flat but you want to be buying industrials, durables, the builders, you know, tech and financials. it's really a cyclical bet you want to make during this pause. >> where are you, tom, on volume? there's been a lot of talk about how low the volume has been this year. gary kaminsky on yesterday's show said of course the volume's lower because the prices of the stocks are higher. you should look at dollar volume, not the number of shares being transacted. do you buy that? >> i mean, that's -- that's true. i think the volume data you have to really be careful how you parse it because, you know, u think some of the stat arb and some of these black box systems that actually dial down a bit, i think institutional volumes actually have been pretty steady in picking up. i think we still haven't seen macro managers make the big trade into equities. but i think that, you know, it's odd. i think it's really unusual. i think we are going to have a market where price leads volume.

i know normally it's volume leads price. i do think we're starting to get more trust in the market, more activity, more churn. that's going to boost volume. >> seen some concerning signs out of europe. but i know you're a u.s. equity strategist. a lot of that's going to pivot around -- i'm sorry -- china's performance, lower foreign direct investment, some harsh words from the likes of singapore about whether or not china sees some kind of harsh landing. is that a worry for you at all? >> yeah. i mean, you know, we definitely have to say there's three things that worry us globally. really four things. one of them is china. but when it comes to china, i think that, you know, we have to remember there's so many policy tools, you know, they're not really working with just interest rates. they have multiple tools to deal with. not only property prices, but easing credit flow, bankrollovers. so i think that we're willing to give them the benefit of the doubt that china can manage a soft landing. again, it's because of the plethora of tools and their track record. >> in terms of targets, are, you

talking year-end targets? maybe we're already there and you're looking for more of a sideways second half? >> in early december 2011, we set a 2012 target of 1430 for the s&p. >> we remember that well. >> yeah. and i think that the case for 1430 is actually stronger. i'd argue that this year barring any middle east surprise, we should potentially take out 1500 this year. because, you know, we're talking about a 1430 as a 13 multiple on 2013 earnings. we really should be at 15 times. every one point of multiple is actually 110 points in the s&p. so just to get to 1500 is basically half a turn in multiple. >> yeah. >> wow. >> that's aggressive. you were -- assuming this all pans out, you were a little early. but i guess better that than a little late, right? >> yeah. you know, i think that investors have to take a look back and say, you know what? there's a bull market that started in march 2009. we're in the fourth year which means really it's a secular bull market.

secular bull markets typically last seven years. because risk premium is so high, stocks are less correlated to economic fundamentals. fortunately we have a tail wind with economic data right now. we have to remember, even if you don't get great economic data stocks can do pretty well. >> tom, thanks a lot. good to talk to you again. >> great. thanks for having me, guys. dow jones is reporting the ecb bond swap to secure the central banks' 44 billion euros of greek debt in advance of any orderly default had just been completed. it's the opening act of what promises to be a very high stakes weekend. cnbc's chief international correspondent michelle caruso-cabrera has got more on what's at stake. >> big event this week pend the european finance ministers do a conference call on sunday. then they meet on monday and the decision they face, do they give greece another 130 billion euros worth of new loans to help them finance themselves over the next couple of years. here's the dilemma the european finance ministers face. when they go into this process, greece's debt to gdp will still be above 120% when it comes to

2020. that would be a violation of one of the key metrics that they set out way back when in october. the big event, we bring up the full screen, is for them to decide whether or not or how they're going to solve that last line, that dilemma. how do you do that? how do you solve that dilemma? you could give them the loans anyway and just look the other way. you could decide not to give them the loans at all because one way to solve it, debt to gdp issue is to not give them more debt. remember, these are not grants, these are loans. you could find some money that would help get greece to that debt to gdp level of 120%. where would you find that money? you could get more from the private sector. you've already asked the private sector to take a 50% haircut. maybe they come back and say, you know what, you've got to take more. who else has loaned greece money? the ecb, imf or esfs. that would be the european partners. would some of those people give them loan forgiveness? do you go back to the greek people?

do all of the above? let's likely would be imf. nobody involved seems they're ever going to violate the principle, that imf is always first and foremost in the capital structure when it comes to loan. other possibilities on monday, are they going to give them a bridge loan to get over that $4 billion euro payment on march 20th, really the big immediate issue people are concerned about? would it have ripple effects across the market? remember, if you do that, you're really going to -- wow. those hedge funds are going to get paid off that really piled into that debt. it's going to give them great incentive to go back and try to do it again. 30 cents, 100 krenlts on the dollar and the european union would have lost any credibility. bridge loan to pay the banks off in the private sector debt reduction. a side deal. you could do a bridge loan for that, that way you could get that private sector deal done on the side. all kinds of possibilities, simon. but that is the dilemma they face. perhaps by the end of monday, we're going to find out exactly what gets done. >> so what do you think, then, michelle? you cover this. is it -- somebody said to me today, there are so many events

now in the diary. the german parliament's got to vote on this. them in.going to kind of rein greeks might have to do 21 more votes through the greek parliament. do you think we stumble from crisis to crisis or as somebody else said to me today, it's not a problem. because ultimately greece holds all the cards and there are elections coming in france and there are elections in germany and they'll do what they have to do, just ignore it. >> look, i think the least likely to happen is i think collectively for all of these european finance ministers to say, no, we're not going to give them the money anymore because that would -- a lot of people argue -- make the most sense. it's really hard in human nature to collectively take some kind of decision that would be so catastrophic, at least in the short term. although a lot of folks would argue that ripping off the band-aid quickly would be the best thing. i think, yes, we stumble along. they probably do something to deal with that march payment. and then after that, it really becomes less of a financial markets issue, right? because you pretty much have

taken care of the banks in some way. the banks don't like it. then you have collective -- you socialize the costs across europe. >> you see, therein lies the next achilles heel. there'll be an election in greece. >> yeah. >> everybody will -- lord knows what they'll say after that. >> okay. but that does not refute my point, which is that if you get past the march payment, now what you've done is you've put it all in the hands of the official sector. you have socialized potential future losses across the entire european union. >> what i was heading for is where next do the markets go? the central question is what happens with portugal. once they've sewn up greece in whatever way that ends, do they then say, actually, portugal can't pay its debts. that's the next one. will the european union come in and offer them more cheap loans? will ireland ask for the same and greece? does it go on or does it stop? >> oh, it goes on. >> oh, lord. >> i think it goes on. yeah. absolutely. remember, human nature to get collectively hundreds of people to agree on something in the

affirmative that is in the short term destructive but potentially good in the long term is extremely hard. it's much easier for everybody to kind of just push the ball forward, kick the can forward as they've done for two years. >> mm-hmm. are we heading towards 13,000 on the dow. michelle, thank you very much. >> exactly. up next on the show, the biotech sector on a tear so far this year. will gilead's trouble wits hepatitis c drug derail the rally? found out after the break. [ male announcer ] technology accelerates at a relentless pace.

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some stocks to watch about 45 minutes into trading on this friday. j.m. smuker removed from the conviction buy list at goldman. the firm also cutting the price target from 89 down to 84. rack space downgraded from neutral to buy at bank of america merrill lynch. hospira downgraded from sell sto neutral at citi. shares of gilead taking a beating after the biotech firm saying some patients treated wits hepatitis c drug experience a relapse. gilead acquired the drug in its $11 billion drug with pharmasset. joining us is an analyst with isi. he's got a buy rating on gilead. would you say that the data will get better and this is a buy at this point? >> hey, thanks for having me on.

so there's no question the data today is a disappointment. with the stock down, here's what investors are doing. we're going to cut numbers in half for this hepatitis c opportunity. given the day-to-day, it's probably reasonable. over longer term, it's probably overdone. the downside risk over the next quarter or so is probably around 10%. versus the upside tonight if they recover as more data is uncovered other the next few months could be 20% or more. it's bad news. a painful day for people like me recommending the stock. i do think over the long term this is more likely to be an opportunity to buy than it is -- than the inverse. >> your take on the drug is still that it will eventually achieve its end point? >> yeah. what happened today was they basically showed that the cure rate when using this drug alone was lower than expected. what may need to happen are two things. they may need just to use the drug for a longer period of time. longer than three months.

maybe use it for six months. that hasn't been tried yet. it is being tried now and we'll get those data in several months. the second option is maybe they just need to add on another drug. unfortunately, gilead has several other hepatitis drugs in development they can add on to the cocktail. we'll see data from the cocktail drugs emerge over the next few years. i think there is an opportunity. the final point i'll make is the data we saw today was in a very difficult to treat, traditionally very difficult to treat sub population of hepatitis c patients called no responders. it's possible, we don't know, but it's possible that the data in nonnull responders, that is most of the patients out there, will be better than the data that we saw today which was from this very difficult to treat null responder group. a small part of the overall commercial opportunity for this drug. we don't know that. we'll understand more about that over the next several months. >> mark, doesn't it put a damper on some of the premiums we've seen in the hep c craze? >> yeah. look, i mean, biotech is a risk

on, risk off space, right? biotech tends to outperform the broader markets when portfolio managers are feeling good about the overall market and they want beta, volatility, and they're willing to buy more speculative spaces. any time you have a setback like this where people are losing money in the teens on a major company like that, that's of course going to make people slightly more risk averse. this is par for the course. investing in biotech, both large cap and small cap, you see moves like this. there's a reason these companies do trials on their drugs. you do trials on drugs because you don't know what the answer is, unfortunately, until you get the data. me as a biotech specialist and biotech investors make their living trying to guess. turns out guessing, sometimes we get it wrong. >> david? >> mark, back to the m and a part, gilead paid $137 a share for this company in cash. $11 billion. a huge premium to where it was trading. it's possible they could have waited at least, isn't it, until we saw some of this data?

you know, they've lost the entire premium in their market cap that they paid to acquire pharmasset. >> yeah. so you make a fair point. sure. in a perfect world, it absolutely would have been better had gilead waited until, you know, call it april of 2012 to buy pharmasset. hindsight is unfortunately always 20/20. but sure. i don't think there's any way to argue that if they had waited it wouldn't have been better. if they had waited who knows if another bidder would have come in and swiped it out from under them. we don't know that. we can't know that. >> we can't. although we can read the background. they've bid against themselves four times from what i remember. nobody else was there. >> you got to be careful reading that stuff. there was no official bid. >> yeah, i know my way around m & a mark, thanks. i understand what you're saying. there was no official bid. i'm telling you there was nobody there specifically. bristol myers and hib dex. is that one of any significance at this point? that deal's closed. different drug. different status in terms of where it is in studies.

should investors be concerned? >> in a way this is good for bristol myers. we've seen an outperform today. it's good for bristol myers. they're probably a little ahead of gilead in terms of developing a combination of hepatitis c drugs. one of the possible solutions is you need more than just this single drug in order to cure hep c. bristol myers has other drugs in its portfolio. they're a little bit ahead of gilead. this actually positions potentially bristol myers pretty well and you're seeing that in the stock today. i would agree with that. >> mark, i wanted to ask you about some of the reaction of the other hep c drug makers out there. vertex is up sharply. what's the thinking. the setback is going to make their drugs more valuable or they're more of a target for the companies? >> back to this concept that you may need more than -- you may need more than just one drug to cure hepatitis c. you may need a combination of drugs. you may need to go to a cocktail approach. kind of drug gilead has is called a nuke.

it was thought prior to today by many people that maybe just a nuke would be enough. now it appears that perhaps just a nuke drug isn't enough. you need other drugs. companies like akillon are developing other types of drugs. these other classes that the market viewed as less valuable yesterday now are viewed as more valuable because you might need to add it on to the nuke. >> thanks very much. when we come back this morning, we'll go from biotech to a different kind of technology. coming up, twitter dee is certainly no twitter dum. learn how they'll make money off businesses and expanding internationally. follow us after this break. ttd#: 1-800-345-2550 let's talk about the cookie-cutter retirement advice ttd#: 1-800-345-2550 you get at some places. ttd#: 1-800-345-2550 they say you have to do this, have that, invest here ttd#: 1-800-345-2550 ttd#: 1-800-345-2550 you know what? ttd#: 1-800-345-2550 you can't create a retirement plan based on ttd#: 1-800-345-2550 a predetermined script. ttd#: 1-800-345-2550 at charles schwab, we actually take the time to listen - ttd#: 1-800-345-2550 to understand you and your goals...

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hundreds of thousands of businesses a free way to connect with customers. now its self-serve ad platform will make money off companies already valuable twitter presence. julia boorstin spoke exclusively with the twitter ceo about his game plan for growing the company. good morning, julia. >> good morning, carl. twitter's revenue is sure to scale quickly once it opens its ad service to 10,000 american express small businesses next month. then to anyone with a credit card later this year. ceo dick costell objection tells me small businesses were begging for access to twitter ads, until now limited to 3,000 major brands by removing spending min ums and monthly commits, he expects a wide range of companies will pay to amplify messages they're already sending. but small businesses are just one new revenue source. this year twitter is taking political ads for the first time and a contentious campaign works to its benefit. costello says every major candidate is both tweeting and buying ads. >> 2012 will be the twitter

election. i think that candidates who don't understand the realtime feedback loop that twitter provides and the realtime conversation it provides around what's happening right now will be left behind. >> costolo's other main focus is overseas. twitter is opening more international offices to sign foreign advertisers and will translate into more languages. it's already available in 20. >> in africa we're growing quite fast now. italy and spain we've really started to take off. so we're thinking carefully about how to continue to grow and invest into those inflection points in these countries where we're growing rapidly, and that's how i'm thinking about growing the business right now. >> one area twitter does not plan to make money on is analytics. though a number of other companies charge to analyze twitter's data, twitter will continue to give it away for free. costolo says helping companies use twitter more effectively will ultimately drive revenue. coming up on "power lunch," i'll have more from my exclusive with

costolo including hi thoughts on ipo pressure and the future of e-commerce. carl? >> julia, give us a taste on that ipo question. i think two questions are -- are all over twitter in terms of viewers' minds. "a," would they ever think of going public or would they accept a check, a buyout from a company like a facebook, a newly public facebook? >> well, i think one thing that costolo is really paying close attention to is this 500 shareholder rule. once the company hits 500 shareholders, it's going to have to do some financial disclosures. he's really trying to keep the company under 500 shareholders. he says for now they're not thinking about going public. he's just focusing on running his business. i have to say, i asked him a couple times. he just laughed. he hates getting that question. but it's one he has to address. right now he's just trying not to deal with it. >> i'm sure he sees it coming. we'll look for it later. thanks, julia. coming up on the show, a big reason why one wall street firm is saying that the housing market has hit a bottom. and there's even more on the home front here on "squawk on the street."

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♪ some of the stories we're squawking about, 7:30 on the west coast, 10:30 on wall street. markets are mixed this morning. gilead the biggest loser on the s&p by a huge margin. down 13% followed by general mills, down 3%. home depot and lowe's both hitting fresh new one-year highs today. both stocks up nearly 2%. and the u.s. postal service is warning it will lose as much as $18 billion a year by 2015 until congress says it can eliminate saturday delivery and raise the price of stamps by as much as 5 cents. 67 points away from dow 13,000. as carl just accurately described, it's a very mixed market so far today. let's look -- there's no clear sector moving substantially. let's have a breadth -- almost 2-1 advance to decline. let's look at the nasdaq and see

what's happening uptown. more evenly spread. >> after some mixed data on the housing market, jpmorgan is coming out and calling a bottom. mary thompson is back at headquarters with more on that. mary? >> thanks, melissa. the call coming from the man jamie dimon put in charge to fix the bank's mortgage business. the chief administrative officer now says the worst is behind them. >> i think it's at a bottom. i think it's at a bottom. >> when you say you believe the housing market has -- has bot m bottomed, what are some of the signs you've seen that have led you to this conclusion. >> first of all, when i look at the sales data, the sales data shows that the distressed sales are performing better than they used to and nondistressed sales are performing much better. more importantly when you look at inventory, delinquencies are down more than 28%. customers in the modification process are down 49%. you see a shadow inventory

moving down. you see reo moving down. those are all factors, when you take those factors and then take home sales prices and put them together, you get to a conclusion, it's close to the bottom. >> can you tell us how long it will bounce along the bottom? >> i think we'll stay at the bottom for a while until we get through the shadow inventory and the reo rental programs. >> is that a year or two-year process? maybe longer? >> i think the housing recovery will take a while. i think this is a year of stabilization. >> he was also a key player in the recently signed servicing settlement between the banks and state attorneys general. he also spoke to cnbc exclusively about why that deal is good and what's the next step in getting housing back on track. you can find that interview on cnbc.com. of course, we'll have more on that coming up later today. carl, back to you. >> perfect segue, thank you very much, mary. according to a new note out from morgan stanley, as many as 1.8 million real estate-related jobs will be created as investors convert foreclosed

homes to rentals. oliver change is the head of u.s. housing strategy at morgan stanley. he joins us this morning onset. a happy friday, oliver. good to have you. >> good to be back. >> it's a lot of jobs. is this just going to happen by itself? >> we think what's happening is that this whole idea of turning distressed properties into rentals, which we're calling buy to rent, effectively, is really progressing on its own. there's a lot of different components. we've talked in the past about the government reo rental component setting up a program to facilitate the sales of these properties. now what we're seeing in just the first six weeks of this year is over1 billion of announcements and capital fundraises to go and put money to work here. we're moving forward with this. and i think that the job creation aspect comes from the fact that, you know, in our estimates, there are 8 million distressed properties that need to be sold over the next five years or so. even if only half of those can be converted into rentals, we're talking about a lot of hands-on labor that needs to go into rehabilitating them. once they are rehabilitated, there's still an ongoing

property management -- >> some construction work, some services work. we've talked, though, about the challenges of maintaining -- an apartment building is one thing. maintaining a series of homes as rentals is another. >> that's correct. and the operations -- it's really what we focused on in this most recent report. so looking at the acquisition phase and the operation phase of this opportunity, the question comes up, is this an asset management opportunity or is this an operating business? in our conclusion, it's really an operating business, right? because even if you figure out, you know, where you want to buy the homes, where you want to rent them out, you still have to be able to fix them up. you have to be able to manage them. they are scattered. they're going to be all over the place. setting up efficient operations key. when we look at the effect it can have on yield just from the cost of management and realizing those efficiencies, we're talking about two or three different -- two or three percentage points on the yield. >> in terms of determining the number of homes that need to be rehabilitated, i imagine you

would have to look at how long they have. unoccupied. they would be in worse condition, assumingly. basted on that, can you also project how much materials, what the knock on effect would be in terms of home depot, lowe's, the amount of lumber, paint, appliances, et cetera, that would also be involved assuming your assumptions? >> just to be clear all we've taken a look at here is the direct impact. we're saying 3 to 4 million homes that need to be renovated. there is an entire set of industries that are related and driven by house ing. everything you just mentioned and more. we haven't even gotten to that yet, right? we're saying that just from rehabilitating homes, rebuilding them, there's the potential to create all of these jobs. it's all prooitly fund zbld how do you come up with the $4 million figure? >> we're saying it's roughly half of the total number of distressed sales that we estimate need to occur. >> how do you know that half will actually go into the buy to rent. >> we're not saying that exactly half are going to.

we're saying even if you take a conservative estimate and only half can go into it. the other 4 million properties are still also -- they're dilapida dilapidated. they might not be turned into rentals. maybe they're sold to owner occupiers who are going to need to renovate them in order to live in them. maybe they're sold to other investors who do a traditional flip sale, right? they still also have to put that effort in. >> to you think that process is sufficient to put a bottom in the housing market? do you think prices will rise as jpmorgan is suggesting? >> we actually -- we published this in december last year. we believe the distressed part of the housing market has already bottomed. and the bid that we see from the investor is really the reason for this bottoming. the prices are very low, obviously. that's why this opportunity exists. but you can see it in the everyday sales of homes. distressed properties have found a bid. yeah, we think that from here, those prices -- while there is this period of time where we have to clear through the inventory and they'll probably remain somewhat flat, but it's a positive for that part of the

housing market. now, on the nondistressed part of the housing market, we still see continued weakness. as we've said in the past as well, that's really driven by toner occupied buyer who is reliant on mortgage credit and the availability of mortgage credit is still incredibly tight right now. >> despite low rates. that's incredible. >> right. >> thanks, oliver. >> thank you. coming next on the program, this week's wild ride for apple. find out what the charts are saying about apple and other stocks. buys or sells? keep it here on "squawk on the street."

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[ cindy ] there's construction workers everywhere. so what does that mean? it means work. it means work for more people. [ brian ] there's a bright future here, and there's a chance to get on the ground floor of something big, something that will bring us back. not only this company, but this country. ♪ but my nose is still runny. [ male announcer ] truth is, dayquil doesn't treat that. really? [ male announcer ] alka-seltzer plus fights your worst cold symptoms, plus it relieves your runny nose. [ deep breath ] awesome. [ male announcer ] yes, it is. that's the cold truth! want to get back to david faber at headquarters with breaking news on the kinnucan arrest. >> we want to follow ip on earlier reports about john kinnucan, the independent research analyst who's been indicted. we do have the indictment itself. as you might expect, it speaks to insider trading, at least alleged charges -- alleged insider trading. that is the charge that mr.

kinnucan was receiving inside chfgs from executives at sandisk, at f five and flex tronices. the government claims he was paying in some ways, either with expensive dinners or directly with cash. again, these are all the charges against mr. kinnucan. we also can tell you that cnbc has learned from a source close to the case that the sandisk executive or at least a former executive, donald barnettson, is expected to plead guilty to one count of conspiracy to commit securities fraud at a hearing later this morning. all of this, of course, part of the government's ongoing investigation of insider trading called operation perfect hedge. been going on for four years. more to come. melissa, back to you. >> thank you very much, david. apple continuing to move higher after that big reversal day a couple days earlier this week. microsoft also soaring to multi-year highs. what are the charts telling us, though, about these stock runs? market muten is chief technical analyst with gray wolf execution partners. mark, i want to start off with apple.

that reversal day was a big one. some are saying that was an outside reversal because it reached a new high on the day and a lower low from the priest d -- previous day. >> a lot of people call this a key reversal. it's important to note that the stock has such momentum that on a longer term basis it's going to take a lot more to suggest that the stock is peaking. >> when the key when you say short term top, tuz that mean a top for that day? it seems like we are approaching that once again. we're on another upward move. >> yeah. oftentimes even if you're going to make a short term top it's going to take several attempts at stabbing towards the highs before you'll even peak out. 526 was the high on wednesday, i believe. if you get above that you could have a chance of getting to 540. i would use that day's low and suggest if it gets below there you could go back to potentially the mid-460s. on the bigger scheme of things the stock really needs to break below weekly and even monthly lows and close below there to think we're making a larger term

top. for longer term investors, pullbacks near term should be buying opportunities for the stock. >> moving on to microsoft. microsoft actually touched 4 1/2 year highs in yesterday's session. we were talking about this. this is a stock that had been left for dead for about a decade. all of a sudden 2012 is a magic year for microsoft. we're seeing such a -- i don't want to say par bollic. when you have a 20% move to the upside in a couple months, that's pretty big. >> it's important to keep in mind the stock had gone almost nowhere for the last decade. breeking above 26.5 which was a trend line in place since 2010 helped the stock accelerate. we get up near 31.5, 32 could be near term resistance. the intermediate term picture in my perspective is more bullish for microsoft and targets -- technical targets lie near 37.7. >> what are some of the bricks ewe use in your argument in making the microsoft bull case for a run up to 37? some would say if the stock hasn't done anything for so long and all of a sudden moves so high, maybe that's just hot

money flowing into the stock. >> if you look at things like weekly and monthly mac d, these are gradually starting to turn back to the upside. those are some things that make more of a bullish longer term case for the stock. there's a very big difference between, i think, short-term trading where the stock can get overbought and might require consolidation versus longer term on a multimonth or even multiyear basis where the stock is increasingly better after having languished for a decade. >> on the nasdaq, we're discussing two major components of the nasdaq 100 and nasdaq composite sitting at basically 11 year highs. >> fewer and fewer stocks are participating in the new highs. microsoft and apple comprise almost 25% of the nasdaq 100. it's tough to be real bearish. obviously things are overbought. you're seeing fewer stocks participating. my thinking is in the next few weeks we could see a little backing and filling. it's tough to get real bearish. if anything it's cautiously bullish. i'm looking to buy dips. >> mark newton of gray wolf.

carl? when we come back, the eurozone's economy may not be looking so good. but their real estate is in its prime. we're going to show you some of the best villas, shat toes and mansions that europe has to offer. first, rick santelli is working on the next hour of "squawk on the street." this one's going to be a doozy, rick. >> top of the hour we're going to talk about interest rates. we're also going to talk about three years ago, what a wild week it was. february 17th, 18th, 19th with regard to stimulus. housing plans. debt. you know, we're also going to have a special guest who's going to help instruct the country and its leaders how to smash some debt. >> here's the deficit smasher! >> i think gallagher and i are going to go into our special room, and we're going to show congress how easy it is to smash some debt. >> and make jobs! >> yeah! back to you. ♪

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♪ well, murdoch back in london, visiting the staff of his sun newspaper. sort of an awkward visit to say the the at least seeing as many sun staffers are angered by news

corp.'s response. >> rupert murdoch flew in yesterday on a legally sk lregu scheduled visit to london. he arrived at the offices today to address employees writing in a memo this morning that he will stay in london for several weeks, quote, to show his unwavering support. we obtained a copy of that memo where he also called the sun, quote, a part of me and reaffirmed his commitment to the paper so much so that it will begin publishing a new sunday edition where news of the world once earned record circulation. he says the sun on sunday will launch, quote, very soon. as for those arrests, he writes, all suspensions are hereby lifted until or whether charged and they are welcome to return to work. news corporation will cover their legal expenses. everyone is innocent until proven otherwise. murdoch says he is even more

determined to see the sun continue to fight for its shuddered immediately after evidence of hacking. we remember that the first week of july. this is a different take he is taking with "the sun." i'm sure we'll hear more in the coming weeks out of this trip to london. >> the difference here, he's throwing them under the bus, isn't he? you've got the internal investigation. that's why journalists are angry. he's throwing them to the authorities. >> right. the management and standards committee, and he mentioned in the memo they are continuing to be in full cooperation with the police and turning over some evidence. the issue here is that a lot of that evidence is what's resulting in these arrests. they needed this rally cry from murdoch today. it does look like he is going to be there for some time now to help engage them. >> in the meantime they relaunch "news the world." thank you very much. this morning we are talking

not about the luxury home market in europe where the debt crisis is obviously creating a silver lining for many if you have the cash to buy a villa or chateau at knockdown prices. on the newsline is mike braunholtz. you can see they go across europe. michael, welcome to the program. let's kick off with the dreamy villa in greece. >> thank you. good morning. the dreamy villa in greece, what a property that is. i don't know if you've seen the square feet. it's 29,000 square feet. panoramaic sea views. cash is king.

they'll take whatever money you've got. obviously, if you come in dollars, i think the vendors, the people selling the property are looking for euros. let's move over to italy and the villa in tuscany. >> one of the best in class. all these properties you've chosen today are what's known as prime properties. these are the properties that, although they've come down a bit, survived the best throughout the worldwide debt crisis. some of them have held their prices. this is a beautiful property. >> to be clear, with this 15th century property, there is a chapel. >> indeed. it's got everything you could possibly be looking for with that kind of classic italian property. >> the heating needs some updating. which is a shame for $13.3

million. >> i think the last winters the temperatures might have dropped to 15. >> i want something bigger. 34 34 bedrooms in geneva. >> come to our website we have 20,000 properties. >> keep going. talk us through the chateau with its towers. >> that is extraordinary. the thing about this property, you will notice the price is heavy duty. $74 million. >> yes. that's right up there with some of your finest american properties. i can tell you now that the owner of the property is entertaining far lower offers. possibly less than half that. >> wow. how come?

>> this is an absolutely classic shadow. you can see it's got everything. it's the fairy tale look. it's as good as it gets in terms of that type of property in france. it's called the versailles of the south. it is that good. >> why has he gone from $74 million to half that? >> we don't know. there are certain individuals who really have a need to sell. and need cash. these are tough times for certain individuals. there are people who need the money. they've got a large asset like this, they might be having to liquidate that asset at this stage and are prepared to take a huge drop in price. i don't want to speculate on the actual personal situation of the owner. this is not alone. we have a number of properties which have halved or more. >> overextending with the purchase of the chateau then. >> it could be or they've got other financial commitments that are reaching crisis point and they need to get the cash.

>> michael, thank you very much. >> my pleasure. thank you. >> keep those tweets coming. starbucks openedist first ski in/ski out in california. where else should starbucks put a shop? tweet us, tell us @cnbcsquawk. with all the opinions about stocks out there, how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea.

starbucks opened its first ski in/ski out coffee shop in squaw valley, california. 8,000 feet above sea level. on today's squawk on the tweet, where is a new place starbucks should set up shop? rob writes, starbucks needs to open one on the beach where you can pull your boat or jet ski up and order. simon writes, if newt gingrich builds his moon base camp, i'm sure there will be a starbucks on the moon. obviously the floor of the new york stock exchange. the extra pep might increase volume from anemic levels. what's sad, there already is a starbucks right over there. >> we buy our coffee there every morning, don't we? >> yes, we do. >> there was a question as to

whether it's better to buy it there or the staff canteen downstairs. >> ahead of tonight, we've got to watch baidu. interesting calls. >> morgan stanley is out with a bearish call while it respects baidu will deliver respectable growth on shorter term basis, it sees a likelihood for weaker stock action. 70% likelihood for weaker stock short term. is maintaining its equal weight rating of baidu. shares are down by about 4%. baidu, the quarter they reported looked good. they were cautious on guidance there. that was a little bit of a disappointment. metrics are staggers. 550 million users in china, double the u.s. market. we'll see. morgan stanley again, bearish short term on baidu. >> what's up tonight? >> of course, it's all about greece on monday, whether or not we are going to get a bailout over the weekend or not?

currency markets trade sunday night. we'll get you set up with the playbook. >> enjoy the long weekend, melissa. simon and i will take this thing till noon. the third hour on "squawk on the street" begins right now. >> here is what's happening so far. >> i actually think we are just the beginning of the transformation of people's lives. i am very bullish on the future. exact valuations, i leave that to experts like you guys. >> i don't know of any company that's successful long term but does not put their customers first. >> up 0.2 in cpi, that's month over month. core is up 0.2. these are darn close to expectations. >> bull markets usually end with euphoria. although i think there is clearly more enthusiasm towards the stock market, it's hard to

say investors are euphoric about u.s. stocks. >> europe is deeply divided. germans are deeply divided. fear of the unknown will probably mean this will do a deal monday. a default from greece is probably on the cards over the next few weeks or months. >> there is a look at the s&p 500. a lot of green there today. >> the new york knicks and biggest opportunity and endorsement he has today is being starting point guard for the new york knicks. >> what we'll look for is a weakening of the early leaders. when the basic materials and semis no longer respond to news. that's when you start to think maybe the market will pause. i don't think it's a pullback but you might be flat and rotate into other cyclicals during that time. >> good morning. happy friday. want to get a check on the markets on this friday ahead of a long three day weekend which we'll be paying a lot of attention to what happens out in europe. split market for the time being. dow industrials started with a

30-point gain and erased about half that. nasdaq is negative and s&p up eight out of the past 12 sessions. it is flat at 1358. campbell soup second quarter net did slip 14%. results beat estimates. stock's up 3% to $33.01. general mills lowering its fiscal 2012 to $2.53 to $2.55 a share. stock almost 4% on that news. let's get to the road map today. oil, gasoline, nat gas, heating oil. all those commodities on the rise this year. we'll find out how you can profit from the surge in all things energy. then we'll smash the deficit literally. we'll see how "squawk on the street" pushes the debt clock to zero. less than a half hour away from european close. optimism about a greek bailout giving markets overseas a boost. will that last? we'll get that live. plus, it could be the first ipo from a major internet company

this year. yelp planning to raise $100 million. we'll hear from an analyst who will cover the stock when it starts to trade and see if you should be getting ready to buy. all that and more in the next hour. first though, we'll kick off this friday with our capital markets editor gary comiskey. looking at a trade in tech. >> not necessarily a trade call. as i left you yesterday. we had to ponder this idea it's safe to say nasdaq correction a lot of people expected in late january showed at some point the last three years you had this roll out of the tech. did not happen. i tried to think about what really has happened over the last several weeks. you've got the questions, i hope we can give you the answers. i think there is a commercial where they say that. let's go back and take a listen to what dave sieberg who joined

me, head of sales and trading at cowen said when we asked about the type of people in early january that will buy large cap technology. >> absolutely. you can see it where the software is lagging. you look at the risk entree in semis specifically, they are here. those guys, especially vanilla guys are buying that space up. >> that is the answer. go back. what was it that was said? plain vanilla accounts. it was simple. it was not the tech sector fund. it was the typical growth value investor funds that were now gravitating toward long-only technology positions. we should have thought it about it then and there. it was different this time around. i have no idea if these guys are fully invested now. that was the sign. i'll make sure we don't miss it next time. >> that was a real tell. you have no sense whether or not they are underweight right now. >> it's not about -- when you're

running a nonsector fund, there is no such thing being overweight or underweight a sector. you can go anywhere. those are plain vanilla accounts. the point was they were basically getting net long technology in january. that was the sign because those are people that don't have to benchmark technology but they were buying it. >> any look at microsoft the last couple of days will tell you. >> exactly. i'll find out why herb is laughing at this and let you know. >> i have an idea. let's get to rick santelli. this will be an historic show. >> we are just getting warmed up. today i think what's interesting with the market is very few times in 2012 we've seen the ten-year note close up above 2%. it's difficult because any technician can tell you when you

test resistance in the form of this yield, you're going to buck up against it a couple of times. break options require one or two closes above key level, pad it up 210, 212. we have 99 billion in supply. two year, five year and seven year. i tell you what, a year, two year, three years ago this week, big week. if you recall we had issues with tarp, we had issues with bailing out insurance companies, auto companies. when the president came into office, was inaugurated in january this week three years ago, things were happening fast and furious. on the 17th you had the stimulus signed onto law by the president. 18th you had one of the first home modification programs put forth. this was all boom, boom, back-to-back. on the 19th. some guy i know rather well had a passionate display known as the rant. on the 23rd, several days later,

the political class took notice how the public wasn't happy with all this. president gave a speech on the 23rd. said by the end of his first term he'd cut the budget deficit in half. well, they haven't been too successful. i think that this budget deficit smasher is going to prove to be very important. we'll try to lead by example with regard to what happened. >> we need the hammer. we need the deficit smasher. the deficit is over there. >> when we come back, we'll put it to good use. >> i have a feeling you'll do more than cut the deficit in half. look forward to that in a little bit. rick santelli and gallagher. things are heating up in michigan. a key state for mitt romney. rick santorum is spending money on ads. who will come out on top? john harwood is live in d.c. he's been touting grand rapids

roots. but what happens if mitt romney loses in michigan? >> exactly. we still have ten days to go. it's i shaping up as a real test for mitt romney. it's his native state. his father was the governor there. a major auto executive. if you look at these polls, rick santorum has taken the lead of eight points or nine points over mitt romney in the average by realclearpolitics.com. you have conservative voters and blue collar voters. mitt romney and the super pac have gone on attack. >> how did rick santorum actually vote? santorum voted to raise the debt limit five times and for billions in wasteful projects, including the bridge to nowhere. in a single session, he cosigned 51 bills for spending. santorum voted to raise his own pay and joined hillary clinton to let convicted felons vote.

rick santorum, big spender, washington insider. >> santorum is fighting back with his own ads by his campaign and his super pac. in the speech at the detroit economic club yesterday, he specifically responded to that big spender attack. >> i know you folks here in michigan have been hearing things on the television from one of my opponents that i am a big spender. you with will find that surprising to the folks who are my colleagues and any objective look at my spending record when i was in congress. >> we are going to find out if rick santorum can take a punch newt gingrich wasn't able to. gingrich has a make or break moment next week when we've got a debate on the 22nd in arizona, which votes that day. most candidates have been ignoring that with the big test michigan to see if rick santorum can slow down mitt romney. >> you see what happened to gingrich in florida.

you'll be curious to see if it happened in michigan. if romney does lose, does the cry for yet another candidate to enter the race intensify or do things align for santorum? >> i think it's more likely things would align for rick santorum. some people will keep pining for paul ryan, chris christie, general bush or somebody to get in the race. i don't think that is realistic. rick santorum has been gaining momentum. he's ahead in national polls as well as michigan and ohio. another midwestern state that votes later in the process. he's got an opportunity if he can beat mitt romney in michigan, he will find a lot of money coming in over the transom. we'll see if he can convert that super tuesday, march 6th, to real progress and potential genuine threat to mitt romney's nomination. >> after the would-be threat from rick perry and gingrich's surge and now this what a primary season it's been. thanks, john. talk to you soon. energy is on the rise in

recent sessions. brent crude topped $120 a barrel overnight. nymex extending gains this morning. nat gas, heating oil seeing gains. bertha coombs is live at the nymex with an energy round-up on a week where it's been about the commodity. >> it has. i feel i need props. guys are going to try to get me a sledgehammer, maybe a jack hammer to drill down here on the commodities. we had a big move up this week in terms of nymex crude and brent crude, as well. in part over the tensions with iran. also the optimism over better than expected data coming from the u.s. here. mike fitzpatrick at kilduff report says if you look at crude, it is at a technical breakout point if we can get above $103.75, you'll see upside move to crude. this morning it kind of stalled out a little bit there. met resistance. we are well off the highs. brent sold off a bit after hitting a closing high overnight. this week we had gasoline,

heating oil and brent hit closing highs for 2012. we are seeing a little bit of profit taking with regard to those. nat gas, a huge explosion. basically what we've seen have been technical moves. not gas held that $240 level which has been critical for support. we got that better than expected report yesterday in terms of the inventories. it's got a big move to the upside now. nonetheless, forecast continues to be for mild weather. gold expected potentially if we hold these levels to maybe put in its first winning week in three weeks. as you can see there, technicals selling, as well. >> bertha, thanks for that. where is the best place to put your money if you're interested in the energy space? we turn to chris jarvis, founder and president of cap rock risk management. good morning. >> good morning. >> let's center in on crude first. near term we had guys on who say into the teens here is not unthinkable this summer. where do you see this going? >> i think right now when you

take a look at crude oil, i know fitzpatrick said earlier 102 was the level. we've broken above that. technically, we'll probably make a run at $115 which was the high last year. you've got back drop with geopolitical risks with iran. they have their elections in march. israel is concerned whether they will strike. there will be that overhang on the market. in general, people are optimistic about the market. it supports oil. we like big cap names like exxonmobil and chevron. we like mesa energy. we think there i up side in that stock. >> you think nat gas has seen its bottom? >> i do not. i think natural gas prices will probably hit back down to the $2 level. right now we are going to finish the season at record levels. once we hit the time we'll max

out 4 ctf in october. i think there is a lot of opportunity in 2012. chesapeake energy, go big cap with good balance sheet, good cap flow. they can pick up distressed properties on the cheap. >> we've seen dramatic predictions on nat gas. i've seen a couple of headlines talking about $1 per million btu. where do you think the absolute low might be? >> well, any time you get these extreme moves you get extreme price calls. $1 is a big stretch. i do think we'll probably breakthrough and go below a little bit. it will be short lived, nonetheless. prices are going to have to stay down at these levels to work off the excess storage. >> when you talk about gasoline, just retail gasoline in this country, does $4, $5 this summer seem reasonable to you? of the drivers of that, the drivers of crude, is it mostly about economic recovery or

tensions in the middle east you referred to earlier? >> i think it's a one-two punch. when you look at it, people are optimistic here in the united states. things are starting to turn more favorable. more importantly, brent crude is a big -- a lot of the east coast refineries use brent. the tensions in middle east have a direct impact on brent. $4 gasoline, if we stay at these levels, will be possible come summer. >> a lot is, even though we haven't seen these war games and tensions in the straits escalate too much, there is a fair degree of hoarding going on in europe. >> absolutely. i think there is concern here that israel will read into an election year obama is not going to do anything with iran. if that's the case, israel could step up and act unilaterally. if that's the case, all bets are off with this market. >> appreciate your time. >> thanks for having me. >> the third hour of "squawk on the street" just getting started.

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stocks to watch on this friday. dollar tree fourth quarter number resonates raised above consensus at jeffries. valoro downgraded from neutral to buy at ubs. finish line initiated buy at deutsche with a $28 price target. when we come back, count you down to the close in europe about ten minutes to go or so. i tell you what, we all know smashing deficits is messy work. when my special guest who is kind of the deficit premiere smasher, i'm getting ready. ♪

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>> if you're frustrated about the deficit, about government spending in this country, rick santelli is at the cme with a special guest who will help you work through that anger. >> absolutely. gallagher, the first place is the big deal they almost signed where they lopped off $1 trillion. >> $4 trillion. >> $4 trillion. now you're talking about potentially cutting $3 to $4 trillion it. 's 30 years out in the future. >> do it now! >> accumulately, we are at the $15 trillion mark. >> show them how to smash it. >> this is congress. it's easier to smash stuff than you think. smash to deficits. smash some deficits. smash some deficits! >> you know the problem with this country, the bureau of the net believes in the freedom of the press.

>> how can we not believe it on that line? the bureau of the men believes in the freedom of the press. i hope americans have a great three-day weekend. this is in levity. >> i hope the cameraman had one of those plastic sheets. that was great stuff. you might do that better than gallagher. i can hear the cheers from behind you at the cme. rick santelli and gallagher over in chicago today. markets overseas are wrapping up their trading for the week. we are about five minutes from the european close. we'll get the close itself and some of the details of what's happened today and what may happen over the weekend. coming up -- european markets closing out the week. will they be celebrating the weekend in style? [ male announcer ] the draw of the past is a powerful thing. but we couldn't simply repeat history.

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after seven months of wondering if the second bailout of greece will go through, we have to spend another weekend wondering and watching. headlines come out of europe and across the uk. simon hobbs break down for us what the next 72 hours are going to be all about. >> i will do that. let me do the market moves, if i may to get it in order for producers back at headquarters.

overlaid on all of this is the fact in now 11 days the european central bank will open basically its printing presses again. they had half a trillion euros. when you see the equity markets rising, yes. the fact we did well on wall street aided the european markets. french banks gained through the session. it's more than that. it's the cyclicals, the cement companies, the glass makers. automotive makers. one hedge fund manager said we think the first quarter growth will be better than expected. you might have trouble in the second quarter. in the second half of the year, the united states and asia will do the business on growth for world equities. that's in addition to the ltro. have a look at the images coming out of greece today. you've got an austerity march from the students which turned

violent. there were scuffles. this isn't what many people in the market are concerned about. yes. maybe if you're in the credit markets, the currency markets, but equity market, they seem to feel they have the luxury of not necessarily focusing majorly on what happens with greece. they believe they have faith that in essence europe will come to their aid. >> we do have the resignation of the german president. not angela merkel, the second president in germany to quit in the past two years. it's one reason merkel was unable to meet with monti today. >> there have been telephone conferences today. out of those there has grown an optimism. merkel is riding so high in the polls at the moment, the fact her president which is a ceremonial post has had to step down for his own private scandals, the feeling is that

won't impact this crisis. >> here's the bell. >> the european markets are closing now. >> many just can't wait to get their hands on that money from the ecb at the end of the month. the debate rages as to how big. a former qe will be. you asked me for the time table. let me give that to you. over the weekend we believe -- we don't know these events are going to happen apart from the meeting on monday. this is how it's shaping up from analysts and the composite view you get from the various press reports across europe. over the weekend, the greek parliament will have to vote through this 320 additional austerity. sunday/monday they will meet presumably to sign off on some sort of deal. will it have be a escrow account? will they have to pay the money into that? they keep the leash tight on the

greeks. will they put 24 prior actions for the greeks to execute on over the next ten days? people are talking about that having to be wrapped up in ten days. wild card from the germans. budget committee voting next friday on greece. then a week on monday, the german, lower house of parliament, will they vote through given the splits we have, the deal that might be on monday. that's how we line up. >> let's bring in our international correspondent michelle caruso cabrera. what do you think the picture will be monday morning? headlines? >> headlines, we know by sunday night because the working group does a conference call on sunday. in theory they button up everything so monday becomes a rubber-stamping ceremony. there is optimism across the board actually something gets done.

the psies ready to launch. press releases are written and begin execution monday night to have the full ten business days to get this whole thing done, which is shorter than you would normally do for debt exchange. they've been pushed to the wall because there is so much delay. we are waiting to hear is the european central bank going to participate in any kind of debt forgiveness? they are doing this debt exchange today so they don't have to take the 50% haircut the private sector is going to take. that doesn't mean they say we paid 70 cents on the bond, we'll accept that in the future. >> there is something implicit in what michelle is saying. if they are going to launch the debt swap, the pfrp si, is the

assumption they are going to come through with 130 billion, 140 billion euro deal on monday because there was the view, if you don't promise that to the private sector you can forget the psi. if they don't get the full plan they won't go through with the debt swap. >> you believe you'll get paid in the future because greece is getting this additional help. it all runs together. there can be conditionalality built in to say we'll do this. if the fins decide not to vote and germans decide against this, the deal is off the table. that is a lot of detail. >> before we go, i heard people say ecb, debt mechanism is a technicality. others say it's an assault on the rule of law and subordinates other debt holders. is it a big deal or not? >> it is absolutely a big deal. that is why they are changing

this debt. right now the debt the ecb holds is the same at every other private sector debt. if they say we will not take losses while everybody else takes losses, that means they run higher in the capital structure. you start to think why would i buy italian debt? i move lower in the capital structure. it is a big deal. that being said, every private sector creditor doesn't want the ecb to take losses at the same level as the private sector. they understand that is a problem. they don't want them to make a profit. if you paid 75 cents, accept 75 cents. don't accept 100 cents. greece is struggling here. while we are all taking losses, you'll take a profit? doesn't make sense. >> a deal on monday is not a debt surge. the journal is reporting the imf, i assume under pressure present washington and the white house, is only prepared to stump

up overanother 13 billion euros. we already know they are short because of the growth estimates on the money they have to put forward. there is a lot of negotiation to go through. it's not a done deal. >> thank you, simon. you see breaking news at the bottom of your screen. house passed that payroll tax extension, the cut for about 160 million u.s. workers through 2012. we'll go to john harwood in washington who is watching that vote and watching the senate vote to happen. >> i believe the house has gotten over the 218 votes they need to pass. in the senate, republicans had been coy on what they would do. i don't think anybody doubts having struck this agreement between republicans and democrats mitch mcconnell will deliver enough votes to make this law. it extends the payroll tax cut

$40 a week for the average worker through the end of 2012. that is expected to boost the economy. the obama administration hopes for. extends unemployment benefits up to 73 weeks down from 99 weeks in some states. includes the so-called doc fix to give reimbursements from doctors provided under medicare. fiscal conservatives don't like the fact it will add $90 billion to the deficit over the next ten years. republicans thought passing this and moving on to other issues was better for them politically. >> john harwood in washington with the house side of that payroll tax cut extension. >> courtney reagan on the floor of the nyse. we've been hanging in moderate ranges. >> it's a narrow trading range on the dow and s&p. s&p dipped onto that negative territory but did bump back up around the time we saw european

close. it's been interesting here. we are paying attention to the greek headlines. we've been here how many times before? we'll wait until the ink is dry to celebrate here. we are watching the s&p 500 here. still about five points away from that may 2011 or april 2011 high. we could still get there. if you look at the vix, the vix falling today. falling down around the 18 flat line. the sector is split between positives and negatives. consumer discretionary and industrials have been positive. the oil services index is signature at about a six-month high. this is crude oil trading around $103 with that weaker dollar and optimism on what is going to happen in greece over the weekend. last but not least, we have equity movements and some

upgrades. memc electronic materials upgraded, front year and pf chang's getting an upgrade and raymond james. >> gilead is being punished far worse than any other country. >> by far. >> thanks, courtney reagan. back to rick santelli in chicago who i believe cleaned up the watermelon off his pants and shirt. what was that like and do you feel better now? >> i do. i feel better. only thing is i never realized when you combine the aromass of watermelon and cottage cheese isn't anything i recommend for dessert. i heard john harwood talking about deficits. there are good programs to grow the economy. it's not easy.

they are trying to figure out what is going on in greece. there was a great article in the op-ed of the "journal" show what may work to integrate some of these economies in. i don't know where the yields are going to be. we are all somewhat optimistic on another weekend. rates are up a bit on the ten. they are well off but still at 12%. what i want to see from the credit market, i want to see the iffy paper be bought back on the spread and good paper sold off on the spread. we need to monitor boons and treasuries. >> trader reaction to the segment you did with gallagher what did they say? >> first of all, thanks to gallagher. what a great sport. he has a lot of fans. the response was, they were booing because it didn't last long enough. they wanted us to smash more things. it did what i hoped it would do.

comedy makes people laugh but makes them think. that's what i'm seeing on the floor. >> good stuff. see you in a little bit. rick santelli having taken off the tie in chicago. microsoft is off more than 20% since the beginning of the year. can you count on more gains? can it hang in the 30s?

coming up next, is a pullback around the corner? we are checking the charts. housing on the rebound. is it for real? a top analyst with his trade on home depot and lowe's. the case against apple. why one of our traders is so bullish on android. next on "the halftime report." >> thanks. microsoft as 4 1/2 year highs and powering ahead of a number of new product launches including windows 8. why the push into the 30s? can it stay there? >> institutional investors told me they were happy to see the

stock move up 10%, 15% before they jumped onboard. you've seen that move and folks are using the stock to deep up with their benchmark. >> you see a waiting change. perhaps there is more force buying. is that being talked about openly? >> i think people are starting. i think there are more things to happen for the stock and company. >> you mentioned take-aways from dinners for various executives. it sounds like they are trying to keep expectations for windows 8 from getting out of hand. >> in front of windows 8, i don't think anybody expects a pc market to be strong. the main take away i had from talking with the company over the last several months has been no reason to think the pc market will look good the next couple of quarters. windows 8, they have the beta launch. that's when you hear them talk about it.

i think the pc market will be deep into the launch. >> why in the past have they ended up being disappointed or relative to expectation disappoints? why do you think this may be different? >> i think in general, just investing and especially in technology. there seems to be buy the expectation. sell the news. with enable touch, they haven't designed a product with touch. they've been left behind not having that. if this is a successful product, it will be due to good execution on the touch side. >> we've been looking at charts as you're talking. does parity between apple's performance and microsoft's. it doesn't take a rocket scientist to figure out why.

>> our survey suggests there are certain tablet users that value productivity application like microsoft office. our expectation is in those areas, microsoft has a good chance to close the gap. the general consumer market, that still remains to be seen. there are parts of the market where they are not playing today. >> to that end, does a big acquisition, writing a big check for something like a rimm or who knows what, would that give it some head of steam in mobile, in social? >> i think culturally the company has not been one that's grown through acquisition. i can't find a property they could buy to dramatically change their position. i think that's unlikely. >> price target? >> $36. >> you're counting on it not being pulled back into the tractor, that being the $20s? >> we are looking at it into the

launch. that is a key milestone. if we become convinced that product will sell well and pc makers get behind it, the stock has legs. if not, we have to reassess. >> investors who have been sticking with it have been patient. we'll see if they get rewarded later in the year. good to see you. >> thanks. when we come back, it could be the first big internet ipo of the year. will yelp be fw for your money? [ leanne ] appliance park has been here since the early 50s. my dad and grandfather spent their whole careers here. [ charlie ] we're the heartbeat of this place, the people on the line. we take pride in what we do. when that refrigerator ships out the door, it's us that work out here. [ michael ] we're on the forefront of revitalizing manufacturing. we're proving that it can be done here,

and it can be done well. [ ilona ] i come to ge after the plant i was working at closed after 33 years. ge's giving me the chance to start back over. [ cindy ] there's construction workers everywhere. so what does that mean? it means work. it means work for more people. [ brian ] there's a bright future here, and there's a chance to get on the ground floor of something big, something that will bring us back. not only this company, but this country. ♪

>> thank you, carl. >> hoffman's comments are nice

to hear. i think some investors are offersly skeptical about some of these business models. do you think he has a point this wave is different than the first one we suffered through? >> i think he's right these guys have bona fide businesses. when you look at the number of people who pay for these businesses, it's very small in relation to the number of people who use zinga is converting their actual users to paying customers. if you look at yelp numbers, less than 3% on the site have been claimed. 2.5% of the claimed businesses are paying. really small. it tells me there is a huge upside if these guys are successful in getting businesses to recognize the value being listed on the site and having

reviews. >> if they can fend off competition, right? if they can have sort of a first strike advantage. how would you rate them on that front? >> if you look at the amount they spend, it goes up every quarter. 65% revenue spent on sales and marketing. that is something like 15 billion bucks a quarter. that is a big moat they are building. i think it will take a lot to catch up. they have 66 million unique visitors. that is worth a ton. i see the value what they do and how hard it will be to replicate. they are very much like google was. it game synonymous with search. yelp is synonymous with recommendations. >> people like to look at angie's list. stocks consistently traded above the ipo price. would you say that is a fair comparison? >> it is, except these guys are

so early in their model. they are not profitable. they are at break even and are down $20 million in cash. they want to expand internationally so they need to raise money. that is not usually a formula for success. we'll see when they become profitable. they are probably another year, year and a half away. >> are you frustrated the percent of shares that they are putting out in the public market? >> i have no stake in the outcome so i'm never frustrated. that's the way underwriters make sure for supply. they generate a lot of buzz and keep the price high. that is a tried and true trick of underwriting. when the lock-up expires, we'll find out what this company is really worth. >> is it your sense in the second half, get into the later part of this year, we'll see more of these or is the year

going to be weighted on this? >> i think people are worried about the election and the expiration of the bush era tax cuts. i think there will be a rush to get out before june 30 and have lock-ups before december 31. >> six months is a key number in all of this as those bush tax cuts do expire. michael, we'll see what happens. >> thank you, carl. >> don't forget to tweet us. i don't know if you've seen this starbucks in squaw valley. it's ski in/ski out. where else is starbucks going to put up a shop? let us know. we'll read some of your answers after the break. anything not moving forward... is moving backward. [ tires screech ] [ engine turns over, tires squeal ]

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starbucks at the dmv, definitely reduces the pain. at the george washington bridge. free starbucks coffee with your purchase of a $12 toll which is not far from where it is right now. let's get to rick santelli as we talk about what's going to happen over the weekend. you mentioned this op-ed in "the journal." "the transformation of europe is being made possible by crisis. conventional wisdom today holds europe is doomed. to the contrary, it is bafbly starting its own supply side revolution." he says they are going through what we did here 20, 30 years ago. >> they wrote a great piece. what i like is something so simple. one of the things that caught on in germany, and remember, their

unemployment was much higher not that many years ago. the ability of companies to fire created an opportunity so they could hire. they are not going to hire if the red tape makes it impossible to get rid of employees. there are a lot of things that affect jobs regularly like the government cutting back, controlling spending. nothing that is good in the long run sometimes they have hiccups. this is a point of view that is not getting enough airing. >> on the news of the day today, house passing the extension of this payroll tax cut. john boehner, speaker of the house, in his words, let's be honest, this is an economic relief package, not a bill that will grow the economy and create jobs. is this a net positive or negative? >> in my opinion, it's a negative. the moral side of this, people need help. un