$525 billion. a fiscal drag comes our way because of the expiration of tax cuts. that could affect the economy second half. stay alert. >> thanks for coming in. >> thanks for having me. that does it for us today. have a great weekend, everybody. right now it's time for "squawk on the street." good friday morning. welcome to "squawk on the street." i'm melissa lee with jim cramer and david faber live from the new york stock exchange. carl quintanilla is on assignment this morning. we are watching futures on the rise this morning. the question is will the dow be able to close today above 13,000? we're looking to add about 25 points which would actually put us above that key psychological mark. as for europe, the trading there, we are seeing green arrows pretty much across the board except for the ftse kpels the ibex. >> let's get to our road map. treasury secretary tim geithner in an exclusive interview saying there's no quick fix to higher

oil prices and the eurozone debt crisis much less likely to derail a u.s. recovery. >> as he made those comments about oil, we are watching it move higher. wti above 108 a barrel while brent hovers around nine-month highs. with prices at the pump in focus on main street and the campaign trail, could we see a release from the strategic petroleum reserve? two retail stories this morning. gap adds $1 billion to its share buyback program, lifts a dividend. margins fall along with profits. the turnaround at jc penney seems to be getting under way. eps did top expectations. apple is trading higher in the premarket this morning even though it did not announce a widely anticipated dividend at its shareholder meeting yesterday. jpmorgan calling apple a sector unto itself underowned by institutions. there's so much to talk about, of course, with steve liesman's remarkable interview with the treasury secretary this morning. talking about topics ranging from oil prices to the housing market. to what's going on in europe and the impact here in the united

states. what stood out to you, jim? >> one of the things i love about what liesman did was he changed up what we really -- the dialogue. it wasn't just about housing. it wasn't about europe. it was front and center with what is going on at the pump. that's what all of america, the middle income, everybody's feeling. i thought geithner's comments were very measured. what he's saying is the republicans without mentioning the republicans say that this is a drilling issue. it's obviously a -- it's got a mosaic of energy we need to do. i was dispinted, he did not embrace natural gas head on. the president made an offhand comment yesterday we've got so much of it we may have to export it. geithner did not offer solutions that are three or five years out. they are available. they're natural gas. >> listen to what geithner had to say about what may be pushing prices higher right now. >> you're seeing two things work to push prices higher. the first is that growth is gradually getting stronger. not just in the united states, but around the world.

at least outside of europe. that's making people more confident in the expansion. that's helping push prices higher. also, you know, iran's doing some saber rattling. that's causing uncertainty in that context. >> people believe a lot of oil guys i speak to, a lot of oil ceos believe the last $20 are entirely iran. that there is fundamental demand coming from india, from china and of course we're getting stronger. wer also producing a lot more. libya's come back online. there are major supplies that have been meeting the demand. opec has said there's not a problem with meeting supply for demand. this is iran. frankly, it is exactly why we have a strategic pe troet yum reserve. i think he did say that's why it can't be tapped. once again, come back, what do we have in this country to combat it? the answer is westport innovations. wtrt. the issue is, do we have enough gas stations. clean energy. cle. boone pickens. >> natural gas.

>> that's right. everyone knows there's natural gas other than "the new york times." one of the things that's really frustrating is the administration is ignoring this fuel other than to give it lip service. it is the way out. >> of course, we could use an energy bill out of a congress that i don't believe has produced an energy bill in years, if i'm not mistaken. another failure on the legislative front that falls on both sides. it's felt when you talk about these issues. no expectation we'll probably get one this year, either. >> one of the things that bothers me here, there is a misconception that the administration has really slowed down drilling in the gulf. there's a very big trial that comes up next week. it's about bp. it's about bankrupting bp, frankly, if it goes against bp. this country, you know, has rules. and they weren't enforced about drilling. now they are. by the way, schlumberger is saying macondo has now been far

exceeded. what we've drilled since macondo. that permits are coming regularly. jerry brown, governor of california, been permitting very regularly. it is not a permit issue is what i'm saying. it is not a government issue. the government is letting it happen. are they subsidizing it? oil companies have been subsidized for years in this country. >> that becomes part of the tax debate as we all know as well. >> when we're talking about this, obviously we have to take this in the context of how it impacts the american consumer and the economy. we have to remember that a year ago prices were about this high. gasoline prices were close to the levels we're seeing right now. a month after that or two months -- month and a half after that, the administration did tap the spr. >> look, let me tell you what you can do in the oil business right now if you're a commodity hedge fund. okay? not if you're an oil buyer. you can go rent a big tanker. a suez max. the most that can be held. for $10,000 to $15,000. you can go fill it up. you can write futures against it.

you can hoard it. it's the trade that i would be putting on if i were at a hedge fund. i'd be just taking that -- i would throw a party on one of these ships. for 10 gs you could get 1,000 people on that deck. people are buying oil. commodity players. >> we haven't heard as much criticism of the old speculators as we did when we hit our highs. >> that's true. >> in '09. >> you know that real users are desperately afraid there's going to be a war in the middle east. michelle ka caruso-cabrera has e remarkable reporting over there. jason gerwits behind the scenes. it's important to point out, i mentioned yesterday i felt that michelle's coverage indicates that israel's gearing up. if israel's gearing up for something, what the heck are we doing with oil only at $1.25125. >> this time it might be the fundamentals, so to speak. >> sometimes i feel like we're

missing -- this is all we should talk about. >> it's very, very difficult to discern exactly what the israelis are really up to. >> right. we don't know. >> are they simply trying to galvanize public opinion around the world, get everybody really focused on the issue? because the difficulty of doing a true strike in iran, this is not like iraq in '81. like syria in '07. one bombing run. this is complicated, difficult, with no guarantee of success. >> i remember in 1962 i was in a playground. i heard about 500 bombers going over my head. it was because it was the cuban missile crisis. we are next to a very big -- i grew up next to a very big naval base. i never forgot it. graham allison, best professor on international relations, teaches at harvard, wrote a book calmed "the essence of decision." saying this literally is our generation's cuban missile crisis. people have to treat it like that. remember, the world stopped for the cuban missile crisis. same thing could happen here. >> let's hope it doesn't. >> in terms of the effects, though, the rule of thumb

basically is a $10 rise in crude prices would take off a half a percent in gdp. in terms of the impact on the economy and on consumer spending power, that's it. >> mark pappa, ceo of eog comes back and says we've had $100 billion windfall from the decline in natural gas. believes natural gas goes sub two bucks. we've got a trade off. warm weather has helped. when we get to summer driving system that will not be the case. >> he is, of course, retail, right? >> sure. >> we do have some retail earnings out today. >> yeah. we've got jc penney. >> right. >> jc penney actually coming out with a beat on the eps. but the revenue was a little bit light. the full year estimate was $1.59. that was sort of in line. the same store sales numbers and total sales numbers, though, were still lower there. >> this is not a quarter you can really give to johnson at this point, though.

>> johnson did what meg did. johnson did what meg whitman did. they talked a big game when they started. that's the wrong thing to do. you've got to underpromise. you've got to overdeliver. suddenly johnson is like you go to the stores, they do look a little like they did a month ago. >> it's going to take time. i don't know that meg came in guns blazing saying we're going to knock the cover off the ball right away. >> you knocked the cover off meg whitman yesterday in your interview. >> that was interesting. listen, she's talking now about, of course, another turn jaround that being hewlett-packard. the performance of the stock is very different than what hewlett has been doing. you know the multiles better than i do, melissa. even with a decent eps number it's trading right up there when it comes to retail. >> it's still high. i believe higher than macy's. >> terry lundgren sell 500,000 shares. big thing in nantucket, i don't know. >> $18 million he's going to get from the sale would go toward buying a new home. >> i think that's what you do. still seems inexpensive in the

hamptons. >> can 18 million bucks get you anything in nantucket? >> that's a darn good question. i don't know. >> parking space. >> how about gap -- >> just financial engineering? >> i think so. insiders have been selling. they're buying. >> not great margins there at the gap. >> old navy. >> nobody really talks about the gap. >> 32.8% margin down from 38.2% margin. you can talk about -- cotton costs have actually abated. >> yes, yes. >> you would think that wouldn't necessarily be such an issue. it could be other things. >> i've got to circle back to sears for a second. >> let's do it. >> the conference call yesterday. talk about brand management. they're talking about doing a lot of things. they'll spin things off. this is what i thought lampert was fwoigoing to do initially. they lost years here. lost years. >> maybe seven of them. i think there was an expectation with sears which, of course, was up almost 20%. a little over 18% yesterday on

this news. that there was a plan b. oh, he's got a plan b. but there really isn't, wasn't a plan b. >> it was a bradley james way to really date myself, plan b. by the way, wt grants. w.t. grants was a huge chain when i was growing up. joe ellis, dean of retail analysts, came up with this idea of comparable store sales as a way that's better to look at than just adding stores. he was a guy that came up with it. he said we can't really measure retail. people at home say why do they always talk about same store sales? you can't measure retail other than looking at a store this year versus last year. sears same store sales are abysmal. >> they're abysmal. today the journal e sfeshly seizing on this idea this is really the beginning of a breaking up of the company. >> right. >> to a certain extent. we'll see if it follows through. with that huge move yesterday. we said so many times they're so many shares short you can't really get short. 60% annualized.

are you going to take a 60% hit? >> not when i can find out that real estate wasn't -- the general growth deal -- >> doesn't that feel like the home depot deal they did early on. everyone went, oh, my god. the whole thing is worth so much money. they never did another deal that followed that. >> lampert fooled home depot? i think he can pull the wool over a lot of people's eyes. >> valuing the rest of the real estate based on whatever you get for certain choice properties may not be the right way. >> the home depot was what drove the stock from 100 to 200. realize this is a lot of real estate that's worthwhile. real estate crashes. real estate coming back. finance real estate. general growth comes in. it's a better story than i thought. still come back to same store sales analysis. >> in terms of stores would it be by product line at all do you think? at this day and age can you have a model where you go in and buy clothes for your baby, a washer, a drill. >> they're very excited about their new washer dryer. >> kenmore's a name play.

the answer to that, land's end is still a valuable brand. they haven't destroyed it. they haven't destroyed it. >> do you go to sears to buy land's end or buy it online. >> i bought tires there a few years ago. >> and a fleece? >> the guy in charge of merchandising tires wanted to know why i didn't go to costco. $30 difference per tire. you still want to save that money. >> while we're on this subject of buybacks, particularly for the gap, worth mentioning web m.d. a stock in the news lately because they tried to sell themselves a little bit but really failed to get anybody interested. the stock has been down sharply. putting in another dutch tender. i think three we usually call a trend. after weight watchers with very disappointing numbers here also not great numbers, yet they'll buy back about 10% of the company km is only 150 million bucks. not long ago would have been a much bigger number, jim. that does seem to be a trend in the making. bad quarter. big dutch tender. >> we want growth.

we want earnings per share. melissa mentioned financial engineering. we don't want financial engineering. weight watchers was terrible. charles barkley notwithstanding or maybe wittstanding. this web m.d. number is hideous. that's the takeaway. the dutch, they're being, i think, unfairly maligned by the term auction. >> are they just simply listening to icon at this point? >> he's in there. very smart shareholders. very smart hedge fund. one of the larger holders. people still waiting, thinking maybe there's a deal there. marty wygot is chairman of this company. he's managed to, you know -- >> mark benioff is not doing -- >> he was on with you last night? great quarter. >> what a hoot. makes fun of a lot of people. then says they're my friends. listen to the conference call. it's a combination of rodney dangerfield and maybe at the top of his game don rickles. >> you mean don rickles is not at the top of his game anymore? come on. he's only 92. >> i'm having fun with mark.

mark is -- is maybe the best pros the letizer for the cloud i've ever heard. it's a good interview. cramer's really full of himself, he says. i like what benioff did in the interview. >> all right. when we come back, central bank's insider. jurgen stark. as we head to break, take a look once more at futures. we are looking for, perhaps, the dow to close above 13,000 today. looking to add 22 points at the open.

welcome back. rick santelli on the floor of the cme. it's not easy today to ascertain is it a dollar friendly day or not. it all depends where you look. if you look at the dollar index, it's down a bit. but let's start out looking at the dollar versus the yen. boy, on a 2-day chart it's a barn burner all of a sudden. we're really starting to move. once again, if you move the chart all the way back to july of last year, you can see that we continually are making new inroads to the high value of the greenback versus the yen. but if you switch gears a bit and look toward europe, yeah, maybe their banks aren't in good

shape. maybe the peripherals aren't in good shape. there's a plan to give them a workout. the euro reflecting that. we can see fresh highs going back to early december. the last chart is 10s. interest rates going down a bit. many are nervous that a big reason that in '08 the equity markets went down above and beyond the crisis and t.a.r.p., high energy prices. back to you. >> thank you, mr. santelli. dutch caairline klm launchi a program allowing you to pick the person who sits next to you on a flight based on social media profiles from facebook and twitter. in today's squawk on the tweet, complete the following sentence. if i could pick who would sit next to me, it would mean never worrying that blank would plop down next to me. tweet us at cnbcst. we'll air your responses throughout the morning. >> sounds like a nightmare. >> we're tweeting who you don't want to sit next to. that's what the blank is, right? >> that's what i thought. but i thought the question was

going to be the positive. >> i believe we've reversed course here. >> i once asked martha stewart to sit in another seat so my daughter could sit next to me. >> how did she take it? >> at that time we had been going back and forth. she said, why should i? i mean, at that time i'd just written some negative -- i love martha stewart. i think she's fantastic. she was joking around with me. she did move. i'm willing to say she's who i want next to me. >> all right. coming up next -- >> i like to be alone, personally. >> me, too. i like to just be by myself. >> please, nobody sit next to me. >> talk to me. i like to read my book. >> unsocial, too? >> yes. >> it's a way to meet people and influence them. >> wow. >> i'll keep that many mind. >> i'll rethink my stance here. coming up next, faster than you can say profits, it's cramer's mad dash. as we head to break, once more look at u.s. futures as we head toward that open on this friday.

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because i'm also making you a smoothie. [ male announcer ] marriott hotels & resorts knows it's better for xerox to automate their global invoice process so they can focus on serving their customers. with xerox, you're ready for real business. welcome back. i'm sharon epperson here at the nymex. treasury secretary tim geithner telling our steve liesman there's no quick fix to higher oil prices. in fact, we continue to move higher here at the nymex with traders piling into this rise that we've seen. the longest winning streak for crude prices that we have seen

since january of 2010. up for more than a week and above $108 a barrel for nymex crude. brent crude futures also moving toward that 124 mark. keep in mind the strength we've seen in this week has seen a reversal in wti futures playing catch-up here and momentum buyers piling into this market. of course, it is the renewed optimism now over europe and iran. the supply issues there that are causing prices to rise. and it is not, of course, only oil prices. gasoline futures continue to move higher as well. prices at the pump, 12 cents higher than a week ago. the national average at $3.65 a gallon. we'll talk more about the divergence in gasoline prices around the country. 5 1/2 minutes until the opening bell rings on wall street. cramer's mad dash ahead of the opening. sharon was talking about rising gas prices and energy prices overall. you've got to wonder how that's going to impact some of countries that really rely on

importing their energy needs like japan or the emerging markets that don't have their own oil supplies. >> japan has switched very aggressively to natural gas. they're paying $16. the price in this country is a little north of $2. there's a mad rush to export our natural gas to japan. a lot of people trying to block that. sierra club trying to block it. it's something to watch. we could be the world's biggest exporter of natural gas if we build the terminals. shaneer is up on that. i have westport on tonight. merrill lynch. old tech analyst upgrading wprt today. clean energy fuels building out that chain of natural gas fueling stations that are so necessary if we're going to switch. >> remember, cutter is an exporter to us or was, thinking they would be. now they can't to western europe which cuts the russians out. remember when they closed off that natural gas pipeline a few years ago? that caused great concern. >> one of the things also to watch, we've been so wrong about energy especially. talk about energy policy. our energy policy was based on a

shortage of natural gas. we have a surfeit. our energy policy was based on we have north america, mexico and canada. canadians are getting angry at the united states. we take them for granted as usual. when we come back, another big day of trading. coming up, are you feeling antsy today? must be the build-up to what's happening next. it's the opening bell. which of these 500 stocks have you excited? "squawk on the street" will be right back. by balsa wood airplanes

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the revenues here, $2 billion going to $3 bill yn. i think it will be a $10 billion company. shorts are doing it at their own pearl at this point. >> opening bells are ringing. at the nasdaq, "the new york times" travel show. crm did have a good quarter. i was wondering about guidance. guidance seemed unclear. revenue was ahead of estimates. in terms of the eps number the range they gave, the top end of the range was -- >> i mean, i think they want to -- i think the range -- i don't want to say it's meaningless. the deferred revenue is really the way i calculate earnings per share. if their deferred revenue is as big as it is -- >> let's talk shoes. i know you love to shop. you're a big retail fan. crocs and decker's. >> disappointed by decker's. some is weather. some a higher price point. i say ugg to uggs. >> it was warmer weather. nobody wants to buy sheep skin

booties. it's 50 degrees outside. >> maybe uggs is no longer in. it's not exclusive. it's everywhere. speaking of everywhere, that's what happened to crocs a few years ago. crocs also disappointing. morgan stanley has a really interesting piece about how under armour is taking share in the footwear business away from nike. missing in that piece was an analysis i like to do. under armour is a technology company. they have invented cotton that lowers your body temperature. it's a very hot product. black hold. i think it's going to take stores by storm. i want it myself. >> the cotton that lowers your body temperature is a hot product. >> it's a good father's day present. >> in terms of decker's, it is specifically the higher price of sheep skin that's really hurting them. going to raise prices on some of their products. that can't help when inventories are, in fact, building. there's a point to be made, too. at one point you mentioned now uggs are everywhere. that's when we saw tremendous growth. trajectory of the stock was very sharp. at this point when uggs are

everywhere, you can't expect that same kind of growth trajectory. >> i think -- i would have bet with him down here. i need a catalyst. i don't have a catalyst. i need a catalyst. >> let's talk apple. apple at least in premarket was trading higher. i believe -- yes, it has opened higher by about $3 a share. a lot of people were expecting -- curious to me. there wasn't so much chatter. sort of like shareholders buying into the idea they're going to do something to the -- the options market, not a whisper, not a peep out of the options market pricing on any sort of dividend. >> it's a $50 share dividend if they gave half of the cash away. i thought it was terrific tim cook said a split means nothing. yes, it does mean nothing! but there's a conference call today. jpmorgan. talking about apple as basically a -- >> its own asset class. >> i like it. >> have you heard that before? >> there's gold. there's real estate. there's apple.

i have criticized a lot by saying it's just another stock when steve jobs died. a lot of that is it's a great stock. ternings are there. i know jobs left them with ipad 4, apparently, apple the phone 6. in the end short term earnings momentum is fabulous. >> the important point out of the jpmorgan conference call as well is it's institutionally underowned. this notion that only -- what was it? 40% of mutual funds in the russell 1,000, 40% do not own apple shares. do not own apple shares. >> the common refrain is i missed it, i miss td it, i mi missed it. if they do my 55 number for fiscal 2012, you're seeing a stock that's still substantially cheaper than the average s&p stock and therefore it is still a buy. >> all right. let's head over to david who's got bob with him. >> all right. yeah, we do. we were just talking off camera about europe, of course, and about that geithner interview. in particular in regards to the imf. this is our time to get updated on europe with you, bob. >> the important thing is he broke some news here. look, there's a big battle in

mexico city that's going to be going on this weekend. the g-20 is going to be meeting here. it's going to be christine lagarde, head of the imf versus the germans. it's going to be an epic battle. lagarde is in a fight with the germans this week saying we need more money. the imf, they've got about $400 billion in the fund. they want $500 billion more. they want almost $1 trillion to shore up the imf's -- let's call it a bailout. that's what it is. bailout funds, potentially, that'll backstop the european bailout. the esm. the europeans -- lagarde is saying yes, yes, yes, more money. the germans, nein, nein, nei nirks. absolutely not. there's a real fight shaping up. their own bailout mechanism, esm in europe. germans have said, no, we don't want to increase that. the germans are fighting a battle on both fronts. the european bailout mechanism and with the imf about more money. here's why this is very important. what mr. geithner said.

kudos to steve for getting this out of him. mr. geithner said he would be willing and implied that he would be willing to consider a larger role for the imf. more money if the european firewall was sufficiently strengthened. you know what that means? that means more money for the esm. geithner has now directly inserted himself into all of this political warfare that's going on between lagarde and germany. the reason this is important is in the past, the u.s. has been very reluctant to have anything to do with this, increase the money. absolutely not. now there's a little more sense that the u.s. might go along with this. i think that's very important. i got immediately comments from traders about the importance of doing that. now this weekend, the chinese will probably go along with more money. if the u.s. does. brazil will probably go along with more money. the southern european countries are. it's germany against -- >> although we'll point out geithner said only if. it's not as though -- he doesn't see them needing the imf money. at least the way he -- >> the point is, he opened the

door to the concept that the u.s. would be an ally with many other countries in going along with additional contributions to the imf. i think that was a very important stance for him to take. germans are going to be voting next week on the greek bailout deal. listen, there's going to be a heck of a lot of german rhetoric next week. we are going to hear about no more money for anymore bailouts. no more money to the imf, to the esm. that's why i'm bringing this up. this is a hot political issue in germany. they're going to vote next week on the greek bailout. >> right. >> you're going to hear a lot of talk about this. >> next week the ltro, correct, is coming up very soon. we saw a lot of those bank losses writing down their greek paper yesterday. >> that's right. next week we'll get the ltro. how much are they going to -- the banks going to bid? most people are expecting 400 billion euros in borrowing for three years at 1%. some people are expecting a trillion. how do you judge if this is successful or not? is it good if it's a trillion? good if it's 400 billion? some people indicate 400 billion

means banks don't need much money. a good sign. others are saying a trillion will indicate there's a lot of necessary funding they've gotten taken care of for the rest of the year. a bigger takeup would be more beneficial. there's a lot of debate going on about what's going to happen next week with the ltro and how to judge whether it's successful or not. it's going to be a very interesting weekend. >> it absolutely will. >> watch for headlines out of mexico city. >> bob, thanks very much. send it back to you, melissa. >> thanks, david. meantime, treasury secretary tim geithner certainly had lots to tell cnbc this morning when it comes to rising energy prices. steve liesman is outside at the white house with the highlights from his exclusive interview. hi, steve. >> hey, melissa. thanks very much. timothy geithner, treasury secretary, is on his way to mexico city this weekend. i want to talk about what he said about europe in addition to what he said about oil prices. essentially saying europe is much less likely to derail the u.s. recovery because of actions taken in europe. but he did call on the europeans, as bob pisani was saying, to enact a bigger firewall. that bigger esm is what he's looking for.

one thing about that is if they do erect that bigger fireball, then he says the imf money which is a second line of rescue that's out there, that'll be much less needed. that has been the u.s. policy, the u.s. stance for several weeks, if not months now. they don't really want to see this imf money used before the u.s. -- sorry. before the europeans put up their own firewall. on higher oil prices he said, it's the results of two things. better growth outside -- in the united states and the rest of the world outside of europe. also because of iran. here's what he said about iran. >> iran can do a lot of damage to the global economy. and we're working very carefully to try to minimize that risk, make sure there are alternative sources supplied from saudi arabia and others that help compensate for reduced export from iran. that's an important part of our strategy. >> well, i also asked him if part of his strategy was releasing oil from the united states strategic petroleum reserve. this was his answer.

>> there's a case for the use of the reserve in some circumstances. we'll continue to look at those and evaluate that carefully. again, the right thing for the country is to make sure we are focused on long-term investments in energy, changes to energy policy to help solve these long-term problems. you can't view this as a problem that can be solved with short-term fixes. >> reporter: there's still lots of concern, though, in the white house and in the treasury department about those higher oil prices and the potential effect on consumers and the economy. more generally. and i think pisani's right, david, that there's going to be an interesting weekend of discussions at the g-20 meeting other that imf bailout money and how much the europeans themselves should be putting forward. >> right. i mean, geithner continued to be pretty constructive, i guess, steve? is that the right word? on europe in terms of its impact over here and the progress they're making, though always with caveats? >> reporter: i don't think he'd ever say this. but i think he feels they've

come a long way toward his position. that ltro, long term refinance operation, is something very similar to what he was advocating. that there be a big backstop. i think he thinks they've made progress and taken the contagion off the table. that doesn't mean we're still not living with the kind of sort of damaclise over the u.s. recovery because of europe. >> great interview. right at the top you talked about oil and iran. did you detect any shift in this administration at all in terms of its dislike of fossil fuels? the department of energy totally dislikes fossil fuels in my opinion. i know geithner is a very -- the government itself has not been pragmatic about fossil fuels. >> reporter: i kind of detected a shift in the past couple months as we've moved away from the big oil spill in the gulf of mexico. i think they have done some acceleration of permitting. they seem to be less hostile, i guess, toward the concept. but i think overall the president has laid out a green strategy despite what you saw this morning in the journal.

a very critical story of how many jobs those projects have created. >> all right, steve. talking about shifting, thank you, steve liesman. we're going to shift to bonds and the dollar. rick santelli at the cme group in chicago. rick? >> well, you know, the markets are very tame in the fixed income arena if you consider tame, once again, under 2% in a 10-year. we're 11 basis points away from 3% in a 30-year. it's fascinating because yesterday's yields on the closing basis are very similar to where we were a week ago. so we're down on the week in terms of yield just like we are down on the day. i think the big topics today are easy. you know, how much are equities going to be affected to the downside by energy up to the upside? how is that dynamic going to affect the fx? probably you're going to sell the yen, energy dependent. see the dollar index also under a bit of pressure, even though it's doing better against the yen because of europe and that wonderful firewall that everybody seems to think they have. but if you look at their bund, i guess the firewall argument

isn't quite making it to the fixed income side. of course, we're all going to watch that ltro. and one final thought, we're looking at volatility in the treasuries, drifting a little bit south. also we had a lot of supply, so look for extension trades next week. back to you. >> all right, thanks, rick santelli, of course, talking about rates there. you know, it's interesting. we also continue to follow the capital markets in terms of how much they giveth to corporate america when it comes to the debt side of the balance sheet. viacom announced $250 million at 4.5% for 30 years. 2-year money at 1.25%. they can -- tax deductible is the interest on it. you can buy back dividend paying stock, retire the stock. they'll under pay the dividend and have it actually be positive to cash flow. >> is this a creeping tenner? a creeping self-tenner? the amount they're buying back at viacom is incredible. >> a lot of those companies.

newspap news corp., viacom, time warner not as much. the incredible cheap money that's out there, we're lower than we've ever been. even bbbs now are borrowing at rates we've never seen for 30 years. >> what a desperate dash for yield that they can even get that. how badly do funds need to get some yield anymore. ought to turn to at&t, verizon, procter & gamble. boy, people are paying common stock -- >> i can't remember having ever seen so much money borrowed to actually repurchase shares in part. >> i've never seen it. coming up next, social media in the skies. using facebook and twitter to pick your seat mate on a plane. complete this sentence. if i could pick who would sit in a seat next to me, it would mean never worrying that blank would plop down in a seat next to me.

take a look at this morning's early movers.

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i think the brothers johnson should be running johnson & johnson. we'd have much higher numbers. >> oh, man. time for squawk on the tweet. dutch airline klm is launching a program allowing you to pick the person who sits next to you on seats based on social media profiles from facebook and twitter. this morning we are asking you to complete the following sentence. if you could pick who sits in the seat next to you, it would never been worrying that blank, whoever you wanted to say, would plop down. victoria tweets, a kardashian. us man tweets, my mother-in-law. i have a feeling we got a lot of those in-laws written in. jim tweets, a sumo wrestler. tom tweets, a tough choice but rush limbaugh. >> a little political there. >> let's turn it around. who would you want to sit next to, jim. >> who would i want to sit next to? listen, i'd like to sit next to -- >> dead or alive. >> obviously you go for lincoln, right. you never go wrong with lincoln. you know what i mean? >> that's true. >> jefferson. >> yeah. >> the dalai lama.

he's always a good guy. i feel very in sync with dalai lama recently. ghandi. >> ghandi would be good. >> back and bigger than ever. >> that would be an interesting conversation. hope that'd be a long flight. much more "squawk on the street" straight ahead. still to come, we've got six reasons why to stay tuned. and they all revolve around jim cramer. six stocks in 60 seconds. when "squawk on the street" returns. [ male announcer ] we know you don't wait

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simon hobbs is down on the floor with a look at what's coming up in the next hour of "squawk on the street." >> good morning, david. we've got a big interview coming up. we're going to talk to the german whose resignation from the ecb rocked wall street recently. jurgen stark. find out what he's saying now about the european crisis and those germans. plus, we'll meet two apple fans who are remembering steve jobs today in a pretty unique way on what would have been the tech titan's 57th birthday. and david faber will be taking a special look at prime real

estate in michigan. so a chance to take a sneak look in other people's homes led by david faber. back to you guys. >> yes. going to be a very special faber report. >> all these homes have names. you know when you've got a name for your home, it's pretty big. >> or an article. when an article proceeds the name of the home that means it's a very important property. an extension of the -- m & a. this is sort of an m & a. real estate's m & a when you purchase a home. >> negotiation. bid and ask. very simple. >> two-way market. time for six in 60. six stocks, 60 seconds give or take a few. nokia becoming the world's number one seller of windows phone. >> people are saying this mobile congress, there could be new news from nokia. i don't believe it. i want to sell it. >> all right. aig. >> you know what? a real executive. a lot of people saying it was done with taxes and mirrors. forget about. he's a remarkable ceo.

company on the comeback. >> monster beverage. >> i like to drink a few bottles before i go on this air. just kidding. monster rehab is taking the world by storm. new drink. >> really? >> rehab. that doesn't sound very good. >> it's one of their names of drinks. you're using my 60. >> amy winehouse. eaton. >> eaton raises numbers at a big conference today. last time they lowered. you could say, listen, that's just playing the game. i think mr. cutler is a great ceo. i like the stock. >> all right. you're watching deutsche bank as well. >> deutsche bank is back. it's bigger. people don't understand it's the safest bank in europe so people want to own it. >> lions gate even though the buzzer went off. >> start focusing. the trilogy done by four movies -- >> hunger games. tickets already on sale. presale. >> it's a must read. i urge fathers and daughters to read it. it's a way to bond. >> fathers and sons. >> it's got a girl hero. >> that's true.

jim, we'll see you tonight. >> yeah. westport and clean energy. listen mr. president and secretary geithner, this is how you solve the energy problem short term. >> 6:00 and 11:00 p.m. on "mad money." meantime, rick santelli in chicago. >> of course, i'll do a little tap dancing. what is it? 75.3. this number is way hotter than we were anticipating. 75.3 is, what, the best it's been going back to february of 2011. 75.3. you know, in michigan, there seems to be some confidence. the one thing i will say, and traders are pretty smart around me. a lot of these numbers now, even something as fresh as this, are going to be a little bit asterisked. why? high energy prices are certainly going to affect confidence in the future. back to you. >> thank you very much, rick santelli. all right. cramer's still here. said good-bye a little prematurely. >> my bad. >> so nice to have you back. >> he's back.

actually, he's back. >> we mentioned aig very briefly. of course, the stock off the highs. but reported after the bell yesterday. >> i think it's time for the administration to start unloading. >> that's the question. when will they sell? there's so many shares that so have to come to market. >> i think this is a great opportunity for the administration to be able to make a good claim in the face of the republicans. this is a deal that apparently, look, you could say they're still not back to where they should be. but they've got a lot of stock and they should ring the register and stop playing the stock market. >> we should come back to eaton as well. we ran through it. there may be something important there in terms of europe. >> eaton is heavily europe. they obviously are a worldwide company. they did make some acquisitions in europe. if europe is so bad, why is caterpillar saying europe is good? if europe's so bad why does eaton say europe's okay? the answer is there's a lot of europe we forget is very strong. particularly germany. >> yeah. look at hewlett-packard. moving lower once again today. down to $27 a share. >> hewlett-packard? i question the balance sheet there. david, i don't know how much work you did on the balance

sheet. not as pristine as it used to be. >> she's trying to actually -- that's one of her key goals, meg whitman, replenish, revitalize that balance sheet. it's going to be a long tu turnaround. she made no bones about it. >> true. >> got to keep your customers and employees confident. you can't also send a message of complete -- >> i say good luck. new set on monday. boy, am i fired up about it. >> new set here on "squawk on the street." cramer, this time we are saying good-bye. see you tonight at 6:00 and 11:00 on "mad money." meantime, don't go anywhere. breaking news on new home sales on deck. stay tuned. optionsxpress, where you can trade your favorite products

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welcome back to "squawk on the street." new home sales for january were down a little less than 1%. we'll call it down .9%. and the reason is, is there was a revision to last month's numbers. so 321,000 units is the january number. that's close to expectations. but the original release of december at 307,000 was upgraded to 324,000. hence, we are moving down from 324 to 321. listen, we could argue that we've had much better, relatively speaking, housing data. this one isn't really one of

them. anything in the, you know, 350 k or down is kind of muddling along the bottom. but it is a little better than expectations. i think there's going to be more deciphering and studying and scrutinizing of the confidence numbers and how all data that we're going to be getting over the next three weeks will get impacted by what's happening right now in places, of course, like energy sectors. back to you. >> thanks, rick. let's get instant reaction to that new home sales number we just heard about. bring in diana olick for that. diana? >> reporter: yeah. this san interesting number. because you've got both good and bad news. you have december revised way up to 324,000, as rick said. then you have the sales coming down in january. while it's only down 1%, we were expecting a rise of 2%. january you have to remember was very influenced by warm weather. the builders' confidence has been very high. highest in four years. specifically because they've seen a lot of buyer traffic coming through their homes in the past couple of months. now, that brought the supply down to a 5.6 month supply.

that is good. i was just given a price number. prices are still coming down. 240,100 last year. but prices are still down. and another thing to note is that this number is based on contracts signed in january. not closings. again, it's very much what's happening today. not so much like existing home sales where we get closings. and you're looking back two months. so, again, this number is pretty flat when we look at the december revision coming up and you look at this one coming down a little bit. again, anything is good when it's not really plummeting for new home sales. we do expect to see more traffic coming into the spring market and builders, again, are very confident. now, one thing to note. we're actually out here in poolsville, maryland, which is a suburb, an exurb of d.c. we'll talk about how gas prices will affect the home builders in this area, specifically if gas prices go up, will people come out here? we're going to have that for you

on "power lunch." back to you guys. let's get you through the markets real quick as we are just about half an hour into trading right now. the dow is higher right at 13,000. will we close there is the question. because, yes, we have been there before. the s&p 500 is at 1366. higher by three points. nasdaq adding seven. apple is gaining on the nasdaq. it's about 520 a share. want to hit the commodity picture as well here. wti continues higher. 108.58. brent is close to nine-month highs, just below 124. gold trading lower today. copper is higher by about .7%. here's the squawk stories we're following. coal producer alpha natural resources posting an unexpected fourth quarter loss. also cutting its 2012 output forecast as u.s. electricity generators have switched to cheaper natural gas. shares right now are down by almost 3%. casino big wig steve wynn outing his former friend and partner from the board of wynn macao.

retailer the gap reporting a 40% drop in fourth quarter net income on the back of rising kogss. gap also saying that it discounted heavily during the holiday season to lure shoppers into their stores. >> jurgen stark's resignation from the ecb last september sent shock waves through financial markets. former ecb executive board member is in new york city today speaking on fiscal challenges around the world. at the university of chicago booth school of business conference. he joins us very kindly on the program. professor, doctor, good morning to you. thank you for joining us on cnbc. >> good morning. >> good morning. your former colleague, mario drag hi, in today's "wall street journal" is brutal in terms of where we are. he says it's already gone. he's also suggesting he should take a very hard line on austerity, that there can be no backtracking across europe. do you have any sympathy with the growing criticism that austerity in certain parts of europe is making it very sick,

destroying too much of the tax base and potentially risking confidence across the eurozone? >> i think mario draghi is absolutely right. the combination of fiscal consolidation and structure reforms is key for the countries in the euro area but also for other countries in europe. many countries have changed their economic policies. with a u-turn which was needed after the many, many years of the standstill in economic reforms. this has changed the overall picture of europe. i think this is -- >> forgive me. i didn't mean to interrupt you. can the democracies actually take the pay? you've got 50% youth unemployment in spain. mario monte is warning of opening hostility in italy. there are elections looming in france and greece. do you have any concern germany's insistence on austerity could detroy the eurozone's solidarity, that it

could actually lead, potentially, to a break-up of the eurozone? >> it is not about the rollovers in the country in europe and about the continuity and the consistency of policies and the future of the euro area. the risk that the euro area to break up, i think it's really exaggerated. and there will be no political agreement to give up the euro. it will continue. absolutely. and for all the efforts made so far in the periphery, but also by the northern countries, which are the main donors or main creditors to support the countries in the south, i think in the most recent political decisions have clearly shown that there is progress in the institution in the reform of the euro area. there were deficiencies. these deficiencies are addressed now.

progress on the fiscal front and progress on structure reform. let me add we have a significant change seen in the euro area with new governments. with a broad political mandate to go ahead with structure reforms. leaving greece aside for a moment, i think in the end in italy, in spain, in portugal, in ireland, they all are aware, the people is aware, that there is a need for -- for further progress in order to fight -- to fight the unemployment and to -- to increase the wealth of the people. >> you make the promise, again, effectively, that there will be no catastrophic crisis. today the u.s. treasury secretary tim geithner was on our network, on cnbc, in an exclusive interview saying that europe needs a bigger firewall in order to make that promise, to make that promise credible. does angela merkel need to back down? does germany need to commit more taxpayer cash to boost the bailout fund beyond $500 billion

to 750 billion? this is a key discussion now at the imf this weekend. >> this is in the end a political decision whether to increase the bailout fund, whether to enhance the firewall. in my view, my personal view, is that the 500 billion are sufficient. in combination with the support by the international monetary fund. and the european governments have committed themselves already to provide additional funding to the imf of about 200 billion euros. by the way, i'm convinced that the size or the leveraging of the bailout fund is of secondary importance. what is important is that the countries in the periphery really stick to the program they are committed to and to do what they can to -- to avoid any spillovers or contagion. i think this is in the hands of the governments of the periphery

countries themselves. >> let's talk about your background as a monetary man, as a central banker. on wednesday the european central bank is going to offer again the european banks unlimited three-year money. it will print up as much cheap cash as the banks can post collateral for and lend it out at 1%. that, of course, is the second lrto. we had a half a trillion last time round in december. if you were still on the ecb, would you be voting for that? >> yes. at that point in time, absolutely. the governing council agreed on two operations. the first was conducted, as you said, at the end of december. and additional liquidity was provided up to 498 billion euros. in net terms, because to some extent this 489 billion euros substituted operations of a shorter maturity, in net terms about 200 billion euros were provided.

so in the circumstances in which the banking system had funding problems, i think it was appropriate to provide this liquidity. however, the central bank -- this is not only true for the ecb. i think also for other major central banks. have to be prepared to absorb the excess liquidity at a certain point in time when the economy picks up. in order to avoid the excess liquidity which has been provided now creates inflation expectations. >> yet, of course, famously you resigned and you did influence world markets because we believed you were so unhappy about the buying of sovereign debt. chiefly, italy and spain. i'm just trying to get a picture of what it's like to sit around the governing council of the european central bank where you know markets outside potentially panicking. the potential that you could have a complete meltdown on the

sovereign debt market. and you sit there in full knowledge of that, but you also have a belief about what central bankers should do and should not do. just paint a picture for me of what it's like to be in there and how you felt and why you made the decision that you did. >> first, my resignation, the impact of my resignation on markets was really short lived and overshadowed already two days later by other events. so not to exaggerate the role i played in this context. and i was not in favor of purchasing government bonds in certain countries. this was announced as a monetary policy decision. however, it had the side effect that it alleviated the excess of governments to the capital market. in the end, this intervention in the sovereign bond market postponed the adjustment

requirements in the respective countries. if it is -- if there is a need, in the case of a need, in case of a deflationary scenario, i think this issue will have to be reconsidered. but in the context as it was in august last year, but also in may 2010, i was not in favor of this action. i did not expect any major market reaction. so -- because a central bank should not finance government bonds. central banks should not finance government. this is an important element enshrined in the treaty -- of the european treaty with the prohibition of monetary financing. >> mr. stark, do you think the eurozone -- >> we have to speak to the roots. >> we get that. your two resignations from the germans proved that view. anyway, do you think the eurozone is past its worst of the crisis now?

>> now, what is key is that the euro area governments have a plan to tackle the sovereign debt crisis. they have a plan to reduce the deficit, to stabilize the debt to gdp ratio and to reduce the public debt in combination with the reform of the economy. the restructuring of the economies in many countries. so this will lead to -- yeah, ongoing tensions. i think we cannot expect positive results to be produced overnight. this requires strong political leadership at the european level, but also at the national level. and in the end you will see that europe will overcome this crisis. and will be stronger than before. >> mr. stark, you're welcome to come back on our network any time you like to let us know how things are and what should be done. >> thank you very much. >> jurgen stark there, formerly

of the ecb governing council. before we head to break, a quick check on the dow. we are about nine points above the 13,000 level. it's just a number, but some would say it is psychologically important. in honor of today being the late steve jobs' birthday, two die-hard apple fans are staging a birthday party for the tech icon right now at apple's flag ship fifth avenue store. we'll take you live to the heart of the action and why they're doing it in just a moment. [ male announcer ] if you believe the mayan calendar, on december 21st, polar shifts will reverse the earth's gravitational pull and hurtle us all into space, which would render retirement planning unnecessary. but say the sun rises on december 22nd and you still need to retire, td ameritrade's investment consultants can help you build a plan that fits your life. we'll even throw in up to $600 when you open a new account or roll over an old 401(k). so who's in control now, mayans?

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stocks to watch about 45 minute into trading. marriott added to the conviction buy list at goldman sacs. trina solar downgraded to market perform from outperform. kroger added to citi's top picks live. as opposed to just top picks. >> live. oil skyrocketing for its seventh straight day. yet, americans see widely divergent prices on gasoline depending on where you live. sharon epperson. >> that divergence is evident across the nation. ft. collins, about $3 a gallon. santa barbara, $4.30 a gallon. colorado, wyoming, montana, utah, that's where we're seeing the cheapest retail gasoline

prices around the nation. and then in california, we're looking at prices that are $4.20 a gallon. what is causing this? a lot of it has to do with the wholesale price of gasoline. the differences there are stark as well. in the rocky mountain region, we're looking at prices around $2.60 a gallon. on the coast 40 cents to 60 cents higher. a lot of this has to do with the wholesale price of oil or the cash price for crude oil in these regions. in the middle of the country where we've always talked about the glut of supply, oklahoma, we're looking at cash prices around $75 a barrel. on the coast, that's where we import oil, actually, to process into gasoline. that imported oil comes from europe. it's based on the brent crude price. that is trading as you know very close to $124 a barrel. so the fact that an inland refinery in the midwest can process crude for about $50 less than those on the coast is a big factor in the difference in prices for wholesale gasoline and prices that you're paying at

the pump. but the fact remains that we are seeing these wholesale prices rise as well. very fast, in fact. that is going to contribute to, perhaps, a 5 cent to 15 cent runup in the retail price of gasoline perhaps just in the next week. back to you guys. >> sharon, i got a quick question. i'm wondering if anybody's talking about the fact that the u.s. is a net exporter of gasoline, about 4% of our u.s. gas production is actually exported to other countries. has that become an issue so far? i would imagine at some point as consumers are paying more at the pump there would be some outrage about that. >> there certainly has been outrage. there have been a number of consumers groups pointing to the fact that we have seen a rise in exports in -- gasoline exports from this country. we've seen a rise in imports as well. of course, the fact that we're exporting gasoline at a time when we see a reduced refining capacity and we have these higher prices, that is something that is certainly going to cause a lot more people to protest and consumers groups to reach out and talk about this. >> interesting. sharon, thank you. let's bring in joey ross, ceo of

new york futures. he trades oil at the nymex. joey, where will we go from here? >> we're up against big numbers. 108.50, 109.50. it feels heavy today. yesterday it was a mixed feeling. could have bought all you wanted at 106 yesterday. even if you bought yesterday and don't get out at 108.50 today i think it's a dumb trade. later in the day laiquidation. it would make a lot of sense for us to pull back to 106.50, 106.72 where we took off from yesterday. there was new buying on the close yesterday. >> that's a short-term call. over the next week or so, is it a one-way bet? how much of the oil price at the moment is due to the speculative element over iran? >> it felt like yesterday was the first day i felt like it came in, simon. because we were champing around, back here bouncing. yesterday after the close it

felt like there was definitely spec buying coming in. what's the reason for it? it wasn't from the dollar. it wasn't responsible for the stock market. we felt like yesterday there was spy buying coming in to test this 108.50, 109.50. >> i'm curious if there's a belief there could be a ceiling on the price of oil. at some point president obama would tap the spr as he did last year. >> we're not thinking about that right now. that's not really on the floor yet. w we're hearing the president's under a little pressure to do something. we finally figure maybe that'll come in. i think gasoline is overbought right now. they're really speculative buying on this march and april gasoline. from my experience, inventories are 230 million. that's fine for this time of the year. we really didn't start using fwas lean yet. i think it's speculative buying in gasoline and crude due to the weak dollar that's really -- nobody really wants to fight it. the only real sell is of the hedges. >> what's interesting, joey, this morning we had a consumer confidence number over 75. so despite this talk, despite the headlines that we get on gasoline, the consumer is still

feeling relatively okay. perhaps better than you might anticipate. >> i don't think the driving season has hit yet. kids didn't get out of school yet. nobody really felt it yet. in new york we're seeing $4, $4.15, $4.20. it's normal. i think we're going to see $5 this year if we have any refinery problems or any bad weather. because the speculative buying in that right now. >> joey ross, thank you. live from the nymex. >> all right. decker's outdoor once a hot commodity among young women for its pricey ugg boots. as department stores and online retailers begin to slash prices on these boots is ugg mania coming to an end? your trade on decker's in just a moment. coming up, gone but never forgotten. apple fans plan to remember the late steve jobs in their own way. see what they have in store for his birthday when "squawk on the street" returns. ♪

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today marks a special day. it would have been the 57th birthday of steve jobs. in his honor, two of his biggest fans are moving forward with a very public and very unique birthday celebration outside apple's flagship store on fifth avenue. we've got both of the men behind the plan. brendan mcelroy is founder of dr. brendan mac repair shops. and seth rogers is community development manager at staff exchange, an online forum which tackles apple questions. gentlemen, great to have you both here. >> thanks very having us. >> thanks. >> how did the idea, brendan, first come about to actually have this birthday party in spite of mr. jobs's death? >> well, seth and i got together and just -- you know, we were brainstorming ideas for a fun event to have for steve jobs' birthday. and, you know, we just kind of

came up with the idea of, you know, handing out black turtlenecks. eating cupcakes. bob dylan and dancers. >> one of the items we were throwing around, actually, was getting a lot of the original apple products from down the line with the first ipod, first macbook. those were probably tough to get. we decided on this as kind of a positive celebration. >> seth, how big of a fan are you of steve jobs? to what extent? do you have every single product? have you read every single book? give us a glimpse into why you would bother doing this. >> so my first computer was the apple 660 av when i was 11. and since then i've used apple computers and i have an ipad. and, i mean, i think they're great products. pretty much any -- being in technology now, in the digital space, everything we work on, every project, every new

product, has been really touched by steve's, kind of, vision of elegance and design. it's part of our culture now. we kind of take that elegance and inquisitiveness very seriously. it's really part of our culture that we're proud of. >> you obviously both have a special place in your hearts for mr. jobs. brendan, i'm curious, now with tim cook in charge at apple, are you confident that the company can continue on the same trajectory in terms of vision and products? >> oh, absolutely. you know, i think it's going to be a continuation of steve jobs' legacy. you know, i think the company's on a great path. i don't really see any -- any end to that in sight. >> guys, have you spoken to apple? do they know you're doing the celebration today? what's the reaction been from the company? >> you know, i wouldn't even know who to reach out to there. so i'm not -- we haven't

contacted apple. we're just going to kind of wing it and have a good time. >> did you send e-vites out to people or is it a spontaneous celebration that's going to happen at the store. >> it's absolutely spontaneous. very much word of mouth. started off with just kind of our friends and apple community folks. and it's spreading. i think we'll have quite a few new york people there. >> all right. brendan and seth, great to speak with you. have fun at your party today. >> thanks for having us. >> thank you. we will. gap and jc penney have both come out with quarterly results this morning. both beating the street. inventory turnover continues to weaken. is a red flag waving in the background? we'll break down the retailers' numbers in just a moment. next week, "squawk on the street" gets a whole new set. >> we'll take it! >> we will, too, lloyd. we'll even be closer to all the trading action. right on the floor of the nyse.

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all right. let's give you some of the stories we are squawking about. p:32 on the west coast. 10:32: 30 here on wall street. new home sales fell in january after four consecutive monthly increases. december figures revised higher. now they show a sales gain of 1.9%. the university of michigan consumer sentiment index rising to a one-year high.

at a final february reading of 75.3. that is above consensus forecast. they'd been looking for 73 even. caterpillar and ebay among stocks hitting new 52-week highs. just today. right now this morning. >> david, we had it and we lost. we had it and we lost it for a third time this week. dow 13,000 was there. >> i know you're so upset, simon. it'll come back. it'll probably come back. >> maybe we can get the two guys celebrating steve jobs' birthday to come celebrate dow 13,000. >> dancers gyrating to bob marley. >> enough of the levels. >> is the s&p the actual statistically relevant index? >> let's look at the breadth. here at the nyse, advancers or outpacing decliners. >> they are, indeed. >> 5-4. over at the nasdaq -- let's just check on what's happening there as we head towards the weekend. decliners there are in greater

number than the advancers. >> yes, they are. >> astute observation, simon. >> jc penney's fourth quarter operating profits beat wall street forecasts. ceo ron johnson moves forward with his strategy to remake the company. gap also beat the street in the fourth quarter but profits fell 40% on heavy discounting. joining us on the cnbc news line, jeff kleinfeldter, analyst with piper jaffray. are there glimmers of hope, at least, from the results and/or from the conference call? >> yeah. it's definitely too early to judge the strategy. it's going to take not only serl additional months but probably several quarters until we have a firm grasp on the success of the strategy. however, you know, there are glimmers of hope, as you say. there are interesting comments about the strength of the shop in shops they do have in their stores currently. also the customer reaction to some of the changes that they've

made in their store service levels in terms of how they measure that through surveys. initial early read, we think, are encouraging. really it's going to take a lot longer to judge. the key is going to be the comps they report coming out of q1 and also the number of shop in shops they actually get to sign on with new brands. >> as for the gap, we did see margins decline there as well. they are announcing a share buyback program. i'm wondering what your assessment was of that move and whether or not this is simply an effort to reduce the number of shares out there to make ings look a little bet bit better? >> i think it's an ongoing effort to try to deliver value to shareholders. it clearly has not been coming in the form of comp store sales gains or market share gains. so they have been returning their cash flow which they've been managing very, very effectively over the last few years. the key here to get gap moving beyond the level of valuation is to get a comp gain. they have to start taking share back across the apparel industry. >> do they have hope of doing that? i have to say just as a consumer, when i think of the gap these days or old navy or

even banana republic i'm not sure what i'm thinking about anymore. the brand identity there seems to have sagged so much over the last few years. how do they move in the right direction? >> that's a great point. you know, that's a question i think a lot of people are asking themselves. you know, they have lost some differentiation, some distinction in the marketplace. a lot of other competitors have emerged in the last several years. that is absolutely the key. i think shrinking the size of the store base for gap is one great way to do that. they have to make it small enough that they can merchandise differentiation into that brand. i think they're working hard on that. old navy is clearly recognizing the competitive set that they're competing with everyone from target to kohl's and penny's to a lot of other fashion discounters. it makes it a very difficult proposition. different than 15 years ago when they launched the concept. >> in terms of the gap, you know, quote, unquote, losing, kohl's losing some share, pen ni's, in the midst of this transformation, who's actually benefits based on what we've seen so far in retail earnings

season and same store sales numbers? who's benefiting from all these retailers at the same time having difficulty? >> that's a great question. certainly the off price channel has been performing really well. ross stores, tjx con ssistently putting up great props. yesterday target reports that their february trends were, quote, well above their guidance range of 4%. that's discretionary areas like apparel and home in addition to the food and commodities. they're gaining some share. picking it up pretty quickly here this spring season. >> jeff, just a last question. is your price target on jc penney actually $50? if it rose to that, what sort of price earnings would we be on? >> that's a fair question. it is $50. you know, we have been viewing penney's as a recovery story. clearly a margin recovery story. it's going to take a couple of years to get to an earnings level that, you know, we think warrants a 15 times valuation. that's how we based our $50

price target. we're going to need to see the markers along the path, though. that's clear. we're going to need to see their comp store sales declines that they likely experience in q1 start to moderate through q kwn 2, q3, q4. it's a back end loaded year. it's 2013 where we'll start to see meaningful earnings gains. that's what we value it on. >> thank you. coming up on the program, as daid faber will tell you with some sadness, 2011 has seen very little in the way of m & a moves. as many corporations are holding on to big sums of cash and the corporate bond markets remains flush, 2012 will be a turnaround year for deal making. stick around. we're back in two. ♪ i was born in michigan >> coming up, if you can't get enough of the michigan primary coverage, why not just move there? we've got some luxury listings that may be perfect for you. if you've got deep pockets. find out more after this break. ♪

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we are so excited. it's going to be a very busy weekend as we prepare for the new set launch on monday. there will be, guys, ribbon cutting. did you know that, david? >> ribbon cutting. with giant scissors, i hope. >> maria bartiromo will be down here. senior members of the exchange. >> will there be food? >> maybe a bagel. with a schmear. >> that would be great. >> stocks to watch. baxter upgraded to neutral from sell at citi. the firm also raising the price target to 42 -- i beg your pardon. $57 on that stock. it was $53. source fire downgraded to neutral from buy at ubs. see the reaction there. under armour upgraded the overweight from equal weight at morgan stanley. the price target on that is now a whopping $106. >> my son's a walking advertisement for that company. all right. let's move on to m & a activity. it's rebounding slightly this

year. but still nowhere near precrisis levels. with ten months to go in this year, will the m and a motor start running hot? let's ask parella wineburg partner andrew betner. he advised the nyse -- which did not happen. nice to have you here at your clients' home base. let's start there. it wasn't just europe, of course. we saw u.s. regulators stop the biggest deal of the year last year. at&t mobile. still a concern some would say and medco express scrips. is it giving pause to deal makers. >> regulators are starting to show an increasing willingness to stop deals. sure, they're going to be active and intervene when appropriate. i don't see that as their mandate. i don't think we're going to see an increasing level of blocked deals. if you're in an industry where the markets are narrowly defined, where you've got few competitors and where there's customer sensitivity, that's going to be a red flag for

regulators. anyone thinking about transacting in those types of industries are going to have to be very clear on what the road map is to get through a regulatory process. >> all right. we're two months in, more or less, into this year. we have not really seen a significant increase in m & a activity. there's been some here and there. not the year, though, that many had been hoping for as we ended last year on a very quiet note. are things going to really pick up? >> well, i think the headwinds that we had in 2011 are really turning into tailwinds for 2012. so you had on your show earlier secretary geithner indicating europe is starting to define a road map. that's encouraging. that was a major headwind for 2011 activity. we have a market that is much less volatile than it was in 2011. so '12, we've seen an upward bias in equity markets. that's a positive for the m & a environment. we're also seeing a wide open credit market. as you said earlier on your show, very low historic rates. so that provides a very good

backdrop for an exciting m & a year. i think we're going to be in that 2.5 trillion or so overall deal value. it's a very big market. it's a very active market. very diversify zbld when are we going to start to see evidence of that? some would say you and i could have sat here a year ago and had a very similar conversation because that was before europe reared its ugly head, really. the first half was pretty good. when are we going to see evidence of what you're talking about? >> we're already seeing it in what's not publicly observable. in our business flows, we're seeing a lot of thinking and a lot of planning about m & a. of course, those two ingredients are prerequisites to getting m & a done. i think we're starting to enter a phase where we're moving from the thinking and planning, and you'll start to see more of the doing as we head into the next couple of months into 2012. again, i do think it'll be a robust year for '12. >> you do? you're still sticking with it and feeling pretty good about it? >> it's a very large, very diversified market. $2.5 trillion last year. even in the depths of the great

recession of '08 and '09 you had $2 trillion of m & a activity. >> what are you hearing inside the board room right now? we talk -- so often we talk about m & a, ceo confidence. i'm feeling better. my stock's up. i watched that guy do it. his stock didn't go down. that always helps. where are we when you're in there having those conversations in the board room. >> ceo confidence is absolutely critical. it may be the most important factor in getting large-scale m & a deals done. right now i've never seen it more difficult to plan for a business for the future. so where there's dissension in the board room and not in a very stressful way or nefarious way, where there's disagreement in the board room, but there's a real challenge in developing long-term business plans. people don't quite trust this economy because it has so many externalities feeding into it. whether it be qe 2 or 3, or the initiatives under way in europe. that is giving people some pause about the foundation of the d

economy? >> what changes that? on one hand you see things pi picking up. on the other hand, levels of caution. what's going to change that dynamic? >> we're seeinging the beginnings of a market being made where we're seeing more intersection in the overlap with buyers and sellers' price expectations. when that happens, we start to see now an increase in activity. when people are planning for their businesses going forward inside the board room, there is disagreement about outlook. there's also disagreement outside the board room with a buyer or seller of an asset. we're starting to see more of that intersection. i think we're starting to get some consensus forming that we do have the makings of a recovery. but the big question is going to be, what is the trajectory of that recovery. >> we ask that question all the time. finally, one thing we haven't focused on as much, but bankers get paid to do it, advise on disaggregation. we saw a lot last year. itt. tyco. fortune brands. is that a continued trend this year? >> we started to see that in

2011. i think generally the composition of m & a is changing. it is still going to include large-scale stock for stock mergers and cash acquisitions. more and more we're seeing split ups and split offs and spin-offs and more complicated transactions. you saw sears yesterday announce a transaction involving a rights offering for a set of assets that they're looking to raise some cash against. again, i think the m & a market will continue to evolve. it will be a less regular way and plain vanilla and more complex. >> we'll leave it there. thank you very much. andrew bednar. straight ahead this morning, we're taking you to michigan to talk the luxury real estate market, just in time for next week's big primary. but first, rick santelli, what are you working on for the next big hour of "squawk on the street"? >> of course, we're going to be discussing some of the great interviews that were on cnbc today. we had treasury secretary tim geithner. i'm going to throw my view in. i don't know. i think there's a bit of misconception about what a

country like iran does when they need to sell oil to pay for their programs that we're not that enthralled with. but they still need to sell the oil. will that affect strategy of why oil's up? you're going to have to tune in to find out. ♪ now st is the time to seize the day ♪ >> we'll be doing just that. watch us from our brand-new set right on the floor of the new york stock exchange. come seize the day with us. next week on "squawk on the street." [ thud ]

♪ [ thud ] [ horn honks ] ♪ [ car alarm deactivates ] [ crash ] ♪ ♪ ♪ [ crash ] ♪ ♪

♪

♪ michigan primary just days away now. so we're taking a look at luxury properties in the state of michigan, specifically where mitt romney is said to have met his future wife -- his current wife, in fact. he met her in high school -- you know, if you write it, i will read it. ronnie keating is on agent with

sotheby's international realty. nice to have you with us. curious as to what you're seeing in the high-end market in that part of bloomfield hills. and are things starting to move in terms of actually selling? >> well, you know, bloomfield hills is a community about 30 minutes out of detroit. and it is a suburban area where mitt romney is from. and it's where a lot of the executives when they come into detroit, they relocate here. so my high-end market actually is a constant. unlike new york or chicago, they have 20 suburban areas. we really have birmingham/bloomfield. so they end up here. it offers great school, shopping. >> and some very large homes, which we want to take a look at. number one, i like when they have names.

barrington park on the market for $4.5 million. only 9,100 square feet. four-car heated garage and piazza-style pat yeos. very nice. >> it's right off of woodward, which is a gated community. that's an estate home that was custom built. we have a lot of athletes in there, doctors in there. we don't have a lot of gated communities because it's an older community. so that's probably what sells most, the new custom-designed homes. >> are these homes being leased at all or rented for a period of time when they can't find a buyer, given sort of the transition that the economy certainly is still in in michigan? >> you know, there is the demand for leases because a lot of people coming here are not sure -- they're not sure if they're going to have their jobs or how long they're going to have a job. so the higher end doesn't

necessarily lease as much. in fact, a lot of the homes are moving now, not a lot of them, but slowly coming around, because of the conditions -- the interest rates, the conditions. so we are getting some movement. so we're encouraged. >> ronni, i understand the head of fiat, sergio marcchione was recently there. and he wanted to buy a home there. does he want to lease? is he permanent there? >> marcchione did just buy. we're encouraged. that's a great confidence level to our area. we're encouraged by what the car companies are doing. roger penske is bringing here people all the time. he's a big supporter of our area and he does a lot of good things. so we have a lot of that coming around again. >> ronni keating, thank you so much.

appreciate it. >> as they say, imported from detroit. tweet time. klm launching an interesting program this morning allowing passengers to pick the person who sits next to them on flights based purely on their social media profiles. we're asking you guys to complete the following sentence -- if i could pick who would sit next to me or sit in the seat beside me, it would mean, never worrying that "blank" would end up next to me. tweet us. ♪

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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. ♪ let's get to it. "squawk on the tweet." klm is launching a program allowing you to pick the person who sits next to you based on social media profiles from facebook and twitter. so this morning, we are asking you to complete the following sentence -- if i could pick who sits in the seat next to me on a plane, it would never mean -- it would mean never worrying that so-and-so would plop down?

steve tweets, this is easy, chatty cathie. >> you need to perfect the glare and chatty cathie will shut up. >> give me the glare. >> no. i'm saving it for monday. >> monday is -- >> it's the launch of the new cnbc set at the nyse. >> we'll see you then. don't go anywhere. the third hour of "squawk on the street" starts right now. welcome to hour three of "squawk on the street." here's what's happening so far. >> i wouldn't take q.e. 3 off the table ever. i've been one that says this is a poe ent weapon that we can use, but we should use it only if the economy deteriorating. >> we've got a tax code today has trillions in affects 7% of our population.

>> the world and oil markets and the global economy and stability in the region could be in jeopardy. that's why we're making so much progress in working with countries around the world. >> a lot of oil ceos believe the last $20 entirely are iran, that there is fundamental demand coming from india, china and we're getting stronger. but we're also producing a lot more. libya's come back online. we can't really measure retail. a lot of people say, why do they talk about same-store sales? you can't measure retail by looking at a store this year versus last year. >> opening bells are ringing. >> new a.r.m. sale -- new home were down in january. done .9. >> the risk for the euro area to break up is exaggerated. there will be no political agreement to give up the euro.

it will continue, absolutely. >> good friday morning. happy friday. markets mixed on this friday as we get a check on all three indices. starting in the green, the dow just briefly passing into the red, although as you can see, flirting with the flat line today, crossing 13,000 for a brief period. right now, 12,987. s&p and nasdaq, positive as well. kenneth cole buckinging the retail trend after its namesake founder decided to take the company private. salesforce.com, the biggest gainer in the s&p after strong quarterly numbers as well. roadmap for a friday, linsanity, the fan who paid $43,000 to spend five minutes with the nay mouse knickerbocker.

companies are looking to the american high-yield market for some funding. we'll find out what effect that could have on your money. and detroit bailout illusions. we'll talk to steve rattner why he thinks mitt romney is dead wrong when it comes to saving the automakers. and deckers gets shorn. the maker of uggs getting hit because of the price of sheep skin. the treasury secretary speaking to steve liesman saying, there's no quick fix for high oil price and that the debt crisis in europe much less likely now to hurt the global economy. steve is in washington with more highlights. you guys covered the gamut this morning. >> reporter: we did. i want to give people an appreciation of what the treasury secretary said in a cnbc exclusive before he heads to mexico for the g-20 meeting of finance ministers this weekend, suggesting that iran and higher oil prices have replaced europe as a major

threat to the u.s. recovery. on oil prices, the rises in part due to growth were due to iranian saber-rattling. iran could do a lot of damage to the global economy and added the strategic petroleum reserve could be used in some circumstances but wouldn't say if this is one of them. europe has made progress but needs a bigger firewall and it's less likely to derail the u.s. recovery, a bigger euro firewall makes the imf rescue package less necessary. i also asked the treasury secretary to respond to a main area of criticism from republicans about the president's corporate tax reform proposal, that it simply replaces one set of loopholes for another. >> we are proposing two preserve a set of targeted incentives for investment for research and development in the united states. we think that's a good, long-term reform imperative. good for growth here. but we're going to replace dozens with a very narrow, very targeted set of things to make sure we're encouraging companies

to create and build things in the united states. i think you'll find very broad bipartisan support for reform based on those bakis principles. >> reporter: geithner said there is hope for congress to take action on some of these proposal this is year, despite the presidential elections. he said the expiration of the bush tax cuts should give senate the incentive to take up comprehensive tax reform. i was looking at the intro to the top of this hour, we get a lot done before a lot of people get out of bed, don't we? >> absolutely. and that's people on the west coast who are just now getting up. steve, don't go too far. let's bring in rick santelli at the cme and get his reaction as well to what the treasury secretary said. rick, whether it's the ltro, the big meeting in mexico, energy prices, reflections on what steve got out of the treasury secretary? >> i love the interview because it shows me why i'm not a big tim geithner fan. he better be careful in mexico.

we never talk about it. we have 46,000 people dead there in the last three or four years. be careful, treasury secretary. here's my beef. i think the treasury secretary, like many politicos, is mixing up metaphors here. i think foreign policy is a much bigger issue with regard to what iran is doing with regard to the oil market. if iran doesn't sell to the left side, they have to sell to the right side. they have to sell it because their disaster plans -- their dastardly plans have to be funded. they need the money. and the other point is, with regard to reforming on the corporate tax side, what a bunch of hogwash! the problem is, they can't pick and choose who gets the credit or who gets a lower effective tax rate. reform means we have to go back to a level playing field where the world can feel everybody's getting treated equal. and that isn't it.

i know they're going to target people like energy and it's not a really good time to do that. >> reporter: rick, don't make the perfect the enemy of the okay. >> i don't know what that means. i just know that everything he said didn't sound okay to me. >> reporter: okay, i'm trying to find a word you might agree with. i was going to say good initially. here's what i mean. they are proposing to get rid of a lot of loopholes. they're preserving some on the other side. but fewer loopholes is better than a lot. >> no. this is the problem with the entire administration right now. they think just because the foundation's crumbling, they could rearrange the power antenna on top of the sears tower and make everything fine. you can't take a corrupt, horrible tax structure, whether it's personal or whether it's corporate, and tweak a couple of things and take away some perceived benefits that your base doesn't like, an industry like energy, and give other

areas that you might like or they might contribute a more fair tax policy. you need to make it so the tax policy on its own stands on its own two feet. and whoever you are interacting with it, it's fair. this is one time i will use the word fair because it isn't a loaded word fair like when i hear it coming from d.c. >> steve, one of the things i saw -- at least online, one of the topic that is got the most vitriol going was a moment that i didn't actually hear but i'm curious to get your reaction when he recommended or he praised the recommendations out of simpson-bowles, obviously coming from an administration that let those recommendations fall to the floor. were you surprised by that? >> reporter: no, because it's been the administration's contention -- and i know people disagree with this. i'm just saying what they have said. while they didn't embrace it wholesale, they have, in fact, picked up key elements of it, including tax reform, including some of the other aspects that are out there. you're right. there are big parts of it they haven't embraced.

but what they're saying is that they've picked up bigger parts of it. >> steve, great work, as always. and, rick, great work with you always as well. we're actually going to head out to chicago late next week. in the meantime, rite-aid popping earlier in the week on interesting rumors. kayla tausche back at h.q. with more on that story. retail and m&a continues to be a big theme. >> we had the big kenneth cole news earlier this morning. rite aid is interesting because it's not necessarily a sale. but a couple of weeks ago, the company issued a bond, about $481 million that was going to be used to refinance other debt. here's what got investors talking about a potential sale. the stock up 5%, shooting up on the day that they issued this bond. but here's the issue. there's a clause in the deal that allows a 10% premium for bondholders so they'd get paid at 110 cents on the dollar in the case that the company entered into a definitive material agreement or a deal in

which it would sell itself in the next year. that's got a lot of people chattering about whether rite-aid could be putting itself up for sale. here's why. this doesn't happen often. it's only happened in a handful of cases in the last year and it's largely happened with energy company. if you see the only other recent issues like this that we've seen, kodiak oil and gas, oasis oil and petroleum, these are big bakken plays. a bond was issued in may 2011 that said, if we entered into a deal, you would get this 10% premium as a bondholder. five months later, they were sold to stat oil or $4.5 billion. rite-aid shares on a tear. good same-store sales. the shares are up 20% to date. good for a company that's had a lot of debt issues in the past. we'll see whether anything happens. they have 12 months for the bondholders here. but it looks like there is a bit of a correction today. back to you. >> also given the kenneth cole news today, retail just continues to be one of the

favorite areas for private equity, for would-be buyers to move in and out of? >> yeah, and i think a lot of these other sectors start rising a little bit with overall macroeconomy and some of these retail names get left in the dust, you'll see a little bit more deal activity there because that's where a lot of the values will be seen. >> thanks a lot, katie. kayla tausche back at h.q. when we come back, the linsane fan who paid $43,000 just to get a word with the basketball star, even though they lost to the heat last night. and hotel stocks seeing double-digit gains already this year. there could be a chance for even more profit, they say, if the economy improves. we'll see which stock you might want to check into when we're back in just a minute.

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♪ if you've never been to the floor of the new york stock exchange, you have to find a way to come some time. it's really interesting, especially the way they've mapped out the room. that's a look at our new set which you're going to see on monday. but that's technically post 9.

some of the other shots, here's post 6. those oval-like desks, essentially, where trademarkets markets. as the markets shoot for their best january and february percentage gains since '91, americans get more excited about the state of the economy. if the economy continues to improve, which sectors are set to stop? brian shactman has our sectornomics. >> the basic theme, improving trends but no explosive growth when it comes to hotels. i want to give you three names to consider. choice hotels is a $2 billion chain that includes comfort inn and econo lodge. the stock has lagged a little

bit. but it yields a little over 2% of revenue per available room or rev parts, key industry metric, up almost 8% last quarter. higher occupancy, higher rates, a very good combo. the stock price could soon follow. if you want something a little bit bigger, take a look at marriott. it was added to gx oldman sachs conviction buy list. it's the second larger operator in the u.s. this is a little bit of a risk here. occupancy, it's at 67.5% but it's trending down. rev par growth is also slowing. 80% of revenues are domestic. if the u.s. does well, so does marriott. if it doesn't, there's no large swath of emerging market business to hedge. but there are 50,000-plus rooms under development overseas. 17,000 of which are in china. they come online, u.s. recovery continues, marriott could surprise. the last one i want to touch on, intercontinental. a little smaller than marriott,

a little bigger than choice, yields 3.5% almost. it's a nice income play. in the u.s., it has crowne plaza, holiday inn, among others. they're hiring new people, 3,000 people in the uk. and hospitality training academy, like to see what goes on there. those are three names to think about. it's big, medium and small. the next focus on "power lunch," we break down restaurants. this one is huge. we went from starbucks to capital grill to see what might be a good investment. >> thanks, brian. even after a tough loss to the miami heat last night, linsanity shows no sign of slowing down. in fact, one fan paid more than $42,000 to spend five minutes with lin after a game earlier this week. our darren rovell was there and he has that story. that's a fair amount of money for five minutes, darren? >> reporter: yeah, i tried to come up with something that puts

it in perspective. we talk about the lunch with warren buffett auction. with a two-hour lunch, the widing bidder pays about $21,000 a minute. one fan paid $42,388 for her husband to spend five minutes with jeremy lin. to me with the star who's only played in 11 games so far. he met walt frazier and that hideous outfit and was presented with the award during the lakers game when he scored a career high 38 points. >> i identify with him, even though i'm not an athlete. he's just every man wanting -- every man and woman trying to get ahead and to try and to beat the odds. >> mitchell says he was literally obsessed with lin and his story. the auction benefited madison square garden's garden of dreams foundation and was conducted by

charity buzz. join me this evening at 7:00 p.m. eastern time on the nbc sports network for a special edition of nbc sports biz where we'll talk the business of jeremy lin with his agent. >> there's a school of thought out there this morning that maybe the smart move in terms of endorsements would be to try to be the anti-lebron. don't do nike, don't do adidas, do ibm or vitamin water. >> reporter: i spoke to a couple of marketers in beijing this morning. and they told me, don't count out the harvard angle because the harvard angle, the value of education in china -- and by the way, the knicks announcing this morning that they've signed a deal with a taiwan-based tire company. >> nice, darren. after the break, ten minutes to go, get you the action live as it happens. we'll take a trip to sweet home chicago where rick santelli is deep in the pits of the cme. we'll see what he's tracking and

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♪ mystery of the mf global bankruptcy continues to be the location of those missing funds. our next guest claims jpmorgan and big banks are keeping the money safe and sound. chris whalen is here along with rick santelli over at the cme. chris, good morning to you. >> good morning. nice to see you. >> this idea that jpmorgan ended up with customer money sticks in your krau. >> oh, yeah. >> and you're even going so far as accusing large media of protecting jamie dimon? >> in our industry we have a legal responsibility to safeguard customer funds. it appears the individual

accounts of the commodity customers of mf global were with raided and they took those funds and made a margin payment to jpmorgan to try to save the business. the u.s. trustee in their report characterizes this as confusion in the back office. but we all know that you can't put your hands on an individual customer account unless you do it very actively. so i think what's going on here, unfortunately, is that the e.c. and everyone else is acquiescing in an equity liquidation of this broker dealer when it should be liquidated under the commodity rules. the reason is because they don't want the trustee to be empowered to claw back the funds from jpmorgan. here's the problem. in order to make the world safer over the counterderivatives, the fed, the other regulators, the congress in washington have so enhanced the safe harbor for secured lenders in this case that even if we brought jon corzine in chains in front of the bankruptcy judge, convicted of fraud, he's innocent until proven guilty, right, the judge still might not have leeway to

give the trustee power to claw back. the other issue is, again, going back to that hideous 2005 bankruptcy reform legislation is that bankruptcy judges don't have much leeway to appoint a receiver. a receiver is different from a trustee. they have broad powers to go after third parties. but in this case, the trustee cannot claw back unless there is actual fraud, real nasty fraud has to be proven. >> rick s chris on track? >> you know, listen, i'm not going to make a comment one way or the other. i read his things. and i want to see the facts. but let me tell you this -- >> read the trustee's report, rick. >> no, no, no. i'm not questioning your facts. to me, the issue is even worse. as we go close to four months, chris, here's my question to you. let's pretend instead of mf didn't have clients that were traders and let's face it, probably people that are somewhat financially secure, okay, they're trading, they have warehouse receipts, they have gold on file -- what if this was

poor people like having issues with real estate, like the bailout that we saw by the banks? is it because it's the wrong type of people that have been disenfranchised? i agree, the media's not interested. chris, why is this any different than worldcom or enron? >> it isn't. >> there's no perp walks or anything. >> everybody should be getting really angry about this because no customer is going to trust an independent dealer to act as s custodian for securities. that's going to be over. and the large basque are tnks a winners here. it's been lobbied in such a way that we're disadvantaging the cash market and the organized exchanges in chicago. >> they're supposed to release these e-mails, chris. where are these e-mails? from free says, we're going to release the e-mails. everybody wants to read the mf trail with jpmorgan. where are they? >> but, rick, these are little customers. these are hedgers and farmers

and everybody else who's being raped publicly and our industry has to stand up and do the right thing and protect these customers. we're done. our industry is going to go away because customers will not have confidence in broker dealers. >> you can see the response from jpmorgan on our screen there as you were speaking. chris, thanks very much. good to see you. the european close after a short break. like in a special ops mission? you'd spot movement, gather intelligence with minimal collateral damage. but rather than neutralizing enemies in their sleep, you'd be targeting stocks to trade. well, that's what trade architect's heat maps do. they make you a trading assassin. trade architect. td ameritrade's empowering web-based trading platform. trade commission-free for 60 days, and we'll throw in up to $600 when you open an account. anything not moving forward... is moving backward. [ tires screech ] [ engine turns over, tires squeal ]

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another busy day out of europe today. got numbers on the german economy, the uk economy. big g-20 meeting in mexico this weekend. here's the bell. and then we'll get to simon hobbs. >> the european markets are closing now. >> let's have a look at where we're finishing out. the equity market in terms of pricing action, a quiet friday afternoon as they head into the weekend. most of those major indices holding relatively static. let's have a look at them, guys. put the markets up on the screen, if we can. to a certain extent, some of the big banks did relatively well today. some of the telecoms came through with numbers that pleased the markets. you can see the kcac, the dax ad the ftse higher. some of the german banks did well. bank of america/merrill lynch put up deutsche bank as a buy today.

i want to point out where we are on the euro. the short squeeze continues on the euro. we're at a 2 1/2-month high there. you remember yesterday that we broke through the 100-day moving average. just above 1.33. a lot of focus on the foreign exchange markets is on the yen today. you have a similar move on euro/dollar as you have on sterling/dollar. meanwhile, over in berlin, there's still a lot of political activities with members of the ruling coalition trying to apply the pressure to greece in advance of monday's meeting. of course, of the lower house of parliament in which they have to vote through that deal to basically rubber-stamp what merkel has said. the rescue plan for athens could turn the country around and that it might very well come back as a subject before the paushlt again in the near future. i think this sums up part of the

difficulty that we have in europe. the economic difference opening up, you spoke about some relatively poor figures coming through on the gdp data for germany in the last quarter that we think they will rebound. on the one hand, you have, let's say 50% youth unemployment in spain at the moment, 50% in the youth. and on the other hand, you have today one of the big unions, labor unions in germany -- actually asking for a 6.5% wage rise for their 3.6 million workers. that is a very stark difference -- or an example of the difference that we have within the eurozone as you try and basically herd all those cats towards an environment in which they can all succeed in the future. back to you. >> inflation on one front and deflation a few miles away. >> exactly. there's a good question for you, simon. wouldn't this help germany -- would it help europe if germany had more inflation and southern europe has more deflation and

kind of meet in the middle a little bit? this is an argument you could certainly make, don't you think? >> one of the things that i heard the other day which surprised me from ubs is how bad in nominal terms the growth has actually been in germany. if you look at debt profiles, okay, in real terms, they've done relatively well. but the inflation is actually low relative to growth in germany. and that has actually meant that its debt profile is deteriorating against the sort of talk that we normally hear. >> remember what happened in eastern europe -- excuse me, eastern germany when they integrated them. inflation rates around 5%, as i recall. this is 20 years ago. but they tolerated that for quite a while. as a potential way to meet in the middle, they may not tolerate that -- >> as you know well, bob, you have one tool to control inflation within europe and that's monetary policy and it's a single interest rate for all.

>> we were talking about your excellent interview with starken. >> good job, simon. you got him to talk about the major points. he reiterated the firewall is sufficient, the imf as well. this is the hard line they're taking. my point here is about this morning, was mr. geithner injected himself into european politics. he's done this before. by saying he, implying they needed a stronger firewall. and then going on to say that they were fully prepared to see the imf play a larger role in europe if there was a stronger firewall. this is politics going on here. simon, you'll remember he did this before with the finance ministers meeting in poland, i think it was, when he talked about the need for a t.a.r.p. for europe. that was almost a year ago. but he got, i think, quietly shown the door a little bit. they said, we'll figure it out, thanks very much. >> yeah. >> so mr. geithner is taking a very active role in what's going on. >> in essence, he's at loggerheads with merkel, isn't

he? the new fund they have, the new safety net, they physically have to put the money in. it's not about guaranteeing things anymore. merkel is under huge pressure not to raise the german contribution and actually similarly geithner is under huge political pressure not to raise the u.s. contribution to the imf. and that's the game that's going on. and arguably, he's right. it's europe's problem. >> right. but he did open the door a crack implying they might go along with some kind of modest contribution. i want to put up what we've been doing this week. it's interesting that while germany is fractionally positive for the week in the u.s., the s&p is up fractionally, the southern european countries, you'll notice a little bit of a disconnect that's going on here. here in the united states, we're quiet even though the consumer confidence numbers were good, the new home sales numbers were pretty good. the bottom line is the g-20 meeting is going to be over this weekend, which is going to be a little bit of a contentious issue. maybe people are stepping back in terms of what's going on.

but we have multiyear highs. every day we go up a little bit. at worse, we move sideways. s&p just broke through to a multiyear high today, the last of the major indices to do that. >> even with crude at $108. >> yes, isn't that something? i mentioned materials had been moving sideways to down. financials had been weak. bottom line is every day, slowly but surely, we get these quiet moves. >> thanks very much, bob. let's get to rick santelli in chicago. rick, i'd love to get your thoughts on what ltro may look like next week if it, in fact, might be the last one? and when it comes to energy, some discussion today about how oil prices may not affect stocks as much when the contango is not as steep, which it is not? >> oh, i don't know. i think if pigs could fly, maybe delta's stock would go lower. i don't know. i personally think, whether it's contango or not, in my opinion, i just keep things simple, carl. get a chart of the equity

markets, all the major indices around the world, get a chart of oil that starts around late '07 and you tell me, bottoms are made when energy gets down to a certain low. stock bottoms are made when energy gets to a certain high. i know '08 had a lot of other issues. but maybe those issues were just contributing factors, more antagonists like q.e. weakening the dollar. so i don't buy into that at all. i think there's different supply situations. i think the delivery process of the abundance of crude we have may have some issues. and there's another point. bob brings up a great point, how we continue now to see the imf brought up. we hear it on some eurocratics speak. we heard it with our treasury secretary. in the political climate we're in, carl, i will challenge you, do you think if there's a headline in the paper that main street reads over the weekend that the imf wants the u.s. to contribute more to bail out europe, what do you think the response is going to be? >> i think we both know what the

response is going to be. >> why do they even bring it up. it seems a little bit crazy. >> and in an election year. response to that kind of headline would be visceral. let's bring in mary thompson who has details on european companies coming to the u.s. >> the health of the ugs hi.s. market, year to date companies account for 18% of the roughly $45 billion of high-yield bonds sold here in the u.s. a level well above those seen in the last three years and above what strategists say is typically 15% of the market. why are european companies coming here to issue their high-yield debt? some say loans are tougher to come by at european banks. but more important, it's the death and the improving health of the u.s. debt market. now yield hungry investors are

back scooping up high-yield debt roughly paying 6.5% above the yield on a comparable treasury. while issuers of the bonds pay a relatively low absolute rate of 7.5%. given the much smaller european high-yield market, european firms are taking advantage of the favorable rates and strong demand here in the u.s. market participants say the quality of their debt is comparable or slightly better than that issued by u.s. firms and is typically sold by european companies with u.s. operations and cash flows. but one other theme of the european high-yield invasion, traders say it's easier for firms boies based in countries where investors perceive the sovereign risk to be lower to sell their high-yield debt here in the u.s. companies from these countries already having issued more dollar-denominated debt than in all of 2011. >> fascinating stuff. thank you very much, mary thompson. when we come back, former car czar steven rattner weighs

in on why he thinks mitt romney is dead wrong about the detroit bailout. but first, a look at the winning and losing stocks from the trading day in europe that's just now coming to a close. [ male announcer ] we know you don't wait until the end of the quarter to think about your money... ♪ ...that right now, you want to know where you are, and where you'd like to be. we know you'd like to see the same information your advisor does so you can get a deeper understanding of what's going on with your portfolio. we know all this because we asked you, and what we heard helped us create pnc wealth insight, a smarter way to work with your pnc advisor, so you can make better decisions and live achievement.

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coming up next on the "halftime report," salesforce.com soaring on earnings. but why one bear is not buying into the rally. and the monster energy drink, is the right trade stocks or bonds? we'll analyze. that's next on the "halftime report." now back to carl and "squawk on the street." >> thanks very much, brian. take a look at what crude is doing this morning. getting a little bit of a pop here on headlines from the iaea saying they're seeing a large expansion of uranium enrichment in iran, which would obviously be bullish for crude, even though it comes after some reports that u.s. intelligence officials do not see iran working on a weapon -- or trying to weaponize that uranium at this point. crude is still up 42 cents at $108.28. steve rattner taking on presidential candidate mitt romney's stance on the auto bailout. in an op ed in "the times"

today, the gist of mr. romney's stance is that the government should have stayed on the sidelines and allowed the companies to go through what he calls managed bankruptcies financed by private capital. sounds like a wonderful ly sensible approach except that it's utter fantasy. rattner joins us to talk about that. why was private capital not available at the time? >> in the fall of 2008 and even through the spring of 2009 when i was working on the auto task force, as you well remember, the country was in the grips of this terrible financial crisis. people were terrified. the stock market was hitting new lows every day until march of 2009. and there was simply no private capital that had any interest in coming in and financing these companies, whether it is inside bankruptcy or as a so-called dip financing through bankruptcy. there just was not any money. i've suggested if governor romney thinks there was money, he should give us some idea as to where that money was.

>> you're asking him to come up with specific names of investors who would say, yeah, i would have ponied up at the time and i had the money? >> yes, but i think a little bit of proof, not simply people who say, of course i would have done it because youit would have bee great investment. during the bush administration, which made the first energy loans to these companies, or during the obama administration and offer to be part of it. i know there was no such person or institution. >> does he not have any point in the way the structure of shareholders, bondholders was altered? is that a completely invalid point? i think you must -- even you must say there's a nugget of truth in what he's saying there. >> let's separate the substance from the optics. from a substantive point of view, everything that we did to restructure these companies was done completely in accord with precedent and with the law. and it was litigated, especially in the case of chrysler, it was

litigated all the way to the supreme court. and not a single joj judge gave a nod saying that we had done anything appropriate. we operated completely within the law and within precedence. i can see that the optics of having the uaw's health care trust own a majority of chrysler and a large share of gm was troubling to a lot of people. i get that. i'm not sure even in retrospect how we could have been fair to all parties and gotten all parties what they deserved in another structure. but i understand why it's troubling. i didn't like it either. but to me, it was a necessary element for getting those companies onto a sound footing and having workers come to work every day. >> in terms of the sheer politics of romney's stance, you point out, a majority of michigan voters, at least, key primary coming up next week, supported the rescue and that he may have to pivot for the general if he gets that far. it sounds like even in some of these recent debates he has had to move toward that in some way. >> frankly, i think he moves back and forth. it's a little hard for me to

know where he is at any moment. but, yes, a majority of michigan republicans were opposed to the bailout, which is why i think he's taken the position he has in michigan itself with the op ed ten days ago and today at his speech. but a majority of all michigan people were in favor of the bailout and on a national basis. if you look at the polls, nationally people initially opposed the bailout. but have increasingly gotten closer and closer toward a majority favoring it. >> we're looking at poll numbers right now. 37%, 35%, romney/santorum. interesting times come tuesday, steve. thanks for your time. always good to talk to you. have a good weekend. >> my pleasure, carl. deckers tripping over higher sheep skin prices. is the stock something you want to flock to or should you clip it out of your portfolio? we've got the trade on that right after this.

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♪ crocs and deckers definitely

not boogying today as you can see down 8% and almost 12% respectively after they reported earnings after the bell. it's due to higher cost of raw materials. sam joins me here on the nyse set this morning. sam, always good to see you. interesting day in your sector. >> certainly is. >> let's take deckers on first. the sheepskin costing you saw coming a while ago. coming home to roost in uggs, an area they're reliant on. >> the sheepskin prices is only part of the issue. the primary part of the issue is the prices are going up. the customers are starting to get a little nervous about that, as well as we think distribution is expanding. and inventory levels were very high, up over 100% at the end of the quarter which i've said for quite a while, i've been quite positive about this. the company's done a very good job about controlling, keeping

the supply underneath the demand, whether or not the weather -- however you want to talk about it. supply's met demand. and now they really have to react. based on what we heard on the call last night, while they guided lower than people expected, we're not really sure if they've gotten the message as to making sure that they pull back the inventory to keep this alive because it certainly is a good comfort brand. but you have a lot of teenage girls that love to wear it for fashion and so on. if they walk away from it, there's going to be a big problem. >> as a result, underperform on deck and a price target of $72? >> correct. >> as that changed after last night? >> not really. we didn't -- we think there's still downside. this is really a -- the sanctity of the brand issue. that's why we stayed with it. >> why the different story there on crocs? >> crocs over the years, you could argue that crocs got overdistributed at the end of

2007. really they were a one-trick pony with just that classic shoe. they got it all backwards in a much bigger situation than what uggs had. but since then, they've gotten cleaned up and so on. they've added a lot more skews. they've diversified their sormt. their top line continues to be good. they only guide quarterly. q1, the top line was still there. we're looking at it as an investment quarter. we do think they're going to lempb t lever the sg & a. we think they're going to surprise to the upside. >> a price target of $30. overall, this dynamic we've seen really just explodes in the last couple of months. higher material costs for retailers, for makers of things. and shoppers unwilling to follow the price hikes. is that anywhere near being done? >> no, but ting key -- we had some meetings about this at the recent shoe show. the customers are not

complaining about the price hikes if there's innovation and newness there. where they're having problems is if there's nothing changed and you're raising the price. you look at something like what nike is doing with a lot of new introductions and so on, they're adding new technology so people are willing to pay up for it. it's where things stay the same is where nobody's willing to pay up for it. and so you need new innovations, new technologies to warrant the price. >>ing that that costs money in r & d and some planning ahead of time. >> exactly. >> thanks, good to see you. >> my pleasure. keep the tweets coming this morning. klm airlines launching this program that allows you to pick who sits next to you on flights. based on their social media profiles. so if you could pick who sits next to you on a flight, it would mean never worrying who sits down. we'll get your responses right after this break.

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friday edition of "squawk on the tweet." god bless dutch airline klm. they're launching this program that will let you pick the person who sits next to you on a flight based on social media profiles from facebook and twitter. our question today is, complete the following sentence -- if you could pick who sits next to you on an airline, it would mean worrying that "blank" would never plop down? anyone from occupy wall street.

couldn't hold my breath that long unless they occupied a shower before boarding. and another tweet, it would mean never worrying that gerard depardieu would plop down and get me wet. rick santelli, you probably have some ideas on that, too, rick. >> if i'm an on airline, the person i don't want to be sitting next to is the pilot. i want somebody in the cockpit, i guess. listen, i enjoyed your interview, as many did, with mr. rattner, the car zar. a lot of us remembered things a little different, carl. we remembered the bondholders were negotiating in good faith in the presence of the government seemed to alter that. i don't know. we all lived through it. i don't know that i agree with that rendition. i think if the government doesn't negotiate in good faith and let's face it, the government likes unions a whole lot more than mf employees. i think if the mf employees were all union people, the outcome would be a bit different. i don't mean to make a political statement here. but, listen, i read the