kernen. andrew ross sorkin is off this week. steve liesman is here. great to have you with us. >> thanks. >> jpmorgan becoming the first bank to boost its dividend after the fed stress test. it came two days after the government planned to post government results. that forced the fed to release results after the close. four banks failed the stress test including citi. >> citi only fails under a scenario where it's gone ahead with a capital distribution plan. so what does all this mean? they hope to return more capital this year through stock buybacks or a dividend increase is less likely to happen. the news a black eye for ceo's vikram pandit. while citi's tier one quality ratio stood at a hefty 11.7%

last year it drops to an unacceptable 4.9% of a 50% decline in the stock marked and 13% unemployment rate and a 21% housing crisis by 2013. that is if one include as capital plan that citi submitted to the fed. without taking action on that which can't be done would their approval, it's given a pachls citi which survived a financial crisis declined comment on the capital plan it submitted to the fed. the bank can submit a new and like lie smaller one 30 days from now but the news is disappointing to wall street where several analysts had forecasted that citi would be boosting its dividend this year. not everyone is surprised about this though. he was concerned citi's $225 billion legacy asset portfolio would be marked hard in a stress portfolio, and this bear out in

the fed's release. they're the highest or second highest among the 19 banks tested. three other banks that failed the test. ally financial which is still owned by the u.s. treasury and atlanta's suntrust. life insurer metlife failed to meet the minimum requirement of 8% firefighter risk-based capital coming in with a reading of 6%. all three critical for the fed's test. they said they plan to talk further with the fed to understand the loss models and asked that they be released to the public for more transparency. >> you know, i guess it's not a huge surprise to see the strength among the majority of the banks. we knew that this was going to be much better. they've come a long ways from 2009. >> you know, in aggregate, it's a positive certainly for the banking sector. again, citi right now is fine because if it doesn't -- if it

can't go ahead with, you know, additional buybacks or dividend, it would have enough cap nal a stress case scenario. it just means investors looking for some of that capital to be returned might be disappointed. >> mary, does it have to -- can it submit a plan that includes a smaller capital distribution so it's out there or some increase at all? because they were only at what, 4.9 and needed to get to 5.0 or 5.1? >> 5%. the assumption would be that, yes, they could submit a smaller plan to fed and they have 30 days to do that. >> here's the question i have. did the banks rally yesterday because the banks got a clean bill of health or because we went through this just regulatory process by which the banks can now increase their dividend and share buybacks? in other words, was it a real sense at all like back in '09? >> i think it's the latter. i think it's the latter. >> there was no sense of relief that these banks are truly -- there was no sort of added information that the banks are healthier than we thought.

i guess it could be. >> i felt leak we knew it. i felt like we knew that, didn't we? >> there's also the reaction to a hefty stock buyback plan. >> do you think bank of america helped? the biggest bank in the country passed. >> bank of america did not ask to issue -- to give back dividends. >> that was known anyway. they said they're nothi going t do that. >> that was last year. that was bank of america was like the big one and it's up -- it's got to be up from 5 to 8 1/2. >> 849. >> i think bank of america helps. what would citigroup's future look like if it had to pay taxes? >> that's a good question. >> thing about how much they're -- they have all those tax loss carry forwards they were forgiven on and they still suck basically. >> well, you know, a lot of this, keep in mind, is this legacy asset portfolio. give them credit.

they have reduced citi holdings to 12% of assets. it was significantly higher. what's happened is they have sold a lot of it. now they have the tougher stuff to sell. once again, this is the bad bank. so in the worst-case scenario, this is going to be the worst. >> parsons is gone now, right? remember how many times mayo said this guy is -- he said it the week before it finally did happen and then it sort of did kind of slide out the side without a lot of fanfare. what else, liesman? were you surprised? we had a guy on monday telling us these stress tests would mean nothing i was surprised. >> you were surprised? >> i was on my way -- >> is that a new tie? >> yeah, it is. >> i know you. i know what you ware. i know your old ties. >> you're watching me a little too comfortably, joe. >> is that a new tie? >> it is a new tie. a couple of guys comparing fashion. >> i was on my way out the door to see my kid play in the

westchester finals. >> did they win. >> they did. >> congratulations. >> they said, liesman, on the air, stress test. i said, no, no, no, that's not until thursday. jpm came out with this thing. i don't think we have the story. we talked with a senior fed official yesterday who said it was a misunderstanding with jpmorgan and no one is to blame, not the fed -- >> right. but i read a report that suggested earlier that once the banks started -- you know, what was to keep -- if they got the pass from the fed, what would keep them from wanting to raise the dividend and that would raise the fend's hand specifically. >> unless the fed specifically said don't do it. >> this is another part of the story that's significant. they came out with the information because they were afraid it with us going to or had leaked to the public already. >> ah, okay. that makes sense. >> there was some chatter about trades made on this. and that's going to be a subject that's a different set of reporting out there. one more question for you, mary. was this a rubber band that has

sort of been allowed to let go here in the sense that was this -- were these pent-up dividends and buybacks, or are we looking at now a series of 20% dividend increases and buybacks like this, or is this a one-off deal where from the cry circumstance all of this was penalty up, they accumulated all this capital, now they can give some of it back. >> well, if you look at the dividend ratio, for example, of jpmorgan, it's 25%. again, e-mail not sure of the numbers. they have 5% more to go to a 30% payout ratio which they say is their payout. that depending on the bank. some of the healthier ones obviously have gone ahead and taken advantage of this. we'll see what happens with the rest of them down the road. >> right. i guess the question is will dividends now be more closely tied to earnings increases rather than this huge bump-up that we receive to have gotten a cliff effect? i guess that's the best way to

ask it. >> that remain as question, too, for your the banking sector, to make more money. >> mary, thank you very much. >> sure. >> by the way, coming up at 8:00 eastern time this morning we have the head of one of the banks that did pass the fed stress test. jim rohr will be here, chairman and ceo of pcn financial services. >> does this make us feel more confident? >> what i don't feel good about is -- i actually feel good because you're why i'm fat! >> colleagues who can make you fat. that's me. >> i wanted to do that today. >> you did? >> you're fat. >> it's an obvious -- i mean it's stupid, but they're saying that people who -- i mean this is "the wall street journal." personal journal, let dees something totally stupid. they bring in treats. >> they obviously were smart. >> just because i -- >> i think there's a problem, joe, and think they ought to be

zooming in more on you because you're not filling the screen anymore. >> no, i'm fat. >> no, no, no. you're not filling the screen. >> no, i'm fat. >> you're thinner. >> fat or saggy. it's one or the other because you lose what -- >> however, i think there is some truth to this. >> what, people bring in treats and make you eat? >> i eat your pretzels from the pretzel box. >> and there's this woman, beth on the way up the stairs with the chocolate thing. >> do you want someone to blame for why you're fat? >> yes. >> do we need that. >> yes. >> i'm not a member of the party personal spotlight. >> i agree. up 16 points after that huge gain yesterday, up to 13,177. some people were talking that, you know, maybe this market has legs. >> are you on the kernen call with a "k"? >> i'm on 30 since october. >> i thought 30 was this year. >> if we get to 30, that's going to be my call. but i'm taking the 30 already

from october. >> from october. >> i just -- >> you claimed victory. that's it. now is it a cell signal? >> no, no, no. i want 30 for the year and i want 30 next year and the year after. i want the three-year 30%. that's happened once. who knows if it ever -- thank you, mac. should we look at the oil board? $107 on oil again. >> this is interesting. >> eventually as we head into the upp summer months, that's g to room. $4 doesn't do it. $5 doesn't do it. if you've got a 20-gallon tank. >> i filled up a quarter of a tank. it was over 20. >> you put in a quarter. >> it was late. i wanted to get home. >> you give them a 20? >> it was 10:30. i wanted to get home. >> where were you? >> i was at a charity event,

brain injury alliance. >> that's right. you told me that. i was nursing a -- i have a wisdom tooth. >> he got a wisdom tooth pulled at 1:30. >> if you don't do the show every day, you miss personal stuff that's going on. >> i can't hear. no, that's such a bad story. >> are you okay? are you all right? are you on novocain? >> it hurt as little. i'll make it. >> you're in a little bit of pain. >> i'll make it. >> you're in a little bit of pain. >> i'm not eating president zells this morning. where were re? >> $107. >> these where it was yesterday. i haven't seen it today. $106. down a little bit. let's check out the ten-year which hasn't done anything in so long. >> big story. >> 2.18%. and gold, all the pieces i receive on gold -- >> and the dollar strengthened and the stock went up too. the back's been broken, right?

>> and gold was down below $1,700 after i heard it was going to a new high. it has. gone anywhere yet. that's my other thing. i say it does not go above $2,000. >> i wonder if gold cascades in a sense that you get no carry on gold, right? you've pointed this out many times. you don't get paid to hold gold. gold is a simply defensive measure. >> you pay somebody to watch it for yu. >> you pay somebody to watch it for you. if it doesn't go down, i wonder if there's a cascade on the way up. this is time for the global markets. bec becky is standing by. how is the stress test playing out over there? >> this is how the picture is shaping up. this is the sixth straight day for the gains in these markets so we're seeing fresh heise. fresh closing highs once again

in addition to yesterday's fresh closing highs. overall, the stock's 600 is up by about 9.7%. off the highs from earlier in the session but not looking too shabby. that translates to each of the major european indiices as well. another 25 points today. 9.4% and pushing up toward that 6,000 level. over 7,000 for the dax across germany. rallying hard there. the cac is up by three-quarters of a percent across france and the ftse is up 1% as well. very broad gains on the european markets driven in no small part, of course, by the results of the stress test. let's take a looks at the 10-year bund. we have seen very low levels on the yields on the german debt. in the uk, we're looking at yield of 2.2% on the ten-year

debt. we did get unemployment figures out earlier this morning. that ire continuing gain for the uk economy. some of the research suggested that that could begin to tick lower. we could be looking at yields on 100-year debts in the uk because the treasury is about to start a consultation program on issuing 100-year bonds. back to you guys. >> thanks very much. i saw becky when we were standing together in red scare. she's about three feet higher than i am. coming up, an optimistic outlook for the financial sector. we'll ask a top money manager yet. as we head to break, check out the stock of some of the banks that passed the government test. "squawk box" will be right back.

we have to get rid of too big to bail. they should be buried. clawbacks should be replaced. it should not cost me money. think that can be done. not such a bureaucratic way that stifles everyone so you can take down a company, including jpmorgan that the equity is wiped out, unsecured pays and the people who deposit stuff, it can keep flowing.

yes, we need more work to prove it. if a big bank went down, charge it back to the big banks. by the way, that's exactly how fdic is run. we pay. >> that was jpmorgan's cpo jamie die mop. jpo among the banks that passed the stress test. in fact rj it was the one that announced it. jpmorgan came out with a dividend increase from 30 cents to 25 cents a repurchase program that got things off to the races. jp missouri began was up by 7%. if you take a look, the dow is up slightly. up about 15 points right now. also in political news, rick santorum winning the mississippi primary with a third of the vote. alabama with 35%. speaking to supporters last night, santorum hinted that newt gingrich should drop out of the race. >> the time is now for conservatives to pull together. the time is now to make sure, to

make sure that we have the best chance to win this election. >> john harwood is our chief washington correspondent, and, john, well, this puts things up in question once again. what do we think after yesterday's primaries? >> becky, this was the result that rick santorum was hoping for, and this was the result mitt romney didn't want to happen. why? because not only did romney not win either state, santorum won both of them, gingrich didn't, and because he didn't, even if he doesn't drop out and there would be pressure on him from some conservatives to do that, he's going be a diminishing force in the race, and what that means is rick santorum moves closer. he's not there yet. but he moves closer to a straight one-on-one matchup with mitt romney. he's going go to missouri this weekend where they have caucuses. he did very well this the beauty contest a while ago. and then he goes to the state of illinois, which is interesting because it would be the first race in a midwestern state where

gingrich has clearly been downgraded in major way, and if rick santorum could somehow have a victory there, might not prevent mitt romney from being the nominee, i still think he will, but it's going be a more slower and painful slog that will not help mitt romney. >> gingrich told his supporters last night he's going all the way to the convention. he's not planning on getting out of this. we also know it wows be mathematically about impossible for santorum to take the lead. he's even acknowledged to his supporters that he wants to prevent mitt romney from getting it and getting to the convention. >> exactly. if he could start winning and getting a larger proportional share in the proportional states than he's been getting so far, he might be able to pdeny mitt romney from getting them. again, we've talked about this many times. i think the principal question hanging over the republican race

is whether mitt romney wins it slow and less painful -- excuse me -- fast and less painful or slower an more painful, and think this encouraging the latter outcome, and it means some recalibration on mitt romney's part. i talked to one of his financial donors yesterday who said we've got to do better at our messages. we can't simply go out there and make a math argument. and on gingrich, gingrich says he's going to go all the way to tampa but i talked the other night to a good friend of sheldon. he says i think sheldon has written his last check to newt gingrich's super pac, so we'll see if he gets the financial support going forward. >> the journal points out, you're talking a massachusetts mormon in the deep south. >> that's a definition of an away game as mitt romney says. >> a definition of an away game. he lost, but he still got 30 in one of the states, right? 30 to 33? >> yeah.

he wasn't humiliated. he just didn't win. >> yeah. but reading this journal piece on gingrich, it's really weird. i mean we've talked about the delusions that guys running for high office sort of allow themselves to be taken under. you know, it's all here. it reads like a -- almost a shakespearean tragedy. sees himself as a visionary. i want to be straightforward. i am a visionary. the reason for staying in now is to make sure romney doesn't get it by the convention, but, it would seem to me, okay, he doesn't want romney. if he wants a conservative and it's not going be him, it seems like it would help santorum if he gets out. none of this makes sense to play the role of spoiler to me. but trump was pointing out yesterday -- >> donald trump -- >> you get to fly aurjsd get the

adoration of supporters. you're supposed to be thinking about the greater needs of the country and your party. >> think about, though, joe, what it takes to run for president, to go into politics with big ambitions and become the speaker of the house. you've got to have an incredit in will be i strong ego, incredibly strong drive, and once you kill yourself the way you do when you run for president, that is a bone-crushing experience traveling around. >> that's what i was pointing out. this is going to be hesitate last campaign it's very, very hard to give that up. >> to what extent could romney say, you know what, santorum, if that's the best you've got, in the worst possible place, at the end of the day it's a victory. two points in alabama and three points in another, mississippi? >> yes. he was saying that last night saying, look, they're proportional states. so i lost the popular vote, but i won a chunk of delegates and

therefore, you know, i'm ever closer to 1,144. he's going say that and the answer for santorum is i'm going to see you in illinois. that's fairly close race. one of the hallmarks of rick santorum's level of competition with mitt romney so far has been in the mid western states he's come closeing he's taken the lead. but ultimately mitt romney could ware him down, grind him down. illinois could provide a text of that contest and circumstance. so would wisconsin which comes a couple of weeks after. if romney flunks that test, you're going to have a real crisis of confidence among republicans. my guess is based on the recent past is that romney will win and ultimately win this nomination. he's just going to have to sweat and bleed for it a little bit more than his advisers and other republicans want him to. >> on the other side, there's two things, two interesting pieces. i don't know if it's posturing or not.

but you've got in the journal trumka saying don't assume all these blue-collar rank-and-file guys are going to be there for him this time in michigan. with all they've gotten -- i don't know how much more they could have gotten. the sweet open-mouthed kisses -- >> they didn't get the bill they wanted to make it easier. >> card check. they got everything else, short of, that they got the nlrb appointments, they got a pseudo card check. i wonder whether this -- whether they're just trying to most fate. then you've got plouffe saying that obama's got the big monetary advantage. this one in "the new york times" says don't assume you're going to be able to compete super pac wise with the republicans. but these things, i think -- >> they're trying to gin up their donors. >> i think they are.

they're trying to gin up the donors, exactly. >> yes. but as for labor and blue collar workers, that's a distinct area of weakness for obama. you say they got everything but card check. they also got 8%, 9% unemployment. >> and they didn't get key stone either. >> when they're hurting -- >> obama, relatively speaking, has had less fallout among some of the people at the top of the income scale than the bottom. that's why when you look at team obama and they look at where their coalition has changed and eroded, it's the working-class voters that republicans have been doing increasingly well with in recent elections that they're significantly concerned about. >> although -- wait a second. i was listening to npr this morning. they pointed out that romney has

taken very specific shots union leaders and if they're not motivated to come out and vote for president obama, main maybe they would be motivated by whoever get this nomination, if it's romney, be motivated by the idea that the republican nominee mayic take some very direct attacks at unions. >> becky, that's what's so fascinating about this race. mitt romney has a disproportion at appeal up the income scale, right? more affluent voters are receptive to him than blue collar voters. the same is true for president obama. he won voters, over 200,000 in 2008. he's got a problem with blue collar, white working-class voters. so does mitt romney. so their strengths and weaknesses, there's an interesting intersection, and each guy is going to try to capitalize on the other's weakness to compensate for their own. >> and union leaders are different than rank and file too. >> that's true. >> union leaders don't have that

much stroke anymore. >> but, look, john, you've got mandatory dues. there can be republican guys that are union paying their dues. they know it's going right into the democratic coffers. that would rub me the wrong way if i knew for sure i'd be supporting candidates that i didn't feel like supporting just from the europe ondues. i mean that's the way it works. >> no, i understand that. and the financial resources that unions can put in the campaign will put into the campaign are sup stan chal, there's no question about that. but i'm saying when you talk about the votes of white working-class voters all around this country, they're not voting because of -- they may be influenced by the spending that's done to reach them, but they're not taking their cues from rich trumka. >> right. oh, that's who -- i thought it was dan dear dorf. he does. >> he looks like alex caras. >> he looks like alex caras who

looks like dan dear dorf. you're well skreb skrubed today. i don't know if it's the hair. >> you go figure. i was on tv at midnight last night and i figured i'd be seriously dragging this morning, but we've got a good story and the story's going to be more interesting. we're going have a good primary. we've all been wrong. >> we're still right, relax. it's mid-march. >> it's mid-march. >> march 20th is illinois, isn't it? >> we may be right at 10,000 feet, but like right at ground level, the fluctuation sthoos what do you mean? read it everywhere. >> it's not going to be over by march. >> it's 85%. >> joe, if you had asked me on january 1st if when we got to mid-march that rick santorum was in a position to threaten/challenge mitt romney

for the nomination i would say you took stronger drugs in college than you actually did. >> he's not, though, probably. it's almost impossible delegate wise to do it at this point. >> the key word there is "threaten." i don't think he's going win it, but he's threatening it. >> all right. 85.6 is where the rate is now on romney. that's from me. nothing is more sure than 85. i'm not sure that anything -- you know, you can't even decide you're waking up tomorrow with a better than 85%, can you? >> i can. >> well, 99. it's not a hundred. the dow closing above 13,000 on the strength of the financials. meantime the nasdaq closed above 3,000 for the first time since november 2000. joining us this morning to talk about his stock strategies is louie nav a lear we haven't seen in a while. ceo and ceo of

navellier & associates. are you running out of grecian? >> i'm aging, joe. >> everybody but us. >> you're the manager of the four starr. $7 million touchstone large cap growth fund. yesterday was the beginning, louie, to take us higher, another leg, or was it the waning stafrmgs of the financial move? >> it confirms what's been going on on a lot of large-cap stocks f of the 40 plus stocks, over 20% are buying back a billion dollars in stocks or more a year. it's a big flashing light to buy it at 1% to 3% stock and buy it

back. that's making the stock go up in a smooth manner. we're at a special time now. >> wait a minute. so you can give me actual data that says that a lot of the moves in the market are buybacks at much higher levels historically than they've ever been in the past five or ten years? >> yeah. it's turned up big time. let me give you an example. proctor & gamble. sold five-year notes at 1 1/4. ten-year notes at 2.3%. we're at an inflexion point now. like coke sold ten-year bunds. that's one of my stocks. if you buy the stock itself, the dividend yield is higher than bond yield. so we're at a inflexion point. ten-year bund is at -- finance 101 when kids go to business school, they ask if they should finance them.

they're moving up in a very smooth steady manner. auto zone or chipotle, they're benefitting. >> i'm not sure. are you saying this is definitely going to come back to haunt them or come home to roost or if we go to 2014 and they're able to do it the entire time, do you buy the stocks because they're going to keep doing what they're doing? >> correct. >> correct, what, those are two different things. are they going to come home to roost or do you go along for the ride? >> i think you go along for the ride. they're keeping their stock prices very, very high because if they split their stock, it's going to increase their stock buyback cost. so the stocks like chipotle at $400 a share, they want to keep that price high while they're buying the stock back because if they split the stock, it's going to increase buybacks. >> give the top stocks, louie.

>> auto zone, chipotle, whole foods and monster. we think monster and whole foods are potential buyout caps. >> i see dollar tree too. great, louie. thank you. maybe it won't be so long before we see you next time. thanks. >> thanks. >> steve liesman has been spending the morning with us. now it's about to get more interesting. blowing in from the windy city, rick santelli joins us on set. good morning. 7jooirksz [ male announcer ] if you believe the mayan calendar,

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welcome back, everyone. it's spatial day on "squawk box." steve liesman and rick santelli. rick, it's great to have you in studio. before the cameras were rolling, you guys were sitting here cooperate, talking through the numbers, and we've had some pretty amazing moves overnight in the markets. >> amazing news. yields have shot up to the highest levels since october 2008. i have the chart in my mind. you'll see whether you look at fives, tens, 30s. there were big spikes and everything went into a dormant range around the middle of november and we popped out of it. >> in the 2 range. >> yes. >> what's interesting to me, rick, you've gone up. the yields are higher, dollar's stronger. >> gold is weak. >> and stocks are higher. that's the weird disconnect. >> finally. >> it used to be the dollar would strengthen and the stock

would sell off. are we in a different trading zone here? >> i think so. the euro zone dispiemted everybody after they put the band dade on greece, so to speak. it didn't have a big rally. as a matter of fact, think they're alo they're looking for the next stages of default. and the yen, that's giving strength to the greenback as well. i think the variables are going to move around. the interest rate's going to move higher. the issue is how do those two gang up on stocks? >> i'm nervous here. i'm thinking if i'm a fixed interest rate, i'm sitting on a book. >> i sit on a book no matter where i go so i can see eye to eye with people. >> i want to get out of the way of something i know is coming. i don't know when it's coming. it's not necessarily the fed not doing -- withdrawing qe from the system, but it's not doing additional qe. and i could see a cliff effect here, and i'm wondering if what we've seen, this 20-basis-point

move here, is the early money getting out of the way of what they see coming down the road maybe not too long from that. >> think so. it's the old crumb off the coffee cake. there could be a lot more in terms of yield. i think the political landscape is going to be very tough for the fed to bring up any new programs. i think, you know, he doesn't want to go on "60 minutes" again. he doesn't want to be interviewed or under the meek oh rows co -- mike rows cope. >> they're not going to li liquidate that. they're going to sit on that until it expires. they're not going to renew. the question becomes -- oklahoma. yesterday was the meeting before the meeting. i think people took a signal from that and said i don't think the fed is doing additional qe real soon. but april is the meeting when they're going figure out whether to extend twist or not. if they don't --

>> twist has another problem. they're going to run out of notes to sell. all in all, i'm not sure if twist has been successful or not. it's a duration trade. i understand it's in the portfolio. >> this is where i argue with you. you say it's not a success but we see the absence adding 20 points to the basis. you could argue that it was something on the order of 20, which is not nothing. >> both of you agree that the economy going gang busters is not responsible for the rates going up? >> i think it's a combination of everything. >> we don't need qe that but it's not getting better. >> do you see goldman finally understanding what i'm talking about, goldman caught up with me? >> it was 1%. >> it's not 1%. yesterday's retail numbers are changing a bit. >> we are coming along --

>> my take, i know you think it's wimpy, the 4% growth economy. this is mathematical, not qualitative, rick, hours worked is how you get to gdp. i thenk you're going to meet in the middle. >> what does that mean for the markets? is that lousy? middle income recovery? >> it's enough to keep the fed from moving into the game. it's not enough, thing, to celebrate. it's not enough to push the envelope on super higher rates, but rates, that's going to be the big odd man out. that's going to be the pipping effect. as they venture out into corporates. we had february close to $100 billion in dollar denominated investment gradish yanlts. so we had the most aggressive february -- >> why would you give the government 2% money or 2 237b9% money if you can get 6% money

from i guess you could call it a real aaa, a corporate. >> i don't know if you're going to get 6% until you -- >> did you plan a trip to europe this summer? >> you know what? i'm not going to europe this year. i have to stay here, monitor the landscape. i think it's going be in a range and i don't thing you're going to see a buck 25. if i had to pick a range for the rest of the year, i'd say 129 to 135 and it's going to be it. >> we've got to go. the stress test results. stay tuned. ♪

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let's check out this morning's market ben lichtenstein joins us from the cme. we're seeing the ten-year up 220, stocks are higher, dollar is strengthening. what's going on? >> no, rick. they had a great fundamental breakdown. from across the board i look at things at a much more technical perspective. the bonds were a major market mover. they started at the 140 handle, working their way into 139, 138. today they broke and a lot of energy associated with it. acceptance of those levels down to the 137 handle. you guys mentioned the yen.

we're seeing a huge move to the downside on the yen but not much by way of dollar activity. steve mentioned retail sales. up 1.2% yesterday. i heard late in the afternoon a major component of that was actually food and energy, gas prices. so another thing that i wanted to talk about was the volatility index. a huge move over the last few weeks to the downside. we were coming off with the euro crisis and euro currency. we were coming off that. that was a big move through 20. and, again, it's just seen a continuation of this. so with the fed announcement yesterday, thing what a lot of traders are feeling are similar to what we talked about the last fed meeting is basically status quo for the low interest rate, build up that wealth effect if you will. >> that's positive. ben, i've got to cut you off there. thanks very much. >> no problem. >> becky, it was 1.1% on retail

and also clothing and sporting clothes. it was a weird mix. in addition to paying more for gasoline last month. >> now i've got to cut you off. what enwe come back, are your brackets ready? the business of march madness is right after this. e money, i just got the popular girls from the local middle school to follow me around. ew. seriously? so gross. ew. seriously? that is so gross. ew. seriously? dude that is so totally gross. so gross...i know. there's an easier way to save. geico. fifteen minutes could save you fifteen percent or more. since ameriprise financial was founded back in 1894, they've been committed to putting clients first. helping generations through tough times. good times. never taking a bailout. there when you need them.

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when you get started, i never get a word in. i have a question. >> i try to do substantive. the bracket -- the people finishing their brackets, did the syracuse news come out after or before? >> a lot of people finish their brackets and then white-out had their relevancy for one time a year. >> mellow is their defense eave players of the year. out. >> i have to redo my bracket. >> can you? >> yeah, you can redo your brackets. >> hen do you have to get it done by? >> thursday at 12:15. >> all right. i already de-emphasized syracuse. >> in vegas they went from 10-1 to 12-1 to 14-1 in 14 minutes. let me get to this substance here. okay. so let me tell you about

brackets, the business of brackets. 85% of people in an msn poll say that the improving economy say they're going to hmm gamble as much as last year. now, the reason for that is, obviously, they look at a 410 (k) and it's gone up three to five percent. they say i'll put five bucks in and i can win 500. i asked people on twitter how much do you spend and one in five actually said more than a hundred dollars. pretty interesting there. you know, under 10, 10-25, both the same. so people spending a lot of money. by the way, the odds of a perfect bracket are 1 in 9.2 quintillion. 6% say they're going to take the first few days off while 30%

will spend thee or four hours doing work following the teams. employers will pay distracted employees 175 milli$175 million the first two days of the tournament. that assumes that every hour i'm working is an efficient hour. what happens if i watch the games, i'm excited. >> i sit right next to you, you are distracted all of the time. what they're paying you -- >> i haven't been fired yet. >> well, that's because they may not be paying attention because they're distracted. >> that assumes that people are completely efficient all of the time. >> yeah, if you're going to get your work done, i eh know i have a 12 kelene 15 game. maybe they'll get everything done from 9-12. >> it's a distraction, though. it cost employers money. but it's part of the whole year,

right, everybody? we talked about the super baum, same thing. >> you do the same thing year after year. >> the teams that are supposed to do well, is this yore they actually do well. >> yes. last year, we obviously had bcu going all the way through. butler is not in this tournament. >> how about cincinnati? >> xavier barely got in. listen, the good teams are as good as -- there is a -- there is a disparity this year. i like ken cukety. >> bobby knight is a semi-pro team. >> is there number of brackets to fill out? >> supposedly women are twice as likely to fill out four brackets are more. >> all right. when we come back, we're going to talk stress test. "squawk" will be right back. on .

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>> italy sold 5 billion euros with yields falling to 2.67%. it is the lowest level. by the way, we've also watching crude oil this morning after some comments from saudi minister. and, folks, that is a change from prior comments that the saudis would only raise production if they saw increased demand from customers. futures right now continue to look higher. right now, those futures up by 33 points after yesterday's big, big gains for the dow, the s&p

and the nasdaq. >> yep, right, matching that 200 point loss. most of the nation's biggest banks pass the latest round of stress tests. mary thompson joins us with more on the results. hello, again. hello, there, joe. failing to meet certain thresholds on measures including tier 1 capital. if the stock buy backs they have requested from the fed were included. investors sending yesterday on the heels of wells fargo and american express among others, who raised their dividends and increased their buybacks. these banks maintain required minimums. by the fourth quarter of 2013. in aggregate, the test showed large u.s. banks in a decent

position to expand this kind of crisis. all coming in above the minimum set. among the 15 making the grade, bank of america. dogged by questions about its ability to expand. but in the last six months, the banks raised its capital levels and didn't ask to buy back stock. all of this resulted in a common ratio that's safe for wells fargo. now, one of those competitors, if you include the capital distribution plan they have requested pr the fed exclude that plan and the bank passes. this means citi's hopes to return to capital. citi can submit a smaller plan in 30 days to the fed. three other banks failing the test, allied financial, the

former finance arm of gm still owned by the u.s. government. both failing to meet the threshold for tier 1 capital. those are the results. analysts say they're not surprised by the results again coming in ahead of this. it's going to show thaw the u.s. banking system is fairly strong and it appears to do so. >> great. okay. thanks, greg. i hear something. i don't know where it's coming from. anyway, coming up at a.m. eastern time, ahead of one of the banks that did stress financials jim rohr who had jimmy dunn on yesterday. they say this is the guy he admires most in the banking industry. >> he later said that he would include wells fargo. >> are you going to talk about

this goldman sachs? >> i don't like rats and cry babies and biners, but go ahead. >> this is a guy who said he's reswipeing today as chief executive -- executive director and head of the firms u.s. equities in europe. >> so far from the place i joined that i can no longer say that i identify with what it stapedes for. it says the clients are seen as sources of revenue for the firm. and it's all about making money at the firm. >> oh, no. >> it's obviously not about loyalty. >> no, no it's not, i guess. >> people that have left -- you know, when you love an administration, whether it's the clinton administration or the bush administration and then you do the tell-all and you get in the new york times or where ever, it's just -- i mean, i always sort of take it with a grain of salt. >> well, whether or not he's right, i can spring this up as a question.

>> like you need to pile on the goldman after the last three years and the last four years in the public perception of goldman? anything new there? the average new york times reader doesn't already have that opinion of goldman? this guy needs to add to it? >> it's pretty damning, though. he says they were called -- what did they say they were called? customers were called "muppets." and one of the objectives was hunt elephants. >> you know, i, joe, also usually take anything like this with a big grain of salt. the bun thing he puts in here is the muppets ripping off their clients. i wonder if that's something that the sec would go back for. >> having been sort of weaned in -- or raised in the retail brokerage system of the early '80s and this is not, you know,

stop the presses that there are, you know, people in the financial services industry that are less client-oriented. that is not a -- that's probably not a headline. you should be client-or younted because it comes back and it all works out over a long career. but, obviously, in any bit -- i mean, if you did a -- pick a profession. i wouldn't say lawyers, but doctors, lawyers -- >> journalists. >> don't play at me with that. >> let's talk a little bit more about the stress test. joining us right now is steve bartlett. it's the lobbying group that represents the industry. here with us for the remainder of the show is our guest host, steve forbes. and steve and steve, gentlemen, welcome to both of you. steve forbes, why don't we start off with you.

the news we got from the stress test yesterday, we've been trying to figure out if the market was up on this news because it breathes a sigh of relief about the health and financial services sector or if this is something more saying the shareholders are going to be getting money back. >> well, there's a sigh of relief but also had some good news from europe if you take the short term view. the european central bankers have turned on the faucets since late last year when they realized the system was about to implod. there's relief at that. china is showing signs of easing up. and you have the federal reserve making it clear it's willing to turn on the spigots at any time. it was one of the factors with regulation that hurt commercial, industrial loans. it's beginning to move up again three years late. i think the market is saying finally we're now doing what we

should have done three years ago. >> things look a lot better obama that front. steve bartlett from the financial services industry. is semm something you walk away with a badge that says we are much better shape? >> well, it's a good news day. it's always good to squawk on a good news day. so thank you for that. it's good news on all fronts. one, it's sort of itsuation bas. it confirms what most have known for some time. they've changed a lot of what they're doing. inyeased their capital, lowered their risk. the reason the market reacted well was the financing the economy part. what it mean social security that these banks are, in fact, financing and able to finance more of the economy going forward. and that will help everyone. so it was a good news. it was a reflection of the reality of the strong capital and the lower risk of these banks. >> steve, are these draconian

measures, draconian times in that in order for a bank now to increase its dividend or share buy-back, a decision that can be taken freely by any board at any other company without regulatory approval in most cases now has to be approved and approved once a year through a extreme stress test? >> these tests that are held up are quite extreme. 8% negative gdp. 13% unemployment. very, very high standards. but i have to say, i think it's fair. i thief what it says is if the worst of times were to happen again would the banking industry still be solid and able to serve the economy. and the answer is yes. under the current capitalization. it wouldn't have been the case two years ago. >> steve forbodes.

>> also going to be very a very, very real cost on smaller banks. you're not going to have the kind of diversity that we've had in the past. what this is going to lead to, i can see it politically if not now in the near future, the government is going to become a political issue and these extreme stress tests, time to do that is when the economy was booming. >> which at no time happen. steve, are you -- >> so i think the bottom line is we've had had a much quicker recovery. the banking system wasn't being restricted by regulators because any time you made a business loan, you knew you were doing to get the third degree. you were limiting your bank, small bank, and twisting your arm. >> is that something that's actually holding back business is that the regulators are essentially now too much in the face of bankers when it comes to getting loans? >> i think it's clear now that

the overall effect of dod frank is far greater than anyone had thought. we'd known for some time that thrombi a lot of things that were negative for the economy. it's increasingly clear. i don't want to pile only the regulators there implementing the law. i think at some point, whether it's 2012 or 2013, they need to revisit dod frank to make it a much more workable law. that needs to happen otherwise the economy over the long run will suffer. short term, the stress tests who are a good thing and it sort of demonstrated that we're well capitalized, even if the adverse circumstances were to occur but we have a long waives to go on some reforms of dod frank. >> steve, what are some of the excesses that you see? >> we've listed out a number of them. pretty much any part of dod

frank that has somebody's name attached to it would become sement. the lincoln rule, the collins rule, the derbin amendment. it's those places where the statute went way too far and started to try to micromanage the exact decisions that a bank would make. some of those have good ideas behind them, but a lot of those went way too far. randy estimated that dod -- that cost of dod frank in terms of hours is 20 million person hours, 22 million which is 2 million more than it took to build the panama canal. >> and you take a bank like bbnt who has had to hire 1,000 people because of compliance. deadweight. >> it's the deadweight of dod

frank is one that has to be visited. i think congress on both sides, republicans and demme cats are at the point where they have to revisit it. >> i think the argument would be how many people lost their job as a result of financial crisis and how many is it worth in order to hire to stop another financial crisis from happening the way it did. i don't think anybody is arguing that relationship was aprop raoult. h. >> agreed. there was some excesses in. >> okay, steve, thanks for much. we have steve forbes who is going to be talking about excesses as the morning goes on. question, comments, anything you see here, e-mail us. you can also follow us on twitter add at squawk cnbc. up next, we'll talk politics and

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rick santorum talking primary dropping hints that newt gingrich should drop out of the gop presidential race. >> the time is now for conservatives to pull together. the time is now to make sure, to make sure that we have the best chance to win this election. >> howard dean is a former governor of vermont and former presidential candidate. he's also a cnbc contributor and steve forbes. howard, i'll get to you in a second. all we need to do is take a shot of you just going like this and laughing evilly. i know what you're going to say. we haven't asked steve forbes about this yet. any word, steve forbes, and i

feel like barbara walters here, but give me one -- if you had to describe this republican primary, i was going to say debockle or whatever you want to call it, but if you were to describe it in one word, what would it be? >> interesting. >> interesting? you're not happy about everything this's happened? or are you? is this something that doesn't kill you that makes you stronger? >> well, bismarck once said there are two things people shouldn't see being made. one is sawages, the other is laws. if it's a process that is messy, what it is doing is making ultimately a much better candidate. he did something a few weeks ago he didn't want to do. i think the pressure with santorum and gingrich has done with health care. what are you going to put in its

place? it's going to make them a stronger candidate at the end of the day. >> you were a perry guy. you were a juliany guy last time. would you ever be a romney guy? >> obviously i'll support the republican nominee. >> but you're not supporting him yet. you're still opened for a brokered convention. >> open convention. >> and who is your guy there? jeb bush? >> you could see a jeb bush eh marling merge. you're going to see enormous pressure to get in this race. so it's not over until it's over. in the map meantime, he's going to be a stronger nominee. >> so is this superman that

withstands kryptonite? >> i think he's getting weaker, not stronger. he's saying things to get himself in a lot of trouble. we talked about this before. supporting the antibirth control stuff and the congress, the antiimmigration stuff. he's down by 6-1 among latino voters. that's just not compatible with winning. so i think this isn't so great. i do think he's going to win the nomination. the other thing is every other week we had this problem with do or die. one of these days, he's not going to win and then it might go to tampa. i don't think it's going to go to a brokered convention. we haven't seen one of those for a long, long, long time. >> are you sure it's not the media. it's going to be -- massachusetts mormon in the deep

south. he has won the decorations. >> by you've got to win that stuff. look, he's trying to put this thing away. i think this there's still no question that he's the front runner. he's got to put it away. and he hasn't been able to do it. >> i can tell you journalistically this is going to be a parenthetical phrase. rom, that's it. all of this that we're talking about right now is going to be parenthetical. >> governor, to this point we have heard that the white house would be most concerned about running. would they be more concerned about what could come from a brokered convention? >> you get somebody who hasn't been scarred up by the primary.

all of these guys have said things that they probably shouldn't have said. but if you've got a fresh face that hasn't been scarred up by this really bloody primary season, then i think that's problem for the white house, i do. >> i love south. i do. you wouldn't want a president picked by mississippi or alabama probably,would you? >> well, they're going to vote republican. >> if they were to pick, you probably wouldn't -- people like you on your side problem rit wa during the iowa first primary that the part of the country that least represents who we are. they will actually say that this dam hp deep south.

>> i think that's beginning to change a lot. first of all, i think the midwest is really where all of the vast majority are in the midwest. the south is beginning to chachk. let's not forget there have been democrats who have done well. so i think the whole -- and barack obama. he won north carolina and virginia by a big margin. so it is true that the south is more conservative. >> all the states are coming in. very few states represent the whole country. that's why the process means every state plays a role. >> does romney solve this problem by offering synth the vice presidency? he cannot solve it that cay. no. and what romney has to do is get

subsidy on health care. he's got to get good on that. and then he can do things in energy and money. >> howard dean, why doesn't money just offer san tomorrow the vice president. >> it would be an interesting discussion. who knows, they may be having those kind of back channel d disdiscussions. >> oh, i know. yeah, that's the problem. right now, santorum thinks he can win this. >> the biggest fear of the left park or the progressive parts of your party is a real hard-core, social conservative. i don't think you feel fiscal conserve tiffs quite as much. wouldn't you call it radical birth control? >> yeah, when you start saying that insurance is going to pay for birth control, you're off d offending 82 neoly% afloat wome

the country. >> yeah, that's an issue in november. it's going to be things like energy, the economy, what's happening overseas. we can go to any drugstore. it's not as if we have a short angerer of contraceptives in this country. >> i guarantee you it will be an initiative. >> attacking women's rights is not a smarlt thing to do in general election. >> we have to wrap it up right there. thank you, howard. non-c steve forbes. the cake box trading box tells you where to put your money. 1-0 i'm constantly working my screens. tdd# 1-800-345-2550 checking the charts. tdd# 1-800-345-2550 looking for support, tdd# 1-800-345-2550 resistance, breakouts, tdd# 1-800-345-2550 a few other tricks that i'll keep to myself. tdd# 1-800-345-2550 that's how i trade. tdd# 1-800-345-2550 and i do it all with charles schwab, tdd# 1-800-345-2550 because their streetsmart edge platform tdd# 1-800-345-2550 helps me trade quickly, intuitively.

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it says action-packed week for commodities and currencies. actually, it's been an action-packed morning. let's get to the shore report. peter yastrow of yastrow originer? now, oil seems to be on the way back up this morning. what's going on? >> we're essentially, steve, in a holding pattern. let's call it between 105 and 109. prices jumped above into these range on feb 21 with some news related to iran and their threat to hold up oil sales to europe. so, at this point, we're just waiting for the next headline to

shock this market. as i said, we're range-bound. we're looking for another headline to get us into that next trench above $110. otherwise, we're likely to bounce around here until we get some revolution. >> one of the stories that's out there this morning is oil is trading higher on better growth prospects in the united states. so we're kind of thinking the growth story a little bit. >> i'm not buying that, steve, simply from the fact that we've gotten in high. the demand fundamentals don't get that fast. so i'm not buying that spin at this point. this market is being driven by fear. fear of supply constraints. number one, being concerns of the disrupt to the flow of oil and number two the fact that refinery can kass pay is less than half. is it the market's ability to supply gasoline this summer. it's the fear.

the fear of supply. let's not begin to try to justify this on the demand side. >> joe, does this have to do with the stress test? >> i don't think. so the dollar is kind of a reflection of what steve is saying about the euro mark. you're pretty much in a holding pattern. i think you've had the solutions of the greek problem. it wasn't really a solution. there's so many things up in lin line behind that, you won't get a sustained boost. you also have a slightly better growth in the united states, at least the prospects are looking a little better. all of these are going to end up supporting the dollar. >> how low does the euro go? >> i would look for the euro to go down to maybe 1.22. as far as the yen, probably going to border up around 90 vmt. >> the japanese seem to be serious this time. maybe by the end of the first quarter.

but you're seeing the japanese do something this time that they've done many, many times in the past. but this time, they say they're going to sustain it. >> peter, why would it go to 123? we're going to do that much better here? >> i think we probably will. but in addition, the europeans have just hiatus at this point. i don't think they have a solution to this problem. and you're going to move onto somewhere else. >> a croissant would be $18. >> down from 26. >> peter, yesterday's fed immediating, how did that show up in the interest rate market? >> well, you know, the fed, basically, yesterday, was pretty much the same as it's been. they reiterated that the rise in oil prices that we saw did not cause inflation to start getting any worse. they reiterated that in the

future, they expect that to stay the same. the bottom line is that the fed is keeping rates low until 2014, regardless of what economic data we see. given that, almost a unique arbitrage to buy u.s. equities. they're only at about a 13, 14 price earnings multiple. if you went back and relied on any historical patterns or any historical corcorrelations, you could see price earning multiples of 30. >> joe, is the dollar training with the economic growth? >> the fed has said they will keep interest rates low. but, you know, the famous line, facts change. i'll change my mind. >> the language of the feds' last few statements, it's like nothing ever before. for them to go back and change what they've said would be a

disaster to the banking system. they're trying to make sure that they can work their way outs of these problems. any company that's got capital in its name, ge capital, any company that is going to have the opportunity to take advantage of really low interest rates. and i suggest we keep it simple and continue to buy those blue-chip multinational firms. >> we are watching the banking sector. >> et doesn't hurt to thank me once in a while. >> what would i thank you for? watching thebacking sector. the kbw banking indust now sitting at a six-h month high. we will have more on that global

market rally and what it means for financials in a few minutes from dick bove. also, we've got jim rohr. that's what it says right there. jim rohr is going to join us. [ male announcer ] how do you trade? with scottrader streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start. try our easy-to-use scottrader streaming quotes. it's another reason more investors are saying... [ all ] i'm with scottrade.

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welcome back, everyone. citi shares fall lower this morning. citi failed one part of the test with its tier one ratio coming in at 4.9%. of course, that was below the passing ratio of 5%. and it was only if citi went ahead with its plan to give back dividends and buy-back shares. citi does have a chance to submit a new, revised plan. joining us right now is a squawk master to talk more about the stress test results, politics and much more. roger atman is the founder of ever-core partners. and roger, good morning to you. >> hi, becky. >> we saw the stress test coming out last night. as somebody who used to be in treasury looking at all of these things, how do you measure the

success of what happened with the stress test? and how do you feel about the financial system right now? >> i think it's unmitigated good news. it demonstrates the degree of recovery in the u.s. banking system, especially on capital and liquidity. and you have to give a shout out to the banks and to especially the fed. i mean, if we think back to late 2008 and 2009 and what the authorities on the banking side did then and have since done and you compare that for example to europe in terms of what has not been done, it's prialtty impressive. i think history is going to render a very favorable verdict on the way the u.s. authorities, starting in late 2008, especially the federal reserve, responded to that crisis. you see that reflected in these stress test results yesterday. the improvement in capital and liquidity has been remarkable.

now, of course, the question earnings power? and how can they pivot, in effect, towards showing higher levels of earnings. and we'll see on that. and we'll see the degree to which the banks feel they need to mauck some adjustments in their business models. but i think this is good news. >> you mention that when we look back, it eas's going to be the authorities in the united states who are treated very kindly by history. we dead hear from the fed yesterday. the market was trying to find out if we were going to be looking for any additional quantitative easing. they seem to be walking a pretty fine line that we are looking at a better-than-expected economic recovery. roger, is there a way that the market can look at this and get good news?

or is it going to be a robust enough market? >> i'd make two points on that, becky. i'm not a particularly good equity market strategist, so nobody should pay a lot of attention to my views on the market. the foundation is laid for good equity market conditions. the recovery is not very strong by historical standards, but it's moving along steadily. obviously, the structure of interest ratines is going to remain where it is perhaps through 2014. you add those two together and that multiples were very lie his. the multiple in the s&p was 14 times. and that is very low, historically. so the ingredients would seem to be there for a good equity

market environment. is the recovery strong? no, it's not strong in any historical sense. you know, the growth is tracking 2% or below for this quarter, which is almost already over. that's not a strong growth rate. and you have some big head winds. but it's steady. >> roger, can you just hold on one second? i want to just ask steve forbes if you agree about the banking stress test that the fed deserves praise for what they've done. >> not as much praise as roger would give them. i think a lot of this could be done in 2009. i think it was destroying bank capital when they stopped that, the banks won't have gone forward. one of the things that is out there, this focuses on big banks, is what dod frank is going to be doing to smaller banks. one of the great versatile psi

is a vibrant, financial system. i agree with roger, it's not a big one. one of the things that would be interesting is what he thinks is happening in southern europe and how we will be affected by that. italy, spain, even though the banking system looks like it's going to be surviving a little while longer. >> well, europe is going to have a tough two or three years as far as growth and recovery is concerned. the basis of it is right. it goes back to the point i made about what the united states did in late 2008 and 2009. we had the fed injected $13 trillion of support through the credit markets, flu the mere yawed facilities.

the first version of them and we followed a textbook approach which in a financial crisis, you respond with overwhelming force and you respond fast. . europe did not do that. not a fully developed central bank. obviously not the capacity for stimulus. they didn't choose to recapitalize their banks, then, and so forth. it's quite a contrast. and you're seeing that in the extonality to which the united states is recovering, steadily if not rapidly and europe is dementing into session. >> roger, i want to thank you for getting up early with us. >> my plrn. pleasure. >> up next, influential financial analyst, dick bove. yesterday, reaction to those stress test results and what it means for his company. squawk box is coming right back. optionsxpress, where you can trade your favorite products,

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if you wanted to say what was the biggest single gift in the banking industry in the last 12 months, it was the disaster in europe because european banks pulled out of this country. they left their clients to the american banks and the american banks have been driving them up. when you talk to jim roy, you ask him how many clients has he picked up as a result of europe pulling away. how many loans has he picked up because europe has pulled away?

basically, we're in a 30-year time period in which clients are moving from one bank to another at the most rapid rate i've ever seen in the 30 or so years i've been doing this. and now it's now, in the banking industry, is benefits enormously. >> dick, steve forbes here in terms of bank stocks, you made the point after 2009, bank stocks in recovery get a huge jolt upward. and then they stagnate. do you see a period now where we're going to get a sharp upward move up with the banks and that it's going to be level again? how do you see this playing out? >> yeah steve, i think you're right. what we now have is finally a recognition that the book value is real. and, therefor, one should not be selling these things at a discount to book value. so i think you should expect to see that bank stocks will move from discounts to book value to premiums to book value. and that will drive them up certainly 25% by the end of this

year and probably a lot higher. but this is the steel industry. ultimately, once the cycle starts to ease off and turn down, these bank stocks will be do poorly again. right now, we're in a period in which bank earnings are going to soar. >> that certainly sounds like dod frank wasn't the, you know, the negative that people said. >> we, think of dod frank as building a factory. again, i'm going to use the steel analogy. you go out and build a steel factory and all of the sudden, you can't show earnings growth in a very meaningful fashion because all of your efforts are going into building that factory. dod frank was that factory. now, what we're going to get is incremental revenue growth over this higher cost. >> great. great. thanks for coming on today, dick.

>> up next, we have pnc financial services group ceo jim rohr. and then santorum winning in the south. we'll take a closer look at key primaries just ahead. >> plus, the president's energy policy under fire from keystone to drilling permits. has the administration done enough? we'll ask deputy interior secretary david heys. squawk box will be right back. my job is to find the next big sound. they sound awesome tonight. and when i do find it, i share it with the world. you landed the u.s. tour ? done. this is fantastic ! music is my life and i want to make the most of it thout missing a beat. fly without putting your life on pause. be yourself nonstop.

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this is just what our economy needs right now. we have stocks climbing to multi-year highs. where should you put your money? he's investing $56 billion. the third hour of squawk box begins right now.

>> your play list, right? >> no, i didn't request this, but i do know this song well. wolf gang. all right. >> you're pretty hip when it comes to music. is that an unhip word to use the word hip? that's not what they use? >> welcome back to "squawk box." our guest host this morning is steve forbes, chairman of forbes media. equity features have been indicating a slightly higher open after a great move that we saw yesterday after all the financial stock related info. on the stress test. we're now solidly above 13,000 and above 3,000. >> in political news, rick santorum winning the mississippi pre mare.

also winning the alabama contest with 35%. mitt romney still holds a strong lead. sandt santorum winning by a large margin. larry kudlow is going to be joining us in joust a few minutes. financials leading the way after the fed approved its aq no, ma'amic outlook. the major markets at this hour, as you can see, are up across the board. the biggest gains in germany and athens. investors have been mulling over results. j.p. morgan announcing it would boost its dividend. the central bank does say that j.p. morgan was not at fault and that there was a miscombine caution.

again, with the stress test out there, people are already starting to speck lace. there is a caveat with that. you souled say that this is with citi when they were going to be issuing a bigger dividend and buying back more shares. they were the ones that wound up with some questions still coming from the federal reserve. >> joining us now with more on the bank stress test, the head of one of the banks that got a passing grade. it's considering a dividend increase at its next board meeting. were you watching yesterday when you got that big, wet kiss. did you see that? can you live up to the best bank ceo in the world? >> it was a beautiful thing, wasn't it, joe? >> yeah em -- you want to go to

semiknolle or something? i guess he really believes it. >> i always thought jimmy was really a bright guy. i've moved him up into the genius can tea gore. it is always up there in the top echelons of well-managed banks. tell us about the stress test yesterday and what you thought of how pnc did? >> well, we have a great team here at pnc. that's really the key to our success. and we have been successful and we're pleased abthe stress test. we had our federal plan accepted by the federal reserve. and we compete to have a very modest share buy back.

but that's also on the heals of requiring rbc down at her cause -- the movement that we've deployed has been very positive for the shareholders. i think the strings. >> maybe you don't want to talk about all of your peers, but what was the difference between, you know, the actions that you've taken and a sun trust, for example? our a citi group is an extreme example. but what are the differences? >> well, it's very hard to say. you'd have to understand, their capital plans and i don't really understand those. i'm busy enough with our own. i think the real issue for all of us, though, is that the fed put us through what has to be considered very extreme stress. i mean, unemployment rate of 13%. 30% higher than we've experienced in the depth of the

recession that we've been in recently. stocks down 50%. housing prices down 21%. clearly a severe stress test. and when you look at and see that 18 out of 19 banks still have a 5% capital ratio after that, really is a confirmation that the industry is really strong. i mean, when you think abatisou, when we managed our risks appropriately, pnc went into and through the financial crisis with a 4.5% capital ratio. now, none the less, that 5% capital after the significant stress is really a positive thing for the industry. and i think the market reflected that yesterday. >> jim, i'm trying to get somebody to criticize the stress test. and i want to know do you think the fed needs to be in a process of continuously improving your decisions on capital distribution? share buybacks? and dividends? are you incapable jim of

figuring out what the risk is? >> well, what we're doing now is through the i were lamentation of dod frank. >> it's a partnership as we work through the new rules. we're running stress tests every quarter. and i think the industry needs to do that. so, one, i any it's good. i think working with the fed is a very good thing, especially at the time that you're implementing. >> my guess is, and this is only a guess, that down the road, once the rules are set in place, and everyone understands what the rulines are, i think the fe will be able to back off and say live by the rules.

but when the rules are in motion like they are today, i think working with the fed is a good outcome. >> jim, you put out a press release yesterday saying that pnc receives no objection from regulators to receive its common stock dividend. >> that's a board of directors, issue, becky. they have the where with all to do that. >> what an answer that was. the chairman of the board you're talking about. >> well, you know, we do take a vote on these things. >> with what we've done for you the last two days. you can't answer that anymore definitive? >> i'll tell you what, i'd get a call from my independent director who i believe is a seminole, but i'd get a coll that would ask me if i -- >> let's say differently. you get to vote on that. what would your vote be? >> we submitted the capital plan

and i was part of that. so you know where i am on that. >> did you hear bove saying that you stole a buchblg of european clients is that true? >> i don't think steal is the right term. i don't think steal is the right temple. but, clearly, we grew customers kite substantially last year, 300,000 households on the retale side and 1165 primary customers on the commercial side. i don't think they were all from foreign banks, but i'm sure some of them were. >> you have to give a specific to the fed. what were those numbers that you put into your capital plan? >> well, i don't think we disclosed those numbers. >> well, here's an opportunity, jim, to disclose them. >> i think we have to wait until the board of directors votes. but i think the board will discuss an increase in the dividend at the april meeting. and i think we'll have a modest share buyback. >> jim, in terms of lending,

one, what is the bank examiner's actually in the banks doing in terms of bank lending when you make a loan to a business? and in terms of net new lending, is that really on the upswing? are you anyoble to da that? >> i think the bank examiners worked with us very well. we've seen significant loan growth. we've seen loan growth on our portfolio for almost two years now because we've had the run off for national city. but, really, in the third quarter and fourth courteders of last year, we saw meaningful up ticks. 6% in the fourth quarter. and that long growth is continuing in the first quarter. i think while housing is not coming back and that will be a while yet, i think the basic american business, even small buzz applications are up 26%.

sfwl what are your worried about most? what are the things keeping you up and saying this could wreck this nice train of mine right now? >> well, dod doesn't impact us as much as it does the large banks, the very large banks. i think for us, i think the issues are around bosell and how some of the interpretations of some investment grade securities and things like that come out. so i think the dod frank issue is more about costs. the volta rule doesn't really impact us much. >> how many people have you had to hire for compliance so far? >> we don't keep track of that. but we're doing a lot of extra work. there's no question. with 300 rulings and a hundred studies and we're just getting under way. >> in terms of getting customers, what impact do you think dod frank is going to have with the smaller community

banks. >> i think they have a very difficult time. especially the overdraft fees. the profitable business for them. these interest rates, it's very difficult to make money on funds brokering. so, you know, basically, they have to make loans that we won't. it's hard for small banks to compete, i think. and as the regulatory environment comes down on them, they can't use technology the way we can. so i think it is a difficult issue. i was on a panel down at the aba convention and the smaller banks were discussing this at some length. i think it is a big issue. >> jim, great seeing you today. thanks. hope to see you again pretty soon. >> we'll be there in a couple of weeks. >> fantastic. see you later. >> all right. coming up with stocks and multi-year highs, where should you put your money? cio will bring us top picks for

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welcome back, everyone. if you are thinking of taking cash off the sidelines, our next guest says that your best bet is still high quality stocks. chief investment officer of a legg mason company. it has $56 billion of assets under management. so, at this points, we have seen a pretty big run. you say that those high quality stocks are still the place to be. why is that? >> well, they're still not expensive. you still see companies raising their dividends quite actively. and the fed is forcing people off the sidelines. i think befor the next two year

and what alternative is there for people really to get any level of income. so i think that stocks are clearly the best -- the best bet, particularly high quality stocks that as long as the dividend yields in many instances are materially higher, i think they make a lot of sense. >> do you think stocks are in a win-win position whether the fed is going to be there to keep rates low and force money back into the game. does that still mean a decent stock market run? >> it's interesting. given what is the apparent improvement of the economy, why would the fed come out again and say that they're going to keep rates low for well over two years. so either the fed doesn't belief it or they're waiting to see more evidence. >> i love the last interview. i think that companies are under enormous pressure. we've seen, in the first couple

months of thissier, above average levels of dividend increasings. s. yes, doctor, they in a win-win situation? >> yes. i guess the only thing that makes me pause is that the yield on the s&p bond is lower than the 10 years treasury. now, you can still get better yields on a package of high quality equities. and i think as long as that's the case, stocks are good. people ask me are dividends in a bubble? defend a pebble as to where the housing prices would agree. but dividends, they just keep going uh. so uh think if people would no

attests cuss, i think they be might more prone to tell me stocks. we talk about what would bring people into the market. unfortunately, what brings people in the market is rising prepss. >> we were at $28 -- this is according to harry -- $28.36. >> does that mean you like financials? >> i don't own pnc. my team and i have not owned it. we do own jp morgan and we own wells. but we've not been bulls on the banks aum though in the first quarter of last year, we saw it with all the bad news coming out of europe.

you saw the stocks not going down anymore. we've put a couple of banks in. our big plays in the financials have been insurance travelers is a big holding for us. but we do have an oversized position. skbl are there areas that you like? >> well, we'll go across the spectrum with good earnings and business models. so 3m, for example. microsoft a little different today. but that's a big position for us. woe eve liked chevron, there's some stocks that are down and out that we find interesting, lower-priced docks. interesting. we think we get a good dive gend. denned. there's a lot of locals moved

into et. it. >> hersch, thank you very much for your time today. >> you're welcome. >> larry? >> what happens? >> who are you? we talked about this yesterday. >> yesterday, the guy said that they were before the rates came dope, things were fine. so not to worry. to me, it's like, you know, if you revalue the entire s&p based on the after-tax yield of the dividends -- >> no, he was talking about the best-paying dividend stock. >> you're talking about two percent to three percent. if it goes from 15-45% which is in the president's budget, then the devaluation of those

dividends is gigantic. >> you better hope that the stock market is not priced based on dividends. >> i remember when they were coming down. what should the s&p be valued at? and you can see they should have been much higher. >> there won't be the pay outs. it means it's going to be used less efficiently. >> ebb remember, it's a double tax. first you pass through the carpeted tax rate. and then you pass through the dividend tax raoult. you're talking about 55% tax rate, all in. >> we're not going to get your comments on rick santorum. >> i just think that's an issue. >> okay. >> before we do that real quickly, the double taxation,

isn't it double taxation if you taxed my paycheck? you already taxed it at the company level. why should my individual tax get taxed, too. >> you get a tax deduction. >> you're right. dumb question. go ahead. >> the thing about dividends, you're passing through the corporate tax. >> that's why there's no small businesses. >> dumb question. thank you, guys. >> well, that's correct. but a lot of people believe share buybacks are rhes efficient. your call, mr. kudlow. tell me how significant the santorum victories were last night or was it expected and this is just another of the many bumps in the road? >> i actually don't think it was expected.

gingrich winning the two races and turns out he did not. i think for santorum, it's a big leg up. it really stores his status as probably the number whoone conservative competitor. he's in the game. >> does he have a chance of winning any other primaries at this point? >> sure, he did. does. sure he did. obviously, he's going to do well in his home state, pennsylvania. i think he's going to fight in illinois. i think he's going to fight in wisconsin. app think when they come back to texas, he's going to fight. santorum refuses to go away. there's no question about that. newt gingrich ought to go away after his lousy performance. but i think santorum establishes himself again. and i think mitt romney, who did well last night in delegate terms winning samoa and hawaii.

nobody thought he would win those southern primaries. but i think mitt still has to tell people at the base of the conservative base of the republican party, why romney care is completely different than obama care. that's still an issue. >> the individual mandate makes that almost impossible. so he must be praying the supreme court is going to come to hi rescue and throw the thing out. but if it esn' even before june, he should do a speech where he lays out what he wants to do in health care, things like nationwide shopping for health insurance. how to get the private sector back in. >> more market coach titianings. i agree with you. i think you should lay out some generic speech, maybe not all of the details, but to show the contrast. what was the name of his book? >> 59 points?

>> that's one of his weaknesses. >> santorum makes the case -- santorum says in 2009, romney was proposing a massachusetts mandate for the whole u.s. now that has not been proven. but i think there's still a suss suspicion there. he's still weak on romney care versus obama care. >> is this continued fight good for the gop and their chances in november? >> since i believe that free market capitalism and competition is the best path to prosperity, i say find it out. all i'll say is better to go after president obama and his weaknesses than to kill each other. i understand that killing each other is part of the process. when i interviewed mitt romney two weeks ago, i went out to canton, ohio. i asked him, specifically, are

you a better candidate today than you were? we talked about this. >> so nice to see you. >> thanks, larry. coming up, still ahead financial analyst will join us onset to talk about stress. [ male announcer ] what if you had thermal night-vision goggles, 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. omnipotent of opportunity. you know how to mix business... with business. and you...rent from national.

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welcome back. import price index for february up 0.4. that's actually a little bit less than expected. the expectation was 0.6. year over year, 5.5 aleutian a letle bit lower that be the 5.8% compation. actually revised down from 0 point three. they're okay with it. down a tiny bit. futures from where they were just before the number. you know, this is more likely to impact rates and the dollar. and raoults are just completely unfaced. the dollaric decks is a tiny bit

stronger than it was. it looks like as far as rates are concerned, the tenure, we really don't care. >> just real quick on this, scott, thanks very much. hp toll yum prices you're up 1.8. let by food. >> all unchanged, the bottom line on this is et might help out first quarter gdp. maybe a little by lower. you can't i gigs or in the town rio here. >> all right, sir. scott, thank you very much for watching that for us.

real quickly, scott, come as you come out of that is the. >> obviously great news in general. citi is the out liar. i think that was a surprise. this is aq which youly just good news. they're looking for generally improving news and they think that that's going to do most for the boppings as far as the stock market is concerned. >> scott, thanks a lot. we appreciate it. >> let's talk a little bit more about what's happening with the stress test. and, as we've been reporting today, the federal research finding four of the 19 bopping

failed some portion. chris wheylan is here with us. chris, what's your take away on this? >> well, not a surprise on citi. we've talked about this for years. citi has always been the outed liar. that's their business model. someone kid me this morning, how are they going to change this? they're not. what was interesting in the stress scenario, they converged on capital one. it's two-thirds credit card. so it really validates the bole notion that citi is a ditched business. >> the difference with citigroup is they had not asked for quite as much, they would have passed the test. >> but this goes back to the point. higher spread. higher loss rate. also more risk than say a wells business model. people go in the city because it's a big stock that trades on a three beta.

most of the arne dust rio is less than 1.5. in's really the difference. >> can citi group pay some dividend? did they ask for just too high a dividend. ? >> it depends on what your view of the future is. look at the loss rates that they were generating in the scenario. keep in mind, the fed is once again trying to convince us that there's no problem in real estate. they're telling me 20% down on rhes den usual homes, we only have about $110 bill yes or no for a loss. how did you ovinely come up with one fifth of the losses? that doesn't make any sense. you see, the problem that comes with stress testing, and i don't want to, you know, offend you, steve. but you shouldn't include economic asuctions in stress tests. you should say what's the loss rate on the institution? what's the income revenue and

then say how much capital do i need. then you go off and decide what gdp change is going to affect charge offs. and you can even do this on a local basis. every bank has a different footprint. if i were the fed, i whammed have had them produce a benchmark that said if gdp goes this way, this is what we think is going to have. you can do it down at the local level and let the banks go from there. don't sit there and ask them to model economics. they can't do that. it's all speculative. >> it's almost what we get when we try and score a budget? >> precisely. one is financial analysis. how much stress can the enterprise take. abchutely right. but then you leave the economics alorn. there's two different things. apples and oranges. >> we do economic capital at ira. we look at the enterprise and turn up the volume and say if you had a three-standard deviation loss event, which is

what we just lived through, how much capital do you need to not have a downgrade. that's the first piece. and then you can go talk about oblong no, ma'amics, but it's all speculative. you don't want to bring that into a financial analysis. >> do you think these regulars are designed in effect? >> well, they are, remember, in 2009, we had the big accounting rule change so it's night and day between the financials prior to that and after. and it's reflected in these tests. the fed wanted to ignore the fair value changes in 2009. and the banks push back and said no, you've got to use gap. otherwise, we're not going to look as good. but, look, all basal is an economist whimsy. >> should we do away with basal? >> absolutely. look, under basal, we have now demonized real estate. >> regulation helped push the banks to doing the crazy things they did. sovereign debt and package mortgages. >> not only that, our team when

they went to europe for the latest negotiations didn't push back when the europeans said oh, mortgage service qh is bad. just watch, next couple years, all of the banks are going to have to stop holding msrs on their books. >> and the reason is because of the changing of the capital requirements you can no longer count. it counts against the banks. >> this is an opportunity for me, now. we have to rebuild nonbank finance. that's where the conduits are going to be. they cannot be associated with a bank. >> chris, overall, does between basal, dod frank and the stress test, are the regulators requiring the banks to be overcapitalized right now? >> i think many of them, yes. the thing is, remember, these tests didn't talk about the litigation with bank of america. they didn't really talk about second leans. i could haircut wells fargo that much by themselves. the fed is trying to justify

what they've done on dividends and also in terms of allowing banks on their earnings. >> dod frank says they're not co-defined, too big to fail. >> of course we are. if you're regulated by the fed, you are too big to fail. we have to get the fed out of bank regulation. give them a very clear monetary mission. let the comptrollers office and the state regulators handle this. >> look, the small bankers like me, too. i got to speak at the f.d.i.c. i said, look, the big banks aren't more profitable than the small bullnecks. they don't do that in europe. if that was just a transaction trust account, which is what it is, it's your mortgage payment, your tax, your payroll, right? those aren't deposits. it makes j.p. that much bigger and they were able to get a monopoly in the secondary market for loans because of servicing. now basal three says you can't

be in the servicing business. >> chris, thank you very much for coming only the set. >> we'll spend the rest of the morning interpreting with them. >> saturday, right? >> yep. >> a lot better than the new york times this morning as we discussed greg smith designing today as a goldman sachs firm. but first, he writes in part the firm has veered so far from the place i joined right out of college that i can no longer in good conscience say that i identify with what it stands for. here's the response. we disagree with the express which we don't think afabulates the way we run our business. in our view, we will only be successful if our clients are successful. this fundamental truth lies at the heart of how we conduct ourselves.

>> is that his number? >> over the 12 years. i don't know. he was kidding. i don't know where he's got property. >> for 12 years, he was able to somehow swallow the incredible conscience it was so the entire time. >> hopefully, he's getting his resume out so he can put food on the table. coming up, rising oil prices of increased pressure on the obama administration open up more land for drilling. the deputy interior secretary joins us next to defend the energy. [ artis brown ] america is facing some tough challenges right now.

two of the most important are energy security and economic growth. north america actually has one of the largest oil reserves in the world. a large part of that is oil sands. this resource has the ability to create hundreds of thousands of jobs. at our kearl project in canada, we'll be able to produce these oil sands with the same emissions as many other oils and that's a huge breakthrough. that's good for our country's energy security and our economy.

calling on the obama administration to open up more land. the white house striking back saying there is plenty of federal land approved on shore and offshore. joining us to discuss this, david hayes. is the federal lands open? they were saying that the obama administration has not left federal lands open for drilling. >> good morning, and thanks for having me on. the federal lands are open. just, in fact, on shore, we have 38 million acres already leased of our public lands, of which only 16 million are currently

being produces upon or explored upon. offshore, we have 50 million acres of productive golf acreage already leased, which only about a third is actually being produced. and we're continuing to offer more. this june, we're going to offer 38 million acres in the offshore. and we've got 32 on shore lease sales scheduled for this year. >> let's see if we can get this clear. the api is saying, also, that gulf oil production has declined under the obama administration. and more interestingly, it's hard for me to believe the obama administration taking credit for the increase in oil production because it takes so long to get these things online. >> it's a good point, steve. i'd say a couple of things here. in the gulf, we had the -- one of the worst environmental disasters in history happen,

obviously, on april 20th, a short two years ago. we have gone through an incredible retool ling of the industry, working with industry. we have an increased safety standards. we're now back in business. and the energy information administration from d.o.e. said production in the gulf is 1.3 million barrels a day. by 2020, it's going to be 2 million barrels a day. so, sure, there's a continuum, but we are doing more than our part to provide the opportunities for industry for doe messedic oil production. of course, as you know, in the last three years, on our public lands just like nationally, or all production is up. >> mr. secretary, steve forbodys here. the industry feels that regulations in the gulf are still at a snail's pace. are you doing things in alaska approving the keystone pipeline and rationalizing these crazy

boutique rules which makes the refiners have to go through contortions. these are things that affect the industry. let's start with alaska. what are you doing there? the senate yesterday confirmed that that's not what america wants to do. we are opening up the national petroleum reserve in alaska which is on the other side of brudo bay. we broke through a permitting log jam that had stopped production for many years and just a couple of months ago, approved a major release for conaco phillips in the national petroleum reserve. plus, as you know, we just approved shell oil company's response plan. and we have an active effort going in alaska. but let me, if i can, steve, permitting has not slowed down

in the gulf. year to year, we just permitted 61 new deep-water wellings over the last 12 months compared to the 12 months before the spill that's virtually eye denty cal. we've had four major discoveries in the gulf. >> the one thing that i've never had cheered up for me is the notion that there are all of these acres that are available. when i asked the other side that, they say, yeah, but geologists know what is a good prospect and what isn't. they really get animated that there's all this land for drilling. it's not good prospects. all the good prost pectases you newlywed fell. is there any truth to that that 40% or 60% is not producing?

those are not attractive prospects. >> the -- the statistics that i quoted are actually acrings that the oil company chose to lease. they're paying money on those leases. nay decided to put out bow nuchale 00 and rental money to release those parcel chls. >> they are an attractive candidate. and there some where they like them to look. but that he can't. >> there's huge productivity in wyoming, utah and cloy cloy. we approved 13,000 on shore permits in the last three years. more than the first three years ophth bush administration. >> now, yes, there are some places where we don't think it's appropriate to drill. but we've -- we have been agreeing with industry.

we've been working with conservation groups to find the right places to drill. enormous opportunity the. i will say one thing, some of the big new plays like the bakken play in north dakota, the federal piece of that is quite modest. so there's a lot of activity on private land there because there's more private and stateland in the bakken than there is federal land. >> david hayes, thank you for joining us this morning. i'll have to have you back. that's the way we're gook to to this. thanks david. >> let's get et. exactly. >> hopefully they won't go at each others' throats and try to rip their hair outs. >> all right. when we come back, we're going to talk everything from stress text to rick santorum. we'll head down to the new york stock exchange. "squawk box" will be right back. ♪

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welcome back to "squawk box." let's get down to the george. carl and jim join us. >> i was just telling jim, the

past 24 hours, the fed statement, a stress test, santorum and this op-ed about goldman. >> we are at a remarkable moment. monday or tuesday, i felt -- you never ferment news. don't ever short a dull market. it paid off not to short this market. we had explosive action. steve, how much knowledge do you think jpmorgan had about what time they should have had the release yesterday? >> i don't know. i thing they went out on their own and knew what everybody else was supposed to do and did it on their own. >> that is a big freelance, isn't it, guys? >> jim had a concept about why that may have happened. you said there were people finding out things. >> that's why the fed ultimately released it. i think jpmorgan was out there because they wanted to get a jump on everybody. >> i misunderstood.

i thought you were saying the other. >> market-moving news is supposed to come, the culture has changed. you get market-moving news, you know you're supposed to save it for the close. the idea you have this 3:00 p.m. announcement was a jar to the stock market. everyone's always prepared. i forgot what it's like to be unprepared timewise. people were not in position. citigroup was supposed to be the best one. >> are you avoiding goldman? greg smith is starting a media firm with matt taibbi, i understand. >> look, elmo, ernie is joining them, bert, cookie monster. >> my daughter saw him live and cried. she hasn't recovered from seeing snuffy. >> big bird is fidelity? who is oscar the grouch, a big hedge fund? i'm trying to match the

characters with the funds. >> what is goldman going to do 150 million he gives back when he feels bad about wearing? >> you've got to wear a hair suit. there is a very -- we were discussing it. >> you do not feel better about the firm having read this piece. >> i love the firm. i got my start with the firm. it's an incredibly important part of my life. i want to hear the other side. >> we've got to get out of this. there is david. we have to go. what is going to happen, they're afraid of joe. they don't yell at joe. they'll yell at me for being late. >> their favor is preferred -- he was sitting there? coming up, final thoughts from our guest host steve forbes. . hello, neighbors. hey, scott... perfect timing. feeding your lawn need not be so difficult. get a load of this bad boy. sweet! this snap spreader system from scotts makes caring for your lawn

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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. stock of the day is citigroup. the financial giant failing. one part of the government's stress test leaving the fed to reject citi's capital return plans. bank says it will submit a revised capital plan to the fed as required. i just saw gold go by down $50.

>> it was down $35 earlier. >> and it was down $35 yesterday, i think. that is interesting. our guest host this morning has been steve forbes. what words of wisdom can you leave us with today? >> the political process is working, messy though it is. i think republicans will get a good candidate, win the election and all this junk about contraceptives will be by the wayside. it will be real issues, foreign pelosi. we didn't get on iran, the economy. health care. >> if the economy stays, if we keep with unemployment, the gains we've seen, what would voters be focusing on to push, to not re-elect president obama with things keep going well as they are, why do you think the republicans would win? >> still a subpar recovery. they don't like health care, massive regulations, intrusions. if romney comes up with a good health care plan, he will win. people don't want