tv Squawk on the Street CNBC March 22, 2012 9:00am-12:00pm EDT
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we have to have regulation. they don't want either. i don't think that works. >> richard, thank you for being here. shout out to e-mailers on the sweater my favorite, at least it has sleeves. santorum take note. ♪ caught in a bad romance good morning, welcome to "squawk on the street," i'm melissa lee with jim cramer and rob sullivan. worries about slowing global growth. decline in chinese manufacturing activity. we'd lose about 7 points on the s&p 500, about 43 on the dow jones. europe falling on weak manufacturing data of its own. eurozone pmi coming in weaker, notable declines in germany and france. the road map begins with china, fears of slowdown reignited by the pmi number sending not just
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stocks lower but commodity to copper. bonds catching a bid on a safety play. mcdonald's ceo jim skinner retiring. fedex expects solid performance to continue this quarter, guidance a little bit disappointing for the street and the latest in the goldman sachs muppet drama. ceo lloyd blankfein ordering a scan of employee e-mails for the word "muppet." he's all over that one. let's take a closer look at the concerns about china's economic momentum and what's at stake for the markets this morning. hsbc purchasing for china showing manufacturing shrinking for a fifth consecutive month. new orders falling to a four-month low, so it seems, jim, we are back at reset to those comments that the bhp executive made a couple days ago
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in a concern there's going to be a sharp and unexpected slowdown. >> how is this relevantory? we know they've been planning it and hearing about cuts. >> big cuts. >> big interest rate cuts. when we get that we're all going to be joyous about it so i'm unwilling to say this is the end of the world. i'm more concerned the about the chatter about a coup. >> i think the communist party has control over the coup. there's a significant increase in probability that there will be in fact a rate cut so as you said again, the communist party to the rescue here on any sniff of a slowdown. >> yes. >> i think the street watches this hsbc data more closely because this is compiled by hsbc, a private firm. it goes against the official china pmi numbers that come out
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so watch that. shen den 300 is up 10% year-to-date. china after dropping all of last year had a nice start to 2012, backed off a little the last couple of days. we'll see if this collapses that again. >> this is a one-month low, finishing the session down 0.1%. it kind of picked up. we've seen the weakness again. the miners are down across the globe in europe right now, where we're looking at a lower open for the miners in the united states. >> i've been saying it's china off, usa on, buttressed by employment claims. i don't see any reason to go into the china play yet. they're obviously in weak hands. i don't want to buck a 2008, remember, people decided to sell the commodity plays, sold fertilizer and steel. why get in front of that when we have plenty of u.s. companies doing well and offer much better value. >> what about u.s. companies doing well in china, i.e. general motors, buick, not the
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hottest brand and china, and beau sick a hot and growing brand. ge, 49% owner of nbc universal, doing business there. >> look at starbucks yesterday shareholder meeting, china will be the second largest market by 2014, they'll have 1,500 stores by 2015, integral to the trajectory of growth, baked into high valuations. when there's a hiccup in china, is there too much baked into the trajectory of u.s. companies that have delivered solidly that are banking on china. >> kfc, yum, people always said look out, that's a great short. that has not panned out. starbucks people want to extrapolate and say sell. this is a capital goods situation, it's a joy situation, not joyful, joy global, and it's a situation for caterpillar which i think is going to do quite well. ge is questionable whether that is a good or bad situation
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because they have such an infrastructure issue where they need more power. all i'm saying is that i see this as an opportunity to buy american companies. i don't want to try to catch a falling knife. i am not a butcher block when it comes to china. >> you wonder, though, we always talk about interest rates and easing if things slow down too much that they might have to ease up. what about a change in the currency pay? pull a japan if you will, not a direct intervention but change the renminbi's peg to the u.s. dollar to make exports cheaper? >> i'm not sure about a change in the peg but premiere wen said at the opening most recent national congress meeting that he is intending on allowing the yuan to float for freely in which case it would probably appreciate. there is that notion. right now we're looking at possibly more immediately before a rate cut an easing of the rrr, the reserve ratio requirement, which would be good, too. >> that's bullish.
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>> it would be easing essential p ly. >> i think we made too much of bhp the other day. you had a snap back. could it happen again? what's going to happen is you'll see china and europe goes down because europe is a no growth economy, more worried about a carbon tax in airlines than they seem to be about growth. we are in a growth mode. i care more that employment claims look good again than i care about china. i think that the united states has to start becoming more usa-centric and a little less the idea that oh, china's got pneumonia. well, we're dead. 'just not true. >> it's not but we are seeing the reaction in the pre-market for today. caterpillar is down by more than a percent. joy global is down as well. >> freeport bounced the other day. it's a charitable trust. look, copper is the lme, the london metals exchange, copper inventories are lower. do i want to say this is a great opportunity ahead of china cutting? i think in a few months, maybe
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in a few weeks we will. the great rallies we've had in the united states have often been the precursor has been the fed saying we have to have rates come down. >> melissa you referenced the european numbers. i'm more concerned about a european slowdown. china is still a poor nation, average income about $4,000 a year. gnp per person is 125th in the world. europe is what worries me. >> isn't the notion that the eurozone is going to enter a recession or severe contraction, isn't that a known fact. >> there's two eurozones, germany and somebody else. i'm going to throw france into the privilegecy this. >> you're throwing them under the bus? >> l'autobus.
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>> they're saying this is an opportunity maybe there will be growth sometime in the future and also a check on fedex, which reported its numbers. i want to keep, i mean i know i'm going to sound boring here but usa on. larry kudlow often talked about usa being ascendant. i thought it was descendant until 2012. >> another company doing business in china is mcdonald's. ceo jim skinner widely executed with the turnaround of the fast food chain he's retiring after more than seven years at the helm. coo don thompson is expected to succeed him. jim skinner became ceo in 2004. since then shares of mcdonald's have more than tripled. some people might be concerned about the transition but thompson has been around for the initiatives, the specialty coffees that have been a tailwind for mcdonald's up to
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52-week highs. >> i love jim skinner. he's been on "mad money." he's a remarkable executive, for two reasons. one is he's had a laser-like focus on trying to build franchises around the world but secondly he, like other ceos of mcdonald's, have groomed and groomed and groomed. this is probably one of the best succession companies in america. they had a couple of people pass away very young who were ceos. i don't want to say anything seamless because skinner is too loved and pieces in the research saying "we will miss skinner." if anybody has developed a suggestion that could work it's mcdonald's. >> love large numbers. under skinner from '40 to the end of 2011, gross profit net income doubled, revenue went up $8.5 billion. they rode a massive growth trajectory and the stock followed. >> why do you put it in a past tense, rode? >> as you get bigger and bigger
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and bigger, is thompson going to be able to double profit and double income as skinner did in a seven-year period from here out? >> let's look at it this way. this is an inventive company. i've been spending a lot of time on my show talking about new technologies, companies that reinvent. mcdonald's is a technology company, come up with wonderful things. the hallmarks of thompson. >> aren't they really from leases for stores? >> very interesting point. >> they're a real estate play as much as anything, are they not? >> i come back and say this company gets the benefit of the doubt. we talked about that with howard schultz. there's certain companies that have managed to be able to create tremendous wealth. >> there's a huge difference between mcdonald's and starbucks in the valuation. >> yes. >> the valuation on mcdonald's you can talk about law of large numbers but talking about a fast food chain that has delivered, delivered, delivered. the yield is 2.8% or so and the current p.e. is about 18. so it's really not subject to the same sort of discussion i
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think in terms as starbucks. starbucks valuation is a moment. >> mcdonald's is mature, but still has lots of growth opportunities for instance in china. mcdonald's is one of my absolute favorite growth stocks in the quintessential way that we view as growth stocks, they give you good yield, good growth, they give you stability. that's going to continue after skinner, when this gets the 3% yield, pull the trigger people at home. it's a great brand, a great company. >> under thompson there have been store renovations, put mcdonald's at the forefront. the knock on burger king which had been under recently the fast food chain they lagged way behind in store renovations. mcdonald's offered free wifi, gourmet burger, got a lot of new initiatives and keep finding new ways to reinvent themselves to appeal to a demographic. >> i question china, my previous point the average income in china is about $4,000 a year,
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100 million people make less than $100 a year. a $5 meal in china is a big splurge for the majority of the chinese. >> it's the law of large numbers. china's population is 1 billion. >> it's very large. >> it is. i'm saying if you take the middle class who can afford it it may be as many as the people in the united states who can afford it simply because of the number of people. >> i'm just sayin', go west, the farther you go west in china the poorer it gets. >> the more they need mcdonald's. >> china is not just shanghai, shenzhen, guangzhou, or macau. >> what happens in macau stays in macau. >> say that in portuguese. >> mcdonald's i want to point out like kfc the seal of approval of american food, meaning it doesn't poison you, is a tremendous benefit. >> exactly. >> people like american food because it's healthier over there.
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i do love a big mac, fries and diet coke. >> yum or mcdonald's, gun to the head, yum or mcdonald's. >> i like jim skinner so much i bet his departure is disturbing so i'm goingor yum which has been a remarkable run. maybe it pulls back at a certain point. >> fedex handily beating wall street estimates. record holiday package shipping and revenues came in slightly below consensus forecast and guidance they're giving for the current quarter, street estimate is at the high end of the range that they are issuing so that's a bit of a problem for the stock. we're looking at a lower open for fedex 2%. express volumes, jim, continue to plague the company. quarter after quarter this is a problem area. >> true. i will point out that fedex delivers your amazon package, that this is -- >> so does u.p.s. >> but the secular trend toward internet purchasing, which we all know we saw it neiman
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marcus, having an ipo today talking about internet purchasing. i think it's a broad trend. the stock is up. this is not an unusual pattern. it gets hammered, two or three days later you come back and you buy the stock, i don't think this time will be any different. >> really? >> to your point, amazon prime, 79 bucks a year, unlimited mostly unlimited two-day delivery has been a huge win probably for fedex. >> for fedex more than amazon maybe. >> revenue per package about 9%. >> right. >> so while volume is not great, revenue per package what they're making and what they sold in the ground division was very, very solid, able to pass through pricing increases. if volume drops a little bit if fedex can nudge up the prices and having customers eat that, they might be able to keep at least a net income line about the same. >> i agree. i got a broken record thing going here. fedex, great american growth company, mcdonald's, great
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american growth company. this kind of analysis is working in 2012. it's different from a macro scare analysis of 2011 so i like to buy these stocks in weakness. >> in this period when we have weaker than expected eurozone pmi, we have more evidence that europe will be in a prolonged, deep contraction recession, call it what you want. fedex is international express shipping, moves down 1% the volumes, not as well positioned at this point in europe as u.p.s., will be entangled in a multibillion-dollar acquisition and integration with tnt. is fedex a better by? >> u.p.s. is so well run and terrific for shareholders, given you that great dividend. i think fedex is asian oriented, talking about streamlining. to put a gun to my head i'd ask to you take the gun away from my head. >> oh, you can't choose. >> very hard. fedex might get hit to 90 and that will color my thinking to buy fedex over u.p.s.
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>> fedex down 2.3% in pre-markets and following the zakz stor goldman sachs story, scanning internal e-mail for the use of the word "muppet." lloyd blankfein told partners about a scan in a conference call saying the firm is looking for evidence that employees referred to clients in derogatory ways, this comes after executive director greg smith resigned with the infamous "new york times" op. ed and he saw five goldman managing directors refer to clients as muppets, in an internal e-mail. >> they're clearly trying to find who greg smith was referring to, number one. if they didn't say in the conference call, but they'll have a hard time. how many goldman forward the the story so they'll find the e-mail chain story. >> there is fabulous software, they do have fabulous forensic to find it.
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how high is this going to go? how high did people use the term "muppet." >> who is the rainmaker that used the word moneyet? what happens? >> on the ultimate business movie of all-time, "godfather" michael corleone, if history has taught us anything it is that you can kill anyone. obviously i'm speaking figuratively not literally. if this goes up the food chain we'll see big czechs hit the road. >> will we see retirements? will it be cloaked or public? that's the question. they should make it public to say you know what? we believe in our clients. we work for our clients. and we don't call them muppets. >> melissa you're totally right and i think these will be public hangings, in order to be able to say we're different from what you think we are. i called for this repeatedly, both behind the scenes and on air and i'm gratified. what it says is if you're a bad apple you're going to get pruned. before this, i kind of felt that
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greg smith was like a pop-off, they weren't going to listen to him. now it looks like someone's listened. >> right. >> all right, coming up, dollars to doughnuts, the ceo of krispy kreme is going to explain his company's game plan for taking on the company we just talked about, mcdonald's. >> and herb greenberg is going to slam krispy kreme. here's another look at the futures as we head toward the own, 52 points on the dow jones industrial average, disappointing data out of china. more "squawk on the street" live at the nyse, when we return. lets you see what's trending around the world, as well as what over a million fidelity customers are trading throughout the day. and advanced charting lets you customize your views and set up your own comparisons. our ipad app can help refine your strategy or even find a new one. i'm velia carboni, and i helped create fidelity's next generation ipad app. it's one more innovative reason serious investors are choosing fidelity.
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♪ ♪ welcome back to "squawk on the street." hey, a funny thing happened on the way to the weekend, as we get closer and closer, we could see that interest rates are now lower on the week. yes. if you look at a ten-year note yield short term we settled at 230 yesterday, around 229 last friday and now hovering 2.26. many traders continue to talk about the idea that we've extended the range of maybe the top of the range is partially defined now. foreign exchange the world seems to be moving towards weaker economics at least certain areas, whether it's pmis in
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china or europe, and to that end, we want to watch the british pound, their chancellor laid out a budget calling for te tax cuts, increased exports but in the end more quantitative easing as well. coming up, cramer's mad dash ahead of the opening bell. it is a big day for ipos at the new york stock exchange, we have economic target ipo coming up. much more "squawk on the street" straight ahead. [ leanne ] appliance park has been here since the early 50s.
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my dad and grandfather spent their whole careers here. [ charlie ] we're the heartbeat of this place, the people on the line. we take pride in what we do. when that refrigerator ships out the door, it's us that work out here. [ michael ] we're on the forefront of revitalizing manufacturing. we're proving that it can be done here, and it can be done well. [ ilona ] i came to ge after the plant i was working at closed after 33 years. ge's giving me the chance to start back over. [ cindy ] there's construction workers everywhere. so what does that mean? it means work. it means work for more people. [ brian ] there's a bright future here, and there's a chance to get on the ground floor of something big, something that will bring us back. not only this company, but this country. ♪
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♪ just about five minutes until the bell rings on wall street, time for cramer's mad dash. we have to start off with exxon mobil. we had a lot of weakness in oil. oil prices today are down. yesterday there's concern about bhi, baker hughes and snack gas. >> i think the oils have been the silent china play and as long as china's cooking people feel oil can go higher and also terrorism and also iran. this upgrade from sell to hold is i think a line in the sand saying this is where you have to go. they have good dividend boost coming and these are stable. it's the group to watch at home if you're worried about global slowdown. >> there is an interesting story about exxon, bp in conoco
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talking about building a pipeline for natural gas. >> if they play that and don't get government support it will be a natural disaster. natural gas is abundant in the lower 48. this is the kind of thing i throw my hands up and say please! it's the united states lower al. too expensive. >> lion's gate 52-week high yesterday, pulling back a little bit. this ramp is incredible. >> this is too much. i've been waiting for 120 million this weekend with "hunger games." take off half now. upgrade. there's a downgrade and upgrades. this is too great a sttrajector for one movie. time to roll. >> hogs are greeted, pigs get slaughtered. >> yes. >> brian over to you.
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♪ more than a feeling ♪ more than a feeling exact target does the honors on its ipo day. well' speak to the ceo in a few moments. at the nasdaq, it was a big day for ipo, caesar stone. is this a big sign, we have three. >> any time it's good i get them. profitable companies, e.t. has accelerated growth which is terrific and part of a whole world of some say software is a service so cloud, people like cloud, everyone wants to be cloud or bullish cloud.
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so the answer is yes when we see more ipos you feel betber the stock market. >> take a look at my screen, no surprise the indications in the futures markets, seeing a sea of red. we're seeing sharp declines when it comes to bank of america, now at 9 b 68, down 1.5%. citi is also weak, the second or third session in a row from citi has more pronounced weakness, down by 1.7%. >> 65% of the revenues international. i want to go against the sell the banks trade. this is all part of the notion that once again a suntrust once again a u.s. bankcorps is somehow linked to europe and they come in and sell the etfs. it is so dumb. the group has earnings momentum. we need a little bit better yield curve. this group is undervalued and the money will come back to it. >> we're seeing another day of
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weakness, yesterday banker hughes and today the osx, the amex oil services is down by about 1.5%. not only exxon today you're looking at tidewater down 2%. >> there's a lot of moron trading. >> muppet trading perhaps? >> muppet trading, i'll send the, mails out. this should not trade as a unit. we see a lot of offshore drillers exploding earnings, whether it be from mexico, brazil or indonesia, asia and the on shore guys should be sold because they're way too oriented toward natural gas which is still in a tail spin. >> oil is down by $2.39. the president's going to be speaking later on during "squawk on the street," giving his remarks about expediting the lower part of the pipeline, remove oil from cushing down to the gulf of mexico which would
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alleviate the cushing. we're seeing pullback in today's session by more than 2% but in terms of the ripple effects here, if we are to believe that it's going to alleviate the glut there and maybe lead to higher prices or better pricing is that more bad news for the mid continent refiners because the spread will narrow? >> we're seeing such a decline in capacity in the east coast. at one point as much as keystone is seemingly important, it's really the seaway pipeline that will reverse things in the second half, after enbridge bought it from conoco and the president isn't doing anything in keystone. it's a talking point. i don't want to denigrate what a president says. there isn't that much permitting left for this. it's not nearly as important as people think and all it will do is raise the price of gasoline in the midwest. >> anybody thinks any part of the keystone will alleviate gas prices being high, but that is not -- we had bill verlager on
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"fast money" last night, he's an economist and said gas prices will go up in europe by 10 to 20 cents a gallon in the midwest. >> the economics seem to be confusing to washington. if you want gasoline prices to go down you support the initiatives that westport and cummins are doing. 25% goes to diesel fuel for trains, union-pacific the largest user of energy in our country or truckers, and if you want to get the price of gasoline down you focus on natural gas and i'm not just talking about alaskan natural gas. the marcellus in west virginia, pennsylvania, virginia and ohio. you want gasoline to come down you back down on gas. >> apple is below $600 for the first time in the session. microsoft trying to make their way into the green. that may be what to watch.
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>> and microsoft this morning, morgan stanley raising price targets saying windows 8 is in it and other iterations of other products that are not in it. i can't be as negative -- we are not europe. we are not china. and we all trade as if we're china. people forget we're the largest country in the world. i'm not being zenful and not giving you an s.a.t. tutorial. if you sell the united states off of a german pmi, a european or chinese pmi you'll miss what's going on all of 2012. >> on that note, brian is with bob pisani. >> we have exact target, indianapolis based company are going public. 19 was the price, indicates 22 to 24. bob, an exciting dual ipo. >> exact target, we call them cloud computing but they're really a marketing firm.
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cross channel interactive marketing. >> best buy, reward zone, you get the e-mails. >> let's be more specific. imagine if you could combine everything in your digital life into one database, all your e-mails, all your twitter accounts, all the stuff that you do that you buy online in a database, that's largely what these guys do. you'd know an awful lot about your life. my google calendar, you know about who we are and the whole game is about marketing and making sure what you do online is turned into marketing efforts here. the bottom line is they leverage their data to send personalized e-mails to the individual. the important thing is for example travel updates, you get travel updates from priceline, changing your itinerary, that's what they do, they're in charge of doing that. you get the customer service tweets from toyota or from auto companies, that's what these guys do, they're hired to do that information and send it out. >> they've been a huge growth story, had 500 employees, started with a few. they had 500 employees two years ago, they have more than 1,100
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today. indianapolis based company and looks like the market's digging it for all intents and purposes. they raised the ipo to 19, indications to 22 to 24. >> papa john's uses them for communication with local franchis franchisees. i hope we ask the ceo, scott dorsey, he's here, about the privacy issues of concern. we have to be more out front about how they use this information and how they get hold of it. i'm concerned about it. it's certainly a growth area so let's keep an eye on them. he'll be here. vantive, payment processor a more well-known organization and business, also at 17. >> and indications, 18.20. >> charles drucker also going to be here. the big debate, what side of the global growth debate are you on, on the u.s., china, on the eurozone and today the glass is half empty. we saw the numbers on chinese
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pmi, and of course on eurozone pmi, weaker than expected. the only thing i would say about this is, before everyone says we're sliding off here, bear in mind generally the numbers have been better. citigroup, for example, today raised its global growth forecast, raised it to 2.5% from 2.4% and even raised it in the eurozone, not slipping so far down. so before we get into the everything is falling apart mode just remember the -- >> happy thursday. waiting on two ipos, the price open. jim, back to you. >> thanks, guys. i agree, bob, don't want to get too negative. hasn't paid off so far in 2012. rick santelli, cme group in chicago. >> not only are you shifting the bonds and the dollar, the bonds traders are shifting from what was a sell side of their car to the buy side. intraday chart about to test 2.25 with tens. pretty psychological area. some say 3.18 to 2.21 is a big
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area. if you look overseas and this is key, look at the italian ten-year, it's now over 5%. we dabbled with it briefly yesterday. you're spending more time there, but if you really want to see what we were talking about yesterday as it continues in its new trending higher rate environment, all you need to do is look at spain and spain's rates are running up, look at the year-to-date tens. we want to monitor this. i don't think it's a coincidence that our rates are going down and some of the peripheral countries once again their rates are moving up. melissa lee, back to you. >> thank you very much. rick santelli. there were a number of earnings we didn't get a chance to talk to, lulu lemon, beating eps and revenue. if you were to question the law of large numbers in terms of the run, this might be where you question it. >> $10 billion company, very compelling piece today in the "wall street journal" talking about the growth possibilities here. they own the woman's market, trying to move into the men's
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market. this is a stock that has sold down repeatedly after they reported. it's doing it again. we were talking during the break, don't want to get in the way of some of the stocks falling. there's no rush to call bot on it in lululemon. it is an expensive stock versus mcdonald's. >> in the "wall street journal" amount sadly was the amount this he promote which is basically nothing. they sell 95% of their merchandise at full price and never discount their core items so that is a winning -- they are the envy of the retail world on that front. >> yes, and i remember when people felt they had too much inventory in the previous quarter, turned out to be a blessing. mickey drexler and j. crew has taught many of us inventory can be the bain of your existence. lululemon inventory has been positive for them. you're saying wow, something's going on it. >> so melissa's point about
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being the envy, gross margin 56%, operating margin 31%. >> that's what you get when you sell at full price and don't put anything on sale. margins are fantastic. >> i'm throwing this out there, you wonder, does a nike start to sniff around a lulu? do they care? >> it would be a $10 billion acquisition. >> they'd probably have to do an eight to ten multiple on ebitda, super expensive. you just wonder if somebody else looks. nobody else could afford it >> 51% of the world, this is a woman's place. you mentioned sniff, this isn't when you go in, lululemon, they have anti-stink pants. >> anti-stink? >> that's the term they put. >> they should put those into other things other than athletic clothing. >> the muppets like suits. >> bike suits. >> men's wearhouse recommended that last night. >> male spanxx. >> the pvh, deutsche bank goes
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hold to buy and that's holding up. cotton prices coming down dramatically. >> apple should buy lululemon and fruit of the loom and have a whole basket of goodies. lemons, apple? >> i don't know where to focus on that, i don't know. >> at least apple could afford them. >> omg pop. >> the trade is young and there's much more "squawk on the street" straight ahead. coming up, we've got a six and we've got a 60. put them together and you get jim cramer. six stocks in 60 seconds. it will make sense. when "squawk on the street" returns. ♪ i'm making my money do more. i'm consolidating my assets. i'm not paying hidden fees or high commissions. i'm making the most of my money. and seven-dollar trades are just the start. i'm with scottrade.
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i'm with scottrade. i'm with scottrade. and i'm loving every minute of it. [ rodger riney ] at scottrade, we give you commission-free etfs, no-fee iras and more. come see why more investors are saying... i'm with scottrade. sadly, no. oh. but i did pick up your dry cleaning and had your shoes shined. well, i made you a reservation at the sushi place around the corner. well, in that case, i better get back to these invoices... which i'll do right after making your favorite pancakes. you know what? i'm going to tidy up your side of the office. i can't hear you because i'm also making you a smoothie. [ male announcer ] marriott hotels & resorts knows it's better for xerox to automate their global invoice process so they can focus on serving their customers. with xerox, you're ready for real business.
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the 50% retracement of its $12, $13 move we saw in wti futures in february. what's the next level? we could see prices fall below $103 a barrel next, according to addison armstrong at tradition energy. we're waiting to see what president will say from cushing, oklahoma, what he'll see about the keystone pipeline. we will see a build in cushing supplies pressuring wti prices along with ul aof the macro economic data we've gotten out of china and look at the impact the data has had on metals, copper, palladium, which is down significantly and gold prices trying to stay above that $1,625 level. that will be the next key support brian for gold. >> thank you, sharon. exact target opening up, it launched at $19, right now the price last trade $23.60. so $4.60 pop for e.t.
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>> ka-ching, nice big gain. >> nice big day for exact target and their employees. >> dollar general remarkable quarter. this is just a fabulous secular trend going to dollar stores. i like dollar tree more. >> toll brothers. >> people saying maybe the stocks should cool off. ubs agrees. i think the housing trade is great. >> people talk about dick's sporting goods. >> this is an upgrade ahead of nike. let's see what nike says. >> rangold. >> i spoke to the ceo, he said gold mine something not for sissys, could be a coup in mali. be careful. that stock is going to go down. >> timbuktu literally mentioned on "squawk on the street," that's a first. western digital. >> i would watch this stock
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because if there's a stand made, needham buy to strong buy that would be a sign that tech comes back first. >> first horizon. >> ceo, the remarkable turnaround, morgan stanley doesn't understand "mad money" they don't get our show. >> what's on "mad money" tonight? >> first horizon. >> a double tease. >> you were coughing before we started. i suggest people look at power go, they are probably going to get a generic over-the-counter cl aritin and lipitor, fda moving over the count per >> we go to bob pi san see. >> reporter: $23.05 is what we opened at on compact target. 15 to 17, price is 19, opens at $23.05, 1.1 shares. you see the orange ja kts? these are employees, one of the great traditions on the floor, the employees come, all of the people in orange are spouses or workers here who have come in.
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scott drake ceo is walking over to the desk. melissa will be talking to him shortly. i'm talking to the employees about how excited they are. insiders own this stock at $4.50. not a typo, $4.50 and opened at $23 so a lot of smiling faces and a lot of smiling employees down here. brian, melissa, back to you. >> thanks. none smiling more than scott dorsey, ceo of exact target. e.t. is the ticker. the ceo is your guest on cnbc right after this. [ artis brown ] america is facing some tough challenges right now.
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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.
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joining us is the ceo of exact target. scott, welcome and congra congratulatio congratulations. >> thank you. happy to be here. >> a lot of demand. why not jack up the share count? >> our investors are long on the company. this was all primary. we had no secondary sellers. two of our larger investors bought into the offering so we're very excited about the future of our company. >> we talk about the future, we look at some of your clients and to bob pisani's point, this is a growing industry but a lot of privacy concerns around the industry. how much information is too much? we know critics will be out, now that you're public, how do you counter that? >> our mission or the foufor th our company 11 years ago is communications. >> consumers are not getting stuff they don't want. >> completely opt in. we help marketers better understand their content to understand ems, facebook,
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twitter and the web so it's completely on the bright side of privacy and permission. >> it seems like an industry that might be crowded not just from other companies out there that specialize in this but corporations doing data mining on their own based on what they learn about their customers. how is pricing holding up? i'm wondering what the competitive forces are and the pressures you're feeling in the space? >> sure, we're very well positioned. the macro trend is that offline marketing budgets are shifting to online and we're in a perfect position to help organizations optimize joan line investments and it's wonderful for the market and the organization and great for the consumers, the more that marketers can understand about their customers the smarter more relevant they can be communicating to them and tremendous value in doing so. we find return on investment to be xla ordinary. >> in the latest year, 2011, you had a loss, operating expenses had an enormous jump of 48%. what was behind that jump.
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are you going to re anythat in? >> our growth rates have accelerated from 32% in '09 to 41% in '10. it's investing in r&d as we build out our cross channel interactive channel called the interactive marketing help >> i'm familiar with tcv ventures, they favor accelerated revenue growth. is it possible that people will go to your website companies which is incredible in terms of the amount of knowledge it gives and say we don't need exact target. we can do it ourselves. did you give away the store on the website? >> we're a safs platform with differentiated technology. >> it's a cloud. >> saft ware is the service. we help organizations leverage our infrastructure and all of our technology involvement to better communicate with customers across all digital channels. it's difficult for organizations to build the kind of capability
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we have throughout our platform and more importantly able to innovate and continue to help organizations take advantage of new emerging channels via social media. >> one thing brian was talking to are about, indianapolis based, hiring like mad. you are an example of putting people to work. i don't know whether peyton's contract is offset by how much you make but talk about the notion of hiring, putting people to work and what it does. >> it's been powerful. we're a great example of the american dream where a software company in indianapolis can build a category leader. we've created over 1,000 high-tech high paying job. indianapolis recruit from wonderful universities like perdue and iu and notre dame and our culture and team is a key to our success. >> the governor of indiana will love you all of the employees win and if you sell or not you provide a chunk of tax revenue to the state of indiana. competitive threats i apologize i did not read the s1, i'm not
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like him, i sleep occasionally. what are the competitive threats for exact target? >> this is a big market growing quickly and for us it's really more about execution than it is competitive risk and our big vision is about how to help organizations tie all interactive and digital channels together and we are well positioned to capture the market opportunity. >> it will be exact target field or lucas still? >> stay tuned. >> scott dorsey, thank you and all of the employees that came in from indianapolis, thank you. >> good job. [ applause ] >> come up -- >> midwest nice. the ceo of vantiv and what it holds for debit card purchases. much more "squawk on the street" straight ahead. the freedom you can only get from hertz to keep the car you reserved or simply choose another. and it's free. ya know, for whoever you are that day. it's just another way you'll be traveling at the speed of hertz.
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[ ron ] when i was a kid i wanted to work with my hands, that was my thing. i really enjoy building turbines. it's nice to know that what you're building is gonna do something for the world. when people think of ge, they typically don't think about beer. a lot of people may not realize that the power needed to keep their budweiser cold and even to make their beer comes from turbines made right here. wait, so you guys make the beer? no, we make the power that makes the beer. so without you there'd be no bud? that's right. well, we like you. [ laughter ] ♪ carfirmation.
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only hertz gives you a carfirmation. hey, this is challenger. i'll be waiting for you in stall 5. it confirms your reservation and the location your car is in, the moment you land. it's just another way you'll be traveling at the speed of hertz. welcome welcome back to "squawk on the street." january house price index, month over month, unchanged, goose egg on the month. that would break a streak, november and december were positive. october was minus 0.9, so there is your comp. leading indicators. february number up 0.7, better than expected. last monday originally released
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0.4, receipt to reup to 0.2. 0.7% is the best level since march of 2011, in that case it was slightly above 1%. melissa lee, back to you. >> thank you very much. rick santelli. let's get straight to bob pisani with vantiv, looks like a pretty decent pop for vantiv as well. >> reporter: excellent. it was a sur flies, a surprise. the crowd is cleefg, but $17 price was the midpoint but it opened at $19, that was an impressive open. all the employees who are coming around by you, melissa, have got big smiles their face. that was excellent. here is our friend over here, scott dorsey, exact target opened at $34, over at $24.43, right near the highs for the morning. great day for ipos here. guys, back to you. >> thank you very much, bob
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pisani. the road map for this hour, vantiv going public today, a payment processing company. we've got the other side of the trade today as one analyst says now is the time to go long. plus the new ipads having a reality check as consumers burn through their monthly data plans in mere hours. so is this a consumer trap or telecom's new opportunity. a little powerhouse stock that could. shares could hit $1,000 in a matter of months. >> canada, more pain for research in motion. ibc reporting that rim lost its position as the top smartphone producer in its home nation. 2 million blackberries against apple's 2.58 million. >> rim is up 2% despite its news. >> it got all of that in canada.
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>> jobless claims this morning hitting a four-year low dropping by 5,000 to a total of 348,000. the weekly moving average slipping to a healthy 355,000. >> it's also worth noting bouillon is dropping to its lowest price since january on the back of weak manufacturing data, coming from china and also europe. a strong dollar sending gold futures and etf down 2% over the past week alone which i don't think is bad given the machinations we have particularly last week. >> the run that we have had and also before today, and before yesterday gold's decline had been based on equity's climb so there was part of that dynamic. in today's session we're watching gold and metals. the pmis out of europe sending metal stocks lower. x is down more than 2%. alcoa along with a lot of the miners are trading lower. >> but central has to be your
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view on the dollar. >> of course. >> if interest rates are going to rise in the united states the dollar will strengthen in an environment where the chinese overnight have loosened slightly because of the pmis. so it's just further upside to the greenback >> vantiv the cincinnati based company that does payment processing going public today. the company's ceo here at the nyse stopping by on "squawk on the street" for another personal interview is the ceo, charles drucker. >> thank you, excited to be on the floor. >> what is the biggest driver of growth in the industry? >> the biggest driver of growth is the shift of cash and checks to payments. so as consumers start using their cards more, we're seeing a lot of good activity. >> and in terms of geographies, where are the drivers of growth there? >> we're seeing in geography increased growth across the geography, good growth in the retail sector, good growth in the everyday spend sector.
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>> this is partly about paying down debt, isn't it? >> yes, there's a portion. >> raising half a billion. it says you're the biggest handler of u.s. debit card purchases. >> we're the biggest handler of debit card transactions in the country, we do over 3.8 billion debit card p.i.n.-based debit card transactions. ? in your filing you name global payments and total systems services, both of which trade i'm not sure what your price-to-earnings ratio is at the moment, it's a great debut but half as expensive as you are. obviously you have' got faster growth. talk me through the two dynamics on the valuation. >> first of all we have great competitors in the market but from our perspective we've been growing fast and expanding our sales force, focusing on new geography, focusing on ecommerce and other emerging markets and what's excite being the payment industry as mobile and other technology comes out, the beauty is more transactions continue to move from cash and check to electronic payments.
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>> it's testament to your growth, income loss is at $85 million. you're still going to have $1 billion give or take of debt after this process. >> right. >> some are suggesting if you hit a bump in the road with that sort of debt, with interest rates rising, you could easily come into a loss. what would you say to those? >> we just refinanced our debt, we're at a three leverage, very good for the market and the cash we're able to reduce our debt cost. >> and what about the legislation? there is obviously a concern about the authorities having greater ability to control credit card payments to allow retailers to charge punitive amounts of various offerings, but that must be a risk for you. >> vantiv actually sits in the middle and moves transactions back and forth. we have banks and merchants and we're able to help guide them through the legislation and educate them on how to bring the best products to market so they can continue to bring the products to consumers. >> ben you look at all the
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technologies out there, moving away from cash, every single technology that moves that transaction away from cash, does that help your business? is that the way you look at it? >> yes. >> doesn't matter if it's global phone or debit card, it's all good for you. >> it's positive. we process transactions to every transaction if you're a merchant is a positive, a credit card, a debit card, an alternative payment, a new device coming in. everything that moves from cash and check is great for the entire industry. >> it must be a scramble to find out what the future will be and to get there. >> it's one of the most exciting industries because it changes all the time, and we're positioned with a single processing platform to take advantage of the trends. >> and what is the one technology outside of debit cards which is a little bit mundane at this point. >> oh! harsh! >> a debit card has been around for a long time. >> some people love that and continue to use it. >> i love debit cards. there's a time and place for every sort of transaction device. anyway -- >> he's the largest debit card
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processor. >> in terms of transactions what do you see as the next big technology? from your standpoint, what do you believe will be? >> mobile is starting to take hold. it will be a while for mobile to take hold but it's exciting how you can put things in your phone, all the cards and the speed of transactions and when you think about the transactions happening over the internet and the ecommerce world it's exciting. >> once you go to mobile and i understand how important that is for emerging markets where there is no infrastructure, but that's a very different type of execution business for you. that's a software operation. i imagine that's a whole different world. >> i would tell you for us, the mobile devices when you go to the store instead of swiping it through a swipe machine, the mobile is just another way that the transaction comes to us. so to us, whether it's a mobile device, whether it's a transaction machine, it's a transaction coming our way that we process. >> you are believing the charge in india and china on mobility, you're just the back end?
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>> right now we're the back end, focussed in the wuss growth opportunities in the future. >> the easier it is to transact the better it is for you. >> absolutely. >> great to have you with us, charles. >> thank you. >> congratulations. >> thank you. >> the major regional banks this morning are in focus, this after credit swiss douisse downgraded will. next we have a guest who says now is the time to get long on some of those names. we'll talk about the banks that have the strongest low growth after the break. stay with us.
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the dow is down 49. let's get some stocks to watch this morning. conagra third quarter earnings coming in two cents above estimates with revenue in line with the consensus. results were helped by pricing actions to deal with input cost inflation. i assume that means they're raising prices. raytheon raising quarterly dividend to 50 cents from 43, a 16% increase and tivo reached an aagreement with microsoft. credit suisse downgrading
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the regional banks. our guest yesterday told us the point was 40, 45% gains in many of the regional banks because the credit quality situation has improved and here on in it's all about the economy. our next guest, however, says regional banks are well positioned for this volatile environment. they have less exposure to europe, stricter loan standards and they know their clients better. let's bring in matt mccormick portfolio manager and banking analyst with bohr and gainer. >> i like regional bank. craig's comments are worth considering, when you look at the broader scope the regional index is over 25%. selectively underneath great companies like u.s. bank is up 12% or colin bank up 12% or u.s. bank 14%, wells fargo up 20%.
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i like companies that are more likely to increase their dividend that are more reegiona and less exposure to europe and have the ability to increase dividend more. if you look at some lower quality banks that have had a great run, i'd stay away from those. >> so of those banks that you mentioned that have underperformed why would they outperform now? >> i think when you look at investors right now where you see somewhat of a digestive phase in the market, trading sideways and muddling through, some people are taking profits in lower quality stocks and potentially looking to shift else where. if you're going to be in financials why not go into something that has not had its move yet. >> why is there an assumption there has to be a move. why was it these stocks were left behind and why is it now that those reasons are gone?
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>> i think the reason why they haven't had the biggest pop they are higher quality in nature, did not suffer as much through last year. a lot of the stocks if you look at regions, it's up over 53% this year. i would agree the move has already been had. the companies like u.s. bank was positive last year so they're less volatile, less likely to get hurt if there is potentially more negative news out of europe and the u.s. it's a more conservative play in a volatile environment. >> if craig were here he'd say exactly they're quality names, and have to be based on what happens with the u.s. economy. as you pointed out yesterday for them to gain we need in his words growth of 4% on gdp or we need the fed to raise rates in 2013. and he doesn't think that's likely to happen, they're more likely to reengage with operating twist or another form of qe. >> i don't -- i understand those comments but if you look at the steeping at the yield curve and a lot of the companies have had negative quarter over quarter,
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year over year revenue growth. the regional banks have the ability to get stronger and i don't think they necessarily need the fed or economic growth to survive. they've done a good job on their own. you look at cfr, never took t.a.r.p., has an energy play based in texas. these are companies we like that don't need economic growth or don't need a stimuli from the fed to outperform. >> why do you go to canada then? >> i like canada because it has limited exposure to europe and its u.s. they have strong dividend yeelz of the companies that we own, they're roughly 4% and 5% increasing dividends. we are a conservative firm and we want banks that are less likely to be more volatile that haven't had the big moves. canada hasn't had a big move in year. great on downside protection and if this environment, i would, where i agree with craig i'd take profits from the frothy, low quality names and look for dividend increases and you get
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it in canada. >> you make your case well. thank you for joining us, matt mccormick from bahl and gaynor. apple's new screen are designed to spur greater use of online video. what happens when you burn through your data plans too quickly? we'll break down the ipad's speed trap next. >> the world economy's growth rate is trending higher than it has been for the 30 years of my existence. it is really bullish for equities. >> t.a.r.p. in my opinion was political piggybank. we were or weren't saved. you know, saved, come on. grow up. >> what is the appropriate growth rate for the company say in 2012? >> i think we should be able to grow at 15%, 20% a year. [ male announcer ] any technology not moving forward
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fast wireless connections but as the "wall street journal" recently pointed out some users are finding out the reality of the services, churning through monthly data plans in mere hours. what does this mean for ipad users and investors in te com companies? dennis burman. >> hi, guys. >> the assumption is it's good for the likes of the at&t or verizon, the best 4g networks out there. >> this is an important story. it may seem funny, a guy burns through his data limit in a month watching through march madness games. this is showing a fundamental change in the pricing model for telecommunications. before companies like verizon and at&t had to sell all you can eat, and now they've been rolling that back for iphones. for the ipad, with their high end networks they're basically saying you will pay more and that's what's happening. >> on the other hand it's quite an interesting way for the
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competition to differentiate themselves. if i were samsung not only could i offer cheaper hardware, i might offer smarter software that runs on it, it doesn't consume vast quantities of data but gives me a clever image or clever game. >> if you're sprint you might say you can use as much unlimited data as you want and that is its selling proposition, but i got to say, the story is fascinating because what it meant to me when i read it and worked with the reporter on it is, i need to buy at&t and verizon stock. they're basically saying after two gigabytes of data you'll pay at least $10, $20 perhaps $30 or more for your cellular ipad wireless subscription, and people are going to pay it. they just are. >> is there a sense of how many people out there, i would imagine the people who first get the ipad, they're very excited, a self-selected group of people who value this and who are trying it out and so maybe they
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have burned through but is there a sense of how many people exceed? remember when at&t had the unlimited data plan and they said if you exceed a certain amount we'll slow the speeds down. >> right. >> they said only 5% of users in that subset exceed those limits. that's a small percentage. >> right. you raise a really good point but look what's happening and how people's viewing habits are changing. they're spending more time with online video. the devices are configured for online video. the programming is configured for online video. so i think we're kind of in an inexorable move, watching videos on the devices. if people are spending more on the plans, what are they not spending on. my best guess is comes from the cable tv subscriptions. we've seen some pressure there, some concern that the cable companies can't sustain the growth they've had. my bet is that's where people
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take their money out of. >> let me back to that complicated relationship that you have with for example apple and the telecom companies. we already know that apple is able to hold some to ransom in order to get the products as we saw with sprint with the $20 billion deal they've got to sell 30 million iphones to justify that. yes on the one hand they'll be able, the telecome companies will be able to recoup some of that cost now, some of the subsidy, because they'll be able to charge more for the data people are using. conversely you might find apple turns around and as part of the deals it strikes in the future says yes you can have the iphone, you need to buy 30 million of them and i also attach to this the demand that you do not charge people extra for the data consumption that comes with our products. that is possible. >> i know, you raise a really good point. that's how people are starting to think creatively, talking about almost 1-800 plans for apps and services. basically i as a video provider, would subsidize the data use through the carrier and so if i
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were youtube say i would say to my users if you use at&t network we've cut a deal, it will not count against your monthly data caps. so what we're seeing is really the evolution of a new medium and the new way of delivering those services in a way that i think is really just begun. >> the other thing that might hold people back from exceeding is the heat issue. i mean if it gets too hot. >> no way. >> or just use it on your wifi network at home. >> duh. >> that's true. >> which is where most people use their ipad at home. you travel around with yours wherever. >> i carry it. >> there is no going back, guys. heat, costs, whatnot, people love these devices. 3 million in the first week or so. there's no going back. so it might get hot but people will probably just wear an extra layer of growthing, thermal clothing to protect their legs or something. >> i-mitts.
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dennis great to speak with you. dennis berman of the "wall street journal." 113 degrees fahrenheit is what the temperature is when you're running the action game and it's plugged in. >> right. >> 113 degrees according to redcross.org at 113 degrees you can get a third degree burn after five hours of contact, at 116 degrees, which is what the ipad reaches, if it's unplugged, playing this action game, you can get a burn in 45 minutes. a third-degree burn. >> they better keep it on the stand then. very serious. >> or wear mitts. let's take a check on the commodities right now, gold, silver, copper crude, trading lower, concern about the weaker pmis out of europe and china, giving bid to the dollar and we're seeing that impact here on commodities of copper down more than 2%. coming up next, breaking news on gas natural inventory and shares of priceline rallying
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over 50% year-to-date. piper jaffrey saying share prices could hit 1,000 in the next two years, a gain there for you of potentially 45%, 50%. we'll talk to the analyst behind that call in just a moment on cnbc. >> want more "squawk on the street"? talk to us any time, e-mail us at sots@cnbc.com. follow uses afacebook.com/cnbc and get twitter updates, cnbcsquawkst. [ mike ] i always wondered how did an airplane get in the air. at ge aviation, we build jet engines. we lift people up off the ground to 35 thousand feet. these engines are built by hand with very precise assembly techniques. [ mike ] it's gonna fly people around the world. safely and better than it's ever done before. it would be a real treat to hear this monster fire up.
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[ jaronda ] i think a lot of people, when they look at a jet engine, they see a big hunk of metal. but when i look at it, i see seth, mark, tom, and people like that who work on engines every day. [ tom ] i would love to see this thing fly. [ kareem ] it's a dream, honestly. there it is. oh, wow. that's so cool! yeah, that was awesome! [ cheering ] [ tom ] i wanna see that again. ♪ a living, breathing intelligence teaching data how to do more for business. [ beeping ] in here, data knows what to do. because the network finds it and tailors it across all the right points, automating all the right actions... [ beeping ] ...to bring all the right results. it's the at&t network -- doing more with data to help business do more for customers.
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welcome back. i'm sharon epperson at the nymex. we're expecting to see an injection of natural gas supplies and we're seeing a decline of natural gas supplies of 10 billion cubic feet and the natural gas rate is on fire right now. i was looking at the east coast. the total supplies for natural gas actually increased by 11 bcf. that was in line with analyst expectations. it is an injection, that comes two weeks before the normal injection season. we do know that they are lower
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than what they normally would be over the next year for heat and next two weeks will be 10 to 15 degrees warmer so all of the factors are pressuring natural gas prices. the key level to watch for natural gas is last week's low, the decade low we saw of $2.20. i'll send it back to you at the nyse. >> thank you very much, sharon epperson. one hour into trading here, the stories we're squawking about, :31 on the west coast, 10:31 on wall street. yum brands rising to new all-time highs today. shares of rangold down more than 8% despite a statement from the gold miner its operations in mali are running normally. renegade soldiers claim they've seized power from the government. two-thirds of randgold occurs in the west african country. the average 30-year mortgage rate now above 4% for the first time since october of last year, standing at 4.08%. >> it is a broad base move
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lower. the main indices down now 63 on the dow. nasdaq and the s&p tracking lower. it is the material stock, the energy stocks, oil of course is falling, that is dragging us down into negative territory, we've lost two bucks on oil. you see the breadth of the move there, 3:1 decline to advancers. let's move to the nasdaq and check in with what's happening there, again, 3:1. an hour into trade, let's head over to chicago for more on what exactly people are talking about and how to trade it. kevin ferry is a cnbc contributor and chief market strategist at kronos future management. kevin, how focused are you on the chinese situation? is this behind the bulk of the move we're seeing today? >> okay, good morning, simon. i think this is definitely what traders are talking about and it's not going to go away any time soon because the information coming out of there is so distorted. so you have a difficult situation brewing, which is the
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china slowing story helps calm down inflationary fears but at the same time it stokes problems with regard to their ability to manage a soft landing, and so i think this is going to be with us for some time, and what we term it is the anti-goldilocks scenario, somewhere between too hot, too cold and just a luke warm bowl of gruel. >> what do you say to people sitting at home about how to trade this? >> okay, well i think that the key here, one positive that we're seeing is some stability come back to the interest rate market, it shows that it was an orderly correction in rates, and so i think that you still have no real problem brewing on that front here at home. so to the extent that the variables are here in the united states, the story is still one of a little bit good. but this is tough. >> so to paraphrase what you're saying then, that orderly move on rates has now happened in
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your view. we now have stability. is that what you're saying to me? >> right, right, or at least stability at something that's a little bit more fair valued. i think that really the risk comes from the unknowns, because this is a unique situation. it's going to be tough to call the economy here in the states when the information is so polluted coming out of asia. >> okay, kevin, thank you for your time, kevin ferry live from chicago thank you. priceline shares up 50% year-to-date. one analyst says there's much more room to run. so $1,000 a share in fact mike olson is the analyst who made that call, he joins us from piper jaffrey. great to have you with us. >> good morning. >> you said $1,000 in the next 24 months, mid 2014 or so is a realistic chance here and in your note you say it doesn't take realistic, excuse mow, heroic assumptions to get to nongaap eps for calendar year
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2015. yet the percentage growth you're modeling in seems to be very steep still so they do seem a little bit heroic. 26% bookings growth, 47.6% non-gaap operating margin in calendar year 13. is this average in the trajectory of priceline? >> well, i think what you have to keep in mind is that the international bookings growth grew 70% in 2011 and we're soaker to the fact it might not sustain that level for the next few years. probably will decelerate. we think the sustainable earnings rate over the next couple years will be greater than 20% and easy to land at $50 earnings per share in 2015 with those assumptions. >> let's be clear, you say a 70% growth in international bookings, bookings made overseas or bookings to overseas sites? >> bookings made overseas, that's correct. >> what is the base case scenario in terms of gdp growths for a china and a europe?
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not sure where the big driver is of that 70%, because right now we're looking at pmis indicated slowing in these two areas of the world. >> i think the beauty of this is we don't have to have significant growth in the economies to make this work. it really comes down to more of a penetration issue, where we see offline travel bookings shifting to online, and when you look at the u.s., about 60% of travel is booked online. it's only about 40% in europe and it's only like 15% in emerging markets so there's still a lot of room to go and considering 80% of priceline's bookings are international, that's really their sweet spot. >> mike, as you know better than i, there is the prospect of low hanging fruit that may already have been gathered in. if you can go across europe and it's a structured market, a lot of big hotel chains. if you're starting to market, you can continue to accelerate penetration through emerging markets that's a different ball game. they're not as really organized, not as uniform.
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you need more work i suspect at the ground, correct me if i'm wrong so the doubling of earnings per share does look a bit heroic, which is what you're talking about. >> i think you have to keep in mind that the european market compared to the u.s. market and more so emerging markets are really pretty disaggregated hotel markets so the number of hotels that are part of a major change is relatively low in europe and emerging markets and that's why an aggregator of some sort is needed and that's why we think an online travel agency that's focussed in the markets out pounding the pavement and signing up hotels to be on their network is going to win. >> we're saying the same thing but in day different direction. you're saying the business model is needed and i'm saying it is but it's hard to enact, really difficult to pound the pachlts pavements in emerging market. you put a two-year plan in which they'll double their earnings. >> i think we do disagree in the sense that they're basically taking what they've done in
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europe and trying to replicate is in other markets. we've done a number of different surveys showing the amount of paid search they're doing in different markets to suggest they're blanketing emerging markets with their brand and building up inventory in that way and i think the first mover advantage in the otm market is huge and they definitely have it. >> what is the flipside to your call, mike, if priceline is going to benefit and grow by this trajectory, who is going to lose in this race? >> you know i think that the losers are really kind of traditional offline travel agents in really international markets and i think that it's pretty shocking that still more than half of travel is booked offline in europe and almost all travel booked offline in emerging markets so i think it will be kind of those traditional offline travel agents. there's really not a problem where they're taking share from other online travel agents. there's a big enough rising tide for multiple players to benefit.
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>> you feel they're better able to execute an ebookers or expedia or the deep pocketed rival like goingical make a big push or groupon. >> i think what you'll see with companies like google and kayak is another one, they're going to be doing some interesting things in what they called medisearch but that's going to be a little bit different. those end up being not totally competitive with what the traditional online travel agents are doing. so yeah, i think that priceline is probably going to continue to be best positioned despite the other competitors in the space. >> mike olson of piper jaffray. thank you for being on the program. coming up security fears amid the markets and the economy, we'll talk to the u.s. secretary of homeland secretary, janet innapolitano on a first cc interview. stay with us. ♪
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72 minutes into trade, the dow down 64 points. open table upgraded to outperform from market perform. raymond james the price target there now $50. rack space downgraded from neutral to buy. the shares were downgraded because of price, i think they mean valuation and mcdonald's announcing ceo jim skinner, widely credited with the company's phenomenal turnaround is retiring. the president and coo don thompson will succeed him effective july 1, after 41 years at mcdonald's he became ceo in november 2004, since then shares of mcdonald's more than tripled, way outperforming the broader market. we'll talk tomorrow with jim skinner exclusively on "squawk on the street," one we're looking forward to.
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activists maliciously hacking and revealing government data accounted for half of all data thefts last year according to a new survey. u.s. republican congressman from new york peter king warned hundreds of hezbollah agents are inside the united states as tensions grow over iran's suspected nuclear weapons program. janet napolitano is the secretary of the department of homeland security, joins us on a first on cnbc. madam secretary it's a pleasure to have you with us. thank you so much. >> thank you. >> cyber security is important for the united states. does it surprise you it's taken so long for the passage of the cyber security act? >> one of the things we're doing is educating the members of the congress about the threat, the urgency and what we believe needs to be done to make sure that the nation's core infrastructure, the critical parts of our country are protected. >> this is certainly a great step in securing the cyber
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security over a country, but it does seem vague when i'm reading through what is being proposed, establish a procedure for the designation of critical inf infrastructu infrastructure. from the research i've done in the past, a lot of the utilities wonder about who will bear the burden in terms of cost for cyber security for beefing up security there. there is a movement to say i'm not part of the critical infrastructure. how will you make sure that what is critical will be deemed critical, and that the companies can actually bear this burden of cost? >> well, two things. one is, what is core critical involves infrastructure that if taken down would effect loss of life, massive economic damage, massive displacement of persons. it's the kind of infrom structure we rely on, everybody plugs into. there's a process in the bill by which those designations will be made and with respect to cost, cost that also should be
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considered is the cost if one of these networks truly is attacked and goes down. that cost could quickly number in the billions of dollars. so there's a public cost as well as a private cost involved. >> madam secretary, how wise was it for, we believe, the cia and/or israel to invent the stooks net worm that attacked iran's nuclear facilities when the data on that, the infrastructure is now available on the internet and it could be actually turned around and aimed back at the united states? >> well, the plain fact of the matter is that there are online programs now that, in the hands of somebody with just a modicum of cyber training can be used to infiltrate other types of control systems. i've seen demonstrations of it. we've provided demonstrations of it to the congress, so we live in a world right now where these kinds of attacks can occur. they do occur, and that's why it's so important for the congress to move. >> well you're obviously very
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clear about the eminent threat. let me ask you, therefore, where we are. you've got a very diverse water and power system across america, as melissa says, all privately owned. how many, what percentage of that infrastructure, of those players have defenses anywhere near capable of defending them from a stooks knit style worm? >> i can't answer that question because they're not required to give us that information. one of the things we want to foster in this legislation is the sharing of information about cyber security. we want to have base standards for core critical infrastructure. we want to have real time information sharing so that say if one utility or something is attacked and it's a particular methodology that we can quickly figure out the answer and then make sure that that is communicated, the answer, to other entities that could be attacked as well. >> do you think, that's a great
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wish list. do you think it's acceptable for the present secretary of homeland security to come on television and say i simply don't know how protected our oil, our power, our water systems are at the moment? >> well, again, you asked for what the percentage is that reaches a certain level, and we don't know, and i think that indicates to you and should indicate to your audience the fact that we have a lot of work to do in this area. are we doing a lot of work already? yes. last year we responded to over 106,000 attacks in the united states into various systems. we know the attacks are going on, we're increasing in sophistication. we know that tactics and techniques are increasingly available online to wrongdoers so again we need a statutory push. we need help from congress now, now that we've identified the problem, what can we do about it, passing this bill, making sure we have a process for establishing base standards,
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core critical infrastructure, better information sharing, that's what we're looking for. >> it's very important to do the proactive measures to protect and make sure there aren't massive attacks but at the same time what are the repercussions here? it's very difficult to trace back these attacks, and it's not clear that if somebody launched an attack, i don't know of the 106, if that actually interrupted, if they were actually maliciously done and interrupted services but if we were able to trace back, what would be the repercussions for, say a nation state who conducted that attack that might have taken electricity out for one town? do you believe there's a coordinated system within the government to decide what is an attack on the homeland? >> yes, we actually have a process and a good process for making those kinds of determinations, and we have a lot of skill and technical know-how as a government in terms of determining attribution. the number one thing we want to
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do is get ahead of this. i think that rather than sitting and waiting for another major attack to occur, we know enough now to say, look, for the nation's core critical infrastructureaa major attack to happen we know enough infrastructure we need base standards that are met. information sharing. we need some other things, as well, but those are the twoot çóidentified. >>e1 madame secretary, thank yo for your time. we appreciate it.4cmdt) rñ than qprofits surging on strong sales and thew3 earnings per sh missedlp the street's estimates and fed-ex is trading in negative territory. when's the big event now? u.p.s. or fed-ex? tfirst,ñi over to chicago and có in with5a rickó[qon whatlp heg working on. good morning, rick. >> good morning, simon. of course, we are talking about many issuesw3 regarding exports and just general growth of many
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york stock exchange. let's send it over to bob pesani for a wrap-up of the day. >> it's a target. crowd's gone here. michael is here, of course. we ,ñçócgdw3remember, price ove here, 15 to 17. talk of -- priced at 19. opened at 23. there's a $24.10. just off of the highsbl of the day. 7 million shares changed hands already. they bought at q.5 million. traded almost the entire quote and be churn here sellingfá sto1 already. the big question is this company compiles information, databases what you do on the web, on your e-mail, twitter e-mail and facebook account. i asked the ceo talking to you, melissa, howt( do we know this
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compillht$e compiled? scott said they don't compile it without the customer's permission and don't send out spam. this is an issue here. they're a company very much on the forefront of that. let's walkxd over here to vanta $17. melissa, this is a processing company. fairly mature industry here at this point and opening here, smiles as we had about 50q employees that aret(ok now on p simon, back the you. >> thank you very much, bob. tweet time. k loo#e]g to scan through internalñi e-mailsñr foe term muppet that'sñiçó derogaton london. asking you this morning, when's flagged on your business e-mail and why? tweet us.
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the term "muppet" referring to clients in( derogatory ways. what's the one word, thew3 one wordfj$váuá not want flagged on the business e-mail? and why? charles tweets i wouldn't want an executive at goldman to discover that i refer to himfá ó u by, the green one. ast( opposed to the purple one that is so much better and the red one poe. >> :lañimpressed you know the n. actually. what about corporate vultures? kind oflp surprised that the public still gets shocked that the big companies care about profit. i wouldn't want anyone toxd see sold my applefá stock at e1$92. >> the thirdc hour of "squawkñi the street" starts right now. welcome to our9 three of "squawk on the street." here's what's happening so far. $jáupáes has aok marginal playe i've heard in the last week is
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because of fracing and horizontal drilling we are in the position of more natural gas in russia ande1 saudi arabia. >> this is the company that's starved for too long oflp investment in marketing and w3r. this is a complreinvest to build a great future. >> initial joblessxd claims dropped 5,000 from an upward revised 353 down to 348,000.fá >> almost one ofñr mye1 absolut favorite stocks. you give them -- they give you stability.okqj thinke1 that's e interest. at 3% yield, hold the trigger people at home. it's a great brand. this goes up the food chain, we see big execs in z(t( ropes. >> heads roll or will we see retirements?w3
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>> our investors ajq loyalfá to the company. this is all primary. we have no secondary sellers and the largere1 investors bought i to the offering. >> what's exciting about the industry is mobileqand other bey is more transactions continue to move from cash andfá checks too electronic payments. >> good morning. welcome to the third hour of "squawk on the street." wherefá we standlmu)u now, red arrows across the board here. 13,037. this is the lowest morning so far. the nasdaq at 3,054. financials as well asht a lot material stocks and transports. department of justice says it's suing at&t onu allegations that they billed the "nfcc for servs provided to thee1 hearing impaired.
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reimbursement for services to international calllp earls who were ineligible for the service1 chevron and transocean in the being charged in connectignze1a5 withc an offsh leak. >> okay. time nowqfor the roadñr map.s7oc us.3w fed-ex withñi lackluster guidan has some worried. find out if the stock is still worth a buy. plus theier mans are increasing the productione1 hereçó in tig united states, volkswagen, adding more jobs andñr the stat of the u.s.ñi auto industry. and then the doughnut maker krispy kreme eating glaze today. taking a hitfá after thee1 comp reported fourth quarter resultq the ceo will be here talking earnings, future growth and lululemon looking like a downward dog today. >> is it downward facing dog?
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>> you would know. you need strategy and make it a winner in a long run. we'll have the trade and much ( hour k on the street." >> we start offqwith news out of the enur president obama said to speak in oklahoma addressing the keystone pipeline and the support of 9ñ we have the latest from john harmon. what should we expect here? >> reporter: we expectxd for th president to both reiterate his own energy priorities and try to blunt republican attacks on his policy. remember, thexd keystone pipeli has twoxdñi parts. one$+)o-@cñr to oklahoma and then oklahoma to gulf of mexico. he's embracing the part of itw3 saying he's not anti-drilling and against all use of fossil fuels. but also make the point that he does have environmental concern] about the top part and therefore try to both support:lañ his basd also neutralize the ways for republicans to go at him trying to appeal to the center of the
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electorate and say thtxd energy policy is really all of the above. >> the danger, surely,e1w3 john political grand standing obscures the truth of what's happening here. southern half of the pipeline doesn'tqneed state approval and will go through whether or not obama says orfá doesn't say. obama himself on the northern part of the pipeline according to what the c.o. told the general asking him to reappá9zdm water facilitiesu and probably get through anyway regardless of what the republicans ac of. >> reporter: i thinkw3 that's right. i think the president actually before the environmental against that pipeline was on track to approve it. heñi responded toçó his base. he is i think eventually it will be ipu)oved. there will be some adjustmentsk made. there have been some. so i think this is a president trying to beçó practical about
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balancing considerations with political considerations as he tries toqwin a second term. >> do you think, john,ñr that t president will address the impact onñi gas prices? governor romney beenxd onx> reporter: i think the president reiterates as he said over andqover again that he does qbóot want high gas prices now. he made the pointok in a recent press conference. why @?p'y president seeking re-election want that? it's a fact. even the transiltionsxd to alternatives is advanced by high energy prices but hisok point i he's not trying to make that happen andok no howaóá5 you dril in the global market, drilling alone is not going to be the solution to america's energy problem. >> all right. thanks so much. when the president speaks, we'll go to him. >> t(awaiting for that, check i this chicago with rick for the
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santelli excñ!hge. rick, over to you. >> thank you verynpmuch,lpxd xd. lots of topics today. i think alp good place to start growth and exports. linked. what do we learn? japan for the month of february exports. why's that interesting? think back to last year. theyçó intervened and yesterday. chancellor presentations of budget in the u.k. c obviously, increasing exports isn't a unique strategy but many countries evene1 maybe think cha as they slowxd think of social issues. they want to keep people employed andkonb chickens on table. interest okrates, interesth$te it? i'll make it easy. basically in aa5 180r8uz 210 closing range for 4 months in 10. 30 basis points, right? the current high yields of this week. so maybe thet( new rate's goingo
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240. keep an eye on-9 that. also, today in the "wall street and talked at the buffett rule withñi regard to the joint committee on w3taxation. supposed to be, of course, bipartisanship butñi i'm not su sometimes but in this case it seemed to be. why? because they set the çóbuffett rule this year generate $1.1 billion with a xd"b" and that's against a deficitxd that's $1.1 trillion with a "t." can we once and for all really -- come on. is that going tojf solve any problem? we all know that we have a spending problem bute1 if it's taxing problem. you know where the gold is? the wallets of the middle class. back to you. >> rick santelli, thank you very much. economic bellweather fed-ex tradingxd sharply lower. revenue did fallfx !=iq of
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estimates. transportation analyst at morgan keegan. art, i imagine you think that the pullback is worth buying and yet they weren'tqvery optimistic coming to the current quarter guidance. >> well, i thinklpçó the curren quarter guidance, there's a lot of things going on but weñi loo at the broader picture of what they're doing on an analyzedc year ago nobody thought they which is what our estimate is tk#pyou put it in the context t they're just short of 665 andlp fact that the company is not operating optimally at thi91 point, we think there's earnings next couple of years and when we put that in that context just on our v5 es of approximately 750, the stock's trading at 12qtimes. and so, we look at this as a
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ut despite the point of a sluggish economic environment. it has great upside to earnings and things coming in as !u expected. >> the margins were very xd impressive. at the same time, art, can you give us in context in terms of c express shipping? ground volume's very strong and been a driver for the company but express volume down dju(s&. 4% decline in u.s.t(xd shipping. 1% decline in international say they want to find improvements here. how important is this part of the business? >> well, the domestic express businessfá is very mature busins and we are seeing due to efficiencies and much greater reliability ox@"round networks, people areu saying tht in three days and a lot of cases next day evenxd by ground and given the price differential, shippers areo#w÷ó[ realizing t great value in thnqei ground
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services. as a result, we areñi seeing so chip away from express here. there's alsoxd something changi with managing the supply chain and what's happening is it's allowing the company to 1fdt) á network which iñr think is a ve significant long-term positive that will reduce their cost structure in the u.s. and make them more profitable and improve the returns of the business here in the u.s. short term opticallye1ñr peoplek at itxd as a bad thing restructuring. but this is supply chain and good for thexd company. >> i love the fact you have axd 127 price company. people can make on the stock. two quick questions. rgb xap markets guest said this sluggish and doesn't think to get tractq until that turns around. myñi second question is about fed-exok warning on the weak
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economy and the u.s. is doubling down of course buying tnt in the netherlands. >> well, let me comment quickly the company mentioned on theq conference caá,eqthisñi morning thatfá they're seeing a pickup shipments out of asia. one thing that is happening, though, is that they're seeing more of it go by ocean and just a function of price differential right now between ocean and ht1 there's much greater value on the ocean. i think that won't narrow the price differential deeper in the year. they're seeingxdxd improvement that marketplace.lp in europe, fed-ex is afácxd ver veryqrelative to its peers a smar,÷ in europe andp, growing there and will continue tolp gr andñr the changes going on in tá marketplace will allow them to grow. they did make a comment on the conference call today they're growing and that they're profitable in < europ i think that's a trend to continue. look. we would lovec better economic
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growth but i think even in this company's performing well and if we see beneficial earnings acceleration for the company. i think the stock did not reflect it. >> okay. all right. art, thank you for youru time. adding jobs and adding a thireó shift one of its çóplants. jonathançó browning isqceo of % volkswagen of america and phil lebeau is with us. ddúail if you would whether the new shift is coming online and about.e1 >> well, the new shift will be coming on in the second half of this year as we continue to ramó up our capacity. this is really another phase ofu vw's growth strategy here in the u.s. part of an overall $4 billion
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investment çóprogram.xd new plant, new products, new infrastructure and now adding in addition toçó the 200 jobs thatz another 800 or jfso,fá adding quality manufacture 2012. >> phil? >> jonathan, adding the production to keep up with demands for soaring sales of the passat, red hot since the reentr reintroduction in the u.s. do you see production cooling off okoverall? >>ñi no. if anything, we see a steady xd the market ran slightly ahead of people's xaexpectations of januy and february and seeing the industry off forecast up almost a million vehicles compared to laste1 year. we think it may run stronger than that. we believe there's good;jfi] ñr momentum. consumer confidence is coming back in to the car buying
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sector. andñr this is a great time with low residual -- high residual rates and a great product in thefá marketplace. >> jonathan, do you believe that in a strange way themy soarings be fueling sales a bit looking at the older models, less fuel jt i want toxd buy and might as well buy now for a 30 or 40e1e1 mile per gallon vehicle? yeah. i think there's a lot to that. a lot ofe1 people delayed purche decisions but with the low interest rates, high residual values at the moment, new products in the marketplace and productsmc like oneetplace and of the vehiclesxd we build here the passat, clean diesel, 43 miles per gallon, a mid sized sedan, and a range of almost 80i miles, customers are loving that. the convenience. the cnbperformance. as well as the fuel economy. >> about 22% of theñii] sales a
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diesel models right now.3dt) qz? >> well, we see that continuing edging up. certain months lasti] year we w( up around 25%.ok currently the uyear,çó running above 20% and more passats come in to!umó the market,çó tdi diee think it will continue to grow of 1 of every 4 of ourok sales. >> i think it is fascinating you are increasingly producing the cars for america inqamerica. not elsewhere. for example, in germany. it's what we call, of course,@úc natural hedging ande1 twoqreaso why you might do that. the first is because you might think that the currencies moveç against you and you want to have area tha you're selling. so do you have a big view on likely to go? the second reason youw3 mightk it to remove a politicalok probm
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d j that@n't generate jobs and growth in america. forces is most powerful for you at volkswagen? >> the premises is we like to build vehicles as near to the markets in which we sell themt(o here we &j" putting in inf infrastructure in the u.s. and north america region inñiok totn product not just assembly but supply chain. building the local assembly and local percentage sales ofñr whas built in the u.s. and the supply chain, as well. to develop going forward. it produces a natural hedge but times in terms of investment ini] plands new programs. soe1 very difficult to planxdi] investments solely on a currency forecast or hedging strategy.ñ fundamentally we do believec produce asqclose to the market as possible and whenxd we've ma the decision toi] come to chattanooga in terms of a
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production e1site, that was ver foremost on thee1i] engineering ability, quality. they like to see manufacturing jobs in the u.s. but in thei] consumer driven marketplace, that isn't the most important decision, factor. certainly contributing factor but i wouldn't say the most important. >> good to talk to you, sir jonathan browning. thank you for joining cus. phil, great work. thank you, as well. >> thank you. >> we of coursecg$áur&l waiting for the president to address the public on his energy policy and importantly what's happening with the pipeline that could texas and brent and if we get news from the president and the white house, we'll bring it straight to you.
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lots of action todayçó atñi nyse. want toñr update you on how they're trading. bob pisani is here with the wrap-up and perhaps more importantly, the look at the point line. >> there's the target.ñi over there. remember price is 19. now $24.20. melis melissa, transition to the markets and onceñr again europes let's takexd açó look at what happened in the euro overnight.
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this is the storyxd right here. we got the disappointing european pmi on top of the chinese pmi numbers. there you have it. it's very early in the morning but europe is open longw3 befor we are and whenwku$at happened theok european ñimarkets, euro dropped here andxdt( our fut)j1 s&p futures is what you want to look at here in the united states, put that up, there we go. that's the drop. we haven't xdrecovered. sitting near the lows of the day. europe commanding our attention. slower, disappointing numbers and people feel we won't be in a severe depression in europe. look at the shipping companies. overseas it is an oil shipper. those are the one that is are somewhat logicalxd in terms of move to the downside. the transports, of coure, true, melissa talking about fed-ex ani disappointing on the fourth quarterok guidance. the stocksw3 would have been we
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today even withoutok fed-ex and going on with that particular company. look at the commodity5a stocks. to theñr down sidexd all down % and 4% and the building names yesterday at new highu1 today o the downside. melissa? >> making smm pushing oklahoma about the energy policy. j )jyñ >> ultimately, help to curb this spike in gas prices that we are seeing year after year after y%pa so today,jf i've comeq@ to cus an oil town. because producing more oil and gas heret( at home has been and will continue to be a criticalñ part ofé@ an all of the above energy strategy. now, under my administration america isp, producing more oi today than at any 4r in the last eight years.
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that's important to know. over the last three!u years, i directed my administration to open up millions of acres for gas and oil exploration across 23 different states. we're opening up more than 75% of our potential oil resources offshore. we have quadrupled the number of operating rigs to a record high. we have added enough newjf oil 1 gas pipeline to circle9 the earh and then some. so, we are drilling all over the place. right now. that's not the challenge. that's not theñrt( problem. in fact, the problem in a place so much oil and gas in places likeñi north dakota and colorad that we don't have enough pipeline capacity to transport all of it to where it needs to go, both to refineries and then
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country and around the world. there's a bottleneck right here because we can'tok get enough o the oil to our refineries fast 1 enough. if we could, then we would be able to increase our oil supplies atxd a time when they' needed as much as possible. now, right now, a company called transcanada has applied to build a new pipeline to speed more oil refineries in the gulf coast. today i'm telling my the bureaucratic hurdles and now,q(e1 you wouldn't know all listening to the television sets. this issue of the keystone pipeline generated obviously a lot of controversyxd andlp poli. and that's because the original
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route from canada inçó t/d the united states was planned through an area in nebraska that supplies somefá drinking water r nearly 2 million americans and irrigation for a good portion of america's fácroplands and nebraskansxd of all political stripes including the republican governor there raised concerns of the safety and wisdom of that route so to be extra careful that the construction of the pipeline in the area like that wouldn't put the health and the éz/prisk. american peoplexdr review the project. i own timeline. not the company. not the i]experts. but members of congress who decided this might be a fun political issue,my decided to to intervene. and make it qmpossible for us to make an informed jfdecision.
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so, what we haveu said -- >>÷ñ thereht you see presidenta laying out his strategy on energy and more importantly, of course, on the pipeline for washington listening to what the president has to qay. it's interesting taking peopleç through very much step byxd ste on the process here. he clearly feels a badñi has be done to him or a misinterpretation of the facts. >> what he is trying to do is pin the fact that he turned down the first half ofa5xd that pip on the republicans saying they were trying to rush him for now, obviously,i] we know there were tremendous political pressures on the president himself so both sides play politics in this and the republicans thought they had a good issue. at a time when the economy's weak andxdñr people concerned a jobs, blocking the jobs, but the presidentñ9i was also playing b
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politics, as well. he had environmental backers pipeline and it had appeared that the state department was going to approve it so with republicans on the attack, you ( counter that, put the ball in sure average voters have a difficult time sorting out both side's arguments. >> but seems to be at( basict( argument over whether or not there's a silver bullet to reduce gas prices and the republicans and gop keepçó inferring that there is and the white house is saying, actually, there isn't.xd always going to be more complicated. >> reporter: yes, the u)urjz is that hejf needs it all of the abovefáe1 py than that was john mcxdcain's position in 2008. republicans would say they're for allok of the abovexd but th president isn't doing enough on the fossil fuel side to make local prices a reality. >> john, thank youw3 very much. w3 turning to bad news.
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checking the markets, two hours in to trading, the dwwt right now down by about 84 !5eip &hc s&p down, as well. nasdaq hase1 lost j}c about --q 1% right now. ise1xdxd that right? if we hadxd the board, i would know. i don't think so. i don't think that's right. yú2et's move on right now. nyse saying it will note1 e1app. saying it's no longer in the came camera. >> yeah. sears holding feeling more pressure. mcdonald's announcinglp ceo jim skinner is retiring. effective july 1. since becoming ceo in 2004,i] shares of mcdonald'sh%ñ%uz than tripled. we should know jim skinner will
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join us fore1 an exclusive interview tomorrow right here. that should be an excellent interview here. >> absolutely. ñr55 a highly capable man. ->>c turning to the board. 3059. >> as you may have noticed, darby int( with us again. interjecting in 0 the shot. shot. >> you were talking earlier on about the move in the euro. i'm looking across the board here and seems to me, the dollar, this isqa dollar story today. if i lookçó at the australian dollar, if i lookçó at the yen,c greenback is much higher across the ñiboard. >> çóright. cause of it was the data getting in china and europe and that caused the euro to collapse and caused a flight in to the dollar. the dollar is stronger and putting pressure on material names across the board. it's a cause and effect thing.ñi the quarter.
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the s&p i wasxd saying up over 11%.fá we would have thexd best quarte since 2009. maybe. it's still a great run. up 10.7%. on the s&p 500. ♪we were up 11% the last quarte. i cbez not sayt( we had the bes qok2009. we have a few da75÷ to go for trading. it is not over yet. but to simon's point, what happened overnight was the weakq pmi data of europe and earlier than that in china and that caused the drop here. @q up the euro here. there you can see it. and that's what caused the flight in to the dollarlp and o futuresok dropped on that news very, very xdquickly. all happened at the same time. early on overnight essentially here in the united states and the europeanxd market open. sitting right near the lowsi] o the day of the s&p fáfutures. take a look at the transport and key thing here isu)u across the board, anythingxdjf shippin around the world includingxd th united states, fed-ex disappointing on the guidance.
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all of this weaker regardless.ok commodity stocks, to thee1 q1) downside. 2%,xd 3% decline. generally on thet( upside for t quarter. this is a phenomenon for xdtoda. finallyyeuz with exact target. priced at 19. opens at 23 ande1 holding up he at $24 and change. has not moved at all.fáxd vantiv, a surprise here.lp a mature industry.e1 t mid range and opening at 19 and holding up there and in a funny i]way, everybody knew exact target in the mid-20s. that's the indication for all st (/qv will be ve today with that performance. >> all right. bob, thanks so much. let's get to sharon for an update on t,j energy sector after the president's qemarks. there m a stock that's reacting certainly and that's transcanada, building the keystonejf xl pipeline and turn sharply on the president's
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remarks and higher. when'st( the latest in the pit? >>a5çó pipeline nbcompany's m having a strong reaction but here we are seeing much reaction initial commentsok outlining th way thefá process of thejf keysó xl pipeline approval has gone are well-knownjf in the marketplace and so what traders here are more focused on are some of the globalxd fundamenta factors, what'sñr happened with china data and euro zone weakened the commodity complex today and also inñi terms of t( contract, dipped belowlú.he 105 level and traders said they're looking aheade1 to next week's data on cushing supply seeing a surprise decline yesterdayñr in last week's data. they're expecting to seeñr anotr build and another reason why e
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$103 a barrel so there's some technical positions here and also in the crude market to potentially push it lower here in terms of brent crude market also seeing prices down more than alp dollar aenlçó lets youw that there is a global fundamentallp factor here at wo in the oil complex and, of course, commodities lower pretty much across the board. back the you. you. now to rickñr santelli in chicak rick? >> april's tax timeqi and tax mf co cometh.fá bill herr is here, aqcpa, -fina there's a story in "the journal" buffett rulef this year at least generate about $1.1 billion against theñ $1.2 trillion deficit. putsçóqthings in perspective.
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you were felling itelling me l taxation andt( targeting variou groups. >> the biggest problem is you cang( have a tax policyfá basedn warrenñit( buffett t(ráhtájju @c apply to 300 million other citizens. u$ere was a guy in new york and they did a study and he paid lp 102%xocñ his taxable income. paid in taxes. >> t(102%? run me throught( this one. >> well, he was in a situation taxes. for the t(emt, they don't want u to e1dñct. >> the moreu taxes you pay, ax. circular argument, the more taxes you have to pay and thenñ phantomi] income. you can make let's saye1 c$100, but costs you qwhe1$50,000 in interest to make it. you netted $50,000. because of the amt they don't
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let youñi deduct that and taxedn all $100,000 so that in and of itself, a short version of what happened in that case. >> i find it interesting two things i hear in conversations about taxes are amt, maybe the only time congress did an inflation adjust indexñi somethg so it goeswhcack to the '60ñis. originally, put forth to capture i'm like talking a very small number of ñrpeople. now millions,ok tens of million of people caught in that. the other thing is, hey,yr have capitalxdñr gains, i can dt capital losses. who has capital4 losses on ordinary income? what do i get to write off then? >> $3,000. apital loss one year. so he's basically devastated but it takes him 333 years to recapture the money fromlpqthe government and look at the tax breaks and don't talk about the penalty for almost every taxt( benefit, there's a penalty took it. the irish have an economic
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reality.-collapse them in to on. we can't do the reverse and say q.(rq(i the box and owe axd bunf money. mention it as a loss. go there with regard to taxation. back to you. >> rick, thank you very much. rick santelliqin fáchicago. diamond foods the snack 3"f&erw3 that's being investigad for alleged improper accounting is suspending the dividend. it's down now -- if you look at the 12-month tracking, halfñr i value. the company also it would appear now looking for alternative capital injections inqorder to strengthen the balance sheet and heard yesterday it might be talking tofá privatew3 equity playr"t to achieve that. let's bringth$r' heather jones, managing directore1 of bb&t capital markets. what point do you buy this stock? >> well,e1 simon, we -- when we look at where the earnings will
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be on a normalizñ basis given the ongoing net costñr inflatio right now or on axjx$u5 of the parts valuation, we get to a stock in the low 30s but in the meantime you have a lot ofxd uncertainty with the lawsuit and thexd uncertainties there, so given the shares here in the 24, 25 range, we just don't see enoughg aqos(rpáed with this. >> some of the parts analysis would seem to an investor with a higherxd tolerance for risk and could have $10 upside. that might be attractive. how would they xdaunlike that equi equity? amy sale of various parts of t business to a kragú or whoever or kettlep, chips? >> it could be private equity but frankly givenñr theqmargin structure and the free cash flow
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structure i think it's more likely of strategic buyers and i think it would be possibly one strategic buyer because i can't ñi strategic investor that would want thec culinary cbusiness. there's plenty of emerald, pop secret or kettle. kettle i think is most brand butxd none of those buyers want the culinary business. for culinary, i think you would need a buyer that hasok experiee with growers, experience of co-ops and there's potential buyers for all those pieces but i can't think of oneñi singleñ buyer. money? >>e1 our top pick at the moment corn products. we believe there's at least 20%, 25% upside of the xdshares. gét a stable cue it also has exposure to emerging markets. very, very strong pricing power andxd a really strong fr=eb cas flow yield. that's our fajaáráe pick.
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>> okay. heather, thank you very much for your time.e1 us there. >> thank you for having me. rñ from nutsfá to doughnuts -- >> oh!fá >> krispy kreme. they're fáhot. so's thefá stock. up almost 20% this year. whytt do they have planned for the future?ok we will have a preview right after this. "why did i roll over my i.r.a. to scottrade?" "for starters, it didn't cost me anything." "and i got a one-hundred dollar cash bonus for rolling over by april 16th." "i like bonuses." "plus at scottrade, there are thousands of commission-free investments." "and if i need help, i can find it online, by phone or at one of over five-hundred scottrade locations."
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"it's why more investors with i.r.a.s are saying.." "i'm with scottrade." ♪ [music] [ donovan ] and i thought "i can't do this, it's just too hard." then there was a moment. when i decided to find a way to keep going. go for olympic gold and go to college too. [ male announcer ] every day we help students earn their bachelor's or master's degree for tomorrow's careers. this is your moment. let nothing stand in your way. devry university, proud to support the education of our u.s. olympic team. ♪ when your chain of supply goes from here to shanghai, that's logistics. ♪ ♪ chips from here, boards from there track it all through the air, that's logistics. ♪ ♪ clearing customs like that hurry up no time flat that's logistics. ♪
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♪ all new technology ups brings to me, that's logistics. ♪ 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.
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ñi welcomeko okñiback.fá coming up, truth seeking onok china. really what's happemjjr'side the economy and how you canqplay it. plus, a tech stock of the year, not apple. mcdonald's shakes!u the halftime report startsi]xd at n eastern. now back to melissa. >> thanks, scott. shares of christie cream up ñr1 this year. earnings this week with better than expected r%)@lts and lowering the forecast for the full year. joining us nowxd for a first on cnbc interview, jim morgan, the ceo ofw3 krispy kreme. greatt( to have you with klqs. >> thank you. >>ñi you made it clearñi you plo triple coffee sales.
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)iñfee sales aboutñr 4% and a h seen it work at mcdonald's where they're able to, you know, sell very high+ margin product. at this point, seems like a crowded field. how will you stand out? th theçói] beginning to get people even try krispy krpqqçó coffee. >> no. i t/a&k that's exactly jfright. wet( seeáu$e multiyear project and offers us just tremendous opportunity. >> so gettingw3 backw3 to the original question, mr. morgan, that is, you know, for customers to try this and not go to the mccafe and the dunken'donut, what will you do? qok as goop[ ast( investors hope? >> we have a promotion right now, any size coffee t(99 centso get them used tot( thinking of coffee coming to krispy kreme and variouslp things like that.
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if we can just get the people coming in to krispy kreme to try the coffee, we launched a new coffee a few monthsñr ago and reporting we'ret( getting an receptions of t+tgñ guests is phenomenal. i think the starting point tot( get those coming to us toe1 fal in love with it and then track new guests to come to xdit. ìc morning to you, the name of the name isxd moviuh in onlp mcdona and starbucks territory. they're moving off in other directions. healthier,t( higher margin. productjf offerings. do you believe that longer term you will be hamstd5hg by the krispy kreme image which does ñ yogurts and juices and other markets they believe the future margins pt"? >> thei] good news is, well, we think about that a lot and talk about it a lot. we're right now with the style we are, 200-somejf shops in the u.s. and 20 countries, we've got
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plenty of demand from what we consider affordable indulgences and maintain the number one product in the class and we think we have that and our brand is fábelow where we arexd we'll to the expanded product line. i don't think we have that as ad obstacle in the way right now. >> when you say you discuss itea lot, do you mean you discuss rebranding the businessc as par outhis? >> no. wñ really discuss it more in the additional product lines for greater parts and quite fr'.e treat definition. >> all right. jim, thanks for your time. we appreciate it. >> my pleasure. >> ceo oft(çó krispy kreme. up next,w3 oklululemon trad high. can it keep flying this high? ei9ñ the earth's gravitational pull and hurtle us all into space, which would render retirement planning unnecessary.
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what do you believe the future will hold for it over the next 12 months to further excite us from thisñi level? >> so, thexd they gotqo it to double digit comp firefighter year? three quarters ahead of comparisons with light inventory jjzd of fiveçó years ago.t( the e-commerce business is also on fire. more than doubled in the fourth quarter. remember, they have only just t u.s. and demand for theg well in excessqof their current distribution. ñ think there's potential that they earn better than $1.80 a year. >> they do plan on opening a lot of new stores herec in the unitd states. i'ms7 wondering if you believe
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they can stillqkeep up the revenue perçó square foot, extremely high, about 30ñi time that of neiman-marcus. can they keep us at very high metrics if they still -- if they continue the expansion? can. 100 is a fairly modestjf numberq compared tot( the opportunity. bear in mind canadian stores comping in low double digits implying aqhigher comp in the u.s. stores. which you are they'll become more productive. articl about lululemon and the different way ofxd approaching e business, namely in contrast to the lpdiscount retailers with scarcity on products in the outlets and same time, for example,xdfá eavesdropping quit
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are ÷dfásaying, for example in rooms andrare they sense of a one-off approach that might have diminishing returns fu.iguju down the line? >> i didn't see that article but doesn't surprise me. it's important to the product design. methodology and that's what l u lululemon is best at. w%yu and women be better at the pursuits. >> thank you forqyour time. >> thank you. >>lp first time i became aware -- >> you were in lululemon. >> walking down broadway and a woman lying in the window onok e backt( with the feet straight u and aqguy balancing on his pelvis. >> live people? >> yeah. a hell of a window display. >> got you in? >> no. i mo,m on by. >> i thinke1 they're kind of pricey. i hear that it's fantastic.
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butñi how much do the pants cos( >>c i don't know. 100 bucks. anyway, send us yourçó ñitweets. goldman sachs. so we'rep,w3 asking you what w you would not want flagged in your e-mail andxhr of course wh. we'll read some of th p &hc ♪ our machines help identify early stages of cancer and it's something that we're extremely proud of.
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you see someone who is saved because of this technology, you know that the things that you do in your life, matter. if i did have an opportunity to meet a cancer survivor, i'm sure i could take something positive away from that. [ jocelyn ] my name is jocelyn, and i'm a cancer survivor. [ mimi ] i had cancer. i have no evidence of disease now. [ erica ] i would love to meet the people that made the machines. i had such an amazing group of doctors and nurses, it would just make such a complete picture of why i'm sitting here today. ♪ [ herb ] from the moment we walked in the front door, just to see me -- not as a cancer patient, but as a person that had been helped by their work, i was just blown away. life's been good to me. i feel like one of the luckiest guys in the world. ♪
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all right. let's get to ñiit. time for "squawk on the çótweet" goldman sachs- is reportedly scanning internal e-mailse1 for the word "muppet." what's the one word you would mott wantok flaggeñ in your e-ml and why? vince tweets, wmd, world math day. not weaponsçó of mass destructi. fantasy isçó a word jopt scanne. fan tmland. goat rodeo, when referringfá to recent goldman executive meeting. let's get over to rick santelli.q hey, rick, the dollar appears to beñi cutting the gains across t board. >> yeah. i'll tell you what.
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i think foreign exchangei] is a hottest trade for a couple of months and i'm notw3 bullish on the dollar at least the dollar index. as many ñiare, as a matter of ft down a bit on the year. âcqeujzok moreñi importantly, i think that the higherqinterest rate environment that briefly though i don't think we'll see a 170 yield,xd simon, i don't think we're zooming straight up as evident by the ñipullback but here's a bullish thought. japan in the intervention and exports and trade surplus for think the begger thy neighbor. he currency and the wild carde1 to help the dollar. >> yes. tellc the brazilians about that. they're hot to trot there. leave it thereqfor the moment. melissa? >> so many concerns of china's growth story. the pmi weaker thanpmlq(uq" and seeing the china-related stocks sell çóoff. we hav
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