we've been watching those futures today. right now they're flat lining but we do have some more information, some data on the houses you'll want to watch on "squawk on the street" so stay tuned. we'll see you later. ♪ how does it feel to be back ♪ how does it feel to be back >> good friday morning. welcome to "squawk on the street." i'm carl quintanilla with melissa lee live on the big board, jim kramer, david faber off today. stocks trying to break the three-day losing streak and brush off some concerns about a global growth slowdown. futures here in the states mildly positive although shanghai walloped again last night. the lowest there since february. europe, meantime, has not been able to shake off the jitters as well and the spanish ten-year yield back above 5.5%, an 11-week high. >> let's get to our tgif road map. the dow is on track for the worst week of the year. a lot to worry about here. china, spain mortgage rates. where did the markets go with earnings season just weeks away? >> bank of america launching a pilot program to let distressed home owners hand over the deeds

to their homes and rent them back at a market rate. is this the solution the housing market has been looking for? >> darden restaurants and nike beat estimates but are trying to overcome investor worries about gross margins. >> mcdonald's ceo jim skinner in his first television interview since announcing his retirement this week, a cnbc exclusive. we'll talk about the economy, his run as ceo, and whether the stock can continue its stellar climb. also joining us for the hour today, the chief market strategist over at convergence. good to have you with us today. >> thanks for having me. >> we were talking about news flow today on a friday. might be a little quieter than some days but things are going to heat up as we get to quarter end and run right into the earnings season in the next couple weeks. >> that's right. we have another week or so to go to the end of the quarter. it's been a great quarter. then there's been a lot of concern about the first quarter earnings releases, whether they'll come in in line and how revenue will be so there is a lot going on in the next four weeks. >> do you think we'll see the

bounce we've seen in the past heading to the end of the quarter? it always, whenever there is some sort of seasonal or trend that's tied to some sort of period of time the market seems to get smarter and smarter each time that time comes around and does it more in advance. >> it absolutely does. if you'll see a rally or reversal of the last couple days of weakness it's going to be the next couple days probably not going right into the end of the quarter. >> if you had to guess which sectors could feel a bump in terms of portfolio managers trying to chase the areas they've been under investment but have gotten away from them perhaps would it be say the financials or technology? >> absolutely. those are the two winning sectors for the quarter. technology and financials. two sectors that make a lot of sense in that kind of recovery if you believe in that story line. those are the two to focus on. >> this week one of the big stories has been worries about china, right? the pmi, business sentiment, again today, showing weakness. are you a hard landing guy or not? >> the market isn't telling me it's a hard landing situation yet. the number one tell i look at is oil. oil prices are still fairly

elevated. if china was really going into a hard landing would oil be a three-digit number? i don't think so t would be more like $80 to $90. >> if you check out the iran premium it would be a double digit number. there are plenty of arguments to say maybe the oil number is telling us there is global weakness because we're elevated because of a premium due to geo political concerns. >> definitely. at the same time, i don't think -- it is certainly consensus that the whisper is iran is the target but at the same time we haven't seen a lot of the preludes to conflict so i don't know how much of a premium is in there and i know directionally it hasn't shown a lot of weakness even in the face of the news from china. >> meanwhile, back home claims were good although we got mortgage rates back above 4 on the 30-year and we'll get new home figures later on today. are you worried that higher interest rates, a, do you think that the bottoming process is over for ten-year? do you think higher mortgage rates put an end to the housing recovery or does it convince those on the fence to get back

in? >> certainly the number one longest time rally i think in financial assets has been the 10 and 30-year bonds. it's really hard to call the end of that long a run. so at the same time as seeing rates back up a little bit it's hard to say the story is over but i believe if somebody is on the fence about getting a mortgage, refinancing, or buying a home, seeing higher rates might push them toward making that decision finally. >> isn't it hard to say that the bond run is completely over because the gdp growth has not or will not be stellar this year? it was interesting. we had the goldman sachs earlier this week saying buy equities. the bond run is over. predicated on that whole argument is that gdp will be somewhere around 4%. and there aren't too many people out there. there is a wider range of opinions where gdp will be but plenty of people are in the 2% camp as oppose today 4%. >> two interesting things about that goldman call, the first obviously making a generational call is a big call. really big call. and how do you do that in the context of rising interest rates? we've known nothing but declining rates for 30 years in

this country. it's what our p ratio histories are based around, what our long-term trend is based around. how do you think about rates heading back up? what effect does it have? they might be right on the earnings and the business and the economy but wrong on valuation. it's just a very problematic call from that perspective. >> as we go into earnings season people say corporate profit growth is slowing. margins are compressing. rates are increasing. inflation is sticky. are you going into this with a glass half full or glass half empty? >> i'm still going into it with a glass half full only because american companies deserve some benefit of the doubt for having really adapted their cost models to the environment they work in. the big wrinkle i think is europe. that's the big concern. if you listen to any multi-national company europe is the key concern. they're worried about how much capacity in europe, look at the auto companies for example. and they're thinking about a slowdown in asia, slowdown in china affecting their pnl as well. but as far as american companies' ability to compete and generate really good profit

margins i think it's the benefit of the doubt. >> though we've seen a tremendous run so far in 2012, we do think part of that benefit of the doubt has been banked in. it is no surprise, we had the contracting eurozone pmi numbers yesterday. it was sort of shocking that people were saying oh, you know this is a surprise here. we're expecting this. it's no surprise that europe is in a deep, protracted slowdown at this point. it's no surprise that china may be slowing down as well. have we sort of baked that insofar and that is what has fueled the rally to date? we're at a point now where it's what next? >> we have baked all this in and i think we're assuming the ecb is going to be easing the monetary policy. >> all right. we'll talk more about markets in a bit. >> all right. let's go to the breaking news desk at headquarters. >> just want to bring your attention to what you are looking at at the bottom of your screen now that the obama administration has nominated dartmouth college president jim yong kim to head the world bank. it is a surprise pick.

the u.s. was due with its nomination by 6:00 p.m. tonight so it comes out now. larry somers had been on some short lists and susan wright as well so it is a surprise choice. robert zellic as you know announced his resignation in february. there is a history of course of the u.s. nominee being chosen to lead the world bank so we'll have to see how this all shakes out. the nigerian finance minister is another one of the competitors for that post. so interesting news, a development today again, jim yong kim currently president of dartmouth now nominated to lead the world bank from the united states. guys? >> all right. scott, thanks for the update. let's talk earnings. darden restaurants posting better than expected fiscal third quarter earnings as the olive garden chain reported its first quarterly gain in a year. darden which is also the parent of red lobster and long horn steak house says mild winter weather and earlier lenten season helped for sales. it is the sign of the olive

garden, the same store sales number, even though much weaker, the weakest of the different chains -- >> certainly an illustration for how we're looking at all data, nick, and that is how do you divorce a good number or decent number from the weather? macro economic advisers talking about the february jobs numbers saying a third of it was warm and the march number is going to have to be tempered down a little bit. are you convinced that the weather was a significant factor or not? >> it is so hard to know because seasonality as a concept isn't just about the weather. it isn't just about hot and cold. it's also about the hiring patterns in the u.s. so for example retail up in the fifth quarter, lays people off for the first quarter. there is a lot more to seasonality than it is 70 degrees in new york on a tuesday in february. >> right. >> it is important to separate the sorts of businesses where weather will pull forward sales as opposed to weather spurring additional sales that would not have otherwise taken place. for instance if you're a retailer and you have warm weather you're pulling forward potentially sales you might have

seen in a warmer month like april or june buying more of the warmer weather clothing. those sales might not happen later on. might not be replicated because those sales have happened where if something like a darden restaurants people might go to the restaurant and then still go in april. >> yeah. in the case of a retailer it's so hard as well because you can only buy what's on the floor. if what's on the floor is winter and it feels like spring how does that actually increase demands? >> yeah. it seems like jucht the other day we were talking about darden, weakness in olive garden, red lobster not big enough to compensate the weakness and then we'll talk later with an analyst about a bunch of different issues, the new, high end concept chain they are about to launch. and then the viral review from this woman. >> right. from the octagenarian. >> who you could argue had a material impact on the quarter after her appearance on the today show and a lot more. darden has been a fascinating story all year. a lot of us surrounding the changing of the guard in mcdonald as well with the ceo jim skinner set to resign this

summer. he will be a tough act to follow for his successor especially considering the fact skinner is widely credited with turning around the fast food giant and nearly tripling the share price during his tenure. we'll talk with jim in the next hour of "squawk on the street." all dow components, since he took that job, no one has appreciated their share price more than jim skinner has for mcdonald's. >> yeah. >> it's always hard coming in after mickey mantle and that's what don thompson's challenge is essentially right now. sure. although the wall street review of don thompson so far is very positive. this guy has rolled out a lot of major initiatives, very important initiatives for mcdonald's. he was in charge of renovating a lot of the stores, rolled out the specialty coffeys, espresso based ranks which were such high margin products. coffee sales were 2% originally and now are 7%. a huge gain in tirms of coffee and of course those are higher margin items as opposed to hamburgers or so. >> the fact that he is a black ceo is not lost, very few among the s&p 500.

>> it is the first african-american ceo at mcdonald's period. >> yes, yes. came up through the ranks, engineered by trade. very good relationships with franchisees. but as the journal points out today very little international experience at a time where they're going heavy in apnea, middle east, africa, asia pacific, and what, they say he has been traveling a lot to compensate for that. >> as coo you have a global view of the business to be fair about it. but unlike skinner he hasn't actually headed businesses overseas and so that's the knock on don thompson if you were to have one. >> and mcdonald's is a nice proxy for at least employment trends, wouldn't you say, nick? a large part of the breakfast business is built simply around people who need something to eat on their way to a job somewhere. >> absolutely. it is also a great indicator of the basic consumer confidence and discretionary spending. you don't have to go out to eat a meal. you can have it at home. the fact that growth occurred in the backdrop of a very troubled consumer is a very promising

sign. >> we'll talk to jim about obviously reflections on his time. can't wait to ask what the biggest challenge has been, whether it was saving the company from the pr disaster that was super size me or managing through the financial crisis both huge gauntlets that he passed. and then we'll ask him whether or not he would expect the stock to continue rising. i remember kramer. if kramer were here he'd probably admit the fact he was not a believer as it got close to a hundred and it kept getting closer and closer and he finally had to give in and say the stock is not coming down. >> this stock has been a triple under jim skinner, the best performing dow component in 2011. don thompson certainly has big shoes to fill when it comes to the performance of the shares. we have to talk about nike as well. the stock is on the rise this morning after its third quarter profit rose and higher sales of its popular shoes and sports gear. sam possessor, senior analyst, has a buy rating, $125 price which is $15 higher from where we are right now. sam, great to see you. >> thanks for having me on.

>> why is the fifth straight margin decline not a concern for investors? >> could you ask me that again? i'm getting a lot of background noise. >> of course. why is the fifth straight quarterly margin decline not a concern for investors at this point? >> well, i think there probably is a little concern. i think what they're doing is working their way through a lot of cost increases and clearing out some apparel and inventory out of china and the western europe but they have so many triggers they can pull. they're still able to beat the numbers and, you know, considering how big their future orders were, up 18% on a cost-to-dollar basis we still think these guys are the one to beat in the space and we think over time the margins will come back. i wouldn't be surprised to see significantly better margins in fiscal 2013. >> part of the euphoria in nike stock right now is the expectation of out performance versus the s&p 500 during a period leading up to the summer olympics. the summer olympics has provided

a boost to nike over the past five olympics by about 24.5%. this according to barclays but i wonder if nike is saying europe challenges are still significant could that impact be dampened simply because of the contraction we're seeing in that part of the world? >> well, their future orders in europe on a cost-to-dollar basis were up 10% but that's not quite as good as some of the other areas with the exception of japan, you know, that's a time of year and an event that really can change things. we think it becomes a share a pocket situation where they do, they'll pick up a lot of business while people will choose to spend money with them rather than other people. and, you know, they've been -- the last few -- since, in many olympics they've set up lots of big ideas as you would put it, big technologies from there that have grown in a tremendous way in years following the olympics.

such as the lunar series and so on, which is now a $2 billion retail platform of athletic shoes that was launched in 2008 at the olympics. we think there's product there now that can continue to bring that kind of excitement in the future for nike. >> sam weerks had you on the other day in advance of these numbers. 6% china apparel, is that below expectation? i wonder to the degree you're worried about excess inventory and lower sales in europe and china specifically. >> well, we knew that they had been struggling with their sports wear apparel which is the more fashion versus their performance apparel. i believe that they probably, you know, thought of trying to get people into the brand through, like, the cotton t-shirts with the nike logo and that is just an example, versus some of the more performance based product. i think they realized that as in the united states the consumer wanted the more performance

based product so they're basically clearing out of the more lifestyle product to make room for the more performance based product. and remember, sports wear apparel didn't do as well as anything in any part of the world compared to the performance product. >> got it. sam, thanks for your time. appreciate it. sam posener. >> absolutely. when we come back double cheeseburgers and a stock price tripled both synonymous with jim skinner who is retiring in three months. hear what he has to say in our live and exclusive interview at 10:00 a.m. eastern time. one more look at futures as we close out a rough week for some of the markets. a lot more "squawk on the street" live from post 9 in just a moment. 3q we always hear about jobs leaving america. here's a chance to create jobs in america. oil sands projects, like kearl, and the keystone pipeline will provide secure and reliable energy to the united states. over the coming years, projects like these could create more than half a million jobs in the us alone.

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bank of america is rolling out a pilot program to offer rentals as a foreclosure alternative. real estate reporter diana olick is in washington with the details. >> reporter: well, melissa, the bank of america wants to keep troubled borrowers in their homes but turn them into renters. and to that end they are launching a pilot program offering about a thousand customers the chance to trade in the deeds to their homes for a rental agreement. this is by, quote, invitation

only. you have to have your loan owned by bank of america, be delinquent for more than 60 days. you must have exhausted modification solutions or not responded to alternatives to foreclosures, short sales and deeds in lieu. you have to have a high loan balance in relation to the current property value, face considerable ultimate risk of foreclosure. no junior liens on the property and must still be occupying the home and have adequate income to make an affordable rental payment. the rents will be lower than the mortgage payment. bank of america says the pilot will help determine whether conversion from home ownership to rental is something our customers, the community, and investors will support. this program may have the potential to further round out the broad set of solutions we offer our customers in need of assistan assistance. that is from bank of america. a spokesman tells me they'll own the properties only in the pilot program and only initially. if the decision is made to make this a much larger program they say bank of america would not be in an ownership position. that means they're going to sell off these properties with the

renters in them to investors. there is lots more of this on the blog. realty check.cnbc.com. carl? >> one exclusive invitation. thank you very much, diana olick, in washington where the cherry blossoms look amazing. interesting you can almost see how they're trying to tailor make a certain kind of distressed homeowner to fit this bill. >> it is. but i think the question that's not addressed by any of the reports that we heard so far is how bank of america plans to manage 1,000 properties. if it's a landlord is it going to -- diana, is it still going to be sending out the guy to mow the lawn and clean the gutters off the roof? what's bank of america going to do about that? >> they say they are going to use rental management companies to handle this. bank of america won't have its staff out mowing the lawns. they'll use companies and that is a new cottage industry is the rental management industry. there are a lot around and they'll be growing. they'll help manage the properties to make sure the rent is okay and keep the homes clean

and tidy. >> a lot of people are sniffing around this opportunity but have to figure out how to do this on sale. it sounds like a product actually bank of america could sell to big institutional investors to buy a piece of these homes that they own. >> right. that's what is already happening right now is that you have these investors going in for the government's program. the fannie mae property program was launched and a lot of investors we've been talking to, some already have rental management, arms of their companies that do this. so there are again a lot of people organizing to do this because this is the investment today is to get in on these properties. the rental income is good right now. the question is how long is it going to last as home prices keep falling. >> fascinating story. thanks so much. diana olick in washington. up next, some off beat market indicators. you probably haven't thought of. also ahead would you trade a multimillion dollar home for some facebook shares? find out who's looking to do just that. much more "squawk on the street" straight ahead. carfirmation.

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five minutes before the bell on this friday let's bring back nicholas colas from convergex. one of the favorite parts midwife day is looking what you come up with in your daily note. you look at the housing market through the eyes of jim rockford from "the rockford files" and the correlation of the smoking rate and their debt-to-gdp levels. takes you to what country? >> unfortunately greece. >> greece. >> really. >> greece has a 40% smoking rate.

40% of all the people over 15 smoke. it is an outlier on the upside. the average is around 20. u.s. is around 16%. what i try to do as indicators is reconnect this to something economic and relevant because one of the more insidious problems of the financial crisis has been we don't trust economic numbers as much as we used to. we question birth/death rates, seasonality. what i try to do is reconnect this to something we can all trust and believe in. >> you also say the correlation is not causation, right? >> that is absolutely right. it struck me as odd that greece had this deviation outlier smoking penetration rate in the population and it led me down the pathway of thinking perhaps as much as a taxation policy as any kind of social norm. >> leads to some policy suggestions about how to lower smoking levels in some of these countries but interesting stuff. it's worth a read if you can get ahold of his note called smoke them if you got them. meantime, another day, another wall street debut. this time it's an online discount and fashion retailer from china. the cfo of vipsha will join us

to discuss his ipo after he rings the oechipening bell.

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.

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there is the opening bell on this friday and a look at the s&p 500 at the cnbc real time exchange. down here at the big board, online discounter in china selling its ipo today. we'll speak to the company cfo in a few moments. over at t the nasdaq investor magazine celebrating the 2012 ir magazine u.s. awards. interesting. just talking about china growth and here we have an ipo pivoting largely around growth in china. >> it's interesting because it sort of sits at the crossroads of the two very powerful flentr in china. the demand has been stellar up 15%. sales of clothing up 15% in 2011 and also this hunger for luxury

brands. anything with a brand with a logo on it is what the aspiring middle class wants to buy. and so this online retailer specializes in that. it will be interesting to talk to the cfo in just a few minutes' time. taking a look at the markets, a lot of big movers already out of the gate. we were talking about home sales and we're going to get a big existing home sales data at the top of the hour at 10:00. kb homes came out with earnings. it was puzzling given what a lot of the other home builders were talking about, a strong start to the spring selling season baufs the warm weather and actually kb homes had a much weaker fiscal first quarter result as well. we see the huge drop in kb homes down 13%. revenue came in barrel one-third of what analysts expected on wall street. increased inventory charges, margins down, orders down as well by 8%. the cancellation rate rose that. 's not a good sign, up 36% from 29%. on the flip side we have bank of america doing the foreclosure to rent program. that stock is sharply lower in today's session. more so than it appears. it is down by 1.6% so that's

worth noting here. in terms of this sort of program, i'm curious if you think this could actually help. at least grease the wheels to start getting this inventory off the markets to convert these foreclosures to rentals. >> it seems like a baby step. not sure how many mortgages could even qualify. how many people don't have a second on their home somewhere? that is a very, you know, narrow segment. i think it's better than nothing and a baby step toward some kind of conclusion. >> yeah. not to mention you're in bad enough shape to be distressed but good enough shape to pay a decent rent -- monthly rent was a little interesting as well. >> yeah. nike is worth noting also. you know, in most fronts except for the gross margin issue it was a good report. nike shares were down by a half percent here on the sort of flat tape. taking a look at luxury clothing maker kors selling a secondary at a 3.5% discount, $47 a share is where the secondary price is so it's trading just under that right now. so that stock is down 4%.

what a ride since the ipo right here at the big board in december. i mean it ipo'd at 20 bucks and here we are in just three months. >> and an upgrade at the car sector over at gold i believe grading dfs putting it on their conviction buy list. also ast they say credit losses should stay lower longer, lower rates in goldman's view, lower rates they say support margins for the group which currently trades at 9.6 times 2013 estimates so people on dfx and asp as well. >> we talked about smoking being an indicator. altria getting an upgrade today and of course it's tobacco. so wells fargo is upgrading to out perform. the price target range is now 31 to $33 saying it is finding balance between stabilizing the marlboro share gains as well as managing profitability. it's getting a minor boost here up 0.6%. this is another stock. the whole sector, paying a nice

dividend, it has had a nice run this year and last year as well. >> my favorite headline of the day is in the ft. nick, the rain is back in spain. we've got yields back above 552. people beginning to look technique late targets that would take out ostensibly the 2011 highs. obviously a lot of talk about austerity there. inability to keep a fiscal target and be honest on that. how much pain do you think is going to revolve around spain in the coming months? >> spain is going to be inc. the number one trouble spot in europe. they have a lot of very negative fundamentals at play. the growth we talked about to unemployment rates, 24 or 25%, no sign of coming down. unemployment rates of young people closer to 50%. those are the kind of people that get very involved in political protests in the process so it is going to be the headline risk for the euro for at least the next quarter. >> "the journal" says it took its spot at the back of the european class. essentially the class dunce.

are they -- they have essentially replaced greece as the poster child for trouble? >> they meant portugal. the whole iberian peninsula is the number one area of trouble. if there is a silver lining it would force the ecb and other policy makers to really outline how they'll improve the fire wall around these problems and that might give the market some support. >> let's head over to bob pisani here on the fourth floor. what's moving this morning, bob? >> what the heck happened to kb home, folks? we have a problem. the entire spring home buying season was supposed to be significantly better than last year. specifically we've been working under the assumption that orders would be up 20% to maybe 30% and so far the early inkags were that is exactly what's happening. i've been saying that for a couple weeks. kb home comes out with the report today not only were they profits below expectations, forget that. we're worried about orders. down 8%. what? where did that come from? we see average selling prices down, declines in the southwest and west. no, we're not suppose today have that.

we are supposed to have orders up 20% to 30%. i need to make a lot more phone calls on this and there as lot of head scratching on the street obviously. home builders are getting killed this morning. as of this moment, i'm calling this an outlier, a little bit of a presumption, but this is way, way off from what everybody else was expecting on the street. so let's see what else. all i can tell you is this bet another the happen with the rest of them or there is going to be some serious problems. the whole theory is going out the window. let's try to get some more information and i'll have more comment thon in the next couple hours. elsewhere you know all this hysteria about cloud computing ipos? it's dominated the ipo market. today we got a quieter one, a stock exchange went public. specifically one of several exchanges that are out there today. they priced the low end of the range, talking 16 to 18 and priced at $16. this is an electronic competitor to the nasdaq and new york stock exchange. why did it price at the low end of the range? it is very simple. trading volumes are horrible. not just at bats but the new york stock exchange, nasdaq,

everywhere. that is because all the major groups are trading less. proprietary trading desks are being dismantled due to coming volcker rule, institutional traders are trading less because they don't know what is going on with the economic situation. high frequency traders are trading less because of lower volatility. they have less opportunities trade. you know retail investors are confused. they've been trading less. it is no wonder you're pricing an ipo for a stock exchange at the low end of expectations. elsewhere "the wall street journal" had a front page article referencing the bats ipo but also saying the s.e.c. is investigating various aspects of high speed trading. none of this is very surprising. two points here. they're looking into colocations where you put the servers of people who are your partners, traders, right near the servers of the exchanges. carl, you know this has been an issue for a while. i don't have any problem with colocation. let people have access to the closest part of the exchanges as long as everybody has equal access. if somebody doesn't i have a

little problem. carl will have more comment on that a little later. i'll get awe comment on what bats is trading at in a moment. >> can't imagine a tougher situation than trying to start trading when you have your name plastered on the front page of "the wall street journal" in connection with an s.e.c. story. >> it's not exactly the most favorable back drop. not at all. >> absolutely. >> all right. let's shift to bonds and the dollar. jeff killberg is a cnbc contributor and senior development director of the treasury curve at the cme group in chicago. good morning to you. >> good morning. >> happy friday. your general take is that the mass exodus out of treasuries is not here yet. right? >> agreed. after nine consecutive days of fierce selling in the treasury complex we have seen two substantial days on buying and today more buying as the uncertainty in europe kind of unravels. i think there are two paramount issues to focus on. look first and foremost at this technical level in the ten-year. back in late october 2011 there was a big ban here, a price

support and yield resistance. so the 221. in the event we get under 221 today all the mass exodus conversation is going out the window and the tlt can be a buyer. more importantly i think we're waiting for the fed. the twist is expiring. we anticipate they won't use the words qe 3. that is essentially hog wash in these pits but they'll have a twist on the twist. so, therefore, get your mustard out. we're anticipating operation pretzel. >> meantime, speaking of bernanke, he is going to speak at 1:45 in washington today. m mervin king. what kind of discussion do you think -- what sort of context do they put qe coming out of this conference? >> a great point. essentially the ecb just released their first wave of qe and came with it hard

essentially 1.2 trillion dollars in that three-year ltro program. however, domestically we saw the waves, the stock market go up and down versus qe one, two, three potential. europe is in the first initial wave and enjoying the liquidity over there but it is a three-headed monster. liquidity, austerity, and obviously growth which we're seeing concern for. >> jeff, thanks very much. talk to you soon. >> have a great day. >> jeff pretzel at cnbc in chicago. less than a half hour from now we'll have an exclusive interview with mcdonald's ceo jim skinner who has announced this week he is retiring at the end of june. company president and ceo don thompson has been chosen to succeed skinner. that brings us to this morning's squawk on the tweet. what new product would you pitch to mcdonald's' incoming ceo to keep growing the fast food giant? tweet us at cnbc squawk st and we'll get your responses throughout the morning. i don't think you are a big

consumer of mcdonald's products but i imagine you can think of a couple ideas, menu offerings they haven't thought of yet. >> even some goodies they only bring in seasonally like the mcrib for instance. i think that should be a permanent menu item. i think there would be quite a demand. whenever they cut back on the menu it is huge. their whole website is dedicated to telling you when the mcrib is coming, how long it will be there, where it is. apparently in germany it is permanent though i haven't gone there myself to witness. >> the germans did a piece last year about people who go in search of the mcrib all year long because it is a promotional item. one thing about designing food for mcdonald's in their test kitchen it has to be able to be replicated at thousands and thousands of restaurants around the world in the same way. >> i would focus on a regional fare from the u.s., two words. fried oreos. >> fried oreos. they're already frying things. pop an oreo in there. >> the calorie count is up there. >> it could be a cobranded sort of specialty with kraft.

>> true. >> we should note this is a story we've been following since yesterday, the volatility etn issued by credit suisse yesterday, they said they were no longer going to issue -- they weren't issuing shares so it was trading like a closed end fund and was not tracking volatility index. they said now they're going to start creating new shares this morning but it is still trading lower. it spooked a lot of people out of this and the tricky thing about etns they track futures markets and contracts so there is a -- they have to continuously roll and so there is always a tracking problem between the actual etn and the underlying asset as oppose today gld which has the physical asset stow is very in lock step but the t vix which herb greenburg brought to our attention yesterday as sort of having a blowout divergence with the volatility index is still trading lower today. that's sort of -- it's interesting because there are so many volatility products out today and a lot of not consumers but investors want to take part in a lot of these etns but it's

sort of caveat entor. >> the problem is credit suisse started doing redeems a month ago but the only thing that creates the arbitrage that pushes things to the actual price is the redeem process. around 2:30 yesterday afternoon word must have gotten out credit suisse was going to reengage and cree eat redeem and it only came out after the close. we'll see who knew what when. >> that should be interesting. t birts is now by 16%. the latest chinese company to go public at the big board. the cfo of vip shop on the online discounter debuted on wall street. take a look at this morning's early numbers. [ male announcer ] you are a business pro. monarch of marketing analysis. with the ability to improve roi through seo all by cob. and you...rent from national.

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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. welcome back. i'm sharon epperson at the nymex. don't let the low behind nu the gold pits fool you. there are a lot of gold trends around the world and a lot pain today. a short squeeze going on in the gold market after gold futures hit a two-month low yesterday.

we're looking at gold prices now above the 16.50 key psychological level and keep in mind as well that we are looking at the number of long-term investors getting out of the gold market. how do we know this? look at the etf action. holdings posting their biggest one-day decline all year long yesterday. we continue to watch a lot of folks perhaps seeing a sentiment change here in the gold market. we'll continue to follow the action here. traders saying it could go either way, melissa. $20 up, $20 down. the future market a little fick until this session. >> sharon epperson, thanks for that. pressure fresh from ringing the opening bell, vipshop in china ceo joins us now. v.i.p.s has just begun trading it looks like. literally just now. 5.98 so it is down just slightly. priced at $6.50. you're the first chinese company to debut in the united states

since august. after some accounting concerns and a lot of investors grew a little we're bit chinese companies. was it a difficult decision to go ahead with this ipo here in the states? did you ever consider listing for instance in hong kong? >> well, yeah. we believe the u.s. capital market is a natural home for high growth high tech companies like ours and the u.s. investors are more receptive to high growth companies like vip shop. that's why we picked the u.s. nyse as the listing exchange for the stock. i know recently the capital market is kind of tough for us but we believe, you know, the listing, the ipo is a natural progression in the development of the company and we want to raise capital to further invest in infrastructure especially warehouse and i.t. systems to provide better service to suppliers and consumers as well. >> a lot of talk about stellar revenue growth. not so stellar profit growth. when do profits start catching

up to the top line? >> well, yeah. you're right. we're growing very fast in terms of top line. we believe, you know, we have a very clear path to profitability. >> any goals? any time lines? i mean, a year story, two-year story, next week? >> we're going to get there. we've not providing. sorry, guys. we strongly believe in the prospect of the company turning profitable in the near-term future. >> you're going public just a week after at least one analyst here, actually an analyst based with jp morgan in singapore arguing china is already in his words in a hard landing when you look at auto sales, looking at construction stocks, and that is really no long ear debate in this one analyst's view. do you concur? >> no. certainly not. i believe china still has the strong growth momentum, well 7.5% is of course lower than 910

but still one of the fastest growing economies in the world. >> explain the business model for people who may not be familiar with vip shop. it is luxury branded goods sold at a discount. there ar lot of sites like that in the united states actually. what competitors do you face in china, a lot of analysts may point oute of your closest competitors. >> our market position is more mid to high end segment. we're helping our brand partners to clear their excess inventory and providing value to consumers by offering products at very good prices. yes there is competition everywhere so in our business but we are very confident, you know, we are the leader in the china retail business.

we're very confident, you know, we're going to strengthen that leadership and be competitive. >> i'm just looking at what are the most popular things your site sells? what are the most popular products? >> well, 40% of our sales are apparel. we have a lot of sports wear, cosmetics, some of the sports wear products are very popular. >> certainly this plays into the chinese consumer's love for brands, love for the retail, for the luxury brands in particular. >> we are very focused on mid to high end market segment. that is where we believe it has the largest, most potential for growth. >> right. okay. thanks so much for joining us, the cfo of vipshop which did open for trade. 5.98 the last trade there down by about 8%.

thank you. >> thank you very much. this summer mcdonald's will have a new ceo. what new product would you pitch to him in order to keep things growing at the golden arches? tweet us at cnbc squawk st and we'll get your answers coming up. remember, an exclusive interview, retiring mcdonald's ceo jim skinner is going to happen at the top of the hour. don't go away. what makes the sleep number store different? the sleep number bed. the magic of this bed is that you're sleeping on something that conforms to your individual shape. wow! that feels really good. it's hugging my body. in less than a minute i can get more support. if you change your mind once you get home you can adjust it. so whatever you feel like, the sleep number bed's going to provide it for you. at our semi-annual sleep sale, save $400 to $700 on our most popular bed sets. sale ends march 31st.

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time for upgrades and downgrades. altria upgraded. wells fargo citing stabilizing shares of marlboro and increased profitability. that stock is up by 0.4%. wet seal downgraded to neutral from overweight down more than 7%. discover financial upgraded to the conviction buy list from hold at goldman sachs. the firm sees upside to consensus and further opportunities to deploy excess capital. discover those up by only 0.4%. for more go to stocks.cnbc.com. >> in a few minutes we'll talk exclusively with mcdonald's ceo jim skinner who announced he is retiring this summer so this morning we're asking you what new products would you pitch to the incoming ceo? don thompson to keep growing the fast food giant.

got a bunch of answers. an aapl sandwich. those four letters. burgers shaped like all 50 states. think of the profit margins in the northeast. tim tweets -- >> hawaii. >> exactly. mcfarmville so people could eat all they want without gaining any weight. and keesh with a slogan real men eat keesh. cheese, beg, bacon filling crimped in french toast. i think she means quiche. >> i would think so. >> great time with you this morning, nick. thank you for coming in. always good stuff. >> thank you so much. >> when we come back breaking news on the economy. new home sales plus market reaction and then as we said jim skinner, his outgoing interview from mcdonald's as he retires this summer. "squawk on the street" coming right back. carfirmation. 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.

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choice. >> you are pointing out he shares the same educational background of the incoming next premier of china. that should make for an interesting -- >> to appease the emerging markets and maybe africa as well. >> very true. getting fresh data this morning as well in this case new home sales. steve liesman back at headquarters. >> just got it through here. looks like 313 at an annual rate versus january, down to 318,000. and this is the fifth by the way, we've had housing data every day this week. we'll recap some of the bidding. we had housing starts that were down from an upwardly revised number but we had existing home sales that disappointed to the down side. so let's see here. 313,000 which is down 1.6%. the month's supply ticked up to 5.8 from 5.7. the consensus was 325,000. i think on balance, guys, the housing data this week was more to the down side than it was to the up side after a pretty

decent january and of course the big debate has been about the weather and the effect that weather has had and will have on future sales. and also, guys, the slightly rising mortgage rates, whether that brings people off the fence. we're just not seeing it right now. we're still in this level 313,000 not getting much of a bump up. in fact disappointing to the down side. carl? >> thank you very much. i'll put that in the context with kb home figures today and you get the picture of what's been happening in the housing market at least for the month. get to the road map this morning for the next hour straight ahead our exclusive interview with mcdonald's ceo jim skinner. you don't want to miss that. >> how long can the transports hold out before getting derailed by gas prices? we'll find out. >> the head of the regional bank outperforming its peers. the ceo of huntington bank shares will join us. >> the buzz around the hunger games is ramping up. one analyst is looking for more from lions gait. we'll find out more and how much he is expecting. >> i did see the hunger games. i saw a screening and i did like it. i have to say i enjoyed it.

i didn't read the books and i'm not that sort of genre person. i see how it is appealing. it appeals to males, females and those over and under the age of 25. a wide field. >> see if it makes a billion dollars like "the twilight" series. after more than seven years as ceo of mcdonald's jim skinner is retiring. since his post as executive shares of mcdonald's have risen more than 229%. president and chief operating officer don thompson will succeed skinner as ceo effective july 1st. for a cnbc exclusive the ceo and vice chairman of mcdonald's jim skinner joins from us oakbrook, illinois. good morning to you. always good to talk to you. >> good morning, carl. good to talk to you. >> probably a lot of investors obviously sad to see you go. two questions. why now and your chief reflections on your tenure as head of the company. first of all, i've been proud to be the steward this of great brand for the last seven and a half years and of course i've

been here for 41 years and it's been a really great ride for me. i am so proud to have been the stewart of this great brand for that period of time and the system has been rewarded with great success as you've mentioned. and that's the thing that aim proudest of. now is the time. i think if true succession plans work effectively ceos make the handoff to the next person at the right time and we think this is the right time at mcdonald's. i think it is the right time. we have a great candidate in don thompson who you all know who is a very talented executive and will continue to lead the charge here at mcdonald's. of course i think that's the thing i am proudest of over that time period. not just the general success of the brand during some very difficult times but the talent management and leadership development of the team we've built and i truly believe that the success of the ceo is

measured a couple years after he has gone not necessarily during his tenure. and i'm confident that mcdonald's growth will continue and under don's watch and the leadership team that's been put in place here at mcdonald's. >> yeah. love to get your reflections on don a little more in a moment. people may not be aware you came into the company at a time of significant turmoil. kpt had lost two ceos in a matter of months. there was a super size meat fiasco. you managed through the financial crisis, weakness in europe, posting hundreds of months of consecutive same store sales here in this country. what would you say has been the toughest gauntlet you've had to cross through? what's been your biggest challenge? >> well, i think right from the beginning as you said having lost two friends and two great leaders in the brand i was here at the right time i believe and was able to fill that vacuum of leadership and had been part of the team in terms of the development of the plan to win which was our revitalization plan.

and i think right from the beginning that initial period was the toughest because you never know how the continuity is going to play out regarding the leadership even though i had a lot of credibility in the system and had been around a long time and been part of the leadership team. once we were aligned as a system around the plan to win in our business model, managing through the external factors and the recession and the financial collapse was not as complicated because once this system is aligned, you know, we're on a good ground and able to perform very, very well. >> jim, wall street certainly loves you but don thompson has his share of fans as well. the one knock that analysts investors might have on don if any at all is his lack i put that in quotes but lack of international experience compared to what you had when you came in to being ceo. they say that he hasn't run an

international business. how would you ease investor concerns on that front? >> well first of all don has a lot of international experience now. he has been the chief operating officer over the last two years. that's what the chief operating officer does. he has been at every country and market in the world. well maybe not all but certainly all critical to the momentum of the company and certainly the leadership and hags been the leader of the brand if you will around the world over the last two plus years. he ran the company before that and was associated with the world leadership and has 22 years of experience and as very talented executive and he is ready to go. he is the real deal as i like to say. those of you who have met him understand that don has ketchup in his veins and has the capability of leading this great brand forward.

>> let's talk quickly about the economy right now. let's pretend for a moment you weren't retiring and we were going to talk about the second half of this year. a lot of chatter about the resilience of our own recovery in the united states. more signs of trouble in europe specifically with spain and wore bitz a hard landing in china an area where don is obviously going to have to focus quite a bit. how would you characterize the degree to which the global economy is repairing itself? >> as we communicated in january in our annual earnings call mcdonald's is facing headwinds this year like everybody else both on a commodity front, this is the first year where we've had two consecutive years of commodity cost increases to the extent that they are but that is all well communicated. this is cyclical. these are the challenges mcdonald's deals with over the number of years that we've been in business and we are in a place now, a position of strength with our business model to be able to adapt to those challenges as we have in the

past. and we expect it to be a little tougher really in the first half than the second half. we think the second half is going to be a little less impactful relative to the commodity costs in particular. we have the austerity in europe, the economy there not very good. particularly in spain, italy, and france and the other markets there as everybody is aware of and yet our business model serves us well in those markets and our ability to continue to relate to our customers and we'll do better than anybody else if you will if you want to look that way. the u.s. economy of course we're seeing some consumer confidence score increases. we're seeing a gdp increase that was 3% in the last quarter and so, you know, it's business as usual for mcdonald's in terms of operating in these different economies around the world and i'm hopeful that the u.s. economy will continue to grow and we'll wrestle through this

european issue and certainly china, china, you know, people get nervous but china's growth rate gdp is still fairly robust. i think it's about where it was when the last time you and i talked when we were overlooking the bird's nest in 2008. >> yeah. four years ago. >> in china. and so it is still a country that will continue to manage their affairs very well i believe and that'll be good for mcdonald's. >> jim, give me 30 seconds to go to washington. just get a quick update on the president and we'll come back. we're going to d.c. >> we're watching the president of the united states this morning who is nominating dartmouth college president jim yong kim to head the world bank, a bit of a surprise announcement, folks speculating about traditional washington names like laura tyson or whaps lawrence somers as haefd the world bank but the kim selection seems to be intregral to the argument that the americans should continue to control the head of the world bank as the u.s. has done since world war

ii. developing nations have said they might want somebody representative of that part of the world as head of the world bank. with the selection of kim, born in korea and a u.s. citizen, that may be a little bit more appealing to those folks. he has a reputation as a physician, somebody deeply involved in the issue of aids and economic development around the world so that seems to be where the administration is going. slightly surprising today but jim yong kim dartmouth president now nominated to head the world bank. back to you. >> we go back to jim skinner the current ceo of mcdonald's. jim, pardon the interruption. we want to continue this conversation we're having. i want to ask you about the kind of company don is going to be taking over and by all accounts it is in tip top shape and certainly the stock price reflects a that under your tenure the stock has been a triple. in the past year the best performing dow component for 2011. the stock right now is close to multi-year highs. carl made a very good analogy. don thompson coming in is sort

of like being next up after mickey mantle, not an enviable position to take over a company when it seems to be at its pinnacle. what do you say to investors who might be concerned this could be even just a speed bump in the trajectory of the share price? well, first of all i take it as a great compliment, you. regarding mickey mantle. but i think that don, we have to recognize don has been here 22 years and was running the u.s. company during the revitalization and been part of the solution. he was the chief operating officer during the last couple of years we've had here at mcdonald's so he has been an integral player in the leadership of the company and will continue to provide the fundamental leadership that is going to be important. the reason the share price performed as well as it did is because of the system alignment and our suppliers and company people are all in line to do a better job at the front counter and drive through and when we do

that and perform well and get the sales, which leads to the earnings and then the multiple which is nothing more than mathematics, we expect that the share price will continue to grow under don's watch as we continue to deliver on the fundamentals. >> so the best days in terms of both the business as well as the share price, the best days are still ahead. >> well, i would certainly hope so. i think that someone made a comment to say, well, if things were troubled and we weren't in the right position for jim skinner to leave he wouldn't leave. that is accurate. this is the perfect time to hand it over to don. obviously we are a 57-year-old company and we expect to be around for a long time and we expect there's a lot of up side in terms of the long-term sustained growth of the organization. >> jim, before we let you go, let's look five years out. what will be don thompson's big evident test and opportunity as

specific as you can make it. >> the challenge for anybody that leads the great brand of mcdonald's will always be the same and that is being able to do a better job today than yesterday in delivering a hot meal in a clean environment at a great price. it's no more complicated than that. the front counter and drive the, the interaction with our consumers, the moment of truth. most important thing. don is all over this. when you look at the idea of optimizing our menu, modernizing theimproching -- improving the accessibility in the current programs it will be five years from now and we'll still be doing that. it's a continuum. we have 33,000 restaurants. we don't just move things into portfolio that quickly. it is a continued, sustained, continuous improvement initiative here and don is well prepared to be afbl to deliver that. >> jim, congratulations. we'll miss you but look forward

to seeing you around the block. >> thank you, carl. >> jim skinner, mcdonald's. joining us from oakbrook, illinois. here is the list of the top performing ceos in the dow during their posts. cisco leads the charge since john chambers became ceo in 1995. shares of cisco have soared 950%. jim is second on that term up 229%. if you measure from the day jim took his job, he leads all other dow components i think by far from the last, since he took that job. interesting times. interesting comments. we'll see how don thompson does. >> yes. well, we're going for the golden arches to a golden boy of wall street that's losing sunshine according to critics. coming up we'll break down goldman sachs' latest foray of management assets with an all star panel. stay tuned. oil sands projects, like kearl, and the keystone pipeline will provide secure and reliable energy to the united states. over the coming years, projects like these

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and you still need to retire, td ameritrade's investment consultants can help you build a plan that fits your life. we'll even throw in up to $600 when you open a new account or roll over an old 401(k). so who's in control now, mayans? i'm sharon epperson at the nymex. we just had a jump of about $3 in both brent crude and wti crude. they've come off of those highs but many traders trying to ascertain what has happened here in the market place. there has been a story posted by reuters about iranian exports falling in march by about 300,000 barrels per day. this of course is the first major change in exports since the tighter sanctions that have been imposed by the eu on iran. we're also of course monitoring what is happening in terms of the spread and in terms of what is happening on the floor trade. there have been significant amounts of volume at those

higher levels and traders say perhaps some of it was some technical trading as well as we have seen a short covering rally across the board in commodities in the session. >> sharon, thank you very much. 47 minutes into trade down here at the nyse. the dow is down 29. let's look at stocks to watch. hot topic says it is getting a sales bump from the release of the hunger games movie this weekend. having sold out it says now of some of its related merchandise including t-shirts, jewelry, and nail polish though the stock is in negative territory. a second quarter loss of 23 cents a share for micron. wider than the 19 cents people anticipated. the company's bottom line was impacted by weaker selling prices for memory chips. mi michael kors $47 each and that has pushed the market price of the rest of the shares down to more or less exactly that level. >> the chinese government has reportedly begun to make it

easier for foreign investors to put capital into china but is doing so quietly through a series of phone calls to top fund managers outside its borders. what could this all mean for investors here? jim observer wise is president of oberweis asset management. did you get a phone call from the chinese government? >> we are a little small i think. really the top largest funds only. >> i want to make that clear. in terms of this invitation i would imagine there would be plenty of strings attached. the last thing china wants to do is invite capital to come in only to find that it's hot money and that it quickly floods out of the system when times are tough. >> yeah. there's always been a lot of strings attached. that doesn't mean it's not a good deal for investors and doesn't mean they shouldn't take it but it definitely comes with strings attached. i think what this really means though is it's a sign. i think it's a sign that the government is interested in bringing more money into china and i think it's a great thing. it is one step further on the road to full convertibility. i think that's what you'll likely see over months to come. >> it certainly is a sign of

perhaps the chinese government wanting to make its market a little bit more efficient. the one knock on the shanghai composite is that it's heavily traded by retail investors. not too many institutions are involved and certainly no foreign investors are involved. would you expect that the eventual effect could be a stabilization of the market and increased efficiency of this market? >> yeah. i think that is certainly the effect there could be some really good swings along the way. let me give you an example. if we had full convertibility, i think you'll probably see much more reasonable allegations within global benchmarks for example on the world index china is 3.5% about 10% of world gdp. think of what that would do for demand if the investors had more access to provide more appropriate waiting. it is the fastest growing segment so 10% is likely to be 15% years down the road. we think there are real opportunities here. >> hang on. we aren't going to get ahead of

ourselves are we? we have capital flight from china, an economy that again the data overnight is indicating is slowing. at a time when the chinese composite is under pressure. this might be a bad time potentially for investors to move in for the united states truly. >> oh, i don't know. i'm actually quite -- carry the opposite view. i think if i can buy a country that's still experiencing growth, growth better than most places in the world though it is a little slower than it's been, eight, nine times earnings, that gets pretty exciting. i'd much rather own china when nobody loves china than periods when enthusiasm is very high. >> that isn't where we are. people have been very optimistic on china. we're now from the consensus of great growth surely moving in a negative direction. that is the market inflection shun point and isn't necessarily the best time. >> i don't know. i think it's an awfully strong term, surely. we have to think about why we're seeing pressure on china. we're seeing a lot of pressure

because the government want thread to be pressure. the government restricted loans. they basically put in metrics to slow growth to a more sustainable level. maybe they overshot a little. now we're starting to see the pendulum swing the other way. you're seeing liquidity increase from the government permitting increased loans. you're seeing the government bringing more capital to increased demand for asset prices. all those things are likely to shift the pendulum the other way. i think probably to the degree most investors haven't recognized at this point. quite frankly i've been doing this seven years and running the china fund. this is probably next to 1998 when the world was about to collapse probably the best time i've seen to buy chinese equities. >> with that said i'm sure not many investors out there in the audience are getting those phone calls from the chinese government but you brought along two stock picks you can buy right now that you are actually invested in. 21 is one of them. >> if you believe the chinese investor is likely to continue to adopt the internet 21 buy a net is the way to play it. the largest data centers,

independent data centers that if you -- which internet traffic will flow through. companies like buy view or e-commerce companies will use their data centers to host and facilitate transactions over the internet. we tnghink it's a great way the investor can play the broad based consumer growth and continuing use of the internet in china thnchs stock has clamsed from the 52-week high and is trading from where it was at its high. what happened in particular to this one? your next pick is pretty close to its high so it hasn't seen that same sort of collapse. just seeing a nice run. >> sure. 21 has seen some margin erosion recently and they're seeing that because the demand is so high they can't support their own data center. they actually have to go and rent space from some of the telecom carriers to support data. eventually they'll build out their data centers and should get margins right back up. remember at this stage of the game they have a third of their market cap in cash on their balance sheet. those are great times to be looking at stocks like this.

mobile was hated last year and is starting to bounce back. it has bounced back nicely so far this year but they provide security software for smart phones. >> right. >> and again, if you believe that smart phones, you believe you'll see increased consumer adoption in china of smart phones. i think this should be a great way to play it. >> jim, good to see you. >> thanks a lot. >> fedex expressing concerns about the recovery. what does it mean for the broader transports? we have the trade on this when we come right back. this is another phase of the growth. new plant, new infrastructure. >> people who think it's too hot to handle? you know what? go to bed, bath, and beyond and buy an oven mitt. >> there are a number of ways to play the water trade. the water sector has handily outperformed the s&p 5008 of the last 10 years. a route map shows you where we go.

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as we look for clues as to where next the broader market will go we'll concentrate on transports which you know are a major underpinning. traditional theory has it of the dow in general. we're looking at a loss now of over 3% for the week. partly after fedex lowered its growth projections yesterday with oil at this sort of level as we have it now well in excess of 100 dollars a barrel. what happens to transports moving forward? david ross is a transport analyst and he very kindly joins us live. what is your view here? >> our view on oil or fedex? >> on transports in general. >> our view on transports is generally positive. you know, absent an oil price spike that's not accompanied by an increase in demand. so at current, you know, volume levels, current oil prices, we like to carry a pricing power that's being displayed right now with tightness in supply/demand

and think as long as there is a slow growth environment going forward it is going to be a good place to be. >> what are you saying a lot of these companies have pricing power they can pass on the costs of oil or gasoline or whatever in their cost space to their customers so the margins hold on? >> yes. through the fuel surcharge programs they have they can generally recover higher increased costs of fuel. the problem is if fuel costs go too high do they impact overall demand for their services and that would be a net negative. >> what is that level? i mean, i've been looking at -- there are some out there that are talking about it, an elongated closure resulting in wti of 240, right, gasoline at $8 a gallon. what is the level in which even a fuel surcharge is not able to keep up? >> well, i think it's much earlier than that level. you know, the old rule is fuel is going to rise as high as it needs to to slow the economy down to get supply and demand back into balance to control prices. so we don't see fuel rising nearly that high, you know,

certainly $8 a gallon in gas would be crippling to the u.s. economy. >> so what should we be buying at the moment in your view? where do i make money? >> you know, the stocks we like right now, fedex, you know, because we think global growth is bottoming. we think that domestically they have very good pricing power and they're also being buoyed by the strong v to c trends we see from e-commerce and also ryder, a unique company, a truck rental and leasing business also in the third-party logistics business and they are going to be a benefit of outsourcing as people look to, you know, control their costs with either rising equipment or fuel costs, ridyde something a lot of out sourcing can use. >> we've given you the bull and bear case on the major regional banks this week and what better way to wrap it up than to go straight to the source. huntington bank shares ceo stephen steinour at 10:30.

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10:33 here on wall street. new home sales falling 1.6% in february. the prices jumped. the average home sale price

rising, the biggest jump in more than a year. t mobile is cutting jobs in an effort to cut costs and stay competitive. seven of the 24 call centers will be closed by the end of june. chip maker micron down sharply after reporting a loss of 23 cents a share wider than analysts expected getting hit by weaker prices. >> we're still down for a fourth straight session as you can see. it is a fairly broad based move. the only market that's in positive territory, energy sector, still $1.79 on the price of light, sweet crude despite the slight erosion on that. this is the breadth of the market. interesting actually not perhaps as one sided as you might think on a day like today. relatively even down here at the nyse and the nasdaq as we head into the weekend, there it is more pronounced, a 2-1 decline to advance line. >> about an hour into trading let's go to chicago for more on the market's latest moves trying to put this week into some

perspective. scott, good morning. >> good morning. >> taking a look at some of the lessons of the week do you think this sudden fear of a real slowdown in china was a bit of a knee jerk? >> yeah. it really looks like it. on the floor the traders on the floor are taking a look at that and saying 8% growth, is that sustainable? so it moves back a little bit. what i'm really focusing in on is that reaction that we saw yesterday is very un -- it's not typical of what we've seen over the last couple months. any pullback we've seen we've seen quite a spike in volatility, quite a spike in the vix. we're not really seeing that now. there is some complacency here but that tells me the fact that we're not seeing that spike up in the vix on down markets, that tells me that we are still in this period of a slow grind upwards. that combined with, we are seeing very heavy volume across the markets down here in the s&ps and option markets. that combined with the fact that the vix is not really spiking like that, i think we're in this

period of this grind upwards and, you know, the slowdown in china is just another peefs the news and i think everybody kind of expected it and going forward i think we'll continue this. >> that said f. the data continues to confirm weakness in china, do you think the market moves past that because they expect another cut in reserve requirements or additional stimulus? >> that's a great point. if we continue to contract, we may see, you know, their part of qe for quantitative easing. that's good for their markets and ours here too. i think it's all being factored in and the fact that we went from 8 to 7.5 or 7% is not necessarily a bad thing. they just had a slowdown at some point. that was factored in. if they do ease i think it's good all around. >> all right. scott, thanks for that. >> absolutely critical as we head into the weekend the cost

of oil with that spike $1.80 the gain. we eroded some of the earlier gains. still a clear worry. sharon epperson joins us live from the nymex. what more can you tell us, sharon? >> well, of course, going into the weekend many traders concerned about what may happen in terms of tensions we've already seen escalating perhaps between israel and iran. add to that the fact we did get this report that from reuters about the decline in iranian oil exports down 300,000 barrels in march and that was a big change and the first major change we've seen since the tighter sanctions have been imposed. but also keep in mind as we look at gas and futures here up five cents going into the weekend, look at what's happened to the brent/wti spread and how it continues to blow out. a lot of folks say there is an indication that many do not believe even though the saudis came out this week and said the oil market is over supplied that they would be able to make up for any shortage, significant shortage from iran in terms of when the oil embargo goes into play. that is something that many traders are continuing to talk about and a big concern that they say is likely to continue

to have brent crude futures moving higher. we are looking at 127 a barrel the high today for brent, 108.25 for wti futures. back to you. >> i read the reuters report earlier today about the general disruption in the market. 1.2 million barrels a day against the total output of 90 million. the suggestion within that reuters report that this might be justification for the united states and indeed the united kingdom to release the strategic reserves. can you tell us any further on that? >> well, we did have the executive director of the international energy agency say in fact that they do not believe it's warranted to release any strategic reserves at this time and in fact the fact that obama did not mention that at all in his speech from cushing leads many to believe that is not something on the table at this moment. so that is not, if it was, you would see oil prices probably significantly lower than where we are right now. >> interesting. sharon epperson, thank you. >> been talking a lot about the strength in regional banks this week and taking a closer look at huntington bank shares a regional bank holding company

thriving in the midwest. shares of huntington up 15% so far this year, out performing the kbw regional banking index. here for a "squawk on the street" exclusive the company chairman, president, and ceo steve steinour joins us here at post 9. good to see you. good time to be regional, huh? >> absolutely. particularly in the midwest. the regional economy is really coming back robustly in the midwest. >> you've been giving speeches, writing pieces for the huffington post about how the term rust belt is almost a misnomer now. >> that's right. it's the recovery belt. >> driven largely by manufacturing. >> export manufacturing, phenomenal manufacturing over all. autos are strong. picking up on your energy comments earlier, there is an energy zone, two levels of gas that are just extraordinary. and they're fueling growth as well. >> does loan growth keep pace with that?

i believe it does. we've been growing commercial loans for ten quart ners a row and i think it will track. >> where do the exports go out of the u.s., asking with the back drop of the slowing chinese economy and contraction in europe. >> well, there is quite a history of european export but it's also global now. the midwest, because of the shipping lanes, the intermodal access, in ohio and other markets, we ship and export around the world. >> so we have this big debate on the program with analysts during the week about the regional banks on the one hand one house saying well actually most of the gains have occurred in the stock price because you had the improvement in credit quality. stocks reacted, fair value. and the other side saying no that is still a buying opportunity because they're more careful about who they lend to. they know their customers far better and are not exposed to europe. i imagine you're in the second count. >> of course i am. >> yes. >> even beyond that you look at prices to earnings price to book historically these ratios are very low.

i believe over time you'll see quite a bit of movement on the regional side. >> where do you think your stock price could go to? >> well, if you take a two times tangible book as a norm historically which, plus or minus a little, it would have been. i think there's quite a bit of room for us. that would be a $10 plus share. >> you mentioned in the midwest how you're benefiting from increased exploration from various sources of oil. on the flip side, though, we're in a time where gas prices are higher overall. energy costs are higher as well. and the president's, quote-unquote, fast track of the pipeline that will move the oil from couric down to the gulf is expected to raise gasoline prices according to many oil economists by 10 to 20 cents for midwest consumers specifically per gallon. is that on your radar as potentially a headwind to this recovery that you're seeing in your region? >> i don't believe that'll be a headwind to the region. part of that is there's enormous reserves that have yet to be brought into production in the midwest. and so you're starting to see

investments in cracker plants and other things that will i believe support and sustain that. >> there was a conversation about you recently and the degree to which you've returned cash to shareholders. where are we now? you've had a stock buyback? >> no we just announced a share buyback as part of the capital plan. this was the first time our bank was able to participate in that capital process with the fed. >> finally, those who worry and say, look, one loss provision stable, good news. higher expenses, bad news. depressed fee income bad news. do they have a point those who worry about those elements? >> they do but the expense side is for us also reflects an investment. we were the second largest bank in terms of branch openings last year. we may be the largest this year. we're investing in our businesses in a contrarian fashion. so banks have different strategies, a number of them are cutting expenses. we're investing. >> the last question we have to ask you, what is your opinion of bank of america's move to rent

out foreclosed homes? do you think this could be the start of a trend within the banking industry by banks who have a lot of foreclosures on their books? do you think it is going to help? >> i believe it's a trial of a thousand homes. i don't believe it is going to change things fundamentally. i think this view of being flexible and working with, however, is great to see bank of america and some of the other large banks do what some of us as regionals have been doing all along. >> thank you very much. good to see you. >> we spoke to mcdonald's ceo jim skinner a while ago. up next we break down another restaurant winner. shares of darden rallying more than 10% here today but sliding about 3% in today's session about 2% right now. we'll break down the earnings number and see if you should add this tasty treat to your portfolio. be right back. e! whee! whee! wheeeeeeeee!

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darden reporting results that beat estimates the company stock currently trading down about 2 1/4%. there is a neutral rating on darden and mark is joining us via phone to discuss the numbers. good morning, mark. >> how you doing? >> obviously the focus here for a lot of investors will be the turn in olive garden. it posted positive same store sales which is incremental positive. is it enough in this story? >> our industry sources are seeing that casual dining sector sales are slowing down so we think that is why the stock is off today and we have concerns. >> why are they slowing down? >> could be gas prices. could also be favorable weather in january and february. doesn't look like march is getting a weather lift so far. >> so what sort of slowdown are you anticipating? is this a year on year story or

a sequential slowdown? >> sequential slowdown. so when you look at ching casual dining restaurants in aggregate their january and february same store sales were up roughly 3%. right now our best guess is that marge is going to be flat to up 1%. >> i know we're trading around your price target of $52 at the moment. i mean, obviously there's olive garden and people talk about it all the time but you have the new restaurants they're rolling out slightly more up market. does that excite you? could you push your target higher on that basis? >> well, you know, when you look at what they're doing with olive garden they're trying to better align value offerings with what today's consumer wants and that is a positive. the stock is up year to date so we think that's priced in at this point. >> do you think we're past the worst of the commodity headwinds or will it continue in the second half? >> for the industry we have

concerns. garden looks fairly well positioned within the industry though. >> top pick? >> starbucks. >> wow. >> all right. good to have you. >> i like the one word question and the one word answer. boom, boom, boom. back and forth. >> pingpong. >> it's all about today's big movie release the hunger games shares of lionsgate scoring this week on the news of record ticket sales, advanced ticket sales which if you judge by that up 7% in the last five days. it could be the biggest blockbuster we've seen in a while. should you sell on the news though on lgf shares? we'll find out after the break. americans believe they should be in charge of their own future. how they'll live tomorrow. for more than 116 years, ameriprise financial has worked for their clients' futures. helping millions of americans retire on their terms. when they want. where they want. doing what they want. ameriprise. the strength of a leader in retirement planning. the heart of 10,000 advisors working with you one-to-one.

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the hunger games arrive. the much anticipated movie trilogy has been a big boost to lions get a shares, ahead of what is expected to be a blockbuster weekend of the rel eefs the first film. matt harrington joins us now, an analyst with busch securities. i beg your pardon. this is a big weekend if you're

holding lions gate shares. what sort of figures do you need to sustain the rally? >> well, i think it's a virtual given that this is going to open north of 125. i think some rival studios think 150 but i think the larger element is how it holds next weekend. i think it could have a freakishly high hold. i really think when you look at lions gate stock it isn't even beginning to fully discount in the value of the four hunger games movies let alone what i think they can do going forward creatively on the market. >> justify that if you would. it looks like a parabolic move, up 146%, a big move over the past year. >> it absolutely is. i think if you look at the call activity too there are warning signs on the trading front but i think if they really put it together in terms of some other, you know, franchises working, you know, this is a stock that could be in the mid 20s a year

from now quite frankly. >> can you walk us through how much lions get a specifically pockets? just for the sake of round numbers if you look at a hundred million over the weekend box office what percent does lions gate get, 50%? what are the costs involved in production? >> they'll get slightly more than 50% of the u.s. revenues but there's also foreign box office which they partially sold off and then, you know, digital streaming and most importantly the dvd market so they've also done a very good job in terms of controlling the costs. this is only a $70 million production cost, you know, movie. it feels like it's a tent pole release from universal pictures if you look at the look of the film and they've done a very good job on marketing, keeping that in the 45 million vicinity. this is a blockbuster that really was produced on a shoe string relative to say the harry potters of the world to get a

little ambitious on characterization. >> when the first "twilight" came out in 2008 it made $70 million. the franchise goes on to make a billion dollars. so i guess my question is what figure do you need to see on monday morning to know if we're going to hit that b mark again? >> oh, i think that there is a very high likelihood that we'll get to "twilight" type numbers on this movie. people are even talking beyond that. i think the important thing is how it holds next weekend. you can only move so many people through the theaters. you can only move, clear the tables so fast. you look at the fan dango, you know, presales, this is going to be a huge weekend. everyone knows that. the issue is what sort of legs this movie has. all the fan boys and fan girls and people who won't be able to get in to tz this weekend i think people will be shocked at how strong it opens this weekend and how abnormally strong it holds next weekend. i think this will hold better than "twilight." >> this is a very odd space.

when a company is well run as walt disney for example this week announced it is going to make a $200 million loss on john carpenter, do you guys have to see the movies? do you have to make a critical judgment in order to determine whether the stock is actually buy or not? if you haven't seen the movie melissa lee has and knows it quite well. >> well, i think disney is very different than lions gate being dependent on the economy and, clearly, they have bad judgment on john carter, people could see the train moving down the track on that. and i think with disney it's a larger company. they have to look at their movie strategy now in terms of how the movies work across different businesses. what the carry over to the parks and consumer products is, etcetera. and lions gate is more after traditional pure studio company that doesn't have a lot of exposure to the economy and is hitting on all cylinders creatively. the next thing to see is whether they develop further franchises like, you know, chaos walking,

get the appeal to the youth demographic they have with "hunger games" and the "twilight" series as well. i think they're really in the sweet spot right now. >> are you taking the family to see it this weekend? >> absolutely. i'll be there for the 3:00 a.m. showing. >> matt, thank you for joining us. >> by the way, slates dana stevens writes if you've been trying to ignore the "hunger games" hype give in. read the book. watch the movie. because they're going to be part of the conversation for a while. and it's more fun experiencing them than dismissing them. >> by the way on e-trade 92.5% probability that "the hunger games" will gross more than $125 million. >> how did you rate it out of ten? >> i thought it was ten, really good. absolutely. it's going to do well. tweet time. our question of the day what new product would you like to pitch to the new incoming ceo of mcdonald's to keep the fast food giant growing? let us know at cnbc squawk st. some of your responses right

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squawk on the tweet. earlier we talked to jim skinner fon an exclusive interview who is announcing his retirement this summer.

what new product would you pitch to mcdonald's' new ceo don thompson to keep growing the giant? mctestimompura vegetables. ted writes mcslim. i like it. and charles writes immediately introduce a big i-mac with two all beef patties, special sauce, i-tunes and a side of angry birds. great responses, guys. thanks for all the help. if you are just tuning in let's get to what you might have missed earlier this morning. welcome to hour three. here is what's happening so far. >> everywhere i go, the conversation is please just help me find a way to preserve purchasing power. forget, you know, 15% return. >> i don't think the sky is falling. i don't think it is a bad thing. >> you're going to see a rally or reversal the next couple days

of the week. this is going to be the next couple days probably not to the end of the quarter. >> the obama administration has nominated dartmouth college president jim yong kim to head the world bank. it is a surprise pick. >> the opening bell on this friday. a look at the cnbc exchange. >> we have a problem. the entire spring home buying season was supposed to be significantly better than last year. kb home comes out with the report today, not only profits below expectations but orders down 8%. what? where did that come from? >> new home sales steve liesman back at headquarters. >> january's revised down 318,000. >> we think this is the right time at mcdonald's. i certainly think it's the right time. we have a great candidate in don thompson who you all know who is

a very, very talented executive and will continue to lead the charge here at mcdonald's. >> good morning. welcome to the third hour of "squawk on the street." i want to check shares of apple right now. the stock halted on a single stock circuit breaker. 598.24 the last check. of course it's been flirting with the 600 level for the past few days. get you more information on that as soon as we can. let's get to the road map. mcdonald's ceo jim skinner talking earlier this morning about his retirement and the new ceo. what should you be doing with the stock trade? we have the trade on mickey ds. the deep south heading to the voting booth tomorrow. this time louisiana's turn. can mitt romney win over conservatives in the deep south? a republican strategist will give us his view. then ignore japan at your own peril. at least that's what one strategist says. find out why he thinks there is more value in japan than in all of europe. and one man's quest for a slice of the social network. see what he is willing to give up for a chance to own some

facebook stock. all that and more is coming up in the next hour. in the meantime as we said mcdonald's ceo jim skinner announcing his retirement about a day and a half ago. "squawk on the street" scored an exclusive interview with mr. skinner earlier this morning. >> the reason the share price performed as well as it is is because of the system alignment and our franchise who do great work on behalf of the brand every day and our suppliers and company people are all aligned to do a better job at the front counter and drive through. when we do that and perform well and get the sales, which leads to the earnings and the multiple which is nothing more than mathematics, we expect the share price will continue to grow under don's watch as we continue to deliver on the fundamentals. >> what can investors expect from mcdonald's as don thompson gets set to run the world's largest hamburger chain? our guest joins from us new york today. jeff, good to talk to you as always. >> good morning. >> your report still in good hands. what do we know, what should we know about don thompson?

>> we have tremendous faith in don and his ability. he is, you know, not a stranger to mcdonald's having been there north of 20 years. spent most of his time on the us business and traveled the world several times so we think they're in great hands. >> the journal today tries to take aim at what they call a lack of international experience. when skinner came into the job he helped run europe, had helped run the middle east, africa, i think part of asia as well. don has done little of that at least on his own. how much of a learning curve is he going to have to climb? >> it is going to be a significant learning curve for him but i think they've selected don a few years ago as the heir apparent. he spent most of his time on the road so he has a strong team beneath him. i expect him to be leaning on each of those people internationally to further get up to speed but we think over the past few years he has done a pretty good job already. >> yeah. always a tough time when there is succession because investors

are trying to gauge not that there is going to be a dramatic shift in strategy or tactical moves at a company but even a couple degrees of change. i'm wondering if you think don will tack either to the right or the left and if so in what areas. >> i don't think you'll see huge moves from don. we often forget, mcdonald's is a 33,000 store system, so making any type of move is significant and very difficult to move that size ship. so i think they will continue to focus on the basic blocking and tackling value in the current environment is obviously important for them and they are still pushing international growth and doing well around the world. >> your last report had potential upside at 6%. it's going to be tough to replicate the gains skinner saw in his term but if he is able to do it, it's going to come from what kinds of initiatives? >> well in the very near term the stock has under performed a little bit. you know, we think there is, the initiative to drive the earnings

growth, the u.s. business is continuing to folk ouns value, building the breakfast business and late night. internationally they're growing aggressively. china and other emerging markets around the world so i don't think it is going to be any one place of surprise but over the next few years we expect them to continue growing higher. >> and in terms of the things you're on alert for i assume it is going to be some softness out of europe? >> yeah. i mean, that was something that was released with their february sales that we have seen some slowdown primarily in france. that is something to closely watch. obviously they're introducing a number of austerity measures in europe but we have to remember in the u.s. during a very difficult and trying time mcdonald's did extremely well so we expect them to hold on in europe as well. >> thank you very much. good to talk to you. talking about some mcdonald's today. we should also mention as you can see at the bottom of your screen apple has resumed trading after a single stock circuit

breaker which we believe was connected to volatility. if we get more details we'll get information to you right awachlt currently trading 597.52. new data out on ceo pay checks. it looks like entertainment is the place to be. mary thompson back at hq with an early look at some of the top earners in big business. >> you know the economy is improving, the stock market is up and so too is ceo paper the second year in a row. the early read comes courtesy of pay consultant stephen hall and partners. it finds viacom's ceo is the top paid though the 43.1 million is half of what he earned in 2010. disney's bob iger follows with 31.3 million. a doubling of stock awards. qualcomm's paul jacobs paid last year 22.8 million. big options for nicholas howley to just over 20 million and the fifth highest ceo so far is at&t's randall stephenson who

pulled down $18 million. remember boards are being pressured to tie pay to performance but meet thag goal can be tricky each year as these numbers show. changes to total shareholder returns of the firms run by these top paid executives don't always match up with the changes to their pay. given that big stock or option grants in a given year or other changes in compensation can skew those numbers. as for the median change in ceo pay for 2011 this preliminary read suggests more modest gains than last year's 11% jump but with many companies still set to file their proxies it's likely this is going to change. last year median total compensation for these 100 ceos was 7% to 6.1 million dollars. the final number excluding any changes to their retirement holdings. as has been the case for years now, long-term compensation typically stock grants or options continue to make up the bulk of their pay. carl, back to you. >> all right. that time of year where we pay a lot of attention to that kind of thing. >> that's right. more of those reports coming up. >> thank you very much. by the way, a little bit more color on what happened at apple.

one trade, a hundred shares, on the bats exchange we understand, which we believe was at 542.80 at about 2 1/2 minutes to 11:00 a.m. it was one trade looks like it might have been a fat finger and that might have been the result or reason for that single stock circuit breaker. straight ahead the republican race to the white house is heading south somewhere where mitt romney has not been successful so far but can louisiana stop romney's southern slide? we're back in two minutes. [ male announcer ] what if you had thermal night-vision goggles, like in a special ops mission? you'd spot movement, gather intelligence with minimal collateral damage. but rather than neutralizing enemies in their sleep, you'd be targeting stocks to trade. well, that's what trade architect's heat maps do. they make you a trading assassin. trade architect. td ameritrade's empowering web-based trading platform. trade commission-free for 60 days, and we'll throw in up to $600 when you open an account.

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hot off romney's win in illinois what should we expect tomorrow in louisiana? have we reached the point where republicans will rally behind mitt romney and start putting some pressure on rick santorum to step back? our guest is a republican strategist and former chief of staff to the republican conference under senator jon kyl. good to talk you to. welcome. >> great to be here. thanks. >> here is "usa today" which has to be the biggest left-handed compliment i've ever seen. louisiana gop primary actually matters this time. how relevant is it? how important is it for at least one of these contenders to step out of the way after this race? >> you know, it really matters, you know, tomorrow in louisiana because of the amount of delegates. there's over 40 delegates in louisiana and it's likely to go to the -- the win is likely to go to rick santorum because like mississippi and alabama, it's a southern state. there is a high amount of evangelicals and social conservatives in the state, and

mitt romney has a hard time pulling that off so every delegate counts in this race. mitt romney has i believe around 563 delegates. rick santorum has about half of that. and so this helps rick santorum, every delegate counts. because the state is proportional in terms of the amount of delegates and awards mitt romney is going to pick some up. it does keep rick santorum in the race and although everyone seems to be believing now that mitt romney is going to be the eventual nominee. >> the one name you did not mention is telling and that is newt gingrich. he is going to be watching the returns we understand probably from his home in virginia. if he does not win, clearly, the pressure is going to be on even more so for him to step out. how likely do you think that is? >> i don't think newt gingrich is going to step out. he's been really enjoying himself despite the lack of delegates he has been getting. in addition i think because he has been in this race for so long and because he has the national spotlight on him, i don't think anybody is going to

tell, even if somebody told him to get out i doubt if he will do it. newt gingrich is his own man and his own force of nature so to speak and he enjoys the spotlight. and trying to get to the convention any way he can, even with a few hundred delegates, would seem to be satisfactory to him. >> yeah. would you say that the endorsements of jeb bush and now jim demint saying he is relatively comfortable and even excited about the prospect of mitt romney as a nominee, is it fair to call that a tipping point in the primary race? >> well, i've been saying since the illinois victory for mitt romney i thought that, you know, high profile republicans would probably be coming out. now you see like you said, jeb bush. you see a veiled endorsement by jim demaint. i think you'll see more and more republicans say let's wrap this up. as mitt romney gets closer and closer to the 1144 delegates needed for the nomination more republicans are going to come around to him especially establishment republicans and say, let's move forward. >> yeah. >> the problem is the base of

the party. the social conservatives. that's been what's really holding back a number of these members who are afraid of getting on the other side of that. >> then you got matt drudge today tweeting and i'm paraphrasing here that rick santorum and gingrich in his view are exhausted, reduced to holding up a children's toy, that is the etch a sketch and in santorum's case arguing that president obama is a better alternative than mitt romney. have romney's rivals degraded to a point where they are no longer speaking the way real republicans speak? >> well, i think that, you know, the mitt romney campaign gave and santorum and gingrich a moment where they could pounce on it. they were using the visual, the etch a sketch. clearly, for the last couple days it seems to have worked in terms of the visual. they are tired. they are exhausted. i mean, if i were newt gingrich i would be on the campaign trail. he's running out of money. rick santorum has moved his family to iowa and spent, you know, all this time on the campaign trail, sure.

he has to be exhausted. but santorum looks invigorated. he does not look wiped out. he seems to be enjoying himself. i don't think he or anyone else thought he would be this far in the race right now. >> that's for sure. ron, thanks for your insight. good to talk to you. have a good weekend. >> thanks a lot. have a good weekend. >> when we come back big problems in a big solar company. will first solar ever be able to solve its leadership or lack thereof issues? we'll be right back. e they shoue in charge of their own future. how they'll live tomorrow. for more than 116 years, ameriprise financial has worked for their clients' futures. helping millions of americans retire on their terms. when they want. where they want. doing what they want. ameriprise. the strength of a leader in retirement planning. the heart of 10,000 advisors working with you one-to-one. together for your future. ♪ our machines help identify

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troubled company first solar trying to turn itself around recently the effort now reaching their corporate governance and may have hit some snags. we go live to headquarters for details. hey, kayla. >> first solar has been looking for a new ceo since october but is also looking to beef up its

board of directors my sources tell me. the company has been canvasing the industry for a handful of additional board members to broaden the current expertise as the headwinds for solar companies grow. active discussions with several potential board members are still ongoing but some industry sources claim the process is losing steam. first solar declined to comment that share holders would likely have to weigh in on the company decisions regarding the board on this year's proxy, a deadline that likely looms in the next couple weeks. of course first solar wouldn't be alone if the case were that these discussions were hitting snags because the compensation for being on a board might not be viewed as worth the challenge or liability as litigation against board members for not fulfilling duties continues to rise. then of course there is the stigma of fothe former ceo's abrupt departure in october when first solar tanked 74% right about the same time the new chief said the industry's challenges wouldn't go away any time soon. carl, hopefully we'll get an

update from the company on the search both for the ceo and the new board members in the near future but it's really too soon to say how that will pan out. >> even as a lot of the class action lawsuits are being filed. watching some basketball tonight? >> a tiny bit. there is a small game on you might have heard about. i would just encourage everybody, everyone loves a good underdog story. tonight is not the night for that. you should be rooting for the north carolina tar heels. we need it with kendall marshal out. that would be my advice to everybody. >> ohio will not know what hit them. thank you so much, kayla. take a look at the markets today up about 13 points coming off the lows here. we should mention that the dow of course ontrack for its worst week of the year along with the s&p. for a while this morning the nasdaq was the holdout. the nasdaq began the week at 3,055 so we're up about 2 1/3 points for the week but if it lost say five points that also for the nasdaq would be the worst week of the year.

it has not had a losing weekly close for all of 2012. an amazing story of how resilient the nasdaq has been. bob pisani is watching that and a lot more at the big board as well. >> just wanted to bring you up to date on an ipo today which we've been talking about, carl, stock exchange operator bats. now bats priced its ipo at $16. that was within the range but at the low end. $16 to $18 was the price talk. it just opened a little while ago. we were waiting for it to open and rather oddly it halted almost immediately. it opened at $15.25. that was below the $16 price target. that's not what's unusual. it just was halted immediately. apparently there is some kind of you would describe it as a system overload over at bats. we're waiting for it to reopen. i have asked bats for some comment. i think the problem may be that they are only trading it on the bats system itself. it's not trading on other exchanges. that may be part of a problem. that may have resulted, may have resulted in some kind of system

overload there again still waiting for clarification of exactly what happened. as soon as i get more facts i'll get right back to you, carl. >> if the system issues, and this is just a suggestion, affect stock tickers at the front end of the alphabet, you may be able to tie that with the action we just saw on apple a few minutes ago. yes? >> possibly yes. apple may be a separate issue around market structure. you know we go -- they go around here with these different exchanges and they compete on price and speed of execution and sometimes when you go around they're required to go around and make sure they check with all of the exchanges to make sure all them are offering prices that are competitive. sometimes occasionally you get an outlier that's there and you can get an erroneous print or unusual print. i'm not quite sure what happened there but that's happened in the past with other exchangines andt is a problem with the way the market is structured. >> of course apple with two as at the front of the ticker symbol would be first in line. okay. look forward to news when it

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the dow holding a 22 or 23-point gain. nasdaq down about 4. s&p up two at 1394. some of the other stories we're watching on this friday gold prices losing some luster as economic data points to signs of a recovery in the u.s. the safe haven metal which peaked at nearly $2,000 last year has of course enjoyed a decade long bull market. zynga under pressure today. the ceo and shareholders looking to sell 43 million shares in a secondary stock offering. also weighing on the stock coverage of the social gaming company initiated with an under perform rating. mike the kors has also priced a secondary stock offering at 47 bucks a piece. the underwrite verse a 30-day option to purchase up to 3.75

million additional shares. turning to japan as well is it time to buy japanese equities? our next guest tells us why japanese companies could add real value to your portfolio. he is head of the deutsche bank valuation group and joins us live from london. good to talk to you. all i ever hear about japan is low gdp growth and aging population. obviously monumental debt levels. what is possibly good about that scenario? >> well, we think people should not confuse the micro pitch wur the equities. look at the major markets last year. they under perform japan. still they go to the high gdp growth and if you look at japan they have been performing in line with the u.s. and europe in dollars since the end of 2009. so we did really think that it is time to look again at the japanese equities. >> right. >> even after the run the nikkei had? >> yes. even after the run the nikkei

has had. the veil yualuation of japan is lowest level for 20 years and in our methodology we find that even after the rally you find much more value in japan than in europe or the emerging markets. >> meantime you talk about the yen and what you see is a structural change. dollar today traded as low as $81.97 yen the lowest since march 13th. why is the yen a game changer at these levels? >> well, we don't particularly have a view on the yen in the short term but clearly what you have is an attractive valuation. if the yen moves against japan or in favor of the company, exporters mainly this is going to be a significant positive for investors. you know, japan, japanese companies have the highest operational leverage on a global basis and a weak yen is going to be definitely a positive for

japanese equities and investors. >> yeah. are you going straight for the exporting names we might be familiar with here in this country? or is there other sectors that interest you? >> well, generally the exporters are well known so, you know, i would say the ones that are not known in the states, you know, are the ones we would focus on. but you would go well beyond that and look at some of the niche players as well and that, you know, you find in japan. >> anything -- any examples you can throw out our way? >> the sectors that you really have to look at are the consumer sectors and even in health care and industrials are very attractive in japan. i can't give specific names i'm afraid. >> right. finally, it doesn't address, certainly doesn't change any of their demographic issues as a country. >> correct. it doesn't change any of the demographic issues as a country

but let's say again, you know, if you look at the merging markets there has been no real earnings growth for the last five years and still people buy emerging markets because they confuse the high gdp growth you find in emerging markets with high earnings growth. when you compare brazil, india, or russia in terms of real growth, the u.s. since 2007 has been out performing these countries in terms of real earnings growth so, you know, don't confuse gdp growth with equities. there are not necessarily the same thing. >> right. >> that's why you should be focusing on japan. >> and the market is trying to treat them all with the same brush. thank you very much. intriguing. joining us talking about some japanese equities. meanwhile bob pisani is literally working the phones here at post nine trying to get a handle on this back situation. >> i thought it was going to be a nice, quiet morning. i come in, look at the new home sales numbers, make a few phone calls, and things get a little crazy.

let's put up, first let's talk about bats and i want to talk about home builders. we had an ipo this morning kind of. we were waiting for it. it's in a big stock exchange of course, competitor to the new york stock exchange. that's bats technologies. and that's trading, did open. now the price was 16 to 18 and it opened at 16, excuse me, the price at 16, low end of expectations and opened a little while ago at 5.25. immediately, it was halted. this here, what you're looking at, this is erroneous. there is a problem. we don't quite know what it is. there is some kind of system overload over there that maybe not enough liquidity out there but these are clearly erroneous trades and it's all going to go away very soon. what's going on? one issue, carl, is apparently they were only allowing trading directly on the bats ek exchange. most of these exchanges trade these stocks and all the different exchanges. i don't know if that was part of problem but i can tell you that all the trading occurred just on

the bats exchange just prior to it being halted. there may have been liquidity issues and balances of buy and sell orders as well. i've asked for clarification and all i can tell you is this isn't going to stand. we are trading essentially in pennies. let's try to clarify that and get more information. elsewhere housing is a big story. we're trying to figure out, the trading community is, is there a slowdown in housing or not? because the home builders are getting killed today and it is really all around kb home. they had their report in, their quarterly report, and right across the board put up this full screen and i'll explain very simply all of the numbers were -- try to get a tight shot. orders, closings, margins, profits, all of them were wrong. and specifically on orders. we were expecting them to be up maybe 20%. they were down 8%. that is a big problem. here is the question. what's going on? the conference call is starting now and there's a lot of people listening in. some markets may have been weaker than others.

the west was notably weak. the southwest was notably weak. the first-time builders, maybe their mix was not right. maybe they weren't in the right communities. also the cancellation rates spiked up. we know first-time home buyers, carl, are having trouble getting mortgages and switching preferred mortgage lenders. maybe they had some internal problems there helping people get mortgages and that's why a lot of people have been out this morning. i've been talking to them and watching these companies carefully saying this might be a company specific problem. here's how we'll solve this problem. number one, they're going to be a lot of questions in the next half hour. i'll get some information to you a little further but, number two, lennar, which is a big competitor, reporting on tuesday. and will now -- will solve this problem very quickly about whether this is company specific or not. but the street is not expecting these kinds of lousy numbers. they're expecting much better numbers. the only thing i would say, carl, is these only go through the end of february. spring home buying season is february, march, april and into may. >> right.

>> so it's still a little bit early. >> just looking at some of the s&p losers, i mean, housing is taking it on the chin. >> that's what i mean. if it wasn't for bats this is the big story today. >> thanks very much bob pisani. not every day that you get a single stock circuit breaker on a name as liquid and popular as apple. let's bring in john fort who can talk about the stock being halted briefly earlier today. hey, john. >> hey, carl. yeah. i talked to apple. you know, how apple likes to not say anything that they hadn't planned to say. but the sense that i got from them, no news on their end this morning. that would account for any kind of strange trading pretty much directed us to talk to nasdaq about what's happened. we're hearing from nasdaq that all erroneous trades this morning have been canceled. we're assuming that includes apple. so no news i suppose is good news on the apple front except the stock is down slightly in early trading. >> certainly got some people's attention today for sure. thanks very much, john, for the update. when we come back the boss of all segments is back.

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welcome back. next up on the halftime report rising rates, earnings fears slowing china. stocks on track for the worst week of the year. our traders get you ready for next week. but active traders are the most bullish they've been since the bull market began. that is a buy or sell signal? and google is one of the few winners of the past five trading sessions should you buy in now?

lots of trade on the halftime report. send it back to carl. we'll have grasso and weis on the set together with me today. i'll sit in the middle and play referee. >> you need your black and white striped jersey. very nice. thanks, scott. bank of america rolling out a pilot program that will offer rentals as a foreclosure alternative. here for a "squawk on the street" exclusive the legacy asset servicing executive for bank of america and diana olick also listening in. thanks for joining us, ron. good to talk to you. >> nice to be here. thank you. >> a lot of chatter and intrigue about the program today. not a lot of home owners here able to take part. obviously a narrow pilot program with a lot of conditions. how broad based could this eventually become and do you think it is a real solution to what housing is facing right now? >> i'll say it's another solution to housing. listen, we need to do everything we can to keep our customers in their homes any way we can avoid foreclosure. as you know first we offer a number of modification programs but when the customers don't

qualify for a modification, the next alternative is some other sort of foreclosure avoidance process. we think converting good or borrowers and customers to tenants is one way to avoid the foreclosure process. i realize it's limited right now but if it goes well we hope to extend it as well. >> i wanted to ask one thing also. how do you know that so many of these borrowers are going to be interested in renting a home that they've owned for so long and then goes into foreclosure? because the timelines for foreclosure have been so long especially in new york state where your pilot program is starting. it can go up to three years of sitting in your house without paying a mortgage payment. do you think everybody is really going to want to get in on this program if they can really pay nothing for a long time? >> well, diana, that's why it's a pilot program. we'll go out and test that theory. again, we have identified these thousand people in the three states in nevada, arizona, and new york. each one of those different states has a different legal environment in which the

foreclosure process takes various amounts of time. we're really going to go out and test in each of those different states whether or not the customer is more interested in remaining in their home through a tenant situation versus waiting out the process of foreclosure. >> ron, you say about a thousand will be invited to participate in the first phase of the pilot but you guys must have an idea of how many home owners out there might be eligible or might be interested. how large could that number be? >> well, i know how many could be eligible. i won't predict the number. but there is a number of people who would be eligible. what i really don't know is how many will be interested. and that really is the purpose of the pilot program. again, the reason we have identified these thousands because they are 90 days behind on their current mortgage. they are in the foreclosure process already. so they generally know the direction they are heading and we're trying to contact them and say would you like to avoid foreclosure by becoming a tenant? remember, it's our thought that the logical person to stay in their home is the current borrower. remember if they do get

foreclosed upon and are forced to find other alternative housing they're probably going to rent a house, single family typically, in the same neighborhood. they're going to pay market rate for that property. why not keep them in their existing home and put them in as a tenant at today's market rates? >> now, ron, you've said that folks at bank of america have told me last night they don't want to be in the landlord business for very long because it is very temporary. that you want to get investors in. is it going to be buying the mortgages, buying the actual properties? and then how do you determine how they're going to manage these properties once investors buy these from you? >> so let's start off, we do not want to be in a landlord business long term. the reason we're doing this as a pilot program is to see how much take we get, how many customers would be interested in staying in their homes through this process. if we get substantial take up on it we will be in the process of selling those homes but will now sell them instead of an empty reo which a lot of investors are buying right now we're going to be selling a home with a

borrower in place with current cash flow in place and also giving the same investors who come on your show and say they're very interested in investing in rented single family homes we'll be able to deliver them a rented home as opposed to an empty home. we'll put a customer who is now a tenant in place instead of them going out and having an empty home when they get it and finding that tenant. finally, ron, the simple question. who takes the call when the renter in this case, the former home owner now renter calls and says the toilet is broken or there is some problem with the property? i mean, rental management is not historically what bank of america has been expert at. right. so right now through the foreclosure process quite frequently we take back a property. it already has a tenant in it. the current borrower has actually rented the property. so by necessity we have been in the management of rental property business. that's not where we want to be long term. we will manage them in the interim through different

vendors and different contractors and various markets so this is how we'll do it. back to diana's point the investors coming in saying we want to get into the single family rental business are all in the process of building staff, how to do this on scale. once we start to build up the homes if the pilot goes as we would like it to go we will be delivering those rented homes to people who can then manage them going forward. >> well please keep us posted. it's gotten a lot of attention today. thank you for your time. diana, thanks to you, too. >> i appreciate it. >> diana olick in washington. meantime mcdonald's ceo jim skinner retiring after more than seven years of the world's biggest food service company, company stock up more than 229% during his tenure. jim skinner was on "squawk on the street" earlier today discussing mcdonald's business strategy. >> this is a first year where we got two consecutive years of commodity cost increases to the extent they are but that's all well communicated. this is cyclical. these are the challenges mcdonald's deals with over the

number of years that we've been in business and we are in a place now, a position of strength with our business model to be able to adapt to those challenges as we have in the past. >> so as the chief executive transition begins, what impact will this have on mcdonald's and their incoming ceo don thompson? the senior associate dean at the yale school of management and cnbc contributor and also a professor at the university of virginia darden school of business, gentlemen, good morning to you both. jeff if i'm don thompson would you want to follow jim skinner? >> good interview by the way with jim skinner. that was fantastic. i know you know the company well. it is like following of course jack welch and many other times where it is hard to follow the corporate legend but i think it's a tremendous opportunity. one of his challenges of course, carl, is that if he doesn't give us yard sticks, we'll create our own benchmarks which is the benchmark against the

predecessor jim skinner. he doesn't want that so he has to give us those global milestones. obviously a lot to do in china. a lot to do with breakfast foods, late night things, and just give us some ways we can measure his success so we don't keep looking back to that tripled stock value under jim skinner. >> yeah. dean, i guess he faces what all incoming chiefs face and that is convincing the street that they have enough experience even though on paper it might not match what skinner's was say when he took the job. >> well, i think that's right. i think it's -- we need to look at two things. is the individual as well as the organization. you know, certainly mcdonald's is not just an iconic brand but truly one of the leading organizations. and they've shown in the past a tremendous depth of experience in terms of their management development succession planning and the like. we also need to look to the organization. they've shown success in the past at doing this and certainly we'd expect that continues. >> how do you -- jeff, how do

you telegraph to the street if at all, look, i know the stock returns have been monumental under my predecessor. do you say that's going to continue? do you try to under prom ans get the street ready for perhaps a period where the gains are not as substantial? >> you're right. if i were thompson i'd really want to try to set the expectations by somehow telegraphing in messages to all constituencies, a reminder of what the global headwinds are. we have four and a half to 5.5% increase in commodity prices on foods. that's tough. a stronger dollar than jim skin heard to put up with is another tough headwind. if the china economy slows a little i don't think it would actually affect mcdonald's a great deal because the opportunity is so vast there and yet still reminding people what those headwinds are so the expectations are realistic. but i do agree it's a wonderful model and a reminder that what we've seen recently in the world of technology that this mess yanic surge for some savior from the outside is not the best way for boards to go.

this as company, when skinner came in they had four ceos in five years. >> yes. >> they were there ready with bench strength here. >> dean, before we're out of time, shift gears to the goldman reaction to that op-ed in the times last week now reports that they're going to try to ferret out employees who in fact referred to clients as muppets. too little too late? what you would expect from a board after an incident like this? >> well, you know, clearly, the process is still playing out. but it certainly looks like they're doing their due diligence. they're doing what all organizations should do which is gather the facts and they're looking at it from two directions. one is to address the specific issue that was identified in the op-ed. but also looking at it in the larger context of making sure that the culture that has been strong for 140 plus years in this organization continues to be robust and continues to provide value not just for their clients and investors but for their employees, customers, and the like. >> yeah. it's been a heck of a week.

if you're interested in watching corporate management in this country. jeff, dean, thanks, guys. have a great weekend. >> thank you. >> when we come back you could be looking at the house that facebook bought. find out why the owner is so desperate to get ahold of facebook stock and what he's willing to give up. we'll be back in two minutes. a." "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." "it's why more investors with i.r.a.s are saying.." "i'm with scottrade." ♪ [music] [ male announcer ] the 2012 m-class continually monitors blind spots, scans the road to reveal potential threats, even helps awaken its driver if he begins to doze.

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want to recap an eventful first day of trading for bats.

there is an investigation of a system problem which affects bad shares as well as other stocks traded on the so-called exchange. all trading in bats themselves have been canceled as far as we can tell which is why we can't bring up a -- >> what a mess here. the story is simple. it's an exchange. it prices at $16 below the price talk of $16.18. we're waiting for it to open on bats. not down here. bats is a stock exchange like nasdaq, like nyse. it opens 1525 and crashes immediately. it's halted. the question what is happened? from what we can tell, they had some kind of, the system, itself, at bats has had some kind of mini crash quite bluntly. i've been in touch with them and the people over there. their comments to me just moments ago we are still gathering data, bob, and that's it right now. i've been asked, what exactly happened? it appears like many orders came in and the system wasn't able to handle it. that would be my initial guess. there's some kind of imbalance or liquidity issue.

i would note that they are only allowing trading or only initially allowed trading on their own exchange. normally you trade these on all the other exchanges and of course there are alternative sources of liquidity and bids and offers. that was apparently not the case and that may have been a factor in the system overloading or crashing. i think it is fair to say there has been some kind of overload in the system. this is a major, let's be blunt, embarrassment. fiasco would be one word. certainly it is an embarrassment. this is an ipo of a stock exchange. the only stock that is listed on the exchange is the company itself. they have some, a few etfs i should note but the only operating company stock that's on there is the stock itself. on its first day. so one question is the reputational effect for them and on the company itself but another is on the ipo itself. there are people who have bought this ipo at presumably this price, $16. >> low end of the range.

>> i don't know what the influence of bats, of this particular event will be on that ipo. >> sure. as soon as we get more information i'm in touch with them directly. we'll let you know. >> thanks, bob pisani. meantime the facebook ipo has been the talk of wall street for months. everyone is eager to get a slifs the social network. one man is so eager he is willing to give up the very home he lives in. jane wells is live in los angeles with that story. hey, jane. hey. if you thought pisani's story was crazy silicon valley was built by those who like to think different, those who have ideas that are either crazy or brilliant. here's one. >> waking up in a park. >> ken rauch is a life long entrepreneur who with his college sweetheart linda bought their dream home 15 years ago in los gatos, an upscale suburb of silicon valley. >> the floors were 16th century bricks brought over from france in the kitchen. >> six bedrooms, 10,000 square feet. the original owner had his face

painted into an entry way mural, and the house is decorated with thomas kincaid originals, a company rauch took public. they bought the home in '97 for less than $4 million. now with silicon valley awash in ipo money they want to sell for? >> $29 million. >> reporter: but not necessarily in cash. after an early facebook investor bought a home nearby for $100 million, rauch decided he'd trade his house for preipo facebook shares. >> i think it's a great model and i would love to own a piece of it. we've gotten a couple e-mails actually from people very preliminary, one individual indicated he has some facebook shares and was hoping and planning on actually after the ipo buying real estate. the other person just was inquiring about how many shares it would take. >> rauch has put his offer online but it is not clear that using shares before an ipo to buy the house would be legal under s.e.c. rules. rauch hopes it is. he'd like to get in before

facebook goes preference. >> that is our preference. >> but post with cash is fine, you know, after the fact cash is good, too. >> yeah. >> reporter: they say they're serious. lawyers tell us that it could probably be done but facebook might have to sign off on it. they're using preipo shares. why would anyone want to sell their shares ahead of time? maybe to beat the competition if everybody starts driving up home prices after the fact. back to you. >> very interesting. is this indicative of the facebook mania over all in any way? >> oh, yeah. believe me. there are people who are waiting. we've talked to car dealers, realtors. they're all waiting but they also realize that maybe some of these people are going to take their cue from mark zuckerberg and not go over the top a lot. that they may be more modest in the things they do. one facebook investor did just buy a house in los altos for $100 million so there are some people going over the top. >> great stuff. jane, thanks so much. jane wells out in los angeles. "squawk on the street" back in a moment.

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