wand pick her. that's what you do. a wand picks you. >> yeah. >> if you're governor, why do florida? miami, orlando. >> governor, thank you very much. we appreciate it. >> thank you for the invitation. >> we'll see you tomorrow. right now it's time for "squawk on the street." >> you know that music anywhere. happy 49th birthday to quentin tarnty no. latest s&p case shiller numbers are shown at the bottom of the screen. we'll break down some of those numbers. meantime, any follow through from the big gain on the dow yesterday. the third best day of the year. futures look to positive action today and meanwhile as for europe, a little short-term debt sale in spain and italy, as

well. mixed results. >> so let's get to the road map for this tuesday morning and starting off with the rally yesterday helping to send stocks to the best first quarter since 1998. investors are too cautious and the glass is more half full than empty. >> lenar giving a boost. under pressure by disappointing home sales and the grim number of kb homes. >> walgreens out, also. they saw strong front of store sales. >> trying to smooth out the hiccups in the business in china, but it's facing accusations of misleading consumers of the capabilities of the ipad. >> in the money on aig. telling kramer last night that the taxpayer could make between $5 billion and $10 billion once aig repays the bailout. beginning with the follow-up

of the monday rally. closest at the highest level since may of '08. poised to post the best first quarter performance since 1998. can stocks build on that rally? jim o'neill says, yes. the chairman says, i continue to see the world glass more half full than empty. on the account that the u.s. is on the way back as it has been for some time and an otherwise sage, jim kramer, quote, we are riding the most robust bull i have seen in ages. >> ages. >> this is a broad market. there's so many areas. yesterday was a day where i said, please, find me an area not working. maybe an oil service company. but i do find that once again this is -- this kind of research and i have got -- this is jim o'neill's piece in front of me. glass more than half full. i'm waiting for someone to say, glass is three quarters full! >> lastly, goldman saying a buy

equities, good buy to bonds. does this correspond in your view -- we were poking fun at goldman says a little bit late and lukewarm and a think piece. this is also lukewarm. >> look, why not say, this is a great market? i keep waiting for someone to say, this market is making a lot of money for people and i think you ought to be in it. but i just find that everyone echos what david was talking about yesterday, a lack of confidence in both the business of the world, employment. the president doesn't want to say it. high unemployment. the republicans want to tear it down. the confidence is lacking. >> to a certain extent it seems to be and that can change somewhat quickly and when you watch the dow jones and the s&p go up every day or significantly that can do a lot to engender confidence. as for o'neill, he's bullish, always. so the fact that he's kind of -- i mean, he still is.

>> right. >> by the way, i gave him a hard time about it. >> you really did. a real head slam. >> he was right at that time to be fair about buying -- >> he said italy at 7% represented a good buy. my chair, i almost fell out of my chair. everyone figured 7% is a prelude to what happened to greece. >> right. >> yeah. >> if things are so great, jim, why's the fed chairman refusing to take us off antibiotics? why continuing to feed the liquidity maniacs, right? >> i think he thinks it's 1936. he remembers in 1937 with taxes raised. people felt that the worse was over. he does not want to be the person that triggers 1937. we went back in to the great depression. only saved by world war ii. we do not want world war iii to save us. >> the breadth of the rally you discussed, how important is that? what does that -- or does it mean anything in terms of future

performance? >> i think in 2008 we had a tremendous run to dow 14,000 and led by mosaic. it was led by -- >> right. >> buy the -- >> potash. >> yeah. you have it and celebrating it and said this is terrific. it's got some coal in it. caterpillar's involved. that's the worst kind of market. that says inflation is back. you can't root it out. all about china. i'm saying this is china off. this is u.s. on. u.s. growth driving this. >> we have for instance if you look at the stocks near or at all-time highs, multi-year highs, ibm, microsoft, it is the breadth of the rally that's important. it is the stocks that people actually own in retirement funds, as well. >> that's the key thing. i was talking saying why doesn't the president recognize 90 million homes are somehow invested? 59% rally since he took off. that's a nice figure to quote.

maybe he thinks talk about stock fat cats? >> households -- the average individual is underinvested and the recent data yesterday came out in terms of stock outflows and out and in in the bond funds once again. >> i know high yield continues to take in enormous amounts of money, record sums. the managers can't deploy it because they want to keep up with the benchmark. if you don't things to expend in, you have to have cash and money flowing out of equities. >> i'm waiting in line to get in panera. i'm outside hoping to get in. why? because the line is too line at chipotle. i got to like move over to panera because the line is shorter. >> once the line is too long what's your third choice? >> my third choice -- just follow him with a camera for a week. >> i know. see where he goes. >> how many brand names he

visits that have a store front in the course of a week. >> going to see "the hunger games." being part of american culture made me a lot of money. >> can we call you catnip? >> look, i came away from that movie -- okay. did i shed a tear when -- spoiler alert. >> yeah. exactly. >> 300 million people seen it. you know? >> i'm not one of them. >> i saw it. lionsgate didn't go down. this is one where i think there's a franchise brewing here. a franchise, it can be a lot. by the way, john carter, the worse bomb ever sent disney up 9% so kind of a counter intuitive moment. disney, what's it lever to? movie, bombs, advertising. well, we hear some cable advertising. seems to be viacom and gasoline prices. everything seems to be going wrong for disney but a 52-week

high. >> people still going to the theme parks. >> yes, they are. >> let's talk home builders. a worry week yesterday but today we have good news on that front. lenar reporting upbeat first quarter results. revenue above forecasts. new orders jumped 33 ars and also reporting improved profit margins. what a contrast to what we got out of kb homes last week which was just a sheer disaster of consolations were up. orders were down. everything bad of home builders, kb homes had it in their report. here we are with lennar. who do we believe? >> stewart miller is a great executive. i used to cover -- i covered leonard miller who was i thought timing the housing market perfectly back in the '80s. i think stewart is executing much better than anybody thought. it's a series of things that -- when you get to the bank and

almost certain to give you the money and then they pull it back or they come up with a new term. it's very frustrating for people because you're blindsided and something that stewart doesn't control. >> seven straight days of housing data. the seventh straight day of pending new, existing and then case today. which we'll talk about in a moment but would you expect sales the rise or prices to rise or both? >> i think that historically you should see a sales explosion at a particular price where they clean up the inventory and then prices start to go higher. on the real estate i'm bidding, i'm fighting many builders. only one property have i found there's not a buyer. now that i mention it, someone will come. >> you haven't said what property it is. hard to come in on an unknown property. >> apartments. apartment building. >> in this country or -- >> no. not in mexico anymore. it's problematic. i was going to offer a mexican house in one of -- in the

charity auction. >> sure. >> i didn't want to hear like, oh my god -- >> liability for you. >> yeah. i got to have murder insurance. that's not -- mexico. i love you. brooklyn is where i'm bidding. and i find that there's $5 million homes, $10 million homes going very, very quickly. mostly goldman sachs buyers and properties with rest rapts in them. there's still some hope to be able to get them and have financing. i'm sorry. you want to -- >> cash flow stream? >> i don't know if you want to be a landlord. that's not easy. >> i'm already that. not so bad. >> jim can fix a toilet like that. >> i'm handy. >> a plunger and ready to go. >> i have a snake. a plunger -- you bet i have a snake. >> really? >> yeah. come on. >> wow. wow. >> start calling you schneider. >> the man's got it all.

>> meanwhile, walgreen reporting profit of 78 cents a share, a penny above. sales beat forecast. did report a same store sales drop of a year earlier. criticism online this morning, jim, how in an aging america with boomer who is need more medicine, same store sales come down. >> i think the xspress scripts tips, a sign with that accepted here, sub text is stop going to walgreen's. we have it. i think it is going to drive the future in a negative way. they didn't come to an agreement. they want to take back the profit margin. i don't know. i don't know if that's smart. >> the pharmacy was the weaker part of the sales. the front of the store did fairly decentury but the pharma sales was bad.

whether or not that continues or not it's interesting to hear on the conference call and filling that hole once again. with other deals. >> only so long to say -- this is operating earnings. going forward, you can't asterisk it. if this is 150-game season, not 163 -- what you are looking at here is a company that's made a bad point and the stock is up today. i think that's warm and fuzzy for walgreen's. it's the future. you're right. all the questions about xspress scripts. >> all right. the just released case-shiller home price report cards. also, building your portfolio by investing in america, the kramer way. looking at futures, follow through on yesterday. more live from post 9 in just a moment. the most spectacular experiences are happening here.

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get back some of the key housing data of the morning. a rocky start to the year for home prices. the composites saw price declines 0.8% in january. david blitzer, chairman of the s&p 500 index committee. david, good morning. good to see you again.

>> good morning. >> rocky start is exactly how the press release states but the data is through january. if you could characterize that month and tell us whether or not you think the time that passed since then looks any different. >> well, january was definitely a rocky start. and quite disappointing. we saw only three cities month to month improvements although that's better than the december report and a long list of cities in the two composites make new lows and a bit of a disappointment. the economic news in the last few months probably going back to december has shown a lot of improvement. the housing, though, is a bit more mixed. most of the february news was a bit up and down. housing starts about flat. sales were a little bit mixed. you mentioned a few moments ago, some of the reports of home builders, some were better than expected but other ones were worse than expected.

overall housing market is a little bit behind the general economy still. >> does it correspond, david, though, the recent data from the various home builders of what you have been seeing and what you suspect is going on. toll brothers, for instance, a strong selling season and does that correspond to what you are seeing and do you anticipate the warm weather to be a factor in the upcoming release of the case-shiler? >> warm weather is usually a positive for construction so i think that will be good. looking regionally, the sun belt areas, florida and las vegas in particular, continue very weak. phoenix has been a bit of a surprise in the last few months and positive numbers. the northeast, boston, new york, washington has shown more resilience over the last couple of years and should continue to do that. and the other factor that's very big is price levels. the weakness continues to be

concentrated in the lowest priced homes. in those cities where we look at high, mid and low prices, the damage is marginally at the lower priced homes and the strength largely at the highest priced homes. given that some of the northeast especially new york tends to be a pretty high priced market, that may also be a factor there. >> david, phoenix and miami let us down. i noticed from your data. phoenix and miami are up. are they precursors? chicago always held up and now going down. is this just a rolling decline that does seem to finally end with the phoenix and miami inventory cleaning up? >> well, i think what's happened in this market compared to, say, three years ago is it's now a lot more local and regional. the big surprise in the downside has been atlanta which is essentially collapsed. largely in the low priced homes but clearly throughout.

and atlanta's been hit with a huge wave of foreclosures and the foreclosures are probably a big unknown. we mentioned phoenix shown some somewhat better numbers. miami, the single family homes to look at continues to be very weak and all reports suggest or all the anecdotes suggest that condominiums in miami are beginning to bounce back. >> right. all right, david. thanks for your time. always interesting stuff. >> all right. time now for today's squawk on the tweet. on track for the best first quarter since 1998. if you could go back in time to that year, what advice would you give to yourself? woe. so many possibilities. david, i'm curious what you would say. 1998. >> '98, he was 15. >> 15 years old. >> yeah. joe kerrnon crossed me every

day. those were interesting days, in fact. yeah. what would it be? buy apple. >> yeah. >> yeah. >> that came to my mind. immediately. >> short everything else. >> buy new york real estate. >> absolutely. >> total home run. >> don't start on that. >> because of the -- >> pain. pain. >> there you go. that's the winner. $6.5 million for a 2 1/2 bedroom new york? >> keep renting. >> how quaint. >> geez. that worked out. >> i sold an apartment in brooklyn for about $250,000 that traded at $2 million. yeah. >> ouch. we all have those stories. >> all right. coming up next, it is kramer's mad dash ahead of the opening bell. the futures one more heading in to the tuesday session. green arrows. the draw with 22 points at the open.

♪ time for kramer's mad dash. they have gotten beaten up with china concerns. deutsche banc is saying buy csx. >> perceived to be a coal play and coal is just a disaster. we saw another great article today about u.s. steel switching to natural gas. if we could get a bottom in the rails, and get a bottom in the federal express, the transports

will act better. you know how important the transports are as a leading indicator of the dow. >> are they going to be hurt further if the regulations of emissions on power plants is passed? if we see it come to fruition. ones with more nat gas power plants versus the coalier powered power plants. >> sierra club sent out a bulletin. why focus on that? because the president is. they came out with the most anti-goal video i have ever seen. >> really? >> make you shake. i think csx not in a position to buy this one. union pacific is the one that's less levered and that play if you believe in the rails. >> all right. buffalo wild wings. >> this is the kind of thing that drives me crazy. deutsche banc downgraded it on what they think is weaker sales but raised the price target. when's the good? >> this. >> the ceo, a march madness

play. it's not over yet. this is where you go to buy wings. >> watch the game, drink some beers. >> what a run. how do you call the top downgrading it and raise the price target? so typical of wall street. the stocks have overrun all the price targets. the analysts remain way too negative. this is not an expensive stock. >> that is momentum-driven stock at this point and the momentum going here isn't where the momentum carrying the stock but the fundamentals don't support that price. isn't there room on wall street for that sort of call? that's what we have seen for some stocks. >> go back to martha franklin, the executive chairman of jardin. the multiple is not going up. i think the multiple, what we pay for stocks and people at home, what the earnings are worth i want more than what the stock market is saying and why these stocks continue to go higher even if indeed they are

momentum stocks. chipotle at the moment. priceline. they can go higher. great places to be in the first quert. >> they were. some of the best performers. carl, over to you. >> thanks. the balcony is now open. we'll get the opening bell in a few moments. [ male announcer ] you are a business pro.

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and we'll throw in up to $600 when you open an account. you are watching cnbc. opening bell about to ring in a minute's time. with jim kramer. we should mention the axp buy back. >> a lot of people have been negative about american express. the charitable trust. in part because it's not as good as mastercard and visa but this stock has got a lot of things going right for it including expanding gross margins by the end of the year. >> highly leveraged to the consumer doing well and the first dip hike since 2007. opening bell about to get under way here and you can see the s&p

500, cnbc realtime exchange. at the big board. russell investments celebrating. we'll talk to the ceo of russell etfs is a few minutes and at the nasdaq, astex pharmaceuticals developing therapeutic for oncology. >> all right. so taking a look, we had a number of banks estimates, price targets raised. >> you like that again? and again. and you have got -- this goldman sachs. it just keeps going higher. you have to start feeling that maybe they have an earnings surprise coming. i have got to tell you. this is so not sync we thought in the year and the quarter. jp morgan, not up this morning but talking about again a company making more money down the road. citigroup, remember they failed the stress test in the stock doing better. morgan stanley, the one that everyone loved to hate, now at

21. i think it is not done going higher. >> mixed trade in terms of financials here at the home. home builders across the board, what a contrast to yesterday's session. seeing for instance, coal up 2%. mdc up 2% and home depot and lowe's close to the highs of yesterday's session and continued strength for the retailers, as well. >> look, we have to remember. this is kind of like what happened with china. last monday, we came in, china was horrible. everyone threw away china. the right time to buy. last week kb homes was horrible. it was time to buy. doesn't this say something about this market in 2012? which is that if you panic and sell, unlike last year where the next day, getting more selling, it's your chance to get in. i think it's a remarkable change in 2012. >> did you do the bac downgrade at the wall? a neutral saying 80% run so far

this year. risk reward is more balanced. the focus will shift from balance sheet issues to profit issues. >> you want to own a home? warren buffett wants hundreds of thousands of homes? bank of america has a lot of homes they own. maybe owning homes isn't a bad deal right now despite what david blitzer said. we know that the selling fees is better. melissa, you have been talking. we know there's inventories being drawn down on homes. maybe it's not a bad toim. >> the only thing out of the pending home sales data yesterday, cancelation deals because they couldn't get the mortgage in the end because the appraiser comes in and appraised it for a lower price. that's a little -- that's troubling here. >> this is -- this phrase can it appraise? can it appraise? it always comes up after you've made an agreement with your seller. where you say, look, i want to be able to get the money and then the bank says, wait a second. can't appraise. ruin's everybody's plans and new

phenomenon. >> great thing -- though, great in quotes, most have their own financing arms so the chance of the appraisal coming in lower than it's worth is very slim because they're appraising their own construction. >> yeah. >> you talk about yesterday's action quite a bit yesterday but do you think in retrospect that fed chairman laid the ground work for qe-3 or just committed reserve through 2014. >> in 2013 we could have a problem in washington, impasse, maybe tax cuts go away and saying, look, if all that happens then we'll lose the rally. donald trump this morning talking sense about oil higher going to lose the rally. many people saying we're going to lose, we're going to lose. you know my view. this is a resilient rally and -- >> don't agree with trump? >> i love trump. i need to see gasoline at five bucks. i do love trump, by the way. he speaks a lot of truth. >> yeah. i mean, the whole $5 a gallon

notion is discounted by some and some in the energy business right now. >> we've been talking yesterday, a lot of people talking about what is going to happen when this su noco take the refinery offline. there was a great discussion yesterday on cnbc. maybe the government should take it over and maybe it's time the government steps in the way truman stepped in with the train strike. this is not the government to make it work. >> we mentioned a stock to keep being, you know, powering to new highs for ibm this morning at the open. 208-66 is the high. here we are, nice run on the stock. >> what a run. talki ining about $15 earnings power. that's too low. it's a beneficiary of what i think is -- hewlett-packard is saying we'll make it. david is talking about meg

whitman. the truth is that ibm has really snuck up a world theater and i think i like it. ibm is a kind of stand-out model. not expensive. >> speaking of david, let's go over to him with bob pisani. >> thanks. carl mentioned earlier so much data on housing over the last week and many of them mixed but nothing mixed of lennar's report today. >> boy am i happy. chewing the nails over this report. kb homes was such a mess on friday, orders down. we need orders up 20% to 30%. the street has the numbers out there. housing numbers in the last week, showing improvement and below expectations. lennar comes out, terrific numbers. run it by you. these are good numbers. orders up 33%. kb home down 8%.

those are the metrics we're looking for. street's expecting 33%. best first quarter sales for lennar since 2008. remember that? 2008. four years ago. the good times. cancelation rate. are you ready for this? 18%. is that good or bad? fantastic. we've been having cancelation rates in the 20% and 30% rate levels because people couldn't get mortgages and appraisals falling apart underneath -- below expectations. this is a great number. cancelation rate. how about sale prices? average sale price up 1%. okay? it's up, though. by the way, incentives, the amount of money they have to spend to get people to sign the contract, flat. they're not spending anymore. they're not giving back money. they're not throwing in free things like builder haves to do. incentives are flat. throw it altogether. you have got better pricing. you have got tighter cost controls right down the line. gross margins were up, too.

almost 21%. in case you wonder for a home builder, gross margin of 21% is a good number. certainly a heck of a lot better than seeing in the last few w r years. if lennar would have tanked, the modest improvement supposition would have gone out the window. >> and kb home -- >> it's outlier and switching primary mortgage lenders around and there may have been a real problem with getting those -- that mortgage lender to deliver on the amount of loans necessary. i think that's why it's justified i think to call it a bit of an outlier right now. let's say greatly relieved on this one. >> let's move on. something you're probably not thinking about today, a portugal. an article. a local newspaper outside of lisbon and noted two things rather odd. the paper wondering, number one, a sudden rise in suicide rates.

remember a couple of months ago we talked about ireland as the face of austerity? one of the things they have seen for a long time now, for months on end, bars closing because people can't afford to drink in bars anymore. too expensive. austerity program. portugal has an austerity program. the second thing that this local paper wondering about, a sudden rise in gold and silver shops in the town. what are they doing there? people giving gold and silver to get cash. >> what about the political will to follow through of austerity that people suffer when this happens? >> that's why i'm bringing it up. there's a program going on there and they have pushed through programs to make it easier to hire and fire people like italy is doing now and the strain is now starting to show on the portuguese society. the biggest lender to portugal outside of portuguese banks are spanish banks and that's why the yields have been going up on the

tenure. there's concern on the strain of spain and spanish banks. keep an eye on this. one of the reasons that europe is starting to worm its way back in to our conversation. >> yeah. okay. bob, over here. over to you, mr. kramer. >> suicide rate, think of the fabulous foreign movie "the lies of others" where the suicide rate, they tried to hide it in east germany because it was just a statistic that shows you how unhappy people are. i think we have to watch that issue. let's shift to bonds and the dollar. rick santelli in chicago, take it away. >> well, jim, if you look at new home sales, pending home sales or case-shiller, friday, monday and today, none of them were the harbingers of terrific news but even though they're disappointing probably giving us an indication that we have pulled some sales and some activity forward. above and beyond the cancelations everybody's talking about. maybe ben bernanke looking at

the state of california's jobless claims speaking yesterday. many say it's always warm in california and their claims haven't budged much. set to release tomorrow. a true picture that seasonalities distorted the general number? these are the issues of traders. look at a two-day chart. below yesterday's yields and since the 13th fed meeting, the cause of rates moving higher, we have been in a range. the upper end defined by 240 in the 10-year note yield. back to you. >> fabulous, rick. thanks a lot. check out the latest news in energy and metals. still controlling. sharon eper son at the nigh mention. go ahead. >> below 220. we have oil that's range bound but the upward momentum is where i'm standing here. we have gold prices that look like perhaps $1,700 ounce level once again. options expiration.

volatility in the gold options pit and a lot of momentum from the futures, as well. particularly after the surge of yesterday on the bernanke comments. we are looking at gold, up about 70 bucks since thursday. that is where the momentum is in the metal space and pretty much in the commodities market right now. copper after a pretty strong showing in the previous session is stabilize here and continuing to watch, of course, what happens in energy because this natural gas story is amazing here. the fact we are below $2.20 jim here for natural gas and that we could easily everyone talking about the $1 handle is this market is watching very carefully. >> all right. sharon, thanks so much. let's welcome jim paulson, the ceo of russell investment etf business. trading under the tickers hdiv, large cap high dividend eft and a small cap based on the russell

2,000. both up slightly since the march 15th listing. great to have you with us. people are on the search for dividends and certainly high dividends but sometimes means that the underlying stock is riskier and a reason why companies hang a high dividend. in terms of screening the companies, what are the main criteria to make sure you're capturing the high quality companies? >> sure. so the key thing is as you say, most of the dividend securities and the yield goes up as the stock price goes down and we wanted to make it different and a new generation to put some high quality screens on the companies themselves. so debt ratios, a number of different quality screens, that would be important to the security selection and picking high quality in the large cap 75 securities and small cap 150 securities that mean the quality screen and yet continue to pay a high dividend. >> how does it stock up to the other products on the market? >> i think we're competitive on

the fees. the large cap product at 33 basis points and small cap at 38 basis points. they come with the russell 1,000 and 2,000 as the universes we're selecting securities from, too. so i think that's also a positive thing. but i think we are right in the right price point for investors on this product. >> do you have a sense as to who's buying in to the etfs? we were seeing outflows of funds and we have been seeing similar trend coming to etfs and the knock is saying that investors, individual investors still aren't back to the markets to buy an etf and mostly institutions using them as trading vehicles. >> in our case, it feels very much to be a 50/50 split. the institutions buy the product, trade it, using it for short term vehicles and then a lot of financial investors to use it to build portfolios for the clients and looking for dividend yield at this point in time. >> with the rally of this year,

have you seen an increase participation in your product? >> slowly coming back. >> slowly coming back. still largely missing out on the rally. >> they are. but they're advising the clients it's time to take a look. a number of big firms making the recommendations to get back in the market. >> okay. jim, thanks a lot for your time. >> very much. thanks. >> you want to hear kramer's game plan for investing in america. as we head to break, a look at the early movers. the next revolution in music is happening here.

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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 s of hertz. today we are talking about investing in america. how about america's biggest insurer? aig expects taxpayers to end up with a profit of between $5 billion and $10 billion on the bailout. this after repaying the

estimated billions owed the government. the ceo talking to jim on "mad money" last night. >> did you have to sell anything you didn't want to to get out of the jam initially? >> not really. >> really? >> no. >> this is the aig that you want? >> oh, absolutely. hank and i debate this all the time. >> you talk to hank? >> i do. he's a marvelous guy. i said it was too big. he said, it's not. i said maybe for you. >> he's referring to hank greenberg and i think to jim's surprise is commune kaicating. >> bob doesn't talk to the government even though the government is largest shareholder. but this is a very complex situation. he is trying to pull apart aig and greenberg's really helping. greenberg built aig and i think so many arcane ends of aig that you can't do it without a guy who ran it in the back possibility. that's what he did.

>> aig possibilities created have been sold. >> yes. >> so much of the business that took place in asia. and this is much more of a domestic company than it ever was. >> invest in america situation. they have a big property casualty. he was glad that everything was sold. he didn't want anything back that was sold. >> this is actually america investing in america. >> yes. >> sort to speak. this is about what the taxpayers want back from the huge bailout. it was $130 billion. so should we really be getting excited about a $5 billion to $10 billion profit? in 2008 if you put $130 billion in to the market, you would have had more than a 4% to 7% return on that money. >> true. but i think that people felt it was lehman brothers situation, never come back. lehman did not come back. i think that bob has done a remarkable job in the sense that there were so many things that -- so many derivative contracts that seemed like they

were nasty. about 100 really did matter. i'm surprised is that when you hear bailout, everyone thinks that the american people was pleased and the american president never identifies himself with the success and this is a success that they get the money back. >> your thought on the stock itself? >> i think it will go much higher. >> why? >> he is talking about a dramatic shrinkage in the number of shares. only thing to get it down to 1.2 -- talking about a huge decline at 1.2 billion. you've got a deutsche banc note yesterday for the tremendous amount of stock to buy back. >> is it not a decline in the number of shares. the treasury is going to sell shares and essentially going to buy back to offset the increase. is there an actual benefit to the shareholder buying back? >> there's people that don't want to touch this thing and feel like the government is going to just, you know, plow in

and just dump stock. he's saying, we'll buy it. >> talking about an enormous amount of stock and i would assume there's an overhang concern. one way of at least ameliorating that is what melissa said. you have -- >> sure do. >> got to worry about that, as well. >> bob is saying, look, they'll dump this, kill it. and he said, i wouldn't worry about that. the government won't be involved by that point. how's that possible other than the fact they're selling off assets and buying back stock? the government stock. >> other stock names? >> usg. that is remarkable thing. when you see gypsum board going up -- sheet rock. that's the last thing that ever goes up. until you get a real housing recovery, a couple things. this company's put through a price increase. hasn't everybody? none have stuck. this is the first time since

2000 -- talking about five years since they had a successful quarter. >> wouldn't you want to see starts better before you jumped? >> maybe this is the conversion. maybe this is the conversion of foreclosures to renters. costs $6,800 to refurbish. >> on sheet rock. >> on appliances. among other things. >> it is a registered trademark. >> warehouser? >> we have good numbers out of japan. everyone thinks that japan can't grow. one of the big sources of growth we thought was going to be the rebuilding of japan, of the 70,000 homes. i think there's a lot of talk that maybe that area is too radiated. if japan has growth and there's a tremendous home building division between wi, then you see it go higher. charitable trust name. >> your last name, nov?

>> people have to understand, oil's trading so badly it is a nightmare right now. i can't believe how badly it's trading. the stock. nov is the way you get at the oil that's not been able to be got at and a technology company. they have many different -- like universities within their company. the's not enough training and technical schools in this country to be able to supply all of the framework they need. this is a great industrial american company. invest in it. >> we have to save time for six in 60 coming up next.

time for six in 60. six stocks in 60 seconds. give or take a few. >> apache. >> there's a leak on a facility. stay away from the group. >> also a price target increase. >> we have this map pharma failing and they have the great migraine drug which is botox. >> finish line recommended. >> we saw good numbers in foot locker. dick's selling shoes well. not a surprise. >> williams company rated buy at ubs. >> if you grow and move in, people get excited.

>> a lot of secondaries lately. the latest one, dollar general. >> stock seems to be holding up despite the secondary. insiders selling. very smart the whole way. >> weatherford taking off. >> this is an offshore driller. almost as if the oil at 120 brent doesn't mean anything. >> what's on mad tonight? >> two very interesting pbh -- that is a great indicator of what's selling at macy's. 50% of the time market. hence my narrow tie. tommy hilfiger. not my style. i have chlorox. they hire veterans. ahead of the veterans to do tomorrow. >> 6:00 and 11:00 eastern time. >> thank you. >> thank you, jim. consumer confidence is next. con, ohh, down by two, shoots a three, game over. so two seconds ago... hey mr. and mrs. harris, where's kevin? say hi kevin. hi. mom, put me down. put...the phone...down.

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welcome back to "squawk on the street." consumer confidence, 70.2. 70.2. that's pretty much as expected. maybe a smidge better. but here's where it gets fascinating. february's number which was the best in the year originally released at 70.8 upgraded to 71.6. it's still only the best in

february, not only, in a year because february of '11 was 72. now, if we look at the current number that becomes the second best going back and very surprising to many energy prices didn't have more of a detrimental effect. richmond manufacturing, also a march read wasn't so lucky in terms of matching expectations. it came in at less than half of the 18 expected. came in at 7. the market, well, pretty close to the low yields high prices of the day. and if you're using 225 as a pivot as many are, this is very important equities holding the goose egg here all of a sudden on the dow jones industrial average. carl, back to you. >> thank you very much, rick santelli. the road map of the next hour. le nnar, beating the street's expectations on revenue. painting a different picture of last week's kb home report. when's the read through? we have the trade next. >> and veterans looking to make

a move to wall street. talking to deutsche banc for their take on how former military members make a move. >> plus, investing in america, bringing it back to the banks amid the big financials rally of 2012. naming names. telling you which you should be buying. >> the news this morning, the largest arts and crafts retailer in the united states is reportedly intending to carry out an ipo. listing comes nearly six years after taken private for over $6 billion by a host of firms with blackstone and bane capital. planning to file a registration document in april. >> shares of total plunging. the uk coast guard maintaining exclusion zones and they're evacuating personnel of nearby installations. >> tech here, many years of praising online advertising,

google swaying from the norm and promote itself on television and magazines and newspaper ads. they're looking to promote the new services including google plus at the chrome web browser. nononline ad spending, shelled out $70 million on tv this year compared to $6 million last year. interesting story of how they're trying to increase visibility for the newer products. >> i wonder if they'll gain traction to the search engines if they're the dominant out there. how many incremental users can they get? >> any word to put ads on facebook yet? >> that would be a help, right? >> facebook wouldn't mind that. >> facebook really does and what we -- michael price here talking a bit about it yesterday but mobile search is so important for google. and they're paying so much in terms of traffic acquisition costs to the likes of aping, actually. so many interesting relationships in this entire

world. >> yeah. >> frenemies. >> shares of of apple hitting a new high. $613.40 the new high. we have been seeing apple trying to make a run at new highs all session long setting a number of them along the way. >> by the way, apple posted this year, 26 new highs. chipotle had 37. >> 37 new highs? 37. much more than apple. >> a momentum stock and kramer says he thinks can keep going. >> amazing. chipotle? >> yeah. apple with the multiple well below of that of the carriers felling so many of the iphones. you would not expect they would have higher multiple earnings than apple. >> true. very good point. we are taking a look at investing in america. let's look at lennar reporting orders for new home sales jumped

33% from the previous year. is this an encouraging sign on the back of last week's dismal kb homes quarter? a home builder analyst at rbc capital markets. bob, good to see you. >> thanks very much. >> kb homes at this point seems like an outlier. what about its mix of business where it operates would make you believe that it actually is? >> i think the issues that are affecting kb are definitely company specific. i think lennar results today, attest to a recovery in the housing market. >> in terms of where they're seeing lennar, the most growth, where would that be in comparison to other home builders like a toll seeing strong demand in the higher end projects of the higher price points? >> lennar is really big in florida, good presence in texas, good presence in california. the real story with lennar, solid top line performance. good developments from the

margin standpoint and good order growth is universally strong and reinforcing the view on the housing market. we think the read through of lennar, an excellent company is also applicable to the broader builders. >> you're there at 225. as you have watched the bond yields rallied a bit here, how much does that infuse in the rates and the ability to get an affordable mortgage? >> there's an incredibly high level of affordability in the housing market so we don't see higher rates as an impediment to a recovery in the housing market at this juncture. >> clearly optimistic about where we are and traveled a long way with the stocks and home builders index doubled since october last year. i see lennar in particular, pretty close to the $29 price target that you have. i mean, are there further capital gains of people to make in the stocks or are we approaching fair value? >> the sector's had a really big

move, especially on a year to date basis but if you look at it on a 12-month growing basis, the stocks are just getting back to last year and experiencing a recovery of lost ground. we're constructive on the sector with the two to five-year time horizon. a near-year gain, the upside could be limited. you have to look at the group. >> lennar the best way to play that? >> we have been saying for a long time, it's a best in class operator with a terrific asset base. looking for excellent risk adjusted returns, it's probably the best way in the group to express that view. >> bob, you also cover a lot of the feeders in to the home building industry, worldwide, for instance. for the greatest exposure to the housing market, would you go for the derivative plays opposed to the home builders themselves that are limited in scope with

leverage to the turning market? >> melissa, i think that's an excellent point. would highlight owens corning with insulation to the builders so if the market starts to take off, owens corning's business will experience tremendous leverage. so there are a number of different ways to express the more constructive view on the housing market. armstro armstrong's a way to play it and owens corning. >> some people may be confused with the conversation that we have just had in the price moves in stocks that we have just seen. with what happened in the first hour of the program, case-shiller reporting prices on both of the major measurements fallen in january. what is the state of the housing market? >> housing market's recovering. we're seeing a continued liquidation of shadow inventory which is depressing national prices but you have to make a big distinction between new home builders are marketing to and their buyer relative to

investors purchasing distressed foreclosures so the market's starting to accelerate at an accelerated pace this degree of seg menation has good ramifications for the builders. the purging of scale inventory from the foreclosure market is a good thing and actually a sign of healing in the marketplace. >> all right. bob, thanks for your time. >> thanks very much. our invest in america coverage continues all day today on cnbc. coming up, home renovation stocks. time to give your portfolio a facelift. next, soldiers taking to the streets. we are talking employment. veterans and wall street in a special cnbc/nbc initiative we're calling "hiring our heroes." next, the veterans on wall street movement, a boish bank, to find out how industry associations build veteran awareness and the skills needed for a wall street career. stay with us. [ male announcer ] lately, there's been a seismic shift

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stocks to watch, baidu, there are reports that the chinese search engine added as an option on apple's safari browser. shares up 30% over 3 months.

urban outfitters, the firm says it's more confident in the product cycle. and crocs initiated outperform with a $25 price target to be traded at $21.74. carl? >> thanks very much, simon. we're honoring the veterans all week long. today, nearly 1 million vets unemployed and many more are coming off active duty. deutsche banc provides career opportunities to vets going in to the financial services industry. john is the global head of financial sponsors coverage. part of veterans of wall street and both served in the u.s. navy. thank you for taublging about? >> thank you for having us. >> talk about the history of the program, john, and why and how it began and what constitutes success. >> sure. we launched the veterans group

in september in 2010 really inspired by the fact that many of us didn't know about how dire the problem was in terms of veterans' unemployment and this isn't just folks getting out of the officer corps but every level. the unemployment rate pushing in to the high 20% depending on how you measure it. in terms of success, whenever each veteran goes right in to a job, that's really success for us. and we're not going to stop until we see that. >> i read a quote of a veteran the other day saying finding a job is almost as scary as being in the him tear military to beg. we know about operational focus, right? ability to complete a mission. what else serves them well in a job on wall street? >> the mail tear really provides you with skills translatable in to the civilian sector. you learn adaptability, you're well trained, learn operational awareness, project management. there are really important values the veterans bring to every employer.

>> yeah. difficult, john, because a lot of them go to sectors like education or law enforcement that knowing what we know about fiscal problems in this country at the state and local level, the jobs really aren't there for them to go to. >> sure. i think what we have been -- one of the challenges we have tried to fit is -- and one of the misperceptions is this isn't just about finding jobs on wall street. that's what part of what we're doing and helping folks in the business sector, come in to the many jobs we have. security guard to back office processing to investment banking to sales and trading and veterans on wall street is bigger than that. trying to use the network we and the other partner banks and five banks involved this have an extended network of venders, clients, et cetera and the butterfly wings as we like to think of it, flap the wings and there's a tsunami on the other end. that's a follow on through effect of the venders. >> ellen, employment at least in new york in financial services isn't growing like it used to.

shrinking in some cases. is the pool there for them to come to? >> the pool is there. the opportunities are there. deutsche banc is very active in the recruiting through the normal pipelines, through mba and undergrad and also reaching out to other areas of the banks, more operational, security guards so there are opportunities throughout the bank. >> we should point out, not all new york jobs, right? global companies with offices all over the country and the world. not about finding an apartment in manhattan and working on broad. right? >> right, absolutely. >> some of the partner banks with bigger retail networks done advanced work of getting folks more injured or disabled to be able to work from home as an example and so they're using their expanded national footprints the find jobs in that way. >> best advice for veteran coming off of active duty and interested in this program, ellen, what would you tell them? >> start doing the research now. go visit veterans on wall street.com. look in to the conference, june

21st here on wall wl and start networking. >> thank you very much. >> we'd refer them to the chamer of commerce, several organizations set up exclusively to go hope that we have partn partnered with them. we did when we got out and you should, to. >> thank you so much for coming down. >> thank you. >> cnbc will be live tomorrow from the "uss intrepid" for a massive job fair with employers ready to hire veterans. thanks again. >> thank you. >> thank you. >> thank you very much, carl. a big day here on cnbc, talking about investing in america all day. up next, a good, hard look at the major u.s. banks. are the big banks finally on a firming footing? which should you buy here on in? we're naming names after the break.

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♪ at the risk of sounding like a broken record, shares of apple hitting yet another new high. $614.75. up 1.4%. one of the best performers here today. think equity. raising to $700 a share from $600 saying, you know what? the heave in the new ipad, that's not a new issue. qualcomm will come out with a new chip to alleviate the heat problem. apple hitting another all-time high. >> president obama caught on tape telling the russian

president he would have more flexibility addressing the sensitive issue of missile defense after the u.s. election in november. the exchange was a rare unscripted moment in global politics and could possible signal a warming in u.s.-russian relations. the question perhaps of investors with the recent political turmoil in russia could be a time to invest in that country. let's go trading the globe with managing partner at triojim asset trading. you have been a fan of russia for sometime. >> yes, i have been. >> where should money put the money? telecom? >> this reset between obama, i think and russia, certainly medvedev has the roots in rush why's desire to root the economy in the nonindustrial -- the oil model for russia doesn't work 2008 and '09's crisis proved that. seeing the political change post

putin, post the protest, see the government addressing the weakness, cabinet changes that also mean that some of the levels of corruption are going to be addressed. wto entry for russia is a long-running soap opera that's been solved and a positive rerating moment for the economy. so yeah. i like the ways you can invest in russia. there's very good companies outside of the oil and gas sector you have to look at. first is yndx. this is the google of russia. a company with world class technology fighting off google at home. probably 60% of the search share. growing ebitda. think about this relative to a buy and people understand as china's google. it trades at 16 times ebitda. you have value here in a space where you usually don't get it. another name i like is ctc media. ticker in new york is ctcm. this is the first and only

independent media channel in russia. i would call them the viacom of russia. they give you exposure to independent content, a demographic in russia that's probably most attractive is the group appealing to. the audience share the growing. disposable income level across russia is growing and buy the russian consumer. >> a naughty question here. >> be naughty. >> i can because you're on "fast money" so often. how does the risk/reward option on russian stocks compare? >> i don't know how naughty that is. cheap to the emps. gives you a value proposition that i think at least in the case of apple you don't necessarily have. although, you know, many would argue apple is not expensive here. it scares me with the momentum of the stock despite the fantastic fundamental story here. i don't think you have that in

russia and i think emerging markets underperformed, developed markets over the last six weeks despite the argument is far superior. no inflation. we are seeing sustained and probably better than expected global growth. this is a very good backdrop to be investing in emerging market stops. >> interesting. thanks so much. >> thank you, simon. >> catch more with tim every weeknight on "fast money" and tuesdays here. next, we are talking investment opportunities amid the major banks in this country. the recent stress test results showing the financials in a far stronger place than 2008. which name should you be looking at? we'll break down the banks next.

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time now to go to trading. the stories we're squawking about. consumer confidence index for march, 70.2, down in february. but roughly in line with expectations.

pfizer, a biggest gainer in the dow, up more than 2% to new 52-week highs. arguments of goldman of how a break-up makes sense for that company. the volatility index up 4.5% near the 15 mark. a focus today, the broader picture is kind of hung on to the bernanke-inspired gains of yesterday. so yes, we're flat but after a big surge yesterday and overnight on both asian markets in particular and to a certain extent europe, as well. have a look at the breadth move so far this tuesday and relatively even spaced down here at the nyse. at the nasdaq, apple a key focus. declining side and no great change. one hour in trade and go to chicago and bring in ceo of full & bear partners. always great to speak with you. may seem like minor moves across the board and yet this is off of

yesterday's very big rally and an important step for the markets in terms of just maintaining that momentum? >> oh, absolutely, melissa. look, this market if you have noticed over the past three months is doing what we have been talking about. if you're bullish. seeing the market going up with equities, s&p's a stellar performer but the real leaders have been small caps, russell tech stocks, the nasdaq. that tells you that this is a broad-based rally. we're watching when's happening to the ten-year. the money is coming out. all of these what i called scared portfolio managers, scared money on the sidelines. seeing them come in, yesterday's action almost capitulation. wasn't truly. it was almost there. if it were to happen next week, i would be convinced it is. >> what was the missing ingredient? >> the euphoria. the last of the die-hard bears getting out. what we need to see are people

convinced that the market's going up. we have a lot of nonbelievers out there. this isn't made by selling and walking away but buy protection and walk away. >> a lot of focus made of the alleged low volumes that we have and overnight merrill lynch saw with the -- research note that points out that the volumes 36% higher this quarter compared to 2007 and that may feel it's perhaps a fairer comparison to make. what is your judgment on the volume and what it means at the moment? >> look, simon. let's be real clear about what the problem with volume is. nobody's been talking about it. it all stems from that mmf global disaster. mf global made up the liquidity and providers here at mf global. if i were to put a number on it, i would say anywhere from 20% to

40% of the industry was directly or indirectly tied to the mis p mishaps of john corzine and mf global. i think we are getting past that and on the floor of the exchange here, terry duffy, only one with the guts to point the finger saying that he did something wrong. i'm actually very, very impressed with the fact he was able to do that and right now he's being shown that he was one of the few guys, john the baptist. the voice in the wilderness and everybody's showing him that he's right. >> jack, just to clarify, terry duffy pointing the finger at john corzine? >> remember, he was the only one who actually did something for our customer base. the cme group, i have to tell you something. stands head and shoulders above everybody else with what think eve done. i don't want to get in to that right now. what i want to talk about is this volume that we have seen from that is starting to come back. happens in the markets. confidence is coming back. with that, more than like the

continuance of the rally. >> good to speak with you. >> we take the stage one off and see what happened. >> department any counsel testifying and see what she says if anything at all. going to be very, very interesting. about an hour in to trading. checking on the energy markets, as well. good morning, sharon. >> good morning, carl. you know very well there's a pipeline race going on and it is heating up right now. we are hearing from enbridge and enterprise in a race to get that oil from north dakota, from the ball kins and canadian oil sands down to cushing and the texas coast and double the seaway pipeline. now they're going to double it. double the capacity to 850,000 barrels per day by mid-2014. they're adding another 450,000 barrels a day in a twin line in that southern route. now, that southern route that's going from oklahoma to the texas

coast is going to compete along with that southern leg of the transcanada keystone xl extension and then addition to that enbridge expanding it to take it from oil flanagan, illinois, to cushing, oklahoma and get it to the texas coast. another 585,000 barrels a day initially. that's the first phase of this seaway pipeline which is heavily anticipated getting under way in june of this summer. and about 150,000 barrels per day to start with then and ramping up to 850,000 by mid-2014. as this race is on, what's the impact? here in the futures market here on the floor, likely going to see it in the spread between brent and wti. and many analysts, many traders are also expecting that this is going to become closer to the historical norms of the single digits but right now looking at the spread around $18.

back to you. >> all right. sharon, thank you very much. invest in america series continues with a look at bank stocks. the economy is picking up. mary thompson tells you how to play it. >> hey there, melissa. there is no question that banks are one way to play the u.s. economy given the lever to businesses, small and large. real estate as well as the u.s. consumer. all good things. as you mentioned earlier given the recent and significant three-month outperformance, could investors be late to the trade? analysts and money managers say, no, if you know where to look. some improvement in loan growth and fueling the recent rally. still analysts jefferson harrelson saying it has a bet on improving u.s. real estate market. he says further gains in the stocks come from a stronger than expected recovery in real estate and growth in the balance sheets and loan portfolio. he says the stocks most likely

to outperform are those of the riskiest banks and inner turnaround, distressed banks have the greater reward with smaller banks outperforming the larger players. he says banks with exposure to florida real estate a theme to play the recovery and less profitable banks as the troubled ones yet to repay t.a.r.p. thinking being those stuck on the sand bars stand to benefit the most. richard steinberg says he's playing the safe sticking with smaller lenders and strong local economies like brookline, massachusetts, and bryn mawr, pennsylvania. melissa, back to you. >> thank you very much. hedge funds stocking up buying stocks and what if the smart money is jumping in, is

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was this your first car insurance taste test? stock to watch on this tuesday over an hour in to trading, las vegas sands. raised to $50 from $68 and raising full-year 2013 estimates. cibo holding downgraded. they're citing valuation over there. and southern copper upgraded to overweight of equal weight at morgan stanley. >> we saw an upgrade of bally also. meantime, we are joined by a very special guest, none other than larry kudlow of "the kudlow report." talking of investing in america with us kudlow style. we want to hit a few topics. first one is proposal that's

expected to be made today by the obama administration to curb co2 emissions of power plants and favor the utilities producing with nat gas plants opposed to coal-fired plants. >> is this more regulatory overreach? do we need this and do we want -- no new coal plants. that's what this means. no new coal plants. some of the existing coal plants may survive but no new coal plants. okay? why do we need this now? why do we need this now? energy prices. is this obama making good on the promise to raise energy prices, electricity prices? coal is 20%. i don't see it. i don't get this. you are right. the natural gas guys will love this. >> why do we need goal plants? reduces emissions. >> growth. growth. >> can't you argue it's a win-win. >> growth, jobs. growth. jobs. stability. >> horseless carriages, too.

>> i understand that. that's a positive break through. that's not a limitation. work out something. it is not clear that the carbon limits are necessary. they haven't proven this. the whole issue of climate control is still up in the air. there's great debates now after what we have learned the last year. you know, do we need this now? this is like no keystone pipeline for canada. we are not opening permits on federal lands. now shut down new coal plants. this sends all the wrong signals if you ask me. >> the u.s. is still in terms of major oil producing countries growing production. >> yes. private lands. absolutely. fracking. shale. great stuff. i like the announcement of the pipelines of enbridge, enterprise. that's great. double, triple the limits on federal lands. go up in to alaska and the arctic. let it rip. north america can outproduce

opec. terrific stuff. i just don't know why the epa has to close down new coal plants. >> we were admiring your cuff links in the break. reagans. >> my reagans. >> you have worked for presidents. >> yes, sir. >> tell me about a president caught on an open mike talking to medvedev about needing flexibility ahead of an election? is this an accident or is this somehow a very graceful move in the game of chess? >> i think i'll assume it was an accident. i wasn't there. what do i know? i assume it's an accident. i think what has people, republicans and many others, what did you mean i can be flexible? did you mean that i, the president of the united states, will meet the demands of russia regarding missile defense for europe and the usa? is that what you meant? does that mean that i'm going to do whatever i can to aswanlg and accommodate your concerns or did that mean i'll defend america's

security interests lock, stock and barrel? this has a real bad for it. >> what's quite clear is that obama is having a different conversation in private -- >> right. >> with international leaders than having in public actually with americans and with voters. and it comes back to the actions of the epa. the rest of the world wants there to be emission controls here in the united states and in china, as well. one wonders if behind the scenes that's not what obama promised them and see it coming today through on coal. >> i want to say on the national security issue, what we need to do now is hold open hearings in the house and the senate as to what the president meant and get his security advisers, secretary of state, nsc. they have to explain to people what he was talking about and what he was thinking. i saw the paper this morning. releases on the campaign trail today. he was laughing it off. he was dissing it. i don't think this is something that should be dissed.

>> doesn't that make it worse? how can you hold public hearings with a national security -- it is a matter of national security an point it out -- >> what did he mean? as simon said, if he can say it privately then he should be able to say it publicly. we need to know precisely what his foreign policy is regarding the crucial missile defense issue. you know, we had this over the eastern europe and the russians didn't want it and looked like we were caving in. i don't have to like that. but i'm just saying, whatever i like, let's have open hearings so that what he's saying privately as simon noted is said publicly. very important. >> let's talk about scodus. >> yes. >> they say today is the most important getting to the individual mandate. do you think as some said in the media this is upheld? >> i'm not a constitutional lawyer. i myself oppose obama care. i have from day one.

i think the spending and taxing and regulating is anti-growth. it's anti-job creation and it's anti-business. okay? that's my take from day one. i want to replace it with tax credits and interstate insurance shopping, as much free competition and little central control as possible. that's my long-held view. whether the court rules, i don't know. i was interested in the tax flap yesterday, right? yesterday, they said, it's no tax so, therefore -- >> if it's successful no revenue is raised. >> we don't have to worry about the anti-injunction law of 1870 or whenever it was. today we'll hear the mandate is fine because it's a tax and the commerce clause regulates taxation and we are okay. they said it wasn't a tax. today they'll argue it a tax. even ginsburg raised her eyebrows at that. i can't figure it out. it's a one of many inconsistencies.

as the governor said this morning on "squawk box," scott and perry, the medicaid provision will bankrupt a lot of states or nearly so. the medicaid provision coming up i guess tomorrow. >> tomorrow. >> is absolutely essential. medicaid mandates what the state haves to pay. that's a perfectly terrible law. that should be a state decision. not a federal decision. >> you have a big show tonight. a couple of big guests. >> we have governor john kasich is coming on. paul ryan coming on. looking at the anti-coal, anti-growth business. a little health care, as well. >> sounds like a good one. that's "the kudlow report" tonight. >> thank you for having me. >> annie's begins trading tonight after michael's announced it's looking to go public. when's the read-through now? we'll talk to the rush to go public next. but first, we'll check in with rick santelli and what he's working on for the next hour.

good morning, rick. >> don't you just love third hour "squawk on the street"? and coming up, we'll discuss a couple of important headlines that came out regarding this wto meetings in geneva and talk about stocks. the big debate for years is it sustainable? why aren't inflows bigger? finally, yes, we are going to talk about mf and what intent truly means. all at the top of the hour. [ male announcer ] any technology not moving forward

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♪ ♪ annie's serving up a big offering of stock. kayla has much more. >> annie's is kicking off this week's public offerings. you know the company for its organic mac and cheese. we'll hear more about what the company is about. this week it's looking to raise $115 million which will go to its private equity owner solara selling 4 million shares in the offering. the $10 million annie's raises could help its muscle its way into the market share of its competition, mainmy kraft foods. a bit of a crowded market but

still jp morgan expects the organic food market to keep growing by 8% just through 2013. investors are already bullish on annie's as well. underwriters upped the price target by 2 bucks yet as demand soared for the company and ipos in general. there are a few reasons for this. the market warms slowly to these deals this year. with the s&p still going up and the vix near record lows, higher confidence here is no question. this week alone has nine ipos on the pricing calendar, and, guys, if you all happen, it would be the busiest week for deals since tes 2010 after one of the slowest quarters on record. back to you. >> all right. kayla, thank you very much. it is tweet time. it is all about the markets today. they are on track for their best first quarter since back in 1998. so we're asking you guys today if you could go back in time to '98, what advice would you give yourself? what would you be wearing? no, just kidding. >> i actually joined cnbc in

february of 1998. >> really? what would you tell yourself, simon? that is a conversation, perhaps, for this commercial break. stay tuned. we have your responses coming up. ♪ [ boy ] looks like our work is done here. i'm heading home. vaaa vrooom! need some help, ma'am? grrrrrrr! [ in high voice ] oh thank you. these things are heavy. zzzzzzzz! [ male announcer ] built for work. and everything you work for.

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♪ ♪ time now for squawk on the tweet on a tuesday. markets are on track for their best first quarter since '98. if you could go back in time to 99, what advice would you give yourself on stocks? pk writes instead of spending 50k to send your son to college, buy him an aapl. he'll be a millionaire at 30 and thank you. find a young punk named zuckerberg, convince him the future is beet farming and create a successful social network. and keith mccullough, advice to self-on the 1998/19d 99 bubble, pray it's not another bubble. if we could all go back, it's

hindsight 20/20. >> i would buy hand over fist new york real estate seeing what the trajectory has been over the past however long. >> s&p was flat for ten years, maybe the best advice is wait ten years and then get in again. in march of 2009. >> buy real estate instead. >> right. do that, exactly. we should take a look at the home builders, too, and anything related to housing today is close to the top of the leader board when it comes to the s&p 500. pulty, horton, coming off the stellar results out of lennar today. best new orders in three quarters. more than offsetting the damage kb did to the sector last week. >> i thought that interview we had where the housing analyst drew a division between the areas of the housing market that they are in and that they are constructing and where perhaps many viewers may find themselves with case-shiller falling at the moment and obviously still great pockets of weakness. >> the best play according to

bob winhall, broader exposure to the improving housing market. >> i thought it was telling k t cramer is watching usg. it's only going through january. end of january. and blitzer said a lot of the data we've gotten since the end of that month has been stronger suggesting case-shiller does improve in february or march. >> right. we're also watching, again, shares of apple. and the last time -- it's now an old record, because it set a new record. 614.91 is the new high. apple shares trying to extend. we're below that right now. 612. that's probably a story of the overall markets as we are -- >> in a market that's down that hasn't actually gained today. >> it blew through 610 early this morning on big trades, too. so the momentum around apple is pretty intense this morning. meantime, tonight on "fast." >> tonight on "fast" keith

mccullough is going to be on and the ceo of hot topic. a three-year high. they sold out of the "hunger games" merchandise. part of the "hunger games" mania trade. they were on the trend with win with charlie sheen. they've had their finger on the pulse as far as teen trends. hot topic on their three-year high in today's session. also we have the top five etfs you want to avoid in terms of etfs that do not track. >> like a double vix. >> exactly. it is a list you do not want to miss in terms of buyer beware when you're getting into an etf. >> we should mention you saw "hunger games." went to the premiere. you didn't go over the weekend. you like it. i'm reading the book now, simon. can we get you in this club? >> i might go see it. it was a premiere you went to? >> it was a screening. >> you didn't go to the nightclub afterwards? she came in and said there wasn't a lot to do the following day.

she said i could have gone to the boom boom room. >> "squawk on the street" field trip is in store. >> simon is going to stick around. if you're just waking up or joining us, here's what you might have missed this morning. >> welcome to hour three of "squawk on the street." here's what's happening so far. >> whether you believe in the bill or not, or believe -- whatever you believe. and whatever the fee is in the beginning, why would government to be able to buy health care cheaper than you can buy it? >> the sooner -- >> do we know -- can you tell us anything at all except i like my current job and i'm not planning on anything else? >> that's exactly what i was going to tell you. >> you're kidding? i've never heard of that one. >> this is a great market. i keep waiting for someone to say, this market is making a lot of money for people, and i think you ought to be in it. >> see at the top of your screen the s&p 500 at the cnbc realtime

exchange. >> wow. >> consumer confidence, 70.2. 70.2. that's pretty much as expected. >> i think the issues that are affecting kb are definitely company specific. i think lannarr's results today are recovery in the housing market. >> third hour of "squawk on the street." a big day for the markets yesterday. a little bit of follow through in the early morning then lost a little ground as we got into the middle of the morning. see the dow's down a little more than 9. s&p is flat at 14, 16. nasdaq holding up at 3126. some of the chip stocks, juniper, jds, micron, cisco. apollo, down sharply after the company released results monday. cut the stock from neutral to outperform. analysts at citi warn apollo's

second half results will be materially lower than estimates. let's get to the roadmap today. the decade-long bull market for bonds may finally be coming to an end. we'll talk live with tony creshinzi about what he's seeing in market and why the bond gravy train is over. mccormick, see if this is still a tasty investment. half an hour away from a european close. europe's problems are still daunting. how will the markets finish the day? we'll find out when we bring you the close live. forget apple. amazon's biggest competitor may be fedex. why the online retailer is focusing more on logistics and what that means for the stock price. all that is coming up in the next hour. we'll start, though, in havana. pope benedict in the middle of a historic trip to communist cuba. the country sits on the edge of significant economic reform. our chief international

correspondent michelle caruso-cabrera is live in havana. michelle, good morning. >> reporter: good morning, carl. pope benedict visited the most important catholic shrine in cuba. he's now going to travel here to havana where he's expected to meet with raul castro later on today. the pope arrives in cuba as this country is trying some tiny economic experiments. in november of last year, just five months ago, they began allowing cubans to buy and sell their homes for the first time in nearly 50 years. we wanted to know how on earth do you sell a house in a country with no real estate agents, no classified ads, no internet? answer is, just barely. the homes available for sale come in all shapes, sizes and, of course, prices. elda, the owner of this apartment is asking roughly $40,000 u.s. dollars. she's telling me right now you don't have to worry, the gas always works, the lights work

and the water always works. this is a smaller bedroom with its own closet. so there are no real estate agents in cuba, at least not yet. no classified ads, either. if you want to buy or sell a house, post an announcement in a public place. this says, for example, i'm selling my historic colonial apartment. two bedrooms, three baths, three balconies, a view of the sea, cold and hot water, gas, meaning you don't have to bring in a propane tank. it's preinstalled. 70,000 local cuban dollars is roughly $80,000 u.s. some are benefiting from the changes. an apartment in this building sold recently. the owner received the equivalent of roughly $15,000 u.s. dollars. you bought a microwave, you got a rice cooker. what more do you want to do with the money? you want to invest it. in a business. a cafeteria. it's a way to make that money grow and provide more revenue and capital to you in the

future. so fledgling the market here for homes. we'll see if it grows into something more. the cuban government has not published statistics about whether or not the number of homes that have been sold in the last five months -- they don't publish many statistics, carl. it's not clear if we'll ever know how big of a market it becomes. >> fascinating story, michelles with beautiful pictures. incredible. we'll talk to you later. michelle caruso-cabrera, one lucky woman in cuba today. gary kominski on the set with us. first time on the new set. >> i must say, late to get here, right? i am enjoying it and beautiful setup. >> we should set this up. because you made some calls, namely by debunking myths that the market couldn't go higher without volume. it did. today you're going to debunk myths. >> let's go back to the volume one. remember in late january, early february, the strategists, many

portfolio managers were saying we can't buy into this rally, we don't see the confirmation. we did a public service announcements explaining why volume in terms of number shares wasn't necessarily the relevant factor to pay attention to. you can't help but watch cnbc in the last week and see these strategists, traders, people who aren't portfolio managers but call themselves portfolio managers talking about this idea of window dressing. i just want to say, there is no window dressing that goes on. an example, let's take a look at the chart. sally has the five biggest percentage gainers in the s&p 500 in terms of what we would have had if the quarter ended tone. look at those names. sere, bank of america, netflix, whirlpo whirlpool, priceline. you own a fund. you get your results for the quarter, the s&p, let's say, ends up 10%, your fund that you've invested in is up 4%. you have now underperformed at a relative basis and you then get the statement and it says you own now netflix in the account.

you didn't own it the whole quarter but now you own it. do you really think that's going to make you feel better? the fact maybe the portfolio manager did not own a lot of winners? maybe the portfolio manager held some cash? the idea portfolio managers window dress? nonsense. doesn't happen. i did it 20 years. never window tredressed. i don't know if this will be a new phrase to many. what we call painting the tape. what is painting the tape? painting the tape is essentially taking companies on friday, the last day of the quarter and trying to make them close if you possibly can somewhat higher. why do they do that? why do pms do that, hedge fund managers do that? simple. if you're billing your clients on a quarterly basis, you're paying asset fees based on the closing price of the portfolio. take a mid-cap stock trading at 9.5. you essentially jack that stock up at the end of the day and the

overall performance, if you could increase a portfolio by a half percent or quarter of a percent, just by painting the tape, that's what happens. that doesn't happen today, tomorrow, the last day of the quarter in the last hour of trading. >> you're saying it's the difference between buying namesthy didn't own and adding to names they already own? >> correct. painting the tape is adding to name names that they already own where they can have an influence on the revenues they generate the next three months as a result of the quarter ending. value of the account. painting the tape takes place. window dressing. something people talk about. >> interesting. i love it when you bring reality to the show. don't go too far. we'll talk in a little bit. thank you very much. as we continue our coverage of investing in america, we turn to bonds. yields have surged in march but remain very low. what is next for the bond market? joining us this morning, tony, market strategist and portfolio manager at pimco in newport beach. good morning. >> hey, carl. >> interesting week especially after yesterday when obviously stock market believes in some

new infusion of something good for markets. bond market less convinced. why the disparity? >> well, the bond market recently has looked at a number of things that have made it decide perhaps there won't be a qe. so the we has been to qe or not to qe? question the fed has faced for several years now. generally speaking the question, therefore, becomes should the fed be massive and expect indodge now forces will allow the u.s. economy to miraculously recover or should the fed be active and work against the sea of troubles facing the u.s. economy? each and every time, ben bernanke, the decider has i've called him, as decided in favor of activism and probably will continue to. as his speech outlined yesterday, the fed is worried about lapses in agate demand. we've known for decadedecades, is the subject of debate in washington. that can't be talked about these days give b the large deficits and debts the u.s. has.

the fed is the only game in town to fill the lapses in agate demand. bernanke is taking no chances and knows or believes cyclical forces here at play, again, something the fed could counter. the bond market is less sure about whether it will happen because of the recent strength in data. >> tony, stay right there. i want to break away for just a moment, get john harwood for breaking news out of the epa in washington. john? >> carl, within the hour, the environmental protection agency and the obama administration are going to throw another log on to the fire of the energy debate in this country. they're going to initiate a new rule requiring that new power plants emit no more than 1,000 tons of carbon dioxide per megawatt. that's a stricter standards that existing coal plants meet. the rule doesn't apply to existing plants. it applies to new plants. gives them a 30 year time horizon to meet that standard. it is a standard that can be met now, is being met now by new natural gas plants where industry is going anyway. this is going to fuel the debate

because you're going to hear from republicans and also from the coal industry that this is going to restrict their ability to burn that plentiful resource. going to drive up energy prices and the administration's going to say, no, this is where the market's going anyway. so this announcement of this rule will begin the public comment period. it's not the end of it, but it comes right in the maiddle of te election season, as you know, over gas prices, a range of energy issues, we have a hot energy debate between democrats and president obama, and republicans and president obama. >> we discussed this with larry kudlow. we'll watch the coal names and nat gas names. anything in this conversation that wasn't already dtelegraphe by the administration? >> people on the left want the rule to apply to existing plants. on the right, of course, they don't want these kinds of restrictions. so the administration is trying to make the case in the middle of the election season that they're taking a middle ground, a reasonable middle ground. we'll see whether they can sell

that argument. >> thank you very much, john harwood in washington with that breaking news. get back to tony over at pimco in newport beach. apologize for the interruption, tony. you laid the framework for where the bond market is now. where does the bond market go next? >> we don't expect much movement. the better economic news makes it difficult for yields to fall in this environment. there are a lot of big negatives still and some that will materialize more in the second half of the year. here's a list of those real quickly. one that's been, of course, wealth destruction, massive wealth destruction the past few years. the household net worth, there's been $8 trillion lost in a society. that means consumption trends won't be vigorous for quite some time. secondly, credit availability, while improved for the mortgage area, that does all kinds of bad things for the economy including a lack of mobility. an individual in nevada can't

move to north dakota to obtain a job. third, income growth, very slow. 2% wage gain year over year. normally it's 3%. the massive financial cliff bernanke has talked about, markets could falter forward in the second half. consumers could, too. $525 billion in tax cuts and spending increases that will hit the tape so to speak january 1st. imagine in july, august, september, how an individual might respond to that or how markets might pull it forward. that makes it difficult for yields to rise much. >> part of your strategy is talking about being concerned or cautious in terms of duration. you work at pimco, sell a lot of retail bond funds. what are portfolio managers doing in the bond funds? if an individual investor is buying a bond fund, he can't control duration. what are portfolio managers doing to protect bond fund investors in this environment here?

>> as i said, there are forces pulling on both ends of the interest rate story here. so we're fairly neutral on duration now. we don't expect rates to move all that much. investors these days, remember, in a demographically aged society, and with two shocks in a decade hit them financially. remember the bubble in 2000 was one of those. investors are more likely to want to be higher in the capital structure. even in the face of strong equity market gains and good gains globally that are available, investors seem to be wanting to be in bonds because they can still get equity risk in a bond, a high-yield bond, a corporate bond has equity risk in it. they've decide the that's the way they want to play the equity market, having gotten hit twice in a decade. what they want to do is chop off volatility at the knees. that's the way you protect money and avoid permanent losses. >> tony, good stuff. see you next time. over at pimco. when we come back, we're spicing up your portfolio.

>> we'll be >> we'll be spicing up more than just your life. how about we spice up your portfolio? mccormick earnings are out. were they just the seasoning the stock needs? find out after this break.

now to another american company that might be a good condiment for your portfolio. spice maker mccormick reported better than expected results this morning. we're joined by a package food analyst at geoffreys.

has a buy rating on mccormick and $57 price target. good to see you this morning. >> thanks for having me. >> let's first deal with the u.s. consumer business, growing 5% organically. how is that? >> well, i think mccormick offers products that consumers, overall packaged food volumes across the industry are weak, consumers like mccormick products. they offer frozen dinners that competitors don't offer and obviously their u.s. buys, they are the dominant company in category, so there's really no way around them. >> yeah. margins in that business under pressure. increasing their marketing spending. where does this lead us? >> well, margins, you're absolutely right, are under pressure because of input price increases. items like pepper and vanilla cannot be edged by mccormick. margins have been under pressure last four quarters. going forward the margin pressure should decline though and margins should improve for the rest of the year combined

with pricing, combined with cost s savings, mccormick will start to improve again. >> the industrial business, which i'll ask you to define for those who don't knee the company well, outperforming, best performance organically since '06. >> that's correct. so the industrial business creates flavors and spice blends for other packaged food companies like frito-lay, for example, and also creates flavorings and seasoning mixes for restaurants, like yumm brands and all their restaurants. and the business really is starting to benefit from improving restaurant traffic growth in the u.s. and from growing number of restaurants that mccormick is supplying overseas, china and asia in particular are growth markets for mccormick there. >> we're getting into a single digit percent upside. at what point to you revisit the rating? >> i think analysts like to take earnings as an opportunity to revisit target prices so it's

something i will have to work on for the rest of the day. >> all right. appreciate that. thank you very much. telo joining us talking about the mccormick numbers and amazing run on that stock as you can see. when we come back, why steaks may become a rare item on restaurant menus. we're counting you down to the close in europe. only about ten minutes to go. we'll be right back. choose control. introducing gold choice. the freedom you can only get from hertz to keep the car you reserved or simply choose another. and it's free. ya know, for whoever you are that day.

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we we talked about mccormick before the break. now to something mccormick spices would go well with, that is some steak. the retail price of beef has climbed about 30% over the last 2 years, leading restaurants to raise prices or cut their portion sizes. maybe you've noticed this in restaurants. some are even taking certain cuts of beef off the menu altogether. take a look at the five most expensive burgers. number five, double truffle

hamburger at d.b. bistro in new york. number four, burger king bling burger. number three, the absolutely ridiculous burger in michigan. number three, colby beef and maine lobster burgers. and the fleur dely's hamburger. >> i have had expensive steak at wolfgang in vegas. >> i've been to prime in vegas. >> there was a burger king burger on that list for $185. >> a really upscale neighborhood. >> okay. that was a little surprising. yes, in vegas, you can get anything, as you know, at any price. >> that's absolutely true. when we come back, it is closing time across the pond. the bell set to ring in just a couple of minutes. we'll bring you the close live there, tell you what it means for your money here at home. "squawk on the street" continues in just a moment. coming up, join us as we head across the sea. european markets are closing

momentarily. and we plan on being there for every detail. "squawk on the street" will be right back. w i bathed it in miracles. director: [ sighs ] cut! sorry to interrupt. when's the show? well, if we don't find an audience, all we'll ever do is rehearse. maybe you should try every door direct mail. just select the zip codes where you want your message to be seen, print it yourself, or we'll help you find a local partner and you find the customers that matter most. brilliant. clifton, show us overjoyed. no, too much. jennessa. ah! a round of applause. [ applause ] [ male announcer ] go online to reach every home, every address, every time with every door direct mail.

it's been a it's been a couple weeks since the time zones were matched up evenly, where europe

closes at 11:30 a.m. eastern time. all is well with the world once again. simon hobbs is here. >> i wouldn't go quite that far. certainly we're doing it at 11:30. what's really interesting is america, which, of course, started the global rally in equities yesterday, has brokered that going around the world. we've seen the reaction of what is happening in europe. let me show you as we head now into the final stages of closing, trading i beg your pardon. for london. can we have a look at the session chart of where we during the course of today's session? thank you very much. we've come right the way down during the course of the european session. look, importantly, how high we were at the top and how low we are here. this is actually a big move on the european session because wall street here hasn't followed through on the futures being as high as they were when perhaps europe was trading around here. that's kind of the story to what's happening in europe today. the bigger news, of course, you had a period of relative calm now because of the 1 trillion

euros the ecb pumped on to the balance sheets of banks. there are three things looming that may undo that calm. i want to highlight those if i may. here we go. the first is that on friday there will be a discussion as to how big the new bailout fund, the permanent bailout fund should be in europe. today the oecd called for the mother of all bailout funds. with merkel moving, you might find at the beginning of next week a tole of 7 billion euros may not be enough for the market. we will see. the second thing you need to watch out for, what is happening with spain? yes, we have a general strike on thursday. on friday they will present the new budget and you'll be aware, there's a huge conversation between spain and the rest of europe about the degree to which it should borrow in 2012. if we have a look at the bond markets, there's been a clear out-performance, of course, between the italian market and the spanish market recently and you can see that the italian ten year has been coming into negative territory. the third thing to watch out for is what is happening in italy. let me take you to seoul and

show you maria monty who was there talking about nuclear issues and the trade particular -- >> markets are closing now. >> don't you hate it when that happens? when you're doing your thing. there you go. that's how we closed out around europe. monty did a news conference in which he gave his country men and trade unions an ultimatum. he said, i'd like to do a good job, i'd like to stay as prime minister in order to change the labor laws, but if you guys don't want me there as prime minister, and i can't get a consensus to change the labor laws and make it easier to fire people, essentially, he said, he wouldn't stick around. that is one of the most terrifying prospects, carl, i think you'll agree, that mario monty would say, actually, i've had enough now, i'm going back to academia. three pressure points.

they may all amount to nothing. things to watch out for over the looming session. on friday obviously is when we get into the meat of that. >> certainly a lot more political turmoil in country in spain than in italy. >> that is true. and also crossing greece, there's the talk about when we'll have the election. may the 5th is the most recent date that i've heard there. >> it's going to get interesting run again. >> it could. >> thank you very much, simon. gary kaminsky back talking this time, the difference, bond, and bond funds? >> again, we're trying to debunk another fallacy out there. this is a very timely one, because so many people hear about interest rates going up and they worry if interest rates go up, that's going to be bad if you own a lot of bonds. that's true if you own a bond fund because a bond fund, we were just talking about tony crescnezi earlier in terms of bond fund. duration is basically infinity. bond funds are constantly being reinvested and the value of your holdings is determined by the value of the bond fund. if you're a bond investor, not a

bond trader, a bond investor, i know this is relevant, i had the conversation with my father-in-law yesterday, who said the same thing. when i look at my holdings, when i look at my investment portfolio, and i see the value of the bonds going down, because of the concern of the interest rates going up, is that a good thing or bad thing? this is what i tell people. if you have a portfolio, whether corporate bonds or municipal bonds, a ladder portfolio meaning you have some bonds coming through, you have a short duration. it is my opinion you want to see interest rates go up because you're reinvesting the bonds that are coming due in the next month, the next six months or the next year at the higher levels. if you're a fixed income investor, not a trader, you want your income to go up. so, again, here is a great fallacy out there. if you just hear -- interest rates are going up, it's bad for bonds, it's bad for bond funds. it's not necessarily bad for bond investors in a laddered short duration portfolio. in fact, it's good. >> is it oversimplifying it to

say a lot of retail investors don't go directly to the bonds? they go through the funds? >> again, most retail investors are told to buy the bond funds. again, you cannot buy -- the bond market is not as liquid as a stock market. you can't go out and buy a huge portfolio of corporate bonds if you have a minimal sized portfolio. if you have the ability to buy bonds, know exactly ba your duration is, you don't have to wake up every day worrying about the interest rate risk as you do in a bond fund. >> good stuff. thank you, gary kaminsky. bob is over at the wall walking us through a day. it's always good to see you down here. we've known each other for years. we talk across platforms to each other. so good to see you down here. the important thing is ipos this week. you know what? we're getting a ton of them. a couple are surprising. the one i've been watching and interested and waiting for all week is millennial. you get ads on your mobile app devices. you get spotify, pandora, ads

every day. this is the company that develops thetrying to make them appealing to get you to click on them to get you to buy things for their buyers and track what you're doing. watch this one. this is kind of the hot ipo of the week. 10.2 million shares at $11 to $13. high chance it will open above that. let's call it a mobile advertising platform. you know what the big surprise is on the ipo? the one nobody's watching? guess what, whole foods. any foods -- this is a natural foods company, okay? they have the number one platform in macaroni and cheese, for example. i know, you're laughing, but guess what? they increased the size of the offering yesterday. everybody's looking at millennial and suddenly $14 to $16, forget it. they're pricing it at $16 to $18. that got everybody's attention. why? why is it happening some kind of natural foods company -- put up this chart. this is why. it's because of whole foods. look at this. five years of whole foods.

this is a $10 stock five years ago. now it's an $85 stock. it's not that whole foods takes annie's foods and sells it, that's not the point. the point is organics foods is a very, very hot market and whole foods has proven you can make the model work. the company is small, but they have tremendous growth potential. when people look at that chart, that's why this one is a hot product right now. >> bob, the investing philosophy world, i never knew annie's was going to be a public company. i see the pleretzels in the hou. my kids eat the pretzels. if you like pretzels, you know the annie's pretzels everywhere. >> organic macaroni and cheese, snack crackers, fruit snacks, organic, the whole thing. let me point out what's going on on housing. lennar's numbers were huge. gary, here's what i'm worried about. big home builders like lennar

are trading two times book value. i used to be the real estate reporter. when you get over 1 1/2 times book value, that gets on the high side. fully priced. >> we've seen valuation calls on home builders this year. thanks, bob. let's get to rick santelli in chicago who's talking a little big ben this morning. >> how did you know we were going to talk about some big ben? we have art with us. if anybody is a good short end, good fed guy, it's art. art, i'm always taken aback by what the press says in terms of ben bernanke yesterday. what was your interpretation to what he was really saying and why did the market respond in terms of stocks the way it did? >> i think, his speech yesterday, it kind of makes you wonder what would make him happy in a sense that he only spends a moment talking about the improved numbers, maybe for unemployment, then he spends almost 75% of his speech talking about why those numbers aren't good enough and why it's not

sustainable. >> he mentioned structural unemployment, didn't he? things traders were talking about in '08 that didn't get mentioned until 2011 by the fed in many ways. >> the unemployment is such a mushy thing and something that is much more academic than it is -- >> stop a minute. do any of the accommodation programs really address structural employment? >> no, because that would be education for jobs, you know, bringing up skills. >> things in short supply when you're sprinkling money on banks. >> exactly. in other words, the short-term rates, keeping them low, doesn't necessarily instruct -- >> did you read "great expectations" by dickens when you were young? the benefactor, okay, isn't ben bernanke like a benefactor? everybody talks about is the stock market rally real? of course it's real. if you're long, cash a check. the money's real. but what's also real is that ben bernanke is a benefactor for those equity traders. what happens when his

accommodation checks stop coming every week? that's the question. >> i think that's a real thing, because no one's ever talked about how do you get out of these things? back in the day, you know, a year ago we were talking about a possible exit strategy. there's no exit strategy here. the stocks are definite beneficiaries for looking for yield -- >> let me give you a what if. what if the next three months had 600,000 jobs created and labor force participation rate rose? i'd be happy. what do you think ben would think of that? chairman ben bernanke is. >> i have no idea. i have trouble thinking out what would make him happy at this point. >> when things are getting better he likes to distance it a b bit. if things get bad, there is a red phone in the office somewhere i'm sure. it's not going to end here. ben bernanke is the center of attention. equities is not the center of attention. look at the inflows. back to you. >> thanks very much, rick santelli. straight ahead, why amazon may have more in common with

fedex than it does with apple and how you can make money in this american-made company. that's next. first, a look at some of the winners and losers from europe's trading day. so uh this is my friend frank and his, uh, retirement plan. one golden crown. come on frank how long have we known each other? go to e-trade. they got killer tools man. they'll help you nail a retirement plan that's fierce. two golden crowns. you realize the odds of winning are the same as being mauled by a polar bear and a regular bear in the same day? frank! oh wow, you didn't win? i wanna show you something... it's my shocked face. [ gasps ] ♪ [ male announcer ] get a retirement plan that works at e-trade.

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or bail. "b" of "a" downgraded. plus is pfizer better off broken up? it's our call of the day. lots of trades at the top of the hour. back to carl. amazon, the inevitable showdown you might think is with apple. each is empowered with a massive army of consumers and each trying to get as many of them as possible to tote their tablets. amazon has been building on its back end business, in cloud computing. can its real rival be apple or fedex? that was a piece yesterday on forbes.com. michael joins us this morning. michael, good to see you. >> thank you, carl. >> anybody who follow employees amazon knows how much -- just this week -- you think this leads them to a cross roads of sort. >> they paid $757 million for kivaz systems. they're great robots. to make a profit off that business, they have to sell it

to other companies. ebay will look at the robots and think they're fantastic but say, i don't know if you realize this, but we hate you people. i wake up every morning grinding my teeth. we'll buy your robots. it leaves them with either the choice of giving up the idea of sells logistics services to roo rivals or splitting the company in two, making a subsidiary. >> what is their ability to be a fedex if in fact that's what they wanted to do? >> they have fantastic back end systems. i give them credit for cloud systems. they were one of the first successes. there's a price war going on. look at the history, right? they're the most efficient online retailer. the nohow they have is market bl to other outlets. people would love to see how they did it so they can repeat the same success. >> it coincides with the bloom coming off the rose, but certainly more of a skeptical eye aimed at fedex, themselves,

yeah? >> exactly. it's kind of funny, when i started doing the story, i looked online and amazon's actually opened up a few customer drop-off points in seattle near 7-eleven. go to 7-eleven as well as get a package delivered. that seems to be edging toward what fedex does, too. >> michael, when you were doing this analysis, looking at the business, u.p.s. and fedex very asset heavy. there are other companies, for example, in the logistics space which takes the opposite approach. does not own the planes, boats. they're essentially able to have better operating margins as a result of that. if amazon wanted to grow that business, if they decided they could become a logistics provider as a separate business, will they be able to that certainly or going to have to go out and buy somebody like an expediter to get at least the customer relationships that obviously fedex and u.p.s. have on the operational side? >> i think they would outsource. i mean, amazon, if there's one

thing in their history they've shown is they're cheep. their value is really the back end in the intelligence. they'll keep that. they'll invest in that. and then anyone who's a partner to carry things from point a. to point b., they'll jut source that. >> if i'm a customer, they outsource it to u.p.s. on a certain relationship, i don't know that my goods are being delivered by u. pp.s. amazon is taking it from point "a" to point "b"? >> there will be a guy showing up in an amazon shirt. you won't know when you take the package. >> what has amazon's reaction been to your piece? >> i haven't heard. they're one of the companies that like to be silent. it's an idea that came to me. i said, you know, i'd rather take on fedex than take on apple. there are huge apple fans. fedex, people like the company. you're not going to sleep outside overnight to get the latest in packaging from them. >> it would not be unlike them to not comment on the story. that's for sure.

>> michael, thank you so much. michael joining us, forbes.com contributor. want to bring in ben shacter, an internet analyst. good morning to you. where would you put this on the spectrum of possibility? >> it's unlikely they want to focus on logistics only in that sense. they want to be a full fulfillment opportunity for any partner they can have out there. in fact, they do a lot of this already, where you're selling something you can outsource your fulfillment needs to them, but the key is they're also helping you to sell it through their own site. >> yeah. the notion would explain at least in part the spending they've been doing, which has given investors some fits in some cases, wouldn't it? >> listen. a lot of what they're spending is trying to build a competitive mode. we don't think anyone is going to be able to capture them any time soon in terms of their ability to more efficiently get goods to a consumer. order something from them and have it delivered to your house in two days and not pay anything if you're an amazon prime

member. >> let me ask you as the analyst the same question i asked michael. is this a business if they decide they want to go full force that they can grow this organically. >> it's going to take a long time. why not go out, make an acquisition? most of their shareholders believe, they buy into the story. if they go out and pay a big price, most companies have to be concerned. amazon not so. they can go out and do a transaction and be rewarded for. >> i think they could do that. i don't thing they're going to try to build a lo jegistics comy for the sake of building logistics. it integrates with everything they're trying to do. what's more likely if they spin off a business around just the digital side, where they're building data centers around the world to service customers on the digital side. on the logistics or physical goods, they want to be able to sell more and more goods through amazon.com and other partners. >> where would you -- what is your thesis on amazon at this point, price target recommendation? >> we like the stock very much. there's room to grow. the question is going to come down to can they get the margins going in the right direction in

the near term? as you know with amazon, every quarter the stock whips around based on what the margins looked like for that quarter. we don't play a guessing game quarter to quarter but longer term, we think building out the logistics, building out these opportunities to sell more and more goods will drive margins in the long term. >> yeah. that short-term guidance has been frustrating for some. certainly the share price has not. ben, thanks again. >> if i wanted to play investment banker here -- >> which you do a lot. >> i mentioned expediters, it's been a great organic growth. the ceo would kill me if he knew i said this. they say all the time, we'll never sell. both of the companies are based in seattle. they both have very huge loyalty up in the seattle area. if amazon ever wanted to do something, again, playing banker,thy would be the perfect combination for the leading asset light logistics company right there in seattle with amazon, also a major player in the area. there's something about those companies in the northwest. they like the culture of other companies up in the northwest.

>> that's true. if it ever happens, we're going to replay this tape. >> exactly. keep the tape. >> speaking of the pacific northwest, straight ahead, microsoft founder gets his identity hacked. we'll explain how it happened to a man like that, after this. >> the cnbc realtime exchange market snap shot is sponsored by interactive brokers. laces? really? slip-on's the way to go. more people do that, security would be like -- there's no charge for the bag. thanks. i know a quiet little place where we can get some work done. there's a three-prong plug. i have club passes. [ male announcer ] get the mileage card with special perks on united, like a free checked bag, united club passes, and priority boarding.

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an an a-wol soldier from pittsburgh has been charged with bank fraud for allegedly stealing the identity of microsoft co-founder paul allen. a federal criminal complaint says brandon lee price called citibank in january and changed the address on allen's account from seattle to one in pittsburgh and had a debit card sent to him a that address. the 28-year-old price used the card to attempt transactions. price is to be detained until april 2nd unless the army takes

him into custody. can you imagine a man who has more experience with passwords and computers than the co-founder of microsoft? >> again, i'm sure you've had the experience, too. it's great to have online banking, it's great to be able to do everything in this world, but it is very concerning when you see these fraudulent transactions or the fact that somebody can actually have a bank essentially draw them a card like that. it's just -- it's a little scary. >> yeah. cautionary tale. that's for sure. >> yeah. >> don't forget to tweet us today, by the way. markets, as you know, on track for their best first quarter since '98. we're asking you, we'll ask gary -- >> i love this quhe. >> if you could go back to 1998, what advice would you give yourself on the stock market? people with a machine.

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the tweet on squawk on the tweet on this tuesday. the markets on track for their best first quarter since '98. if you could go back in time to that year, what advice would you give yourself when it comes to the stock market? devour the market tweets, short enron. raj tweets buy a condo in manhattan, 10,000 shares of apple and open a couple dunkin' donuts. david writes, put all my eggs in

one basket, apple, apple, apple. nobody has no fear when they get to look backwards. >> i wrote the piece on cnbc.com about the opportunity cost of selling apple in '98/'99. i'd have to say the same thing. as an investable answer, should have sold everything. just bought apple. knew that the original ipod was coming and called it a day. >> that would have been it. >> yeah. >> your broader point about the markets right now is you look back to the end of last year, every morning we came in here wondering if europe was going to blow up. all of a sudden the concerns are gone and that rarely goes from 60 to zero. >> exactly. as i was saying during the break, contrarian out there is saying, you know, there is a happy medium. you cannot go from the concerns that we had three months ago, at the end of the year, to where we are today. which is essentially nil. nobody's focused on terms looking at credit spreads. nobody's focused on anything other than the fact that there's easy money around the world. whatever problems in europe are going to be solved. so i just think if we reflect out and think three months from

today, the end of the second quarter, it just can't be from here to here. it doesn't happen that way. >> that's what a contrarian would say. >> yes, contrarians are running money, real portfolio managers are trimming back. they're locking in some profits here. remember, a lot of people have made their year in terms of their absolute relative performance numbers in the first three months. why would you not, if that's what your job is? >> yeah. we have heard similar comments from others saying it's unlikely for q2 to match the gains that q1 has posted. again, we'll see how the rest of the year turns out. rick santelli is chicago watching yields. we're looking at the lowest levels since the fed. >> after the fed meeting we saw 30s flirt with 3 1/2. we're 20 basis points below both of the metrics on the long end. so i think this is very important. because i know that ben bernanke weighed in indirectly on some of the issues about rising rates,

but did he really weigh in or is he just sensitive to the notion that the treasury market isn't ready to give up the roost yet? see it on many occasions especially friday's settlement yesterday. the big run-up in stocks yesterday. did equities two wild? they barely noticed. there are still many issues, not t the least of which is the average investor has a boat load of mistrust. on the tweet of the day, that's easy, note to self-self, sell 5,000. >> one's always smarter than the other. what is the fixed income market telling you about the equity market today. >> that normalcy isn't going to return to the financial community at large, until all of the governments and central bankers start to vacate the premises. that's my opinion. >> guys, thanks very much. good to see both of you. it's great hg