mapped it on s&p, we would have seen a big dip. part of it is the 2008 crisis. >> i guess a little. >> we have to go. join us tomorrow. "squawk on the street" begins now. it smells in here. ♪ 23 years ago today cnbc first went to air. around the same time that to ton loc's album topped the charts. i'm carl quintanilla with melissa lee and david faber. jim cramer is on assignment. look at futures. after dramaerday concerning apple we are going to open to the upside oh thanks to a decent auction of short-term debt in spain which we'll talk about in a little bit. speaking of europe, b we are looking at green arrows ahead of what's been already a busy day so far for earnings.

>> certainly heavy duty earnings load. that top it is road map this morning. goldman sachs boosts the dividend 31% and bought back 3 million shares last quarter. can this continue to fuel the rally. >> and coke, volume growth. up better than expected. 5 prn. the company making gains in the slower sparkling market as well. >> can we see cracks in the apple story? they suffer the biggest five session losing streak since 2009. there could be concerned over mac sales, a mini pad or does this launch the slow down of the apple juggernaut? >> and first solar cut as third of the work force, 2,000 jobs saying operations in europe are no longer economically sustainable. >> we have to start with goldman sachs beating forecasts. $3.92 a share. revenues down 16% from a year ago. raising its quarterly defensive

gent to 46 cents a share from 35 cents. there are interesting lines of business. thick wasn't as strong as the reading from citi, but it was decent and investment banking revenues for down. >> we'll see how the stock reacts. may be up slightly. it's been a mixed picture in terms of the market response from friday and yesterday when we have gotten financial earnings from j.p. morgan and citigroup. we'll see how the response is today. fixed income currency, commodities, $3.64 billion was the revenue number. that was 20% lower than what they call a solid quarter in the first quarter of 2011. reflective of what's been a slow pace of activity. as you see some of the segment revenues we have broken out for you. nobody is knocking the cover off the ball. it's about not just comparisons but market share which we don't know about yet and comparisons with competitors such as j.p. morgan. but always hard to do apples to

apples. they include different things in the basket, so to speak. >> been a couple quarters since the company said the markets are treacherous. we'll rein in risk. some of blankfein's comments talk about growth here and there. >> they talk about paths for growth. something that didn't grow was operating expenses which were down, i believe, 14%. the street probably likes that. but that's a significant reduction over the first quarter. 41% higher in the first quarter of '11 but you can't count that. accrual of compensation was 44%. that can change as the year goes along. the fourth quarter is the most important for comp when we talk about that. he's talking about avenues and paths for growth. we shall see what the remainder of the year brings. it's not the easiest period for goldman sachs. of course after last quarter and

fixed income in particular where the performance has been spotty. >> already a couple of tweets about how muppet capering was higher year over year. they can't get away from that story. one line from blankfein, client activity is low in certain areas, especially parts of investment banking. wonder if that will change. >> lloyd -- we'll talk later to citigroup about mergers and acquisitions in particular. the first part of the year has been lack luster for m &, a. that's advisory fees. equity underwriting has been okay, not great. fixed income, such a driver for the businesses a number of years ago. you know, now perhaps with concerns about spain and europe may start to hit that area. we have seen an increase in terms of junk bonds and the like. that contributes to those areas as well. your guess is as good as mine. >> from a training perspective it doesn't necessarily mean the most for banks to knock the

cover off the ball but a decent quarter to con oh firm the rally we have seen so far. yesterday we finally reacted to the news from citi, j.p. morgan and wells. could be confirmed as wells u.s. bank corp. which had a nice quarter. we are seeing financials across the board trade higher in the premarket. we are still higher. that could be good in terms of gains in the future. >> the theme of returning capital to shareholders is one that's more important as the banks are starting to be allowed to do that. not citi. >> right. >> at least not yet. vikram pandit said yesterday not until 2013. goldman sachs did increase the dividend to 46 cents per common share from what was 35 cents. a significant increase for goldman. part of the concern from banks not about the growth but excess capital returning to shareholders. >> keep an eye on financials today.

coke also beat the street with first quarter results. profits of 89 cents a share. two cents above. they saw growth in all renals especially markets like china, india and russia. a lot of chatter from a company you know better than most. you have a staple with growth in developing economies and emerging economies. few companies do that well. >> sparkling is the area -- soda especially. whatever fizzes is sparkling. that's been slow in north america. slow down in soft drink sales. we are seeing a growth in sparkling beverages in north america on top of energy drinks and teas. that's a powerful combination. close to 52-week highs. people reach toward that when there is market turmoil. the stock is seeing nice gains in the premarket here. in terms of still beverages, water up 15% on the quarter. teas up 10%.

energy drinks helped by the ncaa and powerade is up 25%. those are the highest growth areas. we are seeing a nice gain. >> what it may mean in terms of what was a loss of market share and pressure we know is on to reverse the slide? >> it just highlights the increased pressure pepsi is under. the fact that coke can make the sparkling story work in north america and around the world but particularly north america because it is a mature market puts the pressure on pepsi. pepsi is a totally different bag in terms of the snacks business that also needs turnaround. it's not ams to apples. >> when it comes to beverage market share. >> and the money pepsi will supposedly spend, $600 million on increased advertising. we'll see if they can take back the lost share in north america. >> interesting to see coke versus pepsi over a year. you can see how the market is

differentiating the two. we have to talk about shares of apple. a lower finish yesterday and the worst five-day losing streak in more than three years. it is down 9.9%. nearly 10% from the record intraday high of $644 made on april 10. if apple is down today it will have the worst six-day losing streak since before the ipad was released. last time the stock had so many bad days in a row the iphone was more expensive than a single share of apple. we are highlighting the deterioration. it happened early in the session. it never bounced back. that was unusual. so many times in the past when we have seen a pullback in apple shares we have seen investors going in to grab the shares which leads traders to believe what we saw yesterday could be a rotation out of the stocks that worked in the first quarter and beyond into some of the other stocks that were stalled out in this rally here. >> there is no shortage of theories when it comes to apple.

>> i have heard tax-related selling. what was the thinking there? >> today is tax day. >> that's right. >> there was a thought that in order to pay some, if you owe you might sell some big gainers like apple. just one of the things floating out there aside from a bit of a technical breakdown. the key was, as you said, down 10% from the intraday high on april 10. s&p is down 1%. if the reverse accelerates do markets continue to hold relative value versus apple? hard to say. >> the concern about mac sales. jean munster had a note yesterday. people were concerned about the bear case. that's npv sales were out and mac sales suggest a 4.1 to 4.4 million knacmacs were sold. he believes the quarter is fine and that ipads and iphones will make it up.

that didn't seem to be the takeaway. >> a great story on the street.com about united airlines cfo leaving united to go to apple and become vice president of sales. i mean, if you were posed with the question would you rather be the cfo of a money-losing consumer complaint-ridden industry -- >> but a big airline. >> or go to apple. united will lose $300 million this quarter. apple will probably make $10 billion. would have been an easy sell for a head hunter to say, hey, want to come over? >> how many vice presidents of sales are there at apple? hundreds. >> quite a few. >> finally, first solar announcing plans to gut 2,000 jobs, 30% of the work force. the company is looking to reduce costs in response to deteriorating market conditions in europe. they say it will save $30 million to $60 million this

year, probably $100 million down the road. they are one of the lower cost manufacturers. >> this drives the cost down lower to 70 to 72 cents from 74. every penny matters in the solar market. particularly in europe. the industry has been struggling already with slash subsidies. that was the reason. we had areas of aus a ter ti, but it went away and posed a greater challenge which is why the ceo is talking about the deterioration specifically in europe. the 12 largest players had a market share of 70 million dollars. a german company. today that would be 6.4 billion. >> oh, my god. >> it's obviously the incredible decline we have detailed in natural gas and what that's meant for the energy complex in this country to a certain

extent. it's got to be competition from china on oh price and on int lech chal property and -- intellectual property and replication. so many areas china was competing on what was a leading industry but no longer. >> china can afford to continue to subsidize whatever they want without pushback. >> pretty much. when we come back this morning, pimco's bill gross. what the manager of the world's biggest bond fund has to say about investing. one more look at futures, looking to open on the upside. more "squawk on the street" when we return. are you still sleeping? just wanted to check and make sure that we were on schedule.

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welcome back to "squawk on the street." we have march industrial production. goose egg. unchanged for the month. that's not as good as we expected. we were expecting something up three to four tenths. capacity utilization, 70.6. that matches expectations. it's just a tenth less than the unrevised pace last month at 78.7. we are flirting with 2%. the data isn't affecting the market in a huge way. we are up in equities which is all important these days as we shadow box on the credit side.

melissa lee, back to you. >> thank you, rick. we are getting news about what president obama is expected to speak about specifically in his address at 11:10 a.m. eastern time. the president will call on congress to pass immediate increase in funding for a six fold increase in surveillance staff for oil futures at the cftc. this is to avoid and prevent market manipulation in the oil markets which has been a long-running theme for the administration. >> not to mention calling for a ten-fold increase in the maximum civil and criminal penalties for manipulation in oil futures. and then asking congress to give the cftc, david, the authority to raise margins in futures. >> how you delineate between manipulation and speculation, speculation which is fine in many regards and helps some markets. we always talk about how it hurts. not always clear. >> it ee's been a year since th

attorney general launched a task force into this issue. this may be some conclusions they have come up with. the president will speak live at 11:10 a.m. today is the deadline to file taxes. several businesses commemorate the event with special offers. arby's is giving out free curly fries. >> i'm so there. >> i didn't know that. thank you for the information. >> sonic is slashing prices for drinks in half. that brings us to the question. to soften the sting and make it more enjoyable, i should get a free blank from the government. we'll get your responses later today. >> more than curly fries. >> i'm not getting much of anything. i filed an extension. >> i did, too. coming up, getting ahead of the curve on intel's earnings after the bell. the stock is at a 52-week high. will the rally keep going? and we have an up day with the

dow looking to gain 71 points at the open. stay tuned. ca refu

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nine minutes before the bell rings on wall street. let's bring in art. we are looking at a higher open. granted we have positive news out of the financial sector. we did have housing starts that came in worse than expected. revised lower for february and we have europe brewing on the back burner. what do you make of today's actions? >> you have to be careful with starts. they can be weather-related. some may have been eent up with the warmer weather ahead. the encouraging thing is permits rose. that shows the contractors are seeing some demand out there. at least they're going to get permits for new buildings. this is really a sigh of relief as to what's happening in europe. spain sold only short-term bills. they had to pay up to get them off. they sold them all. that's good in an area where they have gotten bids on two and a half. we offered three and got more than three billion. >> we have seen strange moves. in terms of the charts, the

likes, things you follow. >> it's been incredible. when they sold off several days ago into tuesday they broke trend lines. they broke moving averages. they broke a variety of things. by ye olde traders almanac i would say you're in for a correction. then they rallied and had the best two days they had. some of the yardsticks don't seem to be working as well as they normally do. that creates confusion and volatility. >> what's your take on the apple sell-off? it wasn't only a decline in apple yesterday as well as for the past five sessions but apple crossed below the 20-di moving average and approached the 50. what do you make of the move? >> i think when you have a stock that's had a phenomenal run these things can feed on themselves a little bit. as you know it came baseman a mystery. people thought it was the reweig reweighting. that didn't make sense because

microsoft and intel rallied. you get a mystery. you own apple. you have had a fantastic ride and everybody keeps saying, you know, no tree grows straight to heaven. now you see it pull back. you have nervous selling. that's what we're seeing. >> what does your experience tell you in terms of dealing with things you haven't seen in terms of movements? >> again, i think it's going to breed nervousness and volatility. if the market were to rally sharply enough to reassert all of those trend lines and whatever, i think there is enough people that get forced into short covering. >> we're playing with europe. it's off the table but back on. the first quarter, you barely heard about it. >> it's back on for real. thursday, spain has a big bond auction. >> it does. >> that could be critical. people are saying it doesn't look like it will get bailed out. a lot to keep an eye on. >> you get the sense that

traders here are holding their breath until thursday's bond auction in spain. >> yeah. i think they are holding back a little bit. that could be a game changer. i don't think anyone wants to over commit before that. >> art cashin of ubs. carl? >> opening bell a couple minutes away. the market will react to goldman's earnings and the spanish auction when we return in a moment. [ male announcer ] you are a business pro.

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td ameritrade's investment consultants can help you build a plan that fits your life. we'll even throw in up to $600 when you open a new account or roll over an old 401(k). so who's in control now, mayans? you're watching cnbc "squawk on the street" live from the financial capital of the world. the opening bell set to ring in just under three minutes. we talked about the spanish auction that went off relatively well this morning though it was on the short end of the curve. good investor confidence out of germany. a two-year high. >> yeah. >> it's not all doom and gloom in europe. it depends which part of europe you live in. >> that's the one part you may want to live in. >> yes. for a lot of variety of reasons. >> interesting to listen to

cashin, someone who's watched markets for so long. i think he would admit it's puzzling. >> he did. he hasn't seen movements like this in a very long time. very rarely in his long career. it does argue for more volatility at least in his opinion and continuing to look for signs of the trend. >> 1369 now. we are below the 50-day moving average on the s&p 500. it will be key to get a gain today. did you see the article about paulson shorting european sovereign bopds and buying on european debt. >> i did. >> that's interesting as we continue to wait for the auction in spain which could shape what happens in the united states. >> a lot of managers continue to be overall negative. no doubt about it on europe. and claim that it's a solvency issue not being dealt with.

within the capital structures of various banks. within varts corporations you can do a lot in terms of buying bonds, shorting others. shorting sovereign. and so forth. interesting story on the f.t. today or cited a stoifr that says a hundred billion euros has been pulled out of the sovereign bond markets by investors. is that money going to come back? we know it's been made up in large part by the ltro, the ecb and what that's done for the markets. >> u.s. treasuries? >> no. just european sovereigns. >> a good portion may have come stateside with the ten-year under 2%. >> we have seen it. how do you explain to your investors. well, we were in the sovereign bond markets of italy and spain. they may have been good investments but it can be a difficult conversation investors don't want to have. >> moments from the bell. we are looking at apple lower. it could be their sixth straight

segment of losses. around 579. >> as we kick off a tuesday morning let's listen to the opening bell. [ bell ringing ] there it is. s&p 500 at the top. at the big board, endeavor silver corporation celebrating its anniversary. and we are celebrating our anniversary. on the nasdaq, the independent petroleum association's ceo. we mentioned this day in 1989 cnbc did our first broadcast. >> amazing. >> at least this hour we are doing songs from '89. we did "wild thing," "my prerogative" by bobby brown, "material girl" and i see guns n roses coming up. that's not my chance. >> goldman sachs is higher by a percent. we are seeing market gains in morgan stanley and citi up. bank of america with a nice

gain. go goldman is saying what u.s. bank corps said. helped fuel the gains and this is a big gainer in terms of groups on the s&p 500 so far. >> we saw a similar move yesterday in the early going. it became a tepid rally as the hour wore on. >> apple is down 1%. $574 and change. down another $6 a share. whatever it is that drove apple whether it's concerns about mac sales, concerns that a mini ipad is on the way. co concerns about gross margin. throw that all into possible reasons why investors may be fleeing the stock and there you have it playing out again today. >> 35 years ago this week. steve jobs and wozniak introduced the apple 2. the very first breakthrough personal computer for the home at a computer trade show out west. 35 years ago. >> wow. >> now we're talking about much

different computers and much different revenue for those guys despite what the stock has been doing for a couple of days. >> that's amazing. >> ibm trading higher. its earnings after the close. up by 1% in large part. technology is doing well in today's session with the exception of apple though they are paring losses. google is up on the day so far. so we are seeing the market play here. let's check in with rick santelli. >> i think it's a fascinating day as everyone tries to handicap what's going on with europe. what's potentially the issues here. yesterday, a lot of anxiety regarding what we saw on the sentiment index on the home builders side. today, permits weren't so bad. there are issues between multi family and single family.

industrial production, past utilization weren't far from where they needed to be. it will be hard for the market to handicap what's going on in europe. you know, we talk about the auctions. but it's been made known by a lot of the leadership with regard to some of the countries like spain. they are not going to let auctions fail. you know, in our country there is a ground team for the treasury. something isn't going right with an auction, they will pull it. we want to continue to watch the yield and the price. we are hovering with 2%. the stock market getting on its feet is a big variable for the fixed income markets. then again, four weeks ago, we were 240. everyone said 3% was next. david faber? it's all yours. >> thank you, rick. i'm on the floor with bob pisani. almost there at the very beginning of cnbc 23 years ago.

>> i was on in the beginning and then they hired me as the real estate report. the son of a home builder. my brother is a home builder. my wife is a real estate agent. that's why i watch housing. i was optimistic. the numbers are good. particularly traffic for spring home buying season existing and new homes was terrific. the stocks hit new highs. they moved up. now we are getting disappointing numbers. the housing starts were a disappointment. rick mentioned permits went up. let me tell you about permits. the world is full of home builders that got permits that never start. doesn't mean much. i want to see a start because a start turns into a house in four, five months. a permit may mean nothing. you don't necessarily have to start just because you got a permit. the starts and single family, which is what everybody is looking at, are disappointing. do you want to look

sequentially? you want to see building momentum here as you go into the spring buying season. we are not seeing it. they are pricing in. they are at the high end of the multiple to book. usually 1.5 is the high end. they are all there. if we don't get it we have a problem for the economy, for stocks. so far the numbers aren't in. we are getting signs of caution. >> it can be hard to make sense because things are moving in different directions. >> you get confused by numbers. i will make it simple. watch the month over month changes in these. in existing home sales. in new home sales and in the housing starts. let me talk about spain. the spanish auctions were excellent. they paid twice as much.

the yield for both. 1257bd 18. twice as much. europe is fine with that. they weren't a little while ago, back in december. they are now. i think that's the european stocks that are up. if you look at the spanish papers and some you get in english, the lead article, not the spanish crisis, the debt crisis. outrage over the spanish government's expropriation of ypf and the argentinian oil company. 57% owned by repsol which will be a minority owner, 6% or 7%. the spanish papers are full of indignati indignation. it's an interesting diversion. they have a right to be outraged. for a moment, spain is united against its up start former colony. it was a colony of spain. they became independent in 1816 or so from spain. the paper in the country is full of indignation. >> not to mention foreign investors to continue to invest. one has to wonder.

>> that's one of their closest allies. that's interesting. >> we do have a big auction for thursday. that will be more illustrative. >> longer term money. for all the worries where we are. the s&p 500 when we started this morning was 3.2%. maybe 3.3% from recent four-year high. now up another 7, 8 points in the s&p. we are now 2%, 2.5% from the old highs. despite worries about what's going on in europe, we are creeping back up to the old highs which hit only in the beginning of april. so far all of the nay sayers out there, and i agree the economic news has been choppy in the past we're near new highs. >> good place to end. bob pisani, thanks. over to you, carl. >> let's go to the anyway mention for the latest in energy. sharon? >> oil prices now near $105 a

barrel. we are expecting to hear from president obama around 11:15 a.m. eastern time on market manipulation in the energy markets. of course he's likely to talk about more enforcement staff. increasing the penalties to $10 million. criminal penalties for market manipulation as well as requiring tried traders to have collateral. the fact remains gasoline futures which is a big reason why we are talking about high oil prices have been coming down and the gas crack has come down considerably as the spreads narrowed. we are talking about prices at the pump now that are $3.90 a gallon. that is, of course, higher than a month ago by six or seven cents. we have seen prices slipping several pennies or so over the past week. it will be interesting to see where prices are as obama is talking. david? >> thank you, sharon.

want to take a look at illumina. a contested deal we have talked about occasionally. that of course being the offer. take a look at what happened to the stock price. it's cratered down yet again today. another 1%. tomorrow is the annual meeting. it begins at 9:00 a.m. there are few that anticipate roach will succeed let alone take over for the board as it hoped to when it launched the hostile bid. the question after that is illumina having meetings with shareholders trying to get out of stock. finding longer term holders. but the question remains even after that and after the tender perhaps is dropped by roach, will it then try again to keep negotiating or begin negotiating, i should say, with roche in order to secure a

potential deal. that's the question as we head into the meeting. there are those who believe roche is always a determined buyer and will use the opportunity to drop both the tender, to talk away in terms of after the annual meeting and once you don't have a tender you don't have to tell everything you are doing and try to negotiate a transaction. i have no keen insights which is why i will stop with the point being that illumina shares are having a tough go. we'll see what happens at tomorrow's annual meeting. >> it's been sun if you know to watch. we don't have a lot to watch. >> hardly any when it comes to contested situations. >> one other story today. the answer, david faber. the question, who is the next contestant on jeopardy's power players week? the brain will go up against kareem abdul jabar and former white house press secretary dana

perino. they don't call him the brain for nothing. i can see he's a little nervous. >> i am. >> are you preparing for it? trivial pursuit or -- >> i haven't been. i have read the paper every day for 40 years. hopefully that's preparation enough. kareem, he's smart. very smart. worldly. e he's been around a long time. he's played before. >> tall, too. >> he'll make me look even more absurd than usual. worse than standing with carl. >> or brian sullivan. >> he's truly 7'0". >> yes. >> should be exciting. we're all playing for charity. >> yours is -- >> new visions for public schools which supports 1.1 million students in public schools in new york city with different ways of doing things and charter schools. it's all for a good cause even if i don't do well. >> i think you're going to knock it out of the park. we mentioned the brain nickname. do you mind giving us the

origin? was it betowed by haines? >> it was from joe, mark and i, the old squawk box. i was known for being late. i would miss the beginning of the show. >> shocking. >> one of those days came and it didn't have to do with cerebral power but one of the squeezy brains they stuck on my chair. joe said, david's here because i wasn't there and mark said, oh, the brain. he kept to it. i still miss hearing him every morning, of course, saying that. unfortunately it didn't have to do with actually being smart. >> let everybody think that. >> now you can make the name stick. >> if i come back a loser you won't make me feel bad. >> you're always a winner in our eyes, david. >> you're sweet. >> up next, businesses trying to soften the tax deadline blow by offering freebies. complete the sentence. to soften the sting and make tax

day more enjoyable i should get a free -- fill in the blank -- from the government when i file. take a look at the early movers on this tuesday on wall street. [ horn honks ]

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increase fuel efficiency by three percent. that's about 8 cents a gallon, and that can really add up over the next few years. see, going green can save you green the more you know. [ aerosmith ] ♪ oracle ceo larry ellison will take the stand today in the trial between his company and google. jon fortt is in san francisco with the story. jon? >> reporter: hey, melissa. we expect him to arrive in the next 45 minutes or so. he's scheduled for right at the top of today. opening arguments also will be today. now, the question at the center of this is, a, did goolg infringe on oracle patents and copyrights and b, how much might

they have to pay. making the case that google will fully infringe on the int lech wall property when they acquired sun micro systems. what were they doing with that? android, the leading mobile operating system now. google has upwards of 850,000 android devices per day. lots of people expected to testify including scott mcneilly, eric schmidt and larry page. this will be tough for google. there have been e-mails that came to light that will play a role in the trial. tim lindham says we need to negotiate a license for java. oracle says they realize right there there was an yimpblt also, andy rubin said we have technical options. we can do java and make en aeme.

that's what google has done. the judge expects at least eight weeks, probably ten, taking us through the end of june. jury selection is over, of course. now the trial getting ready to start this morning. carl? >> jon fortt in san francisco. that will be interesting to watch. time for squawk on the tweet. today is the deadline to file taxes. several business szs with special offers. free curly fries at arby's. sonic cutting the price of drinks in half. complete this sentence. to soften the sting and make tax day more enjoyable i should get a free blank. tim says he should get free stock in the companies that were bailed out. a drilling permit and darrell writes, nothing from the government is free but in exchange more my hard earned tax

dollars how about an irs, i pay your wages t-shirt. nothing like taxes to get people's emotions riled up. >> it does. we actually want to go to a live shot of the space shuttle above washington. there you see it. that's an amazing sight actually. >> left from kennedy space center this morning on top of the giant orbiter carrier as it makes it to the smithsonian. new york city will get her own as well. >> really? >> it makes its home at the intrei intrep intrepid. >> that's a beautiful shot. >> the end of an era as the shuttles find their new retirement home essentially. unbelievable. i would love to know how they get it on the plane. >> how do they secure it? >> going a couple hundred mile answer hour. >> when we come back, apple looking to snap a five-session losing streak. is now the time to get on the

ipad maker? as we go to break a look at the biggest losers in the s&p 500. today is gonna be an important day for us. you ready? we wanna be our brother's keeper. what's number two we wanna do? bring it up to 90 decatherms. how bout ya, joe? let's go ahead and bring it online. attention on site, attention on site. now starting unit nine. some of the world's cleanest gas turbines are now powering some of america's biggest cities. siemens. answers.

solid gain on the dow up more than a hundred points now or .8. as you see coca-cola, ibm and financials and energy stocks contributing to the gains we are seeing at the early going. >> with the rally in place, simon will tell us what's coming up on the next hour. >> hi. we'll keep everybody in the goldman sachs call. we'll see what they say about the markets. we'll take a deep dive on housing. the headline was bad. can you explain it from the weather? one guy will say buy to rent is compelling but tricky to execute. we're talking about where you may position for a takeover premium. the head of citigroup will join david faber live. a busy next hour. melissa? >> thanks, simon. we look forward to it. time for a look at the up and downgrades. travellers to equal from under weight at evercore partners. infosys at a neutral from a buy. after terrible session it is stock is higher.

newfield exploration up to a buy from a hold over at jeffreys. csx down to a hold from a buy. and from a buy to a hold for nrg energy at deutsche bank. auto nation to market perform from under perform at wells fargo. for more go to sots.cnbc.com to check it out. the concern around the rails is impacted by lower coal volume shipmen shipments. they say there is no reason to be concerned giving all the things rails transport. >> there's been a migration over time from trucks to rail. one of the reason buffett got into it years ago making a big bet on the usa. in the dow, up three of four

sessions. up 71 yesterday. amazing how quickly sentiment turned from last week. people were wondering about the significant breakdown at least in the s&p falling below 1370. we now have eight points of cushion. >> we have recaptured the 50-day moving average. we are watching. we continue to watch goldman sachs. the conference call is going on. we'll get an update. the stock has turned negative. it paired gains on the session. it's one of the only large brokerage stocks to trade lower. it's down by .6. compare it to bank of america, citigroup, morgan stanley. everybody else is trading higher. goldman sachs being left out. i mentioned energy stocks. the xle attracts energy. that's up more than 1 is%. we are seeing strong gains when it comes to integrated. chevron up by more than 1%. if you look at the oil services sectors stocks, that's also up sharply by 1.3% as measured by

the osx there. >> second best performing dow component, coca-cola up. we talked about volume gains. we'll have an analyst on later in the show this morning. 5% worldwide in areas. china is not 5%. it's 9%. >> 9%. >> india, 20%. a lot of discussion about the growth coke has put together. worst performing dow component, j & j. >> really? >> down almost a percentage point. some of the weakness in medical devices. knees, hips, things that are easily postponable if you are worried about income have taken a hit. don't have a job. >> exactly. >> one of the liabilities people are look at in j & j's quarter. >> first solar is trading higher. that was a stock i wasn't sure if it was highlighting the difficulties of the industry or if it's good news that capacity is being cut. but that along with the solar

stocks in general as measured by the etf that tracks solar which is named tan. all the stocks are higher today. >> back above 13,000 for the dow. when we come back, coke said its profits are refreshing and wall street likes the news. can the stock continue to outperform pepsi?

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[ "paradise city" by guns n roses ] ♪ >> welcome back. let's run through the markets and see where we stand. the dow up 95 points. the s&p 500 reclaiming the moving day average. we have a gain of almost ten points and the nasdaq higher by 29 points or 1%. apple, by the way, is up by 1.4%. a nice bounce off the initial 1% decline we saw in apple shares early in the session. we want to check on commodities here. let's look at the price of gold down by $10 an ounce. the crude oil complex is trading higher in large part. copper seeing weakness along

with platinum. >> for the next hour, another blow to the housing market. construction on u.s. homes hit its lowest level since october. we'll see what's ahead when we talk to one of the top minds on housing for morgan stanley. >> apple is down 10% from its highs. can new ipad rumors get them back on track? >> the bond king of wall street, bill gross discusses why he's so worried about spain. >> and why the auto industry is planning an emergency summit over supply concerns. that and more coming up in the next hour. >> in the dow, johnson & johnson earned $1.37 a share excluding certain items. that topped estimates by two cents but revenue was shorter with sales of medical devices and consumer medicines with the biggest negative impact.

they have been hit by recalls in the past couple of years. >> and get out our alan wrenches. ikea moving into consumer electroni electronics. the new offerings will be furniture with integrated television and sound systems. the new line debuts in europe this summer and will be in other markets next year. >> we are also watching ibm selling the point of sale terminal business to a toshiba unit in a deal worth $850 million. walmart is among the clients of the business. a transaction would make that unit the biggest global seller of point of sale terminals with a 25% market share. >> now to key housing data out this morning. starts from march down 5.8%. the lowest since october. here with his take on that and the state of housing is oliver chang, head of u.s. housing strategy and research at morgan stanley. welcome back. >> good to be here. >> we all thought warmer weather was the answer to all things

good in the world. >> it was a disappointing report. i would caution not to look too much into a single number. especially this one. there is a lot of difference between single family and multi family starts. when we look back a few data points for the trends that have been going on in starts, we see two very distinct trends between the single and multi family industries. if you look at where multi family starts are in the last quarter versus where they were at lows during the recession, they are up 500%. right? there is fundamental demand driving the construction of multi family buildings. we know multi family rents are going up, vacancies are coming down. when you look at the single family side of things it's the opposite story. single family starts are up 40% from lows during the recession, it has not been a consistent growth trend. if you look at the underlying demand, new home sales are bumping along the bottom.

unless you have true growth in the demand for houses, we believe we are seeing more of a restocking issue. so the builders were able to sell a lot of the legacy inventory. now in order to meet the demand they have to build. that doesn't mean the market is coming back. >> this month the weakness was led by multi family. doesn't cause you to change your thesis on that at all. >> if you look at the data series you will see it bumps all over but the trend line is moving positively. >> would you say macro bearish on housing for a while? >> yes, definitely. it's related to what we see going on in the mortgage credit space, particularly when we talk about owner occupied housing. this is all about households being able to afford that house, not only in terms of making the monthly payment relative to where incomes are but in terms of getting credit. households can't just buy homes for cash. when we look and see that the credit scores required in order

to get a mortgage, 760 average at fannie mae and freddie mac, over 700 average at the fha now. the down payments required and all the new rules out that you can't get a mortgage if you have a credit dispute over $1,000. it's really getting tighter rather than easier to get credit. that's holding back housing. >> morgan stanley has been clear saying 2012 is the year of the landlord. in your recent note you say the ability to rehabilitate older, dilapidated properties is essential to long term strategies. we have been talking about it with home builders and are there other plays such as armstrong worlds, home depot, where does an investor go knowing a lot of homes that need to be rehabilitated are not in warmer weather and they may be more dilapidated than the average home? >> a lot of work goes into

rehabilitating homes and the money that needs to be spent on the work will be split between labor and materials. if you look at just where the investors have been so far and where they have been concentrated. we mentioned it in the report. they are picking the low-hanging fruit looking for houses less than 15 years old in arid climates without mold so maintenance is better. they don't have to put a lot of money or materials into those properties to turn them into effective rentals or resales. we looked at where the majority of the distressed housing stock is. it's not in those areas or less than 15 years old. there is a chunk that is. but there is a majority in older neighborhoods not in good shape. when you talk about needing to rebuild the home, what you have is a frame of the house. a lot of the work you have to do revolves around putting in the walls, in some cases putting new

piping back into the walls. >> hence the action in usg. that explains those moves. >> paint, carpeting, flooring, roofing. you know, all of those material that is go into single family homes. >> what about the overall idea about a bid for distressed properties they will turn into rentals and that helping the housing market? it doesn't sound like you're on board with that being enough to get things going. >> we think the distressed part of the market is stabilizing. in fact, our view is that distressed prices already hit bottom. it's really being stabilized by the investor activity. while we are still having a more negative outlook at the macro level the distressed part of the market is becoming healthier. >> your negative outlook is, what, back to standards and underwriting standards you

mentioned, how hard it is to get a snomortgage? >> the big difference is investors are buying for all cash. they don't need the credit and credit is coming for those investors. when you look at the owner occupied market which is a larger share, it is almost entirely mortgage dependent. if you can't get credit even if houses are cheap you can't buy them. >> thanks, oliver. >> good to see you. >> we are 38 minutes into the goldman conference call. it is open to the public but you don't need to log in because kate kelly is listening. what's the latest? >> an interesting call with interesting market observations from the ceo on q & a that was not worthy. he said, we think the chance of a tail event in the euro area has fallen. the u.s. is showing signs of growth. client sentiment is fragile. no sure bets in the environment. debt financing markets are open. m & a hasn't gained momentum but

volumes are under pressure. a mixed bag. the questions across the board range from expenses to revenue. as you would expect. but a couple things that caught my ears. he talked about var and what's going on in terms of the risk taking environment. he spoke about fixed income which while better than the last quarter was not as strong as some of the previous quarters, especially compared to competitors. he said, flow and ficc was not great. there were big asset price improvement but we have been cautious on risk and remain cautious. so are our clients. that was an interesting bit of color. there were a couple of questions about senior level departures at goldman in the recent past. here's what he said about it. 15 to 20% of our partners leave every two years. over the last four years into this year, few left. he talked about how he felt it was loyalty during a tough environment. he said essentially you are

seeing catch-up. it's natural, it's important and warranted. otherwise the next level of people don't have the opportunity to move up. he said to look for more departures in the coming years. he's not worried because the bench is deep. to correct something i said earlier in terms of goldman sachs's equity performance. total equity was 2.25 billion which was significantly better than citi or j.p. morgan in contrast to what i said earlier. my apologies for that. thanks so much. >> kate, can i pick up on the risk outlook? you drew attention to the fact that now for two quarters they kept $17 # billion in core likd ti. and they are talking about risk and the environment in europe and what may happen further down the line. they are almost uniquely positioned with european governments and are an enabler as a market maker for people who want to bet aggressively against europe. what do you think they see that prap wes don't that might happen

in the future and they have a massive cash buffer? >> that's a multi tiered question, but a good one. first of all on the global core excess liquidity that's in the range of $170 billion or so for about a year now. they have been there for a while but they remain in a prudent posture. they said they are cautious. their cfo is very cautious. he hates to predict the future. he said, we need to be prudent. we see a fragile improvement. europe is feeling a little bit better. but they don't know exactly what will happen, of course. nobody does. they think the restructuring of the greek economy is a positive. they see other positive signs. but you can see they are managing in a slightly different way relative to a few years ago. part of it is the regulatory environment. part of it is responding to pressures in europe and here. >> it's been a while since we had a quarter where we went, wow, the guys at goldman sachs.

they did i hafferentiated thems in a positive way. we haven't seen it in a while. does that come back to the unwillingness to take the risk they did in the past and is it a sign that things have changed? >> it may be, david. hard to say. they can blame the environment for plenty in terms of diminished returns and fewer opportunities. in commodities they said it was a low volatility quarter with fewer opportunities. they can put i that way. yes, there is a subtle change in the way they approach things. one major change in the last year or two is the fact that they separate out in fixed income and equities what's investing and lending. in other words, what are positions they might be holding onto and what are they doing on a client basis? other firms don't break it out in the same way. this is a challenge i had this morning. looking at fixed income at goldman which under performed j.p. morgan and citigroup. we are also looking at investment banking. we don't know how the other firms account for this. we can see goldman under

performed in fixed income. i'm not sure they would argue that. but they are accounting for things differently because of the new regulatory -- >> it's important, the immovable feast, isn't it? they can move the line and they are clear this is a possibility moving forward on the analysis of the rule. >> what do you mean they can move the line? >> in terms of what they are doing in what might be proprietary trading is a blurred area. >> this is a subject of huge debate. wouchbt debates regulators are having is how to define a prop trade and is it the length of time you hold it? i might argue the longer you hold it the more it is a prop trade. shorter could be client based. i agree. i don't know that it's up to goldmann to move the line. maybe where they are looking for a sophisticated interpretation they have more latitude. i think that will be clearer in the next couple of years for sure. >> kate, we'll let you get back to the call. kate kelly at head quarters.

>> coming up, apple's five-session losing streak appears to have come to an end with the stock higher by almost 2%. do you get in now? find out what one apple watcher thinks when we come back. [ nadine ] buzzzz, bzzzz, bzzzz, bzzzz, you know, typical alarm clock. i am so glad to get rid of it. just to be able to wake up in the morning on your own. that's a big accomplishment to me. i don't know how much money i need. but i know that whatever i have that's what i'm going to live within. ♪ ♪

♪ we are keeping an eye on apple shares which are currently trading higher by almost two full percentage points. the stock is up 10% over the past five trading sessions. will power reiterating his outperform. he says weakness is a buying opportunity. he joins us from dallas. will, it's proven to be what people are perceiving as a buying opportunity in today's session. in terms of concerns about mac sales, npd had data out saying mac sales may be short of what the company is forecasting. for a company that's priced well and the expectations are high, isn't that a miss that investors should be concerned about? >> first, good morning. mac sales is a concern. our bet is that demand for ipad and iphone will overwhelm that. a couple of issues impacting the mac are delayed refresh cycle

and perhaps an ipad cannibalization as well. it's something we are overly concerned with give good demand trends on ipad and iphone. >> the analyst community in general, why are we willing to say it's not a big deal that mac sales come in short. when they are 15% of revenue mac plus imac is 50% of revenues. shouldn't it be a crack? isn't this a crack investors should be looking at? >> i don't think it is something we are dismissing. we'll monitor it as we go forward. our view is that we'll see mac sales reaccelerate into the next product cycle. if it doesn't materialize perhaps that's something we should be concerned with. the bigger drivers and revenues are ipad and iphone. you are seeing ipad cannibalization. it could be that the mac growth

rates we had over the last many quarters could trail that type of number going forward. >> what is your professional opinion of the price action we are seeing at the moment. do you think it is chinks in the armor, potential problems coming up or a reflection of where apple has traded, the desire for profits and a discussion held as to whether google or priceline will reach $is,000 before apple does. >> good question. frankly there are factors influencing the stock not the least of which that it's had an enormous run. some level of pullback or consolidation is probably not unhealthy. that said, as indicated there are questions on the mac side. there have been questions with regard to the carriers' willingness to continue to subsidize iphones over the degree they have. our view is that won't change in the near term. longer term that's a fair

question. the third element is some questions out there with regard to ipad sales in the quarter given that supply is good. our view is apple has done a better job in the supply than they have over some of the previous quarters. >> i wonder about what. do you think they were intent on making sure there would be enough available no matter what and now the street somehow worries about over supply? it's hard to thread the needle. >> well, it's a fair question. it will be interesting to see as they report results. the big question for us has been with the timing of the latest ipad launch, what was the number of delayed purchases in advance of that. you only had the new ipad for the last couple of weeks of the quarter. we think there was such demand there based on the survey, et cetera, we think it may make up for delayed purchases. and should provide a nice launching pad for the next full quarter here. >> will, great to speak with you. thanks for your time. >> thanks for having me.

>> when we come back, the manager of the world's biggest bond fund, bill gross on everything from the u.s. recovery to the pain in spain and how it fits into his investment strategy. more "squawk on the street" ahead. [ male announcer ] if you want a luxury car with a standard power moon roof,

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>> citigroup's biggest shareholders getting together and mary thompson is there with the headlines. good morning. >> reporter: good morning, carl. as you mentioned the citi annual meeting getting under way. the ceo opened with a couple remarks noting that the bank has achieved two full years of profitability and that 20 is 1 was really a year of investments paying off at citi. the company invested 3.9 billion back into the bank and noted that has started to pay off. that said, he touched on a topic he mentioned yesterday on the earnings call when the company reported better than expected first quarter profits that the bank continues to talk with the frat reserve about whether or not it will resubmit the capital plan or request for dividend this year or will wait for 2013. lastly, he mentioned something -- one of the achievements he highlighted about 2011 saying since the company's decision to reverse to do a reverse stock split that

institutional holdings by the top 50 shareholders in the country, since that reverse stock split the holdings have gone up significantly every quarter leading to reduced volatility in the stock. it was one of the highlights he noted for the year. before the meeting started we had a quick moment with the company's chairman dick parsons who is being replaced by william o'neal. taking the role of chairman after citi received a bailout from the u.s. government. he said he's satisfied with what city achieved under his stewardship although of course there is more to do. lots more coming up. there are shareholder proposals. eight of them. four shareholder proposals voted on today and a q & ah session with mr. pandit and mr. parsons. lots smaller meeting. we have about 250 here in dallas. >> looks like a beautiful day, mary. thanks. mary thompson in dallas covering

citi. spain selling bills just above target range ahead of a much anticipated auction on thursday of some twos and tens. cnbc's julia chatterly has more on some of the moves in spanish debt. good morning. >> good morning, carl. you said it. it was a short-term auction. demand was good. the amount was good but did they pay it for it. yields significantly wider than the last auction. as you said, the key test for the spanish markets will be the ten year and the two year, the longer term auctions we get thursday particularly the ten year. spreads were four to five basis points tighter since the auction. that has fed into the equity markets here particularly in the bank stocks. it was boosted by the finance minister saying spain won't need a bailout.

that was reiterated by the head of the euro group. spain won't need a bailout. it did come at the same time as the spanish central bank governor confirming that spain is back in recession. it's likely that exports is the only positive contribution to growth this year. it just highlights the difficult job that countries like spain have in the euro zone. they have to get the debt and deficit levels down. regain confidence in the markets and balance that with weaker growth potentially. the imf saying if we see weaker growth they don't want to see further fiscal consolidation. it makes sense. where do you draw the line? simon? back to you. >> thank you very much. let's go trading the globe. we are up 130 points on the dow. the managing partner joins us on the program. good morning. >> good morning. >> it says you want to talk about the indian banks. i want to establish whether emerging markets are the place to be in an environment where stock markets are falling.

the losses on emerging markets compared to near at the nyse are twice as big over the last month and twice as big again in europe. isn't your money safer in the united states? >> in some ways, yes. i think you can't deny the emerging markets growth opportunity. you have seen a lot of bad data affecting equity performance. you saw china release gdp numbers that fall short of expectations. you see india still struggling with inflation and fiscal deficits. but you see positive signals. china has liberalized the currency policy. india lowered interest rates. those are positive signals for growth on the way. you have to look at emerging markets for the consumer profile. >> where do i put the money specifically? >> i like consumer staples. they won't be influence bid the dollar trade. a lot of money is left because of the strong u.s. dollar. simple as that. consumer staples stay strong. i like abv. it's a large beverage company in latin america. i like cdd, a convenience store

chain. >> thanks, nice to see you again. >> thanks. >> you can catch more trading the globe on fast money weeknights on fast money and tuesdays on "squawk on the street." >> coming up, bill gross on what he calls a zit, boil and tumor when it comes to the european crisis. looking for a better place to put your cash? here's one you may not have thought of: fidelity. now you don't have to go to a bank to get the things you want from a bank. like no-fee atms -- all over the world. free checkwriting and mobile deposits. now, depositing a check is as easy as taking a picture. free online bill payments. a highly acclaimed credit card

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one hour into trading. housing starts slipping in march, the lowest in five months. building permits rose 4.5%, beating expectations. yahoo hires paypal's former executive to oversee the commerce group. the company will have results after the bell today. the judge dismissed howard stern's lawsuit against sirius xm radio. he says helping reduce growth targets. >> apple semiconductors leading in tech today. materials and energy stocks are higher. a triple digit gain on the dow. 142 higher. regaining dow 13,000. the nasdaq also coming back

nicely for those that are long the mark. the breadth of the mood advance, decline, almost 5 to 1. call it 6 to 1. >> 8 to 1. >> 6 to 1. >> pick a number, any number. >> he gets it right on the third try. >> that's so low. >> you are more than welcome to do the breadth of the market every day, david faber. starting now. the advanced decline is -- >> what is 4.3? >> you're practicing now. >> exactly. >> it's the toughest job at cnbc. >> it's very difficult. >> one hour into trading let's go to chicago for more on the market's latest moves. todd corvin this morning. good morning. >> good morning. how are you? sounds like you're having a good time. >> punchy, obviously. market back at 1383 above the 50-day. i'm guessing you don't think

it's time to ring the all-clear. >> no. i don't think so. i think we are basically trading off of things going on around the world. not necessarily here in the states other than earnings. yesterday's spanish bill auction was positive. i would like to see the same demand when it comes to five and ten-year issues this week. earnings have been good here today especially even though equities really aren't going through the roof. we have a number of different banking and industrial issues over the next week or so. i anticipate volatilities creeping higher. nothing to keep the market from trading where it is now. >> what's your best read on the spanish 2 and 10? how is that going? >> when you look at where it came out, rates are high. if you translate into cost that spain will pay in the coming 18 months and the coming years that can affect their ability to pay. right now germany has suggested the imf needs to step up the

fire wall. i don't disagree. we need to continue to see strong demand for the auctions. the ltro was put in place for that. we have to hope it stays in place. >> how much fuel is embedded in the german investor confidence number we got today? >> well, you look at some of the numbers. it is just one number. while it is a positive, i would like to see maybe three months of that to build a trend. we know equities performed well over the short term. when you look at domestically in the states the weekend report is giving the market a hang over which is why equities aren't much over the 50 day. we are trading water as ten-year yields hover around 2%. i would like to see months of positive economic data specifically out of germany in order to start breaking out the party hats. at what point would you say the rally has hopped back into second gear? >> two things here. we have to look at ten-year yields now at 2%.

you are seeing a lot of money back into treasuries after the preliminary employment report trade was to sell treasuries and buy stocks. if we get north of the 50-day moving average closer to 14000 in the s&p that would bring comfort. in the 0 interest rate environment we are in for at least a year and a half equities will continue to outperform with lack of investment. >> thank you for that. >> we are higher on oil. let's go to sharon epperson for the latest on where we are with commodities. is it a rally across the board? >> not necessarily. in fact what you are seeing is strength in the wti oil contract. some of that may have to do with things we are seeing in europe. much of it probably has to do with the spread activity between brent and wti and the fact that we are looking at the sea way pipeline that will take crude oil from cushing, oklahoma, to texas starting earlier than

anticipated. we have seen the spread come in. the big story now is what's happening to natural gas because we have a new low in natural gas. $1.95. we are hearing much of the low price, the need to get natural gas exported and this week there was approval from the federal energy regulatory commission to have the terminal in louisiana. there is so much natural gas out there, others say we could see natural gas at 75 cents this year. back to you. >> thanks so much. imagine. 75 cents. amazing. >> one of the greatest trades, natural gas, at the moment. it was a one way bet. >> short. >> absolutely. >> all right. earlier this month bill gross tweeted -- this is very visual. greece was a zit. portugal is a boil. sp

spain is a tumor. you can't fix a debt crisis with austerity and more debt. what are his views on spain now? joining us is bill gross of pimco. bill, that was a disgusting -- >> quite. what a turn of phrase. >> wow. >> those are your words but if spain is a tumor would italy be a metastasis at this point? >> that was related to size and perhaps the zit should be a pimple to be more politically correct. when you reach the tumor size it doesn't necessarily have to be cancerous, but it can impede the normal function of other organs. what we are seeing in spain is a situation where yields and the ten-year are close to 10%. yields in the two-year close to 3.5% and a country has to grow in terms of nominal space. that's inflation and real growth. close to what the interest costs

are. spain is nowhere close to that. perhaps 4% or 400 basis points different. that produces a debt trap ultimately and potential ly a cancerous tumor. >> i want to ask what you expect from the auction in spain on thursday? >> i missed it. i'm sorry. >> the spanish auction on thursday. what are your expectations? >> the spanish auctions are a function of the spanish banks. it is an artificially controlled market. that doesn't mean private investors like pimco wouldn't buy spanish bonds but for the most part the bills offered today and the twos and tens offered later this week basically are a function of the spanish economy and the spanish

connectivity. you can't trust an auction in europe. it's a function of what the banks are doing as opposed to what we are doing from the outside. >> good morning, bill. it's simon. you spoke about a fed put under the equity market here. they would come in with talk of qe 3 if the markets came out of bed. you were intent on telling us there was a quote from the ecb in europe. i wonder now that the market since you and i spoke is now down 10% in europe. whether you still think are true. they may not come back in to buy spanish debt as so many people expect them to because it would incentivize backsliding on fiscal reform in madrid. are you getting pessimistic in the ability to have central banks to support what's going on and shareholders?

>> i think so. the ecb expressed unwillingness to continue to buy sovereign debt. they haven't done it for a month to a month and a half. in spain, for instance, while they had the opportunity on a daily basis there's been no real ecb purchases. the refinancings which allow the banks to buy debt. but the ecb is basically becoming more germanic and less southern european, so to speak. that's a tightening maneuver. in the united states the same thing. it was suggested that the qes are a problem and will be dependent upon lower growth. we are seeing some of that. we saw some of it today in terms of industrial production and housing starts. next week's fed meeting will be important to let us know whether qe is on the table.

>> any risk of contagion? we know argentina is a special case. what do you think? >> it is special. they have been in and out of debt. let's not go too far. nonetheless it's private capital should it go through. investors need to be aware of what can happen in emerging countries that don't respect property rights and behave like developed countries have over the past number of decades. i would keep any eye on the developments there. >> we have to ask about the new office you're opening in rio. it's almost shocking that you don't already have an office in brazil at this point. i'm assuming your firm believes in the long-term future here. >> we do. not just investing i brazil but investing for brazilians.

we are starting with a $10 billion base there. it's difficult to open a branch in brazil. that's been a problem for pimco. but we have established an office and are setting up shop. yields are 3% to 4% higher on a real basis. to invest for brazilians as they look to gain from global growth. >> bill, always a pleasure to speak with you. >> thank you. >> bill gross at pimco. >> up next, one of the biggest names at m & a at citigroup. mark shafir joins us for an exclusive interview with david faber. see what he's saying about the environment and where you could position to get a take over premium when they pull the trigger. believe the mayan calen, on december 21st polar shifts will reverse the earth's gravitational pull and hurtle us all into space. which would render retirement planning unnecessary.

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welcome back. we're coming off the slowest first quarter for deal-making since 2004 with just about $580 billion in announced global m & a in the first three months of the year, our next guest says while the necessary conditions for a healthy mergers and acquisitions market is in place the question is all about confidence. mark shafir from citigroup also heads up the telecommunications banking group. nice to have you here. >> good to be here. >> i could have said the same thing three or four months ago. a lot of key things were in place. but we don't see the kedeals. why not? >> we're frustrated, disappointed. a lot of us felt with an improving macro economic set of conditions with good corporate liquidity, good margins and earnings we were in a better position. >> and a good stock market. >> but it hasn't happened. >> usually when you have a stock market the way we did in the

first quarter ceo confidence gains traction. what's going on? what are your conversations? what is it that the executives are worried about at this point in terms of starting the conversation, perhaps pulling the trigger? >> i think there is some degree of what i call risk aversion out there at this point. there is good dialogue, but we are lacking the big deals. that goes to the confidence issue. we don't see it. a lot of good conditions are here. a lot of us expected a better first quarter. some of us expect a better second half. >> do you? >> i think it will be marginal at this point. >> that's changed a bit. you were more positive, as were many bankers. >> much more bullish a couple months ago. it's domp ee's dampened. there are a lot of great things. money is available. we are in a good spot. but you have to have buyers and sellers transacting. we don't have it.

>> gets back to what ceos see in their business or concern about their businesses. >> clearly it's that. whether it's, you know, a higher degree of political risk in the developed nations and emerging nations. nations and some of the emerging nations. whether it's just a sense it's better to focus on organic growth and build one's business. at this point, you know, we're seeing some smaller stuff, what i call middle of the fairway, but the material -- >> what you're describing is one that typically brings another deal and another and another, isn't it? >> it's sort of a knock-off effect in an industry or sub-industry. like i said, there's still stuff out there, there's still dialogue, but it's disappointing relative to what many of us expected. >> this year may shape up to be a poor one, unexpectedly. where should investors focus? where is the activity? >> glencor was a big production

in the first quarter. energy has been very hot. we see real estate has been a good percentage, financial institutions are always pretty good. technology, there's some pretty interesting stuff in the tech world that we see. >> instagram, that wasn't even a public company. it was an amazing deal. >> it just goes to show the power of -- short product life and just how fast companies can gain in value. i think there is still a pretty good rationale for it. cross-border business is down, but interestingly enough, that's been big in terms of the number of deals driven by asia. japan is big. so there's some pockets of brightness in an otherwise bleak. >> given how much financing may be available, not to mention how much equity they've ratised in their funds, i'm sure they want to put it together, but still, a lack of desire in that environment. >> i don't know if it's a lack of desire. we've seen the el paso get done

and the energy space, but you still need sell-sell inventory. we don't have a lot of it at this point. the ingredients for transactions here, i feel like we're all dressed up waiting to go to the ball but there's no ball. >> what about tnt, which you have a focus on in your career? we see the likes of a stress player, so to speak, a rim or a nokia. >> sure. >> is it possible those are potential deals not from strength, but from weakness? >> it's tough to say. what you look at is, is there enough there and at what value in terms of what's left in the technology of companies and the like. there could be some of that, but i think the big issues we tend to focus on, social networking, big data, next gen mobility, those are the sorts of things, the cloud -- or really, the big drivers, i would argue, at this point.

and how some of the older line companies fit in is an interesting question. >> thank you very much, even though they weren't as upbeat as we might have hoped. >> we're trying. >> keep trying. mike schaefer at citigroup. >> great stuff. the dow now almost up 150 points. back after the break. this at&t 4g network is fast.

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"squawk on the street" this morning. today is the deadline to file your income taxes. you probably knew that already. of course, several businesses commemorating the event with special offers. arby's giving out free fries, others cutting some drink breaks. so answer this question. to soften this blow, i should get a free what when i file? >> i should get a get out of jail free pass for when i do mess up on my taxes, and gregory tweets, a set of screwdrivers. >> that's actually very clever. >> what's coming up tonight on "fast"? >> we've got bill muggia. he thinks the low gas is driving a rebirth in manufacturing. also, we're following all the

after-hours ibm, yahoo, all after the bell. >> it's going to get busy and the week is going to get businessi busier as we get closer to mcdonald's. here's what you missed if you're just tuning in. welcome to hour 3 of "str k "sidewalk on the street." here's what's happening so far. >> the idea he should have to release 10 years of tax returns, obama never did that, bush never did that. >> where are you on this? >> i'm very optimistic. i think the presideit's going t direction. so far everything i've seen is at an increase, virtually, everything. >> 654,000 annualized units. that's light on expectations.

>> well, today is tax day, right? >> that's right. >> there was some thought that in order to pay some, if you owe, that you might sell some of your big gainers. just something that was out there. >> the president will pass on funding for a six-year increase of oil futures. >> well, we still have a more negative outlook at the macro level, the distressed part of the housing market, we think, is becoming healthier. >> our country, melissa, has to grow in terms of nominal space. that's inflation plus real growth, close to what its interest costs are and spain is nowhere close to that. good morning. welcome to the third hour of "squawk on the street" where the dow is placing pretty impressive midday. we have 163 points.

the high on the day back in 2007 was 13,000. the president asked to give a statement on oversight on the oil markets, plans to crack down on manipulation. we'll show you that when it happens. coca-cola beats the street. as all the world buys a coke, is it time for you to buy the stock? we're fresh off the call. and another big day on the markets. we'll tell you if there is still time to get in on the rally, where you should be putting your money, and which would you rather have? an ipad, $600 shares of apple or gold? we have the answer to what could be a better investment in the next hour. let's get to gary kominski at 30 rock today. i'm convinced, gary, you are

obsessed with this company and the fact that it's going public. >> you know, originally i wasn't. but as i began to talk to more and more people about how this thing is going to be positioned, it's become somewhat fascinating in the sense that, as i mentioned last week, what you'll hear on the roadshow and what you won't hear on the roadshow, and as we had pointed out last week, this idea that facebook is really going after google one on one, there was an interesting piece in the blog tech crunch yesterday which basically talked about -- as was reported last week with google, the cost bepe click being down 6%, facebook's cost per click going up 23%. the fact is, they are making inroads and they're taking away some of this advertising market share. again, it's early. it's a head to head competition, but i continue to believe part

of the facebook story to try to get that valuation they want is going to be, we're going after google and we're going to take some of that ad market share for sure. >> it's going to be a very interesting standoff and the ipo is going to fuel that. do you mind if i switch topics real quickly and talk about the market today? in all the years which he's tracked charts, this one has been a pretty convincing head flick last week. >> last week was an unusual week. we had not seen this type of volatility for some time. i don't think -- i think that there is a bit of a feeling that the earnings have come in better than expected, but again, that was to be expected because the guidance and the estimates were really on the sort of -- on the low side. but i want to just talk about technology stocks because people ask and maybe this will help explain what's happening in the overall market today. basically, i checked in with dave seaberg who does a great

job following the tax stocks. what you had in all the big names, apple, google, priceline, in the last trading days, it wasn't aggressive short sell, it wasn't hedge funds trying to position themselves, it was plain vanilla profit taking and selling. you take a name like google, and when you get back to the 600 level, you get a lot of aggressive buying there, so selling at the 600s, buying at the 600 level, so i think this rotation theory is sort of panning out there in terms of the big technology names which have been driving the market last week. >> were you convinced by any of the theories surrounding apple yesterday, the fact that it's tax day today, any of that? >> i heard some of them and i got to thinking about the market capitalization, the price of stock and the money trading in that same name every day. you would have to have a lot of people selling apple to raise proceeds to pay capital gains taxes, and i don't think that many people had a lot of capital

gains last year. carl, let me say one thing, in terms of the obsession with facebook and google, i think you know we'll have rick charles jo -- rick sherlund joining us tomorrow. let's ask him tomorrow what he thinks is happening in preparation for this ipo. >> that's a good idea. he's also been bullish on microsoft for a better course of the year, a player that fits largely into the google/facebook story, which you said last week. >> i do believe that's the case. >> do you want to talk about the quarter and whether or not expectations were low enough that even with revenue coming down so slowly and thick, that they managed to resemble a beat this morning? >> no surprise there. the only thing that slid out of my mind was if you look at the return in equity, 12%, and you

think back to where they were in 2006, 2007 when the returns on equity was in the mid-30s at some point given the leverage that was utilized, it's a different business, it's a different world, and i think investors are getting adjusted to the idea that the adjustmein banks are going to be able to make money, they'll be able to work with clients but they're not going to have the return they had in the middle of the 2000 decade. >> they're not saying stellar things about m and a, which maybe we can talk about in the back half of the show. >> i just listened to jeff's interview with bob schaefer, and mark was very bullish that we would see pickup in m and a, and he seemed a pretpretty cautious minutes ago. >> i give you a live shot of washington, d.c., the shuttle coming in for a landing in washington, d.c. as you all know, the shuttles have been retired, the shuttle program in this country is over, but they are going to make their

way to their retirement homes across the country, several of them being housed -- this one at the smithsonian, others will come to new york city and other cities around the country being carried on that airplane, which, of course, is known as the orbiter carrier. it left kennedy space center this morning, coming in for a landing now. an incredible shot in washington, d.c. today. rick santelli joins us today with the tuesday edition of the santelli exchange. hey, rick. >> hi, carl. next week we're going to have a fed meeting and as a guy who likes to try to correlate and put the spin into the -- how do markets trade relative to some of the controls or management or activity that the feds put into the marketplace. recall, look at this chart. we had a five-month high yield close to 240 in a ten-year after being in a range in december. what was the catalyst? the catalyst was the last fed meeting on march 14.

why was that important? because when the fed hinted basically what it didn't put in the statement, that maybe it's not going to be purchasing as many securities, the markets sold off, interest rates rose. what slowed it down? the next employment report. you know, we have lots of jobs reports and lots of good data. when the market was in the range are treasurietreasuries. but all of a sudden when the fed mentioned that they're going to let the markets potentially, maybe, be more normal, we is a -- we saw a weak report. so the fed meeting coming up is going to be extremely important, not because we need the fed to come in and put safety or training wheels in the marketplace, but they seem determined to do so and never let the market be alone. will we always need training wheels? o canada. they're nervous about inflation. remember, they didn't do any qe. if you want to listen to honest

inflation talk, bank of canada is your guy. carl, back to you. >> the president is going to talk about oil speculation in the next few minutes and is asking congress to give the cftc authority to raise margin requirements. how big a deal is that? >> any time you razor lower or alter margins, it's going to be a big deal. the irony here is i don't necessarily disagree with it, but i hate the fact that it's such a political scenario. listen, if you want to control some of the commodity distortions, you have to go after the over-the-counter market and some of those swaps, the commodity swaps, the oil swaps. i think they're slowly coming to address those issues. that would be a good thing. remember, don't tell people what to do, tell them they can do whatever they want, carl. banks trade whatever they want. it's the margin, it's what you charge them to play. that is the only control that really works. >> yeah. i know we'll be looking for your guidance on that a little later on, too. thanks, rick. talk to you in a bit.

coca-cola hitting some 14-year highs today. first quarter reports on higher beverage sales around the world. fresh off the conference call, u.s. beverage analyst to jp morgan, he's had a neutral selling on coke. good morning. >> good morning to you. >> some are calling it an impressive quarter. you had a neutral on it. were you impressed? >> i was impressed with certain things. i think the volume growth certainly was slightly better than expected. the margin leverage was a little bit weaker. we've seen that over the past several quarters. i think what happened here was along with the rest of consumer staples, expectations came down in the last couple months. it's not pricing with a lot of good news, so when you see something a little better on the margin, you'll see stock prices move. >> it doesn't sound like it's enough to solve commodity costs? that's on your mind? >> commodity costs, i think, are going to be fine.

i think the issue becomes, okay, it's actually developing markets that they talk down a little bit. china was a little softer, i think, than people would have anticipated. brazil, however, is getting better. it's just a question of, look, i think they're doing well. they need to show a little more operating leverage, a little more profit along with the volume, and that's what would get me more excited. >> walk me through where you think the standoff between them and pepsi -- where that stands right now and whether pepsi is actually poised to get some shares back. >> coke is definitely winning, there is no question about that. one of the key factors of this company is they're so much more focused on that sparkling beverage, soft drink category because there's more lifebloods. they have a lot more irons in the fire, so they've given less focus to that, particularly in north america. what was interesting was it did come up in the call that pepsi probably lost a lot more share, maybe maintained a little share,

of csds in the quarter, which would be a nice step forward for pepsi, but certainly nothing where we would say, okay, you can take that to the bank that pepsi has fixed their problems. but their margin should be a bit fewer than in the last few years. >> so if you were drinking pepsi and you think you should start drinking coke, do you think that's jumping the gun a little bit? >> what's great about coke is the volumes are in order, they're getting to the property line. you can feel a little safer. the stock is probably 12% cheaper from that standpoint, so if they execute a couple more things correctly, you'll definitely see this move up. a lot more safety with coke right now. and given the way investors are viewing consumer staples, which is, i'm going to own them

because i kind of have to, not because i really want to, given the strength in the market, for a lot of portfolio managers, coke is a safeer choice, they put them in and forget about it. >> i'm not hearing you say anything that would tell me you're leading your neutral from coke? >> no, i don't think so. they're escalating well, what i would question is the margins getting any better. i think that's priced in, most realistically. i think you're actually paying for the buying growth. nothing really surprising at this point. >> thank you for joining us. talking a little soda there. when we come back today, former chief of staff at richard

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a check on the markets this morning. you see the dow up almost 170 points, s&p up almost 18 and the nasdaq closing in on a 50-point gain. richard bernstein is senior advisory of the richard bernstein portfolio. good to see you. >> good morning, carl. a lot of investors are asking,

what was last week about? what do you think is happening? >> obviously, you know, week to week one should really probably never pay too much attention, but i think what's going on was last week we had a hangover from the week before employment report. i think one thing people have to remember is there is still a lot of leverage in the system in terms of investing. you saw people reversing positions, you saw people grabbing on to that negative trade, and i think we had a bad week. now we're having a good week. it is what it is. >> did the non-farm number and some of the earnings so far give you pause? are they giving you pause as you begin to look at the second half? >> certainly. obviously -- look, we're relatively bullish. you always want to see good numbers when you're relatively bullish and slow numbers never make you feel good. i think what people want to focus on right now, i don't think it's the non-farm numbers. they go up, they go down, whatever.

weekly job claims are not outrageously strong now, either. i think if you want to worry about something, you worry about this quarter's earnings reports. this is really a very credital quarter in terms of earnings. why do i say that? because last quarter was the weakest quarter for earnings since '07-'08. the corporate sector is still the largest corporate sector in the world, but it's showing its armor. >> we're looking for outperformance from domestic companies? >> that's exactly right. our strategies are very much focused on the domestic united states economy and not the global economy. the global economy, you still have credit bubbles deflating all around the world. that's a drag. the dollar has been reasonably strong, that's a drag. carl, i know before you were talking about technology stocks and you named some big name technology stocks. it's interesting that tech analysts are not talking about the effects of the dollar and

the year on year comparisons that are starting to get tougher as the dollar maintains its strength here. keep in mind that technology is the most foreign exposed sector in the united states. by far nothing is close. that's going to be a little drag on technology earnings as we go forward. >> has the slower data, the slower trajectory of data, altered your dividend strategy in any way? >> one of the founding principals of our firm has been compounding dividend. ten years ago, nobody cared about it. today everybody loves dividends. dividend strategies are not cheap. no matter how you want to slice and dice them, people are aware of dividends. dividends are expensive. so when a strategy is expensive, do you stretch for yield? do you try to go higher to get that little extra return? we would answer no. do you want to get more conservative? now is the time to get more conservative on dividend strategies, make sure you have a little extra quality, a little balance sheet in there. you don't want to stretch for

yield here because the strategies are expensive, and history shows very clearly whenever you stretch for any kind of return in expensive strategy, it's probably the wrong thing to do. that doesn't negate the need for income, people still need income. that's why you have to be a little more conservative here. >> a few minutes left. everybody is wondering how this spanish auction will go later in the week. today it seems like we have a little sigh of relief. do you see europe becoming a true stumbling block sometime in the next three months? >> it's not just europe, carl, but i think as we go through 2012 and 2013, we won't see europe, but we'll see problems developing in the emerging markets. i think that is the big shoe to drop in the second half of this year, first half of next year that people aren't anticipating. >> good to talk to you, rich. richard bernstein. we'll count down the close in europe, about 9 minutes to go, 8 and a half. don't go away.

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families. when you're trying to get to school, trying to get to work, do some grocery shopping, you have to be able to fill up that gas tank, and there are families in certain parts of the country that have no choice but to drive 50 or 60 miles to get to the job. so when gas prices go up, it's like an additional tax. it comes right out of your pocket. that's one of the reasons we passed the payroll tax cut at the beginning of this year and made sure it extended all wait throu -- the way through this year so that average american is getting that extra $40 in their paycheck right now. but i think everybody understands there are no quick fixes to this problem. there are politicians who say if we just drilled more, then gas prices would come down right away. what they don't say is that we have been drilling more.

in my administration, america is producing more oil than any time in the last eight years. we've opened up new areas for exploration. we've quad rupe he would the number of operating rigs to a record high. we've had enough new oil and gas pipeline to circle the earth and then some. but as i've said repeatedly, the problem is we use more than 20% of the world's oil and we only have 2% of the world's proven oil reserves. even if we drilled every square inch of this country right now, we'd still have to rely disproportionately on other countries for their oil. that means we pay more at the pump any time there is instability in the middle east or growing demand in countries like china and india. now, that's what's happening right now. it's those global trends that are affecting gas prices. so even as we're tackling issues of supply and demand, even as we're looking at the long term in terms of how we can structurally make ourselves less

reliant on foreign oil, we still need to work extra hard to protect consumers from factors that should not affect the price of a barrel of oil. that includes doing everything we can to ensure that an irresponsible few aren't able to hurt consumers by illegally manipulating or rigging the energy markets for their own gain. we can't afford a situation where speculators artificially manipulate markets by buying up oil, creating the perception of a shortage and driving prices higher only to flip the oil for a quick profit. we can't afford a situation where some speculators can reap millions while millions of american families get the sho short end of the stick. that's not the way the market should work, and for anyone who thinks this cannot happen, just think back to how enron traders manipulated the price of

electricity to reap huge profits at everyone else's expense. the good news is my administration has already taken several actions to step up oil sites and close up dangerous loopholes that were alloweding some traders to operate in the shadows. we closed some that were using overseas trading platforms. in the wall street reform law, we said for the first time that federal regulators will make sure no single trader can buy such a large position in oil that they could easily manipulate the market on their own. so i point out that anybody who is pledging to roll back wall street reform, dodd frank, would also roll back this vital consumer protection along with it. i've asked attorney general holder to work with general leibovitz of the federal trade

commission, chairman gintzler of the federal trade commission and others to make sure fraud, manipulation or other illegal activity are not behind increases in the price that consumers pay at the pump. so today we're announcing new steps to strengthen oversight of energy markets. things that we can do administratively, we are doing. and i call on congress to pass a package of measures to crack down on illegal activity and hold accountable those who manipulate the market for private gain at the expense of millions of working families. and be specific. first, congress should provide immediate funding to put more cops on the beat to monitor activity in manager markets. this funding would also upgrade technology so that our surveillance and enforcement officers aren't hamstrung by older and less sophisticated tools than the ones traders are

using. we should strengthen protections for american consumers, not gut them. and these markets have expanded significantly. chairman gintzle rer erksgintzla good analogy. imagine if the nfl quad ruruple the number of teams but lowered the amount of arrests. so we have to properly resource enforcement. second is, congress should increase the civil and criminal penalties for illegal energy market manipulation and other illegal activities. so my plan would toughen key financial penalties tenfold and impose these penalties not just per violation but for every day a violation occurs. third, congress should give the agency responsible for overseeing law markets, new authority to protect against volatility and excess

speculation by making sure that traders can post appropriate margins, which simply means they actually have the money to make good on their trades. congress should do all of this right away. you know, a few weeks ago if congress had the chance to stand up for families already paying an extra premium at the pump, congressional republicans voted to keep spending billions of americans' hard-earned tax dollars on more unnecessary subsidies for big oil companies. so here's a chance to make amends. a chance to protect consumers based on oversight of energy markets. that should be something that everybody, no matter their party, should agree with. and i'm hoping members of congress will ask their parties to stand up. in the meanwhile, we'll take better steps to analyze trading activity in energy markets and quickly eliminate the consumer protections under wall street

reform. let me close by saying none of these steps by themselves will bring gas prices down overnight. but it will prevent market manipulation and make sure we're looking out for american consumers. and in the meantime, we're going to keep pursuing on all the above strategy for american energy to break the cycle of price spikes year after year. we're going to keep producing more biofuels, we're going to keep producing more fuel-efficient cars, we're going to keep tapping into every source of american-made energy. these steps have already helped to put america on a greater path of energy independence. our dependence on foreign oil has actually decreased each year i've been in office even as the economy has grown. america now imports less than half of the oil we use for the first time in more than a decade. so we are less vulnerable than we were, but we're still too

vulnerable. we have to continue the hard, sustained work on this issue, and as long as i'm president, we're going to keep placing our bets on america's future, america's workers, america's technology, america's ingenuity and american-made energy. that's how we'll solve this problem once and for all. thank you very much, everybody. >> and that is the president of the united states talking about plans to crack down on oil speculation in this country. in his words, part of a broader effort to break the cycle of price spikes year after year. ama j mrks ar aman japjap -- well, his most important words were, i call on congress. there is not much in here, or relatively little in here that the president can do on his own

with republicans controlling the house of representatives. it's not likely they'll get a huge boost in the budget from the cftc, for example. a lot of this isn't going to happen this political year, but it allows the president to lay out some markers of where he'd like to go, and in this election year, that's almost as important to get some actual legislation done from the white house's perspective. interestingly, the call for a technological upgrade on the cftc, before this, senior administration officials were really adamant that the cftc needs a big boost in its computing power in order to keep up with what high speed traders are doing in the market. they feel a little outgunned technologywise. that's important, too, carl. >> and of course those critical i.t. up grades to try to keep pace with traders. aman, thank you for that. interesting, the oil market's reaction to this, crude subpoena 1.64 a barrel. sharon epperson is over at the

nimex. hi, sharon. >> these are long-term plans, and that's basically why we saw oil prices unchanged the whole time the president was speaking, but the majority has been very negative on the president's comments and concern there wasn't much commentary on energy policy and more blaming, of course, many people taking it personally here, the traders and speculation. we constantly at this time of year hear about oil market speculation, high gas prices, and really, they're not intertwined. >> no, they're not. these are market 4forces that push these markets up. obama talks about energy speculation and traders. these are the same traders that push that to a low. so it's not affected by that, what he's calling speculation in these markets. what it is is a deflexion of his

failed energy policy right now. he says we want to be energy independent, but he kills the keystone pipeline. he says we want to be energy independent, but he kills one in the gulf. >> he said this is one factor in rising gas prices, not the only factor. he talked about things overseas about what we see in terms of oil prices and therefore in terms of gasoline prices. what you're saying is when you look at the cftc data and the interest we're seeing in this marketplace from money managers,imanagers, it's rising in natural gas, too, and the price are very diverge he not. >> specifically, new epa regulations has caused refineries to shut down. it costs more to refine, to bring it to the northeast. that's another one of his failed policy. i should just say no energy policy. >> that's his opinion, of course, but many traders on the

floor have been negative about the reaction to speculation, as you might expect here, in terms of the trading floor. >> not a big surprise on that front, sharon. thank you for that, sharon epperson. gary kominski has an opinion on what was said. we had one reference to enron. >> yes, he threw enron in there. i think sharon made a great point. what did speculation do in terms of gas in the last decade? you know i talk to the biggest oil traders in the world. i'm up at 30 rock today so i wasn't able to chat with anybody after what was clearly a political speech. here's a simple point. the president did not mention once in that address anything about quantitative easing, ben bernanke or the impact on what the fed has been doing for the last four years and what it's done in the oil markets. the fact of the matter is, you talk to anybody who is an oil trader, whether on the long side or the short side, they're bullish or they're bearish. the fact of quantitative ease and go what it has done to the

global markets, much bigger influence than anything about traders and speculators. you saw tim geithner standing there. he was in the nice photo shoot. geithner knows it. the question is, did he have an opportunity to say anything about it? >> not at that statement right there, of course, the president doing all the talking. let's get to mary thompson who is back at headquarters this morning with a little breaking news. mary? >> carl, thank you very much. we are actually joined with the city's outgoing chairman who joins us at the annual meeting just concluding there. the first question i have to ask you is shareholders rejected the executive compensation plan that you put forward. how surprised were you by this and what are you going to do about it? >> i must say i wasn't totally surprised because we've been tracking along and talking to shareholders during the course of the last several weeks, so we knew that there was a fair amount of unhappiness with the 2011 executive plan. and i think we have begun to get our hands around what the nature

of that was, which was there was too much discretion in our plan, they wanted to see some more metrics and some more formula approach. but as i said to our shareholders, we take very seriously -- the board takes very seriously the shareholder vote on this, and we'll be having some more discussion with representative groups of shareholders to understand -- make sure we understand exactly what the concern was, and that we can address it on a go-forward basis. >> the next question i have for you is you're leaving now, and you're leaving on a somewhat disappointing note in that the federal reserve rejected certain aspects of citi's capital plan. what effect do you get of why they rejected this plan? >> that's a good question. it was somewhat fair and accurate. it was disappointing to us. we didn't fail to achieve the capital levels that are

required, it's just that given the capital plan and the amount of capital we were going to give back to shareholders in that capital planning period, the feds felt a little uncomfortable with that. and that was a disappointment, but in terms of the timing of leaving, i'm generally of a mind that, you know, why step out now? we're leaving citi in pretty good shape and pretty good hands. there will be further discussion with the fed about exactly what the timing and pace of increasing dividends or putting a share buyback plan in place will be over the next several months. but the basic facts are undisputed. citi, in terms of its capital positions, is one of the best capitalized financial institutions in the world. the areas we saw yesterday showed that the core earnings of

this bank are starting to kick in, get more earnings, the trends are all in the right direction. so it's a question not of if, but of when. >> how much capital did you actually return to shareholders? >> that's a complicated question. i don't want to go into it at this point in time because it was really based on a series of assumptions that we have to go into to really give you a sort of textured answer. in other words, the amount of capital that we wanted to give back would vary depending on various other circumstances that might develop going forward. and i think one of the things that we need to do with the fed is explain how we saw those scenarios evolving so that they can understand exactly what the impact would be on the position of the bank. >> mr. parsons, we thank you for your time. we know you have to catch a plane. >> back to you.

>> mary covering citi. mary, thank you for that. we want to talk about the president and the speculation. bringing in michael dunn, senior adviser. good to see you this morning. >> good to see you, carl. >> obviously the president is going to need some of this to come from congress. is the appetite there for congress to give him what he's asking for on this front? >> it's an election year, carl, so i don't imagine congress is going to be doing much. there's a lot of speculation if there is a lame duck session that a lot of things would break out at that time. but i think some of the things that he was asking for, certainly as far as providing additional finance and resources to the cftc, to monitor the market, to find out what's actually happening is extremely important and that shouldn't be a democrat or republican issue. it bodes everyone well if they're working off of good

data. the increase in -- >> number of surveillance personnel, right? >> the increase -- >> increasing the penalties? >> increasing the penalties, you know, a lot of times you wonder when you're in the enforcement business, does somebody just figure in the cost of doing business what the penalty might be, going from 1 million up to $10 million a day per violation is certainly a deterrent, but a million dollars a day is a deterrent as well. i think the fact that the department of justice was standing there which says there may be criminal activities involved that they're looking at, if there are those things, i think everybody wants them out of the marketplace. those four traders, they don't want to have somebody have an unfair advantage because they're breaking a law. now, having said that, we have got to be able to prove somebody is breaking the law, and they don't have that type of overview and surveillance. >> do you believe that the kind

of behavior he's skrdescribing responsible for a significant rise in the price of gas in this country, say, over the past year? >> well, i'm not privy, too, since i've been out of the commission since october of 2011, but the whole time i was there, i never saw any empirical data that said speculators were responsible for an increase or a spike in fuel cost. you know every year when they change over from the winter grade of gas to the summer grade of gas, ret finethe refineries g to be shut down, there is a sweet point. you know every time there is a hurricane in the gulf, there will be problems in delivery, and that's what hedgers are looking at, people who want to be sure they're going to be able to get their fuel at the price they can afford can look at. there are speculators in there? sure, there are speculators.

people have to have the other side of the market as well. >> and i'm sure you might have heard one of the traders who we just talked to from the nymex floor saying what he's describing completely ignores what traders have also been able to do to the gas market. we're starting to talk about price targets that are below a dollar. >> yeah, and maybe they're too low. i'd like to see continued exploration of natural gas. and you look at the cause and effect of the futures market is supposed to be a price discovery mechanism as well, and right now, given the geopolitical situations around the world, the use of china and india on petroleum, those prices are going to go up. that's just a natural geopolitical thing when you look at what's happening in the mideast as well. whether or not speculators are

responsible, i think one of the important things that the president pointed out was that he is going to have the white house economic advisers take a look at the information that the cftc is certainly privy to. i hope people don't view that as being political, having the white house advisers. i look at it as a positive that you've got a greater set of eyes in peer review of what's going on, and can they tell us then, empirical empirically, that speculators are driving the cost. >> thank you very much. >> you're welcome. >> michael dunn, former cftc commissioner. cnbc has confirmed that bank of america is putting up for sale its non-u.s. wealth management business. that's every non-u.s. area except for latin america, i'm told.

the price of this unit could be not $3 billion as earlier reported, but i'm told $1.25 billion, but of course that will be told through negotiations. bids are likely to go forward later in this week. i expect we'll hear more details on thursday when the company talks about its quarterly earnings. but we have confirmed that this order is on the block, apparently it is profitable, but the returns aren't justified in keeping it. it could be a bear stearns, something like that, but of course much more information is needed. back, it's the one question everyone wants answered. jane? >> if you had $600, would you buy an ipad, would you buy apple

stock, or would you buy gold? we hit the beach in la-la land to ask, when we come back. [ male announcer ] this is lawn ranger -- eden prairie, minnesota. in here, the landscaping business grows with snow.

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what would you rather have as an investment? an ipad, 600 shares of stock in apple or $600 worth of gold? jane has been asking that question. what have some of the responses been? >> there's been a pretty focused response. this after apple proved they're human. okay, they're not human but they're not perfect after seeming unstoppable for a period of time. >> buy apple, buy apple. >> buy apple was the call from music director johnny hazel on the boredwalk. we presented people with a challenge. everything on this beautiful display on my card table was worth about the same. which would they rather have? >> these are all worth approximately $600. which would you rather have, an ipad 2, 32 gig, wi-fi in 3d, $600 in cash, shares of stock or about one-third of an ounce of gold. >> i would take the stock.

>> how come? >> right now it's trading at about growth, potentially. >> the stock has started to fall a little bit. but your feelings? >> i feel like they're going to come up with more awesome stuff and it's going to go up. >> it's gone down lately. >> it's going to turn around. it's going to come back. >> and cash? >> cash is cash at the end of the day. it's not going to earn me anything extra rather than investing in the stock market. >> you want to own apple? >> i do. >> how do you feel about it right now? >> killing me as long as you want me to sit on it. if you're talking today, no, i probably want the cash. but a couple months, i think it's probably going over a thousand. >> i asked him at the end if he had an ipad, and he said, yes, he did. he got his from justin bieber, because, carl, this is l.a.

next hour on "fast money," not everybody wanted stock, we talked to people which is gold and someone who actually thought she was going to get my ipad. >> doesn't everyone know bieber out there? isn't that how it works, jane? >> yeah, you know. we have coffee. me and the biebs. when we come back, final word from gary kominski in just a moment. well, i like climbing them, but i've never been one. good point. ( captain ) this is your captain speaking. annie gets to be the princess. oh... but she has to kiss a boy. and he's dressed up like a big green frog ! ewww. ( announcer ) fly without putting your life on pause. be yourself nonstop. american airlines. we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning,

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our takeaway from gary kominski is hanging out at 30 rock. sounds dangerous. >> carl, i am not obsessed with facebook, but one thing i am obsessed with are these artificial interest rates and what the result will be. i went to a board meeting last night, we will know ten years from now what these low interest rates in institutions are across the country, and i tell what you, they're not going to be pretty. >> do you appreciate what the president is saying, and also marc dunning. >> whether it was the