>> it's been great to have you here. good luck with the campaign. >> that does it for us today. right now it's time for "squawk on the street". ♪ good monday morning. hope you had a great weekend. welcome to "squawk on the street." live at the new york stock exchange. the markets poised to start the week lower after absorbing a slew of news. all of it to the negative side. the nasdaq down 192 points almost 3%. we'll keep a close eye on europe. manufacturing data out of europe surprisingly weak. the worst for germany in three years and the first round victory by a left wing candidate in french elections means new uncertainty for the euro.

and wal-mart's bribery scandal hitting the stock. we'll talk about the fallout and whether such practices are systemic to doing practice internationally. new survey says do not expect a new merger boom. and apple posts earnings tomorrow night. we're all waiting, a report that could set the tone for the rest of the week given the companies market cap and influence. the first round of the french presidential elections. nicolas sarkozy coming in second. dutch prime minister set to offer his resignation. and data shows the eurozone contracted the sharpest pace in about five months. this would not be the day for good news out of europe. >> it is always important to kind of own up to when things

don't look good. we had imf this week. let me give you a thesis that may be short term bad or longer term better. i think what is happening in the netherlands, these are revolts against no growth and fiscal osterity. it's very hard but we talk about this a lot. you need growth. there really isn't anything happening that could change the progress here other than growth. >> i agree. i'm not sure how you get there without devaluing your currency. we have this path where germany is in control and you have them saying you have to go for austerity. it may promote confidence in the capital markets so you don't go bankrupt. >> it does not end in a way that

makes it so we are able to offset what is going on in europe when we get numbers like the employment number last week. one reason was because we seemed to have growth in the country. the second was it looked like china was going to cut. china is not great. you say to yourself china is not great. europe is not bad. how strong are we away from our earnings and it makes it difficult to make a case that you should come in today down 1% and say i'm going to buy, buy, buy. >> for a long time the idea was things may not be great around the rest of the world but you could bank on micro pictures here. you think it is too much to swim? >> you can buy weakness. i think we are going to get great growth stocks on weakness. i think i spent time with dave

cody on friday. there was absolutely wrong with that report. that would be a place to go. when you can find stocks that got hit with good fundamentals you can buy them. unless you believe europe is out of the papers for a couple of days i think you end up struggling. >> you have been arguing that things are better here and there should be a decoupling to a certain extent. so many investors were taking macrobets. all of them were doing this risk on and risk off trade again. that matters to people at home who are listening. i have never been an investor the way you have. what do you do in an environment like this? >> we trade as a country that is almost -- if you go back to when we were one big land mass we trade as a country that makes it so that if you think europe is going lower you have to sell raw

scores. it's perhaps the best performing retailer and nipping at wal-mart's heels. when you sell raw scores it can bounce back because it comes back with a great monthly number. you say did i sell raw stores off of spanish weakness it is how long it takes because the futures do bring down everything. >> you were just getting your start in the business when we were one big land base. i'm kidding. >> when japan was part of our land. >> are you going age on me? >> makes him feel better. >> i used to have to trade tokyo overnight. remember the market cap of tokyo was bigger than the united states. you always want to know what tokyo is going to do. we didn't have the linkage that we have right now.

the linkage is so difficult because we are not doing so well. >> and people remember last year and where we were coming in. i can't overstate that. that has to be weighing on people. they are seeing similar headl e headlines out of europe. we aren't yet at italy's door the way we were towards the end of the year. the year ended up getting pretty bad. >> i think the banks are key. the banks have been a fabulous place to be. let's watch horton today. horton reports a monstrously good quarter, better than i ever thought of. the problem here is they don't make homes in europe. some do but i think that horton may be caught up in the vortex. that would be a place to go if you believe that the economy here is better than europe. initially as so often is the case it won't matter today.

when will it matter? 24 to 48 hours later. people say you are just being reckless. >> talking about being reckless at this point you may know wal-mart at the center of an alleged bribery. the new york times says wal-mart looked to cover an investigation. chief spokesman issued a statement on the company's website. >> many of the alleged activities in the new york times article are more than six months old. if they are true it is not a reflection of who we are and what we stand for. we are deeply concerned by these allegations and are working aggressively to determine what happened. >> if you started reading it yesterday you may have finished it by now. it was quite long.

the key thing is not just the allegations of bribery by one individual but the fact that at head quarters in arkansas there did seem to be an effort to bury this as opposed to expose it. >> we know it is old news. what does old mean? old implies that the statute of limitations is past. if there was a conspiracy to not disclose it or to bury it there really isn't -- you can claw back. some people say it is eight years, the statute of limitations. in other words, the idea that it is old may not matter as much as the fact that the people who may have been involved are there and running it. >> they are, in fact. the ceo of the company ran international and wright at the center of the allegations moved up to a much more senior

position at the company at one point being discussed as a potential heir to lee scott. lee scott is still on the board and on the board at goldman sachs. they are still there. duke in particular. we don't know who knew what when exactly what was going on and there is a provision that does allow you to facilitate. in so many companies you need to move things along. we don't know what the defense will be if there will be one from wal-mart. >> is your argument having covered the story, the company extensively, is your worry more about the degree to which they try to tamp down the internal investigation and not go outside as posed to the actual payment?

>> in my opinion, yes. i think to the extent that that investing public finds that there was a real effort to not expose this when they were aware of potential wrong doing i think that does speak to a confidence issue. anybody in foreign markets knows one of the big benefits of beelg in this country is you don't have to pay bribes. that is the way you do business. we did get a number of other countries to sign on in '97 and say we won't let our companies do it, either. >> i felt the single most important piece of information in this whole article and it was a tone was the decision not to go outside and not to use willicy far, an independent law firm, not to bring in a forensic investigator and not to turn it over to the auditt committee.

i have been involved in a situation where you had to bring in the fec. the protocol is we are going to wash our hands and give it to outsiders and they are going to run with it. that is the protocol. that is sarbanes-oxley. they seemed to have completely ignored the protocol. >> there was a protocol to the internal affairs department and they changed the protocol. >> all of this is based on what seems to have been many months of new york times reporting. i would have loved to understand the whistle blower who was at the center of the payments. why seven or eight years later

did he and i'm assuming he was the main source, why did he come forward so many years later? i would love to understand why he made that decision so many years later. >> you cover wal-mart better than anyone else in the world. is this a truly despised company where a motivated justice department gets a call from president obama today saying i read the new york times. you open an investigation about these guys? >> i don't think it's a truly despised company at all. personally, i don't think that's the case. it's complicated like everything else. wal-mart is thefore front of so many things in the country be the largest private employer here and in mexico. it has an incredible culture

that has sam walton exerting influence. a lot of it comes down to the use of money or not spending a lot of it. >> the truth is when you get down to it what makes us different is our logistics, our information systems. it is our culture. part of that culture is that we don't spend money unnecessarily. >> something else they also don't do is let you pay for a check at all. when i had dinner with a number of wal-mart executives nobody would let me pick up a check, not even close. they won't allow anybody to go to dinner or lunch with a buyer. there is a give and take. they are stringent when it comes to understanding influence and

any perception that there could be any quid pro quo of any kind. >> there was a vice chairman forced to step down. >> during the time we were doing our first documentary. >> he was a vice chairman and michael duke was a vice chairman. >> it's an enormous company. they are very powerful. we have to wait and see what happens. wal-mart's own investigation will take place. we all need to understand the foreign practice has been better and the exceptions being a key in terms of payments. this is an important storae one investors need to keep in mind because it does appear that executives at the top condoned or said we are not going to open this up? >> is it your guess that an executive leaves as a result of this? >> if i were running the company

now i would call the audit committee in. i would say i was involved. the audit committee is now running this company. that's what happens in corporate america. sarbanes-oxley is so powerful you see an investment banker or somebody who used to be involved in the clinton administration small business. you say go get us top outside but this is a different company as of this morning because sarbanes-oxley makes it clear that the people in charge of this company are no longer powerful. everybody who has been investigated knows we don't want to deal with the ceo if the ceo were involved. i don't think they realize how powerful sarbanes-oxley is and

you can be prosecuted at a level. >> you can go to jail. >> 13 days ago after an investigation that started in 2003. do not forget people go to jail for this. >> it will be a story to watch. we'll talk more about it this morning and how vulnerable the company was to corruption in mexico. plus live interviews with ceos. taking one more look at futures. going to be a rough start to the week. a lot more on "squawk on the street" live from post nine in just a moment. tdd# 1-800-345-2550 we're hitting new highs. tdd# 1-800-345-2550 the spx is on my radar. tdd# 1-800-345-2550 and i'm on top of it all with charles schwab. tdd# 1-800-345-2550

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welcome back. we want to continue with our coverage of the wal-mart bribery scandal. how wide spread is business corruption in mexico. a look at the culture of doing business south of the border. >> reporter: having spoken with many business leaders here in the last 24 hours they are not surprised that many government officials here in mexico would

accept bribes in order to speed up the permitting process. wal-mart is the largest private employer in mexico. more than two stores. the only exception would be this one. the reason. they have a story about how much the company grew during the time in question highlighted by the new york times investigation. so a lot of folks here shrug their shoulders and say this is how business gets done here. it's so common that there's a word for the people who actually help facilitate bribes. they hand off the cash and stand in line if you don't want to stand in line to pay your utility bill. business leaders are surprised that wal-mart would be accused of doing such a thing to such a

degree. if the new york times is correct that officials in the united states would try to cover it up. they find that very, very surprising. let's highlight the growth here in wal-mart in mexcoo during this time period 2002 to 2005 in question. they built 147 new storefronts under various names. they have wal-mart, sam's club and other names. the new york times article points directly at the man in charge of wal-mart of mexico at the time. wal-mart is saying they are conducting an internal investigation. they are deeply concerned about the allegations. ten minutes from now the new york stock exchange and mexican stock exchange will open at the same time. we'll watch wal-mart in the united states and wall mextrade separately. we will see if it moves. i have had some people say to me

the stock may not move because they are not that surprised by it and they don't see how this will hurt revenues. >> we look forward to more reporting. >> it strikes me on the one hand as you can hear the tone from the country is it is no big deal. we have a law here that it is a big deal. and a company that wouldn't have tried to keep it under wraps. >> i have done a lot of business in mexico. you need expediters. i have done a lot of business in brooklyn and you need expediters. the difference is someone blew the whistle and high level people at wal-mart did not seem to think this was bad. >> you spent enough time in mexico to understand the benefits that wal-mart has brought to the people. >> it is remarkable. they own everywhere i have done

business. you would never buy anything other than wal-mart. you pay too much other than cost co which under cuts wal-mart. >> we're going to save time for the mad dash. getting off to a profitable start here in the new week. we'll get one more look at futures. triple digit losses in our future. back in a moment. [ tires squeal, engine revs ] ♪

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it looks like. apple is still going to help set the tone this week. >> bmo comes out with a piece about maybe iphone sales are weaker. you need things softened before you land and you know that if this stock comes in that is going to hurt it. i also want to point out that j.p., morgan goes from sell to hold. apple holdings is a key supplier. bmo saying phone sales could be not so good. you have this is a u.k based company. tells you what to do. be careful. >> we'll talk after the break with spain now officially in recession. we are just a few minutes away from the opening bell.

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there is a look at the opening bell. it's fluor corporation celebrating their 100th anniversary. at the nasdaq jet blue ten years. somebody wrote on twitter time flies and it certainly does. we are going to talk to jet blue ceo later on this morning, as well. if you are looking for sources of weakness it is a morning where we are inheriting someone else's troubles. >> it will always be the banks. bank of america under eight. i'm focused on people who have big wins in the first quarter.

i want to point out in a rather odd call, j.p., morgan, lots go from neutral to buy. goldman agrees. this is a remarkable stand made by two firmwise the bank that is considered to be the epicenter of the problems with spain officially being called into a recession today. >> two quarters of negative growth, so to speak. where is your line that marks overreaction versus rational reaction? >> had the stock not been so high beforehand i feel that you would have -- this would be almost a viable moment because of the dividend. they do have a good yield. i think i have to wait until maybe '55. the rest of retail is not doing so well. 59 is too high. i remember when it was 59

without this controversy. now you have a big controversy. the dollar trees, dollar generals on the low end. target on the high end. cost co nipping everywhere high and low. this is too soon for me to say buy wal-mart. >> kellogg. >> europe, europe, europe. i like to talk about the winners and the losers. frankly kellogg talked a big game. they have been saying things were quite good. i don't like it when management says things are good and turns out they are not in a short period of time. to blame europe is difficult. europe is price sensitive. people don't want to pay up. kimberly-clark said the same thing on friday. has the absolutely dynamic

brazil business. >> 1/3 of the s&p is going to report. it's netflix, coach, apple, industrials. what are the touch stones for you? >> i want to see the honeywell-like stories. it is true that they are against it. we are strong in america. i want to see see strong in america, strong in china. i cannot have europe being derailing. i point out that honeywell did not see enough weakness in europe to offset the strength around the world. u.s. is still stronger. i am saying we are stronger than the other guys. >> so again two or three names you want? >> apple and cat i think are two. caterpillar is also a company that has said over and over again we are really being strong

all over the country in the united states. united rentals blue out the numbers. titan machinery blew out the numbers. will it matter? obviously anybody saying anything good today doesn't matter. >> 24 hours, 48 hours later. >> tomorrow will wal-mart be known as a place that they bank in mexico which they do? it is possible. wal-mart was expensive going in and that matters to me. i think cost co is cheaper going in. they are the mexican play other than wal-mart. >> true enough. bob and david are on the floor. >> of course, there are bright spots here in the u.s. economy. we got to start with the big cuhoona which is europe and spain.

>> every headline says end of austerity. forget the treaty and things going on in the european union. the euro is down, the dollar is up. commodities are down. here is headline number one. eurozone pmi was terrible. this is going to put more pressure on the ecb to be more. the pressure is going to increase on them now. the socialists. did you see the way the votes came down. 1/3 cast from either far right or far left candidates. the national front on the far right or on the far left. the failed deal in the netherlands may be the most important story of the day.

a lot of people are concerned that the netherlands may lose their a rating. there will be more uncertainty. >> the netherlands people care. >> aaa rating. and then finally not surprisingly the spanish central bank acknowledged that gdp contracted and spain is in a recession. it will be tough. they have to keep up the pace. the austerity people are on the defensive. i'm a little more optimistic about the u.s. i get hate mail about decupabling. >> how can-can people hate you? >> i'm not convinced of this. >> the dynamic that we need to understand and be aware of on days like today and virtually every day it seems. >> i'm relieved at horton's numbers. remember the choppy numbers we got on existing home sales. we will get new home sales

tomorrow. d.r. horton beat the numbers. orders up 19%. the cancellation rate 22%. that's the lowest cancellation rate since december 2006. we are worried about people getting financing and appraisals too low. if we can get it to the high teens that would be better. the chairman came out, mr. horton. our strong sales pace has continued through the first half of april. great relief here. we'll get the new home sales numbers. they make all the stuff behind t the walls. they reported goods. >> a lot of industrial touch stones are looking pretty good. i don't know. all right, kramer. >> they send hate mail to bob. who knows what kind of hate mail they send to guys who got it wrong. let's look at bonds and dollars.

rick santelli in chicago. >> china pretty much says it all. you can see going back to february these are the lowest yields since about the first week in february. let's go to the 30-year bond looking to charge on february 1st. this could be the lowest you close since the end of february. on a 20-year chart there is only one close lower than yield. it was a 164 yield on the 10th of april. look at it from an investor that helps fund countries by buying their epaper. they look at it as a bad funding deal when it is their money going into a growth formula that doesn't work. it's really about growth except where are the plans for growth?

nowhere to be found. think about holland and spain and what has gone on in greece and what may be going on in a few years here. supply in spain, speaking of spain, short term options. the amount they auction tomorrow on bills was slashed for obvious reasons. >> thank you very much mr. santelli with the bond report. let's move on to. nestle did win the bid for what was for sale namely the infant nutrition business of pfizer. taking a look at pfizer's shares it is interesting in part i think this is a more important story for pfizer investors perhaps who were already well aware. the stock moved up on the initial reports of the deal.

>> yes. >> do you like what the new ceo is doing? >> i think the new ceo is trying to become a pharmaceutical company. at one point they had perfumes. the reason why i like this acquisition is pfizer will be able to boost the dividend as one of the higher yielding stocks. for nestles kimberly-clark talked about the need to have diapers in undeveloped areas. they are becoming like united states. nestle's is attacks the fastest growing marketsture are these infant markets. >> 85% are the sales of the units. they are trying to explain it to the share holders. we did get a handful of smaller deals this morning. you take a look at the numbers and the margins for the business

that we're talking about and the estimates and you can get a sense that they are paying at nestle. pfizer has to be happy with it and it will appear neslee is happy to pay it at this point. a couple of other deals. nothing enormous but we did get a few in the bitech area. the big story continues to be the lack of activity overall in mergerers in acquisitions as we are ending april somewhat shocking. every banker saying catch on hand. it would seem business confidence should be okay. >> a survey out this morning. 31% expect an acquisition of their company or by their company in the next 12 months. >> that was the ceo survey. the decision makers themselves were saying -- >> we are lucky to have one of

the great american companies fresh from the opening bell, fluor corporation celebrating their 100th anniversary. you guys are enjoying a remarkable world wide construction renaissance. thas is about as good as it gets for fluor. >> i think there are yet good things to come. i think we have been able to look at the eight international markets. when you think about our ability to grow over the past two or three years in the face of what you see around the world i think it is remarkable when you look at where we go and what we do. >> there are gigantic projects world wide, some of them involving lng. you are taking a gigantic share in the projects that are out there. >> we have been very fortunate. we have a good execution

capability around the world and our countries expect us to deliver for them. i think one of the interesting things is being a 100 year company there are not a lot of places we haven't been. i think that bodes well for our future. >> now, you are really probably one of the great international countries. i know one of your competitors, i have admitted to paying off. you have never -- your record is impeccable. when you read the wal-mart story are you surprised that somebody has to make big, big payments in order to build up the business in mexico. >> if the reports are correct it is disappointing. we have really been able to focus on the supply side of the equation. we have been very active of a country with the world economic forum looking at how we make

sure we look at both sides of the equation. i think the statistic is over a trillion dollars lost to corruption every year. if that money went to the right places what we can do from the economic development standpoint in countries supposedly engaged in activities. >> shares down 26%. we'll keep watching that. given your history and given your understanding of international markets do you feel at any point in countries where bribery if you want to call it that is a way of life that you are at a disadvantage? >> i think disadvantage is probably not quite the right word. we look at different places. we decide whether we want to pursue business in that community or not. i think one of the things that helps us because we have been so vocal about corruption and trance parancy it almost provides a bit of a security

blanket because we know we are not going to participate in those activities. the other side of the coin is we have to make sure we are diligent within our own company and educating our people on what our expected behaviors are going to be. >> you are joining us on a day where news out of europe and lots of forces point to government spending be contradicted over time. >> i think most of the customers we work with are doing these on balance sheet. we work with the u.s. military with the contracts in afghanistan which we're really proud of. as long as the troops are there we will have foresight into the spending of the u.s. government. >> 100 years in the construction business. we have seen boom and bust. congratulations. >> thank you. still to come this morning the future for jet blue after

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i absolutely love building locomotives. i knew i wanted to design locomotives from when i was very young. [ jahmil ] from the outside it looks like such a simple device. when you actually get down into the bare bones of it, there's so much technology that's submerged. [ rob ] my welds are a signature, i could tell my welds apart from anybody's. you lay down that nice bead and you look at it, i love it. they don't go together by themselves. there are a lot of little parts, and everyone has their job. [ scott ] i'd love to see it out there on the open tracks. and when i see it, i'm gonna know that i helped build that thing. [ train whistle blows ] here she comes! [ bell clanging ] [ train whistle blows ] wow! [ charlie ] well, it's one thing seeing them built, but then to see them out here, pulling freight across america, it makes us proud. ♪

♪ jet blue celebrating its tenth anniversary as a company on the nasdaq. the opening bell, dave barger ceo and president of jet blue joins us first on cnbc. i cannot believe it's been ten years. >> great to be on squawk. it's hard to believe it has been ten years, as well, especially in this business. >> survival is often an

accomplishment and tough industry. before we move on i think everybody wants to know since march 27th when the pilot had the incident on your flight have you seen an impact on pricing or bookings? any fallout? >> we haven't seen any impact at all from the event at the end of march. we are there supporting the captain and his family. a very unfortunate medical event. i think it talks about the professionalism of the crew and the cust amors. >> i know you are in arquiet period. broader there is a notion that american and u.s. airways may find a way to get together. i think we have a live picture of protests of people who were contesting that potential move. what would that do to capacity, to pricings? >> we'll be public on friday.

when you talk about consolidation and noise from last week the headline for us it's amazing how much bankruptcy has taken place in the industry. this is a good thing for jet blue when you talk about consolidation. whatever plays with u.s. airways or anybody else if you strip out unnecessary capacity it is good for those of us out there looking at return of capital. >> we're kind of mesmerized. wal-mart down 4%. very big article in the new york sometimes alleging some payments. how do you keep your employees honest and to make it so someone doesn'tant have to pay under the table to get favoritism. >> when you start talking about our five core values. this integrity value when you

are talking about trust, honesty i don't care if it is corrupt foreign practices act or communicating the expectations of the front line it's like painting a battleship. you have to continue about what the expectations are. >> ten years again congrats. if you have been a long term share holder of jet blue you are probably not too happy. you mentioned return on invested capital. this is an industry that rarely if ever has been able to earn its return or what it pays for the capital. when is the industry going to turn the corner and why does anyone bother to want to own an airline stock? >> i appreciate the commentary over the ten years. i think when you compare our model to many of the airlines who took the share holder to zero. one is sustainable growth.

we delivered $350 million in net earnings. our first chapter of compounded annual growth rate which became free cash flow, this is now about return on invested capital. for a young company into our second decade we believe this is a reason for share holders to take notice over jet blue. >> congratulations on ten years. >> look forward to seeing you in 20. >> celebrating ten years. let's head to michelle cabrera live from mexico talking about wal-mart and how others are opening? >> reporter: the mexico market mimices the u.s. market exactly when it comes to time. it is down more than 2%. the vast majority coming from wall mexwhich opened lower by almost 16%.

it's extremely volatile trading. they have done the average daily volume on wal-mart of mexico is 12 million shares. they did 12 million shares in the first eight minutes of trading. skeptics thought this would not be a big deal. the stock is falling pretty sharply here and it accounts for the vast majority of the decline in the mexican stock market. we'll see how it goes. it closes at the same time as the new york stock market. >> we'll come back to you this morning. thanks for being there. get the six in 60. give or take a few and begin with exon mobile. >> you can't get anything to stick negatively. i think it's going to do fine. >> capital one? >> this acquisition they made ing is going to make it for the earnings.

>> harly. >> i think it's worth a buy. they are smoking the numbers. >> dick's sporting goods. >> underarmour said really good things. >> price line. >> an amazing hotels.com business makes it to stablealize. >> you mentioned eaten. >> save you a couple. remarkable. i thought the commentary was terrific. >> it's hard to know how you did time-wise. for more on the names go to the website. you noticing some names that are not falling despite broad weakness. >> we have microsoft doing well and we have apple up. i know it is early. i don't like to see the stories back early because it's a long day. i point out when tech is strong

that tends to be a market leader. i'm watching bank of america. i'm watching microsoft as the very, very key names. let's not forget netflix is a fascination by retail. i am really dicy about how i think netflix is going to do. >> the financials are quite weak as you might expect given what is going on in europe. morgan stanley below. coming out of earnings season none of the stocks look particularly good with b of a flirting with the $8 level. >> these are not european banks for heaven's sake. that's down 13 cents. i should swap out of morgan stanley and get into -- does that make sense to you? >> what is coming up tonight? >> we are going to discuss wal-mart. and i do believe that sandy

cutler can set the tone. he has secular growth. i'm not sure the executive should be written off. >> so we will see decent numbers. >> you bet we have. >> honeywell. >> he was remarkable on friday and bullish offcamera. >> you are reserving throughout the week. >> i got up early this morning because yb can't sleep. >> europe is not a growth market for these companies. >> they trade until the market closes. they shouldn't. there are guys. they have a formula. it's like an algorithm. europe down. they don't think about it. they are not paid to think. >> it's an amazing business. everyone should go into it. you don't have to do well and get paid a fortune. >> we'll see you tonight. when we come back some eye

opening perspectives. apple shares now in correction mode. earnings tomorrow night. we'll talk about that when "squawk on the street" comes back. a route map shows you where we go. but not how we get there. because in this business, there are no straight lines. only the twists and turns of an unpredictable industry. so the eighty-thousand employees at delta... must anticipate the unexpected. and never let the rules overrule common sense. this is how we tame the unwieldiness of air travel, until it's not just lines you see... it's the world. the teacher that comes to mind for me is my high school math teacher, dr. gilmore.

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wal-mart talk as the street begins to digest bribery probe allegations. wal-mart may now find it. >> apple shares officially entering into correction mode. we are checking techniccals to see about the giant move. >> it is an ugly monday. we are tracking the triple digit sell off. >> so let's get straight into the sell off. political uncertainty in europe. news that the manufacturing activity continue to be a factor. the dow sitting down over triple

digits. gold sliding and the dollar adding to gains as you might expect on a day like today. europe leading the way once again. spanish ten year right around 6%. >> the politics were always the wild card. when the people of europe expect austerity and particularly the netherlands. maybe he will be able to get another coalition. we think probably not. one of the few european nations left with the aaa rating. is that now in question? very hard today? >> there is a bright stied this market day. it's just joined us on the set, kelly evans. >> i'm like do tell. i was about to add to the gloom and doom. i should just leave. we were talking about european politics. we have data out overnight which sparks the selloff here. we know the economy there already is potentially in a

deeper recession than first expected. it is probably going to take a turn around. >> if you look at the falls in europe it is interesting that the big mining stocks have come off badly in china. what you see in europe isn't all about europe. it is also about where we go with beijing. >> absolutely. >> let's move on now to one of our top stories, that being the fallout from the alleged wal-mart bribery scandal in mexico, a story first reported by the new york times. right now shares of wal-mart are down 4.3%. we are only talking about 33 minutes. let's bring in patrick mckeever. i guess first off my question, how long have you been covering wal-mart if you don't mind my asking? >> more than ten years. >> give me your sense knowing the company as you do. are you surprised that this went on in mexand perhaps more

importantly that when senior management in arkansas found out about it it chose according to the new york times to try to sweep it under the rug rather than make light of it? >> i am surprised. wal-mart has a kind of squeaky clean image when it comes to this thing. they make a big deal about corporate integrity and ethices. it is surprising, for sure. it is disappointing if management did try to sweep this under the rug. they just met with the investment community in toronto. so the focus has been on the company's international operations and mexico is one of the most important markets for the company. it is very disappointing and unfortunate that it had to be revealed by the new york times. >> let's talk about

international because that's the focus here. it is the growth story for the company. it, of course, is the largest. international has been a key focus for some time. >> it has. that is where the incremental store growth has been for the most part. they are growing their store base in the united states. they've got 2,100 stores in mexico, more than 200,000 employees. wal-mart to mexico is the largest employer. it's a very important market. that's where the growth has been. it could have some implications for the company opening further stores in mexico or perhaps elsewhere around the world. that would be unfortunate because that is where the growth has been overseas. >> they have 2,100 stores in

mexico, that's 37% of wal-mart's total international stores. if you talk about a place like china where wal-mart has less than 400. what in your opinion is the primary reason wal-mart shares are down today and how much down side could there be? >> i think the primary reason is that this could get bigger. it could involve some kind of a shakeup at the top of the company because some of the company's executives in arkansas are implicated in this they at least apparently knew about what was going on in mexico and chose not to pursue it more aggressively at the time. wal-mart has been gaining some traction over the past two to three quarters. they have seen a turn to positive same store sales. they have had management changes. those seem to be gaining traction right now and the

management team seems to be jelling. to the extent that that is disruptive would be a negative. >> it involves around what you believe would be what the fixes are. it could be that within the realms of possibility many of these transaction were not right. if you work out the math it is a very small figure that we're talking about, $12,000 per store. this isn't the $10 billion that the systems was giving for arms contracts or paying out of germany for so many years. these figures are actually tiny. >> you're right. it's not proven. they are just allegations. the statement that wal-mart provided after the allegations surfaced in the times article that statement didn't do the company any favors. i found it fairly weak. they didn't refute what had been

said. in some respects they allowed for the possibility that it might be true, the allegations might be true. that's something to keep in mind. and then, of course, you're right. the numbers are not that big. i don't see any major fundamental implications at this juncture. i don't think it will hurt the momentum unless it becomes much bigger. in the years i have been covering wal-mart this is the most damaging story i have seen. >> it is not a material distraction, right? long term on the business. it's more of an embarrassment than an impact to growth? >> i think it could be a material distraction depending on what happens from here and how much of the executive management team is involved in whatever happens from here.

>> i want to -- mike duke, ceo. if he is forced out who would take over? >> that's a good question. you are putting me on the hot seat, so to speak. i don't know if i have a good answer to that particular question. >> that may be why there is concern. thank you for joining us. appreciate it. >> and from corporate scandals to the tech world apple's move has fallen to correction mode after plunging 10%. time to guy the technicals. mart newton is the chief technical analyst of gray wolf execution partners. tell me about the break down. how severe? >> it's a short term correction as part of an existing uptrend. you did see a couple of different concerns in mid april. the stock attempted to move and

failed. volume has picked up on the down side. those are short term. the bottom line is if you look at a monthly basis we have hardly seen any real deterioration. >> which would be what level. >> near 516. the stock has come a long way in a short period of time. it has moved from 385 to the mid 600s. it feels severe. it is bearish to see what is happening. overall it is simply a short term pullback. >> i'm curious if you can talk about the upmove. how would you liken the behavior of apple shares? were they looking bubbly and frothy? was there anything from a purely technical view that was unusual? >> it has gotten over it in the late 90s and 2007 and even in

2005 and 2006 you saw we call rsi get up in the mid 80s. the stock is quite overbought. specifically what we saw in mid april the market moved higher. you couple that with the stocks weakening. short term these are all technical reasons to think the stock could go lower. >> the structure suggests the stock could go down as low as 544. that is 4 or 5% lower than here. that is a great area of support that i think suggests a good opportunity to buy it. there are a couple of things to talk about in terms of weekly or monthly basis. we haven't seen the dip from overbought levels. this is a short term phenomenon. >> we know exactly what you're

talking about. >> you speak with great confidence. are you confident that in this environment technical analysis works for apple. will you continue to say it will go up in this way or actually is it anyone's guess in a stock that is behaving almost as erratically? >> you are starting to see apple act like other stocks in the last few weeks. no matter what you look at whether equities, commodities, treasuries what goes up must come down for some people. this stock has had an excellent run and doesn't look like that's done. however just short term trading concerns. if you are a short term trader you probably want to hold off. if you are looking to buy for immediate term you haven't seen that overall divergence. the stock has come a long way in

a long period of time. if you look at when apple did make corrections going back to 2007 and 2009 and late '90s the stock had always gone to new two month lows. get below the prior month low. the stock has had quite a bit of deterioration. this is really not that big of a deal. >> we'll keep an eye on 516. thank you. mark newton joining us. let's take a look at the markets here as we head to break. we are tracking all the loops and amid what is a significant selloff of the dow. the nasdaq off by a similar or greater percentage. and the s&p following. wal-mart's impact on the dow we are seeing the other indexes down as much if not more. the next revolution in music is happening here. pandora rocks the big board.

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markets amid a triple digit selloff for the dow. it is down 1.3%. a bit more than the dow. let's bring in brian sullivan. >> as you noted not a good day for the dow jones industrial average. you guys have touched on all the things happening. exxon mobile is down the least of any other stock perhaps on an upgrade. ramen james making the comment about it being a good value

stock here. they upgraded it to an outperform. that trying to help exxon mobile. a couple of other names that maybe you haven't touched on. want to talk about group on issuing an upgrade of group on saying 11 bucks is pretty attractive. been a lot made about insider selling and lockup expiration. it's an issue but thinks the market has overdone that. price line.com raising price target from 790 to $811. it looks like a technical rollover. bad day to raise your price target where the stock is down more than 20 bucks a share. we'll have more from the real time desk here throughout the morning. >> brutal environment materials down well over 2%. for the moment thank you very much.

still to come on the program we are introducing you to a man who was once paid to do the kind of bribes that wal-mart has allegedly been undertaking in mexico. we are taking a look at how wide spread the problem may be next on cnbc.

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find out more online. a rough open for the markets this monday morning and a particularly bad open for wal-mart. its stumble dominating the headlines this morning. let's get the view from washington. joining us from the antibribery conference in d.c. >> good morning. it is a coincidence that just one day after that wal-mart story broke in the new york times trace international happened to be having a national and global antibribery conference here in washington. trace is one of the leading nonprofit groups specializing in

antibribery law. that wal-mart story is the big buzz this morning. i am joined by the president of trace international. give me a sense of what your reaction was when you saw that wal-mart story in the newspaper. >> the allegations are shocking. there is a lot of corruption out there. companies are expected to take all appropriate steps to prevent that sort of behavior and if things do go wrong to investigate and put in place remedial measures so it can't happen again. >> based on the allegations as we know them what did wal-mart do wrong? >> not taking the allegations seriously. things happen all the time. you have to get a team in quickly and do a full

investigation and then make sure that you're documenting and creating a record of what went wrong and how you fixed it. >> when you talk to american companies privately off the record they say you are being naive. we have to do this in certain countries around the world because we have to be on equal playing fields. what do you say to those people that american companies are at a disadvantage. >> very few companies they sat anymore. it's more challenging to do business in some countries than other countries. the down side is you put a bull's eye and say we are the company that pays bribes. then you get more and greater demands because you are marked as complicit. companies that go in with a strong message about compliance will save money and save themselves the haggling that develops if you put yourself in that position. >> give us a sense of what the

prosecution trends are now. i know the department of justice has been more aggressive. >> prosecution is up. fines are up. jail time is up and not just in the united states. the real story of the last couple of years has been prosecutions by other countries. there is a mexican angle, as well. >> thanks for joining us. >> thank you. >> that's the picture from here at trace international's conference on antibribery. >> you raise the point as to whether the politicians potentially are out of touch as to what is actually happening particularly in developing nations. i understand they say this is totally unacceptable. the law is the law. we are going to enforce it. do people have to be lobbied for perhaps more wiggle room in the implementation of this? >> they do. and companies are very concerned about the implications of this

kind of law. they are working over exactly what is allowed and what is not allowed. one advantage for companies that have an aggressive compliance effort is if they are caught they can go to the department of justice and say this was a rogue operation. we have a huge compliance effort here in house. we train our people. we give them guidance and tell them this is not allowed. and the department of justice may look favorably on them if they got thought effort in place ahead of time. that's why they ought to be doing this before they get in trouble. >> a lot of legal sessions to sit through. thank you very much. >> as we go to break take a look at markets here. the dow is down 167. all 30 dow components in the red and s&p below the 1,370 level. we will talk to a man who has seen american corporations engage in bribery overseas first

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one hour to trading. here are the stories we are

squawking about. all 30 components of the dow jones in the red this morning. bank of america amongst the biggest with the financials taking it on the chins. those chairs down. fallout from the wal-mart corruption scandal. its mexican unit down as much as 25%. currently down about 12% here in the u.s. brinker international up 8%. >> against the australian dollar. oil is down. gold is down. all 30 members of the dow are lower. materials, tech, energy and financials are taking it on the chin so far. we are now one hour into trade. you can guess it will be pretty much one sided. here we go. as you can see decline is

massively outpacing the advances. at the nasdaq composite let's look. a similar picture. >> one hour into trading. let's head to chicago. cnbc contributor, director of tgm institutional services. the bigger stretch may be whether or not it chases out some shorts? >> i don't know that it can now but what i'm looking at apple for is how it relates to the bigger picture now. remember that before earnings season started we were kind of in the throws of a correction and earnings season started to knock us off from that. now it seems that the negative news has ganged up on positive earnings. we have europe, china, soft economic data and now it seems like we are back into a correction.

>> we are at 1,360 and i guess something happens to your mindset below 1,358? >> the technicals to me are kind of the fundamental picture. to me it seems enough people want to sell to take it below the trend line. i think 1,335ish is the down side. we have economic data. if they come in mixed i think the 1,335 level will be okay. if they come in bad i think we will have deeper correction. the correction is going to be kind of shallow because there are a lot of people who are barrish. there is a lot of surveys that says protection will be in place. the correction should be shallow. >> the vix up above 20 for the first time since monday. about 16%. is that a surprise given everything we have had handed to us in the last 72 hour snz. >> i thought it would jump good

and it is. if you look at put price to call price ratios the panic that would be in the market is higher than the vix would imply. i think people do have protection on more so than a 20 level vix is really showing us. >> the fed this week everybody says nothing doing. is there a consensus in there somewhere? >> i think it's nothing doing. i think the only thing that can-can get in the way of that is the spillout in the stock market and i don't foresee that happening. they are going to sound calm and try to sound hawkish like they have. we know how they react when things start to hit the fan. they are dovish. they'll show us that if need be. right now there is no need. >> we'll talk to you soon. let's get another market check and send it to brian sullivan. haven't looked at the ten year

treasury but my bet is the yield is headed down. >> we have a down move on the yield. down 172 points. i want to dig into woon story which is boston scientific getting a research on street insider that leering swan is expressing concern that is defibulator has been linked to a death. expressing concern about a possible defect in what they call 26 out of 233,000 of the defibulator devices. there goes my mic, back to you. >> we'll be checking with brian throughout the morning. >> let's get into a story we have been digging into. joining us now the former foreign minister of mexico, nbc contributor and offer of "manana

forever." >> particularly at a municipal level it is difficult to get permits you want without paying off low level officials. at a very low level it's pretty hard to get anything done if you don't spread money around. it's sort of standard operating procedure to a point. >> does it facilitate things that would otherwise happen or can it be prevalent in terms of changing opinions? >> i think it is more a question of pace and rhythm. the quicker you want to do something you better do it this way. if not it can take forever or sometimes it may not happen. >> how surprised were you if at all by this news?

>> to the extent that it's true and i think zee to wait for the wal-mart investigation to know how true it is because there is the issue of whether the whistle blower is really a legitimate critic of all of this. supposing it were true it would not be surprising for mexico. i have no idea how wal-mart operates but i know how wal-mart separates. >> in your opinion if you pay these is that a bribe or like having a lobbiest working on your behalf? >> he is a fixer. she a facilitator. that in itself is not necessarily a crime in mexico. >> so when you read the new york times article can you conclude from that potentially that wal-mart might have believed and senior officials within wal-mart might have believed that they

hadn't done anything that was clearly wrong? >> it is perfectly possible. you want a passport or a driver's license or anything in mexico you have to wait in line. so you pay a guy to wait in line for you and he in turn will pay somebody else off to make the line move more quickly. you're not necessarily doing anything wrong by paying a guy to stand in line waiting for your passport or whatever. >> do you think the law we have here, the corruptions act is misguided? >> no. i think you have to be careful to see how things work locally in a country like mexico with the enormous expansion that wal-mart has had there. >> when you were a kid and went to your friend's house and your mom would say you go by my rules when you stay there. that's what the law is trying to tell american company. >> i think that's appropriate.

that is what the law is for and has been there for 35 years. the issue in a place like mexico is can you expand as quickly as wal-mart did and bring prices down as much as prices have come down in mexico and made an enormous amount of goods, appliances everything available without this sort of operating procedure which may or may not be legal. >> let me ask the question another way around. how much of a disadvantage are american companies at if they obey the law as written on capitol hill? >> probably mexican companies in the retail business if they want to open stores they will resort to these practices because it's the only way of getting things done. wal-mart has only been there for saye 15 years. other big retailers have been operating in mexico 40 or 50

years. if wal-mart doesn't engage in some of these, particularly the legal ones, the legality of the whole thing is -- >> they did make up the largest single employer. >> and the second largest employer period after health care people. >> this is going fast? >> it continues to be there. particularly so much money has been transferred to towns and state governments. the mexican federal budget is $300 billion a year. 100 billion of that is transferred to towns and states who dole it out. there is no transparency. there is no accountability at that level. what is proper, transparent at a federal level is not that way at a municipal and state level. >> thanks very much. >> see you again. one hour into trading. check moves in energy markets.

people are beginning to talk about double digit crude. >> reporter: they are talking about it here on the floor and analysts are saying we will see oil below $100 a barrel sometime this week. the selloff is more intense in other commodities. we have seen hedge funds cutting across the board since about four months ago. we are seeing it greater in silver and copper. those are the greatest declines of the session. it's a miriad of factors whether concerns about a slow down continuing there in europe, as well. all of that factoring into what we are seeing. with oil below $100 a barrel we will see gasoline prices fall further and that is where we have seen comfort to consumers. finally today marks the day that we have seen retail gasoline prices the national average below where they were a year

ago. this is the first time this has happened in over 2 1/2 years. still it makes a lot of difference to many of the consumers who are filling up today. >> if you have just joined us wal-mart is in trouble this morning. the company's alleged corruption was profiled in the new york times this weekend, the paper reporting the largest retailer cut off an investigation. john joins us here at the new york stock exchange. you were an economic hit man for american business. what does that mean? what did you do? >> we identified countries that had resources and had a huge loan but the money never goes to

the country. it goes to our own corporations to build infrastructure projects like power plants that benefit a few families but don't help the majority of the people who can't afford to buy electricity. the people are stuck with a huge loan that can't be repaid. sometimes we say sell oil real cheap without environmental restrictions or social regulations and then in a few cases where we failed. i talk about how i failed with the president of ecwidor, they go in and they aassassinate their leaders. >> to be clear your allegations are going right to the top of government and american foreign policy? >> in my case that was the job. the corporations like wal-mart are at different levels. my job was to corrupt high officials in countries and get

them to accept huge loans to sign off on them to make a lot of money. >> who paid you? >> i worked for a private consulting firm. my title was economist. we were paid by world bank grants. >> did you have direct experience in mexico or with wal-mart? >> i had a lot of experience in latin america but never mexico directly. >> what in the story what does it mean to you given the context of your work? >> it sounds to me that something probably did happen. i think it's a terrible shame that it does. one problem it creates is it takes competition away from mexican firms and small companies that can't afford these. so wal-mart becomes this huge employer. >> that's also part of the benefit. a lot of jobs for mexicans and a lot of low prices for mexican

consumer whose need to buy paper towels and dog food. >> to a certain degree that is true but it also puts a lot of mexicans out of work. one of the reasons we have the immigration problem here is the mexican economy is a wreck to a large degree because of some of the regulations that have put farmers out of work. when mexicans can't find work they come to the united states and we complain about an immigration problem. >> the allegations seem minuscule in comparison of some of the things you described happening at a high level. would you agree? many of the payments may have been to move things along in a more rapid fashion. >> 25 million compared to the things i was talking about. if the implications are very large because you suddenly moved out of the realm where the u.s. government, those big

organizations are playing a role to help the country develop. the theory is if you invest the money in infrastructure you are helping the country develop. in the case of wal-mart it's really been for the sake of one company. yesterday maybe increasing employment but the motive is to make lots of profit. >> as we get trance parancies people will be thinking this is awful. is your impression that the way in which business is done is getting worse or better? one is the fact that u.s. prosecutors seem to be stepping up enforcement of the 1977 act and you now have whistle blowers where you can get as a whistle blower 15 to 30% of funds. maybe this is what is motivating this article today. >> my impression is -- i have been traveling around a lot. i just spoke at a conference.

in my sense people coming out of mba programs are very concerned about corruption. they want to see us move into a better world. they are worried about having kids and bringing them up in a world where they see the economy collapsing because of the way business has recently been done. they want to see that change. i think the big corporations are beginning to get it, too. i hope it is working. i do feel that there has been a tremendous change in attitude in the past six or seven years. >> thanks for joining us. >> thank you. >> as we head to break take a look at the markets here. dow down still significantly. still to come the king of flash. adobe systems is on the move to convince it can redeem its brand. will it ever appease the street? we are talking to adobe's ceo

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talking a lot about international business today and now ford looking to china. sat down with ford's asia president about the company's latest initiative. good morning, phil. >> good morning. it's actually evening time here in beijing. for ford the auto show important. it is going to be dramatically increasing the number of suvs it sells in this country. suvs are a big business in china. 2.5 million sold yesterday. they are exporting the explorer from chicago doubling down on its growth plans. sales up 7% surpassing a half

million vehicles. we always hear the question, where does ford rank compared t work cut out for them. about 2% of the market compared with vw at 17%. but overall the company is optimistic that growth should continue at a nice trajectory this year. >> i think it will continue to grow but at the rate more like we're seeing today. not 32% growth that we saw in 2010. we expect about 5% growth the rest of this decade, which is sustainable and manageable for the auto industry. >> and as ford increases production, it will be ramping up production for 1.2 million vehicles a year by 2015. that growth is key to ford hitting its goal of selling 8 million vehicles annual byly 2015. as you take a look at shares of ford, keep this in mind regarding china. this is the linchpin, guys, for ford to meet its sales goals over the next three years. yeah, a lot of focus on the u.s. and europe. but china is the key. back to you.

>> phil, heard on the street column in "the wall street journal" today points out that unit auto sales in china were down 4% year on year in the first quarter. is the ought douauto industry e too much out of china? >> right. i think we're expecting double digits, it is too much, kelly. it was down 4% in the first quarter. part of that is because of some production adjustments. that's not expected for the remainder of this year. the remainder of this year sales expected to be in the 7% to 10% growth range. basically we're looking at that being the expected growth over the next couple of years. >> phil, thanks. >> a little bit of a delay there. isn't it amazing you can talk to people in china like that on satellite. >> technology these days. >> not to you, because you went to the olympic games, of course. >> wait until we have a hollow gram of phil lebeau here in the set. >> utilities and telecoms are those that have lost the least. very much a down day.

cyclicals, energy, materials. we're going to talk about that more, of course, from the program, a big day for the markets. much more on the sell-off. but first, rick santelli is working away at the third hour of "squawk on the street." what will you be focusing on, rick? >> good morning, simon. you know, austerity has just been flitting around as a word in the media quite extensively ever since greece was in the headlines. so we're going to talk about what it really means, and both sides of the austerity issue, and combine it with growth, and then, of course, wrap it in politics. because until you include politics you're really doing a disservice trying to assess how europe could affect the global economy. all at the top of the hour.

want to quickly wrap up this morning's market moves so far. a look at the dow sitting down almost 150, down 145. s&p is down almost 17. nasdaq down almost 50. the vix back up above 20. gold down about a percent. copper sliding some 2%. nasdaq fell, at least one of the ones to watch. at this point lowest since march

7th. >> i think the choice of there's your trouble as the interim music was appropriate. red arrows across the board. >> and then the yields, i like to keep an eye on fixed income. here the ten-year yield coming down. spain going up. the german, lowest ever in the history of the euro, i believe. >> is that right? >> it's all about growth. 34 minutes till europe shuts up. we'll bring that to you live. maybe that will be a pivot point for the markets moving forward. we will continue our walmart scandal coverage. we'll talk about the company es problems. laces? really? slip-on's the way to go. more people do that, security would be like -- there's no charge for the bag. thanks. i know a quiet little place where we can get some work done. there's a three-prong plug. i have club passes. [ male announcer ] get the mileage card with special perks on united, like a free checked bag, united club passes, and priority boarding. thanks. ♪ okay. what's your secret? [ male announcer ] the united mileageplus explorer card.

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what a confluence of news we've had today. the walmart news this morning. david thank you for walking us through some of that. >> sure. >> your overall impressions of how you think this is going to go down? >> it's going to be with us for some time. we'll see how the investigation goes, see what the doj has to say. it's reporting from one news organization, the preeminent organization in many ways, based on one source. and motives we don't know why this gentleman waited so long to actually come forward. we just don't know the background. let's wait and see. but certainly important. particularly because of the so-called cover-up, and what it may mean for current management,

many of whom were in position -- >> and it raises investor concern. >> but it is a one-sided view of what went on. >> i don't know. >> the article has pushed it -- >> i think it's more than just one side. >> there's a lot of interpretations about what these fixers do on the ground. there is some possibility for pushback from the company. though that's not what they said in the statement. >> we're going to see you later this hour. >> i'm taking off. >> here's what you might have missed if you're just tuning in. >> welcome to hour three of "squawk on the street." here's what's happening so far. >> we're looking at hundreds of cases of this. this is a great company. it didn't need to have to cheat to win. and there's just no defense for this. >> one thing everybody's agreeing on is something has to be done in this country. they're very unhappy with the way things are going around the world, in this country, monetarily, financially, debt, the whole problem. >> some people say that it's eight years, the statute of limitations on this. in other words, it's old may not

matter as much as the fact that the people who may have been involved are there. >> this is an important story one investors have to keep in mind, particularly because it does appear that executives at the top condoned or at least said, we're not going to open this up to sunlight. >> an opening of the big board. >> this is a good thing for jetblue when you talk about consolidation. whatever plays with the amr, us airways or anybody else, if you strip out some of this unnecessary capacity it's going to be good for us of those who are outthere really looking at a return on investor capital for our shareholders. >> this could involve some kind of a shake-up at the very top of the company, because some of the company's executives in arkansas are implicated in this country. >> bottom line is this is just a short-term correction as part of the uptrend so it's premature to get too bearish on apple overall. >> good monday morning. welcome to the third hour of "squawk on the street." let's get a check on the markets

for what's turning out to be a relative tough day. dow down 140, s&p down almost 17. nasdaq looking at the lowest level since about the first week of march, as tech continues to get hit, and defensive names are the relative outperformers. financials some of the biggest losers, morgan stanley, wells fargo in the red. one of the big winners, dion horton. so let's get to the road map. walmart as you probably know by now is under fire. the retail giant in the midst of allegations of a bribery scandal that went to the highest ranks of the company. can investors still trust walmart with their money? and then pimco's tony krescnezi right next to me. we'll talk the fed, see what he's doing with his money. ceo of adobe systems on the company's software announcement and how the company is venturing into cloud. and less than an hour away from the close in europe.

man are they going to be glad to put this market day to bed. markets overseas getting hit hard. we're feeling some of that pain here as well. we'll tell you how to play it all and keep your money safe coming up in the next hour. we'll start with walmart. investors trying to figure out if they can still trust the big box retailer with their money in the mid stf this huge corruption scandal. courtney reagan is live outside a walmart joining us with more on at least the investor sentiment angle. morning, courtney. >> good morning to you, carl. it may be the talk of wall street. most of the shoppers here at walmart don't even seem to know about that explosive "new york times" article that alleges the world's largest retailer paid $24 million in bribes to mexican officials and then covered it up. so if those allegations do turn out to be true, walmart violated the foreign corrupt practices act, committing international corruption. however, that five-year statute of limitations may save the retailer and some executives from facing criminal charges. but what about the penalty that

shareholders could levy against walmart? most analysts i spoke to said as long as the retailer can continue that positive u.s. same-store sales trend, walmart could get a pass. the retailer made $15.8 billion in operating income and returned $11.3 billion to shareholders through dividends and stock repurchases last year. today, though, shares are down more than 4%. but analysts i've spoken to expect the sell-off relating to the bribery investigation, at least, to be short-term. shares of mexico traded 69% owned by walmart has been mentioned as a potential target for short sellers. investors may not be buying but walmart shoppers here gave us mixed reaction. >> they're still pretty cheap, you know. and i got a card there, so i'll probably still go. >> i think it is a big zeal. i think it would raise serious concerns about whether i should shop here or not. >> as a consumer that wouldn't affect me. but as a citizen it does. >> after speaking to walmart,

they believe the retailer is dedicated to a thorough and transparent review. ubs believes the ongoing investigation will not impact walmart's daily u.s. or mexican operations but notes that new store growth in mexico could slow. however, deutsche bank thinks the investigation will be harder for walmart just to sweep under the rug. cases are extensive and expensive, and for those involved, he says jail time isn't out of the question and some senior management could be asked to step down. carl you know that 50% of the shareholders are members of the walton family. and two of them are sitting on the board. that could make it hard for quick management changes to occur. >> courtney reagan joining us with one of the big stories of the week, probably the year. thank you very much. go to capital market, center, gary kaminsky has his own take on some of the allegations. >> we'll touch on more in the second. some of the reporting today,

just liening to the overall market commentary, you would think that we maybe have 200, 300, 52-week -- new 52-week lows on the new york stock exchange. i just checked. basically 51, and probably only about 20 of those are companies that have any kind of meaningful size. it may feel kind of like a really depressing monday but the technicals aren't necessarily pointing it that way. why all of a sudden this week europe has become such a focus? i wish i had the answer to that. you know, as far as walmart is concerned, you know, if you don't own walmart you may think this say story that doesn't really affect you. as somebody who owns stocks. but let me tell you my experience with something like this, very simply you're going to have a bunch of analysts because the research directors across wall street are going to tell their analysts today, take a look at this walmart situation. what we'll typically see is copycat type themes. in order words you have a potential whistle-blower situation here and what you'll find is a number analysts coming

out later today or possibly tomorrow saying okay, these are potentially some names in our coverage that we are concerned that may have done business in mexico, or in other countries, it's typical behavior of wall street, don't be surprised if you see that later today. >> try -- you're saying they would try to use that as an argument to downgrade other names because suddenly doing business in mexico is bad? >> this is how it works. you're going to get the research directors of all these firms going to say okay, anyone who has coverage in their coverage universe that may or may not do business because we know the portfolio managers around the industry are going to be saying okay, we're fortunate we didn't have an experience here. where may be the next similar situation. that's what's going on right now at every one of these firms. >> wow. that's inspiring, gary. >> can i say one thing about apple? >> yeah, of course. >> we know it's broken down here now technically. you remember, carl, when we did bring a couple of i don't want to say negative, because they certainly were not short, the stock we brought a bunch of people on air that had an

opinion that the stock may have been overowned, overextended here, and the nasty sort of hate mail -- hate e-mail that we got as a result of that, this is just a good reminder that strams the greatest situation, the greatest growth story out there may be over wrong. keep an eye on this. coming into this week the big story this week was supposed to be apple's earnings tomorrow night. >> that is true. and may still out to be -- that may still hop happen. >> in fact that is, more on that later. >> so talk to you soon, gary. let's go over to the cme in chicago get the santelli exchange for this monday. no lack of material today, rick. >> no lack of material today. i think it's important with stories like walmart, we keep these things in perspective until the jurisprudence takes hold. but there's an area where we all know it's not about jurisprudence, it's just about common sense. austerity. what is austerity, really? well if you look it up on a wikipedia what they're going to tell you is it's the policy of lowering spending. it's the policy of lowering services. okay.

so whether it's provide all public services, by the way, and programs. like entitlement programs. and what's the other issue? of course, growth. but what we find is, is that austerity really isn't something that anybody's going to volunteer for. when you look at countries like greece or countries like spain, the main issue is, is that maybe austerity is underrated, especially in the u.s. in terms of yes, we actually can get things under control by cutting spending, lowering services, however, there is a boatload of people that are involved in this process, and the austerity we're cutting are their jobs. even though they're public sector. so, without pairing it with growth, what we find is, that the people that are going to get disenfranchised are going to end up in the category of politics. this is what you see playing out in europe right now, whether it's france or in amsterdam. consider this, amsterdam is having a problem addressing the bench mark of austerity, and that is 3% debt-to-gdp.

and that's annual budget deficit. just look at the u.s. i'm doing quick round numbers. in the u.s. we have about 1.3 trillion of debt, about a 15 trillion economy. just by doing a fast down and dirty we're running about 8.5% of debt-to-gdp. we couldn't by a factor of 33% even make that cut. but the real issue is, it isn't to the point in europe where it's voluntary. you know what? they're going to withhold funding, them being investors, if they don't get this under control. with regard to the u.s., i still think if we're more honest about our situation here, that we can team these up, austerity and growth and get the public behind it. why? because there really is no choice. it's just a matter of when. carl back to you. >> we'll talk to you in a few minutes. rick santelli in chicago. obviously euro worries weighing on the markets. what needs to be done to create some debt sustainability there. and how does all of this impact the margeates going forward? please to be joined by tony

cresnezi, market strategist and portfolio manager of pimco. >> thank you. >> you're joining us on what i would say is a perfect morning in a very strange sense of the word because the concerns out of europe crystallized in some of this pmi numbers we're getting. very weak. and last week, questions about ltro, medicine fading. do you think the ecb will have to, or will come back with more? >> well, the ecb president saying that they probably won't. they might if their backs are pushed to the wall. i think what the events show is we've still got to be very attentive to the risks regarding europe and it may be difficult for viewers to understand because there's a very complex issue. i boil them down to the three "rs" of race k. rating risk, rollover risk and restructuring. i can point out recently. rating risk, some are talking about in france, if sarkozy loses that perhaps they'll roll back policies to bring down the deficit. that might mean a rating downgrade for france. rollover risk. >> there's always been one,

right? >> there's been one by moody's. now, also could be, there are problems with the rollover risk. think about spain. their auctions have been in the news. auctions in spain and italy shouldn't be in the news. the fact that they are means that they've got difficulty where there's question marks about the government of spain's ability, and italy, of course, to raise money. because they've got constant needs to roll over debt. and restructuring risk refers to what happens in greece, course of action that hurts investors and this could happen again. could be a psi-2 for greece for all we know and there could be other restructuring action. these three "rs" are the things you've got to be thinking about. and remember ecb liquidity can't solve this. ultimately the people on the ground, citizens, will have their voice, make a say as to what they feel about the austerities, because there seems to be a degree of fatigue. nations are -- people are fatigued about the changes being made to them in terms of ages and so forth. that's why the people of france have spoken up. we'll have to watch the election

result on may 6th there and other elections in ireland, referendum on the fiscal compact. >> a lot of the chatter down here at least has been not so much about ilan but lapen who got 1 out of five votes and called the eurozone a country killing grinding machine. she wants to take the treaties that sarkozy and merkel have written together and represent them up. so, do you think there's a likelihood that a lot of the quote progress they've made will be undone? >> ultimately when they get the robes on, so to speak, when they take office, whoever it is that takes office, he'll likely move to the center. but still there is risk of change to so-called fiscal compact. the agreement that european leaders put together 25 countries that are supposed to take in to effect january 1st. and if it is rolled back, if austerity is not completed, if they don't -- they're less disciplined than they need to be, then they won't ultimately do what's necessary to create the ability which is to do three things. to restore growth,

competitiveness and the external balance to the periphery, the southern countries, by growth we mean, of course you've got to have europe inc. doing well. if europe inc. is doing well that means that tax-based growth, the nation has a greater ability to pay off its debts. and without competitiveness, and there's a lot of areas where they led, they of course can't let europe inc. grow in a way that does boost these receipts, and of corsica how the countries to pay off their debts. so we want to watch what the people of france have to say and there is fatigue occurring. in italy, the prime minister is having a pushback on labor market reforms, particularly with respect to article 18. very important labor market statute they're trying to roll back. >> fed meeting next couple of days. you compare it in your note to -- you put it in shakespearean terms and say bernanke -- >> to qe or not to qe? >> bernanke is a man disposed to battle sort of the way hamlet had to decide how to be. >> the question is to qe or not to qe and it's pretty easy to answer at the moment. and it seems the fed will be on

hold when they meet this week. what they do in june we'll see. the reason we would say it's more likely they're on hold this time and would only hint at qe because of two things. the fed has a dual mandate, growth and inflation. when we think about both it seems like the fed is getting closer to its eu term objectives on both. we know that employment's been better, the last report notwithstanding. employment has been a little bit better. on that front the fed might have reason to pause. secondly on inflation, it's been running a little high. the cpi, consumer price index, 3.2% is higher than the fed's 2% target. the highest in four years. inflation expectations are at levels that in the past suggested the fed wouldn't want to do a quantity tafive easing. the questioned is reeling there's a cost to actions. but yes, bernanke is a man disposed to battle and of course, if the economy falters, and a lot of reasons it could in the second half, and in particular the big fiscal drag slated for january 1st. >> yeah. >> 500, plus billion dollar hit

to the economy from increases in taxes and spending cuts so bernanke will be at the ready. but, given where the fed -- where the economy stands now and with respect to the dual mandate on inflation, there will be reason to pause for now. call it a period of watchle waiting. the fed is in that right now. >> good to have you here. you'll be back soon. mr. transcontinental. when we come back this morning the ceo of adobe joining us live with an inside look at the company's recent success.

a doeb systems climbing more than 15% this year, outperforming the broader nasdaq index. the company announcing this morning it's getting into the cloud business. send it over to our john forthwho is with the ceo of adobe systems. >> carl, thanks. here with shantanu narayen. adobe cloud got photo shop, lots of other programs. about 56% of adobe revenue. tell me what's the impact of this subscription move going to be? because if you buy these things in a box, they can cost upwards of $2,000. but now, you're going to be letting people buy pretty much

all the value at 50 bucks a month. who's going to switch first? >> so, jon, it's great to be here. and i think it is an exciting day for adobe. we've announced that we're reimagining the entire creative process. delivering brand-new applications with cs-6, new applications and enthusiast creative services. and the whole goal is to attract the next generation of creative professionals. people creating content in the web browsers, applications for mobile devices. and so we expect to attract a whole new set of customers who want to create this content, and distribute it across all of these different devices. >> so initially those more price sensitive customers, where $50 is a lot easier to get in than a couple thousand? >> that's right. we introduced this product in australia first as a pilot and what we found was that over 50% of the people who signed on and subscribed were brand-new to us. and, in fact, a number of the customers who also signed that they would not have renewed had it only been the professional license. so we think it's going to be

additive to the company. >> i find this model interesting. because i talk to microsoft a lot about it before they launched office 365. the idea being, now people are going to be buying every update when they're a subscriber, versus maybe they wait a couple years in between. how long does it take for a cloud user to become just as profitable or more profitable than that box user that you had before? >> so in aggregate we certainly think that this is going to be creative to the company. both in terms of attracting new customers and for existing customers, in addition to offering the same type of creative cloud i think it allows us to offer new services. so we think over a 12 to 18-month period we're going to find that this is going to be net positive for the company. >> talk to me about phones and tablets. i know you've got these touch apps here. what's adobe's strategy for really growing? because flash on the phone really doesn't seem to be a place where you're pushing now. how are you going to grow in phones and tablets? >> our vision really is to help not only make the world's content but to make, manage,

mobilize, and we're certainly having server-based solutions right now that allow you to create, whether it's a digital newspaper or magazine or an app on every single device, whether that be ios or android or windows. >> finally i've got to ask, in this global market expansion outside of the u.s. is important. we see walmart maybe getting into some trouble there in mexico. is this something that tech companies, tech ceos really need to keep an eye on as you expand overseas? >> well, jon, all of our growth, and i think this is true for tech companies, is happening overseas. so i think continuing to make sure that we understand how we expand globally while keeping ethical is really an important part for every company in the world. >> shantanu narayen, big day for adobe, creative cloud. thanks for being with us. carl? >> thank you very much, jon, appreciate that. want to send it over to brian sullivan for another quick market flash. >> thanks very much. two quick stocks i want to hit. barnes & noble, bks one of the few stocks moving higher of a

day in the red. here's what i'm hearing on bks, i've gotten in touch with two analysts in the last ten minutes, also got a call in to barnes & noble. both analysts are saying jan that partners which is the huge fund very activist takes stakes has increased its stake in the company to about 12%. two separate analysts saying that is the reason for the news, that there was a filing over the weekend, which i've looked through, the edgar data base in the s.e.c. still looking for that. but two analysts saying increased stake by jana partners is the reason for the move plus remember very heavily shorted name, so any positive news could create a short squeeze. and more on walmart, out with a note saying in their history the average stock falls.2% and the average investigation lasts three years so it could be a significant overhang for walmart. >> that is a good metric. i like this new desk, by the way, brian, although we've got more screens down there than you could shake a stick at. >> i'm going to smash some here. i'm ready to go. >> thanks, brian. appreciate it. as you said, markets in the

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the european markets are closing now. >> here we go. this is an important close for europe. it's a rough close. it's a sea of red and you'll see that the detail within that indicates that we've had some very heavy falls. it's across the board in many instances. if you look at frankfurt, which clearly suffered badly, you've got the techs down. you've got airlines. you've got banks. really right the way across the board. of course today we have to talk about the netherlands or holland as the british call it. the aex is in there, as well. note the way we opened here on wall street has further added to the losses during the course of the session. so not a pretty picture. the german dax now down 3.4% at the close. and of course we have to talk about the netherlands now. a sense of political crisis. a lot of what is going on in europe at the moment is about the far right of politics. and attempting to rein them back and pull them in and keep

everybody on board for austerity. this is the moves that we've had at the bottom of the dutch market today. aegon is a massive financial operation. ing, that's an error. air france-klm down in negative territory. an anti-islamist party has broke an way from the coalition on austerity. they can't rein it back in and therefore we're talking about the possibility of elections. inevitably, you get a look at whether or not the borrowing costs will raise in the netherlands. this is where we are at the moment. this is the spread. this is the extra that investors demand to hold dutch debt over german debt. now it looks very alarming. there is no question that on that two-year track it is now gaining but note that the spread, the difference, is only 76 basis points. the netherlands can still quite clearly borrow relatively cheaply. but it's that peeling away of the core of the eurozone, and of course it was one of the big falls that was an advocate of austerity. need to check on where we are with the spanish yield. because of the general concern in europe.

we pop back as you can see above 6% there during the course of today's session. that's a two-year chart. we're not back up to where we were at the end of last year but it is a concern that everybody is watching. the spanish market has fallen again today. the big construction companies, you know construction is important in spain, ats for example down 10%. a 3% loss overall. we must be back down more or less to where we were at the lows of march 2009. want to show you the french fallout from the election on that first round of voting. you might say well, look, france hasn't really been badly affected today, disproportionately from the rest of europe. but you've got to consider the way in which some of those government connected companies like electricity de france, huge supplier or france telecom lost so much of their market cap coming into today. they've almost lost a fifth of their market cap in anticipation of what would happen. now you go to round two of the election where nicolas sarkozy

in two weeks' time will take on francois hollande. for many people this is the shocker. this is marie la pen with her father, monsieur la pen who is in many people's view a racist. he's made questionable comments about the holocaust but his daughter holds 17.9% of the vote on sunday, an absolute shocker in european politics. now sarkozy has to go forward to try to mop up some of those votes because she is now excluded from the race on round two and therefore he's talking about beefing up immigration. the right is in full prevalence in european politics at the moment the fallout in terms of austerity and voting for europe could be huge. >> that's amazing that we're discussing the degree to which sarkozy tax right or left in the middle of this election. >> the important point is that the middle ground, you're increasingly seeing a dispassion of voters because they're so upset with what's happening.

on the one hand it goes to the socialist francois hollande who has no record of being government. 17%, 18% to the outright racist. that's where we are in france at the moment. >> simon hobbs who is also doing power lunch today. get to work. let's get to our capital markets editor gary kaminsky up next with a look at the fed tomorrow. gary, and a reality check on rates today. >> and carl, at the top of the program i said i'm not sure why europe has become such the focus again. i've got to tell you listening to simon go through that report maybe it's the answer. so many moving pieces and so much to be concerned about. the technicals, fundamentals, elections, earnings, economies. i just got the answer to the question i didn't know. interest rates, we don't talk that much about interest rates in this specific segment but remember any historian of the stock markets knows that interest rate is probably the biggest single factor over the long-term on equity prices. i read something over the weekend. let's look at some data. us cpi inflation running about

2.7% right now. ten-year government bonds, we were talking to tony crescenzi about this, yielding 1.9%. with the negative real rate of something like three quarters of a percent. now, carl did you catch any of the ron paul commentary on "squawk box" earlier today? >> some of it. >> obviously he's got a very strong opinion in terms of the fed, interest rates, manipulation of rates. but with negative real yields it's important to go back and think about some other periods, something like 79, 80, 74, 75 and then a lot of people will go back to 1958. look at where rates went in terms of trying to deal with trying to stop inflation. 1958, you had 2.92% on the ten-ye ten-year, over the next two decades you took yields up to 3 15.32% to kill inflation. not anything we think is going

to happen imminently here but reflecting on ron paul, reflecting on some of the things going on in europe, it is very, very scary to think about what may happen, what may have to happen to interest rates as we start to underwind this unusually long period of easy money. >> it would be like, i was thinking about being in the hot tub for awhile and then you've got to jump in the pool. it would be that kind of shock. >> i read that data over the weekend, i had a conversation with somebody who dividely remembered that '74-'75 time weird. was not a lot of fun and a lot of people out there think that ultimately that's going to be what we're going to have to live through again in order to get rid of this easy money policy that, as ron paul said, the fed has told you they had to do in order to save the world. >> right. gary we'll talk to you in a few minutes. bob pisani has joined us here looking resplendent in gray. it's been tough. tough sledding. >> i'll make it very simple on the french election. simon did a great job summarizing what was going on. it doesn't matter who the next president is, austerity has

lost. the french have rejected austerity. the size of the victories, and put up the numbers here, it's important for everybody, try to get a tight shot of this. what everybody is so shocked about is these two numbers here, one-third of the french electorate has voted for far left or for right parties. this has never happened before. both of these ends of the political spectrum reject austerity. as does mr. hollande the likely french president at this point at 28%. there's nobody except mr. sarkozy and a few small parties in favor of this so-called austerity. so that's the problem the market's going to have. mr. hollande is only going to engage with the markets in so far he's going to be pushed into doing more austerity. and that's what the markets don't like today. at least over in europe. they want pro-active, they don't want to be pushed and shoved by the markets going down, and more debt criseses happening. but that's what kind of the market is saying right now. now that's the bad news. let's talk about the good news. the good news is we're not overreacting here.

i called for this, volume is not particularly heavy. i'm hearing no panic. i'm not seeing aggressive selling going on. here's our risk offtrade. the flight to the ten year note modest, dollar index modest. no big move up in gold that's kind of curious. and how about the vix? everybody said the vix went over 20. forget all that. just take a look here. you see the volatility at 19 up but not much. and here's the important thing. you want to look at the vix futures. that's what matters. that's what the markets looked at. and none of these are jumping up. all of them have been in the mid 20s now for weeks on end. in other words if there was a world moving event today, these numbers would have gone up, a couple of points. nothing has happened. that's the market saying we're not that panicked about this overall. i just want to show you here the earnings trends, because earnings are continuing to improve. remember the panic last week, revenues were only modestly on the upside. but two weeks ago, up 4.7%. now up 6.2%. the earnings picture now up

almost 5%. remember two weeks ago earnings were only going to be up 1%. everybody was panicked. today the earnings were up about 5%. we're moving in that direction. so things are slowly getting better. just want to point out dr horton, cancellation rate 22%. orders up 29.3%. these are great numbers, finally awe're getting some good numbers. very choppy housing numbers. >> relative to what kbh said not long ago. here again we're getting choppy numbers, but we're still doing better than europe. far better. >> thanks, bob. talk to you in a bit. rick santly is in chicago with a little bit more this morning. good morning. >> good morning my guest before we get to him, bob says some great things. they're getting such great earnings right now, why should these corporations need to hire more? i think that's something to think about. it fits exactly what the fed meeting coming up, art is one of my favorite fed watchers, trades the short end.

you've talked about it, arty. why should business hire when they're doing well, on a very tight group of people, keeping expenses down, when they're, you know, looking at the banking sector and looking at all these programs and the uncertainty? >> i think a lot of what's keeping the banking industry, and a lot of other industries from hiring is it's hard to go out there and hire somebody when the national banker in the united states is telling you things aren't good. i think that we're going in -- >> you mean ben bernanke? >> ben bernanke. every time he comes out, we had some good numbers and now it's bad. and we're always waiting for the rainstorm. i think that influences a little bit. you don't want somebody to be a cheerleader, necessarily, but always predicting doom and gloom isn't helping either. >> we've had major economists by some of the biggest firms in the economy and their mission statement isn't to differentiate between those quantitative easing or any of these programs to help the economy, the cottage industry that talks about this is in the financial services side. so the financial services said

ramps up when equities move up and down, when mortgages move up and down but not so much when the real economy moves up and down. if the mission statement flounders, nobody wants to call the fed out on it? >> i think one of the things you have to look at is the fact that how much is the government influencing the market? it's more government, it seems like more government, the thing you're talking about short-term rates, long-term rates, doesn't matter, europe, you know, the united states, they're always -- there's always more influence. and i think that's what you're seeing, and that the cottage industry is to predict the next government move instead of predicting the next economic move. >> exactly. and i think that's really a scary thing. and i'll leave you with one final thought and comment on it, shouldn't ben bernanke be looking at the sustainability of the programs, not the fact that they bump these up temporarily? >> i think that's an important look. show short-term rates were the silver bullet. the big question is, why isn't 1y japan prosperous? they've had low lates for a very long period of time and haven't

produced any prosperity over there. >> so their pump's been primed a lot but isn't running on its own. >> thank you, rick santelli in chicago. get more insight on the european markets this morning on the heels of the first round of the presidential election in france. good morning to you. >> thank you. >> i don't know if you heard my colleague a minute ago basically arguing that austerity has already lost in france. do you think that is true? or is it just suddenly now a tougher sell than it was before the weekend? >> well, i heard -- i did hear bob. and he has a great point. this election has reminded investors that, you know, austerity up until now has been promises and now we have the fear of broken promises, in the wake of these results and also what's happening in the netherlands. where these aren't periphery countries. these are core countries. and you have concerns over the ability to live up to the promises of austerity. and then you know, depending on who wins, they may be forced to

go back to the drawing board, and rethink those promises. in the end, the math is the math. it doesn't matter, really, who wins in the long run. they have to either go down the path of austerity, or look at some other harsh decisions that they need to make. so those are some challenges that the european eurozone is really facing in terms of what they're dealing with. >> right. so without -- i don't know, maybe you do want to call the winner here. let's say it is hollande is the more interesting thing to you germany's response? we've already had some headlines from a spokesman for merkel today, calling the election results over the weekend alarming. >> sure. >> how do they push back? >> well, i think they're doing what they can to emphasize their point of view. in the end the math is the math. that reminds me of what happened in brazil in 2002, when lula got elected. before he got elected there were enormous concerns of him being not market friendly, and not having anything to do with the

capitalism. well he turned out to be really accommodative to markets because the wind was at his back, and he had that benefit. well, here, it doesn't matter if you're typically stringent, like hollande is coming out to be in terms of renegotiating the treaty or whatnot. but these treaties are set as they are now, and even if they need to renegotiate, it may not be as kind of flengsibility that hollande is talking about right now. you have to remember, this is the season for elections over there, so they will say a lot more stuff than they actually get to implement eventually. so i think what ends up happening is some kind of a balance, and you know the results will be somewhere in between, where the approach may be slightly different in france, and they'll have to balance that out with germany. but in the end, you know, the high levels of debt, and the deficits that they're dealing with, have to be addressed at some point. and the markets are not necessarily sitting back and giving them the time. in the fall of last year and earlier this year, when they said that, you know, the crisis

is behind us, and the investors, as well as some of the policymakers were popping the champagne cork. we were skeptical, and our view was, let's wait and see how this really pans out and not necessarily go in completely into these markets. >> well we still need to see how it will resolve itself. certainly we got a better indication on sunday. wassive, thank you so much. great incite. >> joining us from usaa. want to get you a live shot outside goldman sachs in nan hatton right now, where a group of muppets have made their way to headquarters. this is a protest according to at least one press release organized by an artist named joey scaggs. he has led this band of outraged consumers dressed as muppets down to golden on west street. he's also peddling what they're calling his mobile homeless homes prototype. a low cost alternative living space for the millions of underwater or foreclosed homeowners in this country that

goldman is not done hearing about muppets, not quite yet. when we come back, walmart's corner office under fire in the bribery scandal. we'll talk to the former ceo of medtronic. he'll join us with this take on walmart's troubles.

coming up on the "halftime report," as the broader market

sells off, should you be buying? a bold call on walmart amid bribery and cover-up allegations. and the man who manages fidel y fidelity's biggest fund tells us why he's bullish on america and what he's buying. now back to carl. >> thanks so much. the mexican stock market taking a hit today, down almost 2% right now on the heels of the walmart controversy. walmart's mexican counterpart down by more than 10% today. our international correspondent michelle caruso cabrera is live in next ka city with the latest on the ground there. michelle good morning once again. >> good morning, carl. those numbers are an improvement. we've seen the average and also wall next come off of its lows this morning. keep in mind the mexican stock exchange has the same exact hours as the new york stock exchange so we'll know how the close is at the exactly the same time. despite what are incredible allegations in this "new york times" article that ran over the weekend about widespread bribery among walmart and mexico officials back in the early

2,000s, allegations of such, it's not a front page story here. we've actually called people within the story, and i've said to the sents, i'm sure you've been inundated by calls from journalists, and she says no, actually, you're the first one to call. so this is not the biggest story here, even though walmart is the largest employer in this country. that may be because it's long been seen that bribes are a way of doing business here. but it surprised many that a company like walmart might stand accused of doing that. and beyond that, once officials in the united states knew it "the new york times" said that they tried to cover it up. walmart has said that they are deeply concerned about the allegations. they're doing an internal investigation and we remain -- we wait to see exactly what's going to happen. whether there's going to be any investigation here in mexico, carl. but we haven't heard a single official come forward to say anything negative except for some of the candidates running for office. back to you. >> okay. we'll see if that changes, michelle. thank you for that. michelle caruso-cabrera.

want to get more on the walmart scandal this morning. bill george is a professor at the harvard business school, former chairman and ceo of medtronic, sits on the board at goldman sachs and exxon mobil. >> carl? >> let's separate this into two pieces. do the alleged payments to some of these in mexico and do their own internal investigation or lack therefor. which is more serious? are they both a big deal? is only one? what's going through your mind? >> i just don't know enough, carl. i know what i read in the papers, and i would say the allegations in "the new york times" were very serious. anyone would take those very seriously. on the other hand i know both the former chairman, ceo lee scott and current ceo mike duke, and have always seen them and believed them to be people of integrity. and lee scott did some remarkable transformations on the employee side, the diversity and the environment starting about five, six years ago. and they go back seven years, so it's hard to piece all the things together and get the

whole picture when the allegations are coming out from, you know, the walmart seem a relatively low level employee. it's interesting to note walmart itself has launched an investigation over a year ago, from its board and its management. so i think we have to hear the other side. we've heard one side. now we're hearing the other side. it's hard to tell until you hear that. >> you have served with scott on the goldman board, correct? >> i have. >> you haven't talked to him specifically about this episode? >> no, i haven't. but i tell you, he was a very strong boys for integrity and i've seen him that way throughout his lifetime. and so that's why i was very surprised to read that. but again i want to hear the other side of the story. >> how do you resolve, obviously, what the fcpa mandates in this country, right, prohibits foreign corruption practices, and the view by many executives, both on and off the record that, look, this is how things get done in another

country. it's just how things operate. how do you connect those two? >> well, first of all, carl, bribery is not uncommon in mexico. and in many countries, outside the united states, asian and other countries, but this is not how global companies operate. i don't know of global companies that operate by going along with global practices. maybe they did 20 years ago but i can tell you today all the global companies i know are very clear about their ethics, their standards and they enforce them. i think that's what you have to do. if you're running a big, global company it's almost impossible never to have violations. but when you find out about them, you act swiftly, you remove the people involved, you put in new people and you make sure that you have all the preventive practices in place, and that you as the ceo are out communicating all the time. and that's -- >> finally, bill, your best advice in a few seconds for what walmart should do at this point? >> i think walmart's got to be totally transparent in what they learned. they need to have their own investigation and put out what

happened some seven years ago. but it's also got to ensure that it has a very clear compliance system, and it's reinforced right from the top. and mike duke has got to take that on as well as not just training, they have to train everyone, but going beyond that to ensure that there is this culture. i believe they're a company of integrity and that has to be reinforced all the time, because some people that you hire in local locations don't really believe you, and you have to say that's the way we play the game here, and yes, you can do business and you can be successful tw high integrity. that's how you can be more successful. >> right. >> okay. >> bill, appreciate the time. >> thank you. >> bill george joining us from atlanta this morning. markets in the midst of a sharp sell-off today. we will be right back. 42 mpg on the highway. actually, it's cruze e-co, not ec-o. just like e-ither. or ei-ther. or e-conomical. [ chuckling ] or ec-onomical. pa-tato, po-tato, huh? actually, it's to-mato, ta-mato. oh, that's right. [ laughs ] [ car door shuts ]

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