and then maybe "squawk box" right below that. it's tuesday, may 22nd, 2012. "squawk box" begins right now. >> good morning, everybody. i'm becky quick along with joe kernen and andrew ross sorkin. let's get you up to speed this morning. pretty rough start to the week for facebook. those shares falling 11% on the second day of trading. among the headlines on the company, word that morgan stanley's consumer internet analyst reduced revenue forecast for the company it in the run up to the ipo. more began of course t morgan of course the lead underwriter. investors say moves like there are highly unusual, but it does prove one thing, there a separation of church and state there. there's a chinese wall between the two sides. also amid questions about how it handled the facebook ipo, nasdaq will hold its annual shareholder meeting today. the exchange plans to set aside $13 million to resolve bad

trades. the bringiigger potential cost come to damage done to its reputation and lost ipo business as a result. a couple of events to keep an eye on. best buy reporting quarterly results just before the market opens. and at 10ing: in:00 eastern, ap existing home sales. >> other corporate headlines, a key drug from bayer missing a goal in a late stage lung cancer trial. the company failing it to show that it can prolong the lives of patients with lung tumors. but it did extend the time it takes the disease to worsen. the drug already approved to treat liver and kidney cancer. also gucci winning a case against guess. seeking $120 million being a confu accusing guess of copying trademark designs.

the judge awarded a permanent injunctio injunction. and the payout from profit of specific items where trademark were in-tricked. federal prosecutors announcing insider trading charges against a former yahoo! employee and fund manager, said to have illegally trade order company secret information. the pair pleading guilty in manhattan's federal court yesterday. joe. >> $4 million for -- >> is that not enough for you you? >> it they wanted $120 million? these are gucce brands, they're worth $4 million? i think of gucci -- >> what about the guys on canal street. >> $4 million? that's not a win. that's like people are laughing at gucci. a few early stocks to watch. old republic international selling a nearly 21% stake in its recently formed republic financial indemnity group division. they plan a spinoff, all the unit's common stock as a taxable

dividend to its shareholders. urban outfitters better than expected quarterly earnings. company struggling in heavy discounts willing. ha ha hard to explain all the big action yesterday. people are so sick about hearing about facebook and how it was worth all this. let's go into companies that actually -- something that has underpinnings for the stock price. normally a big anticipated ipo that was so important and $100 billion, if it collapsed like that-it would have been negative for the tone of the market. and i think it's negative for the small investor to see once again that these guys that got in early were able to monetize their position and actually those guys don't have to wait

necessarily. >> that's what i'm trying to figure out. zuckerberg did sell off. >> they're not getting stock that they have to try to sell at some point and hope it's still $104 billion. cmgi was worth $2 billion. he never got $2 billion. cmgi by the time he was able to to monetize that -- >> so what's the ultimate worth? >> who knows. my point is a lot of normal retail types, they came in just like the sheep and they gave the actual dollars, the actual physical money to these guys that had paper and they're walking away and these people -- >> you you read in the story there was an individual investor

that they talked to, a guy who bought 1,000 shares of facebook, he bought it through charles schwab through his account and by the time it started going up, he got a little nervous about it, so he canceled the order. but he never heard anything for -- turns out the cancel never went through. he's already hired -- he's called the sec, already looking into what's going on, but he'll be one of the people asking the nasdaq for the return. >> they need his money to pay for some of the people that got -- do you remember mark cuban? >> of course. >> mark cuban had this company that right at the height of the craze. and he was smart enough to see that this valuation, he hedged it or -- sold it to yahoo! but then got out immediately or hedged his yahoo!. he knew. and now he own as basketball team which is a real thing. but key have writtening that back down. we'll see what happens, but now

alled stories are their mobile strategy is totally flawed, i'm hearing about the other -- >> we knew that. >> but now they have a diagram for what's flawed. where was this -- here it is, facebook's mobile miscalculation and they show how with these games, if you order it off facebook, if you buy a game, you get this much, but now the game makers aren't even making them for facebook. they're going to apple and other places. but here it is. remember the guy from cnet, said it might be a fad. >> at some level, every ipo is about the sheep. >> no, i don't agree with that about. >> this one in particular because it has such a refocus grant. >> did you see what he said on -- we tried to make it an auction so that normal people could get a fair shake and it

came at 80 and it went to 600. how are they sheep? they're big fat rich sheep. they're not sheep that are safshing. >> every ipo is about the public meaning the people who -- >> i disagree. never go into another ipo. you have to have some payoff. you can't go in just to get slaughtered. >> i'm suggesting that it's the insiders selling to the outsiders. >> not always. a lot of this wasn't selling shareholders. it was just new shares raising money to invest. it's not always people cashing out. >> whose fault is it? is it who are morgan stanley's raising the share price? >> i think it's all the und underwriter, but it's actually facebook. the bankers did exactly what the client asked them to. usually the bankers are running

the show. we talked about the fee which was next to nothing. facebook ran this this deal i think from the beginning to end. >> last week we said in hindsight we'll be talking about all the stuff and whether it was obvious. and i did a radio interview last night, i said my co-anchor becky says how often do you go to to facebook. you're one of the 900 million. how many times have you been involved with the social interaction and seen an ad and say, you know, i'm going to -- >> i've never even seen an ad. so if they're there, it's been so long since i've logged on, i don't remember seeing an ad. >> i had all these reasons why it was just going -- anyway, in hindsight -- we'll see what happens today. maybe morgan stanley will put the stabilizing bit in this morning. >> there is no way. what do you think the stabilizing would be? >> i wouldn't put a bid in today at $38. to me i immediately think that's

probably not a good price. >> but do you think they stabilize the $34? that's the question. >> i thought it was strange that it closed at $34.03, which means it was probability head at that stabilization level. >> is it possible that they decided to finally came in and make sure it doesn't go below $33? >> they didn't want a 33. >> you do this for a day, maybe two. >> they didn't do it for two. they did it for two hours on friday. but they couldn't. it was like collapsing on them. they're not a money pit. they can't keep stabilizing it as everyone bails out. anyway -- between the flash crash and what happened three or four years ago, this does not help the notion it that wall street isn't fair for the little guy. does that help that perception. >> you're right. in fact my mom was asking me

about this last night. >> think if you really did -- you were so happy you got 1,000 shares. >> i told you about my friend who bought it on charles schwab account. $42 a share. >> you're like at this point you got to be -- >> and now -- >> this is what i get? i can go to vegas and do this will. have more fun. >> some of these people including her had put limit orders in up at $60, $70 because that's what people thought this thing could go to. we never said that, but there are a lot of people actually believe had. >> my favorite conversation is someone wondered whether it was the perfect ipo pricing. i think that would be a no at this point. less than perfect. maybe just below. >> it's perfect for facebook only in the context that they got as much cash as they could possibly get out of the company. bad for the company long term because so many of those employees who still are holding

on -- you you got to see in six months. >> that's true. >> news from the oecd today actually says europe's debt crisis is a risk to the world economy and an eventual recovery. joining us from paris is the secretary general of the eocd. and thank you very much for joining us, sir. >> thank you. >> can you explain to us what impact you see this european crisis playing out? >> there is a slow down, but to 8% or 9%. but in the case of europe, it's

a flat year and it would be mildly positive. so you have many countries which are in the red, some slightly on the positive side. but basically very mediocre situation. what we're seeing is because we run out of room for monetary policy, because we run out of room on the fiscal policy, everybody's trying torous debt, we're saying you have to deal with the long term unemployed, in particular the youth, there's growing in-quaulity in the systm and also go green in the sense of putting on policies that we company into a collision course with nature. so we believe the structural policies are the best short term

policies that we could take. >> have you been concerned by what you've seen just it in the last month or so coming out of greece, the tough talk that's come from germany, from britain it, from other areas? >> at shall point there has to it be a happy medium, but there's going to be a huge step down in the amount of money that's being spent. >> the problem is that in the greek case, we have allowed 2% of the european economy to do contagion if in the rest of the economy and europe and that is having another impact on the world economy. that means the problems in the eurozone are affecting the mood in asiand at united states and in japan and elsewhere. and the costs of the losses in

the exchange markets and the commodity markets and the jobs, growth, et cetera, are now a mull tim of ttiple of the greek. >> so who is to blame? >> it's not just a question of the german fault. you have institutions like the european central bank, you have the european investment bank. you have the esfs, you have the esm, and all these -- and then you have this 430 billion put together by the imf and washington all supposedly are there in order to help and support the euro area. the question is if you go into a championship bout for the crown and then you show up with one hand tied behind your back, you're not going to be very awesome. you're not going to look very strong.

europe has a bit of scaffolding. it's always redesigning itself. when you remove the scaffolding, it looks fine. but the problem is it has not decided to usefully all its instruments and only then will we have a clear signal to the markets. >> so that clear signal to the markets is going to look like what? >> the willingness to say we'll do what it takes to stabilize the yields and contagion won't happen because we'll be supporting spain and italy which are putting in place the policies required and there is no reason why there should be this speculation against them. so to say don't mess with my children because i have enough fire you power, the bazooka is here, and ild use it against you

if you're trying to bring any of our countries town. >> but iltly you think greece should be allowed to leave the monetary union, that that might solve the problem? >> no, i don't think -- today there was an interesting op-ed by the minister of finance of poland saying the ecb should be ready to fire with all engines the moment greece leaves the euro. well, change the logic. say the ecb should be firing with all engines so greece does not have to exit the euro. >> but the problem is greece is not standing by the agreements that had already been cut. the greek voters have said no, they don't want to stand by the agreements the government already agreed to. so as the prime minister laid out, the next vote is going to be a vote of whether or not they want to stay in the union.

>> we'll find that out on the 17th of june. the positions have to be very clearly specified, but also the options. if europe does not explain to greece that there is a way out of the crisis rather than a way out of the euro, then of course the voters will vote to exit. but if they are told that there is an alternative, that there is a better alternative that doesn't have to be all this attrition as all this cut and suffering, then of course they will choose the better option. >> but you think this needs to be a renegotiation of the terms that have already been set. >> what we need to do is just have a credible set of not only policies, but also support. weapons. high caliber weapons. because it's about the

credibility of the measures. let's talk about the impact. why is greece so important for the world? because you're looking at spain and you're looking at italy and some other european countries which are doing as i said, it they're doing all they have to do policy wise, but they're being attacked by the markets because the market is looking for the weaknesses, not necessarily believing that these firewalls that are being built are strong enough or are available immediately in order to shore up countries doing their homework. >> but you can't expect investors to continue to give if the terms continue to change. and the markets may be hammering looking for weaknesses, but the markets are also the private funding that will come in and support these governments. at some level people say that the greeks are no longer in control in this situation.

we could be throwing good money after bad. >> remember already the greeks have reduced the very large portion of their debt through the so-called psi. and therefore what remains is long term debt at very low interest rates. reinforcing policy conditions that were set by the union and imf, et cetera. in order for this to work, obviously this has to be open and clear dialogue between the parties. the more successful adjustment programs in history have been

the ones that adjusted to the needs. and here we're having a scenario that is changing. but the people have to be told what is the good alternative, not just the penalty. and that's support by the european union so that they stay and eventually their effort and their work that they've been doing, adjustment measures actually start to gel and things stoort change. there has to be again in the minds and mood of the people vis-a-vis europe. and that starts by saying europe has enough capacity to deal with itself with its own problems. doesn't even need the chinese or the brazilians, et cetera. but again they have to let it be known that they're ready to use the full balance sheet of the eib, et cetera, they have the institutions and the you power

power and use it. >> mr. secretary general, thank you very much for your time today. >> thank you very much. we should point out it that oecd report also says that result of the euro crisis, they see world growth slow to go 3.4% this year from their earlier estimate of 3 bpt 6%. >> but it does get better in 2013. >> sounds like china has a lot to do with those numbers. >> we've got some issues. >> let's go back across the poo bond for the global market report. ms. evans, pretty interesting stuff this morning. >> yeah, it's ball all the talk. interesting to hear his comments because when we saw those numbers come out earlier, just reiteration of what we're seeing in the subtle and some not so

subtle policy shift. a lot of green on the wall. today we might hand off to the u.s. on a made what more positive note. we're up about 0.6% on the day. partially came after fitch downgraded japan from aaa to a plus. didn't see too much of a raek, but we can take a closer look at how we're looking across the region. spain in the green this morning up 0.1% despite the report out overnight that talks about how their losses -- total bank losses. half a percent for the xetra dax. ftse 100 surprisingly soft inflation figures out this morning. we can take a look at how that changed bond markets.

gilt softer uk inflation data coming in suggesting the bank of england may have more ability to do quantitative easing if it so chooses. spain 6.15, italy 5.18. quick look at commodities, gold in focus. we're seeing a bit of a buns back. there's spot gold 1575. copper doing at bit better, too. so we'll hand off to you on a decent note all things considered. >> thank you. and coming up, larry page sounding off on the facebook ipo. but first, a first of it kind space flight launching from central florida the space x company, the character robert

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quoel back to "squawk box." i'm joe kernen along with becky quick, andrew ross sorkin. we've been talking about facebook all morning although the show has only been going for 30:30. last night on charlie rose, larry page talked about a range of topics and of course

facebook. >> the news has been the facebook ipo. any thoughts about that? did they make a mistake at all? >> i've been through an ipo once and we did some interesting things. >> yeah, you did it in a different way. >> we had an auction trying to get more normal people able to participate. and i think -- i don't know the details, i don't want to speak about their thing. >> they got normal people to participate instead of all the abnormal people. >> they it ook it at the wrong 3r50is. >> average investors don't know enough really to decide whether it's overpriced. and people think -- last week

repeatedly we brought up the 25% additional shares that were being sold by guys that got in early. >> they brought too much of it and at the wrong price. and it's not a problem of the retail investor being able to get a hold of these shares. it's a problem of what wall street cdid in between. >> the people that got in early, when they saw the chance to cash out at $104 billion valuation, there was no question they thought that was a great time to sell. >> i'm not disagreeing with you. >> i thought zuckerberg was only selling enough to pay for -- >> i'm talking about the 25% -- >> that's another part of the problem -- >> showing that those guys would jump. remember sam zell, they came to him for all that real estate he owned in 2007. he didn't even think about where

it's going to go. he's like what price? he said i don't care what happens from here on out, i like that price. >> i think the issue is simply too many shares. there's a hedge fund manager who asked for an allocation, he finds out that he got 500,000 more than he planned on and said if they're willing to give me this. >> and found out everybody else did, it. >> everybody got greedy. >> and you had shares that had been trading like the guys that would want to jump in were already in. the stock effectively already traded. >> and they also all the words coming out of -- remember what we heard about europe, 30 times oversubscribed. with that much demand, you just thought it was going to soak up the -- but obviously way too much supply. we'll talk more about it with

bill hambrecht. he'll have some criticism of the whole process. wasn't good for anybody. i feel bad for morgan. >> you were making the point yesterday. >> and who was one of the beneficiaries? goldman sachs. >> and of the jpmorgan whale, too. >> but goldman was in it and got out. do you remember goldman got into facebook a year ago. they didn't get all out, but they were one of. joe mentioned before that we were mentioning the study of a top brands at the top of the

show. an he will ma apple valued now at $183 billion. facebook was the fastest climber in the top 100. seeing its brand value rise by 74% to $33.2 billion. 19th place. 7 of the top 10 were technology related firm, but mcdonald's and coca-cola kept their number 4 and 6 rankings. and squawk was number -- >> nine, i think. >> did we construct the survey ourselves? >> we would have been number one. >> who is the man behind the curtain on this one. in any event, let's go to the futures pits. good morning to you, sir. >> how are you. and by the way, if you would have been a chicago election, would you have been number one it for sure. never hold an election you don't know the outcome of. >> good to know. i don't know if you got a chance to see the interview at the top of the show about some of these new numbers coming out of the

oced about where things really stand and how that will drive the market. >> it's interesting that the s&ps haven't reacted too badly to it. and the part that i found interesting about that study -- >> that was my voice and joe very nicely said does that sound like one of my questions. joe would have asked a smarter question. >> go ahead. i'd still be asking. i'd be like on my third comma by now. >> sorry to mistake you too. anyway, the interesting thing about the survey is that if you look at it, they're really saying there's going to be the correlation that we've seen so heavily between europe and u.s. will go away and i find that hard to believe because they're

predicting some very nice things in terms of growth for the u.s. particularly compare to the rest of the world whereas with europe, they're talking for the very, very terrible recession. i don't see how this can actually happen. if you're rowe rop goes in to the recession they're predicting, it will overflow into the u.s. and it seems hard that the u.s. would continue to grow and actually the rest of the world can continue to grow if the oecd predictions come true. and i think one of the other things from what i remember, they're kind of reiterating a lot of what they said six month wills ago, which we've seen a lot of shall we say on the brinks in terms of recession. but we haven't quite gotten there yet. we hope there's wrong, but there is a disconnect on both sides of the ocean. >> you can explain what happened with the nasdaq yesterday, what was behind the move and whether that will hold up?

>> i think it was a little strange to be honest with you and most people are having a bit of a tougher time understanding it. i don't know if that will hold up at all. friday was a strange day with everything that happened earlier there. and then yesterday we had this great rally all the way across not only the nasdaq, s&p, dow, everything rallied well. one of the things that i found interesting on the nasdaq yesterday was that if you look at some of the stocks that i guess are almost beneficiaries of what happened with facebook and that being groupon, groupon had a wonderful move to the up side for people. and what i found interesting there is that i think that because one of the criticisms of facebook is that they'll have a tough time perhaps mondetizing what they do. groupon showed that they can monetize what they do. and actually took the stock significantly higher. and i think that that might be one of the things you start to see in kind of a reaction to what happened with facebook is that the social media type stocks that have shown that they can make money, you may see a

rotation of money into them. as i said, how do you monetize the exciting space. >> joe, thanks for your perspective. appreciate it very much. and i apologize, it is oecd, but maybe i just have ocd. >> that's right. or ahd hchdhd. $16 billion and more than half went to the pre-ipo guys. you could not get $104 billion for that company. you have paper, but there's some people in there that would like to get their shares valued at 104 billion and out of the 16 billion that came in from the poor public, the guys it getting out at $104 billion totaled at more than $8 billion. >> how many sold their entire stake. because the stake they have left

is worth less. >> you'd like the rest of your stake to be valued at $42. but then people are writing in about they put a trade in friday, tried to cancel it, didn't know whether their cancel was filled. monday they get confirm that it didn't get it in and it's already at $34. >> it for nasdaq to say that they're only going to put $13 million aside for this, it that may be a small sum if if you start aeding up how many people actually have claims. and where do they draw the line. >> wael s . >> we'll see what happens. is there a price where -- >> what's the real price? >> i'm talking about trading. >> i know. >> pre-market is --

>> i'm not saying what price to buy it. where do you say we messed this up. let's try this again. >> what do you mean try it again, we'll buy back the shares? >> it's done. there's so many screw ups here. there were rumors swirling yesterday that maybe the whole thing needs to be reevaluated. >> this is already out the door. >> i know, but there's egg on everybody's face and it won't end well for anyone at this this point. >> save the tape because in five years from now -- >> it might be okay by then, but the ipo will not be the finest moments of nasdaq, facebook. comments, question, e-mail us. coming up, could be a good sign for summer travelers. why an energy industry insider predicts that gasoline prices will continue to fall. first, though, morning sports buzz. the reds won again last night.

and they are now just a half a game out of first place after beating the yankees twice over -- this is all about hockey is in anyway, devils beating the rangers last night. but the reds won, also.

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i'll you'll see u.s. equity future s down by about 17. after major gains yesterday. in our headlines today, william sonoma reporting first quarter earnings 34 cents a share. two cents better than the street expecting.

>> if you're hitting the highways for the memorial day weekend, could you see gas prices at $3.25 a gallon or below. that's the relief that we're expected to see, but it could be temporary. tracking global and oil demand, former head will of management reservoir management. great to see you again. >> great being here. >> the most important things now deck at a ti dictates crude prices is probably europe? >> so many things dictating. that's the interesting thing about oil and of course most importantly gas prices. biggest one right now is the european crisis which is all greece centric. but greece is not the only play. the other side of the equation is the supply. and on the supply side, there are a lot of positive

developments. >> long term. >> more short term and long term. look at the reality and what's going on right now. russia is at 10 million barrels. saudi arabia is at 10 million. for the first time iraq crossed the famous 3 million barrel mark. libya is almost virtually almost at pre-war levels. so all of those things combine give a very positive supply side picture that's offsetting a lot of negatives. and then when you compound the softness on the demand which originates in greece -- >> and china, too? >> china is not such a major factor right now. it's more the interplay between the european crisis and the extra supplies that are coming to the market right now. >> do you remember boone last week, i thought he said we were

at a new daily record for demand. i can't remember how much -- a huge number. what is daily demand? i thought he said it was 80 or 90. >> right now the global crude productions is right around 90 million. >> 91 or something. >> 90, 91 million barrels. and i don't think we've seen the peak yet before. >> of demand or supply? >> supply and demand go hand-in-hand. there is not a very large margin between the two. >> so it will go up from there, but supply will track demand up from that? >> definitely. the upper hand right now, if this were a boxing game, definitely the round goes to supply. sfwh real >> really? >> definitely. as i said, we haven't seen the end of iraq. iraq is only coming to its own being when this cross the 3 million. project five year, ten years, iraq is not going to remain at 3 million. who is to say what will happen

in iran. iran is definitely handicapped because of the u.s. sanctions. so they're not able to bring as much to the export markets as they normally do. so again visualize the different world order where iran becomes part of the global production community. >> sounds like great news for -- cheap oil sis much better than expensive oil. >> i wouldn't go that far. there are boundaries both on the low and high end. what i see is that more pseudo stable market. it's moving from 80 degrees to 180 and from $80 to $120 depending on which forces -- >> long term you talk about shale and what we can do in this country. >> oh, yeah.

the game changer definitely in the states is the shale resources. unconventional resources. both oil and gas right now the u.s. is leading the world. and nobody can say that u.s. is going to have the eventual to have the eventual monopoly of shale production. a lot of other countries cr including china, italy, even middlesex co, they have significant shale resources. they don't have the technology or the organizational capability. who's to say their organizational capability is not going to spread across the globe. >> feel better? >> i feel great. >> becky, we don't necessarily need the -- >> that's fantastic. that's fantastic. >> these are not -- you wouldn't call this many renewable but they can be clean. >> cleaner. >> there is no question -- there is no question that gas from a

climate perspective is definitely much more attractive compared to -- >> it's a hundred times better. >> the on thing nansen, the bears, the peak oilers would say you're still not facing the facts, you're still spinning we still have plenty of reserves left when the saudi oil fields are totally depleted. >> i love this thing because this is been going for the last ten years, okay? >> i know. >> and people said specifically about six, seven years ago in the matt simmons era that saudi arabia was just about to go down in an imminent decline, there was going to be a precipitous decline and it all depends on how do you define precipitous but we're talking about maybe declining from 9 million to 4 million or 5 million. just the reality, today they're

producing 10, the capacity is 12 milli million. i have no doubt they have the ability to raise production. same comments were made about russia, that russia was so inefficiency, so dysfunctional it didn't have the ability to bring crude to the markets yet look at russia today. so the totality of what i'm telling you is there is tremendous supply capacity coming that's also being matched by new efficiencies on the consumption side. so there are mechanisms where technology is coming in and moderating the prices because now you're even talking about potentially if you go to electric cars hundred mile per gallon type of vehicles. >> nansen, thank you. >> you better, my pleasure. >> still to come this morning on squawk, we'll talk about why

republican larry lindsey thinks mitt romney has a shot at winning the white house but will most likely lose. he's our guest host at the top of the hour.

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coming up, larry lindsey is going to tell us why u.s. taxpayers should not be worried.

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nasdaq under fire. >> lucy, what have you got to say for yourself? >> lucy isn't the only one. ceo bob greifeld faces investors today. >> washington and wall street collide. the senate banking committee prepares to grill ceo jamie dimon over the massive trading losses. >> plus, it's the economy. former top bush economic adviser larry lindsey is our guest host. the second hour of "squawk box" begins right now!

good morning and welcome to "squawk box" on cnbc on this tuesday morning. i'm andrew ross sorkin along with joe kernen and becky quick. facebook back in the spotlight once again this morning after the stock tumbled monday in its second day of trading. a morgan stanley analyst is said to have cut revenue forecasts in advance of the ipo. morgan stanley was one of the lead underwriters of the offering. goldman and jpmorgan were also said to have cust forecasts. >> and fitch cuts japan's rating. and former enron executive jeff

skilling seeks a new trial. he's serving a 24-year jail term after being convicted on conspiracy fraud charges. now we're mixed across the board. dow would open 5.5 points down, nasdaq would be off 2.5 points lower. s&p 500, slightly up. guys. >> amid questions about how it handled the facebook ipo, nasdaq is going to hold its annual shareholder meeting today. i don't know, kayla, i would have come up with something. you know, under the weather, laryngitis, today would not be my optimum day to do the shareholder meeting. >> it's really unfortunate timing. you look at the proxy materials and they were printed on april 12th so obviously no mention of facebook whatsoever but the lobby is stacked and ready for that meeting today. five orders of business on the docket today, starting with

electing 11 directors, ratifying ernst and young as an independent accountant, approving president compensation but the most important one is the fifth one which is the catch all which says to address any matters of business that come to the floor today. that of course has to include facebook. big questions still looming for shareholders. the first is was this a one-time glitch? you changed the amount of time that you waited to process these orders or when you let them take orders up until the trade. up kn you know, is this something that can happen again? will you still be able to attract ipos? it's the bread and butter of how nasdaq makes its money. and what are the liabilities? how far out will nasdaq be paying for a problem like with facebook. it would be one thing if it were settled behind us and just a bad memory but big broker dealers

are telling investors this is an industrywide issue. they're still waiting on confirmation on trades that still haven't come in. this is happening today, even on day three of trading. that meeting start at 9:00al. it's going to happen on the second floor. some of my colleagues have said there's heightened security over the past few days. >> one of our questions this morning, the nasdaq apparently has set aside $13 million to cover some of those busted or bad trades, we were trying to figure out how they came up with that number and if that's enough. >> from the face it have it wouldn't sound like it was enough if you just do the rudimentary math. they said in their address 30 million shares were affected. when you think about just the fact that $38 is going to be your minimum price it wouldn't seem that would be enough. as we reported yesterday, that review as far as arbitrating

those trades that happened, that could go up until 2 p.m. there are going to be millions and millions of trades affected by this and i wouldn't think 13 million would be enough. maybe for this quarter. maybe they're expecting it to span out a long time. i wouldn't think that number would seem like it would be enough at all. >> an update would certainly help. >> right. some people are saying the mea culpa was well timed but it wasn't really enough. it was saying greifeld was humble but addressing the opening but maybe they should have addressed the problem that day, halted trading, not opened the stock and that the mea culpa should have come before the botched trades and not opened. >> if they had said they can't pull this off on friday and waited -- >> it's a no-win situation. in hindsight it looks like it

would have been better if they held it but -- >> what was the original range, kayla? >> 28 to $35 a share. right now they're finding stability at 34 and people are saying maybe you should have priced at the high end of that. >> and it's 7 a.m. stability. an update would help. you wonder 38 was priced too high. 28 to 35. now we're at 34 but we also increased the size by 25%. is this where we find supply and demand? if it were to get worse, if we were to have another bad day, all of these losses, these busted trades, even people that didn't do it, that aren't even trying to be busted, everybody gets more and more unhappy the bigger the losses get. i'm talking morgan stanley. >> it was a rich price but i have no doubt as far as the way the book looked on wednesday and thursday of last week, there was enough demand at 38. but it had to be sold on that

demand and the fact that there was anything that could have gone wrong, you know, having people stepping away from the ledge on that number when something like that happens and i think the market's just dealing with an oversupply. you know, you talked about raising the number of shares that are out there but there's also a big expectation that if morgan stanley is the green shoe to cover the stock in the last couple of days, that 63 million in additional shares that investors would have been selling, they still are willing sellers, they still eventually want to get out of those shares, there's a two-step lockup that expires in the next six months, they're going to take a $4.5 million tax hit. at this price you have to bring it down a little bit to deal with that dilution. >> it didn't start yesterday until about 7:30, 8:00. >> kayla, do you know if morgan

stanley is in there at all? that $34, is a support price by them or others? >> we know they've been using the green shoe. we don't know how swiftly they've been using it. can you tell by what happened with the stock on friday that there were a couple periods where they were using it. as far as whether they were stabilizing yesterday, the way that it was falling, even they didn't have enough ammo left or there want really anything they could do. >> let's hope they weren't. >> all right. kayla, thank you very much. we'll check in with you a little bit later today as well. by the way, the senate banking committee will hold the first of several hearings on jpmorgan's trading losses. the investigation sparked a wall street journal op-ed from our guest host today. larry lindsey is the former director of the national economic council. larry, we know that this is going to change the discussion in washington, it already has greatly. how do you think it plays out in

the senate hearings today? >> well, the senators now have someone to shoot at. that's good for them. what i'm concerned with is that this is a distraction from what's really important in washington. up know, the senate hasn't passed a budget in three years. it doesn't take 60 votes, it only takes 51. three years without a budget. i would think that maybe they should do their own job first and then start talking about how other people are doing their jobs. >> that's a valid point. there's a lot of work that needs to get done but there's also the discussion that we have not finished the regulatory oversight from the financial crisis of 2008. >> we haven't. what they passed was a 2,200 page bill, not all of it well thought out, the regulatory agencies are doing their best to cope with the bill that sometimes has contradictory passages in it, sometimes it's very vague, they don't know exactly what to do. it's not for lack of evident. this was a bill that was not

well thought out to begin with. it was stapled together, a bunch of ideas. again, i don't think congress has done its job. i think jpmorgan made mistakes, there's no question about it. the people who oversee them, the regulatory agency should take a look at it, they should take a look at themselves. they are. but for everyone to start piling on when there's lots and lots of things to do in this world, i think it's a bit of an overstep. what i really take exception to is the thought that somehow taxpayers' money is about to be lost here. >> depositors' money. >> that's how it started. in washington we know how that stuff sort of leaks out. the enemies of jpmorgan started that -- >> the enemies of capitalism also started it. you're afraid to say that. that's why i can say -- >> you have more first amendment rights than i do. >> you have democratic clients. that's what you always say when you come in here, you have to walk the middle road.

>> i try and speak the truth. there is no taxpayer money at risk. >> i agree with you 100% on this. >> uh-oh. reevaluate your position. >> in terms of the fact this has nothing to do with the price of tea in china. there's nothing happening here for taxpayers or anybody else. having said that, the issue that people worry about is that if this could happen to jp, could it happen elsewhere and put another institution that doesn't have as good of risk controls in peril and therefore who gets left holding the bag. that is the issue. it's a hypothetical issue, it's not a factual issue, we're not there yet but how much should we worry about that? whatever the answer to that is explains what's going on in d.c. >> andrew, anyone could lose money on anything. >> agreed. >> banks could lose money on loans. >> bad loan. >> thanks to an overly regulated, inefficiently regulated system.

we had a huge s & l crisis. they had to borrow at short rates and lend at long fixed rates. that was concocted by congress. why we should expect our distinguished elected representatives to do a better job at this just escapes me. they have failed consistently in the past. for them now to turn around and start creating a smoke screen here for things that they did not do i frankly find disturbing. they have a lot of stuff on their plates. that's what they should be attending to. if they actually did a competent job at that, then criticizing jpmorgan would be fine. but they don't have a hook here. >> it's not so much jpmorgan so much as this larger issue. you don't believe this larger issue exists? >> anyone can lose money at anything. >> let me take it one step further. some people would suggest if

you're making loans, there's a social utility to that, right? if you lose money making loan, that may be more forgivable -- it's just a view of the world, not mine but i've heard it -- that may be more forgivable than making trades on your own behalf that are speculative bets and if the taxpayer gets put on the hook for loans, that's one thing, if they get put on the hook for gambles, that's another thing. >> is solyndra more forgivable because it's politically correct? >> i'm not making that argument. there are people who have that view. >> they're free to have the view, it's a free society. but we are never going to get away from the fact that in any system, not just the capitalist system, there are smart investments and there are failed investment, okay? russia frankly was littered with 70 years of failed investments. that's why the berlin wall came down. they lost. they were no better at this, in fact they were much worse at it,

than capitalism. so much we need to all take a deep breath, realize there was no taxpayer money lost, there was no taxpayer money even at risk. there was no depositor money lost. what we have is senators claiming things that aren't true. >> that's a problem. messing up and muddying the waters with lies is a huge problem. >> do they not know what's going on? or are they deceiving us? >> my guess is they don't know what's going on, that -- >> so now what we have is hearings being conducted by people who don't know what's going on. >> that would be a shocker, right? >> yeah. if the purpose of the hearings was to actually find out what was going on, that would be one thing. but a hearing is usually for the senators to be heard. they start with their long opening statements. >> are you really saying with a straight face that trying to develop renewable energy, clean

renewable energy to end our dependence on the stranglehold that these people that hate us in the middle east that, that is not a more noble cause than trading your own account to try and make profits? because i -- >> you say you've heard people say this. you don't believe that's actually a better usage of risk, of taking risk? >> you know what charlie munger's take on energy independence is? >> no. >> it's one of the stupidest things he's ever heard, that we should use up all their gas and oil and they'll they'll have none and we'll have it all. >> it's like a friend that has an e.d. problem. are you sure it's a friend? >> who is that? why are you talking about yourself that way? >> are you sure that solyndra is not a more -- i mean, that's a better thing to teak a chance

on, is it not, than these -- >> we have to let businesses take risks. >> oh, don't tell me what i want to hear! >> i think ultimately businesses have to take -- >> he wrote an op-ed today in the journal, i wrote -- >> there's a lot of different ways to see -- >> i wrote a column about jpmorgan today and said that glass-steagall would not change things. >> it won't. there's always going to be risk. >> the administration would make the argument without any embarrassment that solyndra is a much better thing to be risking money on than these ill-fated trades. >> i bess beth they would. >> as a matter of fact, i'm going to call the white house and try to get a comment. >> i saw the air turning blue over jersey city -- >> unbelievable.

>> axelrod did say as far as being a good mayor, if his house was on fire, he'd want cory rescuing him. this guy is off the reservation. much more still ahead for larry lindsey. plus we're going to talk to a lawmaker who wants answers on the jpmorgan trading losses. senate banking committee member jeff merckly, a democrat from oregon. i have three daughters and my son, and then i have eleven grandkids. right when you see them, they're yours,

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coming up, larry lindsey has already questioned why congress is so interested in investigating jpmorgan's losses. up next, we'll talk to senator jeff merkley about what he wants to hear from the bank and why. ♪ go on, take the money and run ♪ with the spark cash card from capital one,

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we're back on a tuesday morning. the senate banking committee holding hearings in jpmorgan's trading losses. senator jeff merkley served on the committee and helped craft the volcker rule. good morning, senator. >> good morning. good to be with you. >> give us a brief idea of what you hope to get out of the meeting. >> we hope to hear them say they're going to visit the volcker rules for the fire wall and make sure it's a strong fire wall. >> do you think what jpmorgan did wa qualify under the volcker rule? this happened on the commercial side of the bank, even though it does look like it started out as a henning, jamie dimon said it morphed to becoming a proprietary bet. >> this is legitimate under the

volcker rule, then there is no volcker rule and it's meaningless. easy access through the federal reserve is to provide lending through small businesses, family. if you want to be a hedge fund, that's a whole different world but you don't take the deposits. >> i want to take the other side of this. larry lindsey is here, he's going to jump in in a second. no taxpayer money has been lost, no depositor money has been lost. in fact, no money at jpmorgan has been lost at all, they're still going to turn a profit this quarter. so you could ask what gives. >> well, let take, for example, if they hadn't been taking their funds and putting into this $100 billion position, right, huge position, instead they had been lending that money into the economy, which is the function of a bank, we'd be far better off. i mean, every time i go home to every town hall, credit is so tight. so there is a cost, even in the short term, even when there is

not a bailout, if you will. >> senator, that position, that institution in london, has been turning profits for jpmorgan for the last three years, on net far more than was lost here. isn't that cross subsidizing the consumer and business loans that you're talking about? because morgan's making a profit there, the cost is lower to their other borrowers. >> find me an example where the profits from the trading side have been put into lending. the temptation is always to do more of the trading. it's a whole different world. hedge fund trading, it's different penalties, it's a different organization. and those folks aren't saying, hey, we want to make -- >> would you have lent that money if there was tho demano dr the money and would you have lent it back to people who can't pay it back and felt better about yourself? >> it's quite interesting

there's no demand. >> then jpmorgan, they're holding back. there's all this demand but they're using it on proprietary trades and not giving it to people who need the loans? >> they're more interested in the trades than they are in making loans. if you want to have a hedge fund, there's nothing wrong with that, it absolutely a great thing, accumulate wealth, invest that wealth, and if you blow up, you only blow yourself up. >> different question then. within the context of the volcker rule, do you believe investment banks should be able to quote, unquote, hedge their portfolio risk, which was what this department at jpmorgan traditionally did until and i admit potentially morphed into some form of a proprietary bet? >> we put risk hedging into the volcker rule. if you have a commercial bond position, you take out insurance against those commercial bonds, that's risk mitigation. but if you take and buy

something quite unrelated like a broader index, you're way off the mark and if you do things -- >> but does it allow for abuse then? >> it does under the very loose draft rules that we have right now. the real rules are supposed to go into effect in july. i think the regulators, i think we're going to hear them say they're rethinking for two years wall street has been hammering for this flexibility and loopholes. we're going to take a look at it. >> thanks for being with us this morning. we have to jump. >> you bet. hey, did you ever finish last month's invoices?

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welcome back to "squawk box,". >>. in our headlines on this tuesday morning, we expect to see the latest number on best buy. they have seen considerable turmoil in recent months. it's in the midst of a search to replace the recently resigned ceo brian dunn and closing 50 of its big box stores in favor of smaller formats. >> investors will get a fresh reading on home sales well.

economists are looking for a 2.7% increase in march. >> and a study shows apple is maintaining its distinction as the world's most valuable brand. its brand valued jumped by 19% to $183 billion. ibm is number two, followed by google. >> facebook's stock trades below expected. joining us, donald trump. did you get any allotment on the ipo? >> i was trying to buy facebook the day it came out and i was going to sell immediately because these things have a -- but unfortunately rules and regulations precluded me from buying. they actually have a rule that said if you're too rich or if

you have access to these companies, you're not allowed to buy, access to the exchanges or morgan stanley. i said, wait a minute, what are you talking about? if you are a certain net worth individual, i've never heard of anything like this. so i was all set to buy -- maybe i got lucky. i was all set to buy and they said the rules and regulations preclude me from buying, i can binh the op buy on the open market. i said no thank you. >> rules are there to protect. were you not protected? >> i'm worried donald was scammed on this. >> andrew's never heard of this. >> i felt very good the next day when it went down. i said that's good, i saved 11%. no, i was going to buy and immediately sell so i had bad intentions when you get right down to it, but they didn't allow me to buy. >> you take a populist stance on some things, donald, even though

you're far from a populist yourself i would say. but think about the way this worked where out of the 16 billion that they raised, more than 8 billion was going to these guys that got in early and were cashing out at a huge profit. >> right. >> and then look what happened. i mean, is there any reason that a retail investor shouldn't be disillusioned after the way wall street handled it? >> well, i just looked at the stats of other things like facebook, maybe better, maybe worse, and most of them really seemed to go up big the first day and then come down crashing. i don't know what's going to happen but certainly when general motors said they're not going to use facebook, they're not going to advertise and others saying the same thing, i wouldn't say that's exactly a hearty sign. who knows. it's not my world. if i had my choice, i'd rather buy doral country club. there's something i like about dirt. >> exactly. do you think this is a morgan

stanley? is it equal blame between morgan, nasdaq and facebook? >> i don't think it's blame. they wanted to get -- to me the worst blame is if they came out at 30 something or 40 something or whatever and it goes to 80, then they say look at all the money we left on the table. you could say they're very smart. who knows what's going to happen. maybe today it goes up 20%. i don't think that's going to happen. they priced it very full according to everybody. we have to see what happens now. i'll make a deal and everybody's congratulating me, great deal. i say do me a favor, see me in five years. >> this is vintage trump because there's nothing worse than a busted ipo where people just feel terrible about that. but with you, if you're able to sell that caribbean -- the bahamas, poor merv griffin, you

think it's great all the retail investors got hosed? >> no, i made a lot of money on that. >> you like selling things for more than they're worth. you respect facebook and morgan stanley for getting more than they deserve. >> frankly people have to be respected. you want to get the most. i feel the opposite when something doubles and triples. you feel like a jerk. i certainly respect whoever it is that owned the stock, they got the maximum amount for the stock. that's why i was going to buy immediately upon execution. can you call it bad intention or looking at the charts but i'm not a huge -- i think facebook is amazing but when you look at the kind of billions and billions you're talking about, i don't see it. >> so let me ask you this. i think cory booker is amazing -- >> can i real quickly interject, we have best buy earnings out and the company came out with adjusted earnings of 72 cents,

better than what the street was looking for, comp store sales down by 3%. i'm seeing headlines about the cfo and number two financial official potentially leaving on friday. i don't see it in the release yet. >> becky, i can't believe you'd interrupt a trump interview for best buy. >> they made me do it. i was going to get you right back into it. >> i'm trying to figure out how to get you to say something. cory booker, a phenomenal mayor, great guy, i know him. so he says this and then axelrod and actually the president himself sort of came out and said he's wrong because it's not a president's job to try to maximize profits. i was thinking about that. is that true that a president shouldn't -- shouldn't a president try to maximize the profits that the u.s. economy generates? you pay taxes on profits, you're

more competitive on the whole global marketplace. >> absolutely. >> but if you fundamentally don't get it that profits are not an enemy and it's not a zero sum game where you're taking it from someone else, you're able to say stuff like that and not even realize you're wrong. >> absolutely correct. if you continue to allow china to rip us off and opec to rip us off -- the world is ripping us off. the country of colombia made $4 billion on us last year. $4 billion. okay, that's a small trading partner. we call them our trading partner. we don't make money with anybody anymore. you have to get business judgment. i'm not saying it's exactly the same thing because you also have big social criteria and i'm a big believer in that also. but when you have colombia making $4 billion and they don't even do much business with us, we have to have somebody that know what is they're doing. china is going to make $350 billion on us this year. can you say, oh, gee, we don't want to bring business practice into government.

well, you have to to a certain extent. and cory booker is a great guy. he said the truth the first time and then the wrath came down upon him. >> i know. >> and that was the end of the truth. >> he's going to get audited now. >> i thought it was a red herring anyway. my bigger problem with what the president said about mitt romney is the idea that private equity is the only experience he brings. this is a former governor of massachusetts. >> well, he also saved the olympics. becky, he saved the olympics. people forget when he went into the olympics, it was in disarray. it was a disaster and he went in, did an incredible job and took it from a disaster to a really big success. that was a great achievement that he doesn't get enough credit for. he didn't just go in. he went in to save it because it was a disaster. people should think about that. >> it's the latest in a long list of comments look i'm not going to begrudge someone if they want to earn a profit or if you've made enough money, i

think you should stop. i keep hearing it and it makes me wonder whether the idea that the job of the president is to redistribute whatever we already have versus growing the pie. that gets me. >> we all know the right answer to that and actually cory booker gave the right answer the first time and the second time he back pedalled about 80% and i was surprised he actually did that. i think he would have been better off if he stuck to his guns because everybody, including the president by the way, knows that he was right. >> see that's my point, i don't know that that's true. sometimes you would say you have a company, is it really best to try to maximize profits or is it better to pay the average worker to give them a -- pay more money than you're able to, to lower the profits you give to investors but make everyone, all the rank and file a lot more wealthy. we've tried to do that. gm didn't do great with profits for years and years yet labor was able to extract huge concessions for pensions and for

everything else. look what happens. it doesn't help anyone when the employees eventually almost lose a job because the company goes under. >> when a company is really, really successful, everybody benefits. >> right. profits are -- the key thing is maximizing the profits of the corporation, then -- i mean, trickle down has a terrible connotation but if you don't grow the pie and hope that it spreads, just keeping it stagnant doesn't help anyone. >> that's true. one thing you're talking about politics but john mccain made a terrible, terrible mistake. he was too nice. he was just too nice. he didn't want to get into reverend wright. he said to people we don't want to discuss this, we don't want to discuss that. i hope that's not going to happen with the republicans. >> i respect mccain for that. >> barack obama had the most vicious campaign. in fact, i was looking at some historical facts. one. most vicious campaigns ever was

his campaign against hillary clinton and then ultimately his campaign against john mccain. >> are you surprised? you'll see the "new york times" do a series of articles on the bullying that romney did during high school but another series on how super pacs to bring up jeremiah wright is the most low down, despicable thing. on the one hand they'll talk all about private equity and how many jobs have been lost, cher riff picking cases, finding people to come on and say someone was a vampire. but if you were to mention anything on the other side -- that's wait it's going done right now. >> it was the most vicious campaign ever run against john mccain. look what they did to sarah palin, who is a terrific woman. but what they did to john mccain, and every something good and strong, whether it was the house, that was probably a crooked deal, they'd say we

don't want to discuss that. they ended up having nothing to discuss. >> mccain had a tougher time from the bush campaign, just like barack obama's and hillary clinton's got very dirty, too. i think we should aspire to be better than that. >> i've been seeing where the republicans don't want to go to certain little details of what happened with obama. they don't think it's appropriate to bring it up and think think it's appropriate to bring everything up because frankly, if they don't, they're going to have a problem. and you see it with the bullying and it was all nonsense, the bullying. i don't think the bullying ever happened. i know the man. it's not his personality. you don't change so much bleach it or not from 18 to whatever it was, you don't change so much. they bring up all the stuff. if neb brings up anything a little bit negative about obama, like the book that came out, the drugs that he took. if somebody else said what obama said about his taking drugs, they wouldn't be allowed to run for president. they don't even mention it. so i just say to the republicans

they better get tough because if they're not tough and if they don't use what they have, they're not going to win. >> that's the thing with -- becky works you suggest not to use super pac money for the democrats? >> yeah -- >> but what if you lose? >> but you got to take a stand at some point. if you don't take a stand if wh you control the white house -- >> but you won't control the white house. >> i think you have to aspire to lift above. if somebody doesn't show leadership do that, i don't know how it happens. >> i guess we disagree with becky on that. to be honest with you, becky, the ads are going to be vicious against the republicans. >> i think the democrats should have said no to the pac money, too. i think at some point somebody has to take a stand to say you have to rise above. >> that's not going to happen. >> they're not going to say, gee, we don't want that billion dollars spent in our favor.

we-the-have a great court ruling. i happen to love the court ruling. >> mccain took public money. he had 200 million and got outspent by 800 million. >> he did get outspent but he didn't use what they had. >> but the reason he said he didn't want it used is because he remembered hough he had gotten beat up by the bush campaign. >> then he got beat up by the other campaign and he got beat up twice. >> i don't know. i would have picked clay aiken. >> they were both great. we had a great success. it was amazing and two-hour live finale. arsenio hall was great. >> donald, is arsenio going to get a talk show out of this? >> i think he is. three groups are talking to him. as he says, i'm going home to paramount. and he was great. if you remember, he was really, really good. and then he went into hiding for

ten years. he actually left and went into hiding. well, he's coming back. he's going to be great. >> even after clay aiken mimicked your hair style, you still didn't fire arsenio. i just saw that picture there. it almost looked like you sitting there, donald, did you see that? >> i don't know if it looks like me. >> look at that, it's whipped around like that. i'm surprised that didn't ice it for him. >> they were both great. it was really one of my toughest decisions in terms of apprentice. i made the decision for arsenio but they were both great. >> donald, thanks for appearing on trump tuesday. >> thank you. >> i missed arsenio. did you ever do the woof woof and all that? >> after my time i think. was it on late? >> 11:30. >> i was already up early. >> coming up, more from our guest host larry lindsey and we've got best buy's earnings. they just reported above analyst expectations a couple minutes ago.

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futures have improved, up 29 points after a big day yesterday, which broke 11 out of 12 down days. best buy reporting earnings of 72 cents a share. that was well above expectations. in fact, 13 cents above. revenue was also better than expected and the retailers leaving full-year guidance unchanged. which you beat by 13 and leave the full year unchanged. the interim ceo says the company knows it needs to adapt to new market realities. they are talk directly to andrew ross sorkin. they're talking to you. >> the browsing library. >> you go through and pick something out and order it on amazon. that's a tough business model for best buy. >> i know we just told you that. >> we heard the laugh before we saw him. >> where did you --

>> robinhood. he was at the table next to us and someone was saying something funny and it was haunting. it really was. and i looked over and there he was. so it was weird. you were working. >> when was that? >> that night, you were working. >> i was. i was writing a column. >> you know, this other job. >> i missed it. when we come back, a bad start for an ipo doesn't have to be a death centers for a company. we'll get a report from steve liesman on ipo busts that turned things around. >> and bill hambrecht has long been at the forefront of ipo ruined writing. he'll join us at 8:30 a.m. eastern. ♪ going to go to the place that's the best ♪

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not every rookie knocks it out of the park the first time up. even the hottest of prospects can come up short of expectations. does an underperforming ipo mean disaster for the stock's long-term future? steve liesman did some digging and he has some good example. >> i like the way you start that off. we all see the big prospect comes up from triple a and

whiffs. >> i didn't make that up myself. >> the history of ipo pops and flops, it's rare to have a flop like facebook. very, very rare. the average one-day ipo gain usually 20%. so what we're seeing here with facebook is rare. not on is it down but it's down substantially below what it normally comes out as. if the second day close is greater than the ipo, six months later the stock on average is up 8.1%, this is from our friend, mr. jay ritter, mr. ipo, university of florida. if the second day closes below the ipo price, you have only a 3.9% return which underperforms the market by nearly 3%. that would tend to bode badly for facebook holders right now. hold on because we asked mr. ipo to look at this by company size.

a large company debuting with a down ipo price is very rare indeed. take a look. if the second day close is greater, it's 2.5%, second day close, 8.1%. so there is hope for your facebook holders that the stock could come back. all of the underperformance comes from the small companies. when the market doesn't look a small company out of the chute, it doesn't like the small company almost ever again. here are some of the influences after the ipo. as andrew said earlier, underwriters at some point, one day, two days, stop supporting it. the lockup ends so you have people coming to market to cash in shares, the stock becomes increasingly influenced by market trends and quarter live results and other financial information made public. thank you to jay ritter, university of florida, who ran

these numbers for us. heap says there is no correlation between what happens day one, day two with the ipo and future returns for large companies. there is hope for facebook. i guess can you hold on, becky. >> down again today. >> it is? >> indicated by the end of the day. now trading 33.36 to 33.41. down another 2% or so. we'll see. coming up, fallout from jpmorgan's $2 billion trading loss. and bob corker will tell us what kind of reception dimon can expect. >> if you're just tuning in, you're two hours too late. >> i think it's all the underwriters but more importantly, it's actually facebook. this is one of the few times where i think the bankers did exactly what the client asked them to do, which in this case maybe they should not have done. >> and the costs of the losses

in the exchange markets and the stock markets and the commodity markets and the jobs in growth, et cetera, are now a multiple of the totality of a greek debt. >> the senate hasn't passed a budget in three years. it doesn't take 60 votes, only takes 51. three years without a budget. i would think that maybe they should do their own job first and then start talking about how other people are doing their job. >> i was going to buy immediately upon execution. so could you call it bad intention or looking at the charts but i'm not a huge -- i think facebook is amazing but when you look at the kind of billions and billions you're talking about, i don't see it. >> the third hour of "squawk box" starts right after the break. one that continually monitors and corrects for wheel slip. we imagined a vehicle that can increase emergency braking power when you need it most.

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loss. senator bob corker tells us what to expect. >> and gary par will way in on the market, the banks and jpmorgan ceo jamie dimon. the third hour of "squawk box" begins right now. welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernen along with becky quick and andrew ross sorkin. our guest host, larry lindsey, president and ceo of the lindsey group. where did you get that name? >> i don't know. somebody thought it up. >> good. former director of the equity council. up a little over a quarter of a percent after a good day yesterday in spite of the -- ooh, 33.12 now on facebook.

33.12 to 33.16 on facebook. >> as joe just pointed out, it was a very rough start to the week for facebook. those shares just yesterday alone down 11%. that was on the second day of trading. as he mentioned this morning, it's getting close to the point of testing the 33 handle on this. down -- dare we say it, could we see a 32? >> i don't know what to say about this. i'm afraid to say anything. do you know what ipo stands for? >> what? >> no. >> a guy just sent this in to me and i already forgot what it was but it's pretty good. hold on a second, "it's probably overpriced." >> i like that. we can use that in the future. >> this one might have been. >> that's certainly the early indication. >> i don't know. it's just -- someone's going to say it does have some value

somewhere, right? >> oh, sure. >> the question is -- >> what is the value? is it worth $80 billion, $90 billion? >> 57 times forward trading, 57 times forward earnings? >> i thought it was 100 times. >> the journal had something today. >> what is it actually -- i don't know. it's only worth what someone's willing to pay you for it, right? remember -- >> today that would be 33.12, at least at this moment. >> 33.15. it's going up. >> there is word that morgan stanley's consumer internet analyst reduced revenue forecasts for the company in the runup to the ipo. morgan was the lead underwriter. jpmorgan reduced their estimates. investors say moves like this are highly unusual just before an ipo but it also shows there

is that chinese wall between the two sides of the firm. the nasdaq will hold its annual shareholder meeting today and it comes amade questions of how it handled the ipo. the exchange plans to set aside $13 million to resolve bad trad trades. $3 million is what -- nasdaq is seeking to increase it to 10 million. we'll talk with kayla about this later in the program. the bigger potential of course in terms of the cost to the nasdaq could come to damage to its reputation and potential for lost ipo business sashlt. >> senate hearings begin today with leaders meeting to discuss both dodd-frank and the $2 billion botched jpmorgan trade.

joining us is senator bob corker. unfortunately, we had senator merkley on and larry lindsey really had a good question but we didn't get to it and you're the wrong -- i don't know, maybe you're not the wrong guy to ask this. three years without a budget, why don't you guys do what you're supposed to do instead of trying to worry about what jpmorgan's doing? >> i couldn't agree more about the budget. it's been like 1,118 days. >> about. >> we haven't had a budget. it's incredible. i have quit voting for all spending bills until we pass a budget. i wish everyone in the senate would join me in that and then i think we would actually pass one. >> how many votes do you need? the senate doesn't need 60 votes, right? >> no, that's right. and for what it's worth, again, i think we ought to all quit voting for any spending bills until we pass a budget. i think it's ridiculous. we're spend being $3.5 trillion of your money and we have no guideline. we spent over $10 trillion since

we passed a budget. i think it's a total embarrass not to be able to pass a budget. let me get to the hearings. i'm sympathetic to people saying congress shouldn't be involved. i don't think congress should be involved in the inner workings of jpmorgan. but what's happening is washington is very involved. the regulators are hungered down. the phone lines are going hot between them as they're talking about what to do. i think the administration is semi-pan being stricken now because they realize the american people could well wake up and believe that the last three years has been nothing but a bad dream. i mean, if you think about what may happen with the supreme court and the constitutionality of the health care bill in june, the overpromising of dodd-frank, which some people could say and that's one of the reasons i want to have this hearing, some people could say have actually

made our banking system more risky. the big guys have just gotten bigger. the small community banks around our country have been crushed as they have more compliance officers and lenders. we've run up $5 trillion in dbtd and have nothing to show for it and americans are pitted one against another. so, larry, i'm sympathetic to some of the comments you've made before but the regulators may seek over the course of the next several months to prove a negative. i think in the process what we could do under the existing scenario where we have these high lie li complex organizations where even a jamie dimon, who i actually respect, doesn't know what's happening within his institution. we may end up in a situation where we actually make these highly complex organizations even more risky by causing the volcker rule to be something different than it was intended in the first place.

so i think these hearings are very important, not to get into the inner workings of a trade that is probably a blip on a radar screen and maybe less than two or three months in earnings. but i think it's an educational process. i think many for the first time may understand our banking system is far more complex than they ever thought during the dodd-frank debate. >> senator, i agree with you and commend you on your budget rule. what i found interesting is you're going to have someone there from the sec and here you have a bill where you're supposed to streamline regulation and you've created two separateors, some of which do some things and some which do the others. >> larry, i couldn't agree more, if we were going to simplify and create prr regulation in our country, we wouldn't have the

ftc. today's hearing is going to be nothing. i wouldn't even send cnbc cameras into the room. it's going to be a show and tell and will have no impact whatsoever on my opinion on looking into the complexity of the banking system. on june 6th when we actually have the other banking regulators in, there their may be some education that takes place. then the hearing that we have after that. we punted most of the tough decisions, larry, and we never really had the -- when elitists take over washington, there's no intellectual care i don't seeity. everybody knows what's going to happen. we never had the debate about glass-steagall. and the other pieces are sep prattly capitalized and doing --

we never had debates about what kind of financial system we wanted to have in america. what we did, we just had this sort of smothering of the entire system with all these 400 pages. believe me, when people get into some of the hiring practices that have been mandated as we move along, they're going to realize this bill has a lot in it that they never had any idea. in the process again, we never really had an appropriate debate in my opinion in our country about what our financial system ought to be. >> the proof is the too big to fail regulations have gone up. >> when you overregulate, when you have massive regulations crushing community banks in around our country, what happens is the big guys just get bigger when you create these massive

regulations. so, again, what i want to have but what it will do i think people on the senate banking commit, by the way, for the first time to sit down and get up under the hood and understand about portfolio hedging. do we really want these institutions to go out any type of hedging? i don't think in their present form that's what we want them to do. i think this is going to be a good thing. by the way, regulators are watching, regulators are affected by these things and regulators over the next several months are going to put in place rules and regulations. >> senator, just one last question and we got to go. >> okay. >> if i asked senator harry reid why don't you have a budget, you say you want one. would he have an answer for me? what would he say? he would say the republicans won't raise taxes because we can't have a budget. >> what is the answer.

>> your audience isn't used to me making partisan comments but i will just say this. i do not think they want to put any card out on the table, not a single democrat voted for any budget, not a single one, not the president's budget, not the ryan budget, not the twomey budget. remember, they have a majority on the senate, they can pass any budget they want on the senate floor with 51 votes. >> nobody knows this, no new york readers know this. can i just suggest a column for you? they have 53 democrats on the budget. they could pass a budget right now. will you just inform the "new york times" because they don't know this because it would never be in the normal part of the paper, would you just inform them all the the readers that there is no budget?

>> then you'd have to reconcile the two budgets after that, the ryan budget and the democratically passed budget. but then you'd have to get into the tough work that people hire to us do and for some reason, the united states senate doesn't want to do that tough work. >> how many days? 1, had 1,118 days. >> senator, i'm working on it. >> you're just patronizing me. >> nobody reads the new york -- your readers don't even know this. they just think things are going wrong swimmingly. >> all right. when we come back, we'll have more on the fallout of the almost $2 billion trading loss. we're watch the finance hearings. he's going to way in on the banks, the markets and right after this.

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welcome back to "squawk box." as you can see the futures at this point have turned positive, up by about 25 points this day, after a big gain yesterday, the dow better than 130 points. we're watching shares of best buy, reporting first quarter earnings at 72 cents, that was better than expected. >> joining us now on set is gary parr, lazard's vice chairman and this is one of jamie dimon's banker. you worked with him when he sold bank one to -- >> bank one merging into jpmorgan chase. >> and then the other side of the table, bear stearns sold to

jamie. >> yes. >> so you look at this trade and you now think what happened at jpmorgan? >> i think actually no new thoughts. one is i don't fully understand the trade. i don't think any of us from the outside do. but i think it proves it is almost impossible to define when a proprietary trade is versus a hedge. it's easy to see the extreme. in the gray area, hedging a complex balance sheet like a jpmorgan, it's really hard to tell. >> the size of this loss, does it say there's not proper risk controls at the firm? people used to say jamie dimon, the great risk manager. does it say anything about him? does it say thesence constitutions are too big to manage? >> there's an element that one is just risk management, figuring out the loss. $2 billion is a manageable loss to a jpmorgan. >> might be three, might be four. don't know. we do know the other side of the

trade. that is what regulator will be talking about is the degree of complexity is a level that is very hard to manage and arguably too big to manage, too big to regulate and indeed one thing about this trade, the new insig insight, maybe too big to hedge. >> you're saying because they're so large themselves, their ability to hedge is impossible sm. >> certainly more limb ped. how do you put on a good hedge if you are so big in the marketplace you. >> if you were called to go to washington to say gary parr, you've worked with all these banks, you know this business, what is the right answer in terms of what the regulation should look like. >> i'd go down to first principles, the bank should have more capital to create a bufr against losses. >> more liquidity and make sure there's diversification of

assets. those three core principles in place and indeed this it is too big. >> gary, isn't it hop that there's of people out there who would be happy with a barely building and loan? aren't there people who be willing to have the old margins and let the gun slingers do stuff on the other side sm. >> sure. >> couldn't we do that, though. is it really important for the deposit-based banks, that give morgan -- is it really loans? do they need that the other side of the business hope things manage them. u.s. ban corp, they would say no. >> have. >> wks cornyn why not -- no

thanks, i'm let you. >> it's a decent business, isn't it? you could have meek, and then have the banks ready to fail if they want but they never take anyone down with them. >> i follow you all the way but put the gun slinger over into one business, they call it banking and then you have lehman brothers dplp etook down the system. >> they were too systemic? >> they lacked capital, didn't have enough buffer against the loss. i would suggest glass-steagall is not the answer. the bankruptcies that occurred, bankrupt. it was a bank. >> but wasn't it the interconnection of all the money center banks after lehman felt that did it? lehman we could could continue and thens there's some truth to

that. interestingly i'd say the core problem there was a lot of banks what the same asset classless beings. fwen, they didn't have enough liquidity to beal dael with the runs. >> but i think when you have a systemic problem like you're thinking about, there's not enough liquidity in the world. the irony of all this is after we had the mess in 19 the 0, we, the regulators, went in and promoted the universal banking model, as a way of cross subsidizing the small loans that the senate earlier was complaining about, we wanted to have the investment end of the bank in order to bail out the consumer mortgage part of bank. i don't think we're going to find out way out.

but i think we're stuck. there's inherent risk in the system and what we really need is macro policy at the top that limits the amount of runs that can happen. >> but gary's point, too, is that you need more regulation in a sense, that it needs to go just beyond just the banks. it does need to go beyond. people should have some concerns about the chateau braeb bray bay. >> there are a number other business the and firms being sent out. i'm taking on chris beings and learn-term capital. >> are they hedge funds? >> a couple of other trading platforms. this is why i go back to core presents. if you just try and say i'm going to regulate this box, you're creating very creative people had can go and do it

somewhere else. so instead say capital, liquidity and then we'll work with bass -- basel iii is only for the bug banks. and there are other ways. but it is a fairly effect one one. >> how foreign is it for banks like jpmorgan to be able to hedge their portfolio, but this sort of macro wrist allows abuse to from tensionly going g from being headed ij into this priefry this sort of thought. and that is that some states all the banks have an acid exposure. once upon a time we had a

savings loan crisis. it was because they all had mortgages when real estate went bad and that created a systemic problem. how do i talk that be how do it limiting their risk in a downtown is a good after i mean, that's the only school wave to do it. if you have enough capital, i could say but we want to be sure there's plenty of capital underneath with this. do you give het krid, how do you look at this in terms of his image and his influence? >> me view would be looking at someone's career is the right thing to do i think with

anybody, any chief executive. jamie's had an exceptional career. i'm a big fan. it surprises me giving what a hands-on executive he was, it would surprise me there were such risks on the balance she'd and didn't have a complete handle on it. he came out and said i'm sorry, i made a mistake but i know hands on to a mands on manager. >> i respect him from coming outicly. >> is t is really bad timing for the industry but that's okay. my view in the end is back to more cap that will it and wall street. >> they'rele up, he's the ipo engineer behi

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welcome back to "squawk box" on this tuesday morning. and facebook's ipo down today. and the ceo of nasdaq has their shareholder meetings today. >> who is to blame for the problem surrounding facebook's ipo? joining us is joe hambrecht. he's credited for getting google to use an internet-based open ipo model instead of using banks to find buyers when they went blo public back in 2004. thank you very much for joining us this morning, bill. >> thank you. >> why doesn't we talk about

this. we just saw facebook sitting at a new low, below $33. what happened? >> well, clearly the underwriters misread the demand. and that's easy to do with the old ipo system. so much of the demand that comes in is not people who want to own the stock for the long term, but it's people who can't to come in and own it for a day. you're buying a stock not what you think it's worth but what you can sell it to for someone else. >> how does the auction system work? refresh our memories of what happened with google. >> google used an auction that we pioneered and used with other companies, of course. declining price auction, it's

called a dutch auction. the stock is priced at the price that's bid for the last share you want to sell. in other words, if you're selling a million shares, the millionth share, whatever price is on that, that's the price for the whole offering. >> hey, bill, if it's 25 teams sales, how long is the greater fool theory going to be in effect in general for facebook? why won't it be in effect for five more years? >> well, i think it probably will. i think the mistake that people have made is they assume that the ipo market is going to react the same way it did during the internet bubble, when people lost an awful lot of money in the ipos of 1998, 1999. and people have a long memory. so i think the last seven or

eight ipos, particularly in the internet space, have not been able to sustain the premium that occurred on the first day. >> you don't think it's more sinister than calculating demand and cashing those guys out at $104 billion. that would leave a really bad taste in my mouth if i were someone who got in on the ipo. >> the way the ipo business works in its traditional sense is it's an insider's game the underwriter has a right to allocate it to its clients. they call it an initial public offering but it's not public at all. just try and get an ipo that you think is attractive and try and get through it through your broker. it's very difficult. >> the office when i was a broker, the office would get 100

shares. there would be 40 brokers and you'd have 100 shares to split up. >> the auction is open. anybody with a legitimate brokerage account can place an order into an auction. and the individual investor has the same standing as the biggest mutual fund or the biggest hedge fund. >> and look how it worked out with google, too. it left plenty of up side for the company to grow into. this company is priced from perfection right from the very start. you got to hope someone's going to buy it from you at a better price because you not going to be able to use metrics to value it. >> i think google did it exactly right. they went against common wisdom. they did it because, number one, they wanted it to be available to their customer base. these internet companies are really co-ops.

it's a value created by the interaction of the losers. and google wanted to make sure that everybody who used google had opportunity to get stock. >> how much this much do you think is going to be a distraction to the company? is mark zuckerberg going to think about this at all? should he be thinking about this? the day-to-day business, are they watching this the same way we are? >> well urngs know, actually i doubt wlit going to have much of an impact on the company right away. the market will seek its level, you know, sometime over the next several months, it will sort itself out. and it will come to a market price that balances supply and demand. but then it's up to mark zuckerberg to perform. and i think everything will depend, as it does on every

underwriting, on how well the company performs over the next two, three, four years. and, you know, the impact of an ipo generally is something that last s a few months maybe but nt much longer than that. >> bill, you mentioned you thought it was the underwriter's fault for not get deting demand right, not getting the pricing right. we heard this was facebook setting the terms for this. what you have heard from being there in california? >> well, i really don't know what went into the price negotiation, but you know generally when the underwriter is negotiating a price with the issuer, the underwriter has all the leverage. the company can't go out and get another underwriter or check comparable prices. by the same token, facebook was

such an unusual and, you know, attractive deal for an underwriter that they probably bent over backwards to try and accommodate what the management thought it was worth. >> they took 1% fees versus the normal fees they'd get paid for these things. it makes you think the underwriters did not have a whole lot of control. >> it's a competitive world. the underwriter fees have been coming down because electronic communication and electronic distribution is so much chipper than the way it used to be. >> i know you think the duck auction model is really the way to go. have you heard more people say they'd be interested in following something like that since they've seen what happened with facebook? >> well, we hope so. we're talking to a number of companies. we think it's the most effective and accurate price discovery system there is. this is the way stocks open up on the exchange every day.

you basically match supply with demand. and the market i think is much smarter than any underwriter or any company in setting the price of the stock. >> bill, we want to thank you very much for your time this morning. it's been a pleasure speaking with you. >> thank you. >> coming up, taking your tv shows to go. tivo announcing a new service to enable content viewing on mobile devices. we'll talk to about tivo next. we don't have a word for retirement.

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welcome back to "squawk box." national cable and telecommunication associates meeting is being held in boston. julia is there by a special guest. >> i'm joined by tom rogers, ceo of tivo. thanks for talks with us. >> great to be here. >> you just announced tivo

stream to stream live to devices like the iphone and ipad. how will this boost your bottom line? >> we think it's going to boost the appeal of hough people experience tivo and how they enjoy television at home. you have this hole in the el television cop assumption experience where people love television but they want to get this device, the ipad, and now you can get your recordings right to the ipad. we think it's a big deal. >> seems like this put you in direct competition in this pretty crowded space. >> we provide a full package of services to the cable industry. in addition to the retail offerings we have, tivo stream

will be part of our cable television offering. we build tv everywhere using the interface across all devices. it not just what shows up on your television screen but the wait a minute way to package it through the interpad. >> now, we're starting to see grace companies, to allow consumers to access content on their terms, any time, anywhere. does that leave treef owe as a brand and as a product? >> remember, tv r wfr for what they're you're not just paying for your television on your set. can you watch cnbc on your other desizes around the home also. we've grown out of our consumer electronics roots and now cable industry is a key customer of

ours. to provide advanced television solution, we have to be providing tv everywhere. it's not just any content to any device any time. it's all three of those things easily and there's so many choices, so much chaos. you got to organize it and make it easy to get a. that navigation function is what we've always been known for. >> fivo added 3,087 sub skrabers. how are you going to maintain that growth when you do have that level of competition. >> well, that's a function of how we've begun to bring, that was the first up particular fof us thers a mitchell probably the best known capel exclusive. it's doing just wonderfully

rolling uttous to the market there, several hundred thousand subscribers in a relatively short pcht. we sigh our subscriber growth. >> now, we were chatting earlier about facebook, watching the stock move. you mentioned you were starting to work with facebook. what do you have in the works? >> when you have that much choice, when you have that many options, you got to have an easy way to get at what really matters to you to watch. a key way to do that is to know what your social network cares about, what your friend's relatives care about. we're working with phase book to bring it into what friends are watching what and house of representatives you rate it. with that we think that becomes a really interesting way to organize the chaos. >> joe, you want to jump in here? >> hey, tom. >> hey, joe. how are you.

>> good. >> i've heard this argument just because you can develop a technology almost means that you shouldn't. it almost sounds like guys orking on theg on the dvr, i've heard it from cable providers, just because you're able to-to-do it doesn't main should. how does a content providers deal with what is coming because you just can't expect people not to do something. >> to answer have i to take you back a little bit to my nbc roots. before i left nbc i did was put it into an investment of and one of the conditions we put on it was not to have the automatic replay. replay is no longer around, broadcast network sued them.

we decided that there is a way to make it possible for the consumer to enjoy television on their terms and provide the ability to fast forward through commercials, but to balance that against other needs of the industry and we think we came up with an approach. today we've taken that further with all kinds of advertising inventory that we make available as a way for we'll to witch viewers. will are fast forwarded through cash. there were very difficult consequences for the first -- >> my other question was a little self-serving. you already, you and bob write and create -- it mast be harder to get up because the goals aren't as lofty.

>> it's easy to get up because you're already up. >> and we have the same eighth grade social studies -- >> this is true. >> what do you mean? you two get me up in the morning because between the two of you, you cover my life. >> that is amazing. that's so cute. thanks, tom, good to see you. >> good seeing you guy. thanks very much. >> coming up, we're going to get more from our guest host larry lindsey. but first, take a look at some stocks on the move, yup, facebook. there it is 32.93. are let see direction the markets in. we'll head down to the new york stock exchange. that and much more after the break. break. take away the pixie dust. take away the singing animals, and the storybook narrator... [ man ] you're left with more electric trucks. more recycled shipping materials...

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push. >> welcome back on a tuesday morning, not a monday morning. >> if you're going to use that, you should get the day right. or don't even try. i would never know, so i never try. it's morning, though, i know that. >> let's get down to the new york stock exchange. carl, melissa and jim join us on

this tuesday morning. guys, what do we think of facebook? what's going to happen? i don't even know where to go with this? >> i like how the journal quoted that 38 was a halfhearted attempt? >> we'll see some of these subsequented atempbts at 34 are a little more resill gent. >> someone has to try to make a stand. you get this kind of negative vortex. it becomes a vicious cycle down where people say i don't want i. everybody says i don't want it. and the next thing you know, how do you value it? once you get down to valuation, it's very difficult to justify these prices. >> i said he talked about the greater full theory. i said well, when will any trade in facebook be not be based on the greater full theory? how do you know when you've actually reached what this brand or what the future is worth for facebook? i wouldn't know where to price it. >> i think obviously mobile matters. we're going to have millennium

media on. there is a rebellion among youth to not click on ads. >> do you see what wells tweeted, joe? >> jane? >> jack. >> oh, wells. >> yeah, talking about morgan stanley. said they put out too much stock and the pricing was piggish. he called it piggish. >> who are you blaming? >> he's blaming morgan stanley. he says morgan stanley has the blame. >> i'm curious, around that desk. is it morgan stanley or is it facebook? >> look, morgan stanley, yeah. >> guys, too much. >> you can't increase by 50%. >> you don't call smith barny the night before and say listen, we've got 20,000 for you. where does that go? >> what you do is get complacent and then on monday you sell it. >> the people you place it with don't even know you bought it. everybody is culpable on this one.

>> i like you're all the king's men. i didn't get that right away. >> yeah. >> can't put people back together. >> humpty dumpty. that ended badly. >> it did. >> guys. thanks so much. >> when we come back, we'll have more from our guest host, larry lind see. stick around. squawk will be right back. ♪

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stock of the day is facebook. that's another little print there down -- i don't know what -- that's 4%. and we could figure out market cap losses. this should be an interesting day just to see the volume and to see where innerness, where some true interest in buying comes in. it must be somewhere. >> there vn be a lhave been a l shares traded. >> somewhere, you figure, it

finds a bottom in earnest, right? where the underwriter -- >> jim is right. at this point, there's so much talk. >> there's a price where the underwriter should have been able to figure out might have been a better place where it would be. >> let's get some final thoughts from our guest host today, larry lindsey who is the president and ceo of the lindsey group and the former economic director of the economic koun till. larry, you've been watching the race for the senate and have some pretty out there ideas. you think she should drop out? >> if i were an honest liberal out there, i'd tell her to. i used to have, basically, the job she used to have. i used to be in charge with consumer and community affairs of the fed. lying about your ethnicity robs someone with a genuine ethnic background of that kind of position. of course, it also degrades the whole system. right? she is not -- she identified herself as a native american. i'm sorry, that's self identification.

she doesn't go to tribal meetings, her great, great grandfather may have been a cherokee or whatever. that is not an honest yielding of the system. i think it makes a mockery of it and it makes a mockery of affirmative action. i would be very, very disappointed if i were a liberal. i mean, as a conservative, you know, she could run if she wants to run. but i don't think she -- i don't think she's being honest with the people of massachusetts or with, you know, her own party. >> you think romney is going to lose because 49% of the people probably would support the president considering they're on the receiving end? >> joe, the political science model say the incumbent gets elected. there are certainly exception, but the odds are he's got a very effective campaign team. >>