good morning, everybody. welcome to "squawk box" here on cnbc, i'm becky quick along with joe kernan and andrew ross sorkin who, yes, is in the house today. let's bring you up to speed. massachusetts attorney general is subpoenaing morgan stanley. he'd like to know more about morgan's analyst discussions with an institutional investors on the revenue prospects for facebook. a morgan spokesman says that the firm followed the same procedures for the facebook offering that it follows for all ipos. the s.e.c. and finra also calling for review. more from jason frankel in minutes. facebook advised analysts for underwriters to reduce revenue and earnings forecast. the social networking giant reportedly made that decision because of feedback it got during the road show that revealed users were opting for mobile devices that generate less advertising revenue. shares of facebook, by the way, down again yesterday.

$30.52, that was the close. of course $38 was the ipo price. and the big global market story of the morning, the european leaders are gathering for an informal summit today. they are expected to talk about growth-boosting proposals and the idea of a joint euro zone bond. french president francois hollande supports the plan, but angela merkel is opposed. we'll have a live report from europe in a moment. but for now, andrew, back over to you. >> thanks, becks, and joseph, i am here standing right here. we can talk about that in a moment. >> plenty of time. the s.e.c. dealing a blow. the federal judge dismissed large parts of the case against former executives at failed mortgage lender indy mac, one of dozens of case the s.e.c. has brought against executives. and lenovo expects a slowdown in europe. citing deepening global economic uncertainty.

and a strategic plan today that will refocus the u.s. business and look for growth in emerging markets. the company is said to be one of a number of companies that have submitted first-round bids for the asia life insurance business of ing. moody's raising to investment grade for the first time in eight years. the double upgrades paved the way for the automaker to get assets it used for collateral in 2006 in order to get a $23.5 billion restructuring loan. joseph. >> hey, andrew. i'll get to these early stocks. i will. i promise. we'll get to dell and others, but facebook. facebook, facebook -- >> facebook, $30, now we're talking about -- >> on monday, on monday from 6:00 a.m. to 9:00 a.m., it was obvious it was going to go below $30, and then yesterday -- >> below $38. >> and yesterday it also so rough. but now the general media is -- did you see, for example, one,

two, three, four, five, six, seven, eight, nine, ten -- the headline says zucked. >> sweating from his hoodie. >> and they've got eight different stories there. "huffington post," same thing, all facebook. and the "new york times," lead story, facebook debut raises questions. then on the top of the new york post facebook has no friends. and my personal favorite in the daily news, nothing to do with facebook, but that is by far my favorite. >> yep. >> nothing to do with facebook. >> but it was -- >> i was looking at headlines, and i figure -- this relates to the facebook story. because i said if mark zuckerberg's girlfriend is not named, he should've ditched her, but he didn't. and i think that has to do with what happened monday and tuesday. just bad karma, you know, bad move for all single guys that are billionaires, he marries

someone. >> that's a terrible thing to say. >> it is. a few early stocks to watch. dell reporting weaker than expected first quarter earnings and revenues last night and the company's second quarter earnings forecast weak. citing weak u.s. and tech spending and shrinking pc sales. analog devices also was hit after the bell. reported better than expected results, but the current quarter guidance was weak. and take two shares getting a boost. reported a bigger than forecasted loss but raised the forecast for fiscal 2013 on the latest installment of the blockbuster grand theft auto franchise. and check out shares of rail america, the company announcing review of strategic alternative. finally shares of petsmart getting a boost on better than expected earnings. and you can see all the way up -- it was somewhere around -- that makes no sense. isn't that a weird-looking chart? >> yeah. >> yeah. what am i looking at? >> the day plus the after hours.

>> the after hours -- >> the after hours does not -- look, it says 55.62, it doesn't show the after hours price on the right or at the top. it should be somewhere around 60. >> i see what you're saying. >> and it also should -- i look at these things. i want to be telling the truth. >> look at this. says 55.62, and it's above 60. >> hey. >> look at the big brain -- that's what i just said. yeah, something screwy. i look at this to make sure. >> well, pay no attention to that, viewers. we know it was up after hours. >> what about this next thing? >> this one they should pay attention. >> let's look first. >> i'm going to tell you there's pressure on the world markets today. the dow futures at this point are indicated down about 90 points. this is coming as you have the big european summit today. a lot of concerns about what europe will do and what it's going to mean for the rest of the globe. yesterday, the day was essentially flat. and you know, the dow was down by one point, the s&p was up by one point. up one point as a win, the s&p if you count that as a win had

the first two-day winning streak from april 26th to 27th. almost a month since the s&p has put together two days of a win. oil prices yesterday settle below $92 for the first time since october. and now they are down once again today another 1%. $90.87. you're talking about a point where you could crack and see an eight handle on energy prices very soon. check out the ten-year because yesterday with all these moves a the the end of the day, once again, seeing the yield on the ten-year incredibly low, 1.735%. and the euro yesterday dipped to a four-month low versus the dollar after some comments that came out from the greek prime minister. again, everybody's watching europe today to see what's happening in this europe summit. today the dollar is up against the euro once again at 1.2633 and the dollar/yen at 79.41. and 15.5480.

right now time for the global markets report. kelly evans standing be i in london. and kelly, this morning, i was watching your show, listening to jim o'neill who had a lot of interesting things to say about what this european summit means for the entire globe at this point. >> yeah, becky, he actually coming off some of the comments made by an analyst volatile index is saying clear policy makers have to do more if they want to reassure markets here. and as you can see from the sea of red behind me, people aren't sure that's going to happen. take a look what's happening in the stocks, we can almost count on two hands the number of stocks in the green today. pretty much everyone in the red. bank shares among the big losers, and the stock 600, which has been down throughout much of the morning trading session is down 1.64%. we're handing over to you guys on a bit of a weak note. closer look at what's happening across europe, spain, the underperformer, down 2.13%, the cac 40 in paris down 2%, xetra

dax down 1.8%, and the uk down 2%. look at what's happening at bond yields, this flight to safety bid come back into the market, prices in spain and italy are lower sending those yields higher. you look for silver linings where you account a this point, spain is 6.145%. we're falling back toward some of their lows. and the last one as mentioned behind in germany we're down to 1.41%, still not at the record low levels, but getting close. and a quick look. the big story happening with the dollar. in early trading, we've seen the euro fall to four-month lows. and in fact, at some point to almost two-year lows against the dollar. you can see here we're down about .4% on the day. it's a big move. but the dollar index, it's breaching closer and closer to significant highs. that's driving the commodity

complex lower, as well. wish i had better news to report. back to you guys. >> kelly, thank you so much. we wish you had better news too. thanks for bringing that to us. and we'll see you again tomorrow morning. back to this facebook story. regulators want answers about many things that happened before facebook went public. joining us jacob frankel. he is former federal prosecutor, former s.e.c. enforcement attorney. he's also a partner at schulman rogers. just watching it before we knew anything, jacob, we started pointing fingers. then we hear guys cutting estimates at three different firms and some worry at facebook itself. >> and they didn't tell everybody. >> no, i know. and facebook also said -- >> that's the -- >> facebook warned someone about mobile not being as great. and facebook also, i think, knew about gm and said you better come out before this. >> do we know of an investor, by the way, who was told about it? who was told about the -- >> i don't either. >> does anything come from this,

jacob? >> i think you hit the issue on the head. it's memorial day weekend, swimming pool's open, everybody into the pool. it's the regulators, it's the plaintiff's bar, everybody's going to go in. the facebook offering has been under scrutiny. what's going to happen now is people are going to be looking at what facebook was disclosing to the banks, what the banks were disclosing to the investors. all of the discussions, everything is fair game for everyone. and i think it's going to take a while for all of this to sort out. >> even priscilla, the prenup was valued at $38 and now it's $31. was that cast in stone that -- i don't know. so there's a lot of people that will be involved at jpmorgan -- >> but to that point, i mean, i think the examination really is going to be what did the the company know? what did it tell the banks? what were the disclosure to the banks? what were the banks telling select investors? what were they telling other investors? the pricing of the ipo. i think all of this really is going to be fair game. because i don't think anybody

remembers an ipo coming under this level of scrutiny. and when that happens, then you have as many -- as many what appear to be grave mistakes in that process. that really is fair game. >> jacob -- >> yeah. >> and the nasdaq, it would've put the brakes on the offering. they knew there was that glitch too. they had an idea, they didn't know it would be this significant, right? but how about chief financial officer of facebook decided to boost the number of shares but after morgan stanley the main adviser told him there's plenty of demand. was it his decision -- >> i told you yesterday facebook was the one questioning the banks. >> are they allowed to say let's raise it by 25%? >> they did. i mean, they had an unbelievable amount of influence this time around. they were able to say you get 1% -- >> and what's weird, it wasn't raising the 25% to bring in more money for the company to use for

corporate proceeds, it was mostly going to selling shareholders. >> exactly. >> why would the company care about that? >> well, and every one of the questions that you're asking really highlights the level of interest. and you mentioned -- you mentioned nasdaq. you talk about the comedy of errors. i hate to say the candor, but the candor of nasdaq in terms of its own errors in handling the ipo, you know, almost lends itself to a come sue me invitation. and i think that's what we're going to see. we're really going to see a flurry of everybody jumping in, making whatever allegations they can, ultimately seeing what sticks. the real test is going to be what actually constitutes a violation here. and i think there's a lot of sorting out that's going to need to occur. but it's going to be under an intense microscope. >> jacob, i'm just curious, and i'm trying to think this through. nasdaq clearly messed up. that's unequivocal. but all the other issues.

had the stock gone up for some magical reason, we would not be having this conversation. and it just raises this -- we had steve rattner on here a week or two ago. and i'm going to raise it even though it was not a popular thing said. he said individuals should not be playing these markets. just broadly said retail is just -- it's a big boy business, you can't always do it right. and i just wonder given what's happened here, whether we laws were broken and that's the issue or we think stuff happens. >> you know, i really like the way -- the way you hit on that. started that point. because you're right, i think very often if the price of the issuer goes up, you know, then people don't care. this almost reads in some respects like, you know, i have to sue the nasdaq because i wasn't privileged to lose money in the facebook ipo. and you're right, if it had gone up, i think the entire reaction would have been different. but the bottom line is that it

didn't. and when you have failures like this, whether they be judgmental comedy of errors and substantive conduct issues, it almost takes a facebook ipo to bring these issues into focus so that the regulators come in as we sort of talk about who the players are right now. probably the biggest, you know, the biggest splash in the pool was the subpoena you issued yesterday by the massachusetts attorney general. keeping in mind the massachusetts attorney general is one that extracted a $10 million settlement from goldman over its huddles. so we're talking about not just the different players, but there's going to be a lot of competition for who gets to, you know, for who gets to carry the flag saying i brought the biggest case involving the facebook ipo. i think there's a lot really we're going to learn as this process moves forward. >> all right. i'm reading deal book right now, andrew, which got here through

drudge. >> yep. >> and that's your deal. and one of the quotes is, someone -- >> the jig is up. >> the jig is up. >> who said that where? >> somebody said that they kn knew -- remember the cnet guy who said the fed had already -- >> they were not saying -- the context of the quote he's saying -- >> some investors. >> the investors saying the jig is up -- >> i thought you said somebody at the company. >> someone at facebook -- >> no, that's not what that quote was referring to. >> jacob, thank you on this 78th birthday of bob moon. >> who? >> bob moog, the moog synthesizer. have you hit google up today? >> no. >> hit google up today. >> i'm glad becky doesn't know. >> oh! i still didn't know what it was. >> i should have given you a tip so that i could then make him

the odd man out. all the pink floyd stuff, yes -- >> pretty cool. >> yes, it is. >> and if you click on it -- >> oh, and you can actually play it. >> i think you can play it, but i can't hear it. >> well, we don't have volume here. >> bummer. when we come back, it was just one headline and it was hardly new, but word that greece was making contingency plans for a euro exit moved the markets yesterday. our michelle caruso-cabrera. plus, breaking economic data, jobless claims and durable goods numbers due at 8:30 a.m. eastern. don't miss "squawk box" tomorrow at 6:00 a.m. eastern. of how a shipping giant can befriend a forest may seem like the stuff of fairy tales. but if you take away the faces on the trees... take away the pixie dust. take away the singing animals,

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the euro fell sharply -- >> is that funny? >> it is not. it is not funny. let's go back. >> start over. >> the euro fell sharply and stocks dropped from their high of the day yesterday. on news that greece was making contingency plans for a euro exit. but former greek prime minister says not so fast. cnbc's chief correspondent michelle caruso-cabrera talked to him last night joining us on the "squawk" newsline. michelle? >> hey, good morning, guys. late in the trading session, there was a brief headline

across the wire saying papademos: preparations underway for possible euro zone exit. once you saw the full article that came out and after i spoke with him on the phone, it became clear it was a very partial quote. where he said actually very clearly, there are no preparations underway in greece for a possibly eurozone exit. but if such -- and he calls it an unlikely -- an undesired scenario is feared, he says, "it cannot be excluded that some preparations are being made in other european countries, other european institutions." but he was very specific not in greece. he also added that pressure on the banking system had eased in the last couple of days and that the bank recapitalization process was underway and he thought that would restore confidence to the bapgs and allow them to once again fund themselves in the ecb. he wanted to be very clear. it was a very brief conversation, it was very late,

his time was after 1:00 a.m. athens time. there are no preparations in greece for an exit from the euro, and that simply because of heightened fears due to this election in early may, clearly in other european countries and other institutions, you can't exclude that they would be doing preparations just in case. he didn't know of any such preparation. i don't know if that'll help out today at all or not. but remember also he's got to say a lot of these things as the former prime minister of greece, also a former central banker. and the minute you start talking about any exit, that feeds depositor fears and could lead to more withdrawals like they've seen in the past. >> michelle, it has not helped the euro today. and i guess what people are trying to maybe figure out what the headline said the first time around, do we buy that? or do we buy what he was saying afterwards? >> i think when you read the actual article from dow jones, it's -- what hit the wires late

in the trading session was a very partial quote. and he's a former central banker. every single word is extremely precise. so i think in our twitter world where we're trying to fit everything in a few sentences, maybe you didn't get the whole picture. >> that's a really interesting point. in this twitter age, in this time of briefer and briefer sound bites, it's easier to move markets, even inadvertently. >> absolutely. >> thank you very much. we're going to keep an eye on that. but as we mentioned, it hasn't helped the euro just yet. michelle's going to be following all of these things that have been happening and check in with us later, as well. but joining us right now, is the head of investment at brooks mcdonald. and jemma, what do you make of these comments that, you know, michelle just explained, this is not something -- he didn't say that greece was making any contingencies for this. and yet the euro hasn't been

helped. >> contingency plans, although he might not be promoting the fact that anything's being done internally in greece, true that preparations are being made externally. in the uk, the fsa actually advised banks to start making preparations for a possible disorderly exit of countries from the euro back in november of last year. but it's interesting to note that although the focus is on greece at the moment, i think the spanish finance minister came out and said that greece is like the canary in the coal mine. meaning, you know, greece will be warning of imminent danger. the feeling is that spain is that danger. and that's what we're watching much more closely at the moment. >> okay. michelle also makes the point, though, in this age of twitter, things get disseminated, get put out quickly, and obviously markets are ready to pull a trigger when they see something happening. how concerning is that? and how should an investor

beware on a day like this? >> that's definitely a key concern. if we look at for example the g-8 summit going on this week, one of the focuses will be on growth. and this is a prime example of how in this age of just trying to get a sound bite out a focus on growth actually what does that mean? and investors, you know, are very uncertain on whether that means structural reforms as germany wants or actually spending on infrastructure with respect to what france wants. so it means that there's still a lot of uncertainty around. and although rhetoric is obviously still very prevalent, a focus on actual practical plans is still missing. >> so what would you be telling an investor to do right now? >> i mean, we took the opportunity when markets obviously have been rallying substantially to take profits for lower risk clients and actually redeploy capital to alternatives and property. just looking for a more attractive risk return profile until we gain clarity and

confidence to add risk directly in equities. so, for example, we're looking for structural reform, we're looking for greater fiscal consolidation, and there have been talks, again, about euro bonds and how they're going to be able to solve the crisis. and we crucially need to see a move toward either closer fiscal consolidation or exits. and finally longer term structural supports because bank recapitalization needs could provide the trigger. >> all right. gemma, we should point out also, you're not only a quantum physicist, but considered the most popular woman in finance on twitter, as well. so if you weren't following her already, you should. >> and i'm going to retweet her address right now. >> what is your address, gemma? >> it's gcgodfrey. >> and who did you start following yesterday, girl? >> i started following you. >> yes, you did. i saw it. yeah. yeah.

you made it 9,000 and, i don't know, 51. >> sorkin, i don't even want to say 9,000, knowing that you have 500,000. >> 400,000, 500,000. >> anyway. >> i'm going to tweet her address right out. maybe we can add to her. >> we've only got 20 seconds. but facebook, very low volume today so far because it's early, be uh down again. and that would be a new low if it would trade there. coming up -- >> wow, $30.44. a new poll out this morning. among the headlines, the president's thin lead gets even thinner. highs. tdd# 1-800-345-2550 the spx is on my radar. tdd# 1-800-345-2550 and i'm on top of it all with charles schwab. tdd# 1-800-345-2550 tdd# 1-800-345-2550 i use streetsmart edge and its tools like... tdd# 1-800-345-2550 screener plus. tdd# 1-800-345-2550 i can custom build my own screens tdd# 1-800-345-2550 or use predefined ones to help me find tdd# 1-800-345-2550 possible trading opportunities quickly. tdd# 1-800-345-2550 i can also bounce my ideas off their trading specialists -

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really? were you encouraged by me? no, wearing that hoodie. the hoodie's -- this is a mood synthesizer. >> this is from -- >> you're coming along, buddy. >> pop culture. >> pop culture. can i tell you? i'll tell you something after the break. >> now everybody at home -- >> there was a scene. that was -- i was too young to go to that movie. >> your first kiss? >> no, the first time i'd ever gone to a movie where there was a naked person in the scene. >> eddie murphy? >> no. it was a strip club scene. >> oh, there was. okay. >> i remember that scene, actually. >> it was a girl, no the a guy. >> and i was -- >> good morning and welcome to "squawk box" here on cnbc at 6:30 on the east coast. i'm joe kernan along with becky quick and andrew ross sorkin. did you enjoy it?

>> moving along. >> i was like 9 years old. >> that's an age where you start appreciating that. i did. let's start with the markets, ira harris joins us from the cme. some of that was -- no, he was from detroit, i guess, wasn't he? >> eddie murphy? >> yeah. >> ira, when did you first see a naked woman in a movie? >> holy cow, joe. i have to think back -- probably, let's see -- >> don't think back. when was the last time when you saw that? that was this morning. so what do you -- what do you make of -- what do you want to talk about? europe? >> no, we can talk about europe, certainly, let's also talk about andrew's piece yesterday on glass seagal and where he gets it wrong. so i figure we can -- >> oh, i love it. >> come on. >> conflict. go ahead. go ahead. i love this. >> here's where -- i actually sent you an e-mail a piece i

wrote back in august of 2002 where i said it was going to be the worst act the united states has done in quite a while. and here's why. when you repeal glass siegel, the investment banks served a great purpose by acting as a fiduciary and protecting their clients from being involved in anything like the, you know, the toxic waste pushed out. once you took them away from that fiduciary responsibility and allowed them to be a pusher of poor product with -- and this is the key, and joe, this is for you. if you have fdic insurance backstopping these banks and basically subsidizing cheap capital for them, that was the importance of glass siegel, if you want to repeal it, then banks should not have the access -- >> the banks pay for the fdic -- the -- >> minimal. >> what do you mean? who pays for the fdic? >> let me tell you what. >> he's suggesting the taxpayers. >> someone would come in if it's

insufficient. you go after the banks and that in this environment you'd go after the banks for the next ten years to pay that back if the taxpayer had to pay for the fdic. >> no, no, it's actually easy. because what banks would then have to do to keep their low cost of capital, they'd have to reveal what the risk profile truly was, which we don't get. and a real computer time with quick access today they'd be able to do that. and that's the missing link. because if they had to pay real prices for risk capital, the whole system would be vastly different. >> i'm not going to disagree with you. that they added risk to the system at all, but then -- >> the repeal of it. >> but then i think bear stearns, lehman brothers had nothing to do with it, merrill lynch, zero to do with it, aig, nothing to do with it. fannie mae, nothing to do with it, freddie mac, nothing to do with it, bank of america's problems, countrywide, that was their problem, it wasn't a trading issue. >> yeah, but it all built on it. once you repealed it -- listen, why would you repeal it unless it was done for a reason? and the reason was that you were

allowed to then ramp this up and it changed the whole structure of the system. if you're going to change the structure of the system, then change it and makes bank really pay for the cost of capital for the risk that they are taking. and as long as we continue to -- little banks subsidize large banks because don't forget, joe, they're in that fdic pool too and they're paying insurance premium. >> but the big banks are paying the big chunk of it. >> well, relative -- not relative to the amount of capital. and the cost of capital. what would jpmorgan today have to be paying for capital after this debacle? they're paying the same rate. we don't know what the risk on the books really is. okay. but let's go to europe. and now if we go to europe. everybody's talking about these euro bonds. the german constitutional court could nix the whole concept. and they've told sitting german governments, don't go down the road of eurobond because you'll have to go back to the whole german populus to ask for

permission. it would be overstepping the bounds of the european treaties and this is no small element for what's going on in europe. eurobonds, everybody can talk about it, talk about it, it's a much more difficult hurdle to overcome. and this is weighing heavy on this market. >> all right. thank you. >> okay. >> appreciate it. we'll see you later. >> continuing that debate. >> yeah, we will. and -- all right. let's get to a new nbc news "wall street journal" poll this morning. eamon javers joins us with the highlights. i don't know -- where's harwood? he should be -- i mean, normally if you get a four-point obama lead, he would be here -- >> i'm a poor substitute. >> he would be here just to crow about the four-point lead. >> i think he also likes eddie murphy movies. >> i was going to have one more divergence. remember him, serge.

he stole the show. >> i just remember that tune you just played that tune -- >> yeah. >> the entire fourth grade class had to learn that on the piano, that was like the coolest thing, if you could play that, that was it, you didn't have to learn -- >> there was a reason because the antitrust authorities in europe are looking at google for a variety of reasons. this is on the google page today. the moog synthesizer, it's robert moog's 78th birthday. within the margin of error -- >> yeah. >> what i saw and i saw brian williams talk a lot about it last night too, eamon, but it's that headed in the right direction that whether your kids are going to be better -- i think 65% said we're going to be worse off. and that is a bad -- i don't care what the head-to-head numbers are, that's an angst-ridden feeling. >> people are pessimistic, this race is tightening up, and the numbers for the president here on the economy are just not good.

they're not where he would want them to be ideally going into an election in november. take a look at some of the highlights here. let me rattle through some of the numbers so you can get a sense of what we're talking about. starting with the overall obama versus romney. obama leads 47% to 43%, that is tightening up. now 42% approve of the president's handling of the economy while 52% disapprove of that. and 32% say obama has the right goals and policies to improve the economy compared to 26% who are only somewhat confidence and 41% who are not at all confident. obama's job approval rating in here is 48%. that is down from 49% just a month ago. so this thing tightening up still very, very close. and i think what this tells us is that we're going to be looking at a very closely fought battle for those independents, a very narrow group right in the middle here. those are the people who are persuadable by both parties, by both candidates and that's who

they're going to be going after. it's hardening on both sides. >> do you have a graph showing the approval rating for the president for his handling of health care? did you see what that was? >> no -- >> 39%. that's an obama care proxy right there for how popular obama care is -- >> absolutely. >> right now. that's a snapshot. 39%. >> and that's the president's signature legislative piece of -- >> i know, and if that gets thrown out. what were we doing for the first two years? and then you see harvey gallob today in the journal talking about the -- he was a former american express ceo, the worst of the 11 recoveries in the last 60 years, this is at or near the bottom in job growth in every economic indicator. >> what's interesting here is you see the president now sort of in a position that george w. bush was in in 2004.

sort of his popularity fading. people kind of like the guy. and i think if it's a tie here as in baseball, the tie goes to the runner. if it's a tie in presidential politics, the tie goes to the president, the power of the incumbency is so strong that you would think that would be enough to just squeak him through here. but it's just going to be a very, very tight race and anything could happen at this point. >> eamon, these polls have asked something a lot of people talking about. and people asked whether they'd have a problem having a mormon as president. i was stunned by the numbers that came back. 27% say they, someone in their family, or someone they know in their work or neighborhood would have a problem with that. >> that leapt out at me, as well, becky. and i think those numbers are surprising, particularly for people to admit that to a pollster. usually if somebody has a prejudice viewpoint, they're at least smart enough not to tell a pollster they feel that way and so you can kind of get a little bit of misreading in polls. but to see that show up there is kind of astonishing.

on the other hand, you know, president barack hussein obama ran in 2008 as an unusual figure in american politics and was successful. we haven't had a mormon president before, but that's not to say -- >> let's see if the politically correct left cannot try to make hay with the feelings of those 27%. because you would think, oh, you know -- >> it's touchy, right? >> but if they think they can use it. >> democrats had a bigger problem than republicans because it was seen as a proxy for would you vote for mitt romney? the question. but that was interesting. >> if he can find a way to use it without his fingerprints on it, he'll use it. >> it would be ugly for the democrats to use it. >> they will. they will. >> with all the questions over the president's religious beliefs -- >> quid pro quo, clarice. >> it's a loser for them.

>> this poll dug into that question in a big way. not only 27% knew someone who might have a problem with it, they found it was a bigger liability than it was to be a woman, hispanic, african-american president, but not as big of a liability as it would be to be a gay president. >> and you've seen mitt romney sort of trying to deal with this and reaching out to evangelical christian voters. those are the folks that he's going to need as part of his political base in the fall. he's going to need them to turn out in big numbers to win a lot of these states where it's touch and go for the romney campaign. if he can get them, he's much better off. but he has to reach across that divide where a lot of evangelical christians don't look at mormons as christians and don't like mormonism and what it represents. so there's a real sort of theological tussle there that the romney campaign has to res rest l wiwrestle with. that's a trick they'll have to pull off between now and november. >> it won't be right out of -- you won't be able to trace --

it'll be in one of the super pacs, won't in right out of the -- right from the white house itself. >> you never do it with fingerprints, right? >> no, no, never. >> are you cynical about politics, joe. >> oh, i mean, if i had -- if you could measure my cynicism, it would be off the charts. >> well, i've been here in washington for a long time -- >> you're there. >> i'm there with you. >> you went so far cynical, you've given up on cynicism and come back to try to get something positive out of this. >> yeah, flat out reality. look at it for what it is. >> exactly. i enjoy it. i like it, but it's so nasty. but anyway. >> all right, eamon, thanks very much. if you have any comments or questions about anything we've been talking about this morning, go ahead and e-mail us at squawk@cnbc.com. facebook is the ipo we can't stop talking about, but how about buying stock in your favorite company from its own facebook page? a new venture launching today that will let you do just that.

we'll find out more as we celebrate the life of synthesizer creator robert moog. today would have been his 78th birthday. we'll be right back. today is gonna be an important day for us. you ready? we wanna be our brother's keeper. what's number two we wanna do? bring it up to 90 decatherms. how bout ya, joe? let's go ahead and bring it online. attention on site, attention on site.

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did you ever think you could buy stock for your favorite company in facebook? facebook's former chief privacy officer and a director and bill, the ceo of fifth and pacific

companies formally liz claiborne. we appreciate it very much. explain what this is all about. i'm going to be able to buy shares in his company on his facebook page today? >> thank you. we are very happy to be here. yes. that's absolutely the case. you will be able to go to fifth and pacific to any of their beautiful brands, usy cutore, lucky brand and invest as little as $10 and vote with your wallet. >> $10 increments. >> $10, $25 or $50 or any amount that you want to invest up to $2500 per month. you pay no fees when you buy or sell. >> how do you make money doing

this? you are the broker in a way but you are not charging commission? >> our customer really is the issuant and they pay us. our purpose is to affiliate people with brands. people care more about things they own than things they don't. this is about loyalty and democratizing the market for investors and being able to create a closer relationship with social media. >> you have a perspective on facebook. why are you doing this? >> for us it's about one thing and that is customer loyalty. customer relationship management and marketing. >> so now we are mixing being a customer with being an owner. >> that's correct. >> chris, let's talk about some of the larger issues related to

this. given this facebook context everybody is freaking out about this ipo and whether retail investors should be on the market at all. >> one of the things that we are seeing in all of this frenzy right now is that retail investors are completely disconnected from the market. there is going to be investigations and discussion about what went on. what we are trying to do is build a different platform, a different place for basically for customers to express their preferences by being owners of different brands and to do it on small dollars and to align their customer dollars with their ownership dollars. >> here is the real question then. one issue that has come up with this facebook ipo is whether there is a level playing field. whether the information being

dissiminated is across the board. there are questions about whether they knew about the investment powers or not. how do you deal with that issue. now you are selling the shares on facebook? >> the first issue is access. 82% of americans don't get the opportunity to invest in the market today. let's give access to real people. the way that we do that is remove friction. make it easy to invest, just three clicks. make it affordable to invest. invest as little as $200 in ipo and make it a level playing field rather than the richest people able to invest. so that's the issue as far as we're concerned. give access to americans. give access to the market and we can cure things. >> therefore there is probably additional responsibilities since we are really talking about mom and pop now in terms

of who your customer is it has nothing to do with the big boys. we are talking about making sure -- which creates another level of concern. >> fifth and pacific's entire base if you look at their demographic and corporate america and every major consumer company in america it's the same people that we are talking about that are mom and pop. i don't think that we have to be so concerned that we are unsophisticated. people should own what they use. >> did they want to? we had a conversation that retail investors have been scared away. is there a demand for this out there? >> according to research 48% of americans want to invest. 56% of americans are investing in 401 k plans. 18% directly in companies. it's because of the friction points. today we are built to be institutional heavy. it's confusing and expensive.

>> when most of these discussions talk about retail investors they are talking about people spending $50,000 a month. that is a market signaling factor that is just missing right now. we think we can bring them back in. >> real quick. you used to work at facebook. you know these guys well. how is this going to impact the company? >> i think the company is going to stay incredibly focused on building product and shipping. the mentality that has been built in the engineering culture. >> do you own share snz. >> i do. >> you're holding them? >> i'm locked up. >> you would hope they keep doing it. it is a $100 billion company. they owe something to people who put faith in them. >> engineering and building and shipping product. it is going to be fine. >> we got to run.

>> this is not a time for blame game. >> thank you for being here this morning. good luck with the project. coming up "squawk box."

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today's guest host house majority leader eric canter. the european summit front and center as leaders try to find solutions to the european debt crisis. roger allman on what needs to happen and what america needs to do. and an earnings preview from hewlett-packard. the second hour of "squawk box"

begins right now. good morning everybody. welcome to "squawk box." i'm becky quick. let's get you caught up on the news this morning. european leaders are going to try to craft solutions to the debt crisis. among the big points of contention, the idea of issuing eurozone bonds. the french president supports it. we will get more numbers today here in the united states on the housing market. the government will be out with its april new home sales figures. if you haven't been watching this check out the price of crude oil. it has fallen to a seven-month low this morning after iran allowed inspectors to probe into the program. it has something to do with the strength you have seen in the

dollar. the euro has been at a four month low verseathize dollar. you can see that the futures are indicated low this morning. we have been talking about it all morning. let's get to the bottom of this facebook fallout. much of the attention falling to under writer morgan stanley. >> that lead under writing spot was once a coo for morgan stanley weeks ago. that is now causing the bank to be under intense scrutiny. now news that the bank slashed facebook estimates during the deal's marketing period. that has led the public to question whether this deal was mismanaged. in a statement morgan stanley defended itself saying the bank followed the same procedures for the facebook offering that it follows for all ipos.

the procedures are in compliance with all applicable regulations and after facebook released a revised s-1 filing on may 9th a copy was published. morgan stanley going on to say that many banks also adjusted their facebook views based on the updated trends and these revised views were taken into account. regardless whether the practice was standard or not many are throwing their hats in the ring. the massachusetts secretary of the commonal wealth have become involved in the situation and are reviewing the process with all due cause. the fallout has led to a variable tug of war. trading glitches on friday led to several botched trades and a lot of certainty for a lot of investors looking to invest in

facebook. nasdaq saying it would not have launched the deal if it were aware of the execution issues. saying my intention is to make sure that we believe we had a good solution in place and that if we had known that our solution was inadequate we would have fixed the issue with the right solution going forward. that he said she said not doing much to prop up the facebook stock down to a new low and about to break that $30 mark. >> real quick. do we know of institutional investors that got wind of the downgrade or the new estimates from morgan stanley and some of the under writers and decided to pull the shares they plan to purchase? >> reporter: we don't know exactly of that. what we do know is that the institutional demand for that book and for the facebook shares didn't come until later in the road show presumably because that revision scared them off. that's standard.

that is one of the key facets of being the lead under writer. you get the chance to market this deal. you get to establish that relationship between the research analysts and your clients. they are saying this is all within regulation. we'll see what regulators have to say about that. >> thanks, kala. appreciate it very much. let's talk about a lot of things. business, politics and the election. he is the house majority and a republican. he is eric canter. >> i think boehner runs a few things once in a while. >> absolutely. >> who has more secret service guy snz. >> we have capitol police. dig nitear protection division. great guys. >> are they here? >> yes, they are. no secret service comments. i want to start out with some

sound from earlier with all the private equity stuff. let's run it. >> there are folks who do good work in that area and there are times where they identify the capacity for the economy to create new jobs or new industries. but understand that their priority is to maximize profits. and that's not always going to be good for communities or businesses or workers. >> running this a lot last night. that is fallacious. it is good for companies to maximize profits for share holders. when you maximize profits you pay more to federal government. a company maximizing profits is able to stay in business. for communities hiring more

workers allows the communities to thrive. this is something that again and again i have heard. i think if you have made enough money that you should stop. these comments to me show a fundamental lack of understanding in basic economics. >> it is a lack of appreciation for what this country is built on. the country is built on the notion of economic freedom. profit is the incentive for someone to go out and make a better life for him or herself and family and communities. where does the money come from if the money is not going to come from those who are seeking a profit and if the incentive for profit is not that which keeps things in an efficient mode. >> it is how prices are set. it's how capital is allocated unless you are in a status system. >> but the morality of it is

defensible. if we are committed to earnings success rather than having the government confer the outcome and guarantee it for you which is what sets america apart which is why we have so many aspirational people in the world who want to come here. we need to appreciate for ourselves that it is our system of free markets and those able to earn a profit that can give back. >> i know you are going to push back. is this a campaign issue? >> i was going to ask about corey booker said something. they are all saying things that are, are you sure this is the right? does the president know it is a fallacious statement or does he just not understand the basics? >> my experience with the president dealing with him has demonstrated he either has no lack of appreciation for our

free market economy or is just an intent to want to malign those who have been too successful in his mind. i'm thinking when we were talking with the president about policies that want to provide incentives for entrepreneurs investors to put capitol at risk. we don't have enough people with confidence to put the capital at risk. we don't have people willing to take a loan from a bank because they hear the hostility coming from the white house and the policies there. it comes from really a lack of appreciation of the consequences of the actions in washington on actors in the economy. >> you look at axelrod. axelrod said about corey booker he is wrong. politicly this does help in the reelection efforts to saying things. >> how does it help?

>> it's the 49% that are benefitting from -- >> i think more people in this country want to do better. what sets us apart is when people who have not gotten to the top of the ladder are out in the communities across the country and see somebody who is successful i think most americans look at that person and say if i work hard i can be that, too. it's not that they are looking at these successful people saying they are terrible. let's take it from them. that's not america. >> you waited. i agree with everything you just said. and i also agree with corey booker on private equity and with harold and others. >> you also agree with clieber who said they are raping the country. >> i actually don't. having said that. i think if you watch that tape carefully it is just worth pointing out that his suggestion i don't think was across the

board that all profit is bad. i think all he was saying was in some cases it doesn't work. >> gm did not -- >> all i'm suggesting is that in certain circumstances there are times where profit can be put ahead of a community. it happens. i don't think he was saying that he somehow doesn't agree in the profit motive ever. he is saying there are circumstance wheres it doesn't work. >> there are times in the past where you can see where industry moves. >> i think there is more nuance to what he was suggesting. >> that's a fair point, though. >> other communities do benefit. >> back to what i'm saying -- >> i don't think it is for the president to decide as long as there is legal activity which profit is good and which profit is not. if it is illegal behavior we ought to stamp it out. no question about it. if there is legal behavior the

white house nor anybody in washington shouldn't be determining who should have a profit and who shouldn't. that has been the problem here. >> we talked about how this election on a grander scale. is that the case? >> i think that both are true. i think that if you look at the consequences of this election you are talking about taxing the tax policy. you are talking about how to deal with the deficit and entitlements and the pentagon and another debt ceiling discussion in washington. the election is bearing on all of that. i do think that's true. i think in a broader sense what that will do is determine the future path of this country and whether we are going to be able to have people go btd seeking opportunity in this country. >> the flip side is when you can either look at times when the government has tried to do things or look at total

different systems and where we have seen when it is state run and there is no profit incentive. you look at the way medicare is doled out by the federal government. there is no accountability. to have our capital more of it residing in a place where no one is watching a store, amtrak or the post office. name any government agency with no accountability and no reason to earn a profit. there is waste but political reasoning that comes in. >> i am a fan of private equity. there are times when private equity and this is not a campaign against romney at all. there are times when it doesn't work. there are times when the companies suck money out of the company. it does happen. we are looking at this facebook ipo. we are saying the money is being transferred from the public and people are saying this isn't working. there are times when it doesn't work as well as we like.

>> that is free markets where there is always the likelihood of failure as well as success. that's i think the fundamental discussion here is whether you are going to accept the fact that america does value people who want to take a risk. and if they fail we also looked at people who fail and give them a second chance. that's who we are as a country. it's not that the government should be here. >> i agree with that. we are trying to figure out a way so that when it is failure it doesn't hurt other people. we can continue this dialogue. we have another two hours to go. >> it is moeg. when you say moeg they don't know what you are talking about. >> the synthesizer. it's on google today. >> it would be the 70th birthday. when we come back we are going to talk about what

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take a look at facebook shares. we are down to 30/70. >> earlier today they traded at $30. the volume is 193,000. relatively light based on what we have seen the last couple of mornings. premarket tends to pick up around 8:00. hewlett-packard is expected to report more than quarterly results. there is word that the tech giant could can announce it is laying off as many as 9,000 employees. there is a lot to talk about here. hewlettt pack rd shares went down. do you think that is a dell

problem or a broader pc problem? >> it isn't even a pc problem. it is a broad economy problem. >> that means we are down. >> we are in a brand new economy. we are in a digital economy. and that fundamentally changes consumer demand. it fundamentally changeathize way that producers are organized in an economy. everything is changed. we are just sort of catching up with this. >> you are not talking about a general down turn in the economy. you are talking about an entire structural change. >> i wrote balooks an e-mail asking for the sources. hewlett-packard has new

management. i have been saying that the ceo was written by the board. maybe meg whitman will try to run the company. in order to do that she has to put in a new digital economy strategy. fortunately for her the fellow who ran strategy beginning with carly, he's gone. a couple of other key executives are gone. she has a clean slate here. >> what does it mean to run it for a digital economy? >> it means you have to actually figure out what is going on in the advanced economies which is fundamentally different than the emerging economies. and you have to try to please the customers. in the advanced economies we are going for quality of life and not quantity now. we are on the other side of the hill. we are post industrial. in the emerging economies it is a different story. if you balance those two against each other the problem is

hewle hewlett-packard has always been an engineering company. they need to turn it around. meg comes from the digital economy, e bay. she is not a computer executive. she is sort of an accidental ceo from that standpoint. so she has a chance to put together a digital strategy. >> by listening to the customer. >> by listening to the different types of customers and understanding how the different economies are going. >> would layoffs on a grand scale like that play into something like this. >> meg lost the governorship in part because she said she would fire 45,000 people in the state of california. this is not a surprise. it is just the beginning. the opportunity that she has is to put in a digital strategy. >> this is a longer term issue. the street will be focused on the numbers and guidance. what can we expect on that

front? >> remember evaluation here on hp is just way below historic averages. this is just totally broken down. >> what are they trading? >> you got to measure these things. it is ev to sales. they are like 25 to 30% or something. that's ridiculous. a broken computer company trades at 50%. >> what is a fair valuation if a strategy is put in line? >> a successful computer company should trade one times e.v. to sales. if they have a solid strategy and decent growth results. this is why i have always favored ibm because they figured out a brick strategy ten years ago. hp didn't. and then ibm figured out a cloud

strategy five years ago. hp didn't because they were very busy with acquisitions. ibm's valuation ev to sales is the target that hp could be if they had a successful strategy. >> you could say wait at this point? >> we have to see the strategy. >> we want to thank you very much for joining us today. >> thanks. coming up all the kings men, something los angeles hasn't witnessed in 20 years happened last night. details in that. and then hamming it up with the ceo of hormel, the maker of products like spam and hormel chili.

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the quest for the stanley cup continues. kings in the final for the first time since 1993. they now await the winner of the new york rangers and the new jersey devils series which is exciting. game five is on nbc sports tonight. i didn't see what st. louis did but the reds were a half game out. >> go devils. if you have comments or questions about anything you see here go ahead and e-mail us at squawk@cnbc.com. up next the ingredients for hormel's success. the company's ceo talking success. and then traders keeping a close eye on europe this morning.

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welcome back to "squawk box." in our headlines mortgage applications rising by 3.8% last week. the increase was entirely driven by refinancing activity as the average 30 year mortgage rate fell to 3.9%. morgan stanley is defending its role in the facebook public offering. morgan stanley was the lead under writer. a morgan stanley analyst cut his estimates for facebook as told. quarterly profit came in short of expectations and the computer maker issued a disappointing forecast from dell. says consumer business has become more challenging. took a hit on hp, as well. we are here with majority leader eric canter. i'm going to give you just perhaps let's just for instance

say thing. i'm going to base it all on in trade. so in trade republicans keep the house at 75%. take the senate which is not a given but at 64% but obama stays president 58%. romney is around 40%. what would happen to the fiscal cliff if you had a totally divided government like that? >> i think it actually gives more balance to those of us who want to tackle the real problem entitlements. it also, i think, gives us a little more leg up to say taxes ought not go up on anybody. we've got this situation where you are facing the largest tax increase ever in this country. it's a $4 trillion item as far as ten year budget. and the difficulty last year was always we in the house were standing alone saying if you want to raise taxes first of all

fix the problem. don't ask people to pay money in. >> my point is what does the president do if he is reelected and then he is facing a republican dominated -- people think when he doesn't need to be reelected he turns into a full on -- people think he is going to make people mad and deal with the republicans. >> he won't have harry reid in there stopping every bill. >> he's covered from that? >> absolutely. he does. have to take the positions on a lot of things that we are putting forward. so if we have a republican senate again i think that mitt romney will be elected. i'm feeling better and better about the prospects. >> the question based on where in trade is today. we'll know in six months.

>> we're checking it all the time. >> it's like premarket trading and facebook. hormelfood is out with earnings this morning. the company earned 48 cents for the second quarter. key factor is turkey burgers. i had three of them yesterday. >> three? >> i had to because i had nothing else. no carbs. joining us now from austin, minnesota, chairman and ceo of hormel foods. good to see you, sir. >> good morning. >> this is a pretty good number for you. i mean, up 5%. just plugging along with your normal product mix. >> we're very pleased with the results. record sales and earnings for the company. a very balanced set of results with four out of our five business segments generating gains in profits this quarter.

the products within those unites definitely were strong. >> input costs, they have modrated somewhat from here on out? >> we've seen some moderation in input cost. turkey is a great example of what you have to do to address strong increases. they have been excellent at generating supply chain savings and their advertising campaign has driven demand. >> so turkey is your thing, huh? >> it is one of many things. >> all things are focusing on turkey burgers. so there's still i guess a notion about red meat. that is still something that people i guess tie to health problems? >> our strongest protein areas of the company are protein and also pork.

we have items that grew during the quarter such as hormel natural choice items. >> if i have you on i feel remissed if i don't talk about spam a little. >> i knew spam was coming. >> on the old squawk we had more spam items. we were ready with the spam. spamming the globe with spam. is hawaii, jeff, still the spam capitol of the world? >> it's our number one per capita market in the united states. this is the 75th anniversary with spam. we are celebrating with ad campaigns domestically and in key markets such as japan and korea. >> love spam. i love hawaii. i'll take their word for it. it must be good. consumers, what can you tell us

from your results? can you say anything about high end and low end? whether they have money to spend? what do you feel? >> i guess from our perspective we have a sense of optimism. we have seen growth in a number of categories in turkey international and mexico portfolio. we are seeing solid growth in terms of employment picture. many of our plant committees are in markets with lower unemployment rates. it seems more competitive for high quality employees. >> we appreciate it. thanks for your time this morning. >> thank you. >> okay. coming up we will get words of wisdom from a "squawk box" master of the markets. roger altman will be with us plus much more from our guest host.

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hey, it's sandra -- from accounting. peter. i can see that you're busy... but you were gonna help us crunch the numbers for accounts receivable today. i mean i know that this is important. well, both are important. let's be clear. they are but this is important too. [ man ] the receivables. [ male announcer ] michelin knows it's better for xerox to help manage their finance processing. so they can focus on keeping the world moving. with xerox, you're ready for real business. the dow futures still under pressure this morning. at this point the dow down 86 points. the s&p futures down by 9

points. this coming after a flat day yesterday. dow was down by one point. federal regulators are reviewing what jp morgan chase said about their finances. mary shapiro says the agency is investigating the first quarter financial reports to determine if they were accurate and truthful. she and chairman say the $2 billion plus loss should be a lesson for regulators to tighten rules mandated by the financial overhaul. european leaders meeting today. roger altman joins us now and we have guest host house majority leader eric cantor with us, as well. good morning to you roger. let's talk about europe and talk about this fiscal cliff that is looming over us. quick view on where we are in terms of greece and what will happen with italy and spain.

>> it's a knife edge situation. in theory greece should not exit the eurozone because that would usher in i think a very dark period in greece where no one would lend to the country. the state couldn't meet its payroll. it couldn't make all of the social benefit payments which we have seen so much attention to. >> i thought we were over this. i thought we decided to let greece go? >> the eurozone they we able to allow greece to go. i'm pointing out that from greece's point of view it does not make sense to exit the jure zone. i'm skeptical that the greek leaders will choose to go that way. >> let's talk about the fiscal cliff. i am not sure if it has hit the markets yet. the big question i have is when it might hit the markets. you spent so much time in board rooms.

is it an issue? >> they are beginning to talk about it. on the question of how the markets will act as the fiscal cliff gets closer i think that's the giant imponderable. if there is market instability well before the december 31st expiration date that could, of course, put so much pressure on washington that they would be an extension just to relieve the market instability. no one really knows the answer to that question because it is too far off. i happen to think that the odds on severe market instability are relatively low but i know some very smart people a lot smarter than i am on markets who disagree with that. right now it is too far off to judge. >> you are a supporter of the president. one of the conversations we have been having is about private equity and the campaign made against private equity and mitt

romney. i'm curious where you come down on the issue? >> i view private account as another segment of finance. >> is the campaign misguided? >> no. i think it's fair game to talk about what romney's record is and what the ups and downs have been. >> you saw what corey booker said on "meet the press" do you agree with him? >> i don't agree with him. the main point he made was he thought the level of campaign rhetoric and negativism was nau nauseating. this is campaigning. >> let me try to get more specific about now we are talking about whether it is fair game or not. you said it goes back to the venetians and made it sound like it is a necessary thing and a

positive thing long term. can you think of instances where it doesn't make sense for a company to try to maximize profits? >> no. i think maximizing profits is what businesses are there to do. and that's what chief executives and boards of directors are expected to do. >> the president makes fallacious statements. that is a fallacious statement that it hurts communities and can hurt businesses and hurt workers. and you have his ear. >> he said in some cases it can. >> can you think of any cases where it does? >> well, let's be very precise. we all know that there are cases whether it is private equity or whether it's business more broadly where there are difficult social costs associated with maximizing profits.

i mean, our firm, our core business is the merger advisory business. probably worked on most mergers. >> adverse events happen. you look at them as the economy and as progress moves forward there are people along the way get left behind in old industries. normally you look at it and something comes up. there are no record stores but there is apple. as we move forward it seems like if you try to entrench old industries it seems like you are really not helping. you may be hurting individual people from time to time but other people are helped. hopefully you go three steps forward and two steps back. i'm not sure the president believes that. >> my impression of president obama is not as negative as that. >> you're a supporter. >> it's also trying to be ana t

analytical. i think president obama has a reasonable understanding of business. i think he understands the profit job and the job of ceos and boards of directors is. i think he understands in general what private equity does. a lot of people look at the social costs associated with lots of leveraged buy outs and don't like them. that's a fair debate. as i said at the beginning i think private equity is an element part of finance. it has evolved into many different forms but it is ancient. what we see today is the most recent version of an ancient practice. >> to me i think the question becomes as you suggest private equity is just a term that has been placed on investment and the type of strategies that they apply. it's no different than what has been going on for a long time. and when you have issues of

people being laid off because companies can't operate at that level in hopes that the company can turn around and contribute more profit to the bottom line and be reinvested in the community that is the way things work in business. we are going to have failures as well as successes. we hope to have more successes. i don't know if you can explain why the president feels he has to go and intervene and say that this success is wrong. we need to go find another success. that's the difficulty. that is why in dealing with the president have to ask if he understands the market based economy that we have, that we are about risk taking and that means there is a possibility of failure and difficulties that ensue. but we need to be focused on helping people succeed. >> i'm confident, mr. cantorthat he does understand that.

they have been very good at it. >> you said leveraged buyouts have gone on for decades if not centuries. it is a term being applied and trying to find efficiencies in the operations of businesses so more people can be employed and generated so more good can be done. >> we have all seen successful leverage buyouts and unsuccessful ones and we have seen just like in any other form of markets we have seen extremes and deals that were pretty insane. >> if it is legal behavior that is going on, so nothing illegal, who is the white house, who is the president toot start to say that kind of behavior although legal and successful is too much so i want to allocate capital differently and i think it needs to go here. >> you may not agree and obviously you don't agree with

president obama's comments but the issue of whether leveraged buyouts fundamentally are a good thing for society and in the broader scheme my point is that's fair game. >> talk about maximizing profits, roger. we all know that -- the notion that workers like gm did not maximize profits. the pension benefits got out of whack. the legacy costs got totally out of whack. and you would think the workers are going to do much better. and then you don't have a company left anymore. the notion that profits are somehow the product of greed and not a necessary thing in allocating capital. i understand it is a campaign. is that the right way to run a campaign? >> quick aside, joe. the former manager of general motors thought that they were maximizing profits. they thought they were.

>> they should have been. in that case you would say that is probably a noble thing to maximize profits, not a nasty, greedy thing that it has become to the 99%. you stir up the 99%. it's frustrating. >> i don't think the question being raised effectively being raised by the campaign is whether or not the proximate profit maximizuation goal is healthy. i think the leveraged buyouts being a good thing and that is a fair debate. >> roger, we're going to leave it there. of course, we'll be talking to you soon and i imagine we will be -- >> i did hear becky say go devils. >> i'm a big rangers fan and i'm

going to be at the game tonight. i wanted everybody to know that becky said that. >> i thought you said go devil when i was talking. there was an s on there? >> yes. >> we love having you. thank you. >> good sport. >> always great to have to play along with these things. let's get final thoughts from our guest host today. house majority eric cantor. when you look at the markets i know we spent a lot of time talking about politics today -- when you look at the markets, the idea of the retail investor getting scared away and this idea that what happened with facebook is not something that is going to bring anybody any confidence from the nasdaq's perspective or wall street versus main street perspective does it concern you about what is happening? >> it does. this goes back to the discussion that even the president has tried to make the argument that

he wants everyone to pay their fair share and have their fair share of opportunity. i have always said that we really need people to begin to feel again they have their fair shot in life. part of that as retail investors are worried is that they don't have access to the same kind of information. they don't have access to the same investment opportunities than some of the insiders and institutions here. i think that same sense is also transferred the people's attitude towards government. the insiders go down to washington and try to seek gain through putting provisions in tax codes, trying to get theirs out of the appropriations process. >> what does that say to the hard working taxpayer out there who wants to have his or her shot at success? this election is very much about that. how do we ensure access to equal

opportunity? and it's a nuance difference but there is a big one between having a fair shot and having your fair share. >> neither political party has done a good job of cleaning out the lobbiests and things that get in the way of tax codes. how do we feel that this is a goal that can be accomplished? >> we said no more ear marks. that was the first step to try to get rid of capitalism and people going into like pigs in a trough saying i want some money so i can take it to my business. we have done that. now we have to work on the tax code. we are trying and we are putting forward to present a recipe for how to go about tax reform. our blueprint has to do with

getting rid of the preferences in the code. you can bring down rates for everybody. >> it happened in 1986, the last time the tax code was really overhauled with a republican president and democrats controlling the house and those people worked together. can that happen again? >> i believe so. if you look at with all the differences that exist and the big issues with taxes and health care we have gotten things done. about six weeks ago ewe had the jobs act signed into law saying we are going to be there for small entrepreneurs who need more access to capital. we passed the xm pank provision. none of us or i don't think we should be in the business of export subsidies and we want to get rid of them. the reality in the market place is you have other countries who are in that business. if we don't want to disarm our

manufacturers let's put forward a bill to try to wind this thing down. we came together big bipartisan vote and did that. i do think there is room for us if we can seat aside differences, find a way to proceed in common ground and begin these wins on the board. i think if we develop a habit of that you can actually drive towards result. >> it has been a pleasure having you here this morning. >> my pleasure. coming up he's in charge of private market investments at one of the nation's teacher retirement systems.

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investing texas style. >> i meant a texas ranger. >> our guest host is the senior managing director of private markets at the teacher retirement system of texas. he is the midwestern governor who wants to move new york jobs to his state. iowa governor is courting companies like ibm and general

electric. and a rosy outlook for the real estate sector. we will talk to the head of real estate investment firm. the third hour of "squawk box" begins right now. ♪ welcome back to "squawk box." u.s. equity futures at this hour after yesterday wasn't so good not so good this morning either. meanwhile a massachusetts attorney general is subpoenaing morgan stanley. he wants to know about discussions with investors on the revenue prospects for

facebook. morgan spokesman says the firm followed the same procedures for the facebook offering that it follows for all ipos and is reporting that it advised for under writers to reduce like before it was the same week. >> i don't have a problem with that. the question is, did you tell everybody? you want the separation of the two sides. you don't want an analyst to hold off. >> did the analyst have any information that wasn't already in. was any of that therefore dissiminated elsewhere? >> did morgan stanley tell everybody? people suggested that they did. >> that morgan stanley told -- >> retail investors, too. >> all caught up in that. the facebook reportedly made the decision due to feedback during the road show which revealed users were opting for mobile

devices which generate less revenue. we talked about a lot of concerns last week for this offering. checking the shares this morning. they've come back and are trading higher after trading on the low 30s. for more on the facebook story kala joins us from new york rchlt. >> reporter: there is a lot of gray area about this situation as you guys have been discussing because technically it is legal for analysts to make and adjust those types of forecasts regardless of whether those notions are coming from the company or not. there are perimeters about certain types of information that can be shared with investors. that's the line that morgan stanley is taking here saying in a statement yesterday that the bank followed the same procedures for the facebook offering that it followed for all ipos and these procedures are in compliance with all applicable regulations. it was widely disseminated.

it is not necessarily about the amendment. it is the conclusions drawn internally by the research analysts and how select a group was informed about that. because under writing banks are not allowed to send out those research reports to the market until 40 days after the ipo is finished. nonipo under writers initiated a buy on facebook this morning. as far as the market even though we see facebook shares up marginally today they are not convinced that the work is over headline-wise for facebook here. the stock is trading far off of its ipo open and issue price even though it is up a little bit this morning. 4% of facebook shares are currently being shorted. that seems like a low number but that is not including the fact that a lot of shares haven't settled for programs that are

able to be lended. the cost to borrow is a 10 on a scale of 1 to 10 as far as how expensive it is. regardless of whether the practice by morgan stanley was standard many are still concerned. the sec, finra and state of massachusetts are opening up reviews here. >> thank you, kala. stay on this, will you? don't go home. you thought you were finished on friday or whenever it was. i saw you go i'm glad that's over. stay with us. >> reporter: we are doing a special three-day facebook special over memorial weekend. >> you're not kidding, are you? >> maybe she is. >> reporter: i hope i'm kidding. in our global headlines -- >> from her lips to someone

else's ears. >> a three-day special. european leaders are gathering for an informal summit today expected to discuss growth boosting proposals. a french president hollande supports the bond. you look like you have to strain to say that. >> i do. >> i hate when it comes up in prompter. it's like this way or that way. >> this is america. i'm going angela. german chancellor angela is opposed. european equities at this hour. when we went over there we saw it wasn't a great session there and we are piggy backer off of those ugly numbers. >> our guest host is the man behind the texas teacher decisions to place $3 billion

with private equity power lubla. you have been with the fund for about four and a half years. >> four years. >> you are going to be stepping down sooner than you expected because you have done everything you wanted to do with the fund at this point? >> correct. >> let's talk about the changes you put in place because the fund had a tremendous performance. >> i appreciate the opportunity to talk to you and celebrate. my career was in the private sector as an entrepreneur building businesses. previously i was ceo of summit properties. i joined them in '98. we were able to grow. if you bought the shares when i got there and sold them you would have made a 20% each year and about a 2.2 multiple on your money.

i was fortunate to have run that company and move back to austin. became a professor at the university of texas. wanted to give back. had an opportunity to join texas teachers. i established five goals i wanted to accomplish. we have slides that i wanted to show. >> this is interesting because when you look at the pension funds around the country a lot of them are in big trouble. they don't have the assets they need for the number of people retiring. they have unrealistic goals for 8% returns. what kind of returns have you gotten? >> we were the number one performing pension in the country in 2010. we will be number one over the three-year time period. we were 15% a year. it has been a phenomenal return. we have exceeded the 8% that we needed to achieve. >> that is the reason to focus on is. i think we don't have some of the slides but let's talk about what you have done in terms of

some of the goals that you were seeking and what you did. because you moved into some different allocations. that's why you have gotten such phenomenal returns. >> what i established when i got there were five goals. one was to build a portfolio. we were going to increase real estate from 30 bases of the fund to 15. >> what year did you start this? >> '07. >> i just wanted to figure out where we were on the time frame. >> the decision to move into real estate was '07. the execution started in '08. >> in the fall of '08? >> fall of '08. >> that makes sense. keep going. >> so same thing for private equity. we took private equity from 2.4% to 12% of the fund. first thing was to establish where to invest. how much u.s.? how much nonu.s. domestic?

how much different types of real estate? the next thing was who we were going to invest in. we only invest with the top in each asset class that we believe will deliver the best returns. and then we had to set up a system and process. i have a team that is phenomenal. i have a small team. i thought we could overcome that with better systems. we established the texas way which was a system of thorough due diligence but fast for a texas pension plan. if you walk in today with an opportunity we will close in 90 days or tell you no along the way. one was no slow maybes. you don't come in and meet with you multiple times and not sure. >> is this a government entity? >> well, it is. >> this is totally throwing away the play book. 90 days. >> 90 days. >> that is stark contrast to

what you normally think of. >> i think it is nine months to a year. >> and for bureaucratic entities and i'm talking about the government. >> yes. >> you probably made some comments. you have been a government employee for -- >> four years. >> you can talk about the differences between -- >> i can. >> does it work real well? is it like a smoothly oiled machine in texas? >> our government works better than most of the states. our legislature meets every year for 140 days. they are only paid $8,000 a year to serve. we are a small government state. we are leading the country with 40 to 50% higher in job growth because we have no state income tax. we are low bureaucracy. so the people at texas teachers are good people. the governmental system of no bottom line, no profit causes them to do things that are less

efficient. we said we are going to have a different system. we are going to try to run this like a great world class investment organization. clarity equals productivity. they needed to know the goals to establish and get after it. it can be done. >> i want to go back to the investing thesis and how you are looking at it. you had amazing returns since you got there. part of that, though, i have to assume was a little bit of timing meaning you arrived. there was a crisis. you got in -- >> crisis dropped for a lot of things. >> there was some wind at your back. lessons learned from this process -- there were other pension fund managers that got there in 2005 or 2006 or 2001. the question is, what kind of returns do you think you can get going forward next five to ten years out? >> let me focus on the real

estate aspect and the private equity. we believe real estate can deliver a net 10% return. we believe private equity can deliver a net 14%. >> how does that match up with what other pension funds have in terms of their asset allocation? >> we are a larger percentage of funds in private markets. at 15% we are probably double most have allocation real estate. i would say most have 5 to 10% for real estate and private equity. >> we are 12 to 15. >> those are new investments in real estate? >> correct. >> keep in mind. we are large and long term and liquid. one quarter isn't important to us. we should be willing to go where the market won't go. in 2009 we bought a $400 million portfolio. that is up 50% since we bought it. i said this economy is going to

come back. i can buy industrial buildings in core markets across the country and if i had any market improvement. my belief for real estate is that it is a great time to go into real estate. you can buy locally with greater than national average and borrow globally. you can buy real estate at a current return of 5 to 7% it makes tremendous sense and return of high single digits. >> you can't say -- if you are in the top 10% you can't say those pension planvise the benefit of timing, as well. some of them may have had assets that they put in in 2005 that they had in 2010. trying to figure that out. if you are still in the top 10% that means the other 90% have the same opportunities in 2008. but you figure some of these are

long term assets loading up in stuff in 2004 and 2005 so in 2010 they were still hurting -- >> i disagree. by 2010 they had already taken in -- >> then you still outperformed. >> he did outperform. >> i heard your -- >> in four years we did 116 different investments just shy of 30 billion in equity. so we averaged two to three investments every month for four years. that's productivity. >> steve is going to be with us for the rest of the hour. coming up our next guest wants to move jobs from new york to iowa. governor terry branstad. >> the way you said that. >> i have been to iowa. >> he is going to join us next to talk about his push for job growth in the next half hour. ur.

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welcome back to "squawk box." in our headlines this morning ford is returning to the investment grade universe. moody's raising ford's

yesterday. ford will be able to get back assets that it used for a 2006 restructuring loan. this was a very broad number of assets. even the blue oval logo. bill ford will be joining "squawk on the street" at 10 eastern. >> i like him, too. >> you see what he did? >> he said i want to get somebody that can run this thing. he had no ego problems and the rest is history. his name is ford. how do you say i'm not going to run -- that took a lot. you got to hand it to him. >> you absolutely do. this next story is for you, joe. i know you don't live in new york city but i do. you have been to new york city. and the question is, do you need to live in new york city to make big bucks at the top financial firms? iowa's governor doesn't think

so. that is why he is in new york city this week trying to lure jobs to the hawkeye state. joining us is terry -- >> iowa is in solid position financially. i talk over a financial mess. we have a balanced budget. what we have is sustainable. we also have a good solid financial services industry in our state, insurance and banking. and there is great opportunity for growth there. agriculture is strong and manufacturing is coming back. insurance and financial services we have aviva. we have nationwide. we have employer's mutual and life investors and many others. we think there is great opportunity. and we have the kind of skill set -- >> what is the argument? >> lower cost of doing business.

you have really reliable workforce. we reduce the tax and regulatory burdens. we have the lowest in the country. you are in the midwest. there are a lot of advantages in iowa. >> tell him why it won't work? >> the chinese food. >> you have to live in iowa, governor. >> since you brought up chinese. i want you to know we have the closest relationship of china of any state in the nation. >> what about chinese food? >> we have chinese food. we will have more of it. he will be the next leader of china. >> when? >> has he been there? >> who? >> the next leader of china. we established a -- he came in

'85. i personally met with him in '85. when i was in china last year and we met in the hall of people and he said i was in your office the 26th day of april 1986. the friendliness of iowa. >> when warren buffett looks for someone he says it has to be someone willing to live in omaha. that is not something ayou can sell to a lot of new yorkers. they think it is a flyover state. >> if you like being stuck in traffic and like high cost of living and those problems then you want to stay here. if you want to have a short commute. if you want to have a good quality of life. if you want to have all the opportunities that we have, iowa is one of the most livable places there is. it is much easier to get to work. you don't have all the hassles you have here. >> i remember in your paper it said here we have a cross section of people that are the

least representative of the united states picking who the next president is going to be. that's how elites think about iowa at this point. you got to deal with that. >> that is maybe how the elites think about iowa. the truth of the matter is there is a lot of people that are fleeing these high cost places of doing business and looking at a place where you can be successful and profitable and startup businesses there are great opportunities out there. >> there is a bit of a controversy. the des moines register. you said you created 69,000 or 70,000 jobs. they have come out with an article that says that number is 16,5 16,500. >> in the previous years under democratic governors i have created in 16 months more jobs than 12 years. that is the net amount. you have to create more jobs because there are always some

going away. we have created over 70,000 jobs. the previous 12 years they didn't create that many in 12 years. i think we are well ahead of schedule. i set ambitious goals. making iowa best in america in education again. >> we wish you luck. >> get good chinese restaurants there and we'll make it happen. thank you, governor. coming up still ahead the role of the government in spurring innovation.

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coming up we're going to get new home sales data at 10:00 a.m. eastern. first a look inside the u.s. real estate market with the ceo of prudential real estate investors. >> i'm thinking about revenge of the 93rd.

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making headlines mortgage applications are rising 3.8% in the last week. mortgage rates again dipped to new record lows. facebook actually getting good yous. coverage at a buy today. analyst laura martin has a price target of $40. i don't know maybe that could move something. let's get a high rise view of the current real estate market. joining us is allen smith, prudential real estate investor

ceo. and manager director along with our guest host. i say steve leblanc. texas teacher senior manager of private markets. like three real estate dudes, almost. >> absolutely. >> we made the point that it was a good time a few years ago. is it still a good time in your view commercial and everything else? >> i think it depends. we are seeing two dominant themes playing out. one is a quest for yield and security and the other is trying to take advantage of destress and deleveraging. so the opportunity to invest in yield and security takes the form of buying the best quality assets in the best markets around the world. the distress in leveraging which is playing out in europe is drawing a tremendous amount of capital. >> and how would someone

watching at home do that now? >> it is very hard for individuals. the clients we serve are institutional investors. these are private funds that we are raising capital from other institutional investors. i think it is very difficult for individuals to access these sorts of opportunities right now. >> it is one of the benefits of a defined benefit plan versus a defined contribution plan. what other pension funds should be doing and what retail investors in the 401 k don't have access to. >> i think there is a good opportunity today to buy distressed real estate. when we went into the great recession here in '08 the real estate market was not really overbuilt. and commercial real estate was not mispriced versus other financial assets. it was the for sale residential housing bubble that caused this

great recession. that should be contrasted to the last great real estate crash that i lived through which was in 1990. and then commercial real estate was massively mispriced. cap rates were roughly what they are now. the ten year bond was 8.5%. office vacancies were almost 20%. commercial real estate had performed so well for 20 years. everybody felt that you could just make money if you just bought good real estate. you would have a little down turn and then we have this giant crash. this time around it was the world wide bubble of all assets that were mispriced because we had so much leverage. >> that commercial real estate shoe never dropped. we have been waiting for that shoe to drop. we heard it was going to. we got total values of the number of leases that were going to have to be redone over a

certain period of time. did the fed orchestrate that effectively by keeping rates so low? >> what is happening is rents have come down and vacancies are up. the capital markets came back quickly this time just like the stock market came roaring back in '09 and '10. >> to put it into perspective from the trough following the financial crisis for institutional quality assets in the u.s. values have recovered 50% on average. values have recovered. yields have fallen. the yields available for stabilized properties are comparable to 2007. >> that never really happened. >> there's $2 trillion worth of mortgages and cmbss coming due over the next 5.5 to 6 years. many of those loans are for an

amount of excess of the value of the properties. you are having a lot of commercialfore closures where the bankz take over the property or somebody buys the debt and then fore closes. you are buying the property at significant discounts to where the values were in '06 or '07. >> what happens if bond yields come back up? nobody can figure out why the ten year has fallen to the low levels. if inflation rears up or if you have some situation where investors lose their faith in the u.s. economy and that changes the ten year and 30 year. what happens to commercial real estate? >> that's a good question, becky. that's the $64 question. a couple of things. number one, we would expect that cap rates would move up a little bit over time. don't expect they will go

anywhere near the amount that the interest rates would be going up when the economy recovers. if you have inflation people like real estate anyways. i will give you an example. in 1980 we had massive inflation and interest rates were extremely high. >> 17%. >> yes. >> and the real estate was selling at maybe an 8 cap rate then or something. that was in the high teens. so because you expect that the rents would be going up rapidly. so we under write cap rates going up slightly but not enormously because right now there isn't a lot of supply. there is almost no new construction. >> aren't there some rates individuals can buy? >> absolutely. and i think frankly as a yield alternative the average dividend yield on rates is about 3.4%.

so for many investors it is an attractive sort of income option. >> you can ask your broker to pick -- >> absolutely. there are many options to do that. if the rates aren't buying distress -- >> mostly they are core. >> most of them are seeking what we characterize as institutional quality assets that are relatively stable in their income profile. >> you would put some money in this? >> absolutely. >> 10%. >> okay. >> i think your question is really good. the biggest systemic risk for real estate is that interest rates go up for a reason other than gdp growth. >> that was my question. >> what was wrong with mine? >> mine were stupid. >> becky, why don't you take us

to break and do the rest of the show then? >> thank you very, very much for coming in. it's been great having you here. government projects that could end up in the fortune 500 # in the future. steve blank from the stanford entrepreneurship center will join us after this. ♪ ♪ [ male announcer ] the tight-turning, space-saving, eco-friendly smart. escape your stuff. ♪ [ technician ] are you busy?

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today government going public. all day long we will be highlighting the government's efforts to try to be innovative and spur growth. companies like google, quaalcomm and semantic may have never gotten off the ground. steve is joining us live from stanford university in california where this year's final presentations are taking place. thanks for joining us. >> thanks for having me. it's a great day. >> people often think that the government doesn't know how to innovate. private sector shouldn't pay attention to them. you have seen how government and private sector can work together very well. what is the single most important ingredient to making these relationships work? >> one is for each party to understand their role.

the government isn't doing any innovation. what the government is doing is funding the best scientists and engineers. the national sentence federation gives out grants to the best scientists and engineers in the country. what we are doing in this program is just teaching the select few who raise their hand to volunteer how to be entrepreneurs. >> what are some of the final contestants doing in this year's group? >> it is just amazing. what we see is the best in material science and graphing and medical devices and infusion pumps. we have robots that climb walls for inspection. we have a variety of technologies the half of which i would have called science fiction before i saw them present. just amazing stuff in our labs. >> steve? >> one question i have is about regulations.

these companies need to have a beginning, middle and end. i was involved with trying to reduce regulations for early startup ipos so some of the sarbane oxley regulations wouldn't be caught up. without that exit in clear sight inability to raise capital? >> i'm certainly not an expert on sarbanes-oxley but having been an entrepreneur and having served on boards of startups i can tell you putting the same rules for small cap companies and large cap companies didn't work. i'm glad we fixed some of those rules. these kaechs we are working with here in the national science federation are years before they are having that problem. this program is trying to bridge the gap between scientists in

the lab and private capital. it is not supposed to replace private capital and no intention of doing so but it is teaching entrepreneurs how to get ready to raise money from investors. >> i love this. i'm thinking about the way we sold the segment. you have heard the idea that we wouldn't have the internet without the government. we wouldn't have -- he has a list of things. >> energy innovations. >> you have made the distinction. the government could be really good at funding some of these ideas if they don't try to choose the winners or try to choose the ideas. is that fair to say? is that what your take is? >> i think what the government is doing here is providing an education program for all nsf grantees and then letting them self select if they want to join the delta force of startups. that is going from pure research

in your lab to actually getting out of the building and wanting to become a commercial enterprise. it's a large step for scientists. the way i describe it is the difference between an introvertand extravert for scientists is looking at issues. our goal for training them is the goal of looking customers in the eye. >> it is possible to get a private/public partnership that is actually useful and works. we are craving something where we can actually see that done. >> yes. this is probably the most bipartisan thing i think anybody can agree on. it is less than a quarter or 1% of the national science foundation budget parsimonious with your money and mine. and yet the results might be particularly spectacular. we primed the pump with billions

of dollars of cold war research in the valley with lockheed and the fact that stanford had a 400 person weapons lab. most people forget that venture capital didn't bloom on day one. this is another example of i think the perfect government role not trying to be writing hundreds of millions of dollars of checks but putting small bets on educating science and engineers about customers and sales channels and pricing, things they never see in their lab. that is our job of educating them. >> true bureaucrats want to do more than that. that is not going to be satisfying. if you really believe you are smart you want to try to do more to help, right? >> well, not with the people i'm working with. the good news is they understand what their role is. i don't think at least anybody at the national science foundation wants to be in the

role of venture capitalists. i brought in venture capitalists as part of the teaching team. it's other vcs who are teaching these entrepreneurs how to best understand what makes up a company and get them to a state where they can approach private capital. no one here is confused between the government's role in education and private capital's role in making these things work or else you skew the system and get distortions in private enterprise. >> maybe someone at the white house is watching. i might send a tape of this entire interview. >> i bet she would appreciate it. >> i think the fact that this is getting support from both sides of the aisle is frightening and encouraging in this election year. congressman lapinsky is flying in to see this. congressman wolf has been supportive. senator schumer sent a staff here today. we have been talking about

innovation and jobs but no one understood what step two is. i think step two is what we are trying to do here. this country is great at that. we figured out how to crack the entrepreneurship code and we are teaching scientists to do this themselves. >> this has been a fascinating conversation. we hope you come back and hopefully next time bring students, too. >> they are standing here today. this is their big day for final presentations. we are going to change the country. >> that is fantastic. we would love to have you back here and hear from your students, too. thank you for your time today. >> it's been great. inspiring story. we are going to head to the new york stock exchange for the latest buzz on wall street and see whether there is inspiration this morning.

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welcome back to "squawk box" this morning. take a look at futures right now. i think we've got the screen coming up. the dow looks like it opened 93 points lower. s&p 500 would come in close to 500. and a hot item this morning, ste steve's band, the moon cussers is going to be performing tomorrow in new york city. i'm hoping you'll cross the bridge and come out and see them. there he is. i know he's going to be playing tomorrow night. >> and i like how we have it as a report. we have a headline and then a report next right there. >> i'm going to tweet it. i'm going to tweet -- we all all have to tweet it. in the meantime, let's get down to the new york stock exchange

where they have their own band down there and hear what they're playing this morning. carl, melissa and jim? >> i've already retweeted the page 6 item. it's probably half a million eyeballs alone. >> and well deserved. i don't know if you've ever seen him. >> i thought that was a great idea to retweet it. when did you retweet it? like three hours ago? >> yeah, it was early. if you guys go tomorrow night, then i'm definitely going. i can't let you show us up. >> i'm going to take your bet on that. that's fine. >> really? >> kra. >> it's going to be an interesting morning, guys. obviously, facebook has been the lead for the past few days, but europe, jim, you say is in charge. and if not for europe, you say last night we would be at the highest for the year. >> toll brothers, fabulous quarter. petsmart, the absolute domestic security name. it doesn't matter, these are all side shows. >> the summit today has been

called a taxpayer-funded dinner, essentially, for eurocrats. no real policy is going to come out of this tonight, right? >> tremendous german bond auction, zero coupon. who's buying those bonds? everybody who wants out of the peripherals. that's who buys that paper. >> i've got to think about that one. thanks for that. we'll see you in just a couple min ults. coming up, some final thoughts of the $110 billion teacher retirement system of texas. who have used androgel 1%, there's big news. presenting androgel 1.62%.

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♪ ♪ [ male announcer ] the tight-turning, space-saving, eco-friendly smart. escape your stuff. ♪ our guest host this hour has been steve leblanc. and we talked profits the entire show. good, bad, they get a bad wrap. you said some interesting things. my point was if there's not profits, there's no accountability. no one watches the store.

the other side says that profits, when you need to have them, they're taking away the services that a health care provider can provide. you've been both places. are profits -- profits are necessary to keep things running properly, right? >> profits are necessary to keep things running profitably and efficiently. i was lucky. i had a great career as a private ceo. very successful. wanted to get back. and i was able to help serve 1.3 million teachers by having a purpose. and to rally our team, i set five goals and we got them done in four years instead of five and now i'm going back to the private world to do the same purpose. but i think purpose can be as important as profit. you need both. >> you do need both. but in texas government, you can see that if there's no motivation, no accountability, it makes it difficult, right? >> it's impossible. >> it's like night and day working in a private company and working for a public bureaucrat, right?

>> it is, but it doesn't have to be. >> really? >> it doesn't have to be. if you have the right leadership -- >> what about in washington? >> it doesn't have to be. you know, i think if we got a balanced budget amendment passed in this country, we'd see a much different streamlined government. >> that would be starving the beast. we talked about that. >> or raise taxes. at least we get to vote on it. at least they don't spend more than they have. >> with a balanced budget, yeah. >> you're not suing walmart. >> we're not suing walmart. >> and you're not selling walmart. >> we don't want to disclose our stock holdings by what happened. >> are you bothered by what happened? >> yes. >> how would you have grown? you would have said just take your time in mexico? and is it our business to go down and tell the mexicans how to go down and clean uphe