>> no, but going back to purpose, you've got to have a bright line that says no lying, chaeting, stealing. >> what if it's a different word? what if down there, it's a "fee." g if it >> if it aligns with your cultures, it's fine. but don't call a pig something it's not. >> right now, time for "squawk on the street." on a morning like this, you might want to kick things off with some good music. there's "the who" and we're here with almost a two-day win streak yesterday until the last ten minutes of trading. we saw that 50-point game down to the potential by grace. we're going to go to the headline down with a 72 point drop at the open. europe continues to see headlines fluter around this

morning. haland saying he knows of no contingency plans regarding a greek exit. >> it is no surprise that the road map leads to brus sells. europe feeling a 21-month low. former greek prime minister acknowledging that there is a risk that greece could leave the euro. will brussels lead today? >> needham, $40 target. the cfo gets singled out for blaming the journal. >> meantime, dallas trying a free market of a 17-month low. results confirm a tech-spending slow down because of european and fiscal uncertainties. >> we'll start with markets set to open lower with a lead on concerns about a potential greek exit from the euro. lucas tells cnbc there are no preparations under way for greece to leave and that such a

move is unlikely to materialize. european leaders will try to craft solutions to the debt crisis as they meet at a brussebru brussels summit. german chancellor miracle opposed but france chancellor supports. maybe settle for some infrastructure bonds or smaller proposals that might get it somewhere. but overall, tonight is more formal than the big summit in june. >> and not particularly scripted, i guess. so we don't know. maybe there will be unexpected developments. a lot of times they go into these meetings with an agenda. but halland's point, there's still no plan in place to protect against crease exiting the euro is the key. and merkel is still not in anyway ready to embrace euro bonds, in other words, being

responsible for the other's liabilities is a key here. >> financial anarchy, i think. if you had to step back for a moment, i think what you'd say is they ought to kick germany out. i'm not kidding. germany, which was once the status quo, does fantastically if they were left on their own devices that deutsche mark would be sky high and their exports would be hurt. what i see happening here is that the euro is being held together by german intrangence and cannot stand. >> but if you're a taxpayer and you're working longer hours and you have fewer benefits and you're much more productive than your brethren in other parts of the eu, why should you be relied onto help subsidize your lack of productivity? >> because of the lead we gave you yesterday. if you sink into a euro-related depression, than those workers

who are taking it and working for less are going to be looking for nothing because they want a job. >> well, almost five of germany's biggest trade partners in europe are close to recession or in it already. >> i think that what we're seeing, again, there is a very big auction last night. germany -- the amount of money coming out of the of the banks versus what they're willing to say is coming out of the banks is breathtaking. if you think we can wait until june to resolve this issue, that seems fanciful. >> it's about $81 billion euros that have come out of the banks from the end of 2011. that's through march according to ecb data across household and corporate deposits. >> and, of course, so this thing has heated up in mid to late april and certainly through may, may always being the key month for the reemergence of this crisis that we've not been dealing with for well over two years. but what makes you say it's

worse it's being reported? >> listen, very common. modern network cht don't worry about it. it's not really happening. but when i see the amount of money pouring into german bonds, which is what you would do. you would go into a zero coupon, short end bond. you don't want to wake up on monday and discover there are drop ins. everyone has no plan. i don't trust anyone that says anything over there. and i think that if you wake up and you have pasettas, you're going to have a devalue currency. why not pull your money out of the bank and go buy german bonds. >> so something like deposit insurance that is payable in euros. you know eventually you're going to be insure, but not in pasettas. >> yes, 2 trillion euros would be the right amount. rather than just have deposit insurance, they all have deposit insurance. you need the deposit insurance

in euros so you don't say i've got to take my money out of spain and put it in germany. >> what about the notion that merkel is a leader and will lead, right? the opposite of what you're suggesting is they just cut and run. the world's biggest game of chicken is how one person put it this morning. i mean, do you not see that as -- >> if you think the hyper inflation led in a smooth transition to the third reich, you don't want it because you fear a fourth reich. they never want to go to vamar. it also led to what we know as the worst gut transition government transition change in the 20th century. >> what was so shocking about

what was said yesterday is that it just confirms this notion that a greek exit is so within the possibility that now officials are speaking openly of it. banks are putting probableties on a greek exit. what was citi? a 20% chance of an exit within 6 months. the fact that it's out there is weighing on the markets. so what will follow that weight? >> it's two years we're talking about it and finally we're getting closer to the potential of it occurring and the potentials are coming up. >> they're putting the firewalls in place that they need to safeguard against concontagent. >> but they have no plan to kwaurden right now. maybe merkel, in this game of chicken, really has a terrific plan to isolate greece and save spain and italy. i just think that we should hear

at least some sort of schematic of how they might be able to save italy and spain. >> every morning, i try to read your body language. it worries me when your speech patterns get a little more tentative. >> no one wants to be the reason, anywhere around the globe, why someone pulls their money out of spanish banks. these are very good institutions. and you don't want to be the reason why. >> now one of the things i got in trouble for was a statement i made on the "the today show" that said if the theater is on fire, i've got to get people out. now, if the theater ain't on fire, no need to yell fire. >> so the theeater is not on fie right now? >> right.

>> i mean, look, if you're a spanish, wealthy individual -- if you're from argentina and you just took your oil company. if you're -- and there's apparently exporters. there are people around the globe saying i don't trust my government. i don't trust them. i want to pull my money out. but there is one country where there's no turmoil or fear of being assassinated or shot. it's united states. so i hesitate to put anything positive in, but as i did last night, united states is stable. united states has some pretty good earnings. united states has some pretty good companies like con-ed where they're not that much involved. so they come back and say there's going to be big capital. >> until we start our own negotiation. >> we've got a little window of opportunity there. >> we've got facebook to talk about. >> it is higher actually in the

premarket. the fall out remains in the spotlight. david decided to boost the company's shares by 25% as his main underwriter morgan stanley. some investors claim that's a big reason why they've tumbled. he wants to know about a morgan analyst discussion with institutional investors on the revenue prospects for facebook. morgan stanley says the spokesman followed the same procedure that it follows for all ipos. when that news came out yesterday after hours, the stock was down 1.5%. on this unknown. this subpoena. >> when you look at the rules that govern what an analyst that an ipo underwriter is allowed to do and how they're going to communicate, it's not clear that morgan stanley's analysts did anything wrong.

now, we don't know between morgan stanley and institutions contained. i have not talked to a institution who was briefed by this analyst after the amendment from s-1 where it says mobile is more of a challenge. >> then, david, what you're saying is you're questioning the lead story in the new york times today which says there was a call that perspective buyers got who are large institutions of a 5% lower estimate cut. are you questioning -- >> that may be true. >> no, i'm not questioning that. and they may have taken their estimates down. other analysts who also read that same amendment which was wildly available, also similarly may have taken their numbers down, correct? >> yes, but i would argue that this may be a moving target facebook. i was doing some work on -- shockingly -- on the actual numbers. facebook up today. 13 million shares sold yesterday.

it does not make it. but apparently, during the month of may, there was a radical acceleration of facebook use from mobile to desktop. and just so people know, offline, you get dollars for advertising. offline, you get dimes. mobile, you get pennies. so it's entirely possible the speed of this is extraordinary and it just may be possible that they went so high. >> but they question here, was anything wrong about the underwriters advising institutions about their estimates coming down? i mean, on any other road show, don't they issue reports to constitutions who might be buyers of the issue? >> well, the other analysts are not allowed to issue reports because they can't communicate -- >> it's not reports but initiations of that report. >> how would you feel if you didn't get that call.

>> i would feel absolutely lousy because i didn't get that call. >> one of the things i want to explain about the notion, having had close talks for multiple years with the prosecution where ever it is. we on this show and what journalists might say and what lawyers might say is illegal is nothing. you go to your lawyer and securities and say listen. a zealous prosecutor is not going to sit there and say nothing is wrong. listen. we know the way the game is played. zel os prosecutors. zealous prosecutor can go after him. that's why you have these rules in the first place where you're not allowed to go out broadly, where you have to confine yourself to conversations. so here we are now, you know. >> look, i just say that one of the things that i've learned

over time is that what you may think is not wrong, what you may think does not have exposure legally, political anger -- >> i agree. political anger, perception problem. and that is what is hitting morgan stanley on top of the whole european mess. >> they did do wrong. morgan stanley goes out and clearly they were not really feel whag demand was. are you really going to be sitting in the stock? you're getting delivered stock? i don't know. these guys are pretty smart. but they clearly misred demand. >> i know from retail brokers in the smith barney network. now, a lot of the orders that people got in the last minute, or a lot of stock, is batched with someone like tommy joyce who is the ceo of night securities.

and those people were not only able to pull back, but they got stock. not only were they able to sell at the opening, but they found out they had stock and then the stock was dramatically cloeer. >> yes, vicious cycle is the way to put it. if you could tailor a way, this would be it. with the degree to which -- apparently, according to the journal, rode rough shot over morgan stanley for a company that didn't want to go public in the first place. >> but how about the fact that at the last minute, these insiders were able to up their view. >> going up in size and price. >> in the wake of an amended s1 that just took your growth rate down. >> that's where the underwriters have got to say no. sorry.

what it was, very clearly, was a fabulous opportunity. if you were rich and big and powerful, to be able to get out at a great price versus the smaller guy who is not rich and not power. . >> i don't know i think a lot of rich and powerful people were caught, too. >> i think if you're a common guy on the street and i'm talking about the new york times story, which does not caveat this. it's a caveat saying this is illegal. and you read this story and you just say you know what, not only am i not going to be in another ipo, but how many times do i have to take a beating in this market. plus, every morning i come in and some country that i come in and i remember from geography class. so there's a disdain for what

we're talking about. >> that's exactly what happened here. that's what happens. >> how about this. the insiders who weren't even insider enough got hurt. i mean now we're at a level where gecko got blitzed. >> when we come back this mosh morning, the facebook story continues. we'll hear what a former vice chair of the nasdaq has to say about how the exchange bungled the process. the blue oval is back. bill ford joins us on mood he's boosting the automaker's rating to investment grade. take one more look at futures on the dow day shaping up when we come back in a moment. you know, those farmers, those foragers, those fishermen.... for me, it's really about building

this extraordinary community. american express is passionate about the same thing. they're one of those partners that i would really rely on whether it's finding new customers, or, a new location for my next restaurant. when we all come together, my restaurants, my partners, and the community amazing things happen. to me, that's the membership effect.

welcome to the world leader in derivatives. welcome to superderivatives. now down about 1%, the company receiving two subpoenas. and this is one to watch. again, down about 1%. the facebook fiasco brings us to this week's "squawk on the street." i know you're all checking it. saturday, he married his long-time girlfriend just one day after his company began trading publicly. so, this morning, we're asking you what should be mark

zuckerberg's new status update. we'll air your responses throughout the morning. >> now, have you heard that he wanted to take back the 30 million that he sold? that he's, like, listen, you know what, how about a doover? i feel bad. >> he did sell it actually to cover his tax bill so that he could exercise his options. >> oh, okay, that's perfect. if you have a lot of money, like if you pledged a hundred million dollars to newark, there's other ways to do it. he said listen, i had to sell. i have made my option sales at the street and then actually wrote a check because i didn't want anyone to perceive, at that time, that i was bailing. >> you're not mad at mark zuckerberg, out of all of this, are you? >> i'm jealous. from the money to the social media show to the new wife. i mean, he's got it all. i've got a none.

>> oh, the smallest violin is playing for you, jim cramer. >> this guy has the edge on me. let's see. i think he's got the edge on about 7 billion of us. >> he's got some headaches and a large part of that is because he has a lot more money. >> if the rich are unhappy, it's their own fault. and he is my great, great uncle. >> just great, great? >> i stopped on his feet again the other day. you, you, you. >> yeah, i know, 6 and 11. >> great. >> all right, coming up next, getting you over that hump of the wednesday trading session. find out which stock cramer is putting under his microscope. it is mad dash. take a look at the concerns value. the dow is going to take you open. looking up at 7.5 loss, much more "squawk on the street" straight ahead. [ male announcer ] introducing a powerful weapon

in your fight against bugs. ortho home defense max. with a new continuous spray wand. and a fast acting formula. so you can kill bugs inside, and keep bugs out. guaranteed. ortho home defense max.

so you can kill bugs inside, and keep bugs out. guaranteed. forty-five states have joined together... ...to ensure consistent academic standards across america. these internationally recognized benchmarks... ...are unlocking a better way to prepare our children for college and their careers. because when our kids do better... ...america does better. let's reach higher. let's invest in our teachers and inspire our students. let's solve this.

mad dash here with jim cramer. we're looking at dell. consumer revenue down 12%. >> this was an extraordinary call for two reasons. one, the demand side seems very weak. from k through 12, they do a big school business. secondly, the supply, they don't have the right stuff. carl, the subtle sub text of this, apple is taking it to dell.

it's happening faster than people realize, same with facebook. mobile adomgs. the laptop would have a role. notebook sales down horrendously. this is the unraveling of a very good company. >> consumers are migrating to areas in which we've chosen not to participate. >> they say other devices -- hey, guys, it's okay to say apple tablet. there's no problem just admitting. listen, we don't have the right product line. now it's going to cause problems at intel. the ripples are going to be big here. i would tell people dell is not a bad company, but apple is just the sub text here! yeah, and we'll talk later about what it means for hp tonight which is obviously down a lot more. >> i know david broke a great story about restructuring going on.

you can't restructure fast enough. it is really that plain and simple. >> watching the impact from the european fall out here in the united states. also some big opens expecting from facebook, toll brothers and morgan stanley. all of that and much more straight ahead on "squawk on the street."

how math and science kind of makes the world work. in high school, i had a physics teacher by the name of mr. davies. he made physics more than theoretical, he made it real for me. we built a guitar, we did things with electronics and mother boards. that's where the interest in engineering came from. so now, as an engineer, i have a career that speaks to that passion. thank you, mr. davies. take the privileged investing tools of wall street and make them simple, intuitive, and available to all. distill all that data. make information instinctual, visual. introducing trade architect, td ameritrade's empowering web-based trading platform. take control of your portfolio today. trade commission-free for 60 days, and we'll throw in up to $600 when you open an account.

yeah, we're ready for this. there's the opening bell. the s&p 500, wells fargo celebrating its 50th listing anniversary at the nyse. men in black three celebrating the release of that movie. it will be interesting to see if it can take a bite out of the avengers which continues to roll on. >> i think that having the men in black ring the bell rather than what happened on the fiasco on friday. i thought ring the bell was a nice welcome change. maybe they ought to have nothing but actors. >> the new york post today has the picture from the hangover with greifeld, zuckerberg, i forget who the third person is.

>> facebook shares, by the way, up by 1.9%. borrowing started yesterday. >> and i think people didn't expect to come out with such a defentive report talking about how cheap facebook is. may i just say if you really think this stock is cheap based on buying it at 19-times revenues, the brooklyn bridge is about 16 times revenues. >> but in terms of the report, granted, the stock had been down to 30 in change at the time. that's a 33% upside, right? an upside of about a third? but a lot of other reports that were issued, prior to the ipo, their price targets were somewhere around 48. now, in terms of the upside, it's still the same upside surprise or return as before. >> well, let's go back to these

conference calls that morgan stanley was making and there's a possibility that some guys got this 5% lower. >> what i am hearing is that desktop traffic is flat. and moeb is 40% higher. if you don't have a strategy for monotizing mobile, then i've got to cut numbers. maybe it's faster than zuckerberg expected. i think may was bad for facebook. >> mobile up 39%, as you said, to 488 million. also, it says that margins are bigger than google's were when they went public. >> i think the only thing that's really working on mobile are interstitial video ads. and i doents think that group of people are going to sit there and watch that.

you pull up your cell phone and the whole ad comes on. the only stuff where people are making money is if you're willing to watch a 15 second spot while you're waiting for facebook to come up. i don't know anyone that's willing to do that, frank. >> when she says they've already broken through, that is a fair point. 900 million people with 14 minutes each. no one is doing it correctly because you're making pennies. before, you used to say hey, listen, it's dollars and the digital dimes. now it's millenial media saying how great it's supposed to be on mobile. but my sources -- my people that are involved in this industry are saying you're just not making any money.

>> a final execution risk is monetization. >> there was a great story about facebook. i am just saying that the thing to worry about is the mobile market is saturated, it's awful and it's hated by youth. >> in terms of morgan stanley, we are seeing the stock down by about 1.2%. we should note that citigroup is down by about 1%. there are a lot of other things going on. at the same time, does morgan have a risk? a group of shareholders are suing underwriters. >> i think the only thing that hurts a firm like morgan stanley is criminal prosecution. i don't think this will ever get

to that. i think these companies have insurance. these companies make mistakes. i'm going to say no. i don't want to take advantage of the client, morgan stanley. they are saying, listen, we're the anti-jp morgan. >> we finally have an analyst upgrading and downgrading the nasdaq. we've had not too many covering. but deutsche does downgrade to a whole, takes its target from 29 to 25. i guess on the presumption that they will beless competitive in the future? >> they might have more exposure than morgan stanley. what tommy joyce said is that he's grieved. if he lost 30 million, i think he's going to come after somebody. >> yeah, let's switch gears

here. a blow out quarter. the ceo is saying it appears the housing market has moved into a new and stronger face of recovery. this is the most robust and sustained since the downtown began. doug has come out and been very candid. has a very good read ochb his business and is very strong right now. >> $1.5 billion. that translates to 2003 units. the housing market is on fire. >> all right. david and bob are on the floor. hey, guys. >> hey, carl. we're going to start with europe and we're going to start with the banks as all of them doub. >> go long going into an eu meeting and short it on the night before the meeting. so what everybody is talking

about, will they get euro bonds? merkel said no. but i think they're going to point a commission to look into the legal steps that they need to do to get that. that doesn't mean they'll happen. but i think merkel will cave to a road map to a potential euro bond. there's going to be a little money for infrastructure projects. it's going to be a drop in the bucket. the big issue is how do you recapitalize the euro banks. they've got to change the languages to allow the european bail out fund to directly give money and recapitalize banks directly and not go through the sovereign governments. that's a major problem. >> road maps are fine, bob, but we're running out of time. >> we are. and it's a real worry that june is going to hit and a lot of things are going to happen from now until then.

commerce bank, the german bank came out and said we intend to start paying the dividend. there's 25% owned by the german government. but the ceo said we're hope ffu 20-13 we'll making a dividend. a solidly profitable year. there's the difference between what's going on in the north and the south. here's what's important about toll brothers. that is twice what the analysts had. now, remember, a month ago, we were talking about expectations of 20-30% order growth in all the home builders. and they all had done that. nobody has strong as 47%. i think that was the top number that i've seen so far. now, right now, all of these

companies are coming on in line. and the second thing is everybody is wondering why isn't this showing up in the existing and new home sales numbers. the home builders that are publicly traded are taking market share away. but it's still a very, very small part of the overall housing market. it's a very small business. >> what about our broad market. sometimes it has an overwhelming force and other times it doesn't. >> watch how the euro behaves. the bottom line means when you're short going in to the eu meeting, it usually means we're weak here. >> the faster the money comes

out of the banks, i certainly wouldn't bet on anything not happening at all. >> let's shift to bonds in the dollar. rick? >> well, thanks, jim. and listening to bob's comments, many down here say if you want to know what's going on in europe, watch the credit markets. and to that end, let's take a look at a couple of two-day charts. 1.73 down from yesterday's higher. but all things being equal, we're still only four basis points away from challenging last thursday's 1.69 low yield close, is toric. but the other markets are already there. should they close here and be a fresh all-time low yield close? look at the 10-year u.k.

what's the effects on the dollar? these are the highest dollar index level going back to september of this year. >> i want to keep an eye on hewelitt packard today. but, year over year, dell is down 6%, hp is down 40%. packard does not have the right product line up. i'm going to double how bad hewlett-packard is. >> apple and google. they've mentioned both as competitors causing some share loss there. >> you guys said hewlett-packard

after the bell. it's around the globe with so many dimpbt product lines. it will be interesting to see. but it's not something you can judge quarter to quarter or day today, certainly. >> right. i would like to buy petsmart. people spend more on their animals than they do anything else. >> acupuncturist. >> would you ever do acupunctu e acupuncture? >> to alleviate some pain, absolutely. >> i'd hate to see that dog hooked on some painkillers. >> you have to give the dog rehab. if you look back, meantime, coming up, a former nasdaq vice chairman speaks out about the problem surrounding facebook's ipo. this wednesday morning on wall street led by compuware which is

up by more than 8%. [ mechanical humming ] [ male announcer ] we began with the rx. ♪ then we turned the page, creating the rx hybrid. ♪ now we've turned the page again with the all-new rx f sport. ♪ this is the next chapter for the rx. this is the next chapter for lexus. this is the pursuit of perfection. [ male announcer ] the inspiring story

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, and the storybook narrator... [ man ] you're left with more electric trucks. more recycled shipping materials... and a growing number of lower emissions planes... which still makes for a pretty enchanted tale. ♪ la la la [ man ] whoops, forgot one... [ male announcer ] sustainable solutions. fedex. solutions that matter. today is gonna be an ] important day for us.ns. you ready? we wanna be our brother's keeper. what's number two we wanna do? bring it up to 90 decatherms. how bout ya, joe? let's go ahead and bring it online. attention on site, attention on site. now starting unit nine. some of the world's cleanest gas turbines are now powering some of america's biggest cities. siemens. answers. i'm making my money do more.

i'm consolidating my assets. i'm not paying hidden fees or high commissions. i'm making the most of my money. and seven-dollar trades are just the start. i'm with scottrade. i'm with scottrade. i'm with scottrade. and i'm loving every minute of it. [ rodger riney ] at scottrade, we give you commission-free etfs, no-fee iras and more. come see why more investors are saying... i'm with scottrade. ortho weed b gon max. with a new continuous spray wand. so you can kill invading weeds down to the root. without harming your lawn. guaranteed. ortho weed b gon max.

keeping a close eye on the dow, down 83 this morning. also, s&p initiating coverage of facebook with a sell. the technologies and tastes are always changing and posing challenges to incumbent companies. >> we're getting to the bottom of the facebook fall out out this morning. much of the attention turning to morgan stanley. >> we finally found a spot where we can see both morgan stanley regarding blame for both of those two firms and the debut of facebook. now, of course, both firms are the target of recent shareholder lawsuits, nasdaq getting hit with one yesterday. a firm representing investors that recovered more than $7 billion for investors. morgan stanly is mainly under fire for those analysts sharing

internal estimates reducing growth on facebook to the bank's clients not to mention the risk pricing and overpricing that's led to the sharp sell off that we've seen since it's been opening. as for the analysts, its procedures were within regulation and were the exact same as they do on all other deals. nasdaq is still under fire that led to extreme volatility and now the head of transaction services said they thought their trading systems were going to suffice. up almost 3% in early trading today. that's on that upgrade. needham upgrading it to a buy on global scale and the fact that they could improve. but, remember, not everyone is

on this stock. there is some short interest on that. data is about 4%. and even though that's a low number, the cost to borrow is extremely pricey because of the demand there and not all have been settled to be linked there. watch the short emphasis on facebook. definitely a bifurcation of where investors feel that the stock will trade. you're now getting the stock out of the hands of those big institutions and into the hands of day traders. people are going to trade how they see fete and that could go one of two different ways. time for squawk on the tweet, mark zuckerberg has not updated his status since saturday when he married his long-time girlfriend. obviously, a lot has happened since that time. so this morning, we're asking what should mark zuckerberg's new status update be. you can tweet us at

cnbcsquawkst. >> you've got a man crush on mark zuckerberg. >> bitter, table of one. there ee there's a lot more yours truly squa "squawk on the street" still ahead.

that could adapt to changing road conditions. one that continually monitors and corrects for wheel slip. we imagined a vehicle that can increase emergency braking power when you need it most. and we imagined it looking like nothing else on the road today. then...we built it. the 2012 glk. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services. for exceptional offers if you made a list of countries from around the world... ...with the best math scores.

...the united states would be on that list. in 25th place. let's raise academic standards across the nation. let's get back to the head of the class. let's solve this.

simon hobbs is back after a well-deserved day off. here to tell us what's coming up at 10.

>> there's a huge amount of anger about the underwriters on facebook. we're going to hear the story of one investor at home. we're also going to have the man bill ford on the program as the autogiant moves further out of junk territory. and private equity rainmaker scott sperling will be on the show. big names, six in 60, six stocks in 60 seconds give or take a few. >> dell said ground zero, the ripples here, people just say wait, they've got the wrong product. it's a notebook, stay away. >> it's not going down. that's because it has domestic security. you are willing to get overlooked. >> they're buying areba. this is against sales force dot com. >> some better than expected. >> this is spam.

and, by the way, spam juice has never been more popular. obviously, people are buying spam. >> upgraded over b of a. >> the call is it's been oversold versus what's going on. he's still below the street. >> that's correct. 14%. >> finally, jc penney. >> i think it's not going down. >> for more on those names, go to our web site. big show tonight, what's coming up? >> a single-digit guy. the stock is trading up initially. it's all about europe now. where do you feel there's real support in this market right now? >> i don't want to punt. i never want to punt. i go on fourth down.

i have to tell you, i don't want to rule out an upside surprise out of europe which would make it so all of these levels mean nothing. i'm watching apple because, you know, that's a situation. take it from dell. and i'm watching the fxe. it is all about europe, carl. you can't move these guys out. when their backs are to the wall, like you said, merkel compromises. you wish you were in, which is why i temporary -- all of my negativity by saying u.s. stocks still do better, con-ed, nice. >> some of them have come down tremendously. some of them are starting to get the yield support. >> after all the qe and it's still at one seven. >> i mean, they are winners at low interest rates. people should go out and buy a house. there's an asset. >> we're going to get new home

sales in about four and a half minutes. markets have been pivoting. >> automobiles, a lot of the houses, you know, you're talking about napeles, florida doing well. and you obviously have miami doing well. what a bad market that was. you have orange county doing better. that is commuteville meaning people are taking advantage of lower interest ratings and buying homes. virtual circle for the united states. >> finally, you did the today show this morning talking about facebook, right? it's on the cover of the new york times. we had a retail investor on yesterday who got burned, basically, on friday. had to sell it at a loss. called it at a tragedy. says you can't fight the machines. how long term do you think the american investor is going to feel about not just ipos or facebook, but buying stocks in america. >> once again, john was on last night.

>> i'm an individual stock guy. why? because you can get great yield. you can get great performance. i don't think the game is fixed. the ipo process, it's always been dicey. i said it would be like street.are com. facebook is better than the street. but i just wanted to be cautionary. >> when we come back, we'll get some new sales. a cautionary tale when we come right back. why? i thought jill was your soul mate. no, no it's her dad. the general's your soul mate? dude what? no, no, no. he's, he's on my back about providing for his little girl.

hey don't worry. e-trade's got a totally new investing dashboard. everything is on one page, your investments, quotes, research... it's like the buffet last night. whatever helps you understand man. i'm watching you. oh yeah? well i'm watching you, watching him. [ male announcer ] try the new 360 investing dashboard at e-trade. the teacher that comes to mind for me is my high school math teacher, dr. gilmore. i mean he could teach. he was there for us, even if we needed him in college. you could call him, you had his phone number. he was just focused on making sure we were gonna be successful. he would never give up on any of us. 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.

welcome back to "squawk on the street" fhfa. home price index. month over month, which would be for march, well, actually, they dropped it out. new home sales, 343,000. this is better than we expected. we're looking for 333,000. this translates a little over a 3% gain. in february, we had 353,000,

which was the water line going back to april of 2010. back to you, carl. >> thanks a lolt, rick. see you in a little while. facebook investors still facing confusion about their shares. one of those investors will talk to us live about his experience trying to buy into the ipo. >> plus, the executive chairman joins us first on cnbc talking about the investment up grade and what it means for the company and much more. >> and a hedge fund jient speaks out. >> why the company's cfo less than three days before it went public. all of that coming up in the next hour. but we've got to start off with facebook. we've been getting e-mails on their experiences trading shares of facebook. here's one of our.

rakesh chandra was a real estate investor who could not get verified for hours. rakesh, why don't you tell me what happened? >> yes, i did. i put in for a hundred shares of e-trade. and then the gm news came out and the price had increased to 38. and morgan stanley increased the number of shares offered. so on thursday night, i cancelled the e-trade ipo request. >> and did you get -- >> i'm sorry, go ahead? >> did you get confirmation that your trades were cancelled? >> so then i was assigned a hundred shares. when opened, i saw the shares go down. i put in the limit at 4010.

i noticed the stock was still going lower and then i changed the order to the market and there was no confirmation pretty much aulg day. and then told me that both sellers would go through the ira causing a trading violation with a 90 day restriction. in any event, we were quite agoni agonized, my wife and i. and we called every two hours. finally around 6:00 in the evening, i received confirmation that the shares were sold at 40.10 and i was a net gain of 200. >> was this the first ipo you ever participated? >> no, i did purchase the visa, which i held onto. but, sure, depending on the ipo

and the kind of company, i would definitely look into signing up for future ipos. >> how long did you feel you were likely to hold facebook for? were you there purely for the initial bounce? >>ives going to hold onto it because we all use facebook at home. but when i heard the selling and the number of shares and the ipo price, i made the decision to sell it at plus 10%. >> what is the response -- >> i was not aware that morgan stanley had downgraded the stock or that facebook had lowered the rest of it. >> rakesh, if you watched cnbc's output on the 9th of may, you would have known very clearly that they'd refiled their s-1 warning on mobile. and it would have been reasonable to assume that the market would down grade the estimates, as indeed, we learned

that they had done. it was, sir, in the public domain. so who do you feel is liable for that, then? >> well, i mean, other than the fact that i had an aggravating day, i can't really complain because i was net plus 200 on the trade since flipping it 15 minutes after the open. so, i mean, obviously, i'm hearing about, you know, as you're reporting about all of the negative commentary. but on a personal experience, i was assigned the share based on your reporting. and for a net gain. i was worried at one point that i might have been short a hundred shares in which case i could have had a big loss. >> rakesh chandra, he did get in on the facebook shares. we did reach out to both e-trade

and scott-trade. scott trade tells cnbc, as a result of nasdaq issues, many clients who placed orders experienced delays in trade execution and other notification such as modification. we are still waiting. >> but we should be clear. now they've said that they will make everyone whole. so in this case, he's $200 up. those who are not, presumably, through the chain, will get some compensation down the line? that's the -- >> there will be cases arbitrated over the next two to three weeks. nasdaq has not said we'm make up for your losses. >> no, no. i think they did. i think they said they will make people whole. that was the first comment that

came out. maybe i misheard that. they have set money aside, 13 million to make people hold. it will be interesting to see what finra says. yesterday, calling this a matter of concern. but, man, are we parsing fin regular in ways we haven't for years. >> yes, and also looking at the rules surrounding an ipo in terms of analyst communication. rules that were set in place to make sure that you didn't get a huge hype and pumping up of a stock so that retail would get bad. they're getting larger allocations. >> we should point out, by the way, facebook seems to have found a floor, at least near term. don't want to go too far out there at 32 up over 3% this morning. the first update that we've seen

for that stock since its initial public offering. >> and we'll come back to that throughout the morning. the autogiant ford getting a second investment grade. with the upgrade, the autogiant reclaims all of the assets it posted as collateral in 2006. >> goods morning, simon, we're joined by bill ford in dearfield michigan. i know you've waited a long time for this. i know the main question a lot of investors have is we knew this day was coming eventually. what's next? >> well, first of all, phil, yesterday was a great day for us because we got the global back. it was so great to see so many employees just smiling again yesterday. it was a very emotional and great day. what's next for us?

really, it's in someways more of the same. we stuck through that plan through thick and thin. it's working very well. we still have more to execute. as you know, we're growing very quickly. we're opening eight new plants in the next few years. and we continue our march on in north america where we're doing very well. and i think the team there is doing a great job. >> bill, you talk about the two issues that moddies points out there in the upgrade. europe and asia. europe near term. you get 25% of your earnings from europe. and a lot of people look at this and they say we have no confidence that you or any other automaker is going to fix the problems in europe, at least not within the next two or three years. are we looking at the automakers to be dead money for the foreseeable future because europe is a mess? >> that was be absolutely the

wrong way to look ats it. you look at what we're doing in the rest of the company and despite the troubles y europe, we were doing exceptionally well and hitting our targets. we did last year and we're hitting them again this year. and that's in spite of a very difficult environment in europe. i think, really, what the story is, because of our global strength, the strength of the credit company, that the ford motor company in total is doing exceptionally well. >> you're down 30% in the last year. i know all chairmans and ceos say you can't control what the stock does. but are you frustrated when you see that you are meeting your targets and done what you said you would do and, yet, investors are looking at this and saying we're staying clear? >> well, yeah. i suppose at some level, it is frustrating. but, you know, those things tend to even out over time.

if we continue to hit our numbers with very strong cash and most importantly with the products and technology that have been hitting in the marketplace, we'll be just fine. it's very hard to predict when investors are going to like our company or dislike it. but one thing i've learned being here 33 years is if you get the basics right, eventually, people will notice. >> bill, last night on the conference call, there were a number of questions about whether or not you guys were going to make a decision. i know you said you wanted him to say there. yet, this question will be out there for some time. why not come out and say listen, we have an agreement that he's here at least through 2015, 2016, whatever the date might be. at least put those questions to rest. >> well, i mean, we never do that. we've never, in terms of successi succession, you know, announced multiyears out and given a date.

>> we have a great team. and we have some really good internal candidates. and, pornt importantly, they al very well together. allen has done a great job and will continue to do a great job. but part of being a great leader is part of developing the next generation. >> and just yes or no, bill, i think we talked about this. you do have a succession plan in place. you just clearly have not anunsuated? >> well, of course. that's certainly one of my jobs and the job of the board is to make sure that we always have a succession plan in place. >> bill ford, the chairman of the ford motor company joining us the day after a huge day getting investment grade credit rating.

>> thank you very much. next on the program, a question that's very close to david faber's heart. where have all the leverage buy outs gone? >> oh, yes, where have they gone. up next, after the deal. we'll be joined by thomas partner's co-president, scott sperling telling all in an exclusive interview with david faber when "squawk on the street" returns.

well, given the accessibility of cheap borrowing and cash in their funds, how come we haven't seen more activity? scott sperling is co-chairman. it's nice to have you on cnbc. i hear day in, day out, you know, we could finance up to $5-10 billion. the bankers tell me cash in your fupds. it's very large. and valuations are attractive. are we going do see more deals? >> i think what you've described is the formula for many more transactions than we've seen. and the question is why in the environment is credit readily available because of the very low base rate on an absleuth lay

basis that credit is relatively inexpensive. and there is plenty of capital available. >> why? >> and also in corporate america. >> no doubt. >> and i think part of the issue that you have is that there is enormous macro uncertainties that are weighing everyone's expectation about the future doin or create additional uncertainty which means risk. and until those are resolved, i think we're going to be in a slower environment for transactions. the good news is we're -- >> so why wouldn't that color your view, then. if you're seeing strong performance and you have ownership stakes that run a fairly broad gamut around the world, why wouldn't that color your perception of things that aren't bad? >> i think for us and for much of the business world, we're, again, looking at a level of unternty we're not used to in terms of uncertainty and the substance of relaying the

impact -- >> take some risks for god's sakes. you've been saying encertainty now for years. >> we're in the business of taking measure ed risks. and i think the thing that we're going to continue to see, i hope, is the economy remain reasonably stability. but, again, we're worried about domestic policy and not sure the world is worried about what's going on in europe. i think going against that in a favorable way is the fact that united states is becoming ever more competitive because of low energy costs. because of the emphasis on the entrepreneurial nature of our economy. whatever you want to say about the facebook ipo, facebook is a great example of a company that didn't exist half a decade ago. and i think across the board, we're seeing both established companies get better at what they're doing, get more

efficient at how they're able to generate products or services that their customers want. >> also, in the larger scale, by corporate america. >> i think one of the issues that everyone face social security the fact that relative to these economic risks, things are looking a little expensive on the buy side. and so what you're really looking at is the fact that you have these strong, micro-economic factors. it's really strong on the performance of corporate america and certainly from the private equity perspective, on the part of portfolio industries across the country. against that, you have these other issues that as we learned in 2006/2007, that we have to pay attention to. >> your returns, conceivably, could still be higher. >> one of the things that i

think that we took out of that 2006, 2007 period is that don't let your borrowing costs, don't let leverage drive what you paid for a company. that's a way of transferring value from a buyer to a seller. and we are in the business of buying what we think are hopefully pretty good companies and working really hard with those companies to make their operating better. we want to get paid and that we're not transferring that to a seller because we're willing to take the leverage available. what about aggressive on the ipo front? does the facebook fiasco, and i put that in quotes, have an impact on your ability to search for exits for a number of your portfolio companies? >> i think the fundamentals of a company is really important. so obviously, dunken donuts was an example of a company that has incredibly strong fundamentals

that had a very strong post market performance. whatever you want to say, in many ways, it's still a strong company in terms of the fundamentals. and the question is was the valuation appropriate or not appropriate at the ipo. but it's a good company and it's here to stay. >> guys? >> i just wonder, scott, when you started looking at the year end and people are going to start talking a lot about dividends, do you think st strategically think they'll be based in the election outcome or where the economy is? >> i think what we're going to look at is an expectation for the future. the election will have a very significant impact. and therefore, the actions that you take are going to be

affected by the election results. and we need to be realistic that we take that into consideration. we need to look at the fact that we're accumulating very significant free cash flow and the ability to place that back in the hands of shareholders is important. and that's something i think companies across the spectrum, whether they're owned by private equity or they're more broadly owned, that's a fact that they're looking at and i think you're going to continue to see more money put back to the shareholders in various forms, whether it's dividends that are special dividends or share buybacks. >> you talk about uncertainty, whether it's dividends or even where cash is parked. there's some numbers about how much is overseas and to what degree that would come back in a holiday if there was going to be a holiday. >> i think the key thing is we need to make sure we can grow this economy. there's no way to deal with the deficit issues that are so significant without growth. a one hundred basis point change

in our growth rate wipe us out everything that they're talking about. >> scott, before i let you go, private equity is becoming an issue with the campaign. are you concerned at all that there are going to be perhaps ramifications for your business as a result of this discussion and dialogue? >> i think there's two pieces to it. the first piece is how do our investors and private equity look at it? >> and in order for the pension funds and schoolteachers, for them to meet their honorary needs, they need private equity. what we're seeing is an increase or at least a maintenance. the second issue is an issue that we all confront, which is

the substance of what government policy does to our ability to grow this economy. and that's an issue that is for all of us. >> scott, as always, appreciated. >> as also, we're taking a look at the euro versus the u.s. dollar. we're down another leg on the euro. >> dell in particular will bring the tech down. >> so dell is having wide range impact. microsoft, down by about 3%. a and. >> a lot more "squawk on the street" in just a moment. . [ woman ] for the london olympic games, our town had a "brilliant" idea.

support team usa and show our olympic spirit right in our own backyard. so we combined our citi thankyou points to make it happen. tom chipped in 10,000 points. karen kicked in 20,000. and by pooling more thankyou points from folks all over town, we were able to watch team usa... [ cheering ] in true london fashion. [ male announcer ] now citi thankyou visa card holders can combine the thankyou points

they've earned and get even greater rewards. ♪ tdd# 1-800-345-2550 the spx is on my radar. tdd# 1-800-345-2550 we're hitting new highs. 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 - i can custom build my own screens tdd# 1-800-345-2550 or use predefined ones. tdd# 1-800-345-2550 and i can trade wherever i want, tdd# 1-800-345-2550 whenever i want. tdd# 1-800-345-2550 the kicker? tdd# 1-800-345-2550 i pay $8.95 a trade. tdd# 1-800-345-2550 that's a deal in any language. tdd# 1-800-345-2550 open an account tdd# 1-800-345-2550 and trade up to 6 months tdd# 1-800-345-2550 commission-free. tdd# 1-800-345-2550 call 1-800-790-7706. and somebody asks me a question about the volt. what really blows them away is when i tell them i almost never go to the gas station, despite the fact that they see me driving to work every day.

i fill the volt up once every -- maybe once every couple of months. and that feels absolutely wonderful. i'm hardly using gas, but it's there when i need it. anybody that thinks that this car doesn't have solid performance, hasn't driven it. there's no other car like this on the road. ♪ 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, and the storybook narrator... [ man ] you're left with more electric trucks. more recycled shipping materials... and a growing number of lower emissions planes... which still makes for a pretty enchanted tale. ♪ la la la [ man ] whoops, forgot one... [ male announcer ] sustainable solutions. fedex. solutions that matter.

we're now down 1.42. the euro has broken 1.26. this event in europe tonight ought to yield some results. that's what should happen. we'll see if it does happen. >> one would hope. it certainly is having impact. so let's bring in annie bush for our money in motion trade. andy, it's funny. you were advocating for this trade to sell euro against u.s. dollars. but we have breeched all of the levels in which you sent the trade in. what are we looking in terms of the new range for the euro and where we have support? >> first of all, there's a time

to get fancy in the foreign exchange markets. this is just pick a level where you're comfortable and sell the darn thing. we've just seen massive shorts develop in the market, but we're driving this thing much lower. the news out of greece is not getting any better. pick yesterday's low and leave that as a stock and just sell where ever you can in this market. and you're just going to continue to try and sell any kind of rally in the euro until you're proven wrong. don't get fancy or too smart. just sell it. >> and it even more so rings truer in the currency market. if we have one headline out of europe, we could see a massive short covering rally triggered.

should we perhaps play this trade with another cross and stay clear of the euro? >> that's always interesting to do. you would try to use euro sterling to get involved. the bank of england is looking at continuing to ease and maybe have additional easing at their next meeting. that one, you could bee euros and sell sterling. you just want to take what the market is telling you. right now, even though the market is really short, everybody is using rallies to sell it. so the reaction is positive. don't overthink it. just get involved and dump it. >> all right, andy, thank you so much. see you friday. >> currency trading every friday here on cnbc. we'll want to send it over to sharon for some eia inventory. >> right before that number came out, now we are looking at it recovering just a little bit.

we did get a build in crude supplies of 900,000 barrels. that is the delivery point for 9d x futures. we're also looking at a decline of 3.3 million barrels for gasoline. inventories fell by $3.3 million barrels. and just when fuel supplies were down by 300,000 barrels, this fuel supply is down by 300,000 barrels. we are konting to watch what is happening in baghdad. the talks between iran and the u.n. skoourt council. and, again, those talks will continue into the evening and tomorrow. >> for the moemt, thank you very much. coming up, setting the selloff

on exclusive when morgan stanley smith chief investment officer. at bank of america, we're lending an in communities across the country. fro omrevi htalielzeping t a neigbrhbooklyn..or.ho financing industries that are creating jobs in boston... providing funding for the expansion

of a local business serving a diverse seattle community... and lending to ensure a north texas hospital continues to deliver quality care. because the more we can do in local neighborhoods and communities, the more we can help make opportunity possible. [ creaking ] [ male announcer ] trophies and awards lift you up. but they can also hold you back. unless you ask, what's next? [ zapping ] [ clang ] this is the next level of performance. the next level of innovation. the next rx. the all-new f sport. this is the pursuit of perfection.

market very much clearly what is going on in europe. we have a summit, of course, starting off this afternoon. selling off quite rapidly.

it's the financial energy materials that are in negative territory. europe had a very broad-based sell off right from the beginning. let's have a look at the nyse and you will see an hour and four min uts into trade that it is almost 5-1 and over at the nasdaq, where tech is a clear focus in the wake of dell, again, you see a real move to the downside decliners rapidly out pacing the advancers. another volatile week for the markets. here for squawk on the street exclusive now. good morning to you. >> good morning, how are you? well, i'm concerned. >> with good reason. >> $4 trillion of market capitalization have been wiped out. and my schism question would be where does wall street go from here? >> yeah, i think we're dwoigoin continue to struggle primarily around problems in europe.

if you think about the euro zone and the euro in particular, you really have a flawed currency. obviously the focus of the summit. longer term, where is the strategy for european recovery now that europe is in a recession. >> you see, jeff, a lot of those things, certainly the first few comments that you made, you could have made three years ago. and in a sense, you're trying to short circuit to the end of the game. the release of the ecb money in december gave a huge risk rally on which people could have made a huge amount of money. you've got to follow it stage by stage, have you not? >> well, we don't intend to market time. basically, when we make a move, it's based upon a forward, 12-month view of where we think returns are going to be.

we actually got more cautious around europe in particular back in the autumn. so if you look at where you are if you're a dollar based investor, your date is about zero. your return is about 5%. we've been with our portfolios with the u.s. >> give me your overall portfolio view. >> i think, you know, obviously cash is a traditional safe haven. but i think there's another vehicle which makes sense for individual investors and that's managed futures. managed futures have shown to have characteristics that are decently priced.

it's another relative safe haven and much bet ere than sitting cash. >> so on behalf of people at home, what does managed features do? >> they're trend following. if you're in a bull cycle, a bear cycle and that persists for a while and we think pressure on the market is probably going to persist for a while, that should mean that managed futures are a defense ef vehicle. >> sounds to me as if they're correlated with what's going on in the rest of the market. >> but they also take hedge trade. >> i think a much riskier

proposition is having cash and having no return. >> no mention of gold, then, jeff? >> well, we do allocate to commodities. we're underweighted in commodities broadly. if you think about when you want to own gold, you want to own gold when there's high-rising inflation, there's obviously not generally a problem. or when you have concern about the value of paper currency and that's why you have that pretty bilge move in gold last year. >> jeff, people want to know what that view is made on facebook. what can you say to us about what has obviously been a major focus for most people in the markt. >> i think all ipos can be challenging at time. facebook is a very strong fran choose. i think for a long term

investor, it's probably going to make sense. >> i think the market had a lot of challenges. >> thank you for joining us. thank you, sir. >> you're welcome. >> all right, let's check in with the market flash. >> thank you. looking for a little bit of green in a decidely red tape. i want to look at expedia, expe. the only news of note is rates are targeted from 53-44. actually some strength, believe it or not, according to europe eexpe is up b-i-g. back to you, carl. >> when we come back, we'll go inside the facebook offering. what morgan stanley's cfo was thinking days before the stock went public. don't go away. ♪ why do you whisper, green grass? ♪ [ all ] shh! ♪ why tell the trees what ain't so? ♪

[ male announcer ] dow solutions use vibration reduction technology to help reduce track noise so trains move quieter through urban areas all over the world. together, the elements of science and the human element can solve anything. [ all ] shh! [ male announcer ] solutionism. the new optimism. [we love theme parks but withm. four kids, it can just be too expensive. yeah, so to save money we just made our own. oh no! what could be worse than ninety-foot swells?! typhoon! first prize! it's a cheese grater. wooooo... this isn't scary. are you kidding me? look at that picture of your mom's hair from the '80s. there's an easier way to save. wooohooo... geico. fifteen minutes could save you fifteen percent or more on car insurance.

[ male announcer ] introducing a powerful weapon in your fight against lawn weeds.

ortho weed b gon max. with a new continuous spray wand. so you can kill invading weeds down to the root. without harming your lawn. guaranteed. ortho weed b gon max. [ male announcer ] aggressive styling. a more fuel-efficient turbocharged engine. and a completely redesigned interior. ♪ the 2012 c-class with over 2,000 refinements. it's amazing...inside and out. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services. vrj vrjts. take a look at the dow down.

some have seen the intermediate short term support with more bearish targets in the 12.75 to 12.85 range. some miserable results from dell last night. the worst performer in the s&p. less than three days before facebook went public, the journal today reports that this decision may have doonled any real chance facebook ever had on the stock jumping. always good to have you back. hello. these circles are beginning to narrow in. who aparentally had a rather nontraditional as the ipo would normally go. >> i've been tracking this for almost a year now. and all along, he has played a very out-sized role when it

comest to the ipo. he had the company draft their own perspective, which is incredibly unusual. he met with investors before he ever hired bankers. he told bankers he was skeptble about what they could bring to the process. face book was very proud and all along said. >> why didn't morgan stanley say, look, we would love to up the allocation the way you like, but we're a little nervous about demand? >> that's what's so odd about all of this. it seems like there was a major miscalculation of the book. the story line now is that everybody was on the same page, everybody thought there was tons of demands. but now we know that wasn't the case. people were getting more shares than they wanted. >> so why would he be the

person -- or people would point the finger to? it sounds like the lead underwriter didn't do itsz job. it is morgan stanley's job at the end of the day to assess the demand and advise and advise. >> i think that's an excellent point. i think, you know, the lead underwriter who he worked with very, very closely. and it's still unclear who this all is. >> i don't see what he's done wrong. he priced it perfectly. he took charge of the ipo. but there was nothing left on the table for wall street. i failed to see what the guy has done wrong. perhaps there was greater demand. that's not his responsibility. that's the cfo.

facebook paints him as a rock star. he's clever to the underwriters. >> that's a very good point. so he's out smarted wall street completely. that's not so great for the company because they've got a situation on their hand. that morgan stanley was the one that leaked the analysts' change. >> let's talk about that for a moment. >> but facebook is being itchly ka implicated as well. >> facebook clearly filed an x-1 saying there was a problem with mobile on may 9th. facebook has done nothing wrong. >> what do we know about what morgan -- who morgan stanley told what? is it clear to you that it's still more broadly?

>> that is still being completely -- i'm working on that story now. that's a breaking story we're all going to be following it this morning. >> you used the word fumbled in the story. apart from nasdaq, with so much litigation, with so much desire for litigation, whether it's appropriate in this instance. >> i hear what you're saying, and that is exactly what facebook would say. they would tell you that this is all nasdaq. . >> do you think there's any chance they leave the nasdaq?

is it too late to switch? companies switch all of the time? >> there's all sorts of talk about who's online now. we were all winding up for this to be over. the story is just beginning. >> i'll see you later. one busy woman. david, over to you. let's talk about that underwriting that didn't seem to go well. stevens used to run equities at wachovia. he now runs the hedge fund. nice to have you here. >> we both know you for years. let's talk about that tension between the cfo of the company, the company itself and the underwriter. should morgan stanley have more effectively pushed back or did they simply misjudge demand and

that's why they may not have puched back. >> given the hiech hype that surrounded the deal going back 6 months to a year, the level of oversubscriptions and tranks actions have become essentially meanless. i meaningless, because everyone piles on in the deal. i don't envy the job morgan stanley had. it is a great firm that has done some good transactions in the past. in this particular case, they misjudged the real demand. >> how do they do that? they know their way around an ichlt po. >> the level of oversubscription gets to a point where it is ridiculous. to judge what people's real demand is going to be is difficult. raising the price and the size components on the transaction as aggressively as they did also created a problem that you have seen play out in the aftermarkets. >> what about the glitch at the nasdaq. we closed at 3823.

had everything gone perfectly smoothly, no problems at all, would the stock have ended higher? >> it may have. it may well have. i think that with a stock like this that is a momentum oriented stock, because the valuation metrics are very aggressive, i think once you lose momentum, it turns to the down side and it becomes a busted ipo like we have had. i think if the stock had of had positive momentum and been able to sustain that out of the blocks, we may have had a different outlook in the short-term. three weeks, three months, this stock would have been trading at these levels any way. >> where do we go from here? will this hurt future tech ipos e for example? >> i think it will. i think this price discovery risk in ipos. investors normally require an 8% to 10% immediate premium. that's a discount issuers have to take to sell share tots public i this i that discount

widens outpost the offering and the level they will have to take will be higher. >> despite efforts to make the playing field even, it seems as though retail always seems to get hit. >> it is very unfortunate that retail comes in and buys a stock at 42, 45 and the stock trades down. >> is morgan stanley still in there. >> investors should assume this stock is trading on its open. it is way past where morgan stanley could go enter and buy the stock. >> we are down 160 points. any thoughts on the markets right now? >> i am actually beginning to like the markets more. we are getting into more of an oversell position down here. i am actually looking at this as an opportunity to cover some shorts and maybe start going along the market. >> all right. quinton stevens, thank you for joining us. >> thank you. >> back to you guys. certainly much of the attention stemming from the facebook fallout turning to

underwriter, morgan stanley. let's get a morgan stanley analyst take. brennan hawkin is director at ups. he just has a $19 price target. great to have you with us, brennan. i will get to the upgrade in a moment. there are a lot of valuation arguments. first, i want to talk about the facebook fallout. you think it is not a big deal. the subpoena from the secretary of the health, lawsuits, not a big deal. why is that? is it because what morgan stanley allegedly did in terms of the analyst revising estimates down and alerting certain institutional investors? is that because that is not a violation of any security laws? there is no wrongdoing that was done? >> yes, right. as far as my understanding of what happened, i'm not aware of any wrongdoing as far as morgan stanley goes. to me, this is more of a headline risk really for the

stock, more morgan stanley's shares. what's a bigger problem is the read-throughs. facebook was supposed to reinvigorate risk appetite, the ipo. the ipo didn't go well. probably the opposite is happening. risk appetite could be coming back have the further ipo appetite withdrawing. that's a negative. i think that's a bigger deal for these stocks rather than the fallout from morgan stanley he can poliexplicitly. >> they are not aware of how these ipos go. let's say you as an analyst have a stock going public that you could revise estimates lower and notify institutional investors but not the entire street, is that correct? >> yeah. rather than going into the details of the ipo process, which i don't think is going to have a huge bearing on the stock, right, but as far as i

know, in what went on, i don't see any big problem here. >> you know, in terms of things coming down the road that could have an impact, how about mahmouddy's downgrade? will it be two notches or three notches? they keep putting it off. this stock has gotten crushed, $21 after reported nine earnings. here we are pushing 13. >> that was actually what i was getting at with my upgrade. the stock has been completely hammered since moody's came out and put them on the watch list. every global investment bank they put on the watch lis fort a downgrade. morgan stanley, they indicated was going to be cut three notches, which the issue there is as far as the global rack of firms, it will have the lowest operating company rating by moody's. it is going to be baa-1. that's a head wind to several revenue sources, specifically when you look at the fik business, the long-dated der i have tick business, a problem

there. it is probably a bit of a head wind for prime brokerage. when i take a look at what potential earnings impact that cob in the worst case scenario, you still end up getting an earnings number that makes the stock look attractive at $13, $13.50. >> what's the earnings number you get? >> i'm currently at 250 for 2013. when i go through and take my revenue hit as far as the moody's down grade, that lops off 25 cents. when i then assume higher funding costs, because of the moody's down grade, that's another 10 cents. then, we have slow are capital markets velocity, a more conservative assumption for capital markets broadly lops off another 15 cents. you get to $2 per share in earnings and a 7% return on tangible. the stock is pretty attractive. >> we are running out of time. you think all these lawsuits an subpoenas are headline risk. is there a risk that morgan

stanley loses underwriting business in the future because of how it performed as the lead underwriter for facebook? >> that's a legitimate risk. if this ends up giving them a black eye, even if there is nothing really technically they did wrong, legally or otherwise, it could have a perception problem, which they might clearly, their competitors are going to use that when they are pitching business for ipos in the future and say, you don't want to go with morgan stanley because of the facebook fiasco. >> right, sure. >> it gives competitors ammunition. that's completely legit mass. >> briennan, thanks so much for your time. markets in pullback mode. we are just off of the session lous he lows here in the united states. much more on the selloff after this. is. physics teacher by the name of mr. davies. he made physics more than theoretical, he made it real for me. we built a guitar, we did things with electronics and mother boards.

that's where the interest in engineering came from. so now, as an engineer, i have a career that speaks to that passion. thank you, mr. davies. i haven't thought about aspirin for years. aspirin wouldn't really help my headache, i don't think. aspirin is just old school. people have doubts about taking aspirin for pain. but they haven't experienced extra strength bayer advanced aspirin. in fact, in a recent survey, 95% of people who tried it agreed that it relieved their headache fast. what's different? it has micro-particles. enters the bloodstream fast and rushes relief to the site of pain. visit fastreliefchallenge.com today for a special trial offer. in your fight against bugs. ortho home defense max. with a new continuous spray wand. and a fast acting formula. so you can kill bugs inside, and keep bugs out. guaranteed. ortho home defense max.

but not how we get there. because in this business, there are no straight lines. only the twists and turns of an unpredictable industry. so the eighty-thousand employees at delta... must anticipate the unexpected. and never let the rules overrule common sense. this is how we tame the unwieldiness of air travel, until it's not just lines you see... it's the world.

good wednesday morning. welcome to the third hour of squawk on the streets. want to get a check on the markets. dow down 162. s&p down 117 around 1300. the nasdaq down 34 on some weakness surrounding tech. dell is the worst performing stock and hp the second. dell missing first quarter sales and issuing some weak guidance.

hp weaker before it reports after the bell tonight. expedia, one of the biggest winners of about 6%. pip piper jaffrey raising it. if the euro keeps falling, i may go on a european view kags too. let's send it over to brian. dell down about 17%. if it holds up, it will be the worst day since november 10th of 2000. excuse me. a mike would be helpful, brian shactman. it would be the worst day for dell since november 10th of 2000 when it was down 19%. it gives you perspective of the context for dell's day today. also want to take a look at new mining. gold down. it is involved with gold and copper. reuters reporting that their ceo is saying that they are reducing their conga cap ex from 1.5 billion to $440 million.

that giving some bounce to the stock keeping the cash on hand for something else. time for the road map this morning. the facebook ipo confusion certainly causing problems for the nasdaq's reputation. we are going to talk to a former vice chair of the nasdaq. markets overseas under serious pressure ahead of the eeu policy meeting. we will see what it means for the markets here at home when we bring you the european clothes in 20 minutes. a class action suit against morgan stanley. we will talk to one of the lawyers. see what he has to say about all that and more coming up in the next hour. first, we will br i in our cash and director of floor operations at uvs floor operations. >> we had some say we got everything but capitulation. is that closer today? >> i don't think necessarily today. it will depend on what happens out of that dinner in europe. that's the mainstay. people want to see if the new

french president will lead a group of activist world stimulators or will mercle reassert, germany still driving the bus. we are going to watch the euro. uncomfortably close to 126. if it breaks, there may be a trap door under it. >> in terms of policy out of europe, this is not a formal meeting tonight. the real deal is in june. if they come back, with some kind of infrastructure bond. >> i think clearly, people are looking to see, will germany compromise? will they allow for something close to a euro bond? >> if they remain ad dam, we am are looking for a completely different case? >> this continues to be the facebook thing. the fear on the floor is that

these lawsuits are going to come down like heavy rain. every state in the nation needs money. they all have attorney generals. >> there was a draft i, a contingency plan for an exit. they call it an aim meemiable d in which they would give greece money to ease the exit. is the market ready for that? >> i don't think it is truly ready. the true litmus test is what happens at the atm machines in athens. if they are going to give them a separation gift or whatever and the people in the street fear that the buying power of their bank deposits are going to change, they will move faster than any emergency meeting can come together. >> we have got cash here as its own asset class. despite close to a negative return, it is cash in in a bubble are getting close to a

bubble? >> i am not sure it is quite close to a bubble, particularly with these rates of return. >> people tend to not quite hoard but store up what they need. right now, green pictures of dead presidents have a lot of leverage. >> so where do you see support? i had mentioned 1275, 1285. close to the 200 day? >> i think that would be it. in the short run, probably somewhere around 1292. we break that. you could get some acceleration down to the 200 day and then it could get dicey. >> a continuation of the lower-high, lower-low scenario we have seen since may 1st, yeah? >> yes, it gets to be a problem. it is may and advocates are going to be all over the place. the markets unfortunately a little bit vulnerable here on a technical basis and europe is still driving the bus. >> as my friend says, sell in may and leave planetary orbit? >> that's not a bad idea. >> sound pretty good.

thanks, art. want to hop over to the cme and check in with rick santelli and get the santelli exchange. good morning, rick. good morning, carl. it is hard not to notice the credit markets, one of my favorite topics as we are one basis point away from a new historic yield low clothes already occurring in things like boons, guilds in the uk. germany has a zero coupon on their two-year note trading around six or seven basis points. the credit markets and the dollar index touching the 20-month high today. is it because we are doing something great? some might think so i personally don't think so. i think it is more of a function of no outlying qe extensions by our fed and the real link in the dollar index and the high majority of the trade is the euro. germany, the most common text i

get these days is hey, where is the wid mark trading? why is that funny to me? many believe it isn't going to be certain countries that leave the euro zone. some that i talk to think it would be much more efficient if germany left and left the weaker countries in and they operate on the "d" mark. that would leave the euro to the weaker participants and it would help their exports and parts of their economy. california's spending, that is not a mama's and the papa's song. we talked about this several times. i want to do another one on california avenuen though illinois is almost as bad. >> mark landsbalm did a great article on california. he pointed out in january, governor brown thought he would have ruffle a $9 billion deficit. it is looking like 15.7. they are going to have a referendum as to whether they will raise taxes. many of the experts that mark

landsbalm talks about think that that deficit actually could be as high as $17 billion. today, versus 2008, this is great. think about your own lives. think about how you may be more controlled in your spending today than you were before the credit crisis. well, today versus 2008, california actually is going to spend $30 billion more. that's roughly a 15% increase and as this gentlemen pointed out in his column and i will ask you out there, whether it is on satellite radio or you are watching on your tv, how many americans are spending 15% more than they did in '08 and running a significant deficit? i think california might be only unique to other countries and other states, not necessarily citizens. last but not least, their k-12 schools, here is what's really fascinating. they basically want to spend $34 billion. how much did they spend last year? $29.2 billion. so once again we are not really ever talking about stop

spending. we are talking about more taxes and more spending, which always leads me to my final thought, carl. stop spending, stop spending, stop spending, back to you. >> complete with the finger bag today, rick. i like that. >> we will talk to you in a bit, rick santelli. nasdaq's facebook flop may have been a black eye for the exchange but will the wounds heal over time? joining us first is david wild, former vice chair at nasdaq omx, founder and ceo. we were chatting about how this might have been avoided. you are layering complexity on top of complexity and at some point, your stress testing was not sufficient. is that what you think happened? >> obviously, they had a system that was launched that wasn't battled hardened for this size. that never should happen. they are going to have to look at the reason for why that occurred. these markets become so darn

competitive in the wake of regulation and alternative trading systems and national market systems where you have so many competitors that are so tradi tradi trading centric skch, everybody trying to do everything so cheap. >> some of the defenders have come out and said, look, percentage of overall fees that come from new issues is not that substantial. it is no the like it is going to cost them a great deal of money even if some of these arbitrated cases are ruled against them. is that true? >> in the aggregate, it is not putting anybody out of business, there is no question about it. it clearly snatched defeet from the jaws of victory. if something is going wrong in real time, with these complicated incredible computer systems, they are incredibly difficult to fix. when i was vice president of

nasdaq, we had snafus. in real time on something that is this sensitive, whether you look at the way it was mishandled, some would say it was misprice bid the book-running manager and some would say the communications of the earnings of the estimates which is is standard operating procedures but the shift in mid stream undermined the psychology. all these things came together to take something that should have been terrific for the u.s. economy and the ipo market in general and cause everybody to back away. >> defeat from the jaws of victory as you said. >> absolutely. >> let's say we run the nasdaq and a potential new issue you comes to you, what is our pitch? how do you instill confidence after a week like this? >> nasdaq has done a terrific number of these without nary a snafu. my guess is they will go back to the drawing book and use what

worked for them. facebook is a an amly from the sheer side of it. it will not hurt them competitively when they are going after the average, every day transaction. it probably shouldn't. when you are looking at the large transactions, it is going to put an arrow in the quiver of the new york stock exchange. >> a lot of discussion about greifeld but the degree to which he has been aggressive on mergers that haven't worked out. has he been reckless? >> i don't think that bob has been reckless by any stretch of the imagination. i think we have created a difficult sort of set of circumstances for anybody transacting in this market. i am a big proponent that they have squeezed the voice of issuers where the job formation, job creators of the u.s. economy. their voice has been left in the market. you have 60 trading venues because of ts and there is only two guys, if you will, two companies that are left with any kind of advocacy for issuers,

nasdaq and new york. that is way out of kilt ter. the issuers haven't been good at understanding market structure and how it affects chair prices. i had mark greer on a panel. he said that there are times it feels like his stock prices detach from his fundamentals, that they are treating a stock like a casino chip. increasingly, fortune 500 executives are tumbling to that fact. it is high time we step back and look at this that we created, market structure, and go back to the drawing board and see if we can't make it work for the economy again. >> you think that's likely? do you think that's enough to get investors to trust in capital markets? >> bit by bit. if you look at the jobs act which was passed on april 5th. i was there the at the white house for the signing. there is actual will i a clause,

title 1, section 106, which is the other section and they are asking the s.e.c. to actually do a study within 90 days of the date of the act on the impact of tick size or des sim zation on capital formation. it is clear that this is on the radar screen of congress and on the radar screen of the s.e.c. i know sha i know chairman shapiro, a terrific public servant. i think these people really are doing their best to try and get things right. we have the c.a.t. system. it needs to get done because the s.e.c. with the computerized escalation in the arms race of computers that's going on doesn't have the tool kits it needs to be able to figure it out. >> or the money. >> and they need to get that and be given that. i think we will get there. it is going to be a bumpy ride along the way.

>> david, you have insight into this in a way that few people do. david weild, the former vice president of nasdaq omx. still down triple digits. 29 of the 30 stocks are in the red. we will get more on the selloff when we come back after a break. don't go away. t go away. i haand then i have eleven my grandkids. right when you see them, they're yours, it's like, ah, it's part of me. it's me again.

now that i'm retiring they all have plans for me. i'm excited.

welcome back to squawk in the streets. brian shactman here. i want to look at alcoa. it has come back a tiny bit.

earlier, 8.31. that's a low not seen in this stock since april of 2009. of course, one month after the haines bottom. pretty startling in terms of the stock action. you want to see an interesting chart. look at sodastream. reports crossed that they received approval to sell in brazil. you see the spike. it has now come back down. not confirmed reports. some violent price action. as some say in the marketplace, parabolic. i was decent in math. back to you. obviously, alcoya and commodities in the midst of a big slide. watching it with a little cushion? >> that's absolutely right. watching the euro and the dollar for the direction in crude. trader just stopped by and said we had seen a 78 handle in the dollar index. now, looking at 82. that is the big part of the reason we are seeing the selloff across the board in the

commodities sector. oil is getting hard-hit. the wti contract looks poised to break below $90 a barrel today. $90.18 was the low of the day. we haven't seen prices since november. in terms of the brent crude market, falling below the 106 market. below the $90 level for the wti contract. traders say there is not a lot of support until $85 a barrel. we did hear from saudi arabia talking about the fact they were skid itch skiddish about $100 oil. anticipating further slides there at the opec's largest producer. keep your eye on what's happening in terms of the metals market. gold prices falling some $40 and copper near the lows of the year as well. we are looking at retesting some of the lows with he saw in gold and silver a week ago. it will largely hinge on what happens with the euro and the dollar, carl. >> interesting, sharon. with oil prices down, walmart

up. the 12-year high today. that's interesting. when we come back, more on dell's worst the day in 11 years. we will count you down to the clothes in europe. if there was ever a day where the clothes there might rock us here. it might be today. ten minutes way. be right back. ight back.s took a science test. the top academic performers surprised some people. so did the country that came in 17th place. let's raise the bar and elevate our academic standards. let's do what's best for our students-by investing in our teachers. let's solve this. diarrhea, gas or bloating? get ahead of it! one phillips' colon health probiotic cap a day helps defend against digestive issues with three strains of good bacteria. hit me! [ female announcer ] live the regular life. phillips'.

[ engine turns over ] [ male announcer ] we began with the rx. [ tires squeal ] then we turned the page, creating the rx hybrid. ♪ now we've turned the page again with the all-new rx f sport. ♪ this is the next chapter for the rx and the next chapter for lexus. see your lexus dealer.

>> nasdaq saying they will spend

13 million to compensate for the botched trade on friday. >> shares of that company still struggling at this hour. >> breaking news here. want to throw it back to headquarters. the secretary of the common wealth of mass hachusetts has issued a subpoena to morgan stanley on the research department discussions prior to the ipo. keeping eye close eye on the markets today. the dow down 148. s&p above 1,300. the moving average is 1280. walmart bucking trend at a 12-year high. if you want to make the argument that low gas prices this this country are good for walmart, that's definitely working today at 63.81. dell, of course, the big loser from the earnings results last night. that is down 16% and, of course, the next biggest loser on the s&p is hp, which is down only

5%. in the meantime, jackie deangeles with more on dell is over at the nasdaq. >> good morning, jackie. >> we are also watching the dell effect today. interesting to note, the stock plu plummeted 16.8% on the open. the worst drop since november of 2000. we are seeing it trade lower by about 16%. we are watching that dell effect. we are seeing what some of the other pin action is here. we are seeing a lot of these other stocks lower as well. direct competitor, seeing a loss of 5%. intel makes the chips for dell. microsoft makes that. ibm, a little pressure, about 1.5% on this so-called dell effect. back over to you. >> what a day for tech today. the closing bell, in the meantime, about 5.5 minutes away. we will get all the action and details on the impact in the u.s. with the dow down 147.

ortho weed b gon max. with a new continuous spray wand. so you can kill invading weeds down to the root. without harming your lawn. guaranteed. ortho weed b gon max.

well, some call it a taxpayer funded dinner for eurocrats. this meeting of 27 eu leaders in brussels this evening. it might be a little more important than that. we will see. simon hobbs? >> the price action would indicate it is. they may not come up with anything but it is an important meeting. if you look at the way in which we have sold off the end of the european trade, it is quite scary. 96% of the top 600 stocks around europe are in negative territory. if you look at the major markets, this is not the peripheral markets are the major markets, you will see we have come down throughout the session and in london, paris and frankfort, we are looking at losses there of about 2.25. i will show you in a moment when we get to the map. when we shut out, it is much worse in, for example, italy and spain. at the bottom of those losses, it is not just banks, very raw

basis, a lot of the mining stocks, nokia. you will see as far as the individual issues go, yes, a lot of the banks are in negative tary tore for fear of what the politicians may not come up with when they sit down for dinner in 2.5 hours time. the italian banks also are heavily down today. i just mentioned it, because they are clogging up the bottom of the dow jones stock 600. let's have a look at some of them. it is broad based, really, across the board. if you thought you were going to get euro bombs out of the germans, you are on cloud cuckoo land. the rhetoric going in was never they were going to agree. whatever the new french president attempted to put on the agenda. i think what's worried a lot of people is the increased talk of a greek exit and in particular a story that comes from reuters which reveals that on monday afternoon, the civil servants within the euro working group, the 17 nations that make up the

euro said, look, guys, it is time every nation set up their own contingency for what to do if greece leaves the euro zone. we are not there yet. let's have a look. in particular, as we look at the map, look at the periphery, look at where you are on not just greece but spain and italy. >> the european markets are closing now. >> so you see we have 3.5%. greece hasn't done so badly. obviously, that's a market that has already crumbled. worth mentioning as we head into the summit, that the spanish prime minister was where the french president went, not off to germany. there isn't that german access we have usually experienced. he is talking to the spanish merkel really isn't talking to that extent. they will say you have to have fiscal consolidation. in order to do that, you have to change treaties.

they won't get that through. look what's happening in ireland. i want to leave you with one of the interesting things that happened today. i want to show you the man who is the german representative on the ecb, a man who may ultimately help out the markets. york amusin. today, cnbc confirmed that he is on the working group. why that is important. if you look in the quotes in the ft today, he is talking about the need to break the nexus between public finances and bank reform. is he going to be the one that organizes the ecb and everybody else to pump funds directly into the banks? if he does that, that will cause a world rally in equity markets. the question, carl, is whether we are actually there yet. i suspect not. these will be discussed in the days to come. >> they are going to make this as painful and as long a process as possible. thank you, simon. we want to bring in our chief international

correspondent, michelle caruso-cabrera. good morning. >> i was late last nigh, early evening, well past 1:00 in the morning athens time when i spoke with him. he wanted to send a very clear mess annal and clarify something. late yesterday in the traiting session, some flash headlines that hit the wires suggested that he had said that greece was preparing in some ways or making preparations for a possible exit from the euro. he wanted to say, very clearly, that is not the case. he wanted to highlight over and over again he knew of no preparations, no preparations in greece for that. additionally, what he wanted to clarify was simply that considering the fears that have grown as a result of the inconclusive election, it is not without -- it is obviously within the realm of possibility that other institutions in europe would be making possible plans in case of a euro exit, even though he said he did not know of any actual preparations. now, simon just highlighted, for

example, that we now know of this euro working group paper that reuters claims to have read that says that there are now plans just in case. the other thing that papademos really wanted to emphasize was that he said stress on the banking system in greece had eased. understand that this is the battle right now in europe, to preserve the banking system, to stop the outflow of deposits. you can see the big -- we are showing you this 24-hour chart have o the euro. it has been startling in the last 24 hours. once again, papademos mission, every other banker and leader in europe is focused on making sure people don't take their money out of the banks. within emerging market circles, people that went through latin america during the debt crisis, they are using a phrase about europe that they used about latin america back then. they worry that the street has taken control. in other words, that the choice about the future of europe and about whether or not greece stays in slowly the decision is

moving away from policy makers and into the hands of the people. there are three ways this can manifest itself. it can be at the ballot box. we saw that in athens. it can be with dem on strags in the streets. we have seen that in athens. it can happen through the banking system. if you see a continual outflow of deposits. at some point, it is no longer made by the policymakers but by the people. >> thank you very much, michelle. >> i imagine addressing some of the very same topics. >> very good point. i was talking about david faber at the opening. i said the one trade that has worked really very successfully is go long stocks into a euro zone meeting and short them the night before. policymakers aren't delivering on the hopes that the market has. whether it is overhyping or

overhoping or the eue leaders are underdelivering, it is working and it is working again today. we just saw the euro collapse an hour ago. that caused a lot of concerns. there weren't a lot of headlines. we are not going to get what people are hoping for. the dollar rallied dramatically. that is a huge move for the dollar. we are at a 22-month low on the you' euro. we saw a collapse in the energy complex, the materials complex, that always kills us. put up anything, a chevron, for example, immediately as 10:30 hit, we started seeing the stocks move to the down side, right there in chevron. all the big energy names moved down 2%. a lot of the big names are down more than that, about 4%. same situation in the materials complex. all these charts look virtually the same, bht billuton. moving down.

the piece of good news was on the whole home building front. very good april new homs sales anymores. toll had great numbers. did you see doug yearly. the housing market has moved into a new and stronger phase of recovery. doug is going to be on with maria at 3:40 eastern. he will give you more information on where the housing market is going. not a lot of big moves up. with he saw toll brothers on the up side, just fractionally. most of the others. tolls orders up 47%. most of the other companies up 20% to 35%. the problem is, even with the decline, these stocks have already priced in large numbers that we have seen here. >> we forget what a good first quarter they had. >> they were the market leaders along with retailser. >> thanks a lot, bob pisani. how should you navigate the volatility. david kelly, chief market

strategist with jpmorgan funds. good to see you as always. >> good to be here. >> you have put this european game into a nice metaphor of chicken but it is not two cars that are the same going at each other. >> that's the problem. i don't know if the greek people realize, this is kind of like a game of chicken between a tank and a subcompact. if the greek people decide they can't take the pain anymore, they are going to abandoned the euro and default, it is an absolute catastrophe for greece. i think it will be a deep recession in europe. it is going to be very expensive for german taxpayers to have greece leave. europe will get by. it will be a catastrophe for greece. they need to know this. they don't have that much bargaining power. >> with that said, what kind of odds would you give them on doing that, on settling? >> i would give it a slight 60/40 in favor of a continuation. the way the greek electoral system works is the biggest

party gets an extra 50 seats. that sets you up for a lot of tactical voting. all the mod krats in greece have a goal of making sure that sear reeza is not the biggest party. if i am in greece voting for a new party, i vote for a new democracy to beat them for the 50 seats. if they do that, you can end up with a moderate coalition to do a deal with europe. >> can merkel sell something like that. >> she needs to. to me, this is almost the equivalent of the marshall plan. after world war ii, the allies pumped money into the european economy, including germany eve thoen they had been their mortal enemies even though it was in their moral interest. it is in their moral interest to help getting greece going. if not, you have a huge problem. it is going to be much more expensive for germany in the long-run. >> assuming this process takes until the middle of the summer, which i think is what you are

betting on? >> well, yes. >> what do you do in the meantime? >> long-term investors need to remember they are long-term investors. when you look at the news, you would say sell. if you look at how extreme valuations are and how conservative they are already, i think that says buy. it is tough to stay balanced here. i would stay balanced here. valuations just cannot really push you towards bonds and stocks. >> the u.s. clearly, the most compelling equity market in the world. there is a slowdown in emerging markets, a little stronger than people told. the u.s. is growing. some of the housing numbers, can grow barring catastrophe in europe. i would avoid u.s. equities. that's the number one call we would make right now. >> the mood today is, look, i'm going to build some cash. i am going to have my own firewall at home. >> is that misguided? >> i think it is. the question you have to ask yourself is, yeah, this is uncomfortable and so forth. three months from now, will the u.s. be in recession? if you don't think they will be

in recession, if you think we can weather this, and it is terrible for the germans and the greeks, we will muddle through. the evaluation story is so compelling that i would not want to be short equities even at this time. >> thanks for coming by. >> david kelly, jpmorgan. let's check on dell's big drop. matthew hoffmann joins us on the news line. >> good to talk to you this morning. >> thanks for having us on, carl. >> a lot of drama surrounding the call. you lack conviction. you also say longer term, you think they can make the shift in mix. how much time, how much leash are you willing to give them? >> well, it is going to take about six months until the acquisitions this he have been making really start to kick in. that's why the stocks are getting hit here today. ipad is hurting them when they talk about alternative mobile device. apple has a much better portfolio. until windows 8 gets out there and some acquisitions going, eps growth is going to be elusive.

>> you even say we fear there cob another shoe to drop even though they were pretty clean last night on the phone? >> yeah. tech companies that miss once often miss a second time. you don't get the benefit of the doubt in this type of environment. estimates are coming down hard here this morning. so the stock is coming down with it. it is not a big multiple event. you are not seeing the multiple compress a whole lot. stocks really coming down to the extent estimates are coming down. it is going to be probably next year before they start working up again. >> people want to use it as a proxy for what hp might say tonight. is that fair? >> well, hp did do a little bit better. they took some share back from della cording to the latest market share figures that are out there. i wouldn't be surprised on a relative basis to see hp do a little bit better. at the end of the day, they are still exposed to the same apple ipod phenomenon. the one interesting thing was that dell's prospects dimmed in p.c.s as the ipad supply

increased in the month of april. we will see if that's a theme that hp goes through this evening also. >> when you say that you think longer term they can make the strategic mixed shift to higher margin, enterprise solutions, what kind of new products does that mean, if any? >> well, you have a lot of your applications moving to the cloud now and out of a real enterprise centric environment where the ip manager was dealing with the infrastructure. things are moving out to to the cloud. they are making acquisitions to deliver apps out in the cloud and to secure them. when they bought a company like sonic wall or appassure, they did both those this quarter, that will be in fiscal '14 as they work through acquisitions like that. with your neutral rating, do you put a target on knew trals? >> no. we just say it is fairly valued

right now. that 7-8 multiple on the estimates gets you to this $12, $13 range where it is trading at this morning. >> last question here. is there a favorite name of yours in the space other than apple, let's say? >> well, we do cover qualcomm also. that's one that we like. if you are looking down the smaller caps and the enter prize, arubis had a real pullback. they are exposed to one of the good enterprise trends, installing wireless land. a much smaller company than dell. wireless land access points will only increase in time and that's one of the better areas of i.p. spending right now. >> matthew, thanks again for your time. >> thanks, carl. >> matthew hoffmann, senior analyst. facebook shareholders filing a class action against facebook itself and morgan stanley, one of the lawyers representing the shareholders will join us live right after this break.

is break. have you ever partaken in a car insurance taste test before? by taste? yes, never heard of it. well, that's what we're doing today. car insurance x has been perfected over the past 75 years. it's tasty. our second car insurance... they've not been around very long. mmmm... no good! no good? no good! so you chose geico over the other. whatever this insurance is, it's no good. ok so you... are you still sleeping?

just wanted to check and make sure that we were on schedule. the first technology of its kind... mom and dad, i have great news. is now providing answers families need. siemens. answers. at bank of america, we're lending an in communities across the country. fro omrevi htalielzeping t a neigbrhbooklyn..or.ho financing industries that are creating jobs in boston... providing funding for the expansion of a local business serving a diverse seattle community... and lending to ensure a north texas hospital continues to deliver quality care. because the more we can do in local neighborhoods and communities, the more we can help make opportunity possible. support team usa and show our olympic spirit

right in our own backyard. so we combined our citi thankyou points to make it happen. tom chipped in 10,000 points. karen kicked in 20,000. and by pooling more thankyou points from folks all over town, we were able to watch team usa... [ cheering ] in true london fashion. [ male announcer ] now citi thankyou visa card holders can combine the thankyou points they've earned and get even greater rewards. ♪ >> coming up on the halftime report. looking for opportunities in the sea of red. commodities killed, oil flirting with $90 a barrel. traders are looking at how to play that drop. one of the year's top performing fund managers joined us with the picks that have made her a big winner. that and more at the top of the hour, carl. >> scott, we will see you in a

few minutes. facebook and its underwriters were sued. they say it is without merritt. sam rubbingman is lead torn on the lawsuit filed it in manhattan. a partner at robbins, geller, ructman and dowd. >> nice to be here. >> just looking through the complaint now, it seems like the crux of it is what you are calling untrue statements of material fact. when it came to those reductions in revenue forecast. is that the main complaint? >> well, the main complaint, carl, is that the company knew there was a slowdown in revenue growth. it clearly shared that information with the lead underwriters on the ipo. who then told selective investors about it but didn't tell anyone else buying in the ipo. the allegations of the lawsuit are, that that information should have been disclosed.

the registration statement and perspectus. i want to point out one thing. this case is also about more than just what was disclosed in the registration statement and perspectus. it is another example, carl, of the unlevel playing field that retail investors have in this market. i love your network. i watch it every day. it is on my tv 24/7. repeatedly hear how retail investors are not coming back to this market space. take a look at what happened in this ipo and in our lawsuit. it is agood, pri good, prime, e why that is happening. >> they did file an amended s-1. why was that not enough? everybody can read it. it is just a click on line. >> the amended s-1, the actual statement they put in the amended s-1 is in the complaint. we say that is misleading in and of itself. go look at news reports at exactly how much these underwriters took down these earnings estimates.

it was dramatic, the ratcheting down of the earnings guidance. you can't tell me there isn't one investor in that facebook ipo that wouldn't have wanted to know that information. clearly, underwriters thought it was important, because they went and told their certain select investors who clearly acted on that information to the detriment of everyone else that purchased shares in that ipo. >> what kind of damages are you looking for, do you expect? >> the damages are very complicated, something set by the core. if you look at the statutory damages, they nare in the multibillions of dollars. >> have you given any clarity on how many are participating in the lawsuit? >> it is a class action. there is a whole procedure. this covers everybody who purchased shares in the i pchpo >> would you make this complaint if the stock was trading 45 or

51 instead of 31? >> i would be making the complaint that what as done here would be wrong but nobody would have any damages. clearly, what was done here was wrong. we allege it was wrong. we think we will be able to prove it. there are significant damages and that's why there is a case. >> is the crux of the complaint aimed at morgan stanley? it sounds like it. is facebook also named as a defendant? >> facebook is named as a defendant. it goes to both the underwriters and the issuer of the company, who, as you know , facebook, by the way, i love the website and use it. it is about the ipo. facebook is strictly liable for any false or misleading statements or omissions in its registration statement. >> obviously, it is going to be -- the complaint is going to be seen through different sets of glasses. you are going to be called. i'm sure you have already been called an ambulance chaser of sorts. this is complicated.

it seems a little premature to file a complaint four days in. do you agree? >> i don't agree. if you lost money, carl, you would be coming to me nd atrying to get me to file the case and coming to court. the bottom line is the process that occurred here stunk. anyone that bought in the ipo is furious, feels like they have been cheated. feels like morgan stanley and the underwriters did things to their detriment. the timing has absolutely nothing to do with it. >> hope you will come back. >> thank you very much. i will be happy to come back any time. >> sam ruckman with robbins, geller, ruckman and dowd. we spoke with one of the share holders who had difficulty executing trades on the stock through schwab. the company tells cnbc, we are working with clients to resolve any remaining problems resulting from nasdaq's issues on friday. our goal is to do that as quickly as be po.

markets still in major pullback mode. 167 on the down side. we will get more after a short break.

that could adapt to changing road conditions. one that continually monitors and corrects for wheel slip. we imagined a vehicle that can increase emergency braking power when you need it most. and we imagined it looking like nothing else on the road today. then...we built it. the 2012 glk. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services.

a lot to watch. brian shactman has another quick market slash. >> i have been watching zynga and what it means. it has been a steady slide into negative territory. a lot of chatter if there is such a big flight to mobile, it might not be such a good thing for zynga and its gaming. >> it is the relationship with zynga that is driving others away from facebook. that will be a debate for upcoming weeks. we will talk to santelli after this break. with dedicated support teams at over 500 branches nationwide. so when you call or visit, you can ask for a name you know. because personal service starts with a real person. [ rodger ] at scottrade,

seven dollar trades are just the start. our support teams are nearby, ready to help. it's no wonder so many investors are saying... [ all ] i'm with scottrade. it's no wonder so many investors are saying... high schools in six states enrolled in the national math and science initiative... ...which helped students and teachers get better results in ap courses. together, they raised ap test scores 138%. just imagine our potential... ...if the other states joined them. let's raise our scores. let's invest in our teachers and inspire our students. let's solve this. [ engine turns over ] [ male announcer ] we began with the rx. [ tires squeal ] then we turned the page, creating the rx hybrid. ♪ now we've turned the page again with the all-new rx f sport. ♪

this is the next chapter for the rx and the next chapter for lexus. see your lexus dealer. wanted to provide better employee benefits while balancing the company's bottom line, their very first word was... [ to the tune of "lullaby and good night" ] ♪ af-lac ♪ aflac [ male announcer ] find out more at... [ duck ] aflac! [ male announcer ] ...forbusiness.com. [ yawning sound ] and people. and the planes can seem the same so, it comes down to the people. because, bad weather the price of oil those are every airlines reality. and solutions won't come from 500 tons of metal and a paint job. they'll come from people. delta people. who made us one of the biggest airlines in the world. and then decided that wasn't enough.

the dow is down 166. let's check in with rick santelli. 20-month high. >> absolutely. we can never tell what is good or bad whether it is interest rates at these low levels. many politicians think it is great. they can keep borrowing at very low costs without minding what servicing the debt is going to cost. there is a similar dynamic here. as you look at a chart, since the last fed meeting, april

25th, dollar index is up about 4%. the euro is down about 5% against the dollar. the dollar index is fully explained being at a 20-month high based on the ills of europe. nothing to brag about. nothing to celebrate. there is one good thing. the reason i picked april 25th. the fed didn't talk about extending qe, which helped the dollar a bit. when you put all that together, now, we get our lower energy cost. i guess if that's the silver lining, it is better than nothing. >> yeah. so if you had to choose, rick, between the larger impact on the dollar, right, what the fed has been saying or not saying versus euro, what would it be? >> i think that it is the euro without a doubt but i wouldn't underestimate at least at this point the fact that we haven't painted in more q.e., even though the door may be crack just a bit. >> finally, as we go into tonight and this meeting with europe, your expectations for any headlines tomorrow? >> i believe that the bureaucracy of europe are notup