the facebook fallout. investors are suing the company. mean type the ncht ys echlnyse calling. plus shares of hewlett-packard getting a boost. posting better than expected results, but announcing plans to lay off about 8% of its workforce. that's like 27,000 people. it's thursday, may 24th, 2012. "squawk box" begins right now. good morning p about welcome to "squawk box" let's get you up to speed on this thursday morning. we'll start out with europe. index coming in lower than expected in hey. that news knocking stocks and euro lower this morning. take a look at the major equity indexes. you can see that the ftse is up slightly. also talking about in france being up 1%.

euro trading at 1.2567. in the meantime, eurozone private sector shrinking further. new orders falling forcing companies to run down backlogs and cut jobs. and even bigger worry is that today's pmi suggests the downturn is taking root in the poor countries of germany and france. they had been keeping the troubled euro block afloat. we'll have more from kelly evans in london in a minute. meantime in asia, china's factory falling in may. analysts say that the data underpins expectations of more policy easing. and get this, a number of central banks raising gold hodings. among those countries, philly peensz, mexico and ukraine, those moves in line with the trend among merging market central banks to diversify away from the dollar and the euro. and you can see that is pushing gold higher this morning, up by

about $11 to right at $1560 an ounce. >> in corporate news, let's start with a number of reports about facebook. the new york stock exchange reportedly opening discussions with the company about a potential listing on the big board. but the exchange has denied it is discussing a full listing transfer with facebook. we'll talk about that. meantime shareholders are suing the social network and its bankers. facebook says the lawsuit is without merit. nasdaq also facing litigation. and knight capital announcing a loss on the botched makes dak debut and demanding that the exchange compensate the amount. knight ceo says losses were worth coming as a result of the trading issues. shares of nasdaq down in after hours trade and take a look, you can see there, actually not so

bad right this second. head of global sales of research in motion is leaving the company. patrick speps helped launch a range of blackberry 7 devices. the company has seen a steady stream of departures and that is a stock that is just a one way do down. fda advisers rejecting the use of a blood thinner as a way to reduce the risk of new heart attacks and strokes. it is already approved for two other uses. the fda will make a final decision by the end of june. let's take a look at a few stocks to watch. hewlett-packard reporting better than expected second quarter earnings, but announcing plans to lay off 27,000 employees over the next couple of years. the move aims to jump-start growth and save the company up to $3.5 billion annually.

shares of pandora getting a boost. it raised its full year guidance. it's and online music streaming service. and synopsis reporting better than expected quarterly sales and raising its outlo loolook f full year. pvh reporting a jump in quarterly earnings. citing continued growth in its two key labels. and we'll storm into this next story. shares of net app falling. storm is another one of those -- i wish a storm would take some of the pollen out of the air. >> is that what's going on with you? >> don't they give a pollen count or something? >> it is raining. gr so maybe that stirs it up. i don't know what it's

happening. >> maybe you're allergic to mold spores that are getting to you. >> it's not a cold? should i be scared? >> no. do you get scared when people did have a cold? >> we had a producer that sounded like it was not just a cold. it was pretty bad. >> the company blaming exposure -- he's had 66 sick days in the last -- and he smokes and he has a horrible lifestyle. but i haven't been sick enough to have to stay at home for how many years where you actually have to stair at home to nurse yourself? >> you did have the flu really badly. >> like three years ago. and costco reporting results. earnings and revenue topping consensus. >> let's get a check on the markets. this is basically a do over day. yesterday the dow was down and

clawed its way almost back to the flat line. 6.66 points down yesterday. >> i don't like that number. >> this morning indicated a little bit higher. we'll take a look at what's been happening. jobless claims could be a big driver of what happens. oil prices continue to look at these very incredibly low levels. yesterday breaking below 90. again right at 90 bucks and we haven't seen this in about two years since we're below $09. >> did you see the journal made a huge deal about -- a huge -- this is what he said. >> our guest, yeah. >> he said all this yesterday. were they watching? did they not know that he had said all this stuff already and will this is just a summary of what he said on the air. >> his opinion piece. >> but he gave it yesterday.

if i had known -- >> don't tell them that. >> every aspect of this was covered. >> can you you gu did you get pink shirts? >> yours is more purple. i go along the -- >> yesterday you had a cream shirt on. >> i did. i have a large bag of shirts ready to go and then we'll start all over. this is what you yu you get tod. are you all right with that? >> i am. i wore red because the devils won last night. >> you know why you wore red. >> because the devils won. >> you've worn it other times and you know why. because you're open to an advance. that's what red means. >> red signals that?

devils up three games. >>. >> but if you're going to be a shot, today is the day. >> good luck. the ten year yielding 1.747%. again, we get the jobless claims at 8:30. dollar right now is trading down against the yen. up against the euro. right now 1.257 is that euro-dollar. and gold prices have been a little bit higher this morning up about $12, $1560.40 an ounce. >> the joush al also -- this is good, though. they have a huge piece on profit maxization and it's a tutorial for president obama to maybe read. see, i think maybe when he was skipping reading about the supreme court, i think he didn't spend that extra time he had reading about basic economics. >> i watched the tape again of

obama two days ago. >> do you think he was cherry picking? >> what he says in some cases, i don't remember what the words are before before. >> we'll play it again for you. he said it doesn't always help companies, businesses. one of the most basic tenants of economic -- you know what this xi says? failure to understand the simplest and most basic point is probably enough to disqualify someone from the presidency. >> then disqualify me. what i -- >> well, god help us if you ever -- we'd move further left. >> finish your point. >> the point that i was going make is that in some cases it does work. the risk/reward isn't there, it's not -- >> for profit maxmaxization? >> if you watch the full tape, it was about private equity. >> i know. thank you. >> and what he was referring to, i think, is this idea of the special dividends and recaps.

>> thupd yesterday. >> but i want to say it again because i think it's important. private equity in some cases takes money out of businesses before they've actually made money. we've seen it repeatedly. that's what i think he was referring to and -- >> the day that they launch this attack, he was at a tony james fund-raiser for blackstone. >> correct. >> now, did bain have more special dividends or more leveraging? >> no. >> then how can you go to a $40,000 a plate fund-raiser at tony james -- so blackstone is a better -- >> that's not suggesting he doesn't understand economics. it's justjust -- >> to say that maximizing profits doesn't always he help

companies, businesses, communities or employees is a fallacious statement. and if you want -- >> to attack private quit i i p seeming silly. >> i'm a fan of private equity. i think there are certain circumstancesfectperfectly. >> consumers to benefit, you need a company for give consumer what is they want and the way you do that is to he weearn a p and do it as cheaply as you ca. just a basic economic tenant. and i don't think he gets it. i do not think he gets simple -- either that or he decides that there's a big enough pie out there without trying to help maximize profits and i'm just going to make sure it gets spread here, here and here which is not a surprise given all the rhetoric. >> what do you say to all the ceos who are on the big sustainability kicks and the let's help our community kicks

and all the people who said i'm here pot just to -- you hear it repeatedly. >> it's good business. i don't think they need to hang their head in shame. branson's book is preposterous. >> i don't think the president was suggesting anybody seeking profit should hang their head in shame. >> what is he suggesting if he says i think if you made enough money -- when you get to a certain point, you should stop in what does that suggest to you? >> i don't agree with that. >> that suggests that you're taking away -- you say enough things like this and you can see that there is a fundamental lack of understands of the most basic economic principles. and we're paying the price for it at 8.2% or 8.1% or wherever we are this next friday when we're in d.c. >> where do you want to go with this?

>> i don't know. >> why don't we go across the pond. >> i got to save up for $1 million that i'm going to owe her when the president is reelected. >> you owe her a million bucks? >> she has to save up for that, too. >> no, i'm going to owe her a million. actually, i don't think -- it's not a bet. she will pay me a million if he's not reelected i think was -- >> let's get to kelly evans. it is time for the global market report in london. hopefully she's listened to a bit of this conversation. kelly, how much money do you have on you? >> yeah, i've been suffering through it. no, good morning, guys. i want to give you a quick update on what's been happening. for the last several day, europe has been dating trading action and u.s. not just because of the debt crisis, but because of what markets are doing thorn. a bit of a strange situation playing out. we're seeing some green behind me. you can see about a 6:3. stoxx 600 up about 0.8%. that said, take a look at what's

happening in bond markets because this is the real story of the morning. ten year yields in spain are about 6.167%. we're over that 6% mark but off our highs. the real story is the flight to safety that we're seeing in german bunds and uk gilts. 30 year german bund s are yielding 1.943%. that's close to japan levels. take a look at the ten year fresh lows at 1.38%. and ten year gilts, 1.78% about so that off some of those lows that we touched earlier in the session. but still incredibly low levels. spain a bit of a bounce. 1% up, about half a percent on the xetra dax. more than 1% on the ftse. the euro-dollar going to be the focus again this morning. we're down to session lows.

we've bounced back a bit. a lot of pressure still coming out of europe despite the green behind me. >> thank you, kelly. fantastic news. >> interesting stuff. >> i don't know if it's interesting stuff, but it is interesting -- >> for a thursday. >> now you're going to -- okay. coming up, we'll get the street's reaction too hewlett-packard. and big job cuts announced last night. but first, this morning's sports buzz. becky already said that she's wearing that red dress because the new jersey devils beat the new york rangers 5-3. here's the rangers head coach after the game. >> we've been through it before and i know the guys are -- it's a hard one to lose the way we lost it tonight crawling back into it, but we'll go through our day tomorrow, we'll regroup

and again i have tremendous amount of confidence in how we'll react to this. ♪ ♪ ♪ [ male announcer ] the tight-turning, space-saving, eco-friendly smart. escape your stuff. ♪ [ technician ] are you busy? management just sent over these new technical manuals. they need you to translate them into portuguese. by tomorrow. [ male announcer ] ducati knows it's better for xerox to manage their global publications.

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u.s. equity futures are indicated a little higher. dow futures up by just about 27 points. in our headlines this morning, noaa will be holding a news conference to issue its first outlook for the 2012 atlantic hurricane season. the official season starts june

1st and it runs through november 30th. there were accept hurricanes last year. right now let's get to today's national draft. . alex wallace of the weather channel standing by. good morning. >> good morning. and we are tracking storms across the middle of the nation. storms producing downpours. quite a bit of lightning. all lining up with the cold front. east of that, we could see showers across the mid atlantic it, also in the northwest. but again, the focus is right in the middle of the country for that risk for the stronger storms. the areas shaded in the red, that's where we have the greatest risk for severe weather. hail and damaging winds. and we can't rule out a few isolated tornadoes. we'll watch that area closely throughout the day. the other story, the heat, we'll see that building. temperatures for this afternoon, 10, close to 15 degrees above average and it gets hotter friday. 93 for your high in nashville,

st. louis 92. the holiday weekend, expect the numbers to continue to climb. it will be a hot saturday for many areas and a thisthis will continue memorial day, as well. so the unofficial summer starting here feeling very summerlike. >> alex, thank you. hewlett-packard beating estimates. also announcing plans to count 8% of its workforce. joining us is technology hardware analyst at barclays capital. ben, unfortunately, this reminds me of some of the discussions we've been having. it's not good for any of these 27,000 people, yet the stock is called higher. this is one of the problems with i guess trying to earn is profit and operate in a capital list tick system. >> our hearts go out to those

27,000 folks. some will get early retirement. >> communities will be hurt, all the things we hear about, but it doesn't make the managers cold heartless people. >> there's been a lot of restructuring for several years. obviously stocks are different than the human impact here and we are going to get a lot of savings. every billion in savings is about 40 cents to the bottom line. so the stock gets a pop. but they'll reinvest a lot of the savings and have to rehire lot of salespeople and they have to invest in a lot of software because their software systems are frankly a bit antiquated when compared to competitors in ti terms of lead generation. >> the whole narrative you can see it playing out. the stock totally underperformed.

at this point, this company has messed up in so many different areas that it's lost the luster of really being hewlett-packard, thisstory ied firm. it's crunch time for them. >> it sure is. they need to get it right this time. no more fooling around. this this company, we just recently put out a tech strategy piece where frankly they're on the wrong side of apple. tablets are hurting pcs long term and they're hurting printing. young people aren't printing as much. and those are two busiest businesses outside of services. and they are on the wrong side of apple. a lot of these stocks whether it's dell, hp or even printing stocks, they turn in to trading stocks. and this is a nice -- other than the layoffs, this was a really

good conference call for them. outside of the human impact, it was good call, a nice start. the stock will get a pop. we still view with the secular threats that you you mentioned that it goes probably in a trading range, but it was for the stockholder as good conference call last night. >> so at this point, we had mark stall man talking about where the it should trade -- >> he was talking about structural -- >> a price as a ratio to assets that it had or something. and it was 30%. i can't remember the metric he was using. but basically undervalued by -- worth a third what it should be

worth. >> but it says it's because they have these structural problems. >> is this a stock that could be worth $50 again if they get it right? >> if the earnings momentum starts to get going and they get it right, the stock's been there. but i don't see that a this point. the free cash flow, the earnings number really doesn't matter. they generated about 77% in free cash flow in the quarter, even lower if you take out asset sales. they generate free cash flow almost every quarter, which is a structural issue because of the way pcs don't goeearnings quali. they really generate like $3 a share which puts the stock at a pretty fair value. so if the flee cash flow in

earnings quality goes up, then the stock will go up because then there's more money for shareholders. >> ben, thank you. appreciate your insight. at 9:30, we'll have an interview with meg whitman. do you see any parallels to this story? >> the idea of maximizing profit and -- >> you're smiling like you don't think that there's anything analogous here. 27,000 people will lose their jobs. communities will be affected. there's going to be a pain for these people. >> yep. >> this is not a private equity firm. >> i agree. >> this is meg whitman looking at a firm, trying to lower costs, maximize profits. maybe the firm survives and doesn't go the route of xerox or eastman kodak and maybe they eventually rehire people. does this seema -- >> this is how capitalize works. >> and this is why meg whitman didn't win the governorship of

california because she said she was going to cut -- >> is this a bad company? >> no, not at all. >> is this a case where maximizing profits is hurting the overall -- >> no, this is what has to happen. >> would a company looking to help the community -- >> that's not his point. he was talking about when private equity takes and levers up the company. >> how do they know whether cl ones are levered too much? they're doing their best to stay in business as a firm, run the company, hire more people, bring the companies back. that's what they're doing. >> and andrew said he thinks equity -- >> i have no problem with private equity as a whole, i'm just saying there are times where it doesn't work for maximizing profit or the community either. >> that is not exactly what the president said. i think you're giving him --

>> i may be giving him too much credit. coming up, the fate of facebook. . and on small business saturday they remind a nation of the benefits of shopping small. on just one day, 100 million of us joined a movement... and main street found its might again. and main street found its fight again. and we, the locals, found delight again. that's the power of all of us. that's the power of all of us. that's the membership effect of american express. 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.

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[ male announcer ] sustainable solutions. fedex. solutions that matter. welcome back to "squawk box." it is 6:30 on the east coast. i'm joe kernen along with becky quick and andrew ross sorkin. making headlines, facebook. mys emp nyse denies it will discussing a full listing transfer. >> just a partial one.

>> people go to the nasdaq and they said that's the way the old firms go on the big board. it's like the hoodie firm. >> the t-shirt. and the rest is history. >> shareholders are suing. a tie could have made the whole thing different. nasdaq facing litigation from angry investors. knight capital, you saw this guy on right after we talked about it all damon. capital announcing a pretax loss of $30 million to $35 million on the botched nasdaq debut for facebook. the electronic trader is demanding that the exchange compensate it for that amount. knight ceo told "squawk on the street" that losses were

forthcoming as a result of the trading issues. plus facebook coo sheryl sandberg speaking at a harvard business school yesterday. >> i wish for you four things. first, that you keep in touch via facebook. this is critical that your future success. and we're public now, so can you click on an ad or two while you're there? >> are you laughing? >> no. we need to get her on and have our own laugh track. >> the bigger issue is analyst thing. this idea that these analysts were calling their big investors and whether that means that the playing field was not level. and i think that's right now sort of the larger question. >> faber was talking about something yesterday saying some of the rules that govern will came up out of the eliot spitzer investigations because they didn't want the underwriter

going out and piping any of these things. so i guess was morgan stanley following the rules by now -- >> i believe the rules have been followed to a t. >> but would they have been violating the rules if it they had put out a wired dissemination of the information? >> yes. you're not allowed to publish research within 40 days of the actual ipo. the question is you can then make phone calls to your clients and say we think will this is a good idea, we think this is a bad idea. >> shoot uld the analysts not h been allowed to lower their expectations -- >> from research that doesn't exist. it's not like -- >> it was a changing prospectus that was out there. hen henry -- >> the question is whether they knew more information than everybody else. there was an amended filing that had a lot of information in it. i have a story i just looked at on huffington "post," so it was

in the news during those days. >> his point that all four came within a very close change from where they went from -- from where they were with hair earnings estimates to where they went and his point is they wouldn't have gotten to that same number based solely on the information in the process spec it tuesd prospectus. >> to me that's the ultimate question. and is that ultimately inside information. >> a good question. we'll have more on that later this morning. henry blodgett will be joining us to talk about his views, as well. right now, rich steinburg is joining us of steinburg global asset management. and you say you have been hearing more than ever from clients lately what do i do with high money. what's sparking all of the concern? >> i think it's a number of things. one, interest rates are incredibly low. two -- >> so they can't find safety in

the bond market? >> right. and they can't live off their cash flow. the second thing is people are starting to lose confidence again in the system. the jpmorgan new, the facebook debacle. and then most investors don't think about greece's impact or spanish bank's impact on the way that they live. and this will whole kind of move -- socialist movement that's sweeping through europe scares people. we're in a situation for individual investors that they don't know what to do. and they have to get some return on their money back. >> so where are you suggesting they go? >> i think you have to stay with this higher dividend strategy so that in the choppiness of the market, you can get some cash flow. either in dividend etfs,

dividend portfolios that are yielding 4%, 4% plus. so if you have these move, you have the chance to at least eat the cash flow in the meantime until things figure things out. this european issue will take 12, 1 mont8 months to figure ou. p. >> it makes sense until you think what happens on the taxes on dividends. if it jumps 15%, 30%, 40%, does it not makes a much sense? >> it does, but i think we'll end up with a tax compromise. there's no way the politicians are going to kill the tax situation on dividends. i think we'll end up in a compromise, but i think that politicians want to keep their jobs. >> would it change your thesis if it went let's say above 40? >> yeah, i think we'd have to res assess where we start to put

money. >> so this is a call based on the idea that there has to be some sort of an agreement reached in washington. >> if washington puts rates back at 40% on order income and dividend income, yields will spike like crazy here. you'll hear a sucking sound out of u.s. bond markets. and then people have a chance to buy bonds again. there's no way that the politicians who want to keep their jobs will end up at that extreme. we'll end up in the middle someplace and it's probably going to be the most contentious part of the election debate along with as joe was talking about earlier about the jobs market. it will be about jobs and taxes. and i don't think that investors will accept the fact that rates could go to 40%. >> would you really revalue the equity markets based on the after tax dividend yield? they trade on a lot of different

valuations. that scares me. but i don't really know if it's true. in other words, right now you do whatever the market is trading at versus the s&p yield. it that were to be cut in half, the after tax yield, does that mean the market is overvalued substantially? >> no, i think -- >> it's valued on other things rather than dividends. >> we have to see where growth goes. >> but it's definitely a headwind. >> and both sides know that they have to meet somewhere in the middle. >> yeah, and they do that a lot. when was the last time they did that? >> the jobs bill. >> the three months, yeah. >> but i think people can accept the slightly higher rate on dividends and i think the market would accept an incremental change back to like 20%. anything above that i think

causes headwinds for the equity markets. but going back to what do you do with your money, investors need to understand what the game plan is. so it'shard to understand up yo know what the jobs outlook is going to p and europe will be a train wreck that we're just watching in slow motion. >> okay. rich, thank you very much for coming in today. >> good to see you guys. comments, questions about anything you see here on squawk, squawk at c@cnbc.co squawk@cnbc.com. coming up, the which cchocolate business. but first yesterday's winners and losers.

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u.s. equity futures indicated higher despite concerning news out of europe particularly with the economy there, the idea that this is pleading over into france and germany which have been holding things up. not sure why the futures are so positive, but we'll a it. jobless claims could set the tone for the markets, as well. and the l.a. city council vote to go ban the use of plastic bags in grocery stores.

and now there will be a four month environmental review. a second vote and a six month grace period. l.a. would become the largest american city to date to implement an issue like this if it does pass. and the eu says the swiss chocolate maker are devoid of any distinct stiff character, therefore they cannot be registered as a trademark in the european union. it had applied for a trademark of its sitting bunny shaping wrapped in gold foil and it won't qualify. >> and j crew operates more 300 store, prints more than 40 catalogs a year and more than 2 billion sales annually. i'm a customer. david faber caught up with mickey drexler, one very hands on ceo. >> reporter: drexler obsesses about it all, from customer

complaints to coutier. >> anyone who has graduated college last year -- >> reporter: he can be heard through a p.a. system that broadcasts to every room in the 290,000 square foot headquarters. >> curious about a cover. run, don't walk. thanks. >> you are a micro manager. >> i am as others define it. >> it's not a criticism, though. >> no. it has been in the past. i just say it because i think that the world needs more micro managers running companies today. it's my personal opinion. i love micro managers because i know they care about every customer. >> drexler personally will respond customer complaints sometimes within minutes. tune into the original documentary j. crew and the man who dressed america remerie pr tonight at 10:00 eastern only on cnbc.

and i know david faber has been working hard on that. >> and coming up, the goal of any executive, be more proceed du productive. our nest geks works with some of the biggest firms to help them do that. tony zwart to the rescue next.

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we're back on this thursday morning. what's the one activity that fundamentally influences effectiveness and well, over everything else? tony schwartz says the answer is sleep. he's the founder of the energy project and author of the way we're working isn't working. good morning to you. >> good morning. >> so you're on seven? >> seven. >> you've got the baby. five and a half? >> he was up a lot last night. >> are we doing okay if. >> no. >> how many hours did you get last night? >> i got seven and a half, which is incredibly low for me. >> so what do you think is the real number? we have people all the time who come on who say i only need five hours. >> the number of people who need five hours of sleep rounded to whole numbers is zero. we need between seven and eight depending on who you are.

you are absolutely better off with eight and you're even better off, i believe, with more than eight. >> should we talk about napping? does that actually work? do you nap? >> if i can i do. >> does that work? >> absolutely. you shouldn't nap in a workday for longer than 30 minutes because you'll drop into a deeper stage of sleep and you'll find it more difficult to come out. if you do, you'll increase your cognitive capacity dramatically. >> you work with some of the biggest companies around. how do you convince them? i think there a lot of bosses in the world who said, look, i can't make the meeting because have i to go to my nap now. >> you're giving me the opportunity to do so this morning. i believe as you started to say it's the single biggest change that any human being could make who is sleeping less than seven

hours to be more effective and then i'd give you a whole bunch of other things. >> have you convinced clients they need to build napping into your culture? >> what is it, kindergarten? nap on your own time. >> everything you learned in kindergarten -- >> agreed, but do it on your own time. >> here's what you're missing. if you nap, then you shift the paradigm from thinking that value is created by the time you invest to recognizing that value is created by the energy you bring to the time you invest. if you're more effective in the hours aufr nap, you'll get more done in less time. >> i guess that makes sense for a salaried employee who make is on call all the time anyway. but if you've got seven hours of somebody's day, you're going to say go ahead and take a half hour nap? >> what do you mean? >> if you're an hourly employee -- >> well, an hourly employee is a different thing. but if you value what that person does during the hour, at

3:00, you're better better than at 7:00. >> i know traders who literally go into the bathroom to try to get a nap. >> you can make up sleep deprivation by any amount of sleep you get at any time. the problem is it wouldn't substitute for the week that you were cog tifl impaired during the time that you worked. >> you said something, a lack of sleep or sleep apnea increases your risk for cancecancer?

>> we were talking about restoration has an emotional, cognitive and physical component. your immunity system gets restored and strength yerd during sleep. we don't actually know quite how but there's this rapidly growing evidence that every aspect of your life gets diminished by too little sleep. up know what? we're trying -- at the energy project we're trying to change people's effectiveness in a variety of way but this is the easiest one because it feels good to get more. >> what does a ten-minute cat nap equate to in making up to -- sometimes if i get four, five hours and i get ten minutes, it almost feels like it's worth a couple of hours. >> i think you're right in the sense that -- i don't know about ten minutes about 15 to 20 of actual sleep because it might take you a few minutes to get to sleep i think will dramatically increase your capacity

cognitively in the two to three hours to follow. you'll be so much more resilient. >> i'm not a meditation guy. i want to take a nap but my mind is spinning. do you have any strategy for me? >> i do. one is just before you go to sleep, write down what's on your mind. you're down loading it and parking it. >> if i write it down, i'm going to think about it more. >> i don't think so. try it out. test my assumption for two to three weeks. the next thing is breathe. breathe in through your nose a count of three, out through your nose to a count of six. it will relax your body. that will allow you to go to sleep. >> what about napping sitting? if you don't have a bed, it's hard to nap. >> we're moving into a new office and i'm out looking at

barco-loungers. i want you to do over the next week or ten days, i'd like you to test this assumption and go to sleep 30 to 45 minutes earlier than you currently do. >> i want you to pull a george costanza and sleep under your desk. >> i would love to do all of that and i'll let you know how it goes. >> all i get is a maybe. >> i'll try. i don't know if i can do it. >> you're scaring me straight. >> that's what i want to do. >> coming up, we'll welcome banking industry veteran sally crawchuck. and we'll have a live performance by the animal orchestra. we'll head to sea world in

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former head of merrill lynch wealth management on the future of big banks and what regulators are likely to do. she is our guest for the rest of the show. >> all economy all the time, the number one issue on voters' mind as we head to this years's white house showdown. how the candidates will revive america's prosperity. >> and taking the plunge and facing the music. sea world's ceo ramps up hiring for the busy season. >> i'm all about having fun, you know, get a couple cocktails in

me, start a fire in someone's kitchen, maybe go to sea world, take my pants off. >> the second hour of "squawk box" start right now. ♪ good morning, everybody. welcome back to "squawk box" on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. let's get to your morning headlines. we'll get two key economic reports before today's opening bell, the weekly look at initial jobless claims and april durable goods, both out at 8:30 eastern time. claims are expected to remain unchanged at 370,000, durable good seen rises at 3%. a widely followed measure of german business sentiment fell in may for the first time in seven months. and st. louis federal reserve

president says that greece could exit the eurozone without doing deep damage to the u.s. and european economies. he told reuters the european central bank is committed to keeping the banking system in tact and the risks to the u.s. economy are not as bad as some predict. even with the bad news coming out in germany and concerns about france's economy, you see the futures here up this morning. the dow up today after closing down yesterday by 6.66. ooh, look out. >> big question of the day, is facebook trying to defriend the nasdaq just a week after a problem plagued ipo debut? kayla tausche joins us with more of the details. >> you can't really blame facebook for at least evaluating whether a change would be possible after all of the liabilities they could be incurring. i've been told there have been internal discussions at facebook about whether to under go this

change. they remain open to potentially switching. >> how can they do that? >> it's relatively easy. it's happened before. you usually see it the opposite, from the nyse to nasdaq. the only one i can remember that's gone the other way was td ameritrade. but it relatively easy. it happens all the time. apparently it just a technological thing. the other thing that i would be cautious about, though, is given all the technical issues with the actual debut, would you potentially be opening yourself up to more technical issues by then, you know, taking this mammoth offering over to another exchange. >> the bankers and analysts and

what the analysts knew and whether they had inside information, what's the latest? >> as far as what's happened there, it legal. you share that information in a very detailed manner with those underwriting banks, with all 33 of them because they have to build these full-year mod es based on full-year forecast and guidance. that's why you have the 40-day window where an underwriting bank can't really research because they do have access to that information. >> but your big investors get information that the little guy did not. >> it legal for that information to be communicated orally. whether they disseminated that information all across the board -- >> you're saying the information was already in this amended s-1. >> it was broadly in the s-1. it was given in a more specific manner to the banks. >> therefore there was more details and more numbers that those banks had. >> you had some insight, 30 plus days after your quarter starts about what the quarter is actually going to look like, if

it's going to change and be weaker. that sponsored rollout they had had march, they were able to see how effective -- >> and those details were not in the amended -- >> would it have been the analysts would have just gone ahead and blshd these changed estimates and everyone would have gotten the information? did seems like the rules that were put in place to try and keep the brokers from hyping the deals are the things that came back and bit them. >> the rules were put in place and expired just about a year ago. so this 40-day buffer is one thing that stayed in place but it's likely they could have published before. >> kayla tausche, thank you. we're going to continue with i imagine this conversation with our guest host. >> our guest home this morning is the former merrill lynch wealth management ceo. she penned the op-ed in today's

"financial times," jpmorgan shows the futility of fighting complexity. sally, why don't we start off talking about this issue with morgan stanley and the other analysts from the underwriting banks, information that they had that went to some clients, no others. what do we think about this? >> i'm with andrew on this. i think this is a real problem. i've had a point of view on this that i think the most important thing to do to make sure the research analysts are doing their job is compensate them for doing their jobs and pay them for doing a good job for the individual investors, institutional investor. doesn't pay them for invested banking, pay them for -- i think that's all you need to do. so this idea of you can't publish this research report for this many days, i think it's got to be one or the other. either take the analyst out of that equation completely or have

them publish research reports but make sure everyone gets the same information because otherwise it's not a fair playing field. >> if they published it would be fair disclosure, everyone would have gotten the disclosure at the same time. >> absolutely. forget about the individual investor. even a small institutional investor, to go through and parse through there was a change, which sentence was it, when other people are being told look at this sentence, look what the it means. >> and probably getting more detail. >> absolutely. >> if you were the last honest analyst in 2005, then all the other analysts are already dishonest. why are we're talking about something -- >> tease what they called you? >> they did. >> if you were the last one, by definition all the others were already dishonest. >> then elliott spitzer came in and changed some of the rules around, which the most important

is they no longer have their compensation demd by investment bankers. >> and you a bunch of guys making a hundred grand a year instead of -- you did have a lower quality -- >> there's no doubt some analysts moved into different roles. >> look at all the independent research firms that have come and gone since then that try to make it just on selling the research. and there are some that do a very good job. the independent research thing didn't work in my opinion. i looked at this a few years ago and one of the firms, i think it was credit suisse, i'll get this wrong, but $200,000 per client view of the independent research that was out there. no one particularly wanted it, it didn't work. what you do is pay research analysts for the work they do --

>> we're not dpog make money -- >> you can make money on good research. for great investment ideas -- not just in this day and age but particularly in this day and age when it's challenging to invest. >> who is doing seriously profitable research? >> kantor bernstein. >> be >> anybody else? >> you have ian bremer who does a very good job. you have some folks who are independent doing a very good job. >> and some of that is not just individual stock research. >> that's exactly right. and it's all valuable. >> let's talk about your on ned today's ft. you make a really good point where you lay it out and say this shows how complex this is.

what's wrong with that if. >> as i took a step back, there's so much discussion about this jpmorgan loss and it seems like we missed the point which is one of the smartest, about the smartest management teams in the industry had this trade pointed out to them by the press and it took them weeks to get to the bottom of it. then we enter into a debate, which seems to be a parlor game of is it proprietary trading or not. who cares? it's like we're standing around a pool and we're saying there's too much water in the pool, let's take out the purple water, all right? let's take out the proprietary trading, which sounds like a good idea except how do you want it? i can't tell the difference and i know a lot about this. how many ink and time are we going to spend on this issue? the issue is how much risk should the banks have?

are we able to measure it, are we able to manage it? if you don't like the amount, take it down. >> what's the best way to have a regulator who can oversee this stuff? >> first of all, if the regulators don't understand it, we shouldn't be doing it, right? there's a lot of debate -- >> there's a lot of stuff. >> there is but in these regulated entities that have a real impact on the economy, if this stuff is too complex, it need to come out of these entities that it can have this kind of impact on the economy. >> here's the question. was it actually too complex? at jpmorgan, you think about the trade, what's proprietary and what's not? if you're buying -- if you think of it as a hedge against the larger macro exposure. the second you start selling credit default swaps, it changes the dynamic completely. >> sure.

so should you -- >> to me that was an obvious traded -- >> the real question is how much risk does that company have overall and are we comfortable with that and do they have the right amount of capital in order to support that during good and bad times? what you see is some of the measures of risk have again and again failed to keep up with where the risk is. the whole thing about, well, they changed the var calculation. i don't know about all that. we need to make sure we're monitoring and measuring and have very much enough capital for the risk that's there. >> is there a way that you couldier risk across the board? >> that's why you have to make sure var is keeping up with it and the other thing i go into with the review is to have a good partner to have a good rating agency.

the person who runs s&p couldn't be a more honest individual. but the regulation agency is stalled. back to the point he who pays you is your boss over time. rating agencies shouldn't be paid by investment banks. we need to complete the reregular laegs of the rating agency. >> do other banks of wall street have a bank that's a profit center? do you know? >> not to go into detail for any individual bank -- >> let's take b of a out of it. you've been looking at banks for a very long time. >> that's the problem, do you know. do you know what's going on within those, right? it's the complexity issue. >> we don't know the answer.

>> i'm a housewife. >> are you a moment maker? yeah, sure. >> it's a damn good this evening -- thing. >> thank you. it's really hard, too. >> who was it that was saying if you compare it to raising a 2-year-old child -- oh, it was classic, i think on "60 minutes," roger waters. they say how do you do it, you're 62 years old, you're constantly on the road. he goes i walk on to a private jet, they take me to a luxury hotel, i perform a concert for three hours and the car brings me back to my luxury hotel. how is this in any way comparable to what someone raising a 2-year-old does. >> he's right! >> hillary rosen, you just put in a in your pipe and smoke it one more time.

>> uh-oh, i'm sorry. i'm just sorry. >> i like hillary. >> i'm sure you do. hewlett packard with quarterly results and thousands of layoffs. s. aviva, we do things differently. we're bringing humanity back to life insurance. that's why only aviva rewards you with savings for getting a check-up. it's our wellness for life program, with online access to mayo clinic. see the difference at avivausa.com.

hewlett packard shares have been surging after the bell, the

s.e.c. giant reporting second quarter profits fell but reports still beat the street. a restructuring plan includes cutting 27,000 employees. jason follows hewlett packard. good morning, jason. >> good morning. >> 27,000, is it enough? does it change the game for this company? >> well, it points them in the right direction. she's streamlining sales, streamlining the supply chain, kind of a continuation of what mark kerr did and it going to be done over the next couple years. hard to say if it's too much or enough but it definitely makes the company easier to get your arms around from a customer standpoint. >> i was reading a report from a deutsche bank analyst who said past layoffs have done little to reduce reliance on declining or troubled businesses. do you agree with that? >> well, one of the major initiatives that mark hurd undertook was i.t. consolidation

and cuts the number of applications the company use business thousands. that was a very good internal initiative. meg is taking an approach that's more external with the sales force. as a partner or customer of hp, you deal with different people to buy a server, a software, buy pcs. they need to bundle those together. >> is there anything on the product side that makes you excited about hp? >> not on the consumer facing side. it's going to be hart to differentiate. you got go into service storage networking before you see things that are interesting and hp does well on the compute side, on the server side. she's going to take some of of these cost savings and invest in innovation. it going to take time to show

results. >> you take the money from one side, you give it over to the r-and-d side and you pray. what's your expectation? >> it's going to take a couple years to see any major inflexion point. morale at hp right now is probably not very good. it's going to be a dog fight for really talented engineers for the company. it going to take time for her to turn this around. >> real quick, your price target on the company now? >> our target is $28. neutral rated. >> thanks so much, mark. at 9:30 a.m. eastern time this morning we've got an exclusive interview with hewlett packard's ceo meg whitman. >> and also coming up, the broadway blue shirts skating on thin ice.

a number of frosty issues coming up. we are live in just a few minutes. >> tomorrow it's a very special edition of "squawk box." we're inducting three new masters of the market. find out who made the cut. plus an extended interview with "new york times" columnist thomas friedman. don't miss "squawk box" starting tomorrow at 6:00 a.m. eastern. [ horn honks ] 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. is now within your grasp with the all-new e-trade 360 investing dashboard. e-trade 360 is the world's first investing homepage

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♪ it's a beautiful morning ♪ i think i'll go outside for a while ♪ >> well, he teased us before the break. the new jersey devils clawed their way back to win a pivotal game five. at this point the devils lead the series 3-2. game six is going to be on friday night. that's back in new jersey. it can be seen on the nbc sport network and the devils could put it all away. take a look and friday night. also a quick look at some stocks you want to watch this morning. tiffany missing estimates with its latest quarterly profits and cutting forecasts on sale

expectations and internet radio company pandora reporting a narrower than expected loss of 9 cents a share. revenue beating expectations. and of course facebook reports that the social network giant could be considering switching its listing from the nasdaq to the nyse after the disappointing ipo last week. >> company we share your red? >> so you wear it, too? >> no, no, no, i don't want to wear it. >> you would look great in a red dress. >> but the reds are now in first place and they've won like six straight games. i've been saying every day, we keep talking about hockey, i think i know why. kind of an nbc thing, right? >> it great. have you been watching any of the games? >> i'm all with the symphony thing --

>> do you know how many people in our control room have shirts on that they're watching? >> baseball's also -- it's also baseball season. >> i'll cheer for them. >> how about the yankees? a lot of good things happening. a lot of good things happening. >> i'm not wearing pin stripes. questions and comments about anything you see here on squawk, the red, the devils. you can also follow up on twitter. send miss sallie crawcheck a tweet. yankees on the bottom. >> coming up next is mitt romney's economic plan right for america? we'll speak to the economic policy adviser for the romney campaign. and later, sea world gearing up for memorial day weekend. a special animal orchestra coming your way.

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among the headlines that we're watching, facebook shares in the spotlight once again today as lawsuits and investigations pile up. reports now saying the new york stock exchange reached out to facebook about jumping ship from the nasdaq. two congressional panels are looking into the facebook ipo and several lawsuits have been filed against nasdaq and its underwriters. and the new york daily news saying the steinbrenner family is investigating the possibility of selling the new york yankees. the record sales price for the los angeles dodgers, the $2.1 billion price tag has the steinbrenners at least considering that idea. randy levine saying that rumor is not true. and the question of paper or plastic will be disappearing from the new york markets. shoppers will need to bring

reusable bags or purchase paper bags for 10 cents each. joe. >> no paper or plastic. >> if you were wondering what i'd look look in red -- that's cold. andrew, that's -- >> you look pretty. you look very pretty. i think we should just do the rest of the show like this. >> you know what, i'm wearing red and i am in fact open to sexual advances, although i don't have to wear red to -- you're shocked. sorry, all right, that's enough. really, i can't -- >> oh, we are going to -- i thought i was going to be able to ask sallie a question. shareholders and protesters are gathering in new jersey at the annual meeting of goldman sachs. mary thompson is there and has the details. hey, mary. >> hey, joe. already we have a significant

presence here. lloyd blankfein overseeing his fifth annual meeting. as joe mentions, protesters are expected to rally against, among other things, the reelection of director michele burns, because of the allegations the retailer walmart was paid for bribes in mexico. james johnson expected to be under fire, funds lobbying against his reelection because of his history with fannie may and director of kb homes and united health care when both of those firms allegedly engaged if back dating options. glass lewis is supporting sek could iia's directive, even though sequoia is not expected to succeed in its effort.

mr. blankfein having weathered another year of negative headline, most notably an op-ed by former ranking executives. blankfein has offered an olive branch to shareholders. instead the company appointed james schiro as the lead independent director earlier this year. the company is diving into social media. today it will be tweeting from the annual meeting. blankfein's tenure has been marked as the outperformance of its pierce.

the vote on compensation is often a proxy for voter dissatisfaction. we'll have headlines later in the day. back to you guys. >> thank you. we have a quick moment to talk to sallie krawcheck, someone who probably dealt with individual investors as much as anyone, or at least you heard from your brokers about it. >> sure. >> i used to do that for a living and i remember i started like 1981 or '82. that came after 12 years of people being totally uninterested in the stock market and it set up a move from 800 to 10,000 in the averages. i feel like given what we had with the financial crisis, the flash crash and 9/11 and no real advance in the averages for a

long time, the individual investor has to be totally disillusioned and now you have facebook. this didn't help the individual investor either. >> no. >> do you have anecdotal evidence for people just buying real estate or just saying i'm finished with -- >> real estate is hardly the place to be. >> where is it, though? >> a lot of people are in banks. look at deposits. you've seen money come out of the equity fund, seen them going into fixed incomes and you've seen a lot in deposits. people are being very conservative, folding their arms, sitting back and what's really interesting and a bit troubling is about the most conservative out there are the young people. the most conservative are the folks who are right there at retirement, as they should be. the next most conservative group are the folks who are 25 to 35 who are looking at this and saying for my entire investing life i've made no money and look at the press coming out about

wall street and facebook, which they're paying very close attention to -- when it started -- >> they're the people who should be investing so 40 years from now -- >> do you remember the buy-and-hold mantra that was indisputable, you will always make money in the stock market if you buy a stock and hold it for long enough. i've been holding a few stocks for 15 years. i'm holding something but it's not a stock. i guess i'm left holding the bag. buy and hold has not worked. most people would now tell you buy and hold would not work. >> which likely forms the basis for a long wave up trend but it's hard to convince people of that right now. >> what would mitt romney do to boost the economy if he was elected president? joining us is vin weber, a romney campaign economic adviser. the only person on the reservation today with talking

about private equity and private incentives and things like this. how long can you stay? are you free until 9:00? >> that's so not true. >> i'm free until the market opens. >> this is going to sound self-serving for you to answer all these questions because you're representing romney. what do you make of -- it's interesting axelrod goes after private equity and profits and then you have booker and ford and rendell, and even roger altman yesterday had a hard time parsing his way to a nuance position on this as well. what worries me, is this resonating with the voters? when november comes around, will they say mitt romney stole from these companies for his own enrichme ment enrichment? >> i think it resonates for some voters. it's a divisive strategy.

he's not trying to win a consensus victory. if it was just one company that he was trying to vilify, that might actually work. but you look at the history of this administration and this president and at sayerious times he's taken on virtually the entire free market economy mere, insurance companies, energy companies, private equity. by name the administration has attacked the u.s. chamber of commerce, national federation of independent business. the story line of an administration that is kind of at war with the private sector i think ultimately fails and this is part of it. >> you know, it funny that you said that because last night i was trying to remember the most recent is private equity but certainly you can put banks under that with the fat cats. certainly the energy companies have been -- i think some of the people in his department said they wanted to -- what was a quote that was out a few months ago?

we want o creto crews five the companies. and look at the health insurers, the rhetoric to get obamacare through and to a lesser extents las vegas and tourism to that city. other than alternative or renewable energy, i don't know of a single business that hasn't been vilified or a business group that hasn't been vilified. >> i think you're right. you and i have mentioned all the specific attacks over the last three and a half years but that's subsumed under the umbrella la that every speech the president gives, he's tapping into a natural resentment of business that exists among some people. i don't think it's a majority but i do think it rallies his base. >> then why doesn't government romney in my mind really embrace private equity, say