when were you a broker. 1980. >> i had to make cold calls out of a manufacturing directory. they still make cold calls. don't they? >> they do still look for new clients. >> sally, thank you for being here. it's ban pleasure. join us tomorrow. "squawk on the street" begins right now. his picture is on a plaque here at the big board. he was always in your corner. the investor's corner. this morning we remember our friend and colleague mark haines who passed away one year ago today. it is hard to believe it's been that long. good morning. i'm here are melissa lee, jim cramer, david faber at the stock exchange. want to look at futures with the dow. looking at a 42 point pop at the

open. and then there's europe. markets on the rise despite a bunch of bearish economic indicators. german climate sentiment. but still hope they may piece together some band-aids with regard to the summit last night. guys, just a touch on mark briefly. part wanted to start saying live from the financial capital of the world as he did up until a year ago today. >> many of us got our start because of mark. i used to be opinionated. and i sent him e-mail after e-mail saying you don't know this, this is wrong. one day he says listen big boy, get your big butt over here. at that point we were at ft. lee. let's see how you do against me. of course once you got there i was trembling scared to death. please don't hurt me.

and he was a titan. i want everyone to know the intimidation factor came from the fact we knew who he was working for which was you. >> we ask the tough questions to anybody who appears on our air. it is in the spirit of mark haines who always challenged the person he was talking to. it didn't matter who you are. he always had that. he wanted to get the tough questions out there. he wanted to get the answers for the investor. >> probably no one worked with him closer than you did. >> and i miss him every day. i think it's a tribute to him a year after his death a day doesn't pass that i don't get a tweet or an e-mail saying either mark would have loved that question or, you know, mark would have been proud, or want to remember how tough haines was and get it together. people have not forgotten him in any way for a very good reason. >> he certainly would have loved the news flow today. >> definitely. we should start off we the news

flow. we have got to kick it off with hewlett-packa hewlett-packard. as a result the computer maker says it expects $3 billion in annual savings. hp also reporting better than expected fiscal quarter results. but short of wall street forecasts. we'll hear from ceo meg whitman in just moments from now. it is important to understand what they're using the cost savings for. that's what analysts were focused on. prior to the quarter for big data, the growth areas they have to reinvest in order to reinvigorate the business. >> so many analysts on the call last night trying to figure out their numbers. how much of -- you say while a majority of the savings are going to be reinvested, what's the majority? they're all trying to get to a number. hewlett-packard still pointing even though this kusht quarter they came in on guidance. 27,000 jobs, 8% of the

workforce. gives you a reminder of how enormous this company is. >> the bonds have been trading down. behind the scenes a lot of people recognize the corporate market was saying maybe we shouldn't be giving hewlett-packard credit. they've got gigantic needs for credit. i think that stabilization to the bonds is going to matter tremendously. the analysts are strained. if you can stop the bleeding and the corporate bond rate goes back up, then she's won. >> calls it a balance sheet story. growth is going to be so tough to come by. maybe they move more on cuts, on efficiency. on a bit of pricing. but certainly not on sheer growth. >> no. they still don't have growth. and when you look at it, revenue being even flat in pcs is considered a positive. we're not talking about growth for any of these businesses other than autonomy where they had issues and replaced the person running autonomy.

>> i think they should write off autonomy some day. >> i don't think so. meg, we may ask her about it. but she was talking about on the call and hi a conversation with her that entrepreneurial companies only get so far. now it's bigger. they need somebody else to manage it. >> dell versus hewlett-packard makes me feel dell -- >> has real problems. yes. if hewlett-packard can show pc growth and dell cannot, you'll have to wonder what accounts for that. >> when the pc business -- jim, it wasn't that bad. it was pretty good. >> no pc server stable. printers weren't that good, but printers have been tough. i think people got short hewlett-packard. they made no excuses. they were pretty straightforward. they didn't say the fault was in

our stars. they said the fault in s in ourselves. >> let's get to it. in fact, lady of the hour so to speak, meg whitman, ceo of hewlett-packard joins us now. good morning to you. thanks for getting up. you're always up this early, i know. >> thank you. happy to be here. >> let's start off on the pc business. it was a better than some anticipated. particularly with dell's poor performance, did hp take the share. >> we will understand in a month or two but we feel good about that business. the team feels good coming back from the summer announce tmt we may spin off that to 100% committed to the pc business. we have a terrific product lineup for the back to school.

>> do you anticipate that will continue? when we talk briefly about your decision to bring guidance down a bit for this current quarter, you said to me you're concerned about macro economic uncertainty and the change the company's going through particularly given you're going to va lot of people living the company. is macroeconomic uncertainty that big a problem? >> it's a combination of things. certainly we're worried about what's going on in europe, but we're turning around a very big company with five major lines of business. we're introducing a lot of change which is absolutely necessary to turn hp around. but my view is we say what we mean, mean what we say. we want to give guidance that took into account of the landscape we see over the next few months. i feel good on the guidance. this is the beginning of a turnaround. my experience in turnarounds is they are not always linear.

things don't always go to the right. there are steps forward and steps backwards. i wanted to be realistic about the guidance. >> in terms of the turnaround themselves, you mentioned it's not linear. how far along do you really think you are if you had to tell us? 10%, 20% of the way if. >> i'd say we're at the beginning. 10% to 15% there. we laid a lot of ground work. we va clear focused strategy for the company and our operating groups. there's a tremendous number of people in many geographies. so we have to be deliberate, thoughtful and execute. >> and executing, people are looking at the printing side of the business saying perhaps there was a lack of execution there. revenue's down 10%. it was not a great quarter for your overall revenue number. are you executing there or are there things that have not done

well? >> we're not proud of our performance in that business. i personally have spent a lot of time focusing on strategy of that business which is three businesses. ink jet, laserjet, and graphics businesses. we got a great plan going forward. we got to act like the category leader that we are. we have to make sure our pricing is right, advertising is right, and product is right. on the laserjet side we had some gaps in the product. we're not as strong as we should have been. we're coming to market with eight printers this fall that i think will change the trajectory there. on the ink. business we've got a couple of different business models. and by the way, the printer business is going to benefit from the pc global footprint in emerging markets. we put this business together with the pc business. and there's a lot of synergies out of that. >> meg, jim cramer. thanks for coming on the show.

good to see you. turning to services, revenues were essentially flat year over year. but s.a.p., one b of your competitors is indicating much higher growth. one of ou predecessors indicated to me this is where the growth is going to come from. how are you going to get that growth back given up a the layoffs you're doing? >> our services business as i said from the beginning is a turnaround business. and what we have to do is migrate away from some of our lower growth businesses and build practices in the areas that are high growth. practice around the implementation of cloud for our customers. security, big data analytics, so we are in a transition from a lower growth segment of that business to where we want to be in two, three, four years. when mark purchased eds, it was

known for participating in the lower margin/growth areas. and we've got a migration we've got to do. they've got a plan and i feel confident we're going to be able to execute against that. it will take a few years. >> and part of that plan as you broadcast it on the conference call yesterday is reinvest the savings from the layoffs to these higher growth areas. about a third of the savings will go to the bottom line. the other two-thirds will go to the investments of the businesses. is that an accurate estimation in terms of what kwloul use the savings for and in terms of investing these growth areas, do you see simple straightforward investment or bolt on ak sig acquisiti acquisiti acquisition? >> we have set a majority into the business. and the reason we haven't given more clarity is we are still refining the most important investment opportunities, how

much we want to spend over what period of time. and what big companies tend to do is peanut butter those investments. they give a little to everybody. we're not going to do that. we're going to make a small number of very big bet psychosis we funded eed adequately. but we are going to invest in tools for our people to be more productive. we're going to invest in marketing and some other areas to rejuvenate some of these businesses. so that's the current plan. it become clearer over the next couple months exactly how much will flow to the bottom line. >> people might not disagree with the necessity of layoffs, but having to spend a bit of time in silicon valley last week, the competition for talent in leadership positions is fierce. you have a lot of smart rivals in that part of the country. why would i want to go to hp?

how could you sell me on a job given a turnaround is just 10% on? >> yeah. so hp is one of the great companies of silicon valley. we have offices all over the united states and the world. if you're interesting red in working in the enterprise space? servers, storage, networking, computers or software, we're one of the greatest places to work. we have enormous innovation, great history, great people. and we're on the move. this is one of those organizations you can join to help turn around one of the great silicon valley icons. important to california, important to the country and the world. so we compete well for talent. it's a different kind of person who might join a facebook or a linked in than someone who joins hp. we do things that are extraordinarily challenging to do with big governments. for example, a big part of our

technology runs the united states navy, we do a lot of technology that runs the department of public works and pensions in britain. so we do things that are quite different at a different scale. and it's very exciting to be here. i can tell you i've been on both sides of this. i was at ebay many years. now of course at hp. i wouldn't trade my job for anything. >> meg, of course it's exciting to be at a growth company as well. and hewlett-packard is not that at this point. >> you're right. >> most of your revenue numbers are still percentagewise headed down. at what point do you feel like you're going to have really crossed that key point where revenue growth is going to be across the board for this company? >> yeah. so i think in 2013 we ought to start to be able to grow this company again. but i want to be clear, because i think four of our businesses will start to grow at the end of this year or 2013. our services business, what may well be a smaller but more

profitable business. because services is roughly a $26 billion business, that might keep the overall company from growing, but what i hope to see is four out of our five businesses growing the top line in 2013. services as i said may be smaller but more profitable business. that would be the strategy we're executing against. that would be a good result for the services business. >> layoffs, do there need to be more? some would say 8% simply not enough for a company as large as hewlett-packard. >> i don't believe so, david. we're undertaking a huge change for hewlett-packard. you try to go in the organization and decide what we're going to invest in, emphasize, how many people we need to do that. how we need the processes to be more effective and efficient. and you come up with a bottoms up number. we didn't start with a number. we said how can we do this

efficiently and effectively? and how much change can they accept over a period of time. right now i feel we've got that balance about right. you never quite know. we're pushing hard. we've got to make these investments. technology is changing rapidly. at the same time we've got an enormous organization. so you have to pace in sequence. i feel good about that pace in sequencing right now. that doesn't yield to analysis. that is almost a gut decision of have you pushed hard enough but not so hard it starts to be dysfunctional. >> apple, elephant in the room. apple taking share with ipad. we know that from michael dell's call. apple taking share with mobile. mark hurd explained to me the idea of palm. you're going to be able to dominate mobile. he also talked about the tablet. tablet now gone. mobile i don't see. how can you have a growth company without mobile and without tablet?

>> yeah. well, certainly on the consumer side, apple is doing very well. we actually have done well on the commercial side. in fact, this quarter we took the number one share position in the united states in the commercial sector from our competitor who has held that position for nearly a decade. but listen, apple's a very tough competitor. that's why you see our pc, laptop, desk top workstations designs taking a new position and really being state of the art. we are introducing a tablet for back to school. a windows 8 tablet. we have to be in mobility. we're making early steps there but we have not decided on the smart phone strategy. we've decided on a tablet strategy. we've got work to do there. >> finally your most immediate predecessor bought a company called autonomy. revenue was zpoipting. you replaced the ceo.

those would question the future for them and say perhaps this is not going to work out. what do you answer? >> so, i'm a believer on autonomy. when i look at what happened in q 2, it was not the product. great product. it was not the market. there's tremendous demand. and it was not competition that took deals we should have had. it was execution to close the big deals that had been brought by hp and the team, you know, had struggled if you will in terms of executing. this isn't entirely unfamiliar to me. i've watched a number of companies, led a company that went from $4 million. you have to put in process and discipline that is often at odds with the culture. that's the position we find ourselves in with autonomy. great product. no real market problems that i

can see. so i'm a believer. now we just got to go help this company grow up to the next stage. and that's why i decided we needed new leadership and a slightly different organization. >> well, meg, as always we appreciate your spending time with us. thank you. >> thank you. nice to see you all. >> meg whitman, ceo of hewlett-packard. >> david, confident, expectations dramatically lowered. no hype versus ron johnson jcpenney. is this not only a new hewlett-packard but a meg whitman who is a grown up at a company that had nothing but teenagers running it. >> i don't know about that. >> well, they weren't the age. >> i think a couple of things we heard from meg this morning that i haven't nersly heard. 10% to 15% turnaround. it gives you a sense. she says on the conference call it's not going to be linear. there's a long way to go here. and there's probably a lot of risk and potentially a lot of

reward when it comes to hewlett-packard. she's delivered on what she said. when he took over and said she was going to meet the numbers for the current quarter and did. and now they beat for the past quarter -- >> how do they eliminate the personal computer division six months ago. someone's doing something right there. >> exactly. these people thought they were going to be a separate company. not just bringing them back but getting everybody in line. it was impressive. you have to admit. especially what we've seen given dell. >> when she said that, your eyes lit up. >> you need tablet. michael dell said tablet is replacing laptop and notebook. >> i get that but aren't they too late? >> you know, it is the right question to ask, melissa. >> 38% of profits still come from printing, from ink. the old ink business. that is changing dramatically.

but we got to keep a close eye on that also. down 10% revenues is not exactly a great performance. coming up next, a heavy hitter when it comes to your money. cramer is on mad dash. we head to the open on this thursday morning. an update across the board. more "squawk on the street" straight ahead. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. our teams have the information you want when you need it. it's another reason more investors are saying... [ all ] i'm with scottrade. it's another reason more investors are saying... are you still sleeping? just wanted to check and make sure that we were on schedule.

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all right. let's get kraimers mad dash on this morning. pandora last night smaller than expected loss. >> pandora goes up. here's why. spent the whole call saying listen, we're not facebook. didn't mention facebook but ads are taking on mobile because people are used to radio ads. great call. >> is that good for facebook? >> no. facebook doesn't know how to monetize mobile. these guys say we know how. >> it can be done. >> radio we accept ads. internet we don't accept ads. >> pvh this company is just

blocking and tackling well. there's a special on j. crew. pbh is doing with tommy hilfiger. tonight at 10:00. >> tiffany meantime, weak. >> what's the deal here. i've never known rich people to stop buying diamonds when they're rich. when you're rich, that's what you do. you go to tiffany. maybe they're going somewhere else. >> margins were down. inventories were up. flagship sales down 4%. is this -- >> i think there's something wrong here. this is the second bad quarter. i'm using a cockroach theory. hate to associate cockroaches with diamonds. but this is not what should be happening at a well-run company. i am concerned about tiffany. they don't have the mojo.

>> over to you. hewlett-packard is taking pre-session highs. also facebook looks like another day. we've got the opening bell on the other side of this break. stay tuned.

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we're getting ready for the opening bell here at the new york stock exchange. the financial capital of the world. could be a big day. we've had a europe headline that sneaks to come in the last hours of trading. whether to the downside or yesterday to the upside, jim. >> what are you hearing about a situation where lot of weak news out of europe, no deal out of europe, lead story in the new york times and journal and europe up. is that a new pattern? >> the ft today says in their words, depositing for guarantees along the lines what you were saying yet. that is something that would prevent someone from pulling their -- >> that would be huge. >> they've known they've got to do that for two years now. that conversations continues. i'll believe it when i see it.

>> that's important. one of the things we have been repeatedly seeing is we we've seen european markets up and the markets have been wrong. maybe things are so finally horrible enough that merkel has to change her mind. >> there's the opening bell. i don't know this is exciting for me. here at the big boards the broadway cast of the streetcar named desire. if you're a fanatic like i am -- >> it's a great show. i've seen it. >> how's stan? >> stanley's excellent. >> at the nasdaq brazil summit going on on the market site. getting back to europe today on the city. they say that greece exits on january first. 2013 and that the new currency

falls 60%. >> argentina 71%. two years later argentina booming. >> by what the greek politicians need to make clear to the greek people is what will happen and recur as a result of that potential exit. it's not as though that's going to do anything. it'll create a lot of hard times for a country that's had a hard time already. >> that's what citi says. that was the most disheartening part is that it will not solve the crisis. even if that happens on january 1st, 2013, that that's not the answer. >> say they make the announcement. who finances greece? creditors will flee, right? it'd be like a government shutdown we've never seen. >> that's when the imf is supposed to step in. the imf has been the inkrivisib

missions force. maybe they'd do what they done in latin america. the imf has been abysmal this whole time. maybe this is when they step up. >> we should note facebook is up today. up by 2.25%. the facebook fallout, though, continues. and if you take a look at shares of kcg, we had tom joyce on this week. kc grk capitals down by 1.5%. they filed yesterday detailing the loss they will face here. 30 to $35 million. tom joyce eluded to a number around that ballpark. it is finalized, though, here. they will seek damages from the nasdaq for what happened to this ipo. >> i always wonder. the real damages weren't to knight cap. but they were to people trying to get out of the deal and found out they bought the stock, with respect b able to sell.

i think tommy joyce has done a terrific job. we look over and over again and the same pattern. people are burnt here. who's going to make them whole? i have an idea. nobody. >> sorry. i didn't mean to laugh. it's not funny. it was a good delivery. >> are they going to get a j. crew jacket? >> i don't know. you'll have to see tonight at 10:00. >> good plug. >> hewlett-packard shares are up as we knew they would be. better than expected numbers for the second quarter. and despite pulling in guidance such a tad for the current quarter, people do seem or investors at least seem to be what relieved. let's not forget shares were down sharply from the terrible number from dell. >> and down again today. there's no bounce off of that dell news yesterday. that is important. this is terrible price action to

cap off what a loss yesterday. nobody willing to take a fly on this. >> after that confers call last night, for hewlett i did come back and say dell, terrible execution. speak of bad execution, entab. here's one that says listen we're doing terrible. it's miserable. it is all the fault of the world, nothing's wrong with our company. and they are losing share by the second. no one wants to admit that. >> estimates 59. going to have to recompute. nowhere near where it was a year ago. you mention costco where they're softening a bit. revenue a little bit light. the u.s. 4%, international 8%. even though they're able to sell cheap gas and that does drive traffic. >> a lot of people thought there would be a bad miss mere. the fact that they didn't miss

like pbh indicates that there were shorts abounding in costco. and i think that's changed. is this -- this is the conference. jim not the guy anymore. >> it's true. and of course the revenue up 9% on the membership fees after they instituted the increase. first one in five years back in november. that does help. i think people who have the growth slowing thesis point to costco as one more tiny move. >> then you look at walmart today which gets a new high. this is a more than -- >> 12 year high. broke out of the 50, 60 range. >> a lot of this is really good solid locations in mexico doing great in mexico. that's supposed to be a joke for heavens sake. >> can i tell you. my mind is elsewhere. we watch the euro closely as we should. in some ways it could be indicative of our market here.

before we get to bob, i don't know if you can follow me. apparently something weird going on between the euro and the swiss franc. swiss franc is -- they're trading in a very strange -- look at that. >> no. this is u.s./swiss. >> okay. must be some kind of intervention i'm hearing. but it's operating very strange. we're going to keep an eye on that. along with everything else. of course the euro which hit what was it? >> 22 month low. >> everything signals that it's falling apart in europe except europe. i mean, look at this market. spain. it's almost as if someone says if we get rid of greece, everything will come together. discipline. i don't know who to take my cue from. baffled. baffled. >> one guy to take your cue

from, bob pisani. i know you've probably got blair underwood's autograph already. >> he's behind me but he's got mostly female fans with him behind me. we're lucky we opened flat. given the numbers here, china and european pmi terrible. the china pmi numbers declined for the seventh straight month. it's hard to argue about that soft landing. that hypothesis, above 8% gdp. most people have been betting above 8%. the only thinged that good about today. the german gdp, they keep

chugging along. up .05%. one thing they're hoping now is making decision in june. hoping the greek elections don't blow things up and we don't have bank funding issues between now and then. the main thing people want to hear about is plans to recapitalize the banks. they were going to make decisions in june. but it's kick the can down the road in june. they're hoping things do not blow up between now and the end of june. that's when the next meeting is going to be. jim was talking about tiffany. the knee jerk reaction to say europe blah blah blah. tiffany only gets 11% of revenues from europe. you cannot blame the problems with tiffany on europe. half their revenues are from the united states. down 4%. that's a problem. so of course slower spending in the yiet. and signit came out with the

same observations. they had the same problems. they lowered their numbers as well. another problem that a couple of people pointed out to me is price inflation. go into a tiffanys store with $10,000 to buy a diamond ring right now. you're going to be shocked how little you get. they've been raising prices on diamonds for years now. there were some comments that that kind of price inflation was going to slow down. but i think that's hurt them to a large driveway. i think yo did you see the indian rupe? it had a low today. that low rupe is a major problem for gold prices. china and india, muchless buying going on because people can't purchase over there and the slower indian economy hurting as well. >> thank you. i'm puzzling over tiffany. i think you raised good points. in new york city where i live

and involved in real estate, it's more bountiful. new york city the strong. i would have thought tiffany did great. >> it's puzzling. i'll have to read the release. >> let's shift to bonds. rick? >> thanks, jim. if you get a ten year note bb it's down a couple of bases point from the 177 area yesterday. many traders, of course, are continuing to look to the data. even though this morning's weak headline, the deeper you go on the number extracting expectation you can see this really appear. and the proxy for business spending. that was weak two months in a row. uk still in recession. european pmis were weak. germany in particular. it's very difficult on this trading floor to hear a discussion that doesn't seem to think that the events in europe

in an already-slowing global economy are going to make things slow even more. and the aftermath of that is a very non-volatile but well bid interest rate environment for many of the high quality sovereigns like the u.s. today we'll have the last of the options. even though the five year wasn't as solid as the two year was, we saw the results were fairly good. one of the comments in europe that's getting particular attention on the floor is if greece falls out of the european union, it will be messy. what hasn't been thus far? back to you. >> thanks, guys. you were chattering about the swiss. we mentioned it y erl. >> trying to get a sense on the move in the swiss franc. we don't know yet. there's a lot of speculation in the market. >> i know people at home are probably thinking wait a minute. swiss, euro what is going on?

we would be down substantially today if europe were down today. so the big puzzle here is what is going on behind the scenes that makes us more bullish about europe and europe more bullish about europe. we're the last to know what happens. drives me crazy. >> yesterday biggest reversal since october 4th. you've been saying use the rallies to lighten up. you still in that camp? >> yeah. i think you have to switch directions. i talked last night about spam, about hormel. i like companies that are domestic. maybe you trim some of the international companies. go for domestic security. coming up next, the man who has become a retailing icon. you'll want to hear what mickey drexler told our own david

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simon hobbs here a look with what's coming up on the next hour of "squawk on the street" as we look at the spike in the euro on the swiss frank. >> it bears thinking what mark haines would have made of the facebook ipo. we'll talk about ahead in the program. also from detroit or rather italy, the ceo of chrysler will be on the program sergio marchionne. we have an interview with bill dudley. back to you. >> thanks so much. let's talk about what david was eluding to when we talked about a spike over euro in swiss. this is the chart that matters. it is moving on some of these rumors. one is that swiss national bank is intervening buying franks. so instead of putting your euros

into a swiss account, they might keep it in euros. >> that's been the worry. >> that is what's moving the markets right now. >> they try to defend 1.20 don't they? >> a number of different things swirling around. >> something to keep in mind. we've got to keep it on europe always. >> you were in europe. you were in italy. >> i was. very nice transition. i was in fact in italy with mickey drexler. who runs j. crew. mickey drexler turned the gap into the number one apparel company in the world. when that expansion ran out of steam and ran into problems, he found himself facing the words nobody likes to hear. you're fired. sales were in free fall and drexler was blamed. it was steve jobs, a gap board member who gave him the news. >> i left gap not feeling that great about myself. i was let go. >> you were fired. >> i was let go, fired,

whatever. >> james is a cofounder of texas pacific group. that acquired a take in j. crew. >> you weren't just thinking this guy was fired from the bigger company. >> in this world this is better than peyton manning being a free agent. >> all right. for an inside look at how mickey drexler is transforming another american classic, check out j. crew and the man who dressed america. that is tonight 10:00 p.m. on cnbc. >> i'm more fascinated to hear his time at gap and design choices he made that were cultural touch stones that we talk about 20, 30 years later. khaki. that's all you need to say. >> or a blue blazer and a pair of jeans. that's ubiquitous now. but 20 years ago this man was credited to bringing that to the

norm. >> he didn't want to get fired again, but also didn't he want the freedom to be able to miss a month's number, a quarter's number by being able to show his real skill, his eye? >> yes. although it was a public company, let's not forget it went from private to public under drexler. >> could it be public again? >> yes. in fact, drexler says the expectation given your own by private equity as we walked through that beautiful square in italy. we went there to check out fabric they use for their thomas mason shirts. that was a nice walk. >> and he's still excited as ever when he sees something he likes? >> my gosh. the passion is incredible. he's probably the greatest merchant of his time. >> oh, yeah. the guy everyone says when you're off the desk, every apparel guy says i don't have the eye. i can't look at clothes the way mickey drexler does, but i've got a good line. >> it's humbling to stand next

to him and know you'll never dress as good as he does. he looks like he just got ironed. >> he keeps it very simple. uniform with basically the jeans and the jacket. but yes, always nice. very nice shoes too. by the way 500 bucks for a pair of shoe. they go very high end at j. crew. >> they've got that -- he's big on social. and his website, he always has a couple things outrageously priced. but it sell. >> it does. it brings people in. we talk about that and whether they've alienated some customers. >> you've got to watch tonight. 10:00 p.m. eastern time and pacific only on cnbc. "squawk on the street" will be right back. hey, it's sandra -- from accounting. peter. i can see that you're busy... but you were gonna help us crunch the numbers

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jim cramer, what's this deal we read about in the paper where you signed a contract with "squawk on the street"? >> to me it's welcome home. you know how much i love this show, mark. >> of course. you're going to be with us. we have to put up with you twice a month. >> i wish it were more. you know that. come on. you know -- i wear this stuff on my sleeve. take off that kissing.

>> a vintage "squawk" moment to be sure. mark haines had a lot of them. we're remembering him today one year after his death. bob pisani joins us. every time i'm in the field or meet a viewer, one of the first questions is we miss him, right? >> i started working with him and i'll never forget how he taught me make sure you get the common touch in. i did a report on economic numbers and the housing starts numbers. he said bob, should i buy a home or not? tell us what we should be doing now. don't get too lost. only mark haines could pull off a tie like this and wear it with a sense of pride and understanding and feeling. that's what he taught all of us. common touch. don't get lost in too much of the numbers.

>> and remember, really a family man. cared more about his kids than anyone i've ever met. went to every game. last friday with facebook, i cut out early. and i cut out early because it was my daughter's pre-prom party. what i told everyone was mark haines at that memorial service, he never missed. i have missed so much with my kids it's pathetic. mark haines told you it's never too late. >> what would mark haines have said about facebook? could you imagine what he would have said sitting here listening to all this stalk wa the discussions about the analysts making phone calls late in the night to people? probably would have set back and said what else is new? what are you telling me that i don't know already. that common touch that he's had so many times in the past. >> it's hard to guess with him. when a lot of his opinions i think surprised people from here depending on what the topic was, you didn't really know. he could never be pigeon holed.

>> but no free passes. >> the other thing, too, in this part of the country people remember him anchoring in providence, in philadelphia. he went to u penn. he loved this part of the country. >> he was famous in philadelphia because he was anchor of the move riots that occurred in the '80s. this was a big thing in philadelphia. he got on a truck in a compound of people that took over in western philadelphia and stood on the truck and reported from the truck. cindy his wife was the producer at the time. he did amazing on the spot reporting. he was great right on the fly, right off the top of his head. in 9/11, the historic commentary he made. i was here working with him. his calmness and his sense of presence when everybody else and for good reason was on the verge of panicking was memorable. >> the man did something that

was eluded to earlier. you weren't supposed to speak negatively of ceos. he changed the model. ceos were just regular guys to him. they meant nothing. >> yeah. there was no question that was too tough for mark to ask. he wanted to know why and would not take no for an answer. that's what we have to remember. >> our thoughts are with his family. cindy, his kids matthew and meredith. "squawk on the street" will be back in a moment.

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♪ welcome back to "squawk on the street." let's get the road map for the next hour. facebook an the hoodie effect. why the stock may have been hurt by zuckerberg's fashion choice. >> plus the ceo of chrysler and fiat sergio marchionne joins us. >> and blankfein faces shareholders. we'll see what they're saying about the bank's future. >> and new york fed president

sits down with an exclusive interview talking global policy to u.s. economy. all that and highlights the next hour. >> a big look at tiffany this morning. that's a nickel below wall street estimates. the retailer is cutting its four year outlook on expectations. and the stock has been hit badly. a lot of discussion about where we are with luxury goods in particular of course in china. >> different story for costco. the warehouse retailer reporting an 8% profit. costco also posting a 5% jump compared with a year ago. shares of costco this morning are a bit to the upside. for the past year, up about 2%. and about 1.4% today. >> hewlett-packard shares up sharply this morning. posting better than expected quarterly earnings. also plans to cut 27,000 jobs or 8% of its workforce as part of

restructuring. meg whitman just an hour ago on "squawk on the street." take a listen. >> we're pushing hard because we can't afford to wait. we've got to make these investments. technology is changing very rapidly. at the same time we've got an enormous organization. so you have to pace in sequence. i feel good about the pace in sequencing right now. that doesn't yield to analysis. that is almost a gut decision about have you pushed hard enough but not so hard that it starts to be dysfunctional. >> hewlett-packard in today's session recouping all of today's losses and then some. about 6% here. despite the pop, a lot of analysts say this is still a turnaround story unfolding under our eyes and we don't really know where the company will be at the end of this. >> and whitman admits as much. she believes only 10% to 15% of the way through that turnaround. saying that many times it will not be linear. you will have dips along the road. she's trying to streamline the company.

that $3.5 billion in cost savings they're talking about which they will see in fiscal year 2014 is being embraced to a certain extent by the market. to your point, this is still in some ways a sikd half story. they are sticking with -- even raised their earnings despite coming in slightly for the current quarter due to macroeconomic concerns. >> i made two observations on this. i enjoyed the interview. i understand from my sources in hp, the all employee conference call isn't actually until the 18th of june. which is three and a half weeks away. so you have 27,000 employees who are going to go but at the moment those employees have no idea necessarily whether their jobs will go, the detail on the divisions. i think that's an odd leadership situation to be in. it goes to this criticism of hp being arguably a little bit bureaucratic. mike lynch who is the ceo of

autonomy. he hasn't got the -- >> $11 billion is what they paid for it. it's not $11 billion in revenues. >> that's fine. he built that company from scratch. >> he did. you seem to be offended he was fired. >> it's just worth noting you have a brilliant person -- >> is it because he was british? >> i'm not sure compiling live terrorist lists for the homeland security. >> he may not be the right person. the two are not -- one doesn't preclude the other. he can still be brilliant. >> to whitman's point, she says entrepreneurs reasonabaren't al right to lead companies. >> it would be a shame if hp does lose such a brilliant man who is arguably ahead of facebook and face recognition. and that technology.

>> at the same time it seems no surprise. meg whitman came in after the acquisition was made. so therefore, typically there are managements changes when a new ceo comes in. >> he is a rainmaker. he will appear somewhere else in the industry. >> are you related? >> no. i did an interview with him. i was very taken by his ability. >> whatever happened to leo apotheker? we just showed his picture. >> facebook shares in the light again today. sources telling cnbc that the stock exchange has reached out to facebook about it jumping from the nasdaq to here. kayla has more on that. >> there's no formal engagement going on between the two. there has been communication that facebook remains open to as the fallout continues.

the big question is is this common and what are the consequences? it happens often and in both directions. in the last two years, 38 companies have switched to the nyse. nyse has netted 38 companies. but even though nyse may get more transfers by number, nasdaq has netted bigger switches. jumped to the nasdaq since 2005 versus $183 billion of business moving away. and texas instruments and western digital, two of the biggies this year. what's less common is switching it up a week. nasdaq eventually won. with a flurry of lawsuits and final claims over nasdaq's handling of its ipo, that's a

big question about where facebook will stay. knight capital has submitted claims for what it estimates it will be. 35 million in losses for the second quarter alone. facebook might decide it wants a fresh start. the beauty for facebook is there's no deadline to decide. >> i was going to say presumably they're under contract though. it's not something they can just walk away from. it would have been a full negotiation. >> you would think. of course we haven't seen a contract and what is exactly entailed in that. but we did speak to the former vice chairman of nasdaq. he says what's on the books, it's still easy to switch. you wouldn't think so, but it happens all the time. >> thanks a lot. meantime, the analyst who set off a controversy last week when saying wearing a hoodie was disrespectful to investors. he says if zuckerberg had not

worn it the shares wouldn't fall. welcome. people will laugh at this point but i have seen commentary this morning by wearing what he wore, he was not telegraphing that his interests were aligned with that of shareholders. is that what you're trying to say? >> that's exactly what i'm saying. i mean, let's be real. the stock is down because there's more shares out there than the market is willing to absorb. so we know what the supply is. that's not going to change. there won't be more or fewer shares for the foreseeable future. they need to increase demand. and to increase demand, zuckerberg has to commit to investors that he considers them an important constituency. he has to show them he's aligned with wall street. the biggest criticisms are investors are not convinced that the management is really focused

on driving revenue and profit. i think most of the show will focus on user experience and increasing users. i think the guy has to come public now and tell investors i care. it doesn't really matter how he dresses. that's just a signal that he actually considers them important. i think he has to come out now and say i'm committed. i consider investors an important constituency. i'm going to balance the userability. >> managing the streets, he hasn't had a good public relations week either. >> no. and i kind of feel sorry for the cfo. it's ultimately his decision. so i think they made a bad decision on how many shares to issue. clearly there was some communication between the company and the underwriters. we've seen lots of reports about the underwriters. moving the numbers down. i'm not sure that's prohibited.

i think probably the bigger issue is how it was disseminated. i don't think he necessarily got the best advice. yeah. it's a tough week. he's not enough. david ebersman is not the face of facebook. mark zucker burg is. has to get in front and say i care. >> michael, i feel as though you're crying over spilled milk. and the man said to everybody i will not profit maximize. he has customer experience first. that's clear. it's written in black and white the first time they were coming to the market. >> you're right. and i think in order to support a $38 share price, i think investors believe that there'd be some shred of concern about

maximizing profits in there. you're right. they were very clear. maybe the deal should have come out at $32. but the underwritered gauged a man. they're going to one this company in a fiduciary responsible manner. they're going to have to exhibit they recognize they have a responsibility. i'm not sure they have done so. >> michael, steve jobs i don't think cared very much about shareholders. >> i so disagree with you. steve jobs was -- he was laser focused on maximizing profit. >> well, he was laser focused on his product portfolio and his business. why would you argue that mark zuckerberg is not exactly the same? >> where do you think $500 iphones and $500 ipads came from? that came from jobs. >> i don't understand what you're saying. i'm saying that steve jobs was not necessarily focused on his shareholders. he was focused on running the

company as best he thought possible and picking the best products. and then -- so you're not saying -- you don't believe that mark zuckerberg is focused on creating the strongest company over the long-term he can? >> where i think there's a disconnect is the user of apple products is the person that drives the revenue. so focus on the users and the great profit and the revenue happens. the users of facebook's product is not the person who drives revenue. that's advertisers. the disconnect is being focused on the user in the apple situation or the microsoft situation drives big profits. being focused on this user in the facebook situation does not. you have to focus on advertisers as well. gm told us these guys aren't focused on advertisers, we're pulling our advertising we're not getting our value. we need a ceo to focus on driving revenue. in facebook's case it is not. >> before we go, they are restricted from how openly they

can talk so closely after the ipo. you're not saying go on today and talk to the journal in the morning? >> i think it would be fine if he would say we regret where our shares are trading. we think they have tremendous value. at our next earnings call, we're going to demonstrate your commitment to driving revenues and profit. that would be a great statement. >> thanks a lot. meantime, the earning report card for the banks. some of the numbers are mighty interesting. >> that's right. the fdic is giving a briefing now. that briefing is still going on as we speak. let me bring you highlights here to get you up to speed with what they're saying. a very interesting statistic here. they're saying loan balances registered a decline after three quarters of net increases. the fdic calling that banking loan balance decline quote, disappointing, unquote. nonetheless, the banking sector seems to be doing better in terms of profitability. u.s. bank earnings rose in the

first three months of the year to the highest level in five years. the number of troubled banks fell. that's up from $28.7 billion the previous quarter and about 67% of u.s. banks reported improved earnings. so carl, the key question here is why are banks pulling back a bit here on lending and what does that mean for the overall economic recovery in the united states? >> thank you very much. specifically about jpmorgan. they increase their exposure to cds just from september of last year to the end of the first quarter in some cases by a factor of five. big moves even for a bank that size. >> yeah. i'm not quite sure what that all says. how much of that exposure was related to the investments of the cio, do we know? >> durations longer than five

years, it was dramatically higher. >> and it raises question at this point to how accurately can the fed monitor risk at these institutions if they see big spikes in that short amount of time. >> you can monitor it better if you have all derivatives across exchanges and you have prints and records. which is where we were with dodd frank two years ago. we seemed to slip from that under pressure from jamie dimon. that was the deal. >> it's been a long time coming. coming up, chrysler ceo of sergio marchionne. he's at the illinois plant. much more "squawk on the street" straight ahead. or creates another laptop bag or hires another employee, it's not just good for business, it's good for the entire community. at bank of america, we know the impact

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welcome back to "squawk on the street." we've got a tale of two retailers going on. look at walmart. we're seeing these numbers trade at highs we have not seen for 12 years. after walmart's better than expected earnings result last week. then look at tiffany on the high end seeing some weakness in these shares today trading at 14 month lows. disappointing sales from the u.s. especially that flagship store. >> thank you very much courtney reagan. i want to look at shares of rim. down 3.25% or so on this news. it is a steeper slide at

research in motion. >> then the journal also has a piece about whether or not blackberry messenger which for some people is the only reason you have it is in doubt. >> this is for teenagers. >> messenger? >> i hear it's popular against teenagers. >> all adults. until all my friends got an iphone and i can't messenger them anymore. >> change your friends. >> change my friends. why not change my phone? >> that would be easier. coming up, david kostin. stay tuned.

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chrysler kicking off production of the all new dodge dart in belvedere, illinois, this morning. the company betting it will be a strong competitor for the corolla. we're joining with another cnbc exclusive. >> thank you, simon. i am joined by sergio marchionne. in the belvedere plant, we're in the body shop. people are saying why are you wearing these on your sleeves? sparks are flying here. the diart is going to roll out shortly. you love the geometry behind this car. >> best car we've ever built. >> the skeptics will say of course you love it. it's your company, why wouldn't you love the car? but what stands out about this compared to past vehicles you've launched? >> there's been a lot of work that's happening here in the u.s. manufacturing base to try and bring what we have here to

chrysler in 2009 up to what the rest of the world was doing. especially with both the japanese and the germans have done in terms of quality of vehicles. the way in which we build these cars today and the measures we assure are in place. absolutely perfect. these measures are light years away from 2009. by definition, the car has quality that we have never seen. and so it works. >> it works. we were talking. the life cycle on newer vehicles are shortening because of the new competition. how long can you go in this day and age before competition benchmarks from the industry, power drains changes so quickly you've got to relaunch. >> in the next four months

somebody will be in the market chasing our tail. it's that simple. we're working now. we did this with the grand cherokee. we had it down six months after the car has been launched. we're going to be in the market place january 2013. two and a half years after we launched the original version with huge improvements in the car. improved. all these things were planned as part of the launch of the original car. this has got the same pedigree. two and a half years from now we'll be in here. >> let me ask you about the corporate side of the business. you spend as much time in europe as in the united states. you have been blunt about saying how messed up politically and economically europe is. what's your assessment right now and more importantly should greece pull out of the eu?

>> let me deal with the second question last. i think it will be unwise for any member state of the union to pull out. for their own sake and for the sake of the rest of the membership. i think europe must do everything it can in its power to keep the integrity of the union. in the absence of that integrity, it will open up a variety of alternatives to people sitting at the edge of compliance. and if that discussion catches any type of sort of push, momentum, it would endanger the very fabric of the union and the very fabric of the euro. so i think we need to stay away from those. i think b we need to encourage the greek voters on june 17th and make sure they understand the value. the first part of your question is i continue to be as worried

as i've been now for awhile about the way and the speed in which the european union was dealing. i've always been mildly public on this. but i think austerity is a wonderful thing. and i'm a firm believer -- >> but it's not in favor right now. >> but it's not a question of being in favor. austerity by itself cannot be confused. austerity has to do with a way the public is used for things. so you need to cut the spending on the cost of governing these things. you need to use resources to create the path for development and growth. if you don't do that simultaneously, you're doing to shrink yourself. as long as austerity is the only item on the agenda, there's no future. >> sergio marchionne, loved talking europe with you. loved seeing the dart here.

back to you. >> thanks so much. with the merging market stocks at the lowest since december, which of these companies are more to the euro zone crisis? >> countries like turkey, poland. these are countries that live and die by the health of europe. the health of germany in particular. these perimeter countries have become an important manufacturing back office for many of the european manufacturers and they live or die by how europe's doing. >> give us an idea of what live or die means in terms of percentages. >> well, poland. something like 70% of their economic activity is tied to germany. in the first derivative or second. that's a level of independence mexico has on the united states economy. it's completely intertwined with their economy. >> does that necessarily mean

that you want to stay away from these countries? >> not necessarily. but i think you do want to be a little bit careful. i believe europe will eventually be fine and there will be some growth on the far side of this. but we don't know what the future downside will be in the coming weeks and months. i'd be very careful in these markets in russia, turkey, poland, and czech. but taking some time to get there. >> can i gate comment, if i may, on what may burnd the radar for a lot of viewers. the fact you have central banks in india and mexico and south korea who have been in the market recently desperately trying to support their currencies as the greenback strengthens across the board. how dangerous a situation do you think this is for emerging markets? >> i don't think we're to the point of currency war. i think yao got some countries that want that to be happening. it is something to keep an eye

on. a lot of the extra return from emerging market investment in recent years has come from strength in those currencies. as we take that off the table, we need to be a lot more careful where we're buying. >> david, thank you. >> thank you. >> catch more global trades every weeknight on "fast." let's head over to sharon with breaking news on nat gas inventory. >> natural gas inventories for last week rose by 77 billion cubic feet. that's right in line with ls estimates. those surveyed by platt expected that the increase would be between 75 and 79 billion cubic feet. we are looking at a rise that is less than we formally see this time of year. and that is perhaps why we are looking at prices that are basically flat to where they

were to almost unchanged right now to where they were trading before at yesterday's close. we are looking at prices that may approach what we saw as last week's high near $2.76. keep in mind elsewhere in commodities we are looking at a bounce. we have seen the euro stabilize as well as equities and now oil, gold, silver all up on the session. >> thank you very much. amazing what's happened in nat gas in just weeks. when we come back, interview with bill dudley who rarely gives interviews. "squawk on the street" back in a moment. you have to dig a little. fidelity's etf market tracker shows you the big picture on how different asset classes are performing, and it lets you go in for a closer look at areas within a class or sector that may be bucking a larger trend.

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an hour into trade and it looks relatively quiet for the major indices. this is a very volatile market. yesterday within 90 minutes rerallied back 150 points on an inaccurate tweet out of brussels. utilities are doing well. safe steady dividend streams almost like funds rallying today. let's look at the breadth of the move today. it is relatively even. now we're four minutes into trade at the nasdaq. it's relatively even stevens to the declining side. right now goldman sachs is

holding its annual shareholder meeting. mary thompson is in jersey city, new jersey, with the latest. >> hey, there. the meeting is still underway. but i spoke to a person close to the bank that said all of the companies directors have been re-elected and all of the shareholder proposals have failed. again, the official results should be coming out shortly. but the meeting continues as we speak. surprisingly no protesters showed up. there was a police presence in the morning anticipating protesters they never showed up. but overall it's been a civil meeting with ceo blankfein fielding on compensation as well as the bank's reaction to rival jpmorgan's losses. first of all, we want to point out blankfein did defend michelle burn. she has been concern of questions from shareholders because of her part on the audit committee on walmart's board. of course the retailer is under

investigation or there are concerns about the retailer because of allegations of bribes paid. says that walmart takes this seriously and they are looking into it. blankfein also talking about pay for performance. he believes his bank is a living example. and he dismissed a request that asked that the company publish of the employee. saying it's too time consuming. he deferred to the company's newly director james shiro who looks at these and they are constantly reviewing the control environment. its risk measurements. lastly, blankfein said there are elements of this rule. want to help legislators understand that ambiguity. back to you. >> a lot of discussion today about their new twitter feed.

@goldman sachs. but doesn't follow anyone as of yet. you might be one of the first. mary thompson joining us today. as europe's economic weigh here at home. william dudley has called for more global policy to encourage stability. steve leaseman sat down with dudley. he's here this morning. >> you remember when these things were rare, right? >> it was rare. unheard of. >> bill dudley has taken several steps on the sitting down for a wide ranging interview with me. we brought you a segment earlier talking about his changing outlook on policy. here we talk about issues like the fiscal cliff, more transparency from the fed and thoughts on rules. but i began by asking about the controversial assets that sit on the feds books for aig and bear

stearns. >> i think you agree they're not in the situation of holding the assets. it makes sense to try to return them to the private sector where people can manage them in a fulsome way. we want to sell the assets over time. but we want to make sure we get good value for the taxpayer. and we don't want to disrupt financial markets. and we want all to occur in a competitive manner. so people with bid in a fair and open way. >> i don't have a set timeline, but if the economy continues to recover, financial markets are reasonably buoyant, i expect we would be out of the maiden lane assets. but future's uncertain. >> there's one -- couple headlines we didn't talk about. a lot of people talking about the fiscal cliff that's coming in december/january. how much of a concern is that for you? >> it's a big concern. one, if we do nothing, fiscal

contraction starts on january 1st 2013. that would be a huge shock to an economy that isn't that strong yet. number two, the uncertainty about how it's going to be resolved could actually effect economic conditions prior to that. businesses might be less reluctant to hire -- more reluctant to hire. more so i think it's negative now in terms of uncertainty and potentially later. it can be resolved in a way that's not good for the economy. >> what would you like to see the fiscal authorities do right now? >> i think we've been clear about what we like. we want a long-term program of fiscal consolidation to start slowly and build over time. we want it to be credible so people feel that they will be able to have bipartisan political support. >> do you feel like too much of

the burden of stimulating this economy is on the federal reserve and not enough has been carried by the fiscal side? >> i think it's fair to say monetary policy can't do it all. so there's certainly things that the government can do. resolving the fiscal cliff. coming to an agreement on consolidation over time. that would be helpful, i think. >> you're going to give a speech about policy rules. why is the fed these days talking so much about policy rules? >> i think the first thing that's important is it's very important for people to understand how the federal reserve is likely to act as the economic environment changes. if people can anticipate our actions, that makes monetary policy more effective at achieving our objectives over time. so part of this speech and other communications that we've had is to be clear about what's our framework for doing monetary policy. so my view is that rules are

useful guides, but i would be hez tabt to apply them mechanically. >> among them that out there in such size in the markets that you have really made it so that the price information coming from the bond market is not real. >> well, we're very attentive to our role in the market and not being so big in the market that we disrupt market function and market pricing. so that's something we're very sensitive about. it's certainly true that our actions do have an effect on long-term interest rates through our interventions. but it's also true the federal fund rate that we choose also has an effect on long-term interest rates. i'm not sure that it's that meaningful a distinction. >> and yet while the market -- who knows the actual reasons, but while the market has come into the market is not doing accommodation, interest rates have fallen. what do you make of that? >> it is a little bit surprising

how much ten year treasury note yields have fallen over the last six months. economy has been okay and you've seen the yields come down. it's hard to really put your finger on what's driving that. what seems to be happening is market participants seem to be revising their view about what's going to happen to the level of short-term interest rates over the longer term. if you look at real rates looking out five to ten years, they're very reluctant. not only do we think terms will be low today, but they're going to stay low in the future. there seems to be some revision of expectations about long-term course. >> the behavior of the ten year obviously something the president is watching very carefully. earlier we had broadcast the part where he told us that he believed that ultimately they would make a decision in june on monetary policy but seemed inclined not to be in favor. it's all on the web. we'll have additional segments at 1:30. watch the whole thing, read the

whole thing any way you desire. >> what a tossup between that and david's documentary tonight on drexler. you should be taking credit, incidentally. you talked about the transparency at the fed. you should take credit. you pushed them an awfully long way. >> thank you very much. i don't want deny that. they do it because they think of good policy. >> you persuaded a lot. we got to leave it there. we're out of time. steve there with the member of the foc. worries about europe are clearly front and center. hank smith is chief investment officer at haverford. welcome to both of you. we're down 5.5%. where do we go from here? >> we talked not too long ago as we head into the spring here we're probably due for our

garden variety correction. down on the month, but certainly since the april peak we're down about 7% on the s&p 500. what does that tell us in terms of the length of the cycle here? how much bad news have we priced in? i think we're almost there. we probably have another three percentage points to the downside. and probably get a resolution on grace which meanings they have an election and the ecb steps in. that's our biggest concern right now. >> so to paraphrase, you believe a greece exit is priced in. >> i think it's priced in if in fact we get fast action between now and election time, the greek election time by the ecb and imf to do something to reign in. >> and the market moved hugely on that speculation. hank, what do you think? >> well, look. i'd like to focus on the

opportunity this pullback and whether it turns into a correction or not has brought back into the focus a generational opportunity that's been available to investors for the past three years. that is to invest in high quality companies whose dividend yeeds exceed not only the uncompetitive ten year treasury but their own ten year debt. you have to go back to the mid-50s in which you've had this opportunity. and so this is a great chance for investors to pick up yield and get growth of income. and every time the market pulls back like it has, dividend yields go up. with bond yields coming down, it's more attractive. >> you make your cases very well. thank you. hank smith and art hogan. when we come back, how j. crew's mickey drexler is making his mark on fashion and intimidating the likes of vogue along the way. it's after the break. [ tires squeal, engine revs ]

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welcome back to "squawk on the street." linkedin falling 5%. that means we erased all of yesterday's gains. majestic research is making comments about growth for the quarter. >> all right. thanks very much. mickey drexler is the man who put khakis on the map. a retail legend who's led gap to ann taylor. now he has built the brand into a multibillion dollar powerhouse. he's called the king of retail. a king who impressed another fashion royal, anna winter. >> can we change the name of sweatshirts and sweat pants? >> you can walk the floor with mickey at j. crew and he knows every single piece of clothing on the floor. >> anna winter, editor in chief of "vogue." considered one of fashion's most influential voices marvels at

drexler's hands on style. >> you see lots of ceos that are brilliant at what they do, but they're definitely removed. there's nothing removed about mickey drexler. >> i don't want to get emotional, but i love this shirt. >> j. crew is a force to be reckoned with. anyone whowith. anyone who would tell you anything different is insane. >> all right, j crew, tonight at 10:00 p.m. the fashion credibility of the company growing, so are its numbers, more than 300 stores, 4,000 employees, 1,278 different colors and opening stores in london and hong kong. look tonight, 10:00. hope you'll join us. >> he was at the gap for many years. >> yes, he was. joined the gap in the early '80s. donald fischer, chairman of the gap, brought him in to transcript traps form what was a nationwide jeans retailer. and he did. in fact, very much so. opening old navy, re-establishing the banana

republic brand. no doubt that was a huge transformation. >> and then his involvement with apple, which is amazing. you're going to look at that, as well, right? >> that's right. people forget that he and steve jobs, he served on that board, continues to serve on that board and was also involved in the opening of the retail concept for apple, of course, which resulted in the apple store. >> did he persuade you on color? did you come back -- >> polka dots. you'll see me wearing polka dots. >> what a sight that will be. >> i'll be here that day. straight ahead, europe's debt problem isn't the only controversy plaguing the eurozone. see why swiss chocolate and copy rights are causing problems overseas. first, rick santelli is working on "squawk on the street." what's coming up? >> today is interesting one. i like to keep it simple. dollars and cents. we're going to talk about human behavior and regulation. i listen to mr. dudley, ben bernanke, and for very smart,

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. another potential blow for more rely in europe. the eu's highest court is refuse to go trademark chocolate bunnies made by lindt, despite the manufacturer wraps them in gold foil and puts ribbon bow ties around their necks, the eu rules the bunnies are void of any distinctive character. >> it doesn't have an eyeball. >> that's been eaten already, that bunny. >> so anyone can copy them. by way of comparison, melissa lee points out chocolate bunnies sold here in america appear to have far more character. next to the lindt bunny, a godiva bunny and palmer found in drugstores. >> very distinctive. the godiva bunny has hair on the

hare, very distinctive. the only distinction there is the wrapping, but the chocolate form itself was rather vague and undistinctive. >> the scarf. a little bit like courtney this morning, with the scarf. >> i would eat all of them. >> more "squawk on the street" on the street coming up after this short break. stay with us. tdd# 1-800-345-2550 we're hitting new highs. tdd# 1-800-345-2550 the spx is on my radar. tdd# 1-800-345-2550 and i'm on top of it all with charles schwab. tdd# 1-800-345-2550 tdd# 1-800-345-2550 i use streetsmart edge and its tools like... tdd# 1-800-345-2550 screener plus. tdd# 1-800-345-2550 i can custom build my own screens tdd# 1-800-345-2550 or use predefined ones to help me find tdd# 1-800-345-2550 possible trading opportunities quickly. tdd# 1-800-345-2550 i can also bounce my ideas off their trading specialists - tdd# 1-800-345-2550 on the phone or face-to-face. tdd# 1-800-345-2550 and i can trade wherever i want, whenever i want. tdd# 1-800-345-2550

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a close eye on retailer accidents, tiffany, costco. what's up tonight? >> fauber, how gloomy he is, what's going on in europe. and talking "avengers" impact and "the dark knight." what will we see in terms of i max results. >> a lot of discussion. if you're long-term bearish on growth, walmart hit a 12-year high, and tiffany david at a 52-week low. says a lot. >> it does. not sure i've figured it out completely. it's been the reverse. the high end been doing well for years now, and the lower end not as tough. >> it's hype over china, isn't it? look at the demographics. tiffany will be there, da, da, da, don't worry about it, and

ultimately, potentially doesn't add up. >> and china is a concern for this market overall. there are people looking deeper into electrical use and things of that nature, don't like what they're seeing in terms of trying to figure out, are they still at 8% growth or is it falling? >> stocks like berbery are doing business. >> ralph lauren this week, too. >> thanks a lot. look forward to david's documentary tonight, 10:00 p.m. eastern time. if you're just joining us, here's what you missed earlier this morning. welcome to hour three of "squawk on the street." here's what's happening so far. >> 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 just not a fair playing field. >> and being published it would be fair disclosure. >> absolutely. >> the numbers are, durable goods up .2, spot on expectations. jobless claims, they moved down a whopping 2,000 from 372 to

370. however, 370 was the original release last week. so kind of a quasi unchanged number, so to speak. >> this is the beginning of a turn-around, and my experience in turn it was arounds, they are not always linear. there's ups and there's downs, steps forward and steps backward. we wanted to be realistic about the guidance. >> loan balances registered a decline after three quarters of net increases. the fdic calling that banking loan balance decline, quote, disappointing, unquote. >> i think it will be incredibly unwise for any member of state of the union to fall out. for their own sake, and for the sake of the rest of the members. >> good thursday morning. welcome to the third hour of "squawk on the street." the markets less volatile than the last couple days, at least, after a 190-point swing late in

the day yesterday. dow's up 17, s&p up a little more than 2, and the nasdaq struggling a bit at 2847, down 2 1/2. metals on the rise, rebounding, gold, silver, copper and platinum in the green. hp the biggest gainer in the s&p and the dow after better than expected results last night, even though the company plans to lay off about 8% of its work force. meg whitman, the ceo on "squawk on the street" earlier this morning, talking about the turnaround. >> we're at the beginning. i'd say we're probably 10 to 15% of the way there. we've laid a lot of pipe, we've laid a lot of ground work, we have a clear focused strategy for the company. we have a clear, focused strategy for each of our operating groups. and now we have to execute. >> so let's get to the road map with all that in mind. goldman sachs, chief u.s. equity strategist david costin joins us live at post nine, an exclusive look at the hedge fund report. we'll talk about markets in the economy, as well.

get the pulse of the industry, see who is making the most money. also, senator tom coburn sends some light on the job trading mess in washington. why programs might be doing more harm than good. plus, is silicon valley embarrassed after all of the controversy surrounding facebook's ipo. we'll ask the top minds in the industry how they feel about zuckerberg and his social network now. also, facebook's achilles' heel. everyone is questioning the company's advertising revenue, but is its real weakness something different? all that in the next hour. the market hit a high on april 2nd, has since retreated. david costin, chief u.s. equity strategist at goldman joins us here with gary kominski, our capital markets editor. gary, remind us about what he said last time he was on. >> david, when you last joined us, i think the s&p was up 8%, year-to-date. a lot of enthusiasm as there was a year ago, call in the first quarter. you put out a call for the s&p to basically be flat in 2012.

you reiterated that call, and here we are back to basically being flat year-to-date. so remind us, why you made that call? is it still your call on the markets, and if so, why is that the case? >> okay. so the framework to think about the market for 2012 has three parts. the first is a stagnating u.s. economy. the second is a stagnating multiple. and the third is minimal earnings growth. so if you look at each of those three items, the first is you've got a stagnating economy. the economy is growing, but below trend. roughly 2%. and the multiple is important, because the history of equity markets, when the economy is growing at a below-trend rate, is it is a flat multiple. there is a wide range around that, but on average, the multiple is flat. and given the multiple flat, you have a earnings growth 3% this year, $100 per share in earnings for s&p 500 this year, $106 for next year. you put those three things together, that's the framework thinking about what's happening and that's why we remain 1250 as a price target for the end of the year. >> so the biggest difference --

it sounds in the earnings camp you're essentially in line for the rest of the street. it's the multiple that makes a difference. those that say could be 1400 or 1500 at the end of the year are assuming a higher multiple. in terms of earnings, in the same camp. >> correct. the real debate is about the multiple, not the earnings. margins relate to the level of earnings. the question is, i'll give you a 15 multiple, but i won't give you a 9% net margins. margins for the market have been flat for 15 months. five quarters, market -- margins flat, 9%, less than 9%, my forecast is margins will be at this level the next year-and-a-half. we go through the earnings calls that just agained for the fishing, you have a group of companies that think they can increase margins, and similarly large group of companies not having the ability to do that. you saw one of those last night, proctor and bam bell, making that comment they don't believe margins can go higher. if you think about the multiple you're going to put on a peak margins, that's where the debate comes. >> but there is debate on earnings, too, especially when it comes to the fourth quarter,

right? some assumptions are rather aggressive, given what they appear to be doing right now. >> correct. the consensus is too high. you have basically in the last 90 days, first quarter, just had the results, but revisions have been negative. but in the fourth quarter, expectations are almost 20% growth, never going to happen. and so therefore, if you think about normalizing that, can run $100 earnings for this year. >> $100. and that fits with your 1250 year-end. >> in a moderately growing economy, below trend, and that's the issue. and we had bill dudley on this morning talking about the fed's perspective. >> you know, david, you do this quarterly look at the biggest hedge funds, and it's so interesting, because what you actually pull out is what the real influence is in terms of specific securities, contra traded positions. the report basically shows the impact on some of the largest names in the portfolios of the largest hedge funds and what they are. can you explain, sort of simplify it down to us, what do you find as a result of these

big concentrated positions? what does it actually mean to the performance and to these individual stocks? >> okay. so the hedge fund business is an important part of the market. and when we look at the ownership of 7,000 different stock positions, going back over the last ten years, looking at every 90 days, what do you find? we find there's a couple ways to look at the hedge fund ownership. one is the concentrated positions you just referred to. that's where hedge funds own a significant 30, 40, 50% of the shares outstanding. the other way to think about it is the positions that matter most to the results and the performance of a hedge fund. >> stay there for one second. when you say the big positions, when we -- we will report on cnbc hedge fund xyz files a 13-f, they own x percent of a billion, $2 billion market company. the viewers hear that, they hear this fund is taking a position. that's what you mean by a concentrated position. >> that would be a case where you would own 20 or a group of funds would own a significant share. but that's not going to dictate

the results of the hedge fund performance. that's going to be a company like apple, which is among the top ten positions of many, many, many fund. >> we have a list of the five that you deemed to be the five most important names in terms of the actual performance, right? >> when you go through the ownership of each fund -- >> right. >> -- what you'll find is consistently, these stocks appear among their top holdings. that's the way to think about it. an alternative is to look on the short side. and we also looked at that as well this quarter. >> when you looked at what they're adding, what they're dropping is just as fascinating, too, amazon, ibm, j & j, mcdonald's, walmart, exxon. are there themes through what they're dropping versus what they'red adding? is. >> what you're looking at is typical fund on a net basis, the gross and short side so a net exposure is most prominent in consumer discretionary stocks and information technology. those historically are the areas where you get the most dispersion, the best

stock-picking opportunities are in those two sectors. the hedge funds are consistent with the data going back in history. >> david, we're showing the five names that you determined make the most that matter. are you surprised you don't see a financial on that name? there's no financial stocks, large cap financials that show up in screen as having an import to the hedge fund performance? >> it doesn't surprise me, given the uncertainty in the dynamics in the sector right now. that doesn't surprise me. and we've seen persistently google, qualcomm, apple, microsoft that remained among the largest business. the important thing to understand is that turnover in hedge funds is relatively low. it runs around 30% per quarter, consistently for ten years, even in the peak in 2008, high volatility was still running armed that level. that's because hedge funds own on a fundamental basis, they own these stocks for a particular reason. >> if we -- when we see three months from now, do you think facebook is going to show up on that list below, either on the long side or short side in terms

of where the largest hedge funds have taken a position? >> can't comment on that. >> speculation -- i mean, just in the sense of what you have seen historically, how they try to position themselves. >> you can't comment. >> how about this. the average hedge fund is underperforming the s&p year-to-date, yes? >> the average hedge fund is underperforming, but on the long side, they're doing well. their stock selection in the most important positions have done particularly well. it's been the short side that has been -- been difficult. and, of course, when the market is rising, the short side tends to do poorly. that's why this quarter we spent a lot of time trying to understand this, and consistently the stocks that we have identified have underperformed. by about 75 basis points, per quarter, for the last decade. and that's why those companies, top of the list was j & j, on average, if you own that basket of companies, own for 90 days, rolled it again for ten years, consistently outperform,

reasonably high sharp ratio. >> great stuff, david. a lot of data. thank you very much, david costin from goldman sachs. let's get over to the cme group and check in with rick santel santelli. good morning, rick. >> good morning, carl. carl, before i get into the sani santelli exchange, do you have any dogs? >> do i have a dog? >> yeah. >> yes, i have a dog. his name is lucky. why? >> all right. i have a dog named maggi, because our dogs and how they behave is really integral to regulators writing good regulation. and i'll tell you why. here's a delectable piece of raw meat, all right? if i leave this piece of raw meat out, and i too have dogs. i guarantee, when i go out to the barbecue to fire it up and come back, if i leave that piece of raw meat out, carl, do you think it's going to be there when i get back? no, it won't be. and there's a big life lesson to be learned there. and i'll tell you why. because whether you're a banker, whether you're jpmorgan, whether you're morgan stanley, whether

you're a securitizer, all caplesses, all entrepreneurs, all bankers will eat a piece of raw meat that is negligently left sitting out. they just will. it take it a step farther. when our dogs eat the piece of raw meat we left out, i think it's wrong to smack the dog around. but yet let's think about regulation and let's think about human behavior in the context of austrian economics. they don't believe in economic models. they believe you study human behavior. the human behavior of the process of a means to accomplish the end. they look at the real world. and they don't look at the world the way they want it to be. they look at the world the way it is. so we shouldn't be hassling bankers, we shouldn't be hassling capitalists, we should be hassling the regulators, because it's their fault. they leave raw meat out, don't be surprised, you're never going to modify behavior. those dogs are always going to eat the raw meat! harness that in a positive way,

write regulations and acknowledge that capitalism is good, and they will eat raw meat, just don't believe in a -- beleaving a lot of it out without some supervision. back to you. >> i have a chihuahua, so he's about the size of that piece of meat. but we get your point. >> he's still try to gnaw it, though, trust me. he would. >> we'll see you in a bit, rick. when we come back, wholesale giant costco beating the street, although some of these comps getting a little bit softer quarter to quarter. we'll see if now is the time to stock up on big shares or lighten up. we'll be back after the break. almost every day i walk into the office 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.

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welcome to the world leader in derivatives. welcome to superderivatives. costco costco getting a sales boost from its discount goods, low gas prices. courtney reagan is back at hq with a rundown. courtney? >> thanks, carl. despite an intraday stock boost, costcos latest earnings as a low quality beat. the 19% rise in fiscal third quarter earnings beat by a penny but the profit was lifted by a stronger dollar and more favorable tax rate than strong sales. costco's decelerating sales trend is causing concern. third quarter comps slowed to 5%, and the third quarter from 10% in the first. competit competitor, sam's club posted ex fuel at 5.3% for its latest quarter, slightly edging out costco. as a wholesale club, membership fees are a key component to revenue. and over the quarter, membership

fees at costco rose 9.2% guard to 8.2 increase in sales. gasoline, another strong revenue component, and as gasoline prices have fallen, there is a bit less incentive for drivers to fill up less often as those less expensive costco pumps. while shares are enjoying a lift, costco has underperformed the greater s&p index by a wide margin over the last three months. the average analyst rating has a hold on shares. of the average price target is 89, a 5% potential to pop from current levels. so going forward, costco does face tough comparisons, lower food and gas inflation, all concerns for sales growth. the conference call is currently under way. i'll bring you any news that develops. carl? >> it will be interesting. the renewal rate on those membership fees is so high. it would be interesting to see if households are feeling constrained and saying, you know what, we're just not going to pay the 100 bucks and see if that renewal rate comes down. that would be definitely stock negative too. >> exactly. i think the costco consumer is an interesting one. they tend to have a bit higher income, but, of course, they're going in for these good prices

on the bulk products. so i think that it will be an interesting push/pull to see where the level will be when they stop paying increases on the membership fees. >> between that and the miss on tiffany today, a lot of action in retail, courtney. thank you so much. courtney reagan at hq. when we come back, senator tom coburn and the job mess in washington. how we can fix it. a lot more "squawk on the street." back in a moment. . [ woman ] for the london olympic games, our town had a "brilliant" idea.

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let's get back to the cme group, rick san tale on the federal impact job training program. >> thank you. welcome senator coburn, great to have you. last week when i read the op-ed in the "wall street journal" about these 49 federal jobs training programs, and how few of them have actually been means tested in any way as to effectiveness, but yet anybody on the fiscal conservative side of the aisle tries to cut these

programs, the wrath of god comes down! what's wrong with this picture, senator? >> well, it's red meat, rick. like the previous segment. look, we have 47 job training programs as of two years ago, two more now, spent $18 billion. there's 3,000 one-stop job centers in the united states. they help, on average, three people a day each. not with job training, but having them fill out paperwork. they employ between eight and ten people apiece. what our job training programs are, none of them have a metric, none of them have been measured, all of them overlap, except three. what we actually have is an employment system for people in the job training bureaucracy, not job training programs. >> you know, to me, this is the heart of what i think most americans are going to turn out for in november. doesn't this, senator, go to the

epicenter that, yes, we need jobs, we need job training, we need more trade schools, we need better educated skills in some of the weaker parts of the labor force. we need all that. but the question isn't whether we need it, we all know we need it. it's how you get there. and doesn't this issue underscore that even if we assume, and i do, mostly, politicians have our best interests at heart, but they just don't have the ability to get these programs off the ground. they have to figure out a way to bring in the private sector. what's your thought? >> i think you're absolutely right. everybody in washington is well-intentioned. but ask yourself, why would we have 49 job training programs? you know, government is not very good at execution. and what you're seeing in the job training -- you know, it's just one of hundreds of programs where we have multiple duplications. we need to be held accountable to do the hard work. and quite frankly, the job

training programs through a subcommittee in the house have actually been reworked down to about seven, but it can't many cop come to the floor of the house yet and we have done nothing in the senate to address that. we have 650,000 good jobs available in america right now. but we don't have people matched up with a skills -- some are highly technical, but a lot of them aren't. >> you know, vice president joe biden has been on the tapes talking about how -- if it wasn't for the tea party, so much progress would be made, they've caused a stalemate. to me, this is exactly why many americans, you know, that did their duty, their civic duty, they picked people that see the world the way they do, and they put them in washington. i think that our vice president needs to read up on how the country and the constitution work. but what i'm really bringing up is, why don't you as a republican try to cut more of this fat and, heck with the response, heck with the notion

that you can't cut or that you're hurting the recovery or going to cause a recession. the money doesn't come in an effective -- it isn't used effectively. education is the same thing. why aren't the republicans and the fiscal conservatives more aggressive in dealing with these spending issues where we throw out money with good intentions and get nothing back? >> well, i think, first of all, you've got to look at the record. nobody has offered more amendments to cut spending than i have and eliminate duplication than i have, and reform programs. nobody has done more oversight on all of these programs. the tea party has got it right. we should be embarrassed about what we do here. we are incompetent to do what really needs to be done, because we lack a frame of reference. and i'm talking about the congress as a whole of how things really work in life. we throw money at things, and we don't oversight it. and you can see, government spending has gone up, the amount of oversight has gone down. and so the criticism is justly deserved. the point is, you've got to look at who is doing it.

there have been tons of amendments i've offered to eliminate this type of duplication. all of them rejected by the senate. get 34, 35 votes, 36 votes. but never pass the senate. because they don't want to lose one vote on somebody who is on a government program, whether it's an employment program through a jobs program or any other way. they don't want to offend the first voter, because getting re-elected is more important than doing what's best for the country. >> i know. it should be about serving the country. i think house of representatives senators should be picked like jury duty, you serve your time and you're gone. thanks for coming, senator, have a good day. >> you're welcome. >> thanks, rick santelli in chicago. negative economic data today but hopes around the idea of would-be deposit insurance and ltro, and ecb rate cut. we'll get the details when we come back. gined a vehicle that could adapt to changing road conditions. one that continually monitors and corrects for wheel slip.

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some chinks in the arrest more armor with the german economy. simon hobbs will tell us how important some of these numbers we got today are. >> it's poor. so the survey of german sentiment falling for the first time in seven months. the contraction in business activity accelerating now at its fastest pace in three years. and arguably, the summit yesterday carl, which really didn't achieve what it -- you know, okay, it's preparation for what they do at the ends of june. interestingly, the head of the

ecb, mario draghi today saying you must once and for all define its vision for the future. and that, of course, is a precursor potentially to europe further down the line. but it's not a bad day in europe. as we shut you out across the 27 nations of the eu, let's have a look at how the map looks. >> the european markets are closing now. >> so positive as you can see for most of europe today. saw a huge move, but on a lack of any good news from europe, we certainly -- or lack of good news from the summit, we've been able to pull the european forces higher. on a relatively quiet day, i just wanted to take the opportunity to show how how we have this interaction between the u.s. markets and what happens in europe. yesterday you got this very rapid climb back in the dow. over 150 points in, 90 minutes. call it 191 to the bottom. when the european traders come in the morning and they see the united states has cut its losses to that extent, they actually mimic as they do in asia almost immediately. so you can see, if we have a

look on the session charts here in europe today, how they immediately bolted higher at the open. but more broadly, we've put on gains throughout the session such as it is. 1.8% in the uk, as you can see, france is high, germany is higher. some of the banks have shifted, beaten down, no great shapes overall, but the likes of kvc, barclays, making some decent gains today. i've been on the data that carl highlights. obviously, the mood is really dour in europe today. and if you have a look at where we are, for example, on the german bomb market, again, the bomb market in germany continues to rally, flight to safety, you know the argument. so this is the ten-year. you've got fresh -- this is the ten-year yield on a 20-year chart. look, this is the 20-year chart. and you can see the way that we've -- we continue to track -- we are off the lows, i think 1.35 was the yields we have. people saying actually could the ten-year go below 1% in europe. interesting -- another thing i

wanted to mention, of course, if you're in the stock market, oftentimes -- and we've seen this on both sides of the atlantic, arguably today. utilities often behave a little bit like bonds, because they have that steady, domestic stream. and it's interesting that it's the bonds rally in europe today against some of these utilities also running -- seriously bum deal today, $3 billion to finance. drax, edf huge in france and united technologies in the uk. and we saw some of the utilities also slightly higher here, as well. they were the best-performing sector in the united states. >> yeah, interesting. "journal" has a piece about money managers like bill gross trying to arrange -- get their ducks in a row for something happening in europe and that chart is an amazing -- >> the euro, of course. the euro, with everybody piling in on the short side, finally, has had the big moves people for so long were hoping -- the shorts hoped and didn't deliver.

now the euro is really shifting. >> thanks, simon. let's get a check on the energy sector. sharon upperson on the nymex. >> what's going on with the euro, that's a big reason why we are looking at oil prices get a bounce today, along with the rest of the commodity sector. the euro stabilizing, the dollar retreating, and we're seeing commodities lifting here. oil prices also getting a bit of a lift, because a lot of traders said they didn't believe that the talks between iran and the u.n. security council in germany would come out to something positive. and, in fact, they do appear to have stalled with iran saying, hey, we want some negotiation from your part releasing us from the sanctions if we agree to tell you more about our nuclear plans. and, of course, the west is not going for that. so we're looking at higher oil prices here. we are also looking at gold getting a bit of a bounce, and it's gold's correlation with the euro that is now here the highest we have seen in months' time. we are looking at gold prices that technically traders say need to get above 1610 an ounce

in order to really reverse this short-term bear trend that we have seen. of course, they have held up pretty well that 1530 support level. also keep in mind that when it comes to what retail investors use to buy gold, the gld, other etfs, those holdings have remained steady and up a little bit from the peak we saw for gold prices last september. even though we have seen gold future prices drop about 20%. so, again, holding on to those etfs among the retail investor might be another reason why we could see gold futures prices hold their support levels, as well. back to you. >> all right, sharon, thank you very much. sharon epperson at the nasdaq. scott wapner with breaking news. scott? >> thank you so much. obviously over the last several days, there has been so much speculation about the fallout from the facebook ipo and what it could mean for the nasdaq. even amid reports that facebook may be considering a move to the new york stock exchange. here's what i can tell you.

cnbc learned that nasdaq executives are making an aggressive behind the scenes push to try and stem the damage from the ipo. a source can direct knowledge of nasdaq's efforts says executives have made dozens and dozens of phone calls over the past several days to bankers, financial sponsors, companies that have committed already to nasdaq, and those that are, can a possible listing there. the source says nasdaq officials are, quote, concerned about the possibility of facebook leaving for the new york stock exchange. and believe the fallout from the ipo could have lasting impact on its ability to lure companies to list on the exchange in the future. still, the source does say nasdaq execs admit they won't know the true impact for months. a lot of speculation, as well, over the last several days about ceo bob guy feld, whether he has the support of the board. i can tell you from my conversations he has internal support with the source telling me he has the support of the executive team. carl, a number of people here at

cnbc have reached out to board members of the nasdaq and have gotten no comment. i heard from one this morning who simply was referring me right back to nasdaq officials. so that's where we stand at this time. >> all right. that watch will continue, scott. thank you very much for bringing us a piece of the story moving further. gary, your thoughts? >> perfect timing for scott's report there, because what i had hoped to do at this time right now today was to say, okay, we're a week later. i've spoken to dozens of people inside morgan stanley over the last week and tried to sort of put together, what is a narrative, what is the major theme internally at the if i remember right now? and this is the major theme, it's basically this. in retrospect, we issued too many shares. in retrospect, we made prices too high. but at the end of the day, the message to the most important producers at that firm, the most important people at that firm, the message is, if it wasn't handled the way it was handled at the nasdaq, we would not be in the situation we are in today. now whether or not that is, in fact, the outcome when we look

at the six months from today, the message to the most important people at that firm is, yes, a bit of a mea culpa, but the nasdaq has exacerbated a negative situation 20 times worse than it would have been, everything else being equal. and that is simply -- at the end of the day, a distribution mechanism works when those people that are hired to distribute equities, fixed income, believe in what they are doing. and so that call is the message. it has to be generated internally. >> isn't it amazing we're spending so much trying to figure out whats are going to list, when ultimately what the company does in terms of earnings is more important. >> to switch at this stage would be -- >> it's an interesting narrative, yes. and remember, we had a big go-round yesterday. i talked to the nysc, they released a statement to me saying they are not in negotiations with facebook. there was a lot of discussions out there whether maybe lower-level people had been going back and forth.

i would not be surprised to hear that at all. i would anticipate that would happen. so i think what's very importance here is they don't need, as far as future ipos, they don't need to go out and make it part of the nyc's marketing program. it's in everybody's dna. that's a given. >> facebook has made tremendous blunders, as well, okay? number one, if i'm on the facebook board, i'm not worried about where i'm listing the stock right now, as bob points out. like, if i'm a board member and they suggest, let's have a board meeting tonight to discuss possibly relisting the stock on the new york stock exchange, my message to management as a board member is, go run the business. you know, that's not what we should be worried about. i still think, given everything that's come out in the last week in terms of the meetings, the private meetings that took place, facebook should have a publicly disseminated mid quarter update. i almost can't believe they have not come out and worked with the s.e.c. to say at this point -- >> what can we say? >> where do we stand? we're six weeks into the quarter. >> just to give an idea of the

fact, nobody knows how to value this company. look at the price targets. need ham had $40, s&p $30. $9.50 yesterday. >> what's the down side? i don't know. what is the down side? tell us if you are out there and you know what it is. what is the down side for them basically saying, this is what we think, this is what the quarter will look like in terms of revenues at this point. given everything that's happened in the week, it's crazy that they wouldn't come out with this disclosure. >> yeah. do you think there's a problem with the fact that analysts may have called people up and privately said things to them? >> you know, bob, i have listened to a lot of reporting, not just on this network, but other networks, as well, by people that claim to be experts in the syndicate ipo process. i must have attended 500 road shows in my career, probably had 500 one-on-ones. this is what happens. institutional sales people tell people that are pig syndicate deals what they think is going to happen. the reason this is a story is given the nature of the size of the transaction, if you don't

think that institutional sales people do this every day, then you don't know what the business is about. >> one last thing. if facebook came out to 27 different firms and said something materially different than was in the s1 that came out -- we all reported -- if they said something different, that's when i have a problem. if that happened. >> if facebook said it, yes. if the institutional sales people suggested it, that's a different story. >> yes. >> different story. >> bob, thanks for rolling with it today. bob pisani. when we come back, why facebook's biggest weakness may have nothing to do with its advertising problems. we'll reveal the social network's achilles' heel after this break. [ 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. ♪

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no-fee iras and more. come see why more investors are saying... i'm with scottrade. coming up in a few on the "fast money" halftime report, we look at investor mark cuban's fast trade on facebook. should you follow suit? hp is up sharply today as investors cheer its latest turn-around plan. one wall street analyst tells us why he's not impressed. and a money manager with $34 billion in assets is naming names for his best buys in the u.s. ask carl, we'll have much more on the report we just gave you a short time ago about the nasdaq and what they're doing bhiblehi the scenes to stem the fallout. >> scott and the news you brought us, in case you missed it, sources telling scott nasdaq officials are concerned about the possibility of facebook leaving for the new york stock exchan exchange. executives making dozens and dozens of phone calls, they say, over the past several days to bankers, financial sponsors and companies that have committed to the nasdaq, and are considering

a possible listing. this according to a source with direct knowledge of nasdaq efforts. if you work in silicon valley, there's a good chance you go to buck's diner for breakfast, also a good chance you're talking about that ipo debacle. our jane wells talked to the big wigs in the valley at the diner about their feelings toward the company. >> one week ago, silicon valley was on edge as facebook was about to price and go public, now on edge about facebook again, wondering about the fallout. >> oh, the facebook ipo is a disaster, absolute disaster. >> a place described by his colorful owner as the earthlinked mothership for the new jerusalem and the pancakes are good. we came to ask if the facebook ipo gives the valley a black eye. is it something they're talking about?

>> well, it was a dominant talk for weeks before and certainly the dominant talk now. and it's -- if i worked at morgan stanley, you know, i wouldn't want to claim that today. >> well, there's a last big egos around the table, i think, at that company and bankers. so there is plenty of blame to go around. >> i don't think it's a black eye at all. you cannot be here without feeling the excitement in the valley. not only around facebook, but around everything that's going on right now. and it's just a vibrant place to be. >> i have relatives overseas that were calling me to find out about the facebook ipo and there were all these -- i just think any time you hype something up that much, the expectation is just so high. it's very easy to dis -- >> this took us down a peg. this is not good. >> tell me what you really think. he calls this the most controversial silicon valley ipo since net scape's 17 years ago,

the opposite of facebook, shares more than doubled in price day one, ushering in the first dot-com boom. we'll see if facebook has a better finish. >> really good call for anyone trying to understand what's going on in the valley. jane, thanks so much, jane wells. facebook shares higher today but still under pressure as the social network struggles to find its footing. already has an achilles' heel that could threaten revenue streams. he says the relationship with zynga is driving people to other platforms. who will be the winners and losers? pj mcneilly joins us, the author of "early days, the market for social gaming and facebook's potential achilles heel." pj, good to talk to you this morning. >> thanks for having me. >> it's about developers, gaming, and apps. why would they be looking to flee facebook at this point? >> well, facebook right now

certainly has a marquis position. they have great reach. the economics right now from facebook aren't that strong for most developers. and right now, the -- presented pretty much an attitude to developers if you not name zynga. >> a lot of the discussion is about facebook's post ipo life. and there's some bulls out there who say they're going to be unveiling much richer platforms that will allow for much more interesting games that will keep users more engaged. do you not think that's going to happen? >> of well, they are certainly trying to roll out their own platform and their own app store, if you'll have it. but i think the competition right now for facebook is really starting to heat up. you have new players coming into this market. not google or amazon or even microsoft this fall. but i think will certainly give facebook some challenges over the next 12 months. we have seen this historically in the video game console cycle that you see new platforms come along and challenge the leader. facebook is the leader today and i think the challenge is definitely coming. >> pj, do you have any idea what the correlation is between

advertising, those that do the social online gaming, click on the ads and actually eventually buy through? is there any data that can support those are the gamers actually, you know, follow-through on the purchase? >> well, i mean, by and large, the conversion rates on those numbers have varied by the type of game it is, but not as a role-playing game or shooter game or puzzle game. so there is some data correlated by genre. but by platform, the highest click-through rates we've seen so far is really coming from people like apple, who -- where people are preinclined to spend money. the spend money on the handset and less so, for example, on android handset where they might have gotten it for free. >> you also think potential winners, activision, amazon. you want to walk through why? >> yeah, sure. if you look at the developer side of things, three companies are well-positioned on the publisher and developer side. first, if you look at zynga, i think either way, they're going to be getting paid here over the

next few years. whether or not it's through facebook or whether or not through zynga.com, or mobile. and by and large, those are higher margin dollars for them than they're getting from facebook. the second i'd put in there is really after at this vision. of all the traditional console companies out there, activision is the one that will make the first big splash in the free-to-play space and make the transition between platforms. call of duty will be the biggest franchise when it comes on to the console. you can likely see something from them as a free to play game on tablets and/or on mobile in the coming years. so from activision. so i like them here. and thirdly, there's a company that most people haven't heard of called ca bam out of san francisco, despite having a great name, one of the top grossing apps on the ipad store, iphone store, and if you look at companies, it will be the target for takeout or ipo. definitely put kabam at the top of the list. >> interesting. i was going to say, finally, you say social game something more

likely going to be a 12 or 24-month cycle, not a five-year cycle. are you saying that we're all going to get tired of this? that it's going to end up being a fad of sorts? >> no, it's not so much that it's going to be a fad. it's more along the lines there's new platforms coming. you have some big players. you have amazon pushing the kindle fire as a low-priced alternative and they'll have new versions of the kindle fire over the next 12-plus months. you have microsoft coming down the pike this fall, with the windows 8 tablet. that's going to be a huge splash and give gamers a platform to game on. new platforms coming different from a hard year cycle. >> pj mcneilly, digital world research. thanks for your time. >> thanks for having me. >> a lot more "squawk on the street" is coming up right after this break. [ female announcer ] the next generation of investing technology

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welcome back to "squawk on the street." take a look at orange juice futures, up 7.5% with help from a weaker dollar. the market, of course, keeping an eye on storm activity ahead of the official start of the hurricane season. and that's on june 1st. nooa and the national weather service estimating 9 to 15-named storms and four to eight hurricanes. carl? >> wheat prices today, oat prices, a lot of action in the commodities on that angle.

courtney, thank you very much. mark zuckerberg getting the star treatment from "saturday night live's" andy samberg when the actor did a pretty spot-on impression of him. >> in fact, i recently completed the harvard trifecta, start your own company, have a movie made about you and mariano asian doctor. trifec trifecta! so everyone out there be sure to upgrade to timeline and lay off the pinocchio's pizza ha ha, i went to harvard. >> you know you've made it when comedians are doing impressions. for a hot dog cart. my mother said, "well, maybe we ought to buy this hot dog cart and set it up someplace." so my parents went to bank of america. they met with the branch manager and they said, "look, we've got this little hot dog cart, and it's on a really good corner. let's see if we can buy the property." and the branch manager said, "all right, i will take a chance with the two of you."

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until it's not just lines you see... it's the world. carl quintanilla, living lavita nasdaq. what's happening? >> where does the time go? i think that was back in 2000 or so, mark haines trying to pronounce my name, and in the end, just said living lavita loca, one of his great gifts giving you a moniker. >> i was helmet, sproket, helmet or spike. and when i look at the clip, carl, if they had played a clip,

literally after the merger with cnbc and fnn, that first week "squawk box" was on the air, i yes, had a lot more hair. but you had a lot of hair too and still have a lot of hair. >> rick, you worked with him as well and all those mornings on "squawk box." thoughts from you today, a year after his passing. >> they say imitation is the highest form of flattery and whether it was wearing the american flag in honor of our great military and how they protect us around the world on fridays, or the idea of being hard-hitting, maybe a bit cynical, never letting any guest off easy, i learned a lot from mark haines. he was a bit of a curmudgeon, but that's what we really loved about him. i still miss him. i was on first time with him in late '94 as a guest and he made me feel quite comfortable. he was a shining star for our channel and for the industry. >> that was a live picture right there of a plaque that actually just is across the way here on the floor of the nysc. >> staircase.

>> we walk past it several times a day. >> every time you go up and down, that's who you see. and every day i think about him and i miss the humor. i really miss the humor, because doing what we do, that kind of, you know -- it just gets you through it. adds so much more. in particular -- in particular, i got my green card, as you know, two weeks ago. and i would have -- i mean, haynes would have loved that. he would have lapped that up. because he was -- before he died, he was appalled in this mock horror that captain america should actually be a brit in the film. that would have lasted for days and it would have been very, very funny. >> when i walk past that picture that we just showed, what i hear mark say to me every time we go up the stairs there, don't screw it up, don't mess it up. because my memory was that first week when i got on the set with him and i said, what are we supposed to do now? and he says i have no idea, just don't screw it up. and we did. and we just sort of winged it and that's exactly what i hear every day. don't screw it up. we try not to. >> that's the staircase that leads to our work space. and, again, i think the fact we