and our last guest did point out some of the interesting metrics that are a possible measure at this point. >> don't underestimate the damage this has done to the retail community gld they finally got into a hot ipo -- >> people that you and i know have been in the business for 20, 30 years. >> happy weekend, everybody. see you on monday. ♪ >> what a wild ride it has been. welcome to "squawk on the street." jim cramer is off today. let's take a look at how we are shaping up on this friday. consumer data due out later this hour. the nasdaq looking to eke out a gain here. the market is giving up earlier gains in the session. now in the red on worries about potential greek exit from the

euro zone. >> a quick road map today. does it feel like the s&p has been up every day this week? well, it has. on track for the best week in ten. some say it's due for a balance. but the words of one analyst are uniformly negative. >> we're closely following carl's icon of chesapeake buying shares. how much could carl be accumulating? >> no thanks to millions of dollars in dividends. we've got all the details on that story. we've got to start first on this final trading day before the holiday weekend. the bulls hoping for a summer rally. so far, the dow is up 2.5% while the s&p is up 5%. today, belgium's deputy prime

minister warning it would be a great error not to prepare for a greek exit from the euro zone. this morning, we do have crude oil prices. just about flat gold is hired at $3 an houns here. it could be quiet trading, but there's still a lot of worries about europe. >> we could have said that a month ago, a week ago, two years ago. time is starting to run out. i know we've probably said that many times before. but we had the greek elections only a few weeks away. melissa, in terms of some of the people i speak to who have been following so closely for so long, they are start k to believe that we are getting short on time. that germany is finally going to have to make a decision. are we all in or not? >> and that greek exit will certainly become much clearer as a real possibility once those greek elections happen. it means that the timeline, truly, is shorter.

>> and the volatility in the back half of almost every trading session this week has been driven by a headline here. the market is so much in need of some sort of real headline about what's really going to happen. more coming out in the past few minutes about the bank crisis. and on the friday before a long weekend, it's going to be even more volatile, likely. >> and spain one of our keys about ten-year. again, catalonia saying it may want additional aid. we do seem to be getting to a crucial point while merkel and germany continues to say no, we can't do constitutional euro bonds and no we can't do this or that. there is going to have to be a decision made at some point.

if there is a deposit guarantee, there certainly would seem to be a real positive response possible from the market. >> the euro down to about 125.08. it had bounced off a low for the month. it hasn't quite arrived for the euro. we are going into a large holiday weekend. you don't want to be caught on monday with the positions on when the europeans are open as normal. >> s&p went back to its 150 day moving average. it's leading to some buying coming in here. it hasn't been below that level since december. on the other hand, technicians

saying conditions are uniformly negative. and that the best case is sideways training through the summer. if you think valuations are low, those arguments not enough to offset what could happen in europe. >> right. we all followed citi closely and started with percentages on a greek exit. we're going to be dealing with this certainly for the next few weeks, if not through the summer. i think the fear of many market participants is it's going to be a replay of last summer, if not the summer before where volatility is the watch word. and where every headline is parsed and we're still not quite sure where we stand. >> it has been one week since facebook went public and the drama continues. morgan stanly will be adjusting thousands of trades. no trades from facebook's first

day will be failed more than $42.99 a share. those details come from a conference call of brokers. reuters says it's working with thousands of clients affected by trading issues. we're going to watch closely the fall out from all of that, those relationships with retail investers. and then, of course, sort of the week in reviews that we're going to be seeing over the weekend end. i think it shows you what a relatively new phenomenon retail investing is in this country. it's only been going on in this country for a few decades and it's still a work in progress.

i was vaguely aware of that. we've seen this for many years now. and i don't think that lesson is lost on them in many ways when it comes to the stock market. >> we have to wonder, oh, well, how much the retailer actually participated. could they actually have gotten that burned. the daily average retail trades for that day, a friday. 20-30% of the retail trades that took place on friday. and normally, it's 2-3%. >> there were a lot of people investing, trading that day. so you think the people who are touched by the facebook fall out are a percentage of that, that's a pretty big chunk.

>> nick usually writes really smartening up in morning. the 10 ipo commandments that facebook violated. maintain a consistent improvement and narrative about the business. make management available to investors. nope. treat the ipo as the first date, assuming you're going to be tokt for a while. >> and listen, the number one lesson is man, if you're going to increase size and price, you better be sure -- >> another is manage your client. >> yeah, we're going to stick with the original price range. the stock seems to have found a level right around 32, 33. what do you think? >> it looks like it for now. tuesday is a day when options trading will start.

people who are looking to assure facebook there's a more efficient way, we'll see when it settles. >> the one thing we should keep in mind on that -- on that lock-up is you have investor who is got in on the secondary market who may actually have an average price that is right around 32, 33 or perhaps it's 30. they may not be inclined to sell if the stock was 45. and then the quarter. this will become a fundamental story at some point. we'll see how the quarter goes as a public company.

they knew that they didn't have the quarter to deliver. that is a conspiracy theory out there. that is definitely circulating as to whether or not facebook has the numbers to support anything close to the original ipo valuation. >> we'll talk to mark holbert later this morning who has a report out today about why facebook should trade for $13.80. >> 13, wow. let's get some more on this facebook fall out and how to play the stock after the wild first week of trading. daniel, it's good to speak with you. at what point would you say to retail investers out there the stock looks like it's going to floor and maybe it's time to step in. >> i think a lot of long term potential investors are stepping in here.

i think there's a lot of unfundamental dynamics going on. you have issues of figuring what the price is. you have the options. you have the high relative short interest ratio early in the trading 6789d i think there's a lot of moving parts. the biggest thing that happened from a fundamental standpoint is the filing warning on revenues. so i think that that's the point where i said, and we took our numbers down after that came out and we said we think it ought to be pricing in the low end. and then they raised the share. i think that's going to make sense. i'd rather wait for the quarter to get through. there's still a chance if i was a sales guy, i'd have options in the 30s. i think it's a chance to have a

surprise in the quarter. i think there's too much uncertainty. if facebook is going to take over digital advertising, i think there's a really good chance that they could. they have global user base, targeting, i think it's going to happen. you don't necessarily need to be there for day one. google went from a hundred to 600. you could have bought it at 200 going to 600. i think there's an opportunity to sit back, wait, see how the fundamentals go. i'd rather be looking at things like apple and google and have better growth prospects and see how it plays out. >> do you think that management should come out when they're up and able to speak freely to the media and to the public? should they come out? can they do any sort of damage control at this point? >> i think the best thing any management team can do is to not

comment on their stock price. to comment on their fundamentals and be pushing their workers towards improving the business. remember, they're actually in a post ipo quiet period for 25 days after the ipo. and then, when that closes, they'll probably go into another quiet period into the court close. this has been a discussion at this table for a while. what prevents them from asking for permission to file another amended statement? or, the way as gary put it the other day, if a manufacturer had a huge fire, you would see permission to make some disclosure in the middle of the quiet period. >> well, i think that depends on when you know what the quarter is going to be.

they actually didn't say what the quarter was going to be. i think when the quarter is closed, that's really the only point that they can say how the quarter is doing. i think they should be focusing on the business. and i think that's what they've been doing. i think as investors, if you want to believe in very long term, you have to sit back and say i want to take the new york term volatility. you have the options issues, you have the short interest, you have the 91 day lock-up. as i said, i think in the long term story, i like the business. they have fantastic margins. i think they have a tremendous opportunity. if earnings go up, then the price comes down. the price doesn't have to come down for me to be excited. if third quarter guidance is

very strong, you know, then that ratio comes down. i expect that politics will play a favorite role on facebook this cycle. >> we got it. thanks a lot for join us. >> black rock is increasing from 4 million shares to a million shares. joining us on the cnbc newsline with more on the chesapeake story. >> good morning guys, how are you. so chesapeake, last night, had two sort of bullish signals that came out. one was more detailed in a story that david brought me first about the rumor is that he has about 4% of the outstanding shares, which would probably put him pretty comfortably in the top five.

secondarily, i wrote the news that black rock appears to be increasing. i just want to point to some data calls that i had yesterday. they have, as a firm, 15 million shares. but the piece that's interesting is they have one active investor as opposed to the index funds who had about 1 million shares. and in the last ten days, has been aggressively buying. so as of the last filing, they had about 2.6%. now, it looks like it could be 5%, maybe more sort of depending on what the index fund is. >> kate, you know, a number of important things coming up for chesapeake. and i've got a little more insight that i can share on car lal. >> we'll be there. >> good, i'm glad. we've got southeastern in terms of all shareholders.

they're potentially moving ahead with asset sales. are we getting a sense whether it's the data room or the stories about the colorado assets on the block? >> that's right, david, yes. so there's news this morning that the d.j. bay son are going to be part of the efrt. the vieb seems to be pretty positive. they've been known for somewhat exotic accounting and overly high compensation. at the same time, there's not much dispute that they have real asset and that they have market value. the question is what happened with natural gas prices. and that's the company's core business. they're the number two in the

country after exxon. they're trying to move into oil. of course, now, we're seeing a downdraft in oil prices. all right, well, kate, we'll be watching it closely. the stock does look like it's close this morning. and, you know, i can just -- in terms of icon, you know, again, what i'm hearing is from a -- he may be as close to 4.9%. he may still be building a position. it will be interesting. you never know with carl what his strategy may be. >> that and you've got to think he's talking to southeastern with a 13.6% stake in the company. if he's going at it alone for his own completely separate agenda, that's not going to be very successful.

>> they usually do need to file if they're working together. the other thing is the bonds that are out there. a lot of people want to purchase it through the bonds. but they've maintained price since the issue. >> when we come back, shares of facebook may be overvalued. we'll find out why some say they should be trading at $13.80 a share. a modest decline this morning as the s&p is looking for its best week in ten.

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this just out. there's a look at the euro. it's fallen below 125 just briefly. we'll keep a close eye on that even as some say it is not as effective as it could have been. >> and this is the reversal that happened for the first time in four days for some time. but here they are. >> and speaking of currencies, the u.s. has once again declined to claim china a currency manipulator. and a decline in china's current account surplus, although it does say that currency remains specifically under value. had a profit from the online travel ral lee. let's take a ride once more on

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let's solve this. let's go to cnbc's market analyst. gordon, good to see you. >> well, they say sell in may and go away. i don't think they could have ever been truer than this month. certainly stocks down here. it's been a pretty brutal month.

you know, we don't see much today. the guys that went away played it right. and i think a lot of guys are hiding today. but you know what, there may be some opportunity here showing up at some point and seeing oil stabilize and stocks coming into play a liltle bit. everybody is looking over at europe. what's going to happen over there? and until we get some sort of clarity there -- >> man, are we really going to go through this all over again? another summer like last and the one before that? >> this is starting to look like last year. it's a question of who's going to blink first. which way are we heading? so we have a lot of questions. i hope we can find some answers. >> opening bell a few moments away as we wrap up friday here ahead of a long weekend.

a lot more "squawk on the street" in just a moment.

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and here we go, the last trading session of the week of a three-day holiday weekend. the opening bell here at the big board. the president of columbia. ofx, memorial day weekend, that is also a lot of servicemen and women around the area here in new york city. >> memorial day, a nice opportunity to pause and just think about people who have sacrificed to give us the freedom that is we have. and being in the middle of the capital markets, even though they're not perfect, pretty good when you compare it to the rest of the world. >> no doubt about it. we can criticize the facebook ipo all we want. but as we said on friday, it's still probably the only place you could have a facebook from

its inception to its ability to raise money from so many different areas. jim had a bunch of sailors and marines in the audience. really excited to see them all. he doesn't have a lot of reporters on. but when you're on, that is a real street. and, of course, looked great last night. >> there's some data on how fridays before memorial days generally trade. since 2000, 2 friday before the holiday is up only 42% of the time. so we're mostly down on this friday. and, usually, eight of the last 12 years there's been a selloff from noon to the close with an average declie of about 2.2%.

there are a couple of notables here. yesterday, had a very good day after better-than-expected earnings. talked about the quarter and her intentions and how she's going to use the money from the work force reductions. the stock sort of tailed off as the day went on. it seems to be following on the downside now this morning. of course, it's been such a week where we heard from dell and we started to question what was going on in the pc business. but then some signs for pack ard that were a little bit more positive than might have been anticipated. and so much of it does come back

still to the situation in europe. >> well, interestingly, you know, claims this week were back to trend. and that's given some people a little bit of hope. we'll see in a couple minutes, about 175. there's not terrible talk about the labor market. and then gas prices are back at 368. some are back at the middle of june. and down 43 cents from the record in '08. the summer drive does officially begin on monday? >> yes, and hurricane season, too. >> yes, absolutely. and one of the tail aims for consumers of fallen gas price, and also for the airlines. we saw the index yesterday raising its ratings on a lot of airlines.

and they say since february, jet sales prices have come down. we're watching tiffany continuing its declines from yesterday's session. again, yesterday, coming out and keeping it within the retail space. this is where they've got a downgrade this morning. it was a valuation call. the rating right now is a hold. it was a buy back in december. a broker is positive overall with the best growth prospects. it has the highest valuation. we are seeing shares come down just a touch on this. >> yeah, it's -- chesapeake was at a ubs conference recently. i believe it was yesterday.

that raised a lot of red flags because $3 is a sub capital cost of return. so they're not going to be making money. so if they're not going to make the money, there must be liquidity concerns. >> and they did tap the billion bridge loan. i know plenty of managers who schismly won't get involved with the shares because they worry about the company's ceo. one would expect they might want to put a chairman in place. that search continues at this point. but some investors do want to play through bonds. and, yet, those bonds have not come off in price at all really since their issuance. that was a big issue.

one last sfok to watch. cme is up by 1.8%. it makes it more avaluable to a broader range of investors. >> the euro broke 125 very briefly. that's a big issue. that's a big strike price. it looks like a lot of people trying to defend that right now. we had a headline out there from reuters. it looks like that's when the euro went to the downside. >> it's been a horrible month, but not really a bad week. the s&p is up about 2% this week. everybody else is basically down.

whether you look at spain, china, brazil, again, down. their market has been doing terrible. the united states is still out performing on a relative basis. one story really caught my eye, guys, this morning. nasdaq is going to be introducing fees for traders who send large cancellation orders. this is a shot across the bowl to high frequency holders. not everybody, of course, trying to blame high frequency traders. this has been under consideration for a long, long time as a way to step some of the enormous amounts of exchanges. when they figure out they cannot

make any money, they cancel the orders and in some cases, they're sending out simply requests to sniff out orders from other people to buy and sell. they're trying to find a way to mute this trafficking down. it's not going to make a lot of difference right now. most are going to fall below the threshold. it's a start. it's a shot across to these high frequency traders. by the way, not initiating any of these fees. but i know it's certainly under consideration. >> coming up, how far can they take your portfolio, as we head to break. actually, before we go to break, let's check in with rick. >> well, thank you. you know, if you look a couple of charts of ten-year note yields, it's no surprise. but this is going to be potentially the 10th session in a row.

wo weeks of trading. if you look at the euro, we're closing in. is it a green back story? not really. it's a euro story. oslo stock exchange. they're going to initiate fees for fie frequency and i'll go trading. this is very interesting and, of course, it's split right down the middle as to whether it's a good idea. united technologies. they had just less than $10 billion corporate offer yesterday. once again, balance sheets, just to clean them up, that he're certainly taking advantage of these low rates.

>> thank you, rick. let's check out with sharon. >> hey, melissa. traders are falling very closely. of course breaking below that 125 level is significant. but more significant is the popular reason behind it. that lets you know how bad problems are for spain and perhaps for the rest of the euro zone. but what may be helping is that there's traces of uranium higher than they first expected. and enough that perhaps might be enough to create nuclear weapons. this is one report that was out this morning. traders say that may be supporting prices. >> they're going to meet again later this month. we're going to keep our eye on what's happening with gold.

gold pliess are not tracking the euro as closely. perhaps some traders say they have found a bottom near that 1530 level. look at the central bank buying of gold. that may be something that helps to support gold prices. carl? >> sharon, thank you very much. i want to talk about jpm this morning. something we have not talked about a lot. the chief investment office having invested in light square as an ill sfrags of some of the riskier bets. >> i believe there was an opportunity to potentially take control of that failed wireless net wok, at least as of now. yeah, interesting. that does seem to have perhaps

morphed. risk taker right under the eyes of jamie dimon. >> and, of course, facebook, as we mentioned today, the one week before that stock began trading publicly. already, mark zuckerberg abepee to have gotten married. there's rumors that it's already considering switching changes. with the week that he has had, the one thing he'll remember worst will actually be blank. >> gl that's tough. you talk about sensory overload. >> yeah, he became a billionaire, he became a married man. >> he was already a billionaire. and by the way, do you really think he's worried at all about what's happened to the stock? he's focused on running his

business. >> and he's not even focused on profit maximizing. >> the most important decision you make in your life is who you're going to marry. that's a big one. >> coming up, take a look at this chart. priceline, an amazing run. a lot of these online travel stocks, just rips here. we've got top analysts. take a look at this morning's early movers here on wall street. this man is about to be the millionth customer.

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as we gear up for the long holiday weekend, we want to zero in on some online travel stocks. troop advisor leading the pact followed by expedia.

>> i sthi it's interesting -- the growth, you might automatically think of them. but these hotel bookings, that's the engine. >> it's a huge business. it's 3$350 billion market worldwide. >> yeah, highly fragmented. of the three, who has the most leverage in terms of capitalizing on that industry? >> price line is the leader. their hotel nights grew 47% in the first quarter. they are strongest in europe. expectations are a little bit higher with them and they are more exposed to the european economy. we actually like expedia a lot.

the company was underappreciated. i think people didn't realize that expedia was emerging as the two key players. now, guidance to you was a little bit lighter than expectations because of the weakening. here we are sitting with 2246 month lows and there's increased speculation about a greek exit and therefore, it would have to be very tumultuous. how do you factor that into the model? >> well, you know, we do take into account currency. i think you see that priceline has come off a bit off its highs because of that. that being said, the data was actually pretty good. it's something we're going to keep an eye on. we're really trying to take a longer term view.

with a weaker economy, it would impact businesses. but that said, it's going to do a little bit more price come parsons online. assuming it continues, how narrow can they get? >> well, i think the key here, now, for expedia now that investors have started to appreciate it more is going to be a margin expansion. right now, they're generating a lot less free cash flow per each hotel booked compared to priceline. >> interesting.

kevin, have a good one. thanks for coming on. when we come back, the last key economic report of the week. we'll get some breaking news on consumer sentiment. that's coming up at the top of the hour. as we go to break, a look at today's biggest losers on the s&p 500. [ tires squeal, engine revs ] ♪ ♪ ♪ [ male announcer ] not everything powerful has to guzzle fuel. the 2012 e-class bluetec from mercedes-benz. see your authorized mercedes-benz dealer

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traffic isn't too bad in miami so far. opening at a two-year high here. it's up by a fraction of a percent. trading higher for market performance. and after a disappointing earnings removed from the focus list citing revenue concerns. >> so we'll mention talbots this morning. a very small company but one that many people know. 516 stores around the country. canada looked like it was going to get sold.

they said we're not ready to execute a tranks action right now. the stock is down 35%. >> they will continue to be focused on its business plan. not a good day for the shareholders. >> just a brief note on retail. nice to see j. crew last night. but save rit segment? save rit moment? for me, i think it's drexler and his home out on rhode island? >> you know, for me, it's always interesting to see the underworkings of a business. your documentary proceeded j. crew and i watched it last night. i learned a great deal about j. crew. but what drexler was willing to offer is a little bit of his inner life.

>> he bent to the apartment he grew up in and that was the most part of reporting it. that's not often somewhere you get to go. and then the quality of the people you spoke to about him, tim cook -- or ryan john son, i should say. >> right. not bad. all of them have nothing but good things to say. >> this is at least a bright spot to end the holiday weekend. the number is huge. it's 79.3. now, i'll tell you, that is the strongest number. get this, since october of '07, according to my records when the number was 80.9. so that is amazing. that was the mid month read. this is may final.

this is really against a 76.4, which the final for april. so, you know, it's kind of the same in europe we've seen some better confidence numbers in france. a lot of this could be the drop in gasoline prices. >> not too much reaction here. amazing, the best level since october, 2007. >> did you see germany consumer confidence was steady in may? or just by these headlines. >> these surveys are not much of anything. always hard to say. but the market perhaps taking a little bit of time. financials did turn around, i noticed a bit. but that could be as much lack of headlines out of europe as anything else. we're watching morgan stanley trying to maintain that $13 level.

>> you know, we should be confident -- our ceo, i don't know if you saw this ap survey. they only looked at guys and women who have been at the job for two or more years. up 6% last year to $9.6 million since they began tracking in '06. >> when we come back, facebook says research shows the stock should be worth 13.80. we'll explain when squawk on the street comes right back. ♪

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to manage their global publications. so they can focus on building amazing bikes. with xerox, you're ready for real business. welcome back to squawk on the street. facebook investors are fighting back. we'll talk to a retail investor who claims to file against his broker for confusing involment in facebook shares. >> yes, see why he thinks mom and pop investors are too scared to buy into this market.

and why facebook's fair price should be $13.80. we'll explain the data behind that target. >> the casino open today. we'll give you an inside look with the ceo. all of that and much more coming up in the next hour. >> good morning. fidelity investments said to be working with thousands of brokerage clients. investors are taking action. george is a retail investor from kentucky. he claims to file claims against both fidelity and the nasdaq. george, good morning to you. >> what was your story here? >> i participated in the ipo through fidelity. i waited for the allocation.

i didn't get any. so i decided to purchase the shares with the open market. and i entered at 11.27. i didn't like what i saw the stock doing. >> i noticed that 233 p.m., that they were holding at 40 clars. . i've taken the position at 11/26 and then they had consideration before execution. so fidelity says that it's working with thousands of people like you. where are you now in those negotiations? >> i'm still receiving the same

story from fidelity that they claim the assistant worker was working. so they're pointing the finger to nasdaq and saying if they were done correctly, when i call monday, following the fiasco, they were not able to tell me when on the execution of the shares they were purchasing and put it in my account. >> so how do you feel now, george? how do you feel and what are you going to do? >> well, i feel like the ipo is in such a way that they have put their stock very close to the age of wetness.

>> okay, george, stay with us. stay informed. let us know how you get informed. let's not forget came through one week ago today. we reached out to both fidelity and the nasdaq. fidelity tells cnbc a result of nasdaq through friday, may 18th. many ferms across the industry experience delays. we've been working with regulators, they say. and nasdaq to represent all of our customer's trading issues. and will continue to do so. we take our customers concerns seriously and are advocating on their behalf for a fair outcome. nasdaq is not commenting on this specific matter. >> thank you, simon.

the s&p 500 looking for the best week in ten. joining us now, ceo of united capital advisors. chairman and cio of investments. guys, great to see you. are we looking at a repeat of last year at this point? >> and the year before. so we've had both years at 16% decline right around this time with almost the same story. so i think, yes, we're seeing a repeat. i think what we're going to see again is the europeans come up with another hail mary pass that still won't work. the fundamental problem is there's still no growth in europe and they haven't figured out how to create growth. at this point, if you believe you're in for some sort of a repeat, when do can you know when to get in? >> number one, obviously, when

evaluations come down. and, number two, based on specific objections. >> so you're looking at dividend investors. >> it could be fixed income. whatever is going to give us visibility. >> you're getting paid, but you're geding paid at a price because your capital is going down? >> well, i think what you have to remember, if you go back to 1945, this period of time, april to october, if you put a hundred dollars in, you'd have 199 dplars after 60 years. the other months, you'd be up to $7.5. you don't trade it. >> so you want to get in now for that period later obama. obama.

>> how do the elections play into this and the impact, therefore, on gdp? >> it's a major issue. we have a spring in the u.s. where everything wants to do well. >> if things go well and if the weights come off, there's a lot of good things happening in the u.s. so we need to start employing capital as opportunities prept themselves. f for us, are they going to punt again? that changes everything. if you're going to invest in dividends, they need to be flexible dividend companies. >> let's say you want a dividend payer, but you want more exposure. so how do you make that choice. >> what you can do is fund ways to get income from that if you like that company.

or you focus on primarily benefitting from the u.s. >> the average person would say get the global brands that pay dividends and have flexibility. you're still getting a three or four% yield. >> but at the same time, you don't want too much exposure to europe. when you're taking a look at global brands, global europe. >> not necessarily. they get so much growth from the market. so coca-cola, for example, 20% of the income is from europe. all of the growth comes from the emerging market. so you have to look at investing in way that is you've got yield and growth. >> it's the only place with consistent growth. if the government gets out of the way, the u.s. is just waiting. and the consumer, as we saw today.

>> when we come back, fall out from what one executive calls the lost culture. also ahead, meet the ceo of rebel, the resort that many say is atlantic city's best hope for survival. a lot more squawk on the street is back in just a moment. ♪ ♪ [ male announcer ] aggressive styling. a more fuel-efficient turbocharged engine. and a completely redesigned interior. ♪ the 2012 c-class with over 2,000 refinements. it's amazing...inside and out. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services.

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welcome back to "squawk on the street." take a look at shares of all of the different mat res makers. all higher after analysts are making some positive comments on april sales. apparently, they were up 14.5%. so someone out there is buying some new mattresses. >> jp morgan is cracking and it may not be the only one. shares of the bank are on track for the worst calendar month. could this be the sign of a bigger problem? author of stewardship, lessons

learned from the lost culture of wall street. he joins us here this morning in a cnbc exclusive. john, always good to have you. a week after facebook. is that going to have long term negative consequences? >> i don't think specifically the facebook ipo is going to have any direct impact. it's just the latest in a series of snafus that have caused retail investors to caution whether the markets and financial institutions are safe places. >> your view is they left, right, and they really haven't come back which, judging from volume is true. but every time there is a chance they might, and facebook might have been that opportunity, there's another reason for them not to trust? that's exactly right. we've been following it up almost quarterly with a major event.

we had the flash crash and then we had the american u.s. treasury debt, default scare, sovereign debt scare and now we've had jp morgan and facebook. last friday, they were technology issues. or is it a combination of the two? >> i think that's right. it's the technical issue that's been as much concern as anything. the fact that people were flying behind and had to wait over the weekend, that should be table stakes for a financial market as large and liquid as ours. >> i'm trying to understand that you haven't sited anything i can understand as to what's broken and what can be fixed.

the culture ought to be abouts when we do what we were put on earth to do, we connect people who have money with people who can deploy capital. we are a means to a greater end, the greater end being get the economy move iing the problem i we've got away from that client focus when it came to the business models of major financial institutions and started focusing on becoming an end unto ourselves. making money with our capital for ourselves. those were the activity that got us in trouble. the closer we get to a client business model, the better the culture will be. >> are you proud of the way the street has reacted in light of

facebook? do you think it's been an appropriate response that we've seen? if you make a mistake, that is actually one of your best tunts to build brand and confidence. and i am proud of the way our firm and other firms have responded, in many cases, working through trade by trid by trade trying to get satisfaction for retail investors. still work to be done, but so far, so good. do you also agree with how the nasdaq has responded? do you think that was appropriate? >> i think, at this point, everybody is responding in an appropriate way to what was a very unfortunate situation. >> are banks allowed to make a

mistake? did people make too much of this loss? >> i think this whole jp morgan incident was totally overblown. it didn't threaten the survival of jp morgan. it certainly wasn't a systemic event. people say why didn't regulators catch this. i'm glad they dbt. they doent talk about the people that made money. and if it was a hedge in part, it was hedging non-mark-to-mark assets. what you're seeing is the market-market loss on a securities portfolio. >> there's so much to say. when you say the system was

broken, it implies it was mended. there used to be insider trader on markets. as far as jp morgan is concerned, he's actually overblown in many instances on how it affects and the share prices come down. but there is a far bigger issue that they are playing with weapons of mass destruction. it should actually be regulated, put on exchanges and collateralized. now, pushing back from that on the basis it can't afford i. >> that's not true. i chaired the industry that supported that very division of dodd-frank. but here's the point. for financial institutions to do what they're supposed to do, they take risks.

to prevent it from become systemic -- >> i understand that. so that we do not have systemic risk in the area in which jp morgan made its mistakes. >> absolutely. >> john, thanks for coming up. >> appreciate it. coming up, a unique perspective here. mark holbert says a stock should be traded at $13.80. find out why. [ male announcer ] the inspiring story

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look at these live shots taken. traffic on facebook shares, not so good. stock is already down more than 14% from the ipo. there is a case out there this morning that it is still overvalued and should actually be trading at $13.80. the editor of the financial digest. always good to have you. >> you're siting some research to jay ritter, a well known expert on ipos out of the university of florida. there's a couple steps here. one metric leads us to a price of $23 and change. what's that? >> that's a price five years

down the road which would be at about 30%. so my point is even if that's accurate and it's bad enough, you have to promise to return to investors if they know they're going to get a 30% loss. do you back out with an 11% return? you might assume that they need an even higher return because of their risk. you come back with 13.80, it's what you have to provide now to be at 23 and change. you also look at the avenue of the regular company. obviously, a characterization is you have to make a number of assumptions and people could easily say and i perfect le admit that's a good comeback. there's garbage in, gar gaj out.

what's the revenue growth? by assuming that facebook is going to be able to grow as fast as the average ipo, there's many people who think that's already too optimistic. let's assume even over average growth, you still come up with that calculation, which suggests a $13.80 price is what it should be trading today. >> would you say one difference is that facebook has been traded on a secondary exchange for quite some time. so therefore, it's a little bit different. >> well, yes. that's always something worth looking at. there's a million things to look at. another one, though, that works just the other way is that most of those companies that went

public during the '96, 2010 period actually came much closer. so they're 350er yods of most dynamic growth came earlier. in one sense, you could argue facebook has been through that period of time that would be able to produce that kind of dynamic revenue growth. so that time, by assuming, i'm too optimistic. >> is your your verse here all ipos or specifically technology related ipos? this is a study of all ipos over that period of time. one could parse it and slice it and dice it. i want to stress there are a million assumptions that have to go in.

i think what i would say to an investor is the burden of proof is to come up with why working out average growth rates for the last 50 years is unreasonable applying to a company that's already well along its growth cycle and is so big that maintaining growth rates at that pace is going to be very difficult indeed. >> i can't let you go without talking some broader markts. it's only had four updates this month. >> i look at sentiment, in particular. it turns out that the sentiment among the market timers already suggest that there's a very substantial wall of worries. people are drawing analogies between the market of 2010 and 2011. the last two springs.

it turns out both of those periods saw a lot of excessive bullish bs. i'm not seeing anything like that. if anything, the sentiment is painting a picture closer to the bottom. >> so you do not see this as an echo of the past two springs, necessarily? >> well, from a sentiment point of view, no, i do not. >> mark, appreciate the guidance cht fascinating stuff on facebook and the debate will continue. have a great weekend. >> hey, you, too, thanks, bye. >> coming up on the show, we'll look at whether the germans could possibly be moving on in two separate ways. and we'll talk about the euro. which way will you make money now staying with us. ♪ ♪ here we are, me and you ♪ on the road ♪ and we know that it goes on and on ♪

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we are remarkably flat which to many, would be a relief since the s&p a month today is down 6%. it's true in europe. obviously, people not wanting to take presumably risk for fear of what might happen on the other side ovt atlantic. let's look at the breath of the nonmove. over at nasdaq, again, relatively even. let's head over for likely to trade.

he joins us now live from the cme. well, i mean, i can't think of a good reason where i'd want to go long or short over this weekend. we're seeing all kinds of possible risks over the weekend. that's why we're seeing this run-up in bonds. you'd expect the fix into a long weekend which shows you how worried the market is about what could potentially happen over the weekend and why there's really little volume and little price action. i would really want to go long or short into this free-day weekend. so you just take all bets off the table? you're not going to make much money with that strategy. >> no, you're not.

so if you had to do something, here's what i'm looking at. right now, we're looking at the 10-year and the 30-year at incredibly low yields. we've got a vix in the 20s. normally, you'd see it in the 40s, the 50s, the 60s, up to the 80s. well, we can actually trade insurance off of each other. i think a smart play would be to trade treasure options. so sell options -- sell like a call spread on the 30 year bond or the 10 year note and buy call spreads on something like vix options. of course, options action is tonight. you may be picking that up.

>> that is true. and we'll talk about facebook options, which we'll start trading on tuesday. let's get a check on energy and kmoodty. >> hey, carl, commodities are marginally higher across the board. we are looking at a drop for the month and week as well. we are looking at one commodity that has bucked the trend. and that, of course; is natural gas. it's the biggest decliner but it's up about 25% on the month. we did see that in low and mid april. a lot of that sparked the comments that we are seeing more than switching because of the low, natural gas prices. now there are folks out there saying hey, we're going to start to see some self correcting here with the rally that we'd seen in the natural gas market.

that is going to reduce some of the rult. we can see some of the corrections here in the ral lee that we've seen for natural gas. back to you, melissa. this is close to a two-year low. worries are keeping investors on edge. let's bring in global head of g-10 exchange. he's the head of currency strike thatty. guys good to see you. are you surprised at the action of the fifth sfragt day of decline? you would think there's some positions of short covering. >> this squaring of position has been really impressive. obviously, we saw the news from spain that catalonia was having

some finance problems. i think this is just a sign of things to come through to june 17th. the euro has got a debt weight of uncertainty. >> i mean, not right now. there's a lot of caution and a lot of uncertainty. there is concern about the long weekend. the pmi and the catalonia news today, not a lot of squaring up. what is interesting is how you stand so firmly. you're saying over the next year or two, 50-75% chance and you actually think the inverse of that.

it's a very uncertain outlook. but i think the message from europe is going to be a referendum and the terms of the bail out package need to be respected. i think it's going to be a lot of stick and a little bit of carrot. on the greek side, the question is do they want to go down the uncertain path. so i think the clear message is it's very much a ref ran dumb. >> i think what you're saying is very important and professional money managers will hone in on it. there's a huge amount that you'll be rewarded. that is presumably where a lot of the smart money may be attracted to. or be it with huge probableties. >> we've seen a lot of bad news. i think there's still a chance we might see some squaring up as we hit into june simply because

what happens if there is a good outcome. let's just be a little bit more balanced and see the outcome before perhaps putting on the resolution. let me come back with you. you could very easily have a coalition government that's elected in the middle of june and greece that will work with europe and europe will work with them and it will bend as we're hearing from the germans. there is a way out of that. it won't solve the problems, but it will get us to stage b. >> simon, i would agree entirely. i think that's probably the most likely. you know, the obviously terrorist stories is that the market is price lg in right now. >> all right, guys, thanks for joining us. coming up next, at lant incompetent city's holding its grand opening today.

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so you chose geico over the other. whatever this insurance is, it's no good. ok so you... welcome back to squawk on the street. shares of foot locker up. retailer did report very strong earnings last week. also some very strong sales. they're partnering with nike for some special products of initiative based around the london olympics, as well as the european soccer championship. singer beyonce kicks off the official opening of atlantic city. it cost her $2.4 billion.

the casino reports 47 tower structures, basically dominating the beaches or much of them in the jersey shore. kevin joins us now in a first on the cnbc interview. just give us an idea of the scale of this project on what it means potentially for new jersey. >> we're very large, but we're also very intimate. our facility is about 6 million square feet. we have 14 restaurants. we have three different pool areas. we have a great spa. we have a 5500 seat theater. and, really, what we're aiming to be is a complete resort.

you know, we read that there have been problems with the television sets or the slot machines. how have you led that to tonight to the big night? >> well, i'd love to tell you that our technology is in perfect shape. but the reality is i don't believe technology is ever a hundred percent. but we've worked through it. our folks here are really excited. i think we're going to do just fine. >> there are some figures, kevin, about casino revenues in atlantic city. you open on april 2nd. so you did fall into the last mobt month's data. you came in eighth and you said that's a lot because when we were testing, this was not a stel lar launch, but what has the traction been since these numbers have come out in early may?

the whole reason for a preview was to try to make sure that we could get all the glitches out of all of our technology. clearly, we basically had that up to speed about a week ago. so most of may, we were down. in terms of being able to promote. we're hopeful that july, august, september, october will do very well. i'm not paying too much attention to the early numbers. i think our first goal is to make sure that when guests come in, they're happy and they want to come back. i think this is a very different concept and it will take a little bit of time for people to understand how different the business model is. >> and i was just -- i was

reading you've actually changed some of the marketing effort? how are you playing it forward in the market? >> well, actually, we have a different business model. our business model is expanded to two segments that are generally not really markets that have been widely gone after in atlantic city. your four different segments are your traditional game segment and your walking customer. from our perspective, we've never changed what we wanted to do. >> kevin, good luck tonight. i hear beyonce is very nervous with her first concert back.

that's sold out again. kevin, good luck. thank you for joining us there from rebel and a big night in atlantic city. >> the company is suspending all sales to iran. they have been implying that the european union and others not to do direct sales. fiat putting out a statement that it is doubling down on its efforts with subsidiaries to make sure that none of its components or things that were sold through its subsidiaries were sold through iran. those sanctions are tightening now on iran. >> guys, back to you. >> okay. when we come back, how germany might be convinced to help the

rest of europe out for the common good. we'll see about that. rick santelli is working out on the next hour of squawk on the street. rick, what is coming up? >> yesterday, tfgs about protein. today, it's going to be more about carbohydrates. so it's almost as if the santelli exchange is going food channel. i will tell you there's a lot of low-hanging fruit that could create jobs. that's what i'm talking about at the top of the hour. nnouncer ] s and awards lift you up. but they can also hold you back. unless you ask, what's next? [ zapping ] [ clang ] this is the next level of performance. the next level of innovation. the next rx. the all-new f sport. this is the pursuit of perfection.

could the german government moving under the radar to shore up the euro zone. there appear to be two developments, either which could spark a risk on rally. barclays chief economist is joining us live from london. the first development is euro bonds. very publicly merkel vetoed the idea of the italian borrowing

but now reads that they are forcing her to instead reconsider the german idea of a european redemption fund. can you explain to us what that is and what that would do? >> okay. well, the idea of the european debt reduction fund is that for the amount of debt that exists, which is above 60% of gdp, this debt would be held commonly and therefore the countries in the euro zone would be jointly liable. that's the additional 25% of the gdp on top of the 60% gdp ratio. because this is jointly liable for countries, they can borrow from the much more low interest rates from servicing that debt. therefore you need guarantees in place.

and under this proposal for joint european debt reduction fund, there are a number of guarantees, in particular, commitments to achieve significant debt reduction over a 20-year time frame which of course would generate significant budget surfaces or primary surfaces at least which would include the position of collateral around 20% of the total. and it would require additional tax revenues as well. it's quite a complicated proposal but it would actually be needing to much calmer conditions in europe. obviously it would be part of a proposal to move towards a much greater level of fiscal integration if you like fiscal stability union inside the euro zone. that is what has been proposed. >> if you boil it down, do you actually now see light at the end of the tunnel for euro bonds? do you think it will get past the germans? is that, in essence, where we

are or where we are heading? >> there's a big problem with the debt reduction fund proposal, which is that the german constitutional court said last year that if germany is to have a very large increase in its potential commitment to the rest of europe, than that requires some change to the german constitution and that in turn is unlikely to go in support of this and i think the german schans lor would be sympathetic to it but only if you achieve the other adjustments. >> i want to ask you a second question. i said there were two developments. the second one is the german guy who is at the helm of the ecb. and we established that not only is he in charge of the working party on what to do to get greece to deal with the exit but also vocal on the need to break

the link between states and banks. are we on the verge now of the ecb coming in directly to refence the banks in europe in some some form, do you think? i think they are doing a vast amount. and it's lending like crazy and it leads to some form of collective insurance. but to me it's unlikely that the e6 ecb would be part of that. and it was that europe should use the tools available. you have the efs that is meant to come in place. you have the imf out there, the

eib. there is a lot more than the ecb. in terms of deposit insurance, it's a largely fiscal issue that needs to be dealt by the politicians. >> okay. good to see you. have a great weekend. >> that's it for us. don't forget to tweet us. it's been quite the week for mark zuckerberg. the ipo, the marriage, the ipo controversy. the one thing that i remember most from this week is actually what? you tell us. our handle is at cnbcsquawkst. the answer after this. [ sighs ] cut!this. sorry to interrupt. when's the show? well, if we don't find an audience, all we'll ever do is rehearse. maybe you should try every door direct mail. just select the zip codes where you want your message to be seen. print it yourself or find a local partner. and you find the customers that matter most. brilliant! clifton, show us overjoyed. no! too much!

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overrule common sense. this is how we tame the unwieldiness of air travel, until it's not just lines you see... it's the world. time for squawk on a tweet on this holiday friday. the ipo controversy. we're asking you one thing that he will remember this week will be what? gary writes, that there really is a difference between a $5,000 bottle of wine and a $10 one. and it doesn't feel so good to lose your privacy.

and brad writes, what freedom was like before a wife and investors. it's going to change the way they operate. >> yeah, the fact that we have spoken about this stock every single day since its ipo proves that you have to live with that scrutiny out there. >> i don't think you'll find that he'll do the earnings calls or -- a cfo is lined up to do that. >> we will see. guys, have a great weekend. if you're just joining us, this is what you missed earlier today. >> welcome to hour 3 three of "squawk on the street." here's what is happening so far. >> i watch your show every morning. we need short-term stimulus, long-term fiscal rebalancing. >> the world is a risky place and i'm not at all surprised to see europe having economic

problems. >> i think we're in for less than potential growth but i doubt very much we're going to have a serious recession. >> if germany does say all in or if there is a deposit guarantee put in some place to prevent against the contagion from the greek exit. >> the opening bell. here at the big board. >> if you would believe long term, you have to sit back and say, am i willing to take the near term volatility. you have the short-term interest, the 90-day lockup. >> the number is huge. it's 79.3. 79.3. i tell you, that is the strongest number, get this, since october of '07, according to my records.

the dow is down 25 and s&p is down just a fraction. it's already may 25th and sandisk, meantime, up more than 4%. it's been one week since facebook went public. the stock losing 14% in that time. and, of course, nonstop controversy for everyone involved, especially the nasdaq. this was the picture last week. champagne, celebrating. the picture has definitely changed since then. the former chairman of hp, carly fiorina is here. plus, one of the best selling auto brands in the country. now cadillac is struggling. we'll see if their newest model can breathe new life into the

cadillac brand. and worries about greece weighing in on the euro zone. and mark zuckerberg has been the ceo of a public company for a week. is he really prepared for the pressure that goes along with ta that? >> there's been headline after headline this week and kate kelly is here to give you the latest after one crazy week. >> absolutely, carl. i think essentially the focal point is what is the liability to nasdaq? estimates are in the $1 million range between citudal and then others that have yet to come forward. and then, of course, the morgan stanley call with their team yesterday to talk about

reconciliation of botched trades. the biggest headline out of there was they are not making apologies. they are going to try to work through this and not going to hold anyone to fills that occurred above $43. that was a concern for people who tried to put in limits at a $43 level and ended up getting higher because of the technical foul up. we have concerns about whether facebook will switch to the nyse. i think people are angry on the facebook side of things. but one person put it to me like this. you don't want any more volatility. things need to settle down for a while while. it makes sense to stay on the nasdaq and then think about other options. >> yes, there's a school of thought that would be called erratic, wouldn't you think? i'm trying to think of a

precedent. none come to mind, kate. >> you know, carl, this was a huge issue at the time and frank czar had gotten one name in a whole number of years to switch from the nyse to the nasdaq and i think it was a company called aeroflex. he's grown the business in terms of market share. the fact that they got facebook is a huge deal but it's a big setback for them and we may see migration on both sides. there continues to be a debate about the benefit of the floor versus the electronic trading. on the other hand, people wonder how you can switch to an analog and facebook being in the digital age. >> thanks a lot, kate kelly at hq.

>> absolutely. carly fiorina, a former ceo of hp and a cnbc contributor. great to have you back. >> good to see you, carl. thanks for having me. >> we spoke last friday right around this time. even though the stock wasn't going to have a good day, you called it a home run and i wonder if you feel the same way now. >> obviously we have learned a lot of things. but i would say first that this story has gotten overhyped. it was overhyped when people thought the stock was going to be closed at $45 and i think it's being overhyped when it's called a flop. however, i do think that what we found out is that there have been a lot of problems. the nasdaq problems are by now getting a lot of well-deserve scrutiny but i think practices that have been going on for many

years have come to light in a new way and i think people are questioning just how and who makes money on these things. >> let's talk about -- obviously blame will be spread to many different parties. and the role facebook themselves had to play. talking about some of the ipo commandments they may have broken, creating the illusion of scarcity. making yourself available to investors, didn't happen. treating the ipo like a first date, not the last. did they mishandle this? >> well, i think we don't know all the facts. certainly it would appear that the fairly last-minute decision to up the price was probably overly exuberant. of course, that is now the subject of a great deal of scrutiny and a number of lawsuits and we're going to find out whether in fact the

information that they put forward was consistent and equally available to all of their investors. on the other hand, i think the biggest lesson for facebook is, welcome to the public market. it has been a trial by fire. as i said in my open letter to mark zuckerberg, be patient. i think right now the executives and the board at facebook have to be very patient, heads down, execute, get to the bottom of what went wrong here but welcome to the world of incredible scrutiny. >> on steroids in this case and so early on. it's unfortunate they never had that honeymoon. look, you've dealt with exchanges, carly, at hp. would you consider switching? would you take that phone call? would you ponder it or is it too early, not going to happen? >> well, certainly i think they should be listening to the nyse. my guess is that they have been

all along. i think it makes sense to understand what the different options are. on the other hand, i would not advise them to switch yet. i think that will cause just a whole other round of discussion and scrutiny. this was -- obviously many things went wrong and on the other hand there was so much unprecedented about this. i think patience is required here. i think they ought to keep listening to the nyse. they may be one of those stocks that choose to list on both exchanges as hewlett-packard did and we found advantage in doing so. >> finally, you mentioned hewlett-packard. a turn around that meg calls a 15% turn around. talking about how the company's culture is stifling, i never know how comfortable you are

being a monday morning quarterback. what do you make of the turn around there? how much likelihood of success do you give it? >> well, first let me say that meg whitman is obviously taking bold and disease sif action. specifically and that business is responsible for much of the profit and the cash flow and now the question is, can the new growth areas like autonomy take off in time and potentially the pc business and there time is going to tell. that's the strategy for hewlett-packard. >> carly fiorina in washington, thank you. let's go to gary.

>> carl, let's sum up the whole week. i didn't jump. i just came off the stairs. you asked carly -- she was there, in fact, a week ago with us at that time. you had a broker at morgan stanley that couldn't get you shares in facebook, what we knew a week ago at this time was that this deal was massively overallocated. i want to talk about another deal. let's take a look at what somebody wrote in. that sums up the mood of the street today a week later. quote, this is all so bad for our business. i'm sick. have a nice holiday weekend. now, this is a legitimate weekend and i think, carl, it sums up exactly the sentiment of

what is happening and some say it's worse than the stock crash. this was a well documented valuation that retailers across the country and across the world took into account. let's look at the five worst performing stocks in the s&p, if we can bring that up. obviously company-specific. dell, netapp, tiffany, lowe's. we know the s&p is up. take a look at the widely held names, ibm, mcdonald's, if we can get to the next chart, but essentially, procter & gamble and i think what happened here, carl -- in fact, what i know happened here is that a lot of people, retail clients that e ended up buying more facebook

than they decided to buy who decided not to sell sold other stocks. i expect next week a lot of retail clients own mlps and they have absolutely nothing to do, nothing to do with facebook. you're going to see this used as a source of funds. that's a bad strategy that we know from investments. >> so do you think that selling facebook at this loss will make them so sick they can't do it elsewhere? >> we were just talking about this off camera. unfortunately, that's what people do. they make the purchase, by 10,000 shares at 38. they did not anticipate holding it. they want to wait for this thing to bounce back to make this sale. it's human nature and it's a long-term mistake. i've seen it time and time again. >> there are price targets out

there at 40. there are also some closer to 20. it's going to be -- >> i have simple advice. if you have a position that represents 30% of your portfolio and you're waiting to trade this when it goes up, that's a loser's strategy. don't do it. >> gary, we'll talk to you in a few minutes. >> you got it. >> gary, thank you. let's get to rick santelli and get the santelli exchange food involved once again, rick? >> absolutely. we moved from protein and steaks to cash bow hydrates. for getting all of the different political parties, for getting about that, there's a lot of low hanging fruit with regard to jobs. where is the low hanging fruit? energy. if you look at the states that have broken out, whether it's wyoming, colorado, dakota, alaska, oklahoma, texas, if you look at the states that are

truly trying to pull domestic energy out of the ground you'll notice that the unemployment rate is significantly lower. so why don't we go after that? we need to stopville lee fiing fossil fuel. fossil fuel have over a century in them and there's a lot of production there. there's a lot of good things there and now one of the reasons that none of this really ever happened, let me see, do i have a knife? i even have some butter here. the issue is about some of these environmentalists. see, many in power that control our energy, they know who butters their bread but i look at it as the greater good theory. if you look at the environment, we could work with these industrial complexes of energy

companies to try to do it right. but if you prioritize risks, believe me, the energy coming out of the middle east, the middle east is going to end the world a long time before a half of a degree in temperature is. so prioritize it right and we can get a lot of jobs. carl, back to you. i'm hungry. i don't know about you. >> you need to go on the food network, rick. we'll see you in a bit. rick santelli. let's go over to courtney reagan. courtney? >> carl, as 2 1/2 million folks get ready to hit the skies, take a look at u.s. airways, up 22% this week. the fuel prices are dropping. rick was just talking about energy. shares of u.s. airways have seen a nice little spike. >> courtney, thanks a lot. cadillac is getting ready to release a new model, the cadillac sts. but is this enough to save a struggling brand? we'll talk about that when we come back.

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telecom is the top performing sectors. utilities doing the worst right now. here's a look at how the top performing sector is doing. dow has had four up days for the month. we're looking to see the last time a month had so few up days. in the meantime, cadillac used to be one of the most powerful names in vehicles but now the brand is struggling.

phil lebeau is live in chicago with more on that. good morning. >> good morning. >> the next couple of years are critical, starting with this model that will roll into showrooms. it's the xts. it's a mid-size -- actually, it's slightly larger. they need this. this is the first all new caddy that we are seeing rolling into showrooms in three years and the focus will be on the styling, not on the mileage. by the way, 17 in the city and 27 on the highway. the cadillac buyer, when they go in, because they are going to focus on technology, every buyer will get an ipad. they say we know that we are under the gun and we will be boosting this model. >> i'm absolutely sure that we'll get to number four and knocking on the door of number 3 as we close out 2012. 2013 and going forward, from the

time we ended 2011, we need to double our sales within the next couple of years. you know what, it's my job to get that done. >> you heard don butler say that they are going to get back to number four. here are the luxury sales leaders, starting with mercedes. it's slightly ahead of bmw. they have been running neck-and-neck over the last couple of years. sales are up 17, 18%. lexus is starting to come back with the supply issues that they faced and a new company in at number 4. it's audi. it has been k0coming on red hotn the united states. look at the percentage of drop for cadillac. sales down 23%. we thought it would be interesting to compare general motors shares versus bmw over the last year. they traded roughly in tandem. look at the split since the beginning of the year. this is proof consider bmw -- carl, you're familiar with this.

the luxury margins are so much greater than the mass market. gm wants to boost cadillac. that's going to be the key in the future. >> interesting, too the fact that audi has beat caddy. >> absolutely. interesting stuff. thanks, phil. phil lebeau in chicago. we're going to countdown in europe. about eight minutes left to go there. we'll talk about that after a short break.

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four-year highs. sprint and nextel is leading the way followed by metro pcs. people are making calls. can you hear me now? carl, back to you. >> courtney reagan, thank you very much. a few minutes left in europe's trading day. man are they glad to bring this day to a close. we'll talk about europe's close and what it may mean for the afternoon here which on the friday before memorial day tends to be a little nutty. back in four minutes.

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the trading of headlines

will continue if yesterday is any indication. more member states favored euro bonds than oppose them, then you have a member of the ecb that says, do you think that is a solution? it's an illusion, simon hobbs. >> of course, yeah, i'm for free money as well and also of course the realization, the slow down on the periphery and the stand out trade of the week is the euro, a 2% move in a major currency like this is like techtonic trades. what is interesting, if you look at the stock versus the currencies, the delay with which the currency market has actually moved lower and this is the dow

jones stock's 500. this is the top 50 blue chips. that's partly because the currency, of course, is a pair with the united states and you've got to get a lot more pessimistic on europe than the united states. and that's what happened. let's just close it out. >> the european markets are closing now. >> of course, what you often get on friday is a mean reversal. if the spanish and italian stocks as people square over the weekend for fear of an event risk, they will come down. this week that's not happening. one of the major reasons for that is because broadly we haven't actually gone anywhere. you can see that here at the bottom, which is kind of flat for the week overall. i mention the subject of spain, of course, because of where we are with bank here and michelle will be on very shortly to talk

about that. the board meeting will be starting about now. you will have seen the reports that they are going to ask the spanish governments potentially for 15 billion euros more and it's a creation of the spanish government. just before i hand you back to carl and to melissa -- i mean to michelle caruso cabrera, we have added gains -- you devil. look at this. i will do it if it kills me. this three-month chart indicates that we continue to get the yields right and the bond market in spain gently sells that off. clearly we are higher at 6.31. back to you. >> simon, have a great weekend. >> thank you. >> let's bring in michelle caruso-cabrera to finalize the

meeting. >> finalizing for right now at least. this is round two of the money that they are getting. they've halted shares of the company because there is a board meeting going on where reports in spain say that they are going to go to the government and say that they need an extra 15 billion euros. that's because bank keough has a lot of bad property loans in 2008 that have started to explode. we're wondering how emblematic is it of the entire spanish banking system. they don't necessarily have as much government debt. it's that the banking sector may need so much help that the government would have to go into a lot of debt if the banks can't do it out in the private markets or raise the money on their own. that's the situation. that's where we are watching

bankia. there used to be at least. they are having a tough time going into the private markets. we're going to talk about what is going on in europe because as simon pointed out, this has been an extremely pivotal week. we start a lot with the epicenter of the crisis with greece and explain what happens now, where do you go from here? how do you invest when things are so uncertain? what do you do when a country needs to create a new currency, carl? how do you do that? a lot of things that we'll explore at 1:00. >> greece is the fuse, spain is the bomb. i wonder, given the story in "the times" today about switching their currency for pounds. >> yeah. >> what level is your def-con?

>> extremely high. two things happened this week. we have european leaders admitting that greece leaving is a possibility. what is far more important, frightening, even, is that we're talking out loud about bank runs. there is a possibility of bank runs. people should realize that journalists hesitate, show deep constraint, everyone does, because the fear of talking about them is that you might bring them on. the fact that there are open conversations about it shows how tough the situation is right now. >> michelle, we'll see you this afternoon. meanwhile, bob pisani talking about how the effect of the markets today -- >> you story about bankia on the surface seems very important. third largest bank is having trouble. they are going to need more infusion. they may have to reorganize or recapitalize and the effect is largely on reports out of the

regional governments in spain saying that they are running out of money. other than that, it's been a quiet session. very low-volume session. the united states has been outperforming. this has been happening for weeks and weeks. most weeks -- this is the first one in several that we've been up but we are continuing to do better. germany did better this week. you can see spain and china and brazil. we are outperforming once again. again, let's not say, for example, that the united states necessarily is decoupling but clearly things are looking better. a lot of the reporters this morning and some of the analysts are passing around the facebook numbers and price targets that have been out there. i want to highlight the range that we had. these are 12 months, 48, and if you go down a little further,

s&p 500 is $30. star mine has $9.50. my point is that you have some people at 48 and some people at 40. this is a rather, shall we say, odd distribution for price targets. i won't say it's crazy. there are a lot of people looking at the same data and coming to very different conclusions about what should be going on with this company and that's because the uncertainty regarding the future revenue streams are extraordinarily high. this is the indication of how tough things are. facebook has become somewhat of a boring stock. around $32. and the volume has dropped every single day. the first day of trading on friday we did nearly 600 million shares. yesterday, 50 million. one-tenth of the volume that we did on the first day. today will be possibly even lighter. while people talk about panicking and concern, all of that occurred on the first and

second day of trading. since then, it's been relatively quiet. >> that's right. we'll see what happens around then. you can see the price target distributions a little bit unusual. >> disparity of opinion. >> yes. >> thanks, bob. >> you bet. let's go to chicago. rick santelli talking europe with a special guest. rick? >> absolutely. hi, mark. >> hi, rick. >> you're pretty much know as much as anybody regarding the issues going on in europe, today, spain in particular, talking about wanting mutualization in debt. it's not like reforms in greece and portugal. as michelle mentioned, there's a huge, huge housing issue in spain which make it is unique. >> spain has regional issues, banking issues that are severe. it has the cost that they are

carrying the real estate. it's very inflated. i think the numbers are actually worse than what you see. and then, rick, if you add up the contingent liabilities for spain which europe doesn't count -- in other words, they are bank guaranteed, regional guaranteed debt, corporate guaranteed debt by the sovereign, you find the debt to gdp ratio higher than 143%. >> wow. now, if my memory serves me -- and you're the man who would know -- i think they bit off about $319 billion worth of ltr -- not dollars. euros worth of the ltros. they had a huge hunk and i would imagine there's not much cash left. the ltro process doesn't have a lasting effect, investment buy your own paper sugar buzz. any thoughts? >> yeah. i think you're 100% about that.

you get an initial move newspaper prices which brinks the yields down and then everything goes back the other way. as a matter of fact, you were talking a moment ago about the bank run. it's not just the bank run. it's been a bobd run and out of european banks and as you know, rick, my commentary goes somewhat more than 5,000 institutions and one after another that i'm in conversation with are either significantly pairing bank or they are getting out. >> well, you can talk about it better than i. maybe you can tell our viewers what target two levels are testimony straighting. >> target two levels are the funding tech nichl for europe, between the sovereigns and the

banks. it's been growing significantly. and these are liabilities of especially of germany. the other thing that was incredibly significant is the announcement by the eu on their bank plans. they said, no, no, we're going to leave the banks alone. it's fine. no problems. the sovereign will back up the debt and came back this morning and said that that was untrue and what was very worry some about that, it's not going to be the rule of law. it's not going to be the court system that would survive that like in the united states. it's going to be the regulators and bureaucrats and i guarantee that they are going to take it up the ying-yang. >> when we wind up with

regulators in any equation, watch out. >> rick santelli back in chicago, thanks. how is mark zuckerberg handling being a ceo of a public company? first, a look at the winners and losers of europe's trading day just ending now. [ engine turns over ] [ male announcer ] we began with the rx.

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coming up in a few, on the halftime report, mr. gloom and doom himself, why greece needs to default now and where he sees it going for the u.s. markets. the top semi stocks that he says are about to surge. and pressure for lululemon. before we go back to carl, let's go to courtney reagan. >> taking a look at shares of a a ackeom, the shares are up 5%. carl, back to you. >> now nasdaq is going through a pr nightmare in fears that the biggest internet ipo may be

considering relisting here at the nyse. former vice chairman at goldman sachs joins me and gary. rob, good morning to you. happy friday. >> hey, happy friday. >> it is the point of some contention but you do believe that the nasdaq is going to lose business because of this. >> well, there's a great risk. i think that they can manage this but they don't. i think grifeld has got to make sure that he's clear on exactly what happened, how much of it was technology, how much of it was a human error, a judgment mistake. he needs to communicate that, take any action to fix it and make restitution where appropriate and move on. if they do all of those things, they can manage their business but he's got to do those things and he needs to actively communicate on those first

couple. >> in the meantime, you think he's correct to be in hiding, so to speak? >> i don't think he's in hiding. i know that they've been quiet. and maybe that's because they are investigating more what actually happened. but as soon as they have a good grip on that, i think he needs to be -- he needs to be accountable. he needs to explain what happened. he needs to make any changes and maybe the reason he's quiet is he's trying to figure out how to deal with whatever changes they may need to make. >> gary? >> nice call. i should mention that rob is a good friend and if i was running a public company, he's the first person i'd ask to be on my board of directors for purposes of disclosure. rob, if you were on the facebook board -- let's talk about nasdaq. if you were on that facebook board, what are you telling other board members that they should be thinking about and what should they be doing over the next couple of weeks. >> well, now on facebook board, where they stand now, be i would

say, let's not overreact to this. the proof is going to be in the pudding. meaning that the key to us is in operating and running a successful company. if we do our jobs and build this company, this will be a distant memory. i would encourage the leadership team to look forward and run the company and not -- and not dwell too much on what happened here. >> but would they -- i had mentioned during the week that it may be in their best interest, given the information that may or may not have come out, if they came to you as a board member and said, maybe we should do a mid-quarter update to amend the situation and come out and move forward, is that something that you would be in favor of if they could do that? >> depends on the facts. i've read all of the newspaper articles and paperwork that you have, gary. it's still not clear to me what was disclosed, when it was disclosed, and to who it was

disclosed. on the board they need to figure that out. i don't know if they need to make any further disclosure. i do think that they have to get the facts -- i still find it hard to believe that there there was selective disclosure by the various firms but facebook needs to get to the bottom of it on that and make sure that their own disclosure is good. so i don't know yet. i'd have to ask a series of more questions before i knew whether that makes sense. >> rod, people are trying to decide whether it's a cultural issue or technology issue that is driving retail investors away if in fact that is happening. people pointed bats, the flash crash, people point to this. technology today, is it just not able to support the trading today as we know it? >> i guess not. i'm surprised as much as anybody is that nasdaq has this technology problem and i don't understand why exactly they had

it and i don't understand if they feared it why they went forward with this system because they did change it later in that morning. so i just don't know. but i do know it's not good for the market and it's not good for retail interest in the market and we all know mutual fund flows have been poor to retail investors and retail has been shy about being in this market. so none of this helps. that's why i think it's important for nasdaq and greifeld to be forthright about what happened because i think it's important for competence in the market. >> gary and i have been talking for a while about whether this was overallocated or not. you say that we may never know whether the size was appropriate. >> well, yeah. there have been three elements to second guess which happens. price, size, and the percentage that went to retail. the reason i say we may never know, if you gave me any actively traded stock in the

pa market and i told you we're going to fail to perform trades for four hours in that stock, that stock is going to have problems for a while. an ipo, when it's at 100 times earnings, it's so fragile that i'm not sure morgan stanley made the right decisions on those criteria. the reason we don't know, you threw a trading glitch in. my guess is, the offering might have been a little too big and might have overallocated to retail but the truth is, with this trading glitch, i'm not sure. >> carl, let me jump in. as i mentioned, if i'm running a public company, i want this guy on my board of directors. my guess if he was managing this deal we would not have seen a raise in price. we would not have seen a raise in shares. but that could be a guess. >> on that, gary, let me put it differently. if i were ceo of facebook or on

the board, my advice to management would have been, listen, don't worry so much about whether the stock pops so much. we're going to be around for a long time. what you want is to -- it doesn't matter how much you sell or how much you raise. what matters is that you get off to a good start and show investors that you're sensitive to their needs. so, yeah, to gary's point, there's no reason from my point of view, it's asymmetrical risk to raise the size. you could debate the retail situation either way. if i was risk averse, a little smaller and not so sensitive on price. >> rob, you've got to come back more often. thanks so much. we'll talk to gary after a short break. in the meantime, keep those tweets coming. it's been a week for zuckerberg. the ipo, the marriage, and the

ipo controversy. but the one thing that he will remember will be what? @cnbcsquawkst. that's the handle. thanks so much. much.ho home def. with a new continuous spray wand. and a fast acting formula. so you can kill bugs inside, and keep bugs out. guaranteed. ortho home defense max. all in one account. it's powerful, easy to use technology for trading stocks, options, and futures. optionsxpress, the broker smart traders deserve. open an account today at optionsxpress.com.

squawk on the tweet. it's been quite a week for mark zuckerberg. the one thing he will remember from this week will be what?

swimming in pools. and his marriage, i think. he wore a suit. we'll get final thoughts on this week after a short break. don't go away. hey, it's sandra -- from accounting. peter. i can see that you're busy... but you were gonna help us crunch the numbers for accounts receivable today. i mean i know that this is important. well, both are important. let's be clear. they are but this is important too. [ man ] the receivables. [ male announcer ] michelin knows it's better for xerox to help manage their finance processing. so they can focus on keeping the world moving. with xerox, you're ready for real business.

let's go to rick santelli who is watching the euro in spain. folks in spain thinking about taking their money out. responsible to talk about a bank run so casually, or not? >> you know, i don't think so. i try never to say words like, you know, the c word, crash, or the bank runs because obviously the media and the press at large influence people's behavior. but the situation isn't good. if you look at spain, their five-year note yield is around 530. the ten-year is around 630. the ten-year 630, we've been there before at the depths of the credit crisis. that was a while ago. and through all of the band-aids and notions, this is where we are and with spain there are few easy solutions. the housing dilemma is larger

than ours and you added in spain. >> it's something that we can all relate to. we're looking for clarity out of blackrock? >> we've had so much facebook coverage, you mentioned david faber breaking the news about carl icahn positioning in chesapeake. the asset sales are not going great. chesapeake is a seller. it's not about who is buying it. >> carl mentioned a couple of weeks ago, a lot of times short sellers end up being a positive or positive for a