i'm becky quick along with joe concern and andrew ross sore kirchlt it's 6:00 a.m. on the east coast. let's get you up to speed. shares of facebook falling be e low $29. since the stock market's debut on may 18 for this ipo, the company has actually shed about $25 billion in value. >> if you are one for keeping records that's roughly the equivalent of the underwriter morgan stanley. facebook options began trading yesterday. that could be part of the problem. lots of the investors shorting the stock, underscoring the negative sendment. this is the biggest play of options you've ever seen for a new issue that was coming out. also, research in motion has hired bankers for a strategic view. they'll announce a significant number of job cuts. r.i.m. shares dropping sharply in the after hours trading and making a lot of black berry users pretty nervous. also apple's ceo's tv sees an

intense area of interest. speaking of the all thingsgy at the conference tim cook stressed the company's earths could unfold gradually. this comes ahmed apple was on the brink of unveiling a revolutionary tv. jon fortt will join us with more. andrew, over to you. >> thanks. pepboys saying. coar coo coors sought to delay it. they've been falling on that news. also chesapeake energy will be reporting with many of its major lenders. the natural gas producers plan to talk about the plans to meet some liquidity needs. they're said to raise cash close to 9 or $10 billion. 's the funding shortfall and

that's the number to watch. wells fargo promising more than $432,000 that accused the bank of dim krimm na torrey lending practices in the surrounding county. joe. >> let's take a look at some stocks to watch. got it this morning. trading higher after the bell. the student. loan lender slm, sallie mae, a buyback program. it's only a 13% stock. so that's 2%. co-part may not be a house hoeltd name, the stock traded higher after the dell. the highest auctioneer of damaged and stolen vehicles. and wynn resorts was up. the target price is $136.

>> the stock market index. you can see we're under pressure this morning. right now dows future down by 73 points. this is as people start to sit up and get a little worried about what they've seen in greece. not sure why it didn't resonate. today it certainly is. we'll see what happens when it gets to the trading session. we're keeping an eye on oil prices. oil this time is down by about a dollar. wow, it is below $80. we'll have to figure out when we saw a low this high. the concern, probably not the reason you want to see crude oil prices dropping. concerns about what h's happeni. take a look at the tenure. this has been the flight to quality. the ten-year is yielding 1.69%. again, guys, we're seeing all sorts of concern play its way

out. i don't know the last time we even seen it. >> it's a record. >> with may have seen it in the last couple of weeks, but before that, 1.71. >> this is playing out the concerns. investors have been running to german bunds, running to the ten-year. >> i haven't refi'd. i've been waiting because i keep thinking got to wait. >> i hope you're wrong on that. >> you never refi'd? >> no, no. i did. i did once. even in the past couple of months i've been thinking about it. >> you've got to decide. >> she's doing a 30-year. >> if you know you're going to move, it's one thing. >> a guy on the move. >> he just redid his home. it's nice to be in a safety factor. the thing that's been so

confusing is as investors have really run to all these safe havens they've not been running to gold. 1,550.80 an ounce. it's down for the year. a little over 1%. that may come as big surprise. we haven't seen a run like this where it hasn't picked up. since 2008 it's been all about the dollar and the tenu-year. i'm surprised it's that high. >> you have everybody criticizing it. >> if you're david einhorn, you say you have no idea what the fed is going do. that's such a gamble. >> and they even got to print in europe eventually, you figure. a stronger fiscal union won't necessarily save europe.

>> right. >> only inflation. >> putting it in after the fact, you mean? >> yeah. i mean you can imagine -- i love this, but if they issued euro bonds where the north and the south -- the north was responsible for everything, which is already the way it victory but to issue a euro bond, you would need much tighter fiscal consolidation of all 17 economies, right? >> yesterday at this tiemt, maybe part of the reason that things were a little more complaisant is that spain had come up for this plan but now the ecb says you can't do that. you can't use their -- >> how can you have a kmorn currency when you've got 17 different places just -- some of them going crazy with spending and spending whatever they want aunt they have the same low interest rates as the countries that are really frugal. >> if you were going to give up a lot. >> you'd need a much tighter union. you'd probably still need -- eve eventually you'd need to print. >> you would have to get to a

smaller union eventually. >> we'll see. june's going to be an interesting month to watch, i think. obama care, we're going to find out and we're also going to hear, you know -- >> you thing you're going to get greece in june? >> i don't know. isn't that what people thing? at least by january. >> by the june 17th elections you'll have some idea of something, whether there's chance for it to continue or not. >> we need to -- can anyone get into michelle caruso cabrera's account? have you got into her travel thing? >> yes. >> let's get to a few global stories of note this morning. global regulators say they will issue proposals on rules to encourage banks to put derivative banks through a clearing house but they're saying they won't be ready for a summit of world leaders next

month. also china rolling out a mini stimulus. beijing is moving cautiously after its massive response to the 2008 global crisis, leaving a painful hangover of inflation debt. no word, though, on a total price tag. it is now time for the global markets report. kelly evans is stamgd by in london. kelly, i saw you sitting on a desk earlier, did my eyes -- was i not seeing right? what do i see there. >> yeah. we move around the studio to make full use of it and so that was the digi deferring where we read digi comments. >> we'll have to thing about that. do you want to start sitting on the devgsome. >> not really. >> i don't recommend it, i don't know where to start. it's been a weak day. it has a lot to do with china. take a look behind me. i'm clearly in the wrong color. red on the board. very little in green.

come over here and take a look at the trading session this morningful we're now down 1.6%. very choppy and a lot of concerns about spain and idly after that country had managed to stay out of the headlines. take a look at the indices behind me her. cac 40, down 1.3. xetra dax down 1.15% and the ftse down. this began when china seemed to indicate overnight it wasn't going do any great 2008 stylus maeshs. then we're goating tedlines. a tough story to follow on what spain's going to do to recapi l recapitalize its banks. it's clear. this isn't 2008 where it's matter whether countries would come in and support them. it's the countries that need to be supported. the 30-year german bund is trading at 1.87%. it was only a couple of weeks

ago that the tenure was at those levels. ten year at italy is up. it's r5 and ten-year auction went off as soggy as some people are talking. ten-year in spain, 6.673%. ten-year german bund, this one in the headlines, 1.32%. incredibly low levels. it's the euro/dollar. the dow, 0.4 on the day. kind of an ugly one. back do you. >> one question. we were batting around the table before. why was everybody so complaisant yesterday but not today? >> i'm not actually sure they were that complaisant. equities were holding oklahoma.

what happening is this morning it's putting pressure on it. yesterday for whatever reason it was somewhat kweert oochz but it was only relative to what was already an ugly start to the day but it's this morning we're really seeing these spikes. it's a risk on/risk off kind of day. people are increasingly looking to see what can possibly stem the euro doan deyueurozone debt. speks it is now starting to make the rounds this morning. >> thanks, kel. it is official, mitt romney clinching the republican prison den chal nomination after winning the texas primary yesterday. you can imagine that they've got playbook and shift into high

gear. they're going go on the offensive in terms of the economy. a lot has to do what happen this friday with the jobs picture. a lot is out of the hands of both of these guys in terms of -- see that plane? coming up in a big week for jobs. the adp report won't be out until tomorrow but it's not too soon to be ready. the sports buzz. the stanley cup finals begin tonight. the six kts seed new jersey devils will take on the eighth seeded los angeles kings. there will be red on here at some point, won't there, becky. >> there will be red. there are l be blood. >> blood is red. >> another appearance in the finals, the spurs beating the oklahoma city thunder. oklahoma city has a team? >> i didn't know that. >> the spurs now have a 2-0 lead in the western conference and in

the east, the celtics and the heat will square off in game two tonight. the heat took the first game of the series. [ wind howling ] [ technician ] are you busy? management just sent over these new technical manuals. they need you to translate them into portuguese. by tomorrow. [ male announcer ] ducati knows it's better for xerox to manage their global publications. so they can focus on building amazing bikes. with xerox, you're ready for real business. in here, great food demands a great presentation. so at&t showed corporate caterers how to better collaborate by using a mobile solution, in a whole new way. using real-time photo sharing abilities, they can create and maintain high standards, from kitchen to table. this technology allows us to collaborate with our drivers to make a better experience for our customers.

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welcome back. let's take look at headlines.

coupon acquiring bread crumb. they're involved with providing solution for the ipad. terms were not disclose and this is going to be a very interesting deal. i'm very interested in it. >> i don't understand how bread crumb works. >> basically point of sale systems at restaurants and other places, typically cost 30s,000. the restaurant pays for it. very expensive. this is a device you can do everything on there. and if groupon has that and then can integrate it with all of the coupons and all of the groupon system, that's -- >> so you go home -- i mean you know how to call a black car from anywhere in the world from an iphone. you know how to do all these apps. how do you learn? do your twins teach you this? >> henry and max. >> how old? >> they're prodigies, we like to think. >> you're a prodigy at 35. it's called what?

>> bread crumb. it's not out yet. that's -- >> that's not out yet but you know how to work it. that is unbelievable. >> meanwhile i'm quaking in my boots over r.i.m. don't take away my blackberry. please let it keep working i i'm going to buy something off the internet. i am. if i can find where to plug in the -- is there a -- i put it in and it's like for a disk. >> type your number. >> now to today's national forecast. alex wallace joins us from the weather channel. hot one yesterday, alex. hot one. >> brutal for a lot of folks but a big cooldown for us particularly in the midwest. it's all coming in behind this cold front. we're talking chicago. we were talking 90s over the weekend. 50 down there. we're tracking beryl. it's bridging us quite a bit of rain. here are the latest statistics

on beryl. 35-mile-an-hour winds moving to the east-northeast at 14 miles an hour. right now it's 30 miles to the east-northeast of the charleston area. look at all the rain it's bringing now moving into portions of north carolina. wilmington getting heavy rain. prompting flood watches here from north carolina to south carolina. some of these areas are going to be picking up quite a bit. locally six inches of rain will be possible. here's some of the spots here through friday morning, what we may be dealing with. wilmington, 1 to 2 inches. cape hatteras. 2 to 3 inches. where will it be heading? ? out to the east. it could restrengthen to a tropical storm, but be i that point it will be moving further and further away from the coast. so major impacts not expected to affect beryl. in the middle of the country for today, we've got stormy weather in parts of the southern and central plains.

threats of tornadoes, damaged winds and large hail as well. guys? >> thank you very much, alex. we're closing in on friday's may jobs report. joining us is michelle girard, senior economist with rbs. do you ever recall seeing anything below 1%? >> no, not in the time we biron in the market, that's for sure. i mean the safe haven, you know, bid to the market continues and kind of despite any signs of -- when we had signs of improvement early in the year we didn't see much but now that the economy in question, the combination of the fed doing more and the safe haven bid, you know, people are talking 1.5%. >> 1.68%. it's worse than when we looked at it five minutes ago. >> that's become quite -- i don't want to say the son census, but that's a very wide

consensus. >> for this year? >> yes. >> it seems artificial. it seems orchestrated. >> of course, it is. >> that still doesn't take way the onus from pechlks plans that have their 8% assumption and they're like 10 years, 1.5%. that doesn't take away how daunting their task is going to be. >> it continues to be but this, of course, is a problem that companies like insurance companies have been dealing with. i mean it was a struggle even when you had rates at 3%. this is becoming just increasingly difficult. >> 1 1/2. you sit around getting 1.5%. people would end go into it. they'd leave it in their checking account. we would have at times people would pay to get their money back. last summer twhaus the situation here. we haven't had that now. it speaks to obviously --

>> how long was the negative yield? >> we ha add little bit last year, the real short -- real short, three-month treasury bills. >> peter shactman tells me the record loi for the ten-year is 1.35% but, again, we're getting very close. >> each or was it last year? >> last year, yeah. >> i was going to say. i don't think we're all that low. imagine friday's job report in any way disappoints. we're looking for gain of 175,000. pretty close to what i think the trend is. march and april numbers are obviously much softer. i think that's pay bachlkt think we've kind of moved past that over, you know, unsustainably strong numbers. now i think we're going to see a number closer to trend. it's not great but a job gains

of that magnitude do allow us to bring the unemployment rate down graduateually. >> but that is kind of taking it as an assumption that we receive this temporary dip and it's only been because of payback. i've about heard from some ceos who say they did see a turndown of demand in the beginning of may. they can't say why. maybe it's consumer confidence in the headlines. if that happens, how do they change the forecast? >> that's the thing. we were seeing a much higher trend. even over the last six months or eight months, the trend has been closer to 200,000. so we're looking for a number a little bit shy of that. but i think that that is the concern. i'm not sure that it hit so much in these -- the may numbers, even june, but i certainly fear going forward with all of the uncertainty not only in the eurozone but as we start to move toward the fiscal cliff that personals are going to get a little more nervous. >> factor out the old, decrepit

people, no one i know. i'm not talk about myself, but people who really did leave the job market. >> the discouraged workers that no, not them. the ones that are gone. >> oh, okay. >> they do want to leave the work-force. take the ones that would like the work. maybe they haven't had a job in a long time but they'd like to, they're real discouraged. what's the unemployment rate? 15? >> that's very, very difficult to -- it's hard to separate ought of the demographic people and fix out where should the labor force should be. >> where should it be? it's at a 30-year low, the force itself. >> it's not at a 30-year low. >> where are we, 63, 67, how long. >> >> 2007 is where we peak. people don't understand that this trend is a demographic trend just like you're saying.

>> it may be discouraging people. >> no, certainly not. the bulk of that as people say, if we were at the labor force participation we had at the start of the recession. >> wait minute. there was something out today i read that the problem is people who are in their prime working years who should be working. >> or working less or part time. >> it was like 80%. i don't know if i'm getting ages right, between 21 and 54, that age group, was participating at 80% before this downturn and now it's 75 and change. >> again, there's an element to all of this that if we had more people, you know, who wanted to find work coming into the labor force, you know, there are discouraged workers out there.

there's too much focus on it as a result of people leaving the labor force. that's where there's a little bit of misconception. the number of workers is still elevated but it is not moving higher. it isn't that the decline in the unemployment rate is ooh that people are giving up. again, that sort of has run its course. we're actually seeing the labor force grow. speaking of what you're talking about, there are people, you know, coming into the labor force now. so it isn't as if all of that we're seeing is a mirage. >> the percentage of worker tweens 25 and 51 are at 75%. that's a percentage point over wait was at the downturn's worst before the recession when they hovered at 87% than's from "the washington post." >> there's a circular component and is secular component to

both. we're talk about the overall movement and expecting that the labor force par it is rate should be higher. the fact that we've got baby boomers leaving is going to overwhelm. >> how many more home? 25 to 54? >> 25 to 54. about 75.7%. >> you should be watching and tuning in. >> if they're home and they're tuning into us that's our demo. can we appeal them to turn us on because you turn me on. >> michelle, great to see you. friday, tune in for a special guest, lanl greenspan. >> fears coming out of europe giving investors reason for pause this morning. wi oar going to talk to one strategist who says we could be

looking at another lehman moment ahead. stay tuned. stay tuned.es schwabs taking a close look at you tdd# 1-800-345-2550 as well as your portfolio. tdd# 1-800-345-2550 we ask the right questions, tdd# 1-800-345-2550 then we actually listen to the answers tdd# 1-800-345-2550 before giving you practical ideas you can act on. tdd# 1-800-345-2550 so talk to chuck online, on the phone, tdd# 1-800-345-2550 or come in and pull up a chair.

>> what were you doing? oh, good morning. and welcome back to "squawk box" here on cnbc along with an draw ross sorkin and becky quick. giving back yesterday's gains. here's why. you can see it down 6.1%. european equities are lower across the board with some pretty big numbers you can see. and the problem areas, 3% plus in greece and almost 3% on losses in spain. visiting from chicago this

morning, michael gur ka. we've already talked about the pronouncer on the bur knack. it's chicago thing but while you're in in mg or the east coast you're going to go with the bernanke. it's hard for you to say it, right? >> i adapt, joe. >> you adapt. okay. michael, o1.5 we just heard possible on the ten-year. how much do we look at that and say, wow, that is the global situation. that's where supply and demand has taken yields and how much do we say this is fed orchestrated? i would say 90% of it. clearly. >> it's really real. >> yeah, everything is getting funded that way. the way some of the metals are reacting, dollar based versus euro or anything, everyone's going to clam for more that. >> if it because in gold. you would see that.

>> for a long time we heard they were orchestrating housing rates. double mandate for the jobs market. you ire saying with out without the fed the ten-year would be where it is i think it's going to happen. there are so many people on the street right now. there are tons of funds. had them on for quite some time. i'm sure when jpmorgan was taken off some of those trades recently, i'm sure they're along quite a way. you have to look at that. the street's long and they're not going to take that off yet. if you have a perception from where we are today, that's a pretty long term move. >> you know, gary kaminsky just e-mails me. he predicted the ten-year hits 1%. >> did he really? >> 1%. i'm not going to say we're not

there yet but we're quite aways. how much can you continue to buy treasuries if you look at bond futures, where they're going. this long position cannot continue. you know, another thing is that's where the liquidity is in the market. >> you would say, okay, so pension plans, individual invests, savers, what should they do in any given time in history you'd say buy stocks. why is that questionable as a strategy right now when you've got yielders at 3% and 4%, a blue chip company. you'd say go to the market. >> 1.5% is never sexy, right, but at the same time if we want to look at the commodities play and you're seeing a lot of that talk this morning through the papers, you know, early this year i thifrp you asked me back in january what's my trade of the year and i mentioned grain markets. ethanol, be it, whatever.

you're looking at the largest corn acreage since 1937 this year. the demand is here. i'm not going to be surprised if we see gains on the gain side. who wouldn't want to be short a euro rowe and long on the dollar. if everyone tips to one side, you're going to see a mass exodus. >> the idea of getting into treasuries at this point, joe mentioned the pension funds that are looking for 7%, 8% returns. as an investor, if you're worried at all about inflation ever coming back to bite, how can you put your money into this? >> i don't think it's going to be a long-term trade. i think at the same time volatility is going to be coming back into the markets. a lot of people have been coming

to us, what is your premise of when the fed rate goes back out. from there it's going to incrementally working its way into the market. >> that's your tipping point at this point? >> the first insight of higher rates, that's when you're going to see this. >> everyone knows it. >> six months to 12 months from now right now it's actually a lot of time considering what -- i mean look at the dow yesterday. the premise was that things could be a little bit better and we're going to take it back by the opening tomorrow. so volatility is clearly in the market. if we want to talk straight treasuries, u i think the lower we go in yield, as soon as it started to show a little bit of a synopsis that feds are coming to play and rates are going to come up, all of a sudden it's a whole new ball game and these markets are just going to explode. but we're not there yet. we don't see it.

>> the tipping point, is it greece if we get a vote? >> that's part of it. if we start seeing plus 200, plus 300 continuously, then all of saud people are thinking things could be better. that's not it either. >> michael, thank you. why are you back here? >> because i missed you guys. >> good answer. i missed you too. >> if you have any comments or questions about anything you sheer on "squawk" or jump in on the conversation i'm us at squawk@cnbc.com. facebook trouble. also blackberry banker r.i.m. is hiring bankers to explore options. first as we head to a break, take a look at yesterday's winners and losers. ♪ ♪

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welcome back. equity futures are down. dot-com is reportedly acquiring buddy media for more than 800 million. that rings a bell, buddy media. >> have we just? >> yes. >> you didn't tell snus you didn't tell us. >> we had him on the show.

he didn't tell us. >> so are lights going off in my mind. you remember that was like a week ago. >> week ago. and i ran into him the other day. he was wearing like yellow pants. >> was he really? >> yellow pants? >> i'd be wearing yellow pants if i was make $800 million too. >> buddy media is company that helps brands manage their facebike presence. >> what did he say about where he veentsually wanted to take the company? >> his name was not buddy. was confused from that. we're going to get him on the show. he has a goatee. >> does he have a goatee? >> i'm going to make a phone call. >> did he say i don't care about doing it, it's about building great company? >> we're going to go look. we're going go look. >> we'll check that out. first, facebook closing below $29 a share after seven trading days at $38 a share and r.i.m.

shares tag below $10 dollars on news it plans to restructure the company. here to talk about these stories is cnc contributor carly fiorini, former ceo of hewle hewlett-packa hewlett-packard. we've got a lot to talk about. >> yes, we do. >> facebook, one o the worst showings ever in an ipo that's come out. it's the worst performer that's ever come out. what happened? >> well, first, i think everybody expected to make money. it was overhyped on the upside. remember the day it debuted people were talking about it closing at $45 a share which was, frankly, ridiculous. now people are running for the exits and looking for someone to blame and we get front page stories on who's in charge of the pricing, et cetera. the most important thing now i believe is for the company to focus on build gragt company.

if they execute well, if they get their strategy in order and can articulate that compellingly to the market over time, none of this is going to matter. but right now we're seeing a market that is reresponsibilitying emotionally both on the upside and now on the downside. >> it didn't help with the options players. >> exactly. people are realizing, gosh, i'm not going to make money i thought i was. >> how difficult is it for people that work there to -- >> i think it's very difficult. in my open letter to mark zuckerberg, one of my pieces of advice was be parent, stay focused on long term and i said in the letter this will become more difficult than it seems right now. they're now experiencing the full pressure of the public markets and i think it's going to be tough to stay focused and hypothey will. >> i guess he's in a better

position than most would be because he's the guy -- >> sure. he owns the company. he has the ability to stay focused. i think they have the discipline to stay focused. i think it's going to be great company. i presume the board has his back but the pressure is going to get more and more and more intense. >> when you say there's going be long-term success, it is a company that's worth 50, $60 billion or $100 billion like goog google? you're not an investor, per se, but you live in this world. >> someone would say -- i can't remember their name so i can't give them credit. someone said in your show what do you think you're betting on when you bet on facebook and this person said you're betting on the way this world is going. thank's right. i think facebook is a bet on the way world is going. more connected more personal, more virtual relationships. is it going ta take a long time?

>> yes. >> do we fully understand how they're going to mon tice their users? no. i always think the doom and gloom is overdone on the down side. this is not a stock to make short-term money on unless you're an options trader. this is a stock you buy and hold and wait and see. >> how do we know it's not a fed? half of them goes on once a week and no one buys. i mean -- it had never not be a fad. >> that i agree with. what they succeed in doing and you see it in every teenager, they've succeeded in changer behavior in a very profound way. that's the hardest thing for a company to do. apple succeeded. i think they have a reservoir of good will among their users. now, as everyone has pointed out, they've got to monetize it.

>> if buying facebook shares is a bet on the way the world is moving, what does it mean to be buying shares of r.i.m. right now? >> well, i'm a loyal blackberry user, i want to disclose that. >> me too. >> i think r.i.m. may be a story, all-too-common story where companies wait too long to make the big move into something else. that's why a book was written called "the innovator's dilemma." generally the right extstrategi move is made before it's obvious. it means it's controversy. a problem skpifts. now the big question for r.i.m. is can they ramp up the new to make up for the low. the answer is no. their new mobile operating

systems and that's difficult because people don't want to learn now systems. now they've hired a banker. >> mow maybe they sell. maybe something happens, somebody approaches them. who bice them? throw out other names if you want. >> who does buy them? look. i don't know what they're telling them. what i see is a walk away from the personal device business and a walk into unstructured data in the enterprise space than seems a bit inconsistent to me. microsoft, marks but, boy, they've made a big pet on their own systems. >> who else is out there? what are the other conceivable names in your mind or other options? what could they be doing -- >> they could be trying to sell patents, they could be trying to sell market positions, maybe an asian player would get involved.

i don't know. palm -- they said the same thing about palm. >> i like china, de-nova or something. >> maybe. people that might want a big entry into the devices by, a big user who don't have it are asian names to me more than u.s. names right now. >> i hate to hear this. >> i know. because i'm a loyal use sneer and i can't type on a screen. i need a keyboard. >> exactly. >> because i write too many e-mails. >> if apple were paying attention. >> give me a keyboard and i'd be okay. >> if iphone had gameboard, the game would be over. >> someone please give me a keyboard so i don't have to -- i have little fingers. >> it's not little. this is a little technology thing but all women will agree with this. women have a harder time on the iphone than men. >> why? >> because our fingers are

colder and it's heat-sensitive. >> it is. my fingers are freezing. >> i asked an apple engineer. said do you have any women on your design team? the answer was no. >> i thought it was the size of my fingers. >> i'm a loyal ipad user. >> i can use the ipad because it's a big screen. >> but you're write. i hit the buttons again and again and again. carly, you have solved the huge question. >> they do sell gloves but who's going to wear gloves. back berry, fix it. >> when you look at what's happening in the world right now, what when you see the bad news, you're somebody out there as a ceo and watched this happen, how worried should we be at this point and what do you thing of the jobs picture that's coming up? >> first, i think the european situation is quite worrying. it's worrying. it always has been. i have never understood the

short-term optimism that buoys the market for a day or two in europe. here we have spain in very serious trouble. have spain in trouble. they have a bank bailout plan that has been rejected. you have germany maintaining their position of no, no, we won't go. it is hard to see how that situation gets resolved smoothly. >> as a result if you are a ceo do you hold off on hiring plans? >> well, certainly in europe i would say you do. the european market is going to be extremely stressed. i think you are hearing that from ceos. i think the asian market continues to be an area of growth and therefore optimism. i think we will see what the jobs report looks like this week. there are worrying signs. i think we're going into a tougher period in the second half for sure. >> thank you very much for

joining us this morning and for solving that question. >> the novo i like that name for others. still to come this morning we are going to be welcoming the former j.p. morgan board member. plus, it happens to also be a facebook share holder so we will talk about that and the troubled ipo. stay tuned for that and a lot more. 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.

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talk banks, facebook and much more. plus marc lasry on investing in europe. european stocks are calling the shots this morning. more on "squawk box" returns at the top of the hour. p of the hour. it's gonna be a casual thing.

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from facebook's fallout to j.p., morgan's blunder. lifting the kurtdens off of private equity. find out where marc lasry is putting his money to work. and the race is heating up. >> we are going to get this country moving. >> my priority and our national priority has to be putting americans to work and it is. >> it's the number one issue this november from wall street to main street. why he says his candidate will get america's economy moving again. the second hour of "squawk box" begins right now. ♪

good morning. welcome back to "squawk box." i'm becky quick. to your morning headlines. battered black berry maker research in motion says it expects to announce significant layoffs in the week ahead and has hired bankers to evaluate options. also gasoline prices continuing to drop. the weekly energy department survey shows the average price is just under $3.67 a gallon. and one economic report this morning to keep investors occupied. we have the national association of realtors expected to report that april pending home sales were unchanged. we are seeing pressure on the futures this morning. right now you will see dow futures down by 65 points and the s&p futures down by just

under six points. >> a lot of that is a result of jitters about spain. let's get a global markets report from kelly evans who has a bit more about what is going on across the pond. >> i have a lot of headlines out this morning. take a quick look at what is going on behind me. i apologize for clashing with the background. it is hard to find green on the screen. europe's stock is down about 9/10 of a percent. take a look at what is happening. the ftse 100 also down. what started out were headlines out of china saying the country may not pursue stimulus.

that with a debt auction and continued concerns about spain are dominating the headlines overnight. in italy 6.079% on the ten year deal. borrowing costs up sharply from a month ago. here we have the ten year in spain 6.69%. ten year german bund is benefitting. if you can show that the 30-year bund at a yield at 1.88%. all the attention is focused on the euro dollar which is lower again today. it is driving a lot of the risk moves. take a look back over here. we are down 2/10 this morning.

a lot of these metrics actually improved. we were looking weaker earlier this morning. joe. >> i guess we'll be watching closely over there. we don't like it when the tail wags us. that is happening today. you will be back here someday on the mothership. today we have larry. honeywell toyed at dow electric for years and years and sat on the board of other dow components. you have been looking at global situations for a long time. and i'm wondering as a corporate manager this is what we're told. europe goes into a recession we can manage that here in the united states. if there is a financial event over there like with spain or something that we can't handle.

what do you think the most likely outcome is? >> i think that you are going to see a long drawn out episode where we avoid catastrophe on the brink for the next six months or so as everyone knows the greek situation blaed itself out in the short run. >> 669. >> spain is going to be bigger to deal with. you have portugal, ireland. i think they avoid a catastrophe. >> greece stays? >> absolutely. they have to do it. >> do they issue euro bonds? do they get a single fiscal authority that has some type of power? >> getting unity over there is difficult if not impossible. >> will she have to -- >> she will have to compromise. there will be euro bonds.

that's the only way to get fiscal unity over there. >> if we say give you the euro bonds but listen to what we say. >> the more austerity they put on greece the less likelihood to meet their bond obligations. they have to be careful they don't squash them in the process of demonstrating how strong they are. it is going to be prostract boo -protracted. it does have a weight on the u.s. economy. >> when you were at j.p., morgan -- >> let me tell you something. there are new headlines that says the eu is calling for the eurozone to have a banking union and have direct bank recapitalizations and boost growth. this is the european commission

saying this saying they have to boost growth and cut debt but it has to move towards a banking union considered euro bonds and the directory capitalization of banks. so these are new moves. it looks like the stock market may be moving off the lows on some of this news. spain and greece are certainly rebounding on this. >> i think they are listening to me. >> this is something that has to happen in order to keep this whole thing going. >> before we go to jp. longer term economy you have europe and tax a coming up. >> there will be a lame duck congress depending on what happens. and then the new president is going to have to embark on something to get this country out of a ditch.

and so i think for the next 12 months we are going to limp along. >> now down only 1% in spain. >> this is not an optimistic way to start the morning. >> it's reality. >> this london based investment office at j.p., morgan was a profit center when you were on the board. you knew about it? >> i knew it existed. >> you wouldn't get updates that they made a billion dollars in a quarter or the proprietary trading with money laying around. >> you would look at a consumer portfolio and you could judge how well it was doing by delinquency and look at the commercial portfolio. you could tell by past dues and losses. in the trading position they measure risk in a number of sophisticated ways.

you would evaluate risk at the time. you look at what the limits were because you can't oversee each position. >> so look at that metric that doubled. the var. you were familiar with that? >> i wautz. >> what was your last year on the board? >> must have been five years ago. >> a lot of this did happen in terms of size limits happened after larry left. much of it is the result of all the new depositts they took on. >> it was going on i think but to a lower scale. i think the size of the bank as well as the deposit probably grew it. >> how did it sneak up on jamie dimon? >> he is on top of everything over there. the fact that he missed something was surprising.

i think he was listening to people. i don't think he looked at the specific positions and when he did that's when he thought this is a problem and we are going to have to go. you don't come on a week before and say it is a tempand is a tea pot. he came to the party and had to admit the significant issue. >> how much of it is the idea that these are in the finley traded markets? >> i think one thing a trader understands is what is his bet. you don't want to be the market. the thing that gets me is this. now there is cry for more regulation. regulation worked. the biggest thing they can do for regulation is having them have more capital. they lost $2 billion or more. big, big number. less than 2% of the tangible value. why isn't that enough. if you strengthen the capital base you don't want to take

losses to this size but to the extent you do occasionally -- >> that 2 billion has been depositer money and taxpayer money. the taxpayers are going to lose. >> then there was a wag yesterday and sold securities in order to make money. he has share owners. if you do that you are going to lose the profit and pay taxes. isn't that what happens in any profitable investment? you pay taxes on the profit. i think some of the conversation gets way off base. >> do we give too much credit or take too much away from jamie dimon in that this is one of the companiwise a singular ceo. he has become the risk manager. he is supposed to be everything. and i just wonder in a firm like this we talked about too big to

manage. can one individual do it all? are we putting our eggs on one guy in a way that is unfair on both sides of it? >> i think he is a preeminent ceo in an industry that doesn't have a lot of them. he has a good team. he knows he can't do it by himself. he is always the point man for criticism and praise. he does have a good team. and the fact of the matter is this terrible incident has not caused any -- market has punished them. >> the conversation around the stock price has been jamie dimon was getting a premium before and maybe investors shouldn't give him a premium. do you own shares of j.p., morg morgan? >> i do. >> how does this make you feel? >> i feel there will be a temporary pullback. you begin to perform again and

the stock will come back. there will be a penalty to be paid. it will respond. >> if it were me i would feel like he is watching more closely after this. >> he has made personnel changes as a consequence of this. they are going to come back and be fine. there's a time period where they are going to suffer. >> always the crisis where you see the real leaders come about. he has been there more than anything i have seen in a very long time. we have much more from larry as we move along. concerned about the economic recovery. we all are. we are never that far away from that issue. marc lasry, chairman and ceo of avenue capital joins us next.

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back to lows. they bounced off temporarily as we got headlines from europe. apparently the european commission has been making

comments about what it thinks needs to happen over the next year. among recommendations is the idea euro bonds could be in the mix. as you can see in spain numbers are still looking better than they had before in terms of what the market is doing down 1.6%. back here in the united states we bounced about 49 points down for the dow. we will continue to keep an eye on the euro which is below 125 at 124.39. this is day two of our alphamasters coverage. our next one is marc and his sister in the chapter of the alphamasters book. we had her on yesterday. it is a great book. there is a great chapter about you and your career. let's get your views on what the

heck is happening right now. europe. >> europe and i think larry talked about is really what you have this summer. you've got it every summer. you have headline risk. every week there is a new headline that keeps coming out. ultimately for us we think there is a massive opportunity in europe. there is quite a bit to do and you are going to be able to invest there at cheap prices. >> where are you buying? >> you have opportunities in southern europe and northern europe. i wouldn't tell you any specific region. >> i have beenandy a few turn arounds. it is harder to do turn arounds in europe, what are the problems you confront? >> i think the biggest issue in europe is really the north and south. northern europe is more of a legalistic society. if you are in germany or

switzerland or in the u.k. legal system is very strong, better than the u.s. if you are in italy or spain or portugal or greece -- >> france. >> france is another one. legal system takes longer. when you are investing you have to assume a three to four year period. >> when you talk about buying things in europe you are not necessarily buying publicly traded companies. you are looking at things that are in trouble that maybe you can take all of it and take assets. >> we are trying to buy senior debt. so investing in senior debt of companies out there. the problem today is because of the lack of liquiddity you are able to invest at a four multiple. you are able to come in at very low prices. >> curious right now. we have been talking about

treasuries. you think about pension funds invested in your funds and this idea that they are trying to hit 8%. what do you think the new number -- what do you tell pension funds and other downies who come to you and say what should we be expecting? >> i think pension funds have real issues. they have to make that 8% which i think is very difficult. i was watching earlier, i think treasuries are trading around 1.5%. the risk rate is 1.5. pension plans have to make six times that number. you have to make six times the risk free rate to just break even. i don't think people focus on it that way. for us we are looking at trying to make higher returns which means you are taking substantially more risk. you can't generate high returns

without taking a lot of risk. i think you are getting overpaid for that risk but let's recognize where we are. you are in an environment where 1.5 is risk free and pension plans have to make 8%. that seems kind of hard. >> do they ask you that or are they burying their heads in the sand. >> they recognize the environment where they have to take more risk. so whether they are doing it with us or in the equity markets or a number of things. but i think that's the problem that is out there. so everybody is searching for yield. everybody is trying to generate those returns and it is very hard. >> would you touch gold? >> would i? no. never. >> any sovereign debt? >> no. that's political. >> i have an issue with some of that. it's a quagmire to try to figure it out. i wonder how much corporate debt

it is all going to be in the same pool eventually. >> i have some of the same issues. so when you guys were showing earlier you have spain or italy, sovereign debt trading for 6.5 or 7 we're buying that debt. we are trying to buy something to give us a yield if you are buying something at 60 cents on the dollar and has a 5% coupon that means you are making 10%. i'm not buying anything at par. i'm buying it at hopefully a bigger discount. >> but if it goes to 0 it still goes to 0. >> here is the issue. no matter what we do anytime we buy something at 60 the first question somebody asks is why don't you buy it at 50? if you buy it at 50 why don't you wait until is 40? if you buy it par all anybody

asks you is what is the yield. think about the psychology. are you getting paid 6.5 or 7? and i'm focused on am i buying it at 60 cents and i get asked if that is too high. >> in this environment what rate of return do you look for? has it changed? >> it has changed a lot. i think you are taking on more risk so when you are buying something you want to try to generate a higher return because of that. a lot of it is your entry price. whereas i would have told you last year you might have looked at buying at 70. today you want 50 or 60 because there is more risk. greece today you can buy senior secured debt at 20 cents on the dollar. the reason for that is you have all the issues greece has and the question is are you getting paid enough for the risk. some people tell you you are getting overpaid and some tell

you why would you invest in greece. >> private equity, do they do god's work or are they vampires? >> i think they do very good work. >> we were debating this earlier. you consider yourself a hedge fund or a private equity firm? >> investors. >> are you bothered personally by the approach of vilifying -- or do you figure you have to do what you got to do? if you can't get elected you can't do what you want to do. >> i think everybody has the right to sigh what they want. we focus on what we are doing and don't really pay a lot of attention to it. i think if we do a good job people will be happy with what we have done. if we do a bad job nobody cares. >> you are a obama supporter and clinton supporter. you probably do fund raisers. it was noted on the same day

that the attacks were issued you were getting a huge check from private equity. is there a problem with that or is it politics? >> it's politics. >> does it change your business? is it harder to raise money? is there any impact in this national dialogue about private equity that the president has raised that is changing the dynamic of the business itself? >> i have never heard it from a pension investor. i don't think investors look at whether you are a democrat or republican. i think they are focused on whether you are making them money. i have never had an issue or a question. >> the next time a politician asked you to write a check do you say, are you running an ad against me? >> do you think there have been either communities or businesses destroyed because an investment firm was trying to maximize

profits for himself? >> i don't think so but i don't know sort of all the situations. >> that's the idea that a firm can stay in business by basically gutting companies for their own share holder's benefit and you can keep doing that and somehow it is not going to -- normally -- you are shaking your head. >> i think marc laid out the reasons why the unions are in private equity. everybody's got to get a yield. private equity has been very successful. not because it has never been wrong. by and large when you look at companies in private equity whether they lose jobs by the time they fix them they have higher employment from when they started. >> i think private equity gets a bit of an unfair rap. if you look at most companies in the united states if a company

is doing a good job things are going well and if not people are losing jobs. whether you are private equity or organization you will have issues. it seems whenever there is a failure people want to focus on that. when you make mistakes it's easy for people to look at you and say you did wrong. >> how many conversations do you have with colleagues in the business who say i can't believe you are supporting obama? >> i would say one or two. >> what do you tell them? >> it is what it is. you need focus on what you think is the best and i'm going to focus on what i think is the best. >> marc lasry, thank you for being here. a lot of interesting stuff. >> fair enough. if you have comments, questions about anything you see here on "squawk" shoot us an

e-mail squawk@cnbc.com. still to come mitt romney supporter tom stem berg will join us to discuss the race for the white house. and the tenth annual all things digital conference is underway. tim cook kicking things off last night. 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. [ engine turns over ] [ male announcer ] we began with the rx. [ tires squeal ]

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welcome back to "squawk" on this wednesday morning. eurozone is recommending direct recapitalization of banks and says the issuance of euro bonds should be considered. facebook getting a second request regarding the $1 billion acquisition of instagram. the sale of pep boys to

gores group has been called off. the two sides had struck a 7$79 million deal in january. gores group expressed doubts. today all things d conference kicked off. john fortt was there and joins us now from california with a lot more. >> i would say it is bright and early. he had a very interesting talk last night, went almost two hours. first taking questions from walt and swisher and then from the audience. he tackled a number of topics including labor in china and overtime rules. >> last month we were at 95% compliance. we are measuring working hours for 700,000 people. i don't know anybody else doing

this. and we're reporting it. so you can go on our website and see. >> he said he wants there to be an apple product from the future built in the u.s. let me give you a few other highlights. he all but admitted the failure of the ping social network. he hinted at a warming relationship with facebook mentioning he just talked to cheryl sanburg and said apple doesn't need to own a number of things. said of siri there is more it can do. he talked about mna, too. >> i'm not looking at a big one right now. we are not looking at a big one right now. but i wouldn't rule it out. and so for us we have

historically not bought a company for revenues trade. we bought a company because they have great people, cool technology, great ip and there was a synergy with a product that we were working on. maybe it would become a feature of the product. maybe there were great skills that we could redeploy on to another project. >> he said the days after steve jobs death were absolutely the saddest days of my life and mentioned heroes including kennedy and martin luther king. he hinted at more things like he normally does. >> before you go give us a hint. you said he hinted. what was he hinting at? >> well, he said, again, that the tv is an interesting space for them. they are going to continue

pursuing that. that it the facebook bit about the warming relationship. steve jobs was harsh with dealing with mark zuckerberg. they want to talk to facebook. maybe we should expect to see a bit more there. >> very good. thank you. we appreciate it. it is early out there. it's early here but thanks for coming in. you heard when john was talking about cook. you said you think he's a good ceo. maybe not a steve jobs but good at what he does. >> probably a better ceo than steve jobs but not necessarily the same degree of passion and involvement and demand for understanding customers that steve jobs had. this guy has been running the company for a long time. >> what do you make of what has happened with facebook? >> first of all i bought the shares i have to admit.

>> you got an allotment. >> i did. >> at 38. >> yes. i was surprised it formed the way it did. >> do you still have them? >> i still have them. i think it is a company with a lot of imagination and in the right space in terms of the future. >> do you need me to write you a check? do you have two shares or two million. >> i have 5,000. the truth is i tried to buy more. >> they are for sale today. >> i'm going to hold it for a while. i think they will come back. i think the guy has a lot of imagination y. think at the end of the day it will perform well. >> do you loo at this as a botched deal? >> one thing -- two things that were concerning to me which argues that i should have taken a smaller position. number one, a lot of people selling into the ipo were in

there early looking to make a buck or thought the frost was off the cake. and two there were too many shares. the number of shares out there. and then the nasdaq glitch didn't make anything better. >> who do you deal with? you're a good client i'm sure. when they told you i have 5,000 shares for you that should have been your first clue? >> he gets 5,000 shares every day. on a hot ipo in your life? >> i got less than i asked for. so stock went up to 42 bucks. >> even the best clients on a hot ipo maybe they get 500 shares or something. a lot of people said they got a tail allocation like where did this come from. that was probably an indication. >> probably was. i didn't get what i asked frmpt i still think it is over time.

not so good today. >> is it the options traders driving this at thips point? >> sure. yesterday they drove options and drove it down another couple of bucks. >> this may be the first time in history that everybody knows exactly what the market cap is of the company you are talking about. even when microsoft came out. now it is 80 billion. who knows what facebook -- those are all big numbers. >> if you went out with a $79 billion market cap that's pretty good. >> that's what i mean. >> is this an argument that retail owners of a stock like facebook are just hat money. it went up to 42. day one was not a horrible day. it's that it didn't go up to astronomical numbers that somebody to the retail crowd jumped out of it. >> the retail crowd didn't get a

lot of it. joining us now to talk about money making opportunities in tech, walter price, managing director with rcm alliance, global investors. he manages global technology and specializes in big cap tech companies. facebook is big cap. do you own any of that? >> we don't own facebook. >> why? >> we think it's overvalued. we think fair value is around $20. so that's where we would be interested in facebook. >> 30 times earnings. what are earnings? so not even sales. what kind of sales multiple? >> well, i think the sales multiple is they'll do about $5 million this year so ten times revenue. about a $50 billion valuation.

>> would this be something you might put in the fund. >> at that valuation i think it is interesting. they are building a social graph to allow companies to efficiently keep in contact with their customers and potential customers. >> who are the big four horse men? >> apple, microsoft, google and amazon. do you own all of those? do you like all of those? >> we own a small position on amazon and a large position of other spots. i like all of them. >> what about intel? >> intel we also own. i think that as we look at 2012 and '13 there is a big product cycle coming on the pc area associated with the end of xp and hundreds of millions of computers running xp that have to upgrade.

we are pretty enthusiastic about windows 8. i think it gets intel back in the tablet market. that's why we own that group of stocks. i think google and apple are cheap stocks. >> ibm, hewlett-packard, dell? >> we are not involved in those stocks. >> how about rim? >> not involved in rim. >> did you ever own it? >> we did. we made a lot of money in rim about three or four years ago. we haven't owned it for a couple of years. >> appreciate it. good to see you this morning. still to come this morning mitt romney clinching the gop nomination with the win in the texas primary. we will speak to tom stemberg right after this. investors awaiting friday morning's may employment report. a lot of news that seems to

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republican nomination with a win in texas. now he is looking to deflect criticism about his private equity career. our next guest promising that romney will clean up what he calls president obama's mess. joining us is tom stemberg, the managing partner. >> talk to us about private equity. what is the role that private equity is supposed to play and how will this play out in this debate? >> i hope just as during the republican primary season that after his opponents in this case president obama takes cheap shots and even the liberal media

report that these allegations are totally unfounded that they'll give up and talk about the real issue that america is confronting which is a lack of jobs. 23 million people who either can't find work or have given up looking for work. the fact that we have trillion dollar deficits and we are going to leave our kids saddled with huge taxes and debts for the rest of their lives. that's why we need mitt romney as our president. >> you look at the jobs report coming up on friday. that could be a huge determination in how the scope of this conversation goes. if the number comes in above 165 or 170,000 people may think that this was a run off and we had warm weather in the beginning part of the winter. this is the payback for what happens. if that is the case, if we see a stronger number, what does that tell us about the jobs market right now? >> at the end of the day we had a president who spent $800

billion on the stimulus program, has interest rates at near 0 flooding the market with money. despite that we are sitting here with roughly 2% gdp growth, higher unemployment than when he took office. that is nothing to celebrate. we should be talking about the record of our incumbent and the plans of our challenger. >> tom, why doesn't romney embrace private equity? i mean, really take it on. mr. fix it. this is what i do. you never see him embrace it in that way. i'm also curious in terms of some of the elements that people have questions about private equity. recaps or carried interest. why doesn't he say private equity works most of the time. i want to -- i don't like that stuff. why can't we have a conversation about the issue of private

equity? >> i think the reality is what mitt wants to talk about is what is important for america. whether it happens in a steel mill in kansas city a couple of decades ago or a paper mill the facts suggest that mitt was trying to save companies as opposed to milk companies. the steel company would have gone away eight years earlier had bain not come in and saved it. mitt wants to talk about finding jobs, securing their children's future and creating an america that we can be proud of and not apologize for. >> you are probably preaching to the choir here with our audience. private equity will not bevilleinized here. if you look at the jobs numbers what happens friday will set the tone. if that number is better than expected that can change the

entire conversation. >> at the end of the day the american people will go to the polls in november and decide if we are better off than four years ago. given where deficits are today and the prospects of incredibly higher taxes i think the american people are going to make the right choice. >> this is larry. i saw a recent poll that said 75% of the people in the country think we are in recession. 35% think we are headed in the wrong direction. only 33 think we are better off than we were when the presidential period started. the economy is worse or as bad as '68, '92 and 2000. and yet the president has a 48% approval rating. how do you deal with that? >> it's a real challenge. the fact of the matter is that president obama is a brilliant speaker.

from all i know from people who know him well, arne duncan is a long time friend of the president. he is a good guy. i think american people gravitate towards good guys. when push comes to shove this time around the country being in the crisis that it is in i suspect they may turn away from the guy they think is the nicer guy and vote for the most competent. >> we had donald trump on the broadcast yesterday who raised the birther issue again. he was with romney last night as part of the fundraiser. romney has tried to distance himself from that issue but not really. what's going on there? >> you know, i don't really give much credence to this whole notion of where president obama was born and whether he got a scholarship as a foreign student when he attended university here in the united states. >> if that's the case why hasn't romney disavowed himself of

this? >> i'm not part of the campaign. i'm a guy who mitt gave money to and served on my board. >> what do you tell him he should do in this case because it is a political issue? >> i think mitt will focus on issues important to the american people and not talking about private equity or where president obama was born. >> i want to thank you very much for joining us today. it's great talking to you. >> great talking to you and have a great day. >> you, too. when we come back we will have more from larry. and former kansas city federal reserve bank president and ceo will be talking about europe, the fed and much more. there is a lot more happening. this is an interview only here on "squawk box" so stick around. ♪ ♪

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futures down by about 51 points. there are a lot of the same headlines out of europe. concerns about greece and spain the ten year yield blowing out. but you can also take a look that right now spain's -- the stock market is barely budging at this point. it was down considerbly earlier. there were comments that came suggesting that things they like to see happen this year could include direct capitalization of the banks. that's when we started to see

things turn around. this was a big move. >> that's like watching here we would be down 600 points. that is an amazing move from 5% in spain. >> the reason you saw a big dropoff earlier was spain came up with the idea of how to recapalize by using some european bonds. that's when you saw the dropoff. european commission laying out the year long perspective of what they would like to see. >> are we below 6.7? >> if we could call up the debt yields. see how stressful things are in the market. some are getting more stressed. talked about how especially on the peripheral debt market they are not getting the benefit they had seen. so there has been a lot of stress today and some concern. we are watching this play out.

the ec statement did for a while support things and bring our futures and those other european markets back into line a little bit. we'll see how it plays out. >> it is a multi speed universe and we are trying to look around corners. i do that for him because i know he is watching. >> driving without a spare tire. >> this is an inflatable one. coming up the facebook free fall. we will talk to an analyst about how low it could go. special interview next former kansas city federal reserve bank president and ceo thomas hoenig to talk europe and the economy next.

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♪ la la la [ man ] whoops, forgot one... [ male announcer ] sustainable solutions. fedex. solutions that matter. uncertainty by the market. bruce bartlett will weigh in on debt and taxes. he is a former economic advicer. and barbara isn't worried about disappearance of investors. and former kansas city president thomas hoenig has a plan to limit banking activity. how he plans to end too big to fail. the third hour of "squawk"

begins right now. ♪ welcome back to "squawk box." first in business world wide. our guest host is larry bausity. he is set for life. >> now there is a facebook share holder. >> that is why he is here today. checking u.s. equity futures indicated down back to 72 points. it got a little bit better on news out of europe. now back down. even though spain which was 5% earlier. greece is still down 3%. in our headlines this morning shares of facebook

falling below $29. the company has shed about $25 billion in value since the stock market's debut on may 18th. facebook options began yesterday and many under scoring the negative sentiment and many think that is putting pressure on the shares. we are going to talk to the first facebook analyst to issue a sell rating for the stock. warning it would likely report a first quarter loss, rim, and announce a significant number of job cuts and whether they end up selling part or all of the business. that is not apparently on the table right now. take a look at shares that dropped sharply in trading yesterday. in our global markets the european commission calling for the eurozone to move towards a banking union.

in a statement says the eurozone must boost growth. they have come back a little bit but we still see red arrows across the board. our next guest is responsible for about $2 billion. barbara is with gam co investors and helps grow the income fund. it is great to have you here today. >> good to be here. >> there is a lot of chaos and confusion and volatility this morning. we have been watching unbelievable things with europe and the ten year here. what do you make of what you see here today as an investor. >> interesting times. daily it's been an ex cruciating watch on what we are seeing with the euro disintegrating. it is interesting that the latest headline with the european commission saying something positive about calling for better fiscal unity. you look at hard transactions

italy had a bond auction that went poorly and the ten year went over 6% and spanish over 7% at one point. and then even the talk behind that is very uncomfortable with the headlines in the last 24 hours on the front page saying that the ecb had denied spain's plan to recapitalize its bank. two hours ago saying we never did that but stand ready to advise. we are no farther along than any hard actions in order to solve it. companies are taking steps. you probably watch this much more closely. companies are taking steps to protect against european breakups. it is inevitable it seems and is impacting us. >> the breakup is inevitable? >> it looks like it. we haven't seen anything that indicates -- i guess this has

really been a progress in works for a few decades of how close and how unified europe wants to be. now they are addressing how much unity they want. we haven't seen answers to that yet. with the other transactions and currencies and spreads indicating things going in the other direction it's hard to imagine that we have any scenario for unity. >> when you are looking at big cap stocks and running the dividend and growth fund what do you do to change your investment outlook as a result? these are companies that have business in europe? >> yes. and we hear some of them taking steps to match up assets and liabilities and pulling back on spending. we have seen other headlines like that. but i think timing is very hard. there are a lot of things that are perhaps somewhat priced in to the market at this point. but if you look out six, 12

months or mow you have a lot of companies that will see difficulties with slower world wide growth. some of that is priced in. these companies a lot of them are very strong, good outlook for earnings over the next year or two. bay good cash earnings. i think those are very investable right now. >> the idea that this is priced in may be the case, do you think that particularly with the dividend fund that higher taxes is priced in, as well? >> it is inevitable. it is funny how the market prices in suddenly. it is hard to tell what that is. when we take a step back and look at companies that pay a good dividend and grow over time half the return on the market has come from the dividend and that has come during period wheres it is taxed at a higher rate. we have what might be an

extraordinary tax rate we expect that to go up. we think that return is an important component. >> what companies do you like in particular? >> some of the companies that we like right now pfizer, some of the pharmaceutical companies. i think they are selling at nine or ten times earnings. pfizer has a good pipeline. once you start to see execution on that you can get an expansion of the multiple. has 4% dividend yield. dupont. >> the seed company is higher this morning. closed at 74. have you bought it. 76.60 bid this morning. no? >> i don't have it right now. >> the reason i am bringing it up the company is sharply boosting its quarterly and year guidance based on strong selling of seeds in the planting season.

i like this company. not everyone is aware. it's run by hugh grant. really sexy and charismatic i think. doing very well today. >> one of the reasons why we like dupont. >> that's why i brought it up. >> because of the seed business. >> he is doing very well. he is looking for double digitt growth from that. >> they mention the early growing season for planting. you can imagine that farmers said the size of the acreage and other things offset it. i don't know why it would be -- maybe some of it was before this quarter. maybe they actually sold some earlier than they would. it would have pulled forward so this quarter is higher and maybe they sold it earlier. >> what are some of the other names that you like?

>> we mentioned pfizer and dupont. >> yes. >> i like microsoft. selling about nine times earnings with 50 billion in cash on the balance sheet. that stock has been completely flat over five and ten years selling at 29 and $30 a share. and windows 8 coming along. >> what sparks that? is it windows 8? >> execution and better earnings to spark that. i think tremendous value on this period of time. >> have you seen windows 8 exhibited yet? >> i have not. >> has any of you had a chance to look at it? it looks like a dynamite product? if that's the case it will catapult it. >> yes. >> i noticed that the fund name has changed. it's now the dividend growth fund. it used to be blue chip value fund. >> the strategy didn't change.

we thought this would focus attention where the companies in the portfolio have been companies that have good cash earnings and the chance to grow those earnings and the dividend over time. we thought this name change would point in that direction. >> marketing savvy. >> exactly. >>. >> we want to thank you for joining us. it's a pleasure talking to you. former kansas city fed president on his plan to prohibit banks from creating securities or derivatives. he will join us next. in the next half hour -- >> he is also the vice chairman of the fdic. >> and a facebook analyst the first to put a celerasell ratin. check out the "squawk box" market indicator. et indicator.e. i had three kids.

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box." the futures right now have worsened down 86 points, almost 87 points on the dow.

down almost ten on the s&p. economic issues drawing a great deal of attention from friday's closely watched jobs report. steve joins us with a very special guest. >> tom hoenig is the former president of the kansas city federal reserve bank and the author of a plan for dealing with banks getting a little buzz these days in washington. good morning. thanks for joining us. i guess if you wait long enough everything comes to you. >> apparently. i hope there is follow through with this, as well. >> let's talk about this plan. i want to get there a little bit through the back door. andrew was talking about this concept which you talked about of too big to manage and that is right on the news these days. we talk about j.p., morgan and jamie dimon thought to be one of the best bankers out there. if he can't oversee are these

banks too big to manage? >> i think there is a case for that topic in the sense that you're managing not only your commercial banking and lending and now trying to manage your broker dealer activities across a broad spectrum so the span of control does become unwieldy. i think you do endanger i think the ability to manage that large of an organization no matter who you are. and i made that point well before any of the more recent events took place. it's a very difficult set of circumstances to manage that much. >> tom, knowing the members of the afflouancy well like i think i do you were one of the most free market guys on the board there and you have the proposal to limit the activities of banks and you come at it at a free market way. >> i think the main thing to

keep in mind is that what we did was we allowed the high risk broker dealer trading activities to come inside the safety net which is deposit insurance, discount window and the implied guarantee that goes with every larger institution. so you have taken the market out of the equation in the sense that you are allowed to use the safety net to build your leverage to engage in these activities. what i am suggesting is that you take those high risk activities back outside the safety net and allow the safety net to be used as it was intended. that is to protect the payment system, the settlement system and the intermediateiation process. and you allow the high risk broker dealer activities to be outside in the market where they can be subject to a greater degree of the market discipline. and that will give us better

outcomes. >> tom, some people are listening on the radio so they didn't get to see the full screen we put up. i want to read these things out. you would proebt broker dealer activities. proebt market making activities, trading securities on derivatives, sponsoring or investing in private equity funds. isn't that going back to the 20s or 30s? >> pre1999. people say we won't be as competitive. when you put it back in the market and you allow that specialization to take place you will be more competitive. remember this. from the end of world war ii to 1999 the united states was the most innovative, most competitive, most sought after capital markets in the world. there was no terrible disadvantage to us. we were, in fact, the lead in the world in developing capital and bringing capital to market. this is what i think if i may

use the word reinvigorate the market physic markets if you allow them to leverage up and engage in activities that if i may say or suggest to you contributed to the crisis of 2008. >> larry has acreti question tr. >> this question of too big to manage has been around for a while. it presupposes if you are small you make mistakes. that isn't the case, of course. when too big to manage means you get a team of people in place to help run the enterprise doesn't mean you will never error as j.p., morgan does. what size does for the country, it operates globally and provides big blocks of credit. it makes markets. all of those things it seems to me are a value.

i think it has proven over time to be something that has been in the best interest of at least this country. >> i'm not suggesting that that is not correct at all. what i'm suggesting is that when you bring these institutions inside the safety net where they are no longer subject to the market and its discipline you create crisis. and have these institutions in 2008, some of them, been outside of the safety net they would have failed. i would have been perfectly satisfied with that. that is the price you pay when you become so large that you are not allowed to become subject to market. i said in the testimony and other places that i'm not against a large. i'm against too big to fail. that's the issue. i don't think moving these institutions outside i'm not saying that you end the fact that we have broker dealers and risk taking in the market. i'm saying you put it back in the market so it can be vigorous

and we can benefit from it. that's the goal here. >> i don't disagree that going back to glass siegel would -- somehow the financial crisis not have happened had it not been in place. even bank of america had very little to do with this idea of the broker dealer being inside these firms. citi group i will give you. >> remember there are two other parts to the proposal i make. you have to do money markets and bring them back to reality. this idea of breaking the buck and it's a fixed amount is not accurate. they should be marked daily. that would make them more the

retail customer more aware of the risk. secondly, we allowed repos to come into place using long term risky real estate assets and be funded by short term liabilities because of changes in bankruptcy law. i have said that has to be changed. lehman brothers of course and others like that were actually using very short term liabilities to fund their investments in the long term under the presumption that these would maintain their value as money market mutual fund. that has to also be remedied. remember before the passage we had failures. we had drexal burnm. it failed. i would also admit to you that i'm not suggesting it would end financial crisis. we had crisis in the 80s but i think it would have been far less severe and the american people would have felt the

affects of it far less than they did because we had very high risk activities brought within the safety net both directly and implicitly. that's what we need to address or we will have another very significant crisis which will require that we bail it out at some future point. let's see if we can mitigate that outcome is my goal for this country. >> then morning we are watching the ten year yield falling below 6.7%. would you be concerned when you see it sitting at these levels at this point? >> i'm no longer in that business. i'm now with the fdic. the fact is my views were well known prior to my leaving the fed in terms of 0 interest rate policy and those views haven't changed at all. >> tom, i just want to ask you a slight separate question here

back to bank regulation. the fed had 40 people inside of j.p., morgan. the occ 70 people. we are told that supervisors are not responsible for keeping the banks from making mistakes that they have enough capital there. this causes me great concern in the sense of how to evaluate the work of the supervisors? are we creating moral hazard by putting these supervisors inside the banks? >> i'm aware of that. i saw the articles on that. and i need to think about that quite a bit. because i do understand that you expect if you are going to put people in there that you expect them to somehow be able to prevent mistakes. i think that is probably wrong. i think mistakes were made. it is the structure that i think we should focus on. simplifying that structure and moving these high risk activities outside so the market

can allow mistakes to be dealt with. i said the market impresses me not because it is smart but because it is a harsh disciplinarian. the safety net is for the payment system and for the intermediateiation process. we have ten seconds. does resolution authority work? yes or no? >> yes and no is the answer to that question. appreciate it. tom and steve, thank you. we should let you know that when we come back we will be talking about how going to college used to be so much fun. if you can stay there or not get kicked out there is a new study with some startling numbers that we'll bring you right after this. and still ahead taxes and a looming fiscal cliff breeding uncertainty in the markets. we'll speak with bruce bartlett, the former president advisor to

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welcome back to "squawk box." education experts say a new problem has emerged with student loans. more young people are drowning in debt without a degree to show for it because they dropped out. according to recent data analyzed by think tank nearly 30% of college students who took out loans dropped out of school. coming up more from our guest host and when it comes to facebook our next guest is antisocial. the first analyst to come out with a sell rating on facebook stock. he is going to join us next.

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welcome back to "squawk box." let's take a look at stocks on the move in today's trading. research in motion shares dipping to more than an eight-year low after saying the company expected to report a current quarter loss. also, pep boys shares are under pressure this morning after the deal to be bought by gores group was cancelled. gores struck the deal in january

but then began to express doubts. that stock at this point down 24%. also finish line is raising current quarter earnings forecast thanks to better than expected sales. that stock is up about 3.8%. our rick santelli is standing by. there are weird moves today. how about the ten year? >> i don't think anybody really around the globe is shocked to be a boom hovering at 130. 167 historic low yield. we had a 169 on a closing basis. we need to differentiate. i'm sure there will be a point out there when more issues reach that tempest mode in europe where we will probably have a bit of a shock where we will see greater drops in yield and price

rallies. i still contend that if you can march forward ten years in time and look back on this quasi zone from 2011 and 2012. the real issue isn't 167 or 157 or 147. the issue is when will rates move higher? and with when will that occur and how it will occur is the saliant feature of the treasury market to be concerned with. >> we have moves into treasuries and gold prices are down today. >> once again think about it as a commodity trader would think about it. precious metals isn't necessarily -- if there is still financial issues that would normally raise the price of gold and bring buying and treasuries i think the new world is that

europe and the insolvnsy is causing people to crack piggy banks that they consider valuable. i doubt the day in the sun for gold is over. >> i know we have jobs reports coming up. my question is what is the expectation there if the 165-170 is what people are expecting. is that setting the bar low so they can jump over it or is there concern for a low print like last month? >> it's true with oil prices and it's true with jobs. how do you make 200,000 look good? you get 150,000. i think this is the new mode. and there are many stories out whether it's the unemployment force doesn't match on a skill basis, the jobs that are open, the job openings and labor turnovers taking on a heightened importance. if there truly seemed to be more

research indicating that part of the lack of job creating is a skill set then we have to have an introspection of programs and how we move people into the benefits, unemployment insurance. if it is a skill issue we should be making a difference in improving the condition. >> what do you say about gold at this price? is it off a couple hundred bucks or a good buy to hedge down the road or about to go lower and you hold your power for now? >> i'm not sure that i look at gold under the inflation microscope. it has had some strange economic liaisons and relationships. i would contend that whether it's the end of the year, our election, our spending, europe's spending, the japanese malaise there will be plenty of times for gold to reach closer to

2,000. 1,400 to 1,600 is the zone. i think it is a zone to find good support in the near to medium term. >> rick, anything else we should look out for today? >> i really think it's important to look at the equity markets around the european close but more importantly if you like to play dice and craps and you have pretty much used every alley on the east coast there are very few places to put money. and i do think that equities are continuing to probably surprise us by how they hold up. i just wouldn't use that sector as a positive saying the dow is going to be at 13,000 or it's at 12,500 the economy is doing better. i think equities represent the alternative to ultralow yields and treasuries but isn't a poster child for great economic

activity. >> we'll see you coming up on "squawk on the street." our next guest is not surprised on the drop on facebook shares. joining us is brian weiser, the first analyst to issue a sell rate er. your target on the company is what? >> we have a $30 price target. thanks for having me this morning. >> are you thinking about putting a buy rating on the stock? >> we are holding our target and rating where the stock is right now as our target is. frankly there is a lot of uncertainty around what exactly was said during the under writing process. we are not certain what more information is out there. we look at a lot of other factors. investors are incorporating expenditures on capital efforts

and data centers. there may be more risks in the stock that we're still trying to get our hands on. >> i want to talk about risks in a second. walk us through the calculation. how are you valuing the company? what are the different metrics you are using? >> very fundamentally driven approach in value waiting the stock and using the rest of our coverage. we have google and yahoo. we look at very fundamentally driven metrics. >> and you get to 30. let's talk about this analyst situation. you talked about the risk. there has been a big debate about whether certain under writers and analysts have access to facebook and management team and new numbers and that that was passed on to investors. what do you know about that? >> i think we like a number of news organizations were aware of this information when it came out that the information was put

forward is known exactly what was put forward we are not certain of. >> were you left out of this? >> correct. >> you were not an under writer. do you believe there were numbers that analysts had that you did not? >> absolutely. but that said expectations that the company or the under writers put forward may or not be consistent with the numbers we had out there. we came out with the $32 price target. >> how troubling or not is the issue about under writing analysts being able to provide information but the retail investor not having access to that same information. >> we focused on the fundamentals. and because having worked inside the agency world understanding what marketers are doing and why they use facebook and looking at the fundamentals we feel we can get comfortable with the

valuation of the company. frankly, we would argue that many of the indications we have heard from the company we just frankly disagree with. we don't think there is problem with mobility. we don't think that is causing slow down. we think other factors are slowing that. >> larry is here. he is a facebook share holder. >> let me ask you this. hoy do you think that the under writers got up to $38? in other words this was studied for a long time. they had nice people on the left corner and right corner. how do you think they got to that high a number? >> clearly there is enough demand for it. that is one way. we know on shares posted and other private market exchanges the stock was trading in that zone. it is understandable why they would try to clear the market at that price and a lot of people are very optimistic dreamers trying to push it higher. >> thanks for your perspective

this morning. coming up uncertainty in the markets being fuelled by the november election and the looming fiscal cliff. bruce bartlett was an economic advisor to the reagan and bush administration. joining us to talk debt and taxes. ♪ ♪ ♪

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can the government cut taxes and balance the budget at the same time? joining us is bruce bartlett, author of "the benefit and the burden, why we need it and what it will take." i at this point just about everyone on both sides of the aisle pretends to be open to the idea of simplifying everything, broadening the base, maybe lower

rates, raising revenue that way. but i think your point is it is very difficult. talk is cheap but it is not easy to do this anytime soon. >> absolutely correct. remember the 1986 tax reform required a year of treasury studied before a proposal was even sent to capitol hill. and then it took another two years. we haven't started the process so the earliest possible stages of anything actually happening is certainly not going to happen this year and probably not next year either. >> it is human nature as complex as this system is people are willing to do back flips using this complex system if they think they can pay less in taxes. if you tell them you are going to simplify it you are going to pay less but it will be hard for them to accept that and they

won't give up sacred cows. >> that's right. there is one way you might be able to do an end run. micha michael crats has an idea to raise the personal exemption to $100,000 which would make every tax loop hole worthless for the vast majority of people. and you would pay your taxes when you buy things. of course, there is very strong resistance to a value added tax even if there was massive simplification process. >> one of the persons in your cross hairs the most is paul ryan. you think that that plan makes no sense to have trillions cut with no way of covering the revenue laws. >> that's right. i think the greatest weakness of

the ryan plan is that he says he wants to balance the budget and that is his primary concern but he has a massive tax cut included in this package. now, at an absolute minimum that means you are going to have to cut even more spending if you are going to get to a balanced budget. and i think that makes no sense. you are coming and going at the same time. >> who is at fault here, bruce? if you did have to point fingers, both sides, democrats aren't serious about entitlement cuts. is anything possible after the election? >> i doubt anything is going to happen in the lame duck session. obviously everything depends on who wins. i think it's wrong to say that both sides are equally at fault. i think the democrats are far, far more willing to talk about cutting entitlements than republicans are about raising

taxes. they are just adamantly in concrete. we will not raise taxes for any reason. until they are willing to negotiate on that subject i don't think we will see meaningful progress. grover is the leader. i don't think he calls the shots, so to speak. if he had an efifany apipepipha need to raise taxes. >> you have to cut. the case can be made since both hurt the economy and you know you got to get down from 25% of gdp you might as well start with that before you do anything else that hurts the economy, too? >> the problem with the cut spending only option is if you leave defense off the table and you can't get any fast savings out of entitlements that means all the cuts are going to come out of the domestic spending

accounts so it will screw the poor. we need to put taxes on the table if only for fairness. everybody has to pay something. >> question on taxes. do you believe that by lowering the tax rate you ultimately will create more revenue or not? >> it depends. i don't think we would get revenue from cutting rates where we are now. the evidence of cutting rates in 1980s which were much, much higher is you would get back maybe 25% or 1/3 of the revenue loss. the idea that a tax cut pays for itself is nonsense. >> again, on taxes i think the common person in the street thinks at the end of the day you have to increase taxes and cut spending. are either one of the candidates as well as the president, are they able to bring about the persuasive powers to make that happen? >> not before november, that's for sure.

>> after november. >> maybe after november. we'll see. maybe mitt romney will turn out to be a closet moderate and govern the way he did in massachusetts. there is no evidence to support that right now. perhaps obama since he will be a lame duck after the election and have no reason to run for reelection may be emboldened to try to leave some kind of legacy. it is hard to speculate since we don't know who the next president is going to be. >> the book is "the benefit and the burden". when we return we go from facebook to research in motion. we head to the new york stock exchange. with scottrader streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor, right at your fingertips.

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the new york stock exchange. take a look at this. 1.67% just moments ago. the yield at 1.672%. obviously, a lot of things happening today. carl, melissa and jim. take a look at this. >> boy, what a great time to get a medical report dwaj. . >> we're benefitting tremendous sli from the fact that money is

pouring out of there and coming here. we're a stable political environment. i think people are underrating the fact that we're going to have an election. one of them is going to win, the other is not going to cause insurrection. different place. different time. >> i was going to say, we'll talk a lot about europe. why brussels apparently thinks they are berlin today. you come up with an idea and it's turned away by the germans. we'll talk about jim cook. he's no stranger to the company. he's handled the hot seat fairly well. >> when you have faith in a balance sheet, apple's balance sheet is better than any balance sheet in europe. they could probably get the same rate that the treasury could do. >> and is there some of the parts out there? we'll break down that trade, of course. >> cramer, you probably love the seeds and the corn. that's one of your stocks. >> that's the first thing that i

thought of. >> the chinese need corn. the chinese are always short of harvest. they've got the stacked corn. it's u.s. technology and it's winning. >> hey, carl, i was looking at your twitter feed. what's your thing about le les miserables. >> we share a love. it's a universal picture coming out later this year. >> i forget where it was. it had to be ten years ago we ended up singing it in the car. >> i remember that. >> but you haven't seen rent three times, have you, carl? >> i have. i have. >> it's a spin ach dip. >> we'll see you in just a few minu minutes, guys. coming up, we're going to get to our guest host after the break. ♪

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stock of the day is research and motion in company. it's for strategic review also warning it would likely report a first quarter loss and announce a significant number of job cuts. our guest speaker this morning is larry. i just wonder what does it tell us about facebook and other market leaders. >> i think it tells us that we always have to stay ahead of the curve. that's what apple has done. so there's a big price to be paid if you don't keep up. and that's unfortunate. but i think, you know, back to this -- the election upcoming, i hope that debate just three

things. i hope they debate how to get inside of this financial ditch that we're in. they both have proposals. i'd like to see them -- >> now, you went to this on your own. i was talking about a stock. you went into politics on your own. >> i am. i am. number two, i want them to debate health care. and three, i want them to debate education. how do you fix it? how do you get better teachers to pay them? if they do that, i'll feel good about this. >> health care stocks. >> i do want to look at the nexus of politics. obamacare, we've got to figure what to buy with what's going to happen. you think kennedy goes with liberals. >> that's my inclination. i think it's going to go 5-4. if it is upheld, we're any better off. >> or hmos, if you buy them, everybody is going to be covered. >> on the othe