stocks are indicated sliegtly lower. have a great weekend, everybody. make sure you join us on monday. right now, it's time for "squawk on the street." " >> >> happy bit day birthday to kanye west. welcome to "squawk on the street." melissa is on assignment. david is off. fridays have not been good for the s&p lately, our futures are negative after a selloff in asia. more on that in just a moment. we want to get to the weekend. you've got to follow the road map. the market has had their best three days since december. oil, gold breaking down. by the way, the s&p has not gained on a friday since april. reports say spain will ask for an a for its banks this

weekendment men time, we're bracing for a dell yuge of data. and chesapeake annual meeting starts with two hours. >> well, since the dow jumped 140 in the middle of yesterday's session, futures are lower this morning. leaving options open on stimulus. china's rate cuts sparking fears of a slow down. meantime, commodity slumping. copper, 6-month low. coal is stockpiling. why does this matter? it's emblem attic of what i think is not going to work. minerals are not going to work. i said technology, time to sell, banks not working.

it's funny, the worst-performing stocks were the stocks like kellogg, okay. hershey. but these are the companies that are winners in an environment of lower oil. how many weeks have we now been down in oil? well, how about the fact that this is the longest scene of bad oil prices in 13 years. and you know what, last i looked, we all buy oil. we don't sell it. we're in better shape. oil, we've got to close the week at 8323. or it's the fourth time since 83 that it's been down six weeks in a row. >> i know -- i don't want to be completely contrary and talk about our nation for a second. i know that sichbs 1492, spain has been incredibly important in china. it's been a war up there. china, i know china controls, so to speak. i talked about that last night. but there are people who benefit from a dramatic decline in crude.

85% of the s&p, 100% out there. we know credit problems can really create a great recession again. but i also want to point out that this is huge for america. to have oil come down. >> so you're looking -- you're thinking there's a glass half full argument to be made. >> pepsi huge buyer of energy. i'm using pepsi again. pepsi is emblem attic of coal and peabody. >> geiser right here saying it was everybody sort of had to make a stand. >> right, 1321. absolutely right. obviously, we're closer to 13, 14, we'll see what happens today. but somebody wrote on twitter this morning, i'd rather be a nervous short than an overconfident long going into the weekend. is that a reasonable attitude? >> i think that spain is in bad

enough shape. i watched that bond auction yesterday that happened between 5:00, 5:30 our time. everybody thought that spain was terrific because they got about 6% up 5 and three quarters. and the spanish banks are all buying the spanish debt. we saw a huge percentage of it. in other words, it's getting more dire. and i hate to say this. the worse spain is, the worse ben bernanke is. germany, by saying we want euro-wide fdic insurers that guarantees your spanish deposits would go so far to making a rally that if you were sure, 1320, 1420, 1492. that's the level. if we get a deal in spain, we could go to 1492. no deal. and, well, let's just say that

we're going to be back into the period when the moores challenged spain in that 1100 period. >> no, not a good day. >> jim mentioned spain. they are expected to make a weekend request for a financial package to crop up its banks. actually, almost four senior officials. one german source said she was not aware of any pending announcement on that rescue. a conference call of euro zone finance is planned for tomorrow. not to mention the fitch downgrade three notches yesterday. >> one of the unreal aspects of what's happening is on the one hand, spain is saying banks are fine. they're in great shape. on the other hand, they're saying, please, please, please help us. so you have the split personality. if they would drop the banks, they're fine. if they would drop the level of confidence, then germany would say oh, jeez, we've really got to help. but, please, can we just say ben

bernanke does not have deposits in madrid. i'm sure merkel would take her orders, ala 1946. right now, merkel is, like, hey, what's the problem here? >> well, you know, before yesterday and before bernanke, we were looking at -- what did we have this week? we've got australia cutting. central bank sort of went their way. and i wonder if you think the hope of a big coordinated policy action was fading? >> i do. i felt that the spanish bond auction went poorly and there was a sense that we could have bank runs in spain. everyone would have to coalesce. i guess he's from south carolina originally, who knows. but i would say the idea -- tim

geithner, remember where in the world is matt lower? where in the world is tim geithner. we need somebody from china on the phone with brazil. yes. but it just seems like a beach weekend and that's worrying me. >> but it's supposed to be good weather. >> it is. germany exports down more than expected. the bright spot 06 their economy. italian industrial, down more than expected. the data is not helping. >> that level of confidence ebbs by the day. i think the german's notion, while our stock market is up, what's the worry, is mistaken, they've got to come to the table. they need to save the euro and they've got to do it now. >> it brings us to our next story, which is mechanic donalds with some weaker-than-expected

same store sales. austerity measures in europe. sales down 3-3, well below the estimate of 49. but offset by germany, which people are trying to get their heads around. how can europe be positive, partially offset by the best thing europe has going? >> it's a quandary and the numbers from japan were bad. okay. here's why. mcdonalds, what's been going on for the year in mechanic donalds? it's been the worst performer of all of the discretionary stocks. it's down 12% year to date. why? because people were worried that this would happen. this is a company that's a big beneficiary of commodity decline. everyone wants to give up on mechanic donalds in 80, 81, 82. they loved it at 90, 99, 101. before you panic with mechanic donalds, think about the people who wisely sold it 17, 16 points ago. >> at least they're going to

undergo a succession at the end of this month. china, not helping asia pacific, either, which is probably going to bleed over to young today. >> yes, i think that's the first thing we're talking about. i always love these stories. the western chinese cities. kentucky fried chicken was faltering. look how weird this is. i had domino's pizza on yesterday. do you know that taco bell beat them -- i'm sorry. that we are seeing other pizza chains starting to do better including pizza hut. young is not regarded as an american company. mechanic donalds is not regarded as an american company. we think of it as a french company. you know what, maybe we ought to be a little more america centric for you for a few days and forget about selling everything. think about the idea of commodity costs going down and a taco bell reversal and people coming back to pizza hut. you know, this matters.

it does matter. >> interesting. there is some chatter this morning that even though -- the japan numbers were terrible. they were down 11. after the quake, there was a post-quake spike in mechanic donalds since the infrastructure of eating was so -- is in such disarray. you go to mechanic donalds quickly. >> look, i think you really braugt up a central point about the problem with mechanic donalds as i hit it up. jim skinner, who is one of the most well-known ceos in the country, done a great job for mechanic donalds for years, is retiring. and i think people are used to his calm manner. but you know what, mechanic donalds got a deep bench, as we know from two previous ceos. i'm less concerned. everyone wants to freak out about mechanic donalds. >> i thought that was good enough. >> finally, chesapeake today announcing plans to sell its pipeline assets in three separate transactions.

a total of $4 billion. it moves as the natural gas company gets ready to hold its meeting about two hours from now. aubrey mcclendon tried to ask that this meeting be delayed, jim. that's not going to happen. and there could be some fire works today. >> yeah, aubrey is doing what people expected him to do. david faber said the other day, this has already been on the table before the activists. i think what people don't understand about aubrey and chesapeake is their eyes were obviously too big. they expected natural gas to go up. but they have a lot of contracts that they made a lot of parts for this country. i think a lot of people say why don't you just stop drilling and all of the problems will go away. if you read one of those contracts, they say listen, we're going to drill and we're going to pay you. and that's the problem with aubrey and chesapeake. >> you had an interesting exchange about nat gas just

before the top of the show. >> look, i'm going to exempt obama from the discussion because romney has been just as weak. he's an oil guy because that's the balkan. the north dakota and now the second largest producer in the country. but natural gas is the solution. no one seems to want to embrace it. the president with hey, listen, fossil fuel, i want to do everything. you can't put a window on a car. you can't put a nuclear engine on a car. i have westport on tonight. they've got the engines. i just want to point out that natural gas could be a game-changer for our country. >> yeah, we've watched rick convert gas on this show. >> look, 200 gas stations -- people have to understand that natural gas is a fuel that can span the country. you blanket the interstates and

long haul truckers will do what people have done locally. you can convert. this country didn't use diesel. it converted to diesel and diesel spiked. natural gas is the fuel of the future if just one of the parties would embrace it. by the way, you get ohio, pennsylvania, west virginia, there's a lot of states that are drilling like mad. ohio, major nat gas state. tieing it back to chesapeake, clearly at play here. 11.8%. >> oh, that easterble. they're just terrible. that's a technological issue, by the way. cummings has a better engine. the engines are really hard because the epa is involved every step of the way. and technologically, you need to have better science. it's an amazing technology. this is where bright people go. engineers go. we have financial engineer who is wreck the world. they come here. but we have actual engineers who go to cummins and they save the environment. >> but my question on icahn is i

wonder if you think carl put in a bottom? >> well, he put in a bottom in a preferred, which is a lot of people are worried about financials. the common stock relies on earnings. the survivability is off the table, and i think that's a pretty good call. >> he is going to issue a statement on the economy, 10:15 eastern time this morning. take one more look at futures. fridays have been challenging, but we'll see what happens. dow looking to open down about 20 points in change. "squawk on the street" live continues in just a moment. s tio-y siin lxtes zemethan a porsche panamera s. the 429 horsepower genesis r-spec.

from hyundai.

good morning, carl. some interesting news coming out of this meeting before it's even started. the two directors who are standing for reelection, the only two, i might add, burns and richard davidson, a former geico official, are nearly certain to be defeated by the shareholder votes. essentially, many people voted in the advance of the meeting. and according to someone i just talked to, it's very, very unlukely these guys can stay on the board. but there is a small sliverer of votes that are expected to be cast during the meeting. so we'll have a final explanation after the meeting. but here's the impact of this. you've got a nine-member board. he's going to step down as

chairman in the next couple of weeks, but he will retain his board seat. those two are going to stay. the other 7 seats are now in play. if davidson is defeated, they will have to tender their resignations. due to a technicality, the board doesn't have to accept those rez ig nati resignations but almost sernlly will. and it looks like there may be a sixth seat that's also in play because of the defeat of these two guys. if you haven't lost me yet, it looks like due to a shareholder out cry, the vast majority of this board is likely to change hands. >> jim cramer here. there are people on this board who are actually major american ceos and executives. i want to ask you about pete miller. what are you hearing about him?

he's the lead director. are people angry at him, too. >> i'm glad you asked this question. miller is very much wanting to be kept on the board. he is on the audit committee which is doing the investigation of aubrey's finances again after shareholder protests of the way the company has been fndled financially and he's been doing some things himself running a hedge fund. so he just named the lead director and on the audit committee. they would like to keep him, which means davidson is going to have to leave in order to make room for miller and the five new faces coming on board. the new chairman and the four representatives and carl icahn and the largest shareholders. so in answer to your question, a very long answer, i do think miller is long regarded and i do think the board is going to try to hang onto him, if they can. >> okay, well, probably not the only data point out of that meeting today, kate.

we'll come back to you when it begins in a little more than an hour and a half. >> people were saying on twitter, when are you going to come out against him? i said look, the stock has been a dog. i didn't like any of the things he's done. what am i supposed to do? go down there and picket him? like at the finals at the nba finals? listen, you fool, move. how many times can you say look, the guy screwed up. he screwed up. >> well, if after watching lebron last night, i don't know what would be the better match-up. thunder celtics or thunder heat. >> he could take it to aubrey. >> wow, that was some game. >> meantime, facebook unvailing its new app store touting some 600 apps. apple's app store has half a million. that brings us to this morning's "squawk on the tweet." facebook is going to take on apple. tweet us at cnbcsquawkst.

really, apps and developers are in the eyes of many in tech where the real action is right now. and not a bad small business story for america. >> no, no, not a bad one. and it is the cottage industry. i do want to point out that last night, dominos said that they find facebook add vvertising effective. remember, a huge percentage of the business is online. they have billion dollar sales online. i've been so antifacebook that i felt like in the interest of saying that i heard something good about facebook, i put it out there. >> yeah, yeah, interesting. >> coming up next, ending the week on a profitable note by running with cramer. we'll take one more look at future as we set up this friday and wait for some potentially market-moving events in europe over the weekend. back from post nine in a moment. 3q

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nothing like a friday edition of the mad dash as we're about five minutes and change away from the opening bell. let's talk some fast food. do you think what energy and gas is doing in this country, largely coming down, is going to get reflected in the quarters to come? >> yes, i co. i just like the longer trade. that was the upgrade of mechanic donalds. i think mr. thompson is going to do a great job. we had updates to sonic the other day. jack-in-the-box.

people want to own domestic retailers and domestic retailers. why? more money in your pocket because of the declining price of kbas lean. i like to point out that some things that are being caused by europe are positive. europe and china reduce the price of gasoline. the dollar goes up. gasoline is something we all use. carl, we can't say everything is negative. it is just untrue. >> is the bigger effect going to be felt at the consumer level or the input level for company that is use it as a feed stock? >> great question. i think the answer will be both. most of the companies say jim, it's not the price of the corn flakes, it's the bag. it's the box, it's the trucks to the supermarket. raising numbers, domestic food companies. i'm doing it right here, right now. >> cisco gets a big call from city. >> i was surprised with this call. i don't want to go with it. they're saying telco spending is

going to pick up and the group is okay. they like juniper. i've got to tell you, i think this call is wrong, but i know that people have been waiting to be able to get into these stocks. wait, john chambers will tell you things are better. right now, they're not. >> what's misguided? the call on cisco or the larger call on bold tech. >> i think government spending is bad, i think european spending is bad. maybe something has come back. but, mostly, verizon and at&t aren't spending. these companies have built out a lot -- they're good companies. can i also put in a plug for verizon, at&t? now, maybe they get thrown out with the futures, but, boy, they keep snapping back. american companies are doing better than people think, carl. >> it's a good point. one you made, i imagine, on the today's show this morning. >> yes, sorry to be not a downer. sorry to not be so horribly negative. i'd like to join everybody else. the other day, snapon.

i love these comments that we're a cash-rich, confidence poor country. if we get a little confidence, maybe people will agree with me. >> opening bell after the break. don't go away. [ male announcer ] if you believe the mayan calendar,

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vrjts the vrjts the dow coming off its best three days since december. only managed to close up 46. and, of course, the s&p has not had an up friday since april 27th. but there's the opening bell. we'll see where we get today. the big boy celebrating 95 years of service. the new york state police, who we're going to talk to in a moment. on demand holdings, a pay-per-view provider in china. >> were they ripping out their cable in china? is there's suddenly a big downturn. it's so seize si to cast gloom everywhere. how do you do it? do you take gloom pills? this optimism is based on the fact that i got in this business down 1100?

dow 1100 and -- i've got to get more negative. >> speaking of gloom, we've seen a lot of valuation calls. >> yes. this is one of those industries that's very difficult to try to fathom. the stocks have all run. toll brothers have told me listen, it is a good season. 10% of our economy is homes. we have really strong auto-sales, we have really strong retail-sales. yes, we have bad coal sales. i'm just trying to balance things out. >> you've got to have your dose of gloom. >> look, spain is incredibly important. and technology, i don't like. the banks, i don't like. i'm trying to figure out how did home depot get to its high. they did not march to the tune of the soon-to-be launched pacetta.

>> i hope that's not the case. >> interestingly on squawk this morning, talking about the potential of a messy run on banks. that is the key to avoid. >> yes, it is. he understands greece is going to leave, but he just doesn't want it to happen immediately. also talking about the idea of being energy self sufficient because of natural gas. there is a cross current here which says that if there is a good discussion over the weekend, we're going to come in on monday and be -- and have a short-term solution that could tide us over. i keep talking about earnings. in another couple weeks, you and i are going to be sitting here on earnings season saying oh, that was a bad number. i want people to be in front of that. and it's not going to be bad numbers from home depot. it's going to be from international companies that looked like they were very pressured to move into europe and asia when they did. >> yeah, we'll see what kind of numbers they are from best buy. more reports after yesterday's show. now leaving apparently to decide

how to pay his 20%. >> yeah, schultz is a titan. some industries were obliterated by the new economy. first it was books. i remember when borders was a $20 stock and i went to see them in ann arbor and they said what do we do with this amazon thing. and i think the answer was take a permanent vacation to go with your permanent intellectual vacation for not seeing it coming. i don't care how brilliant anyone who runs best buy is, it just doesn't matter. if you're going to be a retailer, you're going to be selling something that amazon doesn't sell. >> yeah, the fundamentals and we've seen others go that way before. it has not turned out 2k3w50d. banks, the fed voting for these three accords, even for small lenders. i know you're not a fan in general. not until 2019, but, still. >> i know that jamie dimon has complained about these. i also recognize that our banks are so much better than the rest of the world that there is an

absurdity here. that we're coming down on our banks. do you know most of the banks would have been seized already by the f.d.i.c. in spain? they've got two, three, four times the number of loans that we seized companies during 1990 and 1991. so i keep on wanting to remind people, our banks are strong. but the regulators do not like them. >> yeah. we talked about commodities at the very top of the show. copper is going to get a lot of attention today. and i wonder, for those who are -- for those who are going to try to make it a macro indicator, is that fair? is dr. copper still -- >> 12 years ago, 30% of the copper in the world was used in the united states. it is the reason why people are so concerned about china. and aluminum has not been able to replace copper, although people will tell you that should happen. >> yeah, a lot to watch this morning. let's get to courtney reagan. >> hi, carl.

good morning. you're hearing a lot of words like jittery and cautious. we'll talk about where traders are going ahead of those conference calls expected between the e-finance administers to discuss spain. we'll be a little bit on edge ahead of that. if you take a look at some of these commodity stocks, you can see very clearly that we're having a very weak risk entree. as you can see, your energy is the biggest loser. material shortly following that. but despite all of that and the lack of news we got on additional easing as well as the chinese rate cuts. world markets are holding up fairly substantially. on the last day of the week, you can see the s&p is up 2.5%. we have to hold about where we are. china logging its worst week of the year and worse since december, actually. we've seen a pretty steady loss all week. today eegs declines making that a little bit more exasperated.

we've got brazil with a 6-week losing streak. so some positive news out of there. they're potentially looking to cut those rates. look at spain up more than 7%. this is an interesting one. of course, spain, all sorts of headlines coming out of there, perhaps on some hope coming out of those conference calls. or some bottom fishing. maybe a little bit of both. up 7%. and if you look at the euro banks, pretty clear. for the most part, euro banks are weaker except for those spanish banks. and then if we swing it all the way back to the u.s. markets, take a look at some of these insurers. we're seeing them get new contracts, particularly in ohio. so you can see some significant turn arounds in these stocks from what we saw yesterday. >> thank you. before we switch, i just want to

say, carl, bristol myers, that's where i want people to go. they're not done going up. they've got some momentum. maybe there's some euro. but they've got momentum and they've got some new drugs. let's shift to bonds and the dollar, rick santelli. rick, take over. >>. >> i'll tell you what, jim, i think we'll have to do a part 2 to that. install some of those natural gas pumps people can put in their garages. listen, if we look at treasuries, they're certainly getting cheaper. once again, look at a chart over the last 24 hours. and you can see, yields are down from 164-157. but what's really fascinating is the weekly comp. if you open it up to the entire week, last friday, we settled at the close of 1:45. but maybe the biggest news of the week was, of course, how the markets are weighing for ben

bernanke and whether there's going to be an extension to any accommodation programs. anything can happen on the 20th when the statement is read. however, the dollar index up almost three quarters of a percent. why becau why? because it's probably not going to be the punching bag that always seems to hit the dollar when the fed decides that the combination isn't quite big enough. now, lelt's . >> what we saw from bernanke yesterday, a little bit positive. but at the same time, he's not telling us what he's going to do. also, some more economic data coming out of china this weekend. so traders are taking a wait-and-see approach. that looking for trends on global growth. and still a lot of trends coming out of europe. also, the conference call on saturday. you know, we're going to a weekend, so there's a little bit of selling ahead of that, as well.

traders basically saying they want to take some risks off the table before making any big moves at this point. >> joining us this morning, straight from ringing the opening bell, celebrating 95 years of service, the new york state police joined by superintendent joseph d'amico. welcome. i love just reading the story of how the state police even got started years and years ago. >> tremendous history in the state police. you think back to 1917 that it was the actions of two women that formed the state police. they saw the need for a statewide establishment. and from there, we ended up patrolling and policing most of the rural areas. now we have various functions including new york city and the rest of the state. >> almost 5,000 sworn members, more than a thousand nonsworn em employee yees. computer crimes sort of caught our eye. where does that fit? >> well, we're very active in computer crimes.

today, everything. whether it's narcotics, prostitution, everything relates to come puter. almost every criminal investigation we do, we're seizing computers and doing forensics. it's just a sign of where we're at. that's how we do business. >> one of the thing that is you guy dos a great job when you're on the line for violent crime. but you're also the guys that people go to when there's local corruption. everybody trusts you. now, was this always one of the missions of the state police? you see it constantly. you see it in movies. listen, we've got to go to state police. local guys, i don't know. that's a tough play, isn't it? i think the reason is we're independent. we're independent across the state. so generally, wen we have these type of cases, we're a good entity to do it. >> and you're known by all. >> very good.

>> finally, it's been an interesting week for public workers in general. a couple of key vote ins california talking about the way in which retired employees are going to get paid through their pensions. are you feeling stresses from state governments? from payrolls on down from workers who are still active or retired? >> i think these are tough fiscal times for everybody. whether you're in a private field or work for civil service or a state government. we' we're all feeling the crunch. i think it's just natural to revisit employee funds and how funds are managed. you know, personally, no, i think most people here do what they do because they like doing it. we don't dwell on things like that. >> thank you for protecting us. >> superintendent joseph d'amico. that's about 600 apps or so, jim. >> do you know how many apple has? >> yeah. half a billion?

>> 500,000. so if facebook's app store is going to take on apple's, facebook better what? tweet us on cnbc. as we go to break, take a look at this morning's early movements.

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together to be able to challenge the dollar store. they've gotten a lot more natural foods. a lot of short positions. the shorts did not pan out. it takes a lot of fire power to move walmart. walmart is a play on gasoline going down and it's a play on american spent. and please understand that that company is not ruled by what happens this weekend with spain. >> yeah, lower gasoline prices really moves consumption at the low end. >> yes, it dud. now, we're not going to see gasoline down dramatically yet. two months ago, we talked about gasoline being at $5 by independence day. i refuse to look at everything negatively. there are a lot of people say oh, my, oil is down. it's slow. it has nothing to do with america. we're taking advantage of the fact that there are other countries that are not doing that well. that's why walmart is at a high.

>> that stock has been on fire since it allegedly disappointed. a lot of people are rallying behind that. i continue to think that that wasn't nearly as bad as people want to say. i'm stuck with this homework thing i do. i mean, like last day, the phillies had a day game. if you're not watching bell mont stakes, the open and paciao. it's going to be a great weekend for sports. squawk on the tweet this morning, facebook is unvailing its new app store.

apple's app store features some 500,000. facebook better what? rick writes better get on steroids. and better come with its own tablet. kevin tweets the facebook's app store better not take three days to confirm the purchase of an app. and john tweets it better not wake up the sleeping giant. and we do have an apple developer's conference on monday. i'll be out in san francisco for us. apple versus facebook? apple is the company that our younger generation looks to for efg. and that's not really for our parents' generation and my generation. we don't know how powerful it is. >> you'll see it. >> in general, the stock has tended to move up ahead of the conference and then sell off. and then we'll get a better look at tim cook having really only given a couple key interviews this year.

>> we are not a bunch of idiots in this country. oh, dad, come on, they make them over there. >> well, they do manufacture them over there. this is an american company. sony is a japanese company and they make their stuff all over the world. can america lay claim to apple? yes. >> i don't think anybody would disagree with you on that. by the way, later today on the fast-money halftime report. nyse, duncan niederauer, talk about the potential for a move. we see craft moving to the nasdaq today, jim. >> scott doing an amazing job yesterday with tommy joyce. this is an issue that everybody feels bad about. i think we're going to feel retail interest since the box facebook deal. that was a hated thing that happened. that just caused more hatred than even the flash crash. there's that many people

involved that didn't do well. >> yeah, wapner has been all over that story. >> take a look at facebook shares. where do you see the bottom for fb? you have until tuesday, about a week before the one-month anniversary of the public debut to send us your predictions on where the stock will bottom out. tweet us at cnbc squawk st. the prize is a hoodie that everyone has signed. you have until tuesday to tweet us your predictions. >> look, it does have earnings. domino's pizza says it's the greatest way. i'm just presenting that because i have been nonstop negative on facebook. jim, you never say anything good about it. well, dominos came on air. >> interesting presentation of twitter yesterday being written about saying that their mobile revenue out performs their nonmobile. >> oh, that's very interesting. it's based on just the opposite.

and not been a problem for them. they expect to crack a billion in revenue by 2014. people talk about them being, perhaps, the next chapter of the storybook in this country. >> i think twitter crosses a lot of boundaries. in other words, this one has been really adopted by a lot of people. in a very quick fashion. >> relevance not an issue for twitter, by any means. >> you want to know what americans are thinking? i read your tweets. you had a tweet this morning. you're in there at 4:30. >> not early as you. >> i love it. >> important to note. dow is down 45 points. a lot more "squawk on the street" still ahead.

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simon hobbs here, tell us what's coming up at 10:00.

>> good morning. the chesapeake shareholder meetings about to get under way. we're going to talk to one shareholder who's lost $8 million in the last 2.5 months. it was arguably one of the worst weeks of the obama campaign. we're going to look at one of the worst weeks in china and the very lovely, the extremely well connected will also join us live. back to you. >> standing right here by simon. >> thanks, simon. let's get six in 60. six to stocks in 60 seconds. we'll begin with manpower. >> this is a huge european company. don't forget. sell, sell, sell. >> all the companies that are involved with oil and gas are going down. morgan is oversold. >> yahoo upgrade at bernstein. >> very compelling. everyone has kind of forgotten about it since the change on the board. >> what's the news at intel? >> watch this fight between apple and samsung.

in terks l is ready to take over that project. >> morgan stanley says whoas are unjustified. >> this is a discretionary play. i'm thinking about doing coors versus coach. interesting dichotomy. >> finally, mechanic donalds? >> remember, i said listen, mechanic donalds, in the last seven years has charged 14 below earnings. everyone's giving up on mechanic donalds. sorry. big mack, fries, diet coke. >> for more of those names, cnbc dot com. >> west port. this is the natural gas thesis that everybody seems to embrace. they've got the engines coming against them. but these guy haves got the right thing. don't forget, royal dodge, 200 gas stations coming dounl the pike. that's called shell. i filled up there, you have, too.

going into tonight. we've got spain news maker tomorrow. >> it's friday in the summer. whoever is still there is going to be able to control the open. there's so few people playing. i figure somebody blast the futures down to make it really ugly. that's a game i can't stand. >> when we come back, chesapeake getting ready to face shareholders in about an hour's time. we'll talk more of them when "squawk on the street" comes right back. [ male announcer ] this is the at&t network.

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welcome back to "squawk on welcome back to "squawk on the street." april hitting the wires up 6/10 of one percent. if you missed it, the trade deficit was minus. it was a deficit. it was minus 50.1 billion. and here's what's interesting. when you see a trade balance increase or deficit increase, it's not so bad if you're

importing more than you're exporting. but both numbers improve. on this trade deficit, we saw a draft in percentages of both imports and exports. carl, back to you. >> thanks a lot, rick, talk to you in a little bit. the president set to issue a statement on the economy in about 15 minutes. we'll bring you live coverage with his job potentially on the line, chesapeake ceo will face off with the company's disgruntled shareholder base at their annual meeting. we'll get one take on all of that china. china on the heels of the country's first rate cut since '08. just how bad is the slow down there? >> when it comes to the stock markets, we have exclusive results of the latest cnbc all america survey and that's all coming up this hour. >> okay, the tension is mounting in oklahoma city. in about an hour from now, the em battled chesapeake will face disgruntled shareholders at the company's annual general meeting.

kate kelly is already on location as those shareholders gather. kate, what is the latest? presummablely, it's about the asset sales? >> yeah, simon, the company announced earlier this morning, they're expected to sell $4 billion and three separate transactions. this was widely televised a couple of days ago, but it took a longer than expected. it was kind of later in terms of the announcement time than we had hoped. the other thing was that two of the directors were up for reelection today. so those folks are likely to tender their resignations. ironically, the board does not have to accept those resignations and will probably not make a final decision on whether to do so today. people are starting to file into the meeting which is taking place behind me. more than 200 shareholders are expected today and possibly even more than that. it's unclear who may show up at the last minute. there is definitely some tension in the air. the company is clearly very

nervous about the media coverage. they've asked us to sign sheets saying that we understand that we can't interview people on campus. we're actually shooting right off of the campus, as i speak. i might add, i said this does not preclude me from approaching them. i added that to it. i've never seen anything like that in terms of an annual meeting. you can see that there's a lot of anxiety. first thing on the docket is the reelection of the shareholders in this proxy and the second will be to see whether they adopt a majority shareholder approval clause, which the board is supporting in which two-thirds of the votes cast have to be in favor in order for them to be elected. that's kind of the scope of it, carl. and the transaction today, it will give them about 2 billion in proceeds. i'm told about a billion,

billion and a half in debt relief. but does that do anything to the leverage? how healthy is this? and do shareholders really care about that? >> that's the question. i think they're top of mine for many shareholders. certainly mine for any recently. that's actually a little built more of a drop in the bucket, if you will. so they're making some progress. the other thing is, as always is the case, aubrey and his lieutenants like to give you a positive surprise, right? so this pipeline deal, when they first emerged a couple of days ago, i think people were expecting to see news on the asset sales. it's probably what aubrey has up his sleeve. he's going to get those done as soon as he can. but he's going to hit us with the pipeline sales today and

hope to hit us with the base. >> you say nothing precludes you from approaching management. i don't think it would preclude you from approaching anyone. but, seriously, my jobl is to talk to people and really be professional about it. but i didn't come out here not to get some interviews, right? >> did you go to the oklahoma city thunder game last night? did you see him there? >> i did not. last night, i went to the metro wine bar which is one of the local restaurants which aubrey has a partial or an entire stake in. i'm always working. >> if i were working and i saw you coming, i would put on my running shoes. >> let's just, as we stay with the subject, get a shareholder's take on what will happen today. david dreeman is ceo. i guess he owns about 1 million

shares, david? >> yes, that's correct. so you've lost what? 7 or $8 million in the last two, two and a half month sns. >> our clients have, yes. >> so what do you want to have happen today? >> well, we've been dissatisfied with the management and the board of directors for quite some time. and as things unravel, just more and more negative factors come out. and there's a enormous amount of must be money that's being spent all the way from real estate to rowing. i think mcclendon put a $9 million rowing course on the river there. and it just goes on and on and on. they've got a couple hundred million in real estate.

and here's a company that we just saw a minute or two ago. and the boards of directors is paid. the average directors are making roughly $500,000 a year, including something like 43 hours of air travel a year. >> mr. dreeman, forgive me for interrupting. you're a very experienced investor. it's not great news to know that mcclendon was a monarch in that company. why sudden ly are you able to turn on the board this way. have you been able to pledge so much of your client's money? >> well, a lot has been coming out that we really didn't know clearly.

for example, the fact that he gets 2.5% of every gas well drilled that he had the same financing as the company did, which is a possible conflict of interest, a lot of this, as they say, is coming out. we knew bits and pieces. but when you put the story together, i think in the last six weeks or so, we know an awful lot more. again, it's struggling. and it's being pushed. instead, it would run out of cash early next year if they didn't take action. >> so they said they'd run out of cash early next year if they didn't take action. but what is your time line for the company? you've been a long-term investor in chesapeake.

how long are you willing to wait before throwing in the towel? how much money are you willing to lose before you say no longer? >> well, right now, i think there's a -- we have to take stock of assets and see what really is there, what they're going to sell and how much of their most important properties will they have to sell and what's going to be left. so it's -- it's too early to throw in the towel. this is after all, the second largest gas producer in the united states. also, i would bt buy anymore stock at this point. jugs in a word, david, which is a greater ally for your clients at the moment? aubrey mcclendon? >> well, you see, the -- all of

the things that aubrey mcclendon has done in the past years and increasing, i don't think as talented as he is, he should be a member of chesapeake anymore. i think that he should be either resigned or be fired by the reconstructed board. >> turning now from chesapeake to nat gas to crude oil which is heading for its longest losing streak in 13 years. speculation of falling demand in this country and china are some contributing factors. joining me this morning, sterling smith. sterling, good to have you back, good morning. >> and good morning. we are definitely in a down trend here. >> abds right before the summer, too. >> yeah, that is completely driven by the european situation. the markets are very nervous

towards risk assets. the strength and the dollars. but america can continue to drive lower. i think, you know, last time it was low, $75. i think it's definitely a target. i think the downside is limited there. >> it's always split between bears who want to see it as a macro economic indicator and bull who is want to see it as a tail wind for the consumer. where are you on that side? we should see some better movement in july and august with prices being a little bit longer. it may help out summertime driving.

>> sterling, thanks for your time. we'll join you soon. when we come back, the president set to issue a statement on the economy in just a couple minutes. we'll bring that to you live when we come right back.

at the white house. at the white house. expected to talk a little bit about the u.s. economy, a little

bit about europe and potentially a message for congress on how they should pass certain elements of legislation. >> i think what the president is going to do is try to put the breaks on as best he can on a very bad run of news that he's been experiencing from the wisconsin recall. funld raising numbers. this has been a very tough time for the president. the approval rating has ticked down. and so i think he's going to try to use this forum to put pressure on congressto enact his job plan chlts he'll take a couple of questions after the statement which is expected to

go around 7 minute ors something. >> yeah, you mentioned summers and president clinton. but it's also ed rendell and corey patrick. i don't think its's bain capital, per se. they can prosecute that in the ad wars and come out ahead i think the more problematic has been about tax and weakness and slowing growth and slowing job growth. the fact that you've bot people saying they should be temporarily extended. that plays in thehe line that t

republicans are trying to draw between this president and the republican party and mitt romney who don't. >> it's interesting that he would actually take questions at the end. this would be the first opportunity that the press would have to talk to him about wisconsin. and i understand the early indications or that he wouldn't take questions. he drew the statement and he'd heedly leave. >> i don't know about that early indication. what i had heard was two or three questions, we'll see what happens in practice. but wisconsin is clearly something that you could expect the president to be asked about, although with only two or three questions, it's a roll of the dice as to which one becomes more important. you get asked about syria, you get asked about europe. wisconsin was a sign that republicans were not on their heels. >> obviously, we had ben

bernanke on the hilt yesterday. he was asked directly about the bush tax cuts expiration. being the biggest element in his view of the fiscal cliff saying that if you weren't going to let them expire, you dould do other things, john. you know, ben bernanke has been an ally from the beginning. therefore, the words he says have an effect. i do think the administration does see other ways of alleviating some of the pressure on tax cuts would have and then affect the middle class after january 1st.

we've got a long way to play out. anything is going to be done until after the election. at least in a lame-duck session of congress if not after january 1st. >> and then we 'going into a weekend of uncertainty in europe. spain may become the fourth european country to formally ask for aid. your view of the likelihood of him say ing ing.

that whole austerity versus growth debate is one the administration has been trying to drive in the direction of growth and growth in the way that the administration defines it, not the way republicans in congress define it, which is cut back government. >> yes, well said. clearly we'll have a couple minutes here to wait. we'll get to the president and his statement on the economy when we come right back. and development. some new members of the team will be introduced. the chairman emeritus will distribute his usual wisdom. and you? well, you're the chief life officer. you just need the right professional to help you take charge. ♪

okay, okay, waitiing waiting on the president this morning, we were told 10:15 on the president's statement on the economy. clearly running 10 minutes late. when that does happen, we'll bring it to you live. the big question plaguing facebook. the stock was slammed earlier this week saying facebook ads don't impact users. the opposite. here's a look at how facebook has been trading since it went public three weeks ago. our julia borsten is in los angeles with more on the business. >> good morning to you, carl.

facebook ads are effective, saying that facebook-earned media is having a statistically positive lift on people purchasing other brands. now, the stock is moving higher this morning which is titled it's time to change the discussion on measuring facebook effectiveness, in which they criticize reuter's methodology and find that users ignore. comscores say that people are spending more time on facebook and they don't realize how much ads impact them saying stay tuned for more details next week. now, comscore's news is monetizing itsd growing mobile usage. this week, facebook introduced mobile-only advertising allowing a larger ad package. facebook is algs making it easier for user apps.

and just last night, facebook launched a new way to lure users to spend time and money. an app center with 600 social apps tayloring social recommendations. it's designed to encourage developers to work on facebook apps. and to increase engagement with apps which should drive virtual payments of which facebook takes a cut. facebook has a no-meeting wednesday policy to keep engineers on task. and we will, of course, have the latest from comscore study next week when those are out. >> thank you so much. facebook's app store available to mobile users. twitter's ceo announcing this

woke it generated more revenue from its mobile platform than from its web site in the last quarter. >> >> i want to throw you a question about this app store. now, right now, and twitter, you know, we should say they're both pretty much using the same sfrat ji. amass enough people in one place and trying to make money off of them, will that strategy be successful in the app store as it has been for the web site to start with? >> we really don't know. i think the big issue, in terms of mobile advertising, is actually what facebook and twitter are both doing that's unique, which is rather than having display ads, which is the traditional method. and so you as a user would see it the same way we use status updates.

now, in terms of the app store, the idea is really just to increase engagement and also to help people find apps because it's not always easy to find those apps. >> julie, i would like to throw the question to you about the in-app advertising. when will they start being able to make money from users paying directly to developers. >> if users buy virtual goods and say on facebook, facebook does take a cut. it's 30%. so it's in facebook's best interest to get more people playing games and to get people buying more ver chul goods in those apps because the more people engage in payment in apps, the more money there is for facebook down the line. the one thing that is really interesting, kayla, is this idea

that facebook is really transitioning to the mobile world. it started off as a web site and now is trying to figure out how to make money in the mobile world, which is where everything seems to be moving. facebook does not have mobile edit score. it's trying integrate it into everything it does, and that is a process. >> so it all begs the question, does facebook need a phone at this point? they now have an app store. do they need a place for the user to put all of those apps? to get into the phone business is a whole can of worms that face book doesn't want to get involved in. they can be successful without needing to create their own phone.

the problem is they're not there yet. >> right chblt and, of course, we're all expecting an update on the first quarter earnings. thanks so much for being with us. and, orvegs later today on the fast-money halftime report, we'll have the first interview since the follow up from the facebook ipo. of course, a big question about whether facebook is headed to the new york stock exchange. that's today at 12:00 p.m. eastern. we'll bring you that live from washington in just a moment. this country was built by working people. the economy needs manufacturing. machines, tools, people making stuff. companies have to invest in making things. infrastructure, construction, production. we need it now more than ever. chevron's putting more than $8 billion dollars back in the u.s. economy this year. in pipes, cement, steel, jobs, energy. we need to get the wheels turning. i'm proud of that. making real things...

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presidents have their own way of managing time. president clinton was notoriously late for everything. 43, president george w. bush notoriously on time. president obama is kind of a mix. sometimes he's late for us, other times he'll show up early, unexpected. today, he happens to be late. we were expecting a 10:15 start time for this address on the economy. >> okay, that gives us time to quickly briefly touch on where we are with the markets. the main theme coming out of markets over tonight is this bearishness on commodities and on oil in particular. a bearish view of what bernanke was saying. that's how they interpret it in asia. let's get over to chicago and get more on the markets.

the founder of traderoutlook.com. and the cme. good morning. as soon as i saw it, i was like no. >> let's have a call of this. we'll just go over my name. talk to me about oil. these are big losses today. >> yeah, you know, oil's weakness is interesting to me because it's not so much about the commodity's story as it is about the effect it can have in the overall markets and the overall economy. you remember we had a mild winter and that seemed to play into a little bit better consumer spending. and i think you could have that same effect from the low crude prices. there were not buyers of crude at these prices. and with the summer driving season starting, that could, potentially, it's a small positive for equities. but it could take people into higher consumer spending at a time when you would expect it to be spent on gas. >> but we racially see this lull

in oil as we go into the summer season. it's ultimately good for consumers, but can they count on that for the next three months? >> that's a tough thing to answer. it's being driven by potential global economic weakness. and that obviously is being driven by europe. we're seeing a little bit of concerted central bank action. you guys mentioned before the break you guys were disappointing. i think he'll probably be pressured into that over time, especially with the politics going on. if that continues, it would have been a tall oil. >> clearly in front of so many republicans. that would have picked a fight on capital hill. talk to me about the locals? >> are you saying he's a republican? >> no, no, what i'm saying is he doesn't want to create tension and an argument with politicians on that very public platform by saying yes, i think we should go to qe.

and then they say but qe doesn't work. i think the audience was yesterday. >> mr. bernanke is in an economic and political prison. the market wants the qe, the president wants the qe, the republicans don't. it's a really tough spot to be in. it's supposed to be political. they're not supposed to be subject to those things. unfortunately, is. he can be blamed for this, really. i mean, it started in 2007, 12008. and the blame can be president bush, president obama and squarely on bernanke. >> do you think that we can go further from here? >> in the metals? >> yes, copper, for example. gold, specifically, has much,

muchl more volatility than it does in the past. here's the thing about gold. gold has perceived at lower levels than this as a permanent store value. right now, it is an investble asset. it will be an investble asset above a thousand dollars. having said that, the volatility has been more than we've seen in the prior 16 months. >> rob, thank you very much. >> your name is hobbs, i can't expect you to say my name right. >> maybe they should start writing it out phonetically for you. >> they already do. >> let's head over to steve liesman finding just under half of americans believe the stock market is rigged for insiders. what did you find in this version of the survey? >> yeah, kayla, we thought jp

morgan, facebook, what do americans think about whether or not they could make a buck in the stock market, our cnbc economic survey of 800 americans across the country. we asked who can profit? did anyone profit if you do your homework? that's 49%. what about only experts. one in five americans believe only if you have inside information can you profit and 10% say they're not sure. what about how people who have money in the market or who have money in general. what do they think? here's the results. 49% say anyone can profit. financially, not as different as you would think. yeah, they think they have a better chance or are more likely to profit on their own. but 40%, not different from all americans thinking that it's for experts or insiders only. on the key question, bad time or

no, that's ticked up a bit. the unsure remains right around where it almost always is in the 50% or 15% area there. and what about the financial elite? a very interesting development we've been following for a while in the five-years of this survey here. you can see here it is now below 50% of those with money in the market saying that it's a good time to invest in stocks and the number who say no is coming up. i think that's one of the biggest problems or challenges for the market. people in the markt, they are getting increasingly pessimistic on stocks. coming up at 1:00 p.m., john harwood will talk about how the american public views, the candidates on key economic issues. you can see more from our exclusive survey. >> do people always try to

decide around what opinions pivot? jobs largely in this country. but for those who are in the market, i guess it's got to be more closely tied to the wealth effect of what markets are actually doing, right? i think that's key. the attitudes of the market stayed the same for at least a while. what's interesting is to see that long, slow, steady decline. and now it's below 50% of the financial elite, believing that now is a good time to invest in stocks. i think the retail invester is a good brom tor. you know, people sitting at home, they know a thing or two. and actually, your chance, steve, would more or less attract the ten-year. >> we'll do the economy and then i'll take some of your questions. today, we 'fighting back from the deepest economic crisis

since the great depression. after losing jobs for 25 months in a row, our businesses have created jobs for 27 months in a row. 4.3 million new jobs at home. the fact is job growth in this are stronger than the one following the last recession a decade a ago. but the whole we have to fill is much deeper. that's why we have to keep on pressing with actions that further strengthen the economy. right now, one concern is europe, which faces a threat of renewed recession as countries deal with a financial crisis. now,the good news is there is a path out of this challenge.

these decisions are fundamentally in the hands of europe's leaders. and, fortunately, they understand the seriousness of the situation and the urgent need to act. i've been in frequent contact with them over the past several weeks. and we know that there eegs specific steps to take to prevent the short term from getting worse. part of that is taking clear action as soon as possible to inject capital. just as important, leaders can lay out a framework and a vision for a stronger euro zone including deeper collaboration budgets and banking policy. now, getting there is going to take some time. but showing the political commitment to share the benefits and responsibleties of an integrated europe will be a strong step. with respect to greece, which has important elections next weekend, we've said that it is in everybody's interest for dwrees to remain in the euro zone while respecting its

commitments toe reform. we recognize the sacrifices that the greek people have made and the european leaders understand the need to provide support if the greek people choose to remain in the euro zone. but the greek people also need to recognize that their hardships will likely be worse if they choose to exit over the euro zone. over the longer term, large debt burdens carry out fiscal reforms. but they've also got to promote economic growth and job creation. as some countries have discovered, it's a lot harder to reign in deficits and debt if your economy isn't growing. it's a positive thing that the conversation has moved in that direction. and leaders like merkel are working to put in place a growth agenda alongside responsible fiscal plans. the bottom line is the solutions to these problems are hard, but there are solutions. the decisions required are tough. but europe has the capacity to

make them. and they have america's support. their success is good for us and the sooner that they act and the more decisive and concrete their actions, the sooner people and markets will regain some confidence and the cheaper the costs of clean up will be down the road. in the meantime, given the signs of weakness in the world economy, not just in europe, but also some softening in asia, it's critical that we take the actions we can to strengthen the american economy right now. last september, i sent congress a detailed jobs plan full of the bipartisan ideas that would have put more americans back to workment it had broad support from the american people. it was fully paid for. if congress had passed it in full, we'd be on track to have a million more americans working this year. the unemployment rate would be lower. our economy would be stronger.

of course, congress refused to pass this jobs plan in full. they did act on a few parts of it, most significantly, the payroll tax cut that's putting more money in every working person's paycheck right now. and i appreciate them taking that action. but they left most of the jobs plan just sitting there. in light of the head winds we're facing right now, i urge them to reconsider. there are steps we can take right now to put more people back to work. they're not just many ideas. they're not just democratic ideas. they're ideas that independent, nonpartisan economists believe would make a real difference in our economy. keep in mind that the private sex tor has been hiring at a solid pace. one of the biggest factors are teachers and cops and firefighters. congress should pass a bill putting them back to work right now.

giving help to the states so that those layoffs are not occurring. in addition, since the housing bubble burst, we've got more than a million construction workers out of work. there's nothing fiscally responsible about waiting to fix your roof until it caves in. we've got a lot of deferred maintenance in this country. we could be putting a lot of people back to work, rebuilding our roads, our bridges, some of our schools. there's work to be done. there are workers to do it. let's put them back to work right now. the housing market is stabilizing and beginning to come back. there are still millions of homeowners who did everything right and struggle to make ends meet. so as i talked about, let eesz pass a bill that gives them a chance to save $3,000 a year and take advantage of these historically low rates. that's something we could do right now.

instead of just talking a good game, congress could give the job workers a tax break for hiring more workers. these are ideas, that, again, have gotten strong validation from independent, nonpartisan economists. it would make a difference in our economy and there's no excuse for not passing these ideas. we know they can work. now, if congress decides, despite all of that, that they aren't going to do anything about this simply because it's an election year, then they should explain to the american people why. there's going to be plenty of time to debate our respective plans for the future. that's a debate i'm eager to have. but, right now, people in this town should be focused on doing everything we can to keep our recovery going. and keeping our country swamped. so i would urge them to take another look at some of the

ideas that have already been put forward. with that, i'm going to take a couple of questions and i'm going to start with karen bohem who is with reuters but, as we all know, is about to go get a fancy job with the national journal. we're very proud of her. so congratulations to you, karen. you get the first crack at it. >> thank you very much, mr. president. could you tell the american people what role the united states is playing in the european debt crisis? and, also, do you think european leaders have a handle on what's needed to step the crisis? and you talked about a number of ideas that you plan to put forth? a couple of things. you've got some countries like greece that genuinely have spent more than they're bringing in.

there are other countries that actually were running a surplus and had fairly responsible fiscal policies. but add weaknesses similar to what happened here with respects to their housing market or the real estate markets and that has weakened their financial system. so there are a bunch of different issues going on in europe. it's not simply a debt crisis. what is true is that the markets, getting nervous, have started making it much more expensive for them to borrow. and that, then, gets them on a downward spiral. we have been in constant contact with european leaders over the last two years. and we have consulted with them both at the -- at the head of government and head of state level. i frequently speak to the leaders not only in formal settings like the g-8, but also

on the telephone or by a video conference. and our economic teams have gone over there to consult. as i said in my opening remarks, the challenges they face are solvable. right now, their focus has to be on strengthening their overall banking system, much in the same way that we did back in 2009. and 2010, making a series of decisive actions that give people confidence that the banking system is solid, the requirements are being met, there are stretszs out there that can be absorbed by the system. and i think european leaders are in discussions about that and they're moving in the right direction. in addition, they're going to have to look at how do they achieve growth at the same time

as they're carrying out structural reforms that may take two or three or five years to fully accomplish. so countries like spain and italy, for example,italy, for example, embarked on some smart structural reforms that everybody thinks are necessary, everything from tax collection to labor markets to a whole host of different issues. but they've got to have the time and the space for those steps to succeed. and if they're just cutting and cutting and cutting, and their unemployment rate is going up and up and up and people are pulling back further from spending money because they're feeling a lot of pressure, ironically, that can actually make it harder for them to carry out some of these reforms over the long term so i think there's discussion now about in addition to sensible ways to deal with debt and government finances, there's a parallel discussion

that's taking place among european leaders to figure out how do we also encourage growth and show some flexibility to allow the reforms to really take root. now, keep in mind that this obviously can have a potential impact on us because europe's our largest trading partner. the good news is that a lot of the work we did in 2009 and 2010 have put our financial system on a much more solid footing. our insistence of increasing capital requirements for banks means that they can absorb some of the shocks that might come from across the atlantic. you know, folks in the financial sector have been monitoring this carefully and i think are prepared far range of contingencies. but even if we weren't directly hit in the sense that our

financial system still stays solid, if europe goes in to a recession, that means we're selling fewer goods, fewer services and that is going to have some impact on the pace of our recovery. so we want to do everything we can to make sure that we are supportive of what european leaders are talking about. ultimately it is a decision they have got to make in terms of how they move forward towards more integration, how they move forward in terms of accommodating the needs for both reform and growth. and the most important thing i think we can do is make sure that we continue to have a strong, robust recovery. so the steps that i have outline reasonable doubt t are the ones that are needed. we have a couple of sector that is are weak. overall the private sector is doing a good job creating jobs. we have seen record profits in

the corporate sector. the big challenge we have in our economy right now is state and local government hiring has been going in the wrong direction. you've seen teacher layoffs, police officers, cops, firefighters being laid off and the other sector that's still weak has been the construction industry. those two areas we have directly addressed with our jobs plan. the problem is that it requires congress to take action and we'll keep pushing them to see if they can move in that direction. okay? jackie comes? >> thank you, mr. president. i would like to ask you a couple -- what a couple other people have said about europe. i'd like to know if you agree with former president bill clinton who said in the past week that the europeans' policies you have described here today are much like those of the republicans in this country,

politics of austerity that would, you know, take us in the same direction as europe, if you agree with that. the republicans for their part said you're simply blaming the europeans for problems that have been caused by your own policies so i would like you to respond to both of us and tell us concisely time how much you personally spend on the european situation. >> any other aspects of the question? >> i do have more questions. >> first of all, in terms of the amount of time i spend, look. i think it's fair to say that over the last two years i'm in consistent discussions with european leadership and consistent discussions with my economic team. this is one of the things that's changed in the world economy over the last two or three

decades, is that this is a global economy now. and what happens anywhere in the world can have an impact here in the united states. certainly, that's true after the kind of trauma that we saw in 2008 and 2009. and, you know, if you think about the situation in europe, they're going through a lot of the things we went through in 2009, 2010 where we took some very decisive action. the challenge they have is they have 17 governments that have to coordinate. 27 if you count the entire european union, not just the euro zone. so imagine dealing with 17 congresses instead of just one. that makes things more challenging. but, you know, what we've tried to do is to be constructive, to not frame this as us scolding them or telling them what to do

but give them advice based in part of our experience here and stabilizing a situation effectively. and, you know, ultimately, though, they have to make a lot of these decisions and so what we can do is to prod, advise, suggest, but ultimately, they're going to have to make these decisions. now in terms of characterizing the situation over there, what is absolutely true, this is true in europe and it's true here in the united states, is that we have got short-term problems and long-term problems. and the short-term problems are how do we put people back to work? how do we make the economy grow as rapidly as possible? how do we ensure that the

recovery gains momentum? because if we do those things, not only is it good for the people who find work, not only is it good for families who are able to pay the bills, but it actually is one of the most important things we can do to reduce deficits and debt. it's a lot easier to deal with deficits and debt if you're growing because you're bringing in more revenue and you're not spending as much because people don't need unemployment insurance as much. they don't need, you know, other programs that are providing support to people in need because things are going pretty good. that's true here in the united states. and that's true in europe. so, the problem i think president clinton identified is that if when an economy is still weak and a recovery is still

fragile, that you resort to a strategy of let's cut more. so that you're seeing government lay-offs, reductions in government spending, severe cutbacks in major investments that help the economy grow over the long term. if you're doing all those things at the same time as consumers are pulling back because they're still trying to pay off credit card debt, and there's generally weak demand in the economy as a whole, then you can get on a downward spiral where everybody's pulling back at the same time. that weakens demand and that further crimps the desire of companies to hire more people. and that's the pattern that europe is in danger of getting in to. you know, some countries in europe right now have an

unemployment rate of 15%, 20%. if you are engaging in too much austerity too quickly, and that unemployment rate goes up to 20% or 25%, then that actually makes it harder to then pay off your debts. and the markets, by the way, respond in -- when they see this kind of downward spiral happening. they start making a calculation, well, if you're not growing at all, if you're contracting, you may end up having more trouble paying us off so we'll charge you more. the interest rates go up and it makes it that much tougher. so, you know, i think that what we want both for ourselves but what we have advised in europe, as well, is a strategy that says, let's do everything we can to grow now even as we lock in a long-term plan to stabilize our

debt and our deficits. and start bringing them down in a steady, sensible way. and by the way, that's what we proposed last year. that's what's proposed in my budget. what i've said is let's make long-term spending cuts. let's initiate long-term reforms. let's reduce our health care spending. let's make sure that we have got a pathway, a glide path to fiscal responsibility. but at the same time, let's not under invest in the things we need to do right now to grow. and that recipe of short-term investments in growth and jobs with a long-term path of fiscal responsibility is the right approach to take for i think not only the united states but also for europe.

okay? >> what about the republicans saying you're blaming the europeans for the failures of your own policies? >> the truth of the matter is that as i said, we have created 4.3 million jobs over the last 27 months. over 800,000 just this year alone. the private sector's doing fine. where we're seeing weaknesses in our economy have to do with state and local government. oftentimes cuts initiated by, you know, governors or mayors who are not getting the kind of help that they have in the past from the federal government. and who don't have the same kind of flexibility as the federal government in dealing with fewer revenues coming in. and so, you know, if republicans

want to be helpful, if they really want to move forward and put people back to work, what they should be thinking about is how do we help state and local governments and how do we help the construction industry, because the recipes they're promoting are basically the kinds of policies that would add weakness to the economy. would result in further lay-offs, would not provide relief in the housing market. and would result, i think most economists estimate, in lower growth. and fewer jobs. not more. all right? david jackson? >> thank you, sir. a couple of books out with some interesting details of national security issues. there are reports of terrorists kill lists. you super vise. there are reports of cyber attacks on the iranian nuclear

program you ordered. what is your reaction to the news getting in public and the lawmakers saying you leaked the details to boost the re-election campaign? >> first of all, i won't comment on the details of what are supposed to be classified items. second, as commander in chief, the issues that you have mentioned touch on our national security, touch on critical issues of war and peace, and they're classified for a reason. because they're sensitive. and because the people involved may in some cases be in danger

if they're carrying out some of these missions. and when this information or reports, whether true or false, surface on the front page of newspapers, that makes the job of folks on the front lines tougher. and it makes my job tougher. which is why since i've been in office, my attitude has been, zero tolerance for these kinds of leaks and speculation. now, we have mechanisms in place where if we can root out folks who have leaked, they will suffer consequences. in some cases, it's criminal. these are criminal acts when

they release information like this. and, we will conduct thorough investigations as we have in the past. the notion that my white house would purposely release classified national security information is offensive. it's wrong. a and, you know, people i think need to have a better sense of how i approach this office and how the people around me here approach this office. we're dealing with issues that can touch on the safety and security of the american people. our families. or our military personnel or our allies. and so, we don't play with that.

and it is a source of consistent frustration not just for my administration for for previous administrations when this stuff happens. and we will continue to let everybody know in government or after they leave government that they have certain obligations that they should carry out. but as i think has been indicated from these articles, whether or not the information they have received is true, the writers of these articles have all stated unequivocally they didn't come from this white house and that's not how we operate. >> the investigations going on now? is that what you're saying? >> what i'm saying is that we consistently, whenever there is classified information that is put out in to the public, we try

to find out where that came from. all right? okay. thank you very much, everybody. thank you. >> can we ask about wisconsin? >> as the president essentially putting on his economics professor hat saying that the problems with the u.s. economy are due in large part to the economic problems of europe and also intransigents here in congress saying less business for europe is less business for milwaukee and would not take a role in policy other than speaking with european leaders regularly and that the u.s. role is to prod, advise and suggest in his words. our john harwood with a wrap-up and your reaction, john? >> reporter: i think prod, advise and suggest is what he was doing in holding this press conference and privately. it's interesting the way that the advice that he offered for the europeans underscored the inability of the administration in concert with congress to

enact what he's he prescribing for them, that is a short-term emphasis on steps to encourage growth while locking in as he put it long-term structural reforms that would reduce budget deficits. he's not been able to forge an agreement with republicans in the congress to enact those and now he's advising europe to do the same and they're having a comparable difficulty. we have to take note taking the intensity of the focus the president hit back hard against the idea that's been advanced by administration critics including republicans and some democrats that national security information was purposely leaked for stories "the new york times" that made him look stronger in the re-election campaign. he said that's offensive and wrong and suggested an investigation is going on. >> i wonder if this will look like a more historic press conference than we realized while it was taking place and whether or not he's laying out

the terms under which the united states will now as lead shareholder of the imf pump money to the spanish banks. i say it because we know that the imf board is meeting today. the ecb president let that slip. they're talking about the spanish banks and explicitly said two things. the first is the fate of the u.s. economy is linked to what happens in europe. and he then secondly went on to say very clearly that the french and spanish are not the same as greeks. they have not overspent and victims the markets. that indicates to me the united states might be about to do a u-turn and commit american money as part of the imf to a spanish solution. what do you think? >> reporter: well, the united states is a major contributor to the imf and so if the imf steps up and takes action, that is an indication that, you know, american money is implicated but i would be very surprised if the administration commits new money for this purpose given our own

economic difficulties and fiscal difficulties at home. >> okay. john, thanks so much. john harwood with us at the white house today. want to thank kayla coming here, as well and walking through issues. >> happy weekend. >> yes, thanks. simon, you will be here for the next hour, as well, helping us through the european close in little less than half an hour. let's get to the cme group and rick santelli. good morning, rick. >> good morning, carl. you know, we're going to do something different today. we're going to do a segment periodically. i used to love technical analysis when i was a trader and the reason i liked it, even though there's so many that aren't respectful of technical analysis is an aggregate behavior model. you know, alan greenspan said if you have 12 bright people in china making bright decisions, it is the decision process that works the best. why does that work the best?

well, if people's behavior is somewhat consistent, technical analysis should work. indeed, it does. there's a couple of thing that is are very important. whether you look at a two-minute, five-minute chart, ten-year chart, the patterns don't know time. even though it was einstein that said time is relative, it is really true with technical analysis. there's people on this trading floor whose favorite charts are three-minute charts but the patterns they use and how they trade those patterns is a same if you were looking at a multi-year chart trading a stock. here's a trick i want to teach and really the point of this. retracements are a big thing and why retracements work really goes back to fibanocci numbers. it is a summation process. and so on. 21. 54. 89. 144. 233. why am i saying this?

because it's important. lots of traders down here like looking at 13, 21 and 55. with their moving averages. i know stock guys are the 50-day to 200-day. but trust me. you can tell a fixed income technician seeing moving averages that match up there. i invented a trick many years ago. when the kansas city stock exchange opened in the '80s, they were giving out gan rulers. it has a bunch of holes for the pen and the different retracement angles. that is cumbersome. i invented high/low perpendicular midpoint. i'll show you why it's important. okay. let's say you have a chart pattern that kind of looks like that. okay? and you're trying to gauge where it's going to go next. one thick that always worked for me is you take the high of any move, time is relative. you take the low of any fant move. you connect them with a line,

find the midpoint and draw a perpendicular line and when the markets retrace, this zone is important. think about how this works. you can keep doing this. as the market moves, you constantly get an indication of where it may go in the future. so remember, high, low, connect them. perpendicular, midpoint. and what that zone will tell you is where the retracement levels should be. just one trick and try to do this every couple of weeks. carl, back to you. >> rick santelli, master technician, i like that a lot. thanks for the lesson, rick. see you in a few minutes. meantime, china's surprise interest rate cut caused a rally on wall street yesterday. joining us this morning to talk more about it, adrian mowat. strategist at jp morgan. a pleasure to peek with you today. i wonder what you make of this long term. because they raised a few times

in 2011. raised a few times in 2010. now the first cut in four years. what does this tell us about their level of concern about a slowdown, if, in fact, there is one? >> carl, i think the situation is relatively complex here. it looks like it was a simple interest rate reduction but it, in fact, is an asymmetric story. it's allowing the banks to offer a premium on depositive its if they wish to and discounts on lending rates. so it could cause an asymmetric move in interest rates which would be nearly a halving of interest margins from the chinese banks and that's why the equity market in hong kong performed particularly poorly today. i think it's also the timing is important. we have a lot of data over this weekend in terms of housing starts. housing sales. cement, steel, production, car sales, et cetera. and the indication in that they

have had this interest rate reduction suggesting the data is relatively poor and another reason why the markets have been weak. >> yes. >> it's very important that -- >> i was going to say over the next few days, or hours we'll get cpi, ppi, industrial sales. do you think they're uniformly disappointing? >> i think they will be poor. the chinese economy is relatively weak at this point in time. but it's very important that people begin to wake up to the demographics of china. china has a peaking working age population this decade. if you look at the number of 15 to 39-year-olds with university degree, it's falling 4%. this decade, falling by 150 million. so what you have is a strange situation in china where you have a weak economy and a relatively tight labor market. and i think that the fact that the chinese government isn't

overreacting to the slowdown in the growth is because the labor market is relatively tight. and ultimately, this is going to be a very good thing for the global economy. we all -- we have a simplistic view of the global economy. you have the locomotives and the passive carriages but that's not the correct way to think of the global economy. what matters an extreme amount in this point of time in the developed world is inflation and the fact of the chinese economy is slowing, oil prices coming off, commodity prices coming off, a really big rice crop in asia is extremely good news for inflation. and the fall in inflation is boosting the developed world and bullish for global growth even though china's slowing down. we need to look at a more complex model rather than china is a fast growth economy. >> all that said, the bit about good news and inflationary

concerns may be dampening down the road, you are underweight china overall. why? >> well, we are underweight china for a number of reasons. 75% of the chinese economic market is staked on enterprises. what we have going -- >> oh, i'm sorry. we lost him. adrian mowat with good insight while we could on the phone from hong kong. over at jp morgan. this morning, analyzing the latest headlines out of chesapeake. our kay kelly is there and checking in with her when we come back. [ creaking ] [ male announcer ] trophies and awards lift you up. but they can also hold you back. unless you ask, what's next? [ zapping ] [ clang ] this is the next level of performance. the next level of innovation.

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chesapeake's board facing off this morning. vice president of energy research with stern ag, has a neutral rating on chesapeake and joins us on a day holding the shareholder meeting in oklahoma city. thank you for coming by. >> good to be here. >> sounds like with the news out of the board more than you maybe expected to happen today. >> certainly. the press release this morning adds another addition allayer of removing hostility of board and governance issues. we'll hear on june 22nd about that and alleviates pressure on -- >> for how long? >> i would say this probably is through 2013. we believe 2012 liquidity risks

are not an issue. they have been having trouble monetizing given a tough environment for multiples for the services stock and fades a bit as an issue because $4 billion in proceeds should allow the company. >> so those worst-case scenarios may be off the table but the neutral rating is based on you say shares will remain in a range until meaningful changes are initiated or nat gas rebounds. >> yes. >> which happens first? >> i would say it's real lay toss-up. i think in 2013 we could see meaningful changes on both fronts. the question on the shares, why they remain range bound is we don't know the 2013 spending budget. we believe the icon southeastern is meaningful on the budget. >> of the plays made in this space, it's looking good for carl, is it not? >> yes. coming in. he bought starting in april so i don't know how much he's made at

this point. the track record is not 100%. he had some misses but the sentiment is positive. >> were there on the street i mean among you guys was there a lot of criticism of the board prior to this, prior to the reuters headlines popping up every other day? did they feel like aubry owned the board and to what degree do you think that's changed? >> i think people generally felt that aubry hand picked the board and as the chairman rubber stamping his agenda and looking at the lavish compensation package they received, you can understand why the board wouldn't give him more scrutiny and looking at possibly new members and a chairman coming in, the next couple of weeks, you think there's a counter balance within the company. >> what's the best thinking of who that nonexecutive chairman might be? >> i don't want to speculate. there's rumors floating around that's unsubstantiated. you want someone with experience in the enp space. >> interesting look not just as energy but corporate governance

in this country overall. tim, thanks so much. >> you're welcome. >> talking chesapeake. of stern ag. want to get to the cme group. back to you, rick, with the take on some college graduation issues? >> yeah. i tell you what. a funny thing happened on the way home from "fast money" last night, carl. i jumped on the train and reading the newspaper and a young man staring up with what looks like his girlfriend and here he is. steven moore. right before i got off the train on my stop, he came and introduced himself to me. he says he he watches "squawk on the street" and interesting to get a view of a recent graduate of college. welcome. >> thank you for having me. >> what school did you go to? >> wheaton college. >> how many kids go there? >> 2,500. >> we never met before. >> no. >> you are an avid watcher. what is the general feeling right now amongst some of the graduates with regard to something like the job market? >> the job market?

we are having to use a lot of connections. we are noticing that companies are a little hesitant and so it's tough to find opportunities to get a jb. >> what was your major? >> business and economics. >> you told me something that blew my mind. >> where are you going to look for work? >> i'm going to houston to work in the oil and gas industry, hopefully. >> you can't make this stuff up, carl. so, you know, what's your degree in again? >> business and economics. >> business and economics. you think natural gas and texas with opportunities. why do you think that? >> i think that there's a big opportunity in natural gas. it's very cheap right now and especially in the midstream, things are expanding an i feel like they can have a lot of work available for entry-level jobs. >> are you surprised we don't see more natural gas issues being brought up or in this state -- i mean, when you get there, i was in oklahoma. i mean, natural gas is everywhere in terms of an alternative fuel. now, student that is you go to school with, do they see the world in energy terms? what about battery cars? what's the talk on the campus?

>> a few professors push ele electric cars and students work on those and that's a hobby they talk about. >> that's great. any thoughts about the linkage between fossil and battery and taking care of the earth, global warming? big discussions that you have with your peers? >> these are big discussions and it always comes down to the balance of what's efficient in the markets but the same time good stewards of what we have been given. >> that's too much logic for a young person. now, i've found that wasn't your girlfriend. you're married. to me it is a bit unusual. to get married while you are in college. i think that gives you a lot of interestenal fortitude. what is your wife doing going to texas? >> going to optometry school at the university of houston. >> does she have something lined up? >> not after the four years. >> did you vote in the last election? >> i did. >> going to vote in this election? >> i will. >> what's the most important topic to you and your peers?

>> the greek crisis, the euro crisis and working that out. >> listen. our president was just on saying we need to spend more to help. do you think that's the answer? >> you know, if it was working but the deficit is going on and burden falls on. >> from the mouths of babes. carl, i think i found a good candidate to get to washington. >> that was fantastic. don't let him get away without getting his resume. rick santelli in chicago. a lot of china data out. as fears rise on slowing growth, how should you play the industrials materials trade? we'll talk about that after a break and the european close. 3:33 away. don't go away. [ male announcer ] this... is the at&t network.

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we'll see what this weekend brings in europe. could get an announcement tomorrow. simon, walk us through what we need to know. >> yeah. it's hugely significant when a news agency like reuters reports so many sources telling it that we'll get some sort of application from the spanish for a bailout of the banks. we know the imf, the berd of that is meeting today and they have their report on the spanish banks to consider. we thought they might wait perhaps to the end of june with the 23479 reports but maybe they're moving that up with the

greek collection one week from sunday. this is the close across the board today we have really come back from the lows that we had at the beginning of the session. >> the european markets are closing now. >> importantly, we have a lot of green there on spain. of course, the beginning of the session was very much bearishness coming out of asia and negative view of what central banks were doing. that of china or bernanke or the ecb and therefore the big, economic, cyclicals were negative and you see those big minus quoted in london down and continue to be down and off the lows but the big news is we cut losses throughout the session. partly because of what we have done on wall street. so you can see here, the ftse and the german dax coming higher, cutting the losses and more importantly look at the way in which spain tracked higher

contemplating the possibility that spain could get money in to the banks and really importantly get money to n to the banks without going through the sovereign. so you don't burden the sovereign debt pile by that bailout so there you see gains in the course of the session there and actually if you look now at where we traded in the year it is for the week to show you for the week just note how spain has come back. spain is still down 26% for the year. but it is rocketed back 8% during the course of the week. let's have a look at the affect on the spanish bond market. of what's been going on. you will see that we continue to fall on during the course of the session or the week on the yields and that is significant. they're elevated. make no mistake. the situation is fragile in spain. no question of that. but the yields have come down in the course of the week. if you can deal with the banks without burdening the debt pile then obviously there's a chance you won't get such sustained

selling, particularly after a bad result in greece in one week's time. we talk a lot about this. this is the extra investors demand to hold spanish debt over german debt, above 500 basis points, 5% is a real big issue. we are clearly, clear he below that. there's one last chart to leave you with. only a stupid person would suggest we have bottomed out in europe. only a really stupid person. this is the dow jones industrial average. the white line in the course of the year. this is where we are on the top 50 blue chips in europe. it is the yellow line. you will see that we have been falling on both of those and you know that the european markets have massively underperformed the top blue chips here in europe. in the united states. but just watch here. how you are getting higher lows and higher highs in europe. only a stupid person would suggest that, of course, was the bottom of the market. back to you, carl. >> all right. thank you very much, simon. over to courtney regan on the

floor of the new york stock exchange. what are you watching? >> carl, we saw equities begin to pair the losses right around the time of the wholesale inventory data coming out. when president obama began making the comments he said that he thinks it's in one's interest for greece to leave the euro zone. markets moved higher. and so far we haven't had a positive friday since frill. for the s&p s. right now we're up fractionally. on track for the best week of the year. a number of lifts from president obama's comments and while off the session lows, global growth concerns are weighing on a number of energy stocks, particularly those production and exploration names. cutting production in a kentucky mine and that's pressuring some other coal miners, as well. when we are thinking about global growth concerns, we are getting headlines out of big european economies.

german exports, this is a big one for them. italian industrial production contracting in april and the bank of france saying their second quarter gdp is expected to contract. that's concerning. goldman and barclays lowering their estimates and continues to weigh on the markets. look at the unhappy meals for names like mcdonald's and yum brands, very disappointing for mcdonald's and that's very worrisome for yum. perhaps more reliant on the foreign markets. back over to you. >> courtney, thank you very much. that mcdonald's story is unbelievable. a lot of moves amid the commodities. want to check in with jackie deangelos. jackie? >> oil prices still under pressure here at nymex. bernanke not delivering on the

immediate stimulus. the hopes of traders here. the china data is going to be key. you had a guest on earlier saying the data might not be so great and looking ahead to next week. we have an opec meeting in vienna on thursday. overproduction once again going to be the key issue to look for there. now that brent is under $100 a barrel. in terms of metals, also under pressure, as well. euro weakness, dollar preng. not helping gold today. sayi saying bernanke's dovish tone is sending gold lower in terms of trading today. if it doesn't hit 1,600 and stay there, we could be going much lower. back over to you. >> okay. thank you very much. watching energy markets with crude 82.83. if it doesn't get above 83.23 i believe by the end of the week it's 6 straight weeks of losses, only happened a few times since 1983. meantime, even if europe

stabilizes, the next guest making a bold call. so far this year industrials up about 2% or so. josh pocawinski joins me here at post9. welcome. >> thank you for having me. >> this is one of the more bearish calls because the point is don't buy in to relief that the sector might see if europe gets quote fixed. >> that's right. to be clear, we are not ready to adopt the mayan calendar here quiet but the important point is the stocks worked well early in the cycle. you see the consumer sectors lead industrials and process industries normally associated with commodity prices worked early and enjoyed the good growth early and if you look across the multiples have done, even with the correction and gotten air time, you are talking about stocks still where they should be if not a little bit above where they should be at this point in the cycle. margins are peaking. multiples look fair.

growth appears to be slowing and at the very least tied to the macro sensitivities in europe and china which i think augusters poorly for single stock selection. >> sounds like you're arguing that europe wouldn't move the needle any way if things change there. >> right. so in our note we pout out analysis saying, basically, look, if you want to get incredibly d incredibly draconian on europe and amounts to a head wind with the correction we have had a lot of that on the heels of some of this european news, we have already priced that. i think the more important point and what investors need to be cognizant away with a sigh of relief in europe is that you're tied to that macro economy and makes picking individual winners and losers very challenging. >> let's talk about a couple of days. you have buys. themes? >> i think the big theme in the group and why we want to focus

less on playing the cycle and more on individual names with stories is self help. so clearly, names that have taken acquisitions, a cost story, laten in the growth cycle are names to focus in on. we think the ship largely sailed and emerging markets which have been kind of a beacon for most of those names, more talk of a conversion from growth fixed investment to the consumer side and seeing industrials lag if you get a rebound in growth in, say, china. >> is the theory that margins have anywhere to go but down with insut costs coming down, as well? >> i think the point to keep in mind is that the big surprise of 2009 and '10 is how quickly the companies take out cost. and on the back of that, you're talking about reaching pretty

close to prior peak revenues already and needing to add those costs back. clearly material headwinds were a challenge in 2011. we were able to get on top of that. copper falling to 325 a pound is a help for the group but the important point is reinvesting in the production and sales infrastructure. margins will be above operating margins today but we think that margin expansion slows from here and operating leverage in earnings growth. >> okay. thank you very much. interesting call. are we going to do rovell here? let's go to darren with breaking news. really surprising on i'll have another, darren. >> yes. we just heard moments ago, carl, that i'll have another has been scratched from tomorrow's belmont stakes. it appears like it is a tendon injury we are told. this is obviously a big blow, not only to the belmont stakes here but for horse racing in general.

the sport really suffering. needs a story like this. of course, not a triple crown in 34 years since affirm did it in 1978. all we know is that the horse was on the track in the early morning before he was supposed to actually go out. he went out at 5:30. not a lot of people saw the horse and then rumors circulating and then just a couple of minutes ago it was confirmed that he is out of the race tomorrow. once again, i'll have another will not try for the triple crown which, again, appears elusive for another year. carl? >> having won the kentucky derby, having won the preakness, there's a press conference, darren, with doug o'neill, the trainer, at 2:00 p.m. at belmont park. he has weathered a fair amount of criticism and scrutiny, as well. >> yeah. you know, the question is, is this about, you know, this is on doug o'neill. this is not about the horse in particular but 14 violations in 14 states involving performance

enhancing. nothing on i'll have another. i think that the real question is going to be about the horses. can the way they breed horses today, can they do this many races in just such a short period of time or is it too much to ask? is it possible that things have changed in -- it's not like the '70s. the breeding schedules that the horses have is entirely different. and is it possible that we just will never have another triple crown winner because of that? so there's going to be a lot of questions about breeding, about just the taxing horses like this. but it appears like this could be the horse's last race. by the way, we were told by the president of three chimneys who stands big brown and i'll have another's father sire flower alley that the horse even if it had a bad belmont is worth about $6 million, 15 to $20,000 per live foal and a breeding career

ahead and breeding might be the problem here, carl. >> i'll tell you between this and the lawsuit against the nfl by those 2,000 former players, the debate over the impact of participants is reaching levels we haven't seen in a long time. i'm sure we're hear more from you later, darren. when we come back, the author of groupon's biggest deal ever and turned down the deal of google. remember that? an just be too expensive. yeah, so to save money we just made our own. oh no! what could be worse than ninety-foot swells?! typhoon! first prize! it's a cheese grater. wooooo... this isn't scary. are you kidding me? look at that picture of your mom's hair from the '80s. there's an easier way to save. wooohooo... geico. fifteen minutes could save you

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♪ ♪ life in the fast lane ♪ surely make you lose your mind ♪ ♪ life in the fast lane coming up in a few minutes, a special edition of "the halftime report" live from the conference. he's the man everyone is waiting to hear from. duncan niederauer joins us talking about the botched facebook ipo and why he thinks the scc will say no to nasdaq's plan and the long shot trade, finding stocks soaring triple digits. carl, looking forward to this one. see you in a bit. >> can't wait. meantime, groupon's market cap around $6 million. roughly the same that google offered to buy it in 2010. a new book released this week

called "groupon's biggest deal ever" chronicles the rapid rise of that company. frank senet joins us from the windy city. frank, welcome. congratulations on a great read. >> thank you. >> a lot of debate about whether they did the right thing in retrospect. i wonder what you think and i wonder what they think about that decision. >> yeah. i remember on ipo day standing in the nasdaq market site there on times square and watching kramer interview jason child, the cfo. euphoria and everybody was so happy and it was the right decision and the market cap is what google was offering and i think there's second guessing certainly outside of groupon but inside they're still really committed to being that dashboard of local commerce and ultimately winning the day but the jury is still out. >> talk about fly on the wall coverage in the book. you have a couple key quotes. i'll read one of them. some of the key players, mason,

chief among them, had the nagging sense that youtube sold too early and even though the offer was nearly four times as large as landing yup, the chicago crew couldn't shake the feeling that they still might be cashing out too soon. how pervasive is that feeling? >> it was a rolling thing. as time went on, they got some presentations from a data scientist who said the hyper growth they were experiencing could continue, they could be doing ten times the revenue and andrew never really wanted to sell. he was willing to sell to google. i think eric was more on board of selling and over time as all after this -- the projections came out and then they weren't sure if they would clear department of justice approval in 18 months and started to tip the other way. let's not take the deal and a huge decision, obviously. >> yeah. you're critical of coverage they got going in to the ipo, some website that is are largely read in business circles.

do you think they got a fair shake? >> i think that ultimately it all shakes out to be fair coverage. there's more noise than -- there's more heat than light now sometimes but networks such as yourself, you guys did a great job. "wall street journal." "the new york times." there's great reporting still out there. i just think it was kind of amusing how severe the backlash got but some of those people may gloat if things go south. >> yeah. and then there's mason himself, a fascinating character. doesn't like to do anything the traditional way. and you walk through some of the examples of that. dpuz he help or hurt his cause by being a conformist in so many ways? >> you see now he's kind of dialed that back and i think would like to be out of the limelight. i looked at the stats on the coverage that groupon got versus living social and it was no contest and a lot of that had to do with andrew doing stunts and

now it's like get some adults in the room and the financial controls in order. let's move to profitability. and i think that's kind of a mode he's in now. >> yeah. finally, probably underreported, the impact that groupon has in chicago business circles. because although they're a big player in tech overall, i mean they really do determine in large part the move of the new wave of business in that town. >> absolutely. i mean, they have opened an office in palo alto to get the engineering talent, et cetera, they're a tremendous draw here in town and as the fortunes go, so go chicago tech fortunes to a certain extent because we don't have that breadth they have in silicon valley. everybody's holding their breath in business circles here. will they make it and get over the hump? it's a big deal in chicago. >> frank, congratulations once again on the book. we'll talk to you soon. >> thank you. >> joining us in chicago. when we come back,

mcdonald's trading down after reporting a lower than expected rise in may sales. what's next for the golden arches and why would you be negative in germany and china? back in two minutes. optionsxpress, where you can trade your favorite products,

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mcdonald's out mcdonald's out with weaker than expected may same store sales. austerity measures in europe. matt defriska has a buy rating on mcdonald's. lowered the price target, matt, but not by much. 105 to 104 and you write the perfect storm of challenges may abate. what's may about? >> my reference is more to 2012 and diminishing the earnings growth and looking at 2013 a return to growth. may continues to be a challenging period for them. i think they saw germany and japan as you highlighted earlier turn negative for them and value is top in mind with those consumers and seeing in parts of europe austerity measures, pressure the informal eating out

occasions and in the market demand. >> i'd always been led to believe that part of mcdonald's traded around employment levels. germany, unemployment is remarkably low, especially for that content. why would you be trading down? worries of the future? >> specific to germany, there's aggressive promotion. burger king is going out there strong with value promotions. in addition, that customer, mcdonald's management describes of deal oriented. and i think mcdonald's had some promotions around some premium products earlier in the year and try to regain their position and so they're going to ratchet up -- the response is ratcheting up the dollar value. >> there's asia, also somewhat of a concern. mcdonald's is getting hit today but nowhere near as badly as yum which has much more exposure to that part of the world. how worried should we be about that? >> well, japan is their biggest market there. that's concerning.

i guess ever since the tragedy over there, there's an inconsistent recovery. now higher utility costs. i don't think we're out of the woods at japan yet. they'll continue to hold their share through value advertising but i think as far as looking at the demand for the category, of again, informal eating out, it will be pressured for sure as disposable personal incomes are drained by utility costs. >> finally, might get ribbing for the price target down a dollar. is that symbolic? >> no. the earnings outlook for 2013. we have not changed our multiple. we think it's going to be between a 15 to 17 pe. we are below the street on 2013. we think a 610, 611 outlook is appropriate now as street numbers come down i think the appropriate place to be is around a 17 multiple. trading back two. currently right now i think we are finding support. 15 times 2012. so we're at the low end of its

one-year trading range we believe in our view. >> all right. have a great weekend. >> thank you, carl. >> over at lazard. tweet time. about 600 apps and apple's got 500,000. so our big question to you on squawk on the tweet. if the facebook app store takes on apple's, facebook's better what? we'll get some of your responses after a break. you won't just find us online, you'll also find us in person, with dedicated support teams at over 500 branches nationwide. so when you call or visit, you can ask for a name you know. because personal service starts with a real person. [ rodger ] at scottrade, seven dollar trades are just the start. our support teams are nearby, ready to help. it's no wonder so many investors are saying... [ all ] i'm with scottrade. who have used androgel 1%,

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"squawk on the tweet" for a friday. facebook is unveiling the app store. so our question to you is if facebook's going to take on apple's store, facebook's better what? daryl writes, better have 600 apps that do something that apple's 499,997 don't. john writes it better not use the nasdaq's i.t. team. oh man. keep an eye on markets here going in to a friday. the s&p, if you take a look at it intraday, has not closed up on a friday since april 27th. that's the longest streak since july of 2006.