still look what happened. >> i hate when markets go up because we're counting on fed action or central bank action. that always means there's something so bad they're going to have to do something and that seems like a warped reason why bad news turns into good news. happy father's day. >> happy father's day to you. >> happy father's day to you guys, happy father's day to all you. right you to, it's time for "squawk on the street." good friday morning. welcome to "squawk on the street." i'm carl quintanilla with melissa lee, david faber at the new york stock exchange. take a look at the futures. this is the weekend we've all been waiting for. the greek elections, potentially the answer to a question that until now has been largely academic. that is can the eurozone with stand the departure of one of its members? a lot pivoting on headlines we got yesterday, melissa. >> no surprise. our road map today starts with

the rally. a 118 point swing in the last hour of trade, the biggest in a month. volume has claimed for four straight sessions. how much of this is for real? >> and what about those headlines about central banks being on stand by if greece implode these weekend? are they to be trusted? spanish yields are down and now close to 7%. >> and microsoft bills a major announcement. could it make some strides in the war against apple? >> men time, future is on the rise after yesterday's rally on hopes that global central banks stand ready to act this weekend if the greek results speculation turnover sparks a big jump in the dow and the final hour of trading before it closed yesterday. up 156. we were up 200 and change, jim. wa did you make of this action yesterday? >> when you see the word liquidity, anytime you see the word liquidity, i don't care whether people think the central

banks are happenless or hopeless if you do nothing. no trader wants to be short when they see the word liquidity. it's pavlovian. liquidity means printing money. we're all kind of waiting -- the bulls are waiting. >> and you wonder if seeing a violent response like that to frankly some vague headlines out of reuters discussing a topic that if you think about it, you would expect. if there is severe location in the markets on monday, wouldn't you expect the central banks to move in? why are we moving up so much? why is this suddenly new to anybody out there? >> car crash, police will respond. >> when dr. j. john had

tremendous call buying in that last hour, these are options that have just hours left to trade, he thought that that meant that this rally was actually -- it actually had some legs and some people had some belief in this. >> well, i think there were kind of two rallies yesterday. there was that initial, the market was up 78 points, the dow was up 78. next thing you know, it was up 180. and i thought that was people saying, holy cow, i want to be short. and then we sold off between 3:20 and 3:40. and then i saw a lot of people say, hey, you know what? maybe i ought to take a buyer ahead of liquidity. i used to love those punts when i was a hedge fund manager. you knew he were going to lose money if the amount of money that happened overnight, but the amount you were going to lose, it was a nice ante up.

>> there were criticisms of the sourcing of this particular story out of reuters, namely that it cites g-20 officials who were talking about central bankers, two different schools here. it would be like asking the quarterback what he thinks the defense is going to do. is that fair? >> we are in rumorville and every rumor matters. and i think if someone got -- look, it could have -- for all i know, it was the mix can finance minister. i mean, you don't know -- >> in the library with the knife. >> yeah. >> colonel mustard. >> i think we all are living in a really stupid world, so to speak, in the sense that no one thinks, whoa, hold it, is this the time that they really get it together in europe? instead, what they say is, wow, they may have a master plan. if we know one thing, it is a euro confederacy of dundels. >> they do not have a master plan. memories go back as far as the late fall/early winter when we saw kward nated action by the

central banks followed up by the long-term financing liquidation. we're up still significantly in the markets since then. >> good point. >> we have a fed meeting coming up next week, jim. and some people trying to play the parlor game. if there is a new rtl over the weekend, does it coincide with an emergency easing here? do they wait for the fed to have their regularly scheduled meeting on tuesday and wednesday? >> trichet, who i think will go down in the lords of finance, too, will go down as one of the -- i'm trying to -- i have to think about what is a diplomatic word to say here. i know i can't use the word loser any more. >> you were never a fan. >> well, no. i think that he was a lightweight, but he raised ra s rates -- wow, what a bad move. he raised rates twice and we've only taken back one time. >> in terms of yesterday, a lot of the usual suspects rise.

but at the same time, technology, while it did gain on the session, it mapbly underperformed overall. and that was a real signal to me. apple, for instance, finished the day in the red. take a look at some of the leadership in telling. just did not catch a bit, even on this notion that liquidity would be ingested into the system around the world. what do you make of that? people seem to want to stay away from this group. >> great question. i think the quarters will be weak. i think 20% of their business on average comes from europe. there's been a 300 basis point differ rel republicanal between technology and other stocks in the period that is june, july, august. i think people are saying, wow, i have a break here. i can get out of a group that's going to underperform. also, by the way, oil. the oil stocks are up. even though we had some interesting storage numbers. i think that that group is the most vulnerable because i think that's the group that's going to preannounce, some players could preannounce. >> we've got some comments out of united technologies earlier

in the week. hon honeywell earlier in the week that europe is not only getting worse, but europe is going to catch up to the headline as cody said earlier in the week. we're not that far away from preannouncing. >> it used to be if you had a 5% difference, you were supposed to preannounce. where do they have to be in teps of the earnings book to preannounce? that said, i thought that dave cody, who has been so positive, that was a bit of a bummer. >> you don't have nearly as many companies giving guidance any longer, either. >> right. >> how about one interesting call is jeffries saying buy guess, the retailer, because after the lekdzs this weekend,

they think europeans will speed up names and they say the comps could double. >> i saw that and i just said -- guys, bf corp. has tried to stem it by saying good things in europe yesterday. no one seemed to care. ralph lauren said good things in europe. i don't put guess in that category. i'm not saying that it's men's warehouse, which has been huge disappointment, but that's domestic. i'm just saying ta my first instinct when i hear about liquidity and central banks is -- not to take the stock of guess. >> although i will tell you for quite some time, i know hedge fund managers have been focused on names in europe, german names in particular that most of their revenues come from outside the eu. we all know germany is a huge exporter, but they've been penalized. that continues to be at least a theme. >> at the same time, we want to go contra to what the call is. that is to embrace european exposed companies that haven't been down. i would think one would reach

for a mcdonald's owe or a coca-cola. >> a colleague of mine yesterday made a spirit of defense of mcdonald's, underlining that there's been two downgrades, from 85 to 86 nap and from 86 1/2 to 89. these are people who johnny come latelies who literally, i think, at 100 loved it. whenever you have it at 100 who loved it and at 85 they turn on it, that's an exposure issue. >> you wouldn't do it in the second quarter already, the stock is down 1% and then pile on to the bandwagon and say, you know what? there's a problem here. >> that's why they're analysts and not hedge fund managers. >> ow. >> i think we get a good level of analysis from fund managers, but i don't think that's

necessarily coupled with great market sense. >> there's a lot of strategy going on where they'll be called in and they're like, hey, you liked mcdonald's. they have a lot of european exposure. only 2% of their profits are from europe. but you may not able to think about taking off mcdonald's and adding something that's more domestic. and then i think the analyst highways to just capitulate. >> starbucks called this morning from ubs, warning about slowing momentum near term. it's basically long-term to you remains unchanged. they still believe about 20% growth over the next 20 years and they keep the buy rating as opposed to a price target. >> and i thought it was funny. my initial reaction was what momentum? the stock has been a straight line up. u.s. may be accelerating, minimizes europe, talks about china going strong. i am a huge believer howard schultz will get it right. he's made that promise.

i like schultz. he does not work at a hedge fund. he's not an analyst. but the entrepreneurs are number one. >> lou gercer this morning, he turned around ibm who was not the founder of ibm. >> one of the greatest turn arounds. >> and that took a long time, by the way. people forget, how long was the ibm turn around? >> 5, 10 years. >> and when you look at highway patrol, i think you sometimes have to recall recall ibm and

gercner. >> gigantic tablet push coming. >> and they had a tablet before, right, jim? >> a projector era. >> where is he? >> he's even below an analyst b with isn't he? >> that was five seconds. speaking of tablets, they're back in the spotlight as microsoft gears up for an event on monday, microsoft has concluded that it needs to have its own tablet and device its own software to compete with apple. a microsoft tablet. now, we have to be clear. on monday, this event apparently starts after the market close.

he thinks it's the probably not a major financial announcement, but still, the buzz is out there that they could be at some point talking about a tablet strategy. >> i'm a beta use he of microsoft windows 8. and it is one of the most exciting projects. it's a fabulous, fabulous machine. you turn it like a book and it's beautiful and it's got -- it's really well organized. microsoft taking some hits off nokia. but i think you buy microsoft ahead of windows 8. i don't want to -- amazon i think is doing far better than people realize. the stock is really not down at all during this sell-off since the last quarter. maybe there's room for everybody. that's the t.j. rogers view who makes a lot of nonapple products. i think this is an explosive world and there's room for -- i know a lot of people carry a kindle and a tablet. let's put it that way. >> people are wary of mike error soft getting into kind of

hardware game. the history hak checkered and they rely so much on the dells and the lenovos. does it make nor sense tore them to get more integrated? >> microsoft, it's another product that we all assume is a me, too, product. and you can be dazzled by a product that is an innovative stock. microsoft has the buy power to do a lot. i have to disclose, bomber was a very close friend of mine at college. >> he had the -- you know, out of a class of, what, 1600? >> 7 suspect. he didn't have an i phone.

he had this nokia with a microsoft -- i said, wow, steve, that is so cool. what is that? it is a nokia microsoft phone. >> the x box has been a great success. i would not rule him out. >> now to rick santelli. >> may industrial production dropped .1%. the mirror image of what we were expecting which was up 0.1%. capacity utilization coming in at a four-year high and it dropped a bit to 79 versus 79.2 last look. .that was expectation and it was also the highest level of

utilization. we saw international capital flows and that was 25.6 billion, net long-term. total net minus .25. but expected and coming on the heels of a total net that was minus 48.6 previous and these data points are always two months in arrears. carl quintanilla, back to you. >> rick, thanks so much. when we come back this morning, the facebook effect with a twist. what impact the slump has had on the stock, that is, on the real estate market in silicone valley. take one more look at futures as we head into a potentially eventful weekend. features up 45 on the dow and a lot more "squawk on the street" in a moment. [ female announcer ] it's time for the annual shareholders meeting. ♪ there'll be the usual presentations on research. 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.

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the greeks are headed to the polls on sunday. this weekend's developments are nothing short of a nail biter and that brings us to this morning's "squawk on the street." we're asking you to finish the title complete the title of the greece's next chapter, the greek tragedy: what? it could be anything, how greece took a problem and made it worse, which means the

possibilities are infinite. >> and our viewers are always great with these things. >> it's been tough to watch. >> fun in sunday, by the way. one programming note for the premier of greek tlajdy, 8:00 p.m. eastern time. >> not to put too fine a point on it. >> hopeful lit it won't turn out to by a tragedy. >> it might be a little late for that. >> let's look at the futures one more time. the s&p is looking at about 4.5 at the open. more "squawk on the street" straight ahead. ttd# 1-800-345-2550

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seven minutes before the bell on this friday thorpg. let's get cramer's mad dash. nokia we said was misery yesterday, but some analysts disagree today. >> citigroup and opco, sell to hold. david faber yesterday was talking about analysts and what they do wright and what they do wrong. there are some guys that got nokia right and they said stay away. now, there are also people, credit suisse goes from buy to hold. let's say nokia is the crown

jewel of finland. you're not going to come in and say, you know what? we are going to take over this company. if you do get a takeover bid, it's not going to be a four or three, it's going to be a take under. >> so you're saying you don't think it's going be bought, u you're thinking maybe they sell some property? people have to look at history about the fins. the fins are a proud culture. they're not going to just say, nokia, we're going to sell out to samsung. they're fought going to let that happen. i just don't believe it, tease my view. >> more talk on a name i know you love, that is j&j. >> this is something i've learned over many years. you can't have analysts come out day after day and after day and say buy johnson & johnson without something happening at j&j. this is the new ceo at j&j. carl, this is an inexpensive

stock that was run into the ground, but the brands are so powerful that you cannot destroyed j&j. i want to buy the brothers johnson. i've never felt this strong since strawberry ladder number 23. >> but you're responding to the yield or the potential of a break-up? >> we have seen these drugs companies. when they do break up, they have gone like this. j&j, gorski, lots of momentum. this may be the stock for the second half of 2012. >> all right. that's a good call. >> j&j. >> we'll keep an eye on that from nokia to j&j. meanwhile, who will rule the final day of this market day? the bulls or the bears? opening bell is coming up next.

on december 21st

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this is kind of an interesting moment. wasn't like we got great data this morning. industrial production okay. empire, okay. but this notion of liquidity, people do not want to get ahead -- financial companies, banks, they all do well when you start hearing liquidity. and i think the domestic ones that should be affected are all part of etfs of banks and i see lots of buying in them. wells fargo early on, u.s. bancorp doing better. >> in the end of the day, the greek election, they may elect the party that let's them stay in the eu and we may get no policy response whatsoever because it won't bring about a crisis. >> is that bad for the market? >> a good outcome could be a bad thing for the markets. yeah. >> have you ever looked at that plate of candidates? united states kind of like they have a wade group of parties in greece and there's a lot. i will say that it will not be -- whatever happens monday morning will not be fathomable.

but we have a lot of people talking about would he be nervous? again, i feel like there are nervous shorts out there. >> yeah, certainly are. of course, we are waiting database here we go, the opening bell. take a look at the nyse realtime exchange. ingredion celebrating its name change from soren products inert national and a ticker change, as well. at the nasdaq, former new york nfl stars celebrating the 50th anniversary of the mets organization. >> very nice yesterday. our young mr. neunheiss had two home runs. we're looking at the third baseman, keith hernandez, bobby ohida. >> stay in the game. >> we're getting there. how are you doing? how are the phillies doing? we're four games under .500. we're going nowhere.

>> we thought you had the pitching staff at the beginning of the season. >> we won two in a row. >> be careful. >> thome has a couple of big runs. it's 9:30. someone can say what are we doing talking about -- they are ringing the bell. >> that was legitimate. >> they are ringing the bells. >> okay. let's talk about nat gas for a moment. a few days after boone pickens said the commodity head blossomed. >> energy on last night on mad money, they're the largest storage company. believe me, there's a lot of nat gas. you need a real cold winter on top of a skalding summer to get this inventory down. i will say this, though. shanira is a big exporter. what they're basically saying is, look, if obama doesn't want

nat natural gas for service fuels, we will send it all to china. and i have to think that that's going to happen. >> lng, by the way, got a upgrade helping to add to that upgrade that you were talking about, jim. >> it has been a great speculative chart. >> meanwhile, moody's has cut a dutch bank, ing, and we talked whether or not this morning that's a precursor to other downgrades closer to home. >> we know they're coming. we just don't know when. at this point, we're already past the middle of june. we would have thought we would have gotten them. but the large global investment banks are expecting to be downgraded by moody's. the question is how many nomps? james goreman came out a few days ago, though, and said he thinks it will be. and i forget his exact terms, but unexpected if they were to go the full downgrade from morgan stanley. we shall see a lot of this, many would say it has already been

incorporated, investor perceptions of this stocks at this current price. >> goreman did not say moody's was naive. he simply tried to avoid that word. >> he saved that. >> by the way -- >> he could take ta back. >> tomorrow is citi's 200th an verse iry. happy anniversary to citi. >> somebody said positive things about citi today. >> j&p securities had a bold note on the bracket this morning, including jpmorgan, bac, goldman sachs. they said that they still are an underperform rating on these group. either meltdown happens or an

almost meltdown happened. in other words, not a full meltdown, but events get to scary, that these banks go down, anyway. so they outline a lose-lose scenario. >> sobering. >> you have been -- if you want to, you've been able to trade. they move. >> a liquidity statement on monday morning will make the banks rally. and by the way, there was a big conference this week. the mortgage numbers we just got this week were incredible. the u.s. bax are doing well and i know this is not the call to buy goldman or morgan stanley off this. >> it's funny, we don't talk very much about the smaller banks which are public that took

t.a.r.p. some of them haven't paid t.a.r.p. back. t.a.r.p.'s interest rate goes up in the future, if you recall. when they gave them the money, there was a jump in the interest rate. >> i think every time a bank buys a bank, the stock has been hit. pnc. there's all can of things that have happened in this market. the street doesn't like it. >> i thought you were going to say every time a bank buys a bank, an angel gets its wings. >> no. this is more like when he died and negative was laughing at the angels. remember that great scene when it's kind of like talking about the mets, i know. but when the -- >> we're not at building level. >> mary thompson is covering stuff on the big board. >> we have broad based gains in the early going. the dow is off its best levels

of the day. but we are seeing strength, as i mentioned, pretty much across the board. the s&p is up about 5 points, the nasdaq higher today, up about six. of course, what traders are watching, what we've been talking about all morning, the greek elections. also, of course, the graduate ruinel witchling today and the rebalancing of a number of s&p 500 international indices today. traders say pretty much the betts have already been made. what we've seen this past week is we take a one-week look at the dow, investors still remain cautious about getting into this market in large part because the market tends to react in a zits phrenic nature. wa we want to do today is watch a number of countries that have great exposure to europe and ahead of those reports that the bank, the ecb stands ready to act post the elections if there is a worst case scenario on that. so some of the stocks we will be

watching there including coca-cola, enterprises, borgwarner and priceline. we could see them react not only today, but on monday, as well. in the we're keeping watch on the eurozone banks. they, too, were higher on the back of the gains we've seen in a number of the eurozone markets today. may's industrial production came in ahead of this. traders are saying, if it came in stronger, that could raise questions about what the fed might do in this two-day meeting. of course, we have consumer sentiment coming up in a couple of minutes. traders are saying there could be an up side to the reading. offsetting that is the weak job market we continue to see. once again, the dow is holding on to a 60-point game.

jim, back to you. >> it does set a tone of more optimism today. let's see whether the bonds can continue with optimism. obviously, upcoming greek elections. rick santelli, at the cme group in chicago, take it over. >> thanks, jim. let's start out, of course, looking at the fixed income. and if you're looking at a two-day cart of the yields, the yield of 1.622, the lowest aukdz rate on record, we see it's dipped below 1.60. we're at the low yield, high prices of the week. we all know why. the effect above what happens is evidence by citi research today. citi is saying they expect contract yn in italy to be larger than they expected. i'm not advocating the research. in my opinion, these are big trends and many research groups are just catch understanding to

them in many ways. if you look at boone's, same dynamic on a two-day chart. but on monday, they came in and established a 130 yield. even though they're off in the 140s, it isn't the same exact setup in the u.s. as you look at the chart of the euro going back to the third week in may, you can see that yesterday was the third close of the 26 handle since the 22nd of may and it continues at this point, which is like a picking cherries to the traders down here. they think the euro is too high and they're probably looking to sell it. is it the right decision? only time will tell. back to you. >> thank you so much. let's go to sharon epperson. every time i see oil pick up, it's been great for the stock market. go ahead, sharon. >> we're watching developments in europe, jim, and we're seeing sideways trading this morning. we have basically flat prices for u.s. oil prices, brent prices slightly higher.

but there are many factors for the oil market to watch in addition to the greek elections. we do have those talks in moscow on monday and tuesday, overrun nuclear programs. and even though not much came out of the last round of talks, they are waiting for those sanctions to begin on july 1st. so there's still definite lay reason to be bullish oil prices at this moment. we're keeping our eyes on the metals and we have seen a lift in gold and silver. some traders on the floor talking about the fact that we are likely to see some type of stimulus at some point and that is supportive of the precious metals. in terms of natural gas, we were talking about it earlier, that tremendous spike we saw in thursday's session of 14%. but the fact remains, there is plenty of natural gas out there and the government has statemented we're going to see 4.1 trillion cubic fear near capacity. with the levels we're at, we would have to eat away quite a bit of natural gas not to hit that number, david.

>> thanks very much, sharon epperson. we keep an eye on things going on in greece and the entire macro environment, there has been a trend in the u.s. market overall, over many years now in which we have seen investors essentially withdraw from equities. we've a lot a lot about it here at this disk. it is not just retain investors, it is also institutions. take a look. there they are. when you're below the line, that means money is coming out of domestic mutual funds. when you're above the line, it's going in. you see what happened to the largest part of '11. we're in that first quarter of '12. we started to see things move back in, but that yet reversed. where is the money going? despite all-time record low yields on the 10 and 30-year, it is going into, yes, bond funds. and that has been a trend that has sustained itself for much of this year. in fact, as you see for much of the last few years, given the volatility we have seen in the

stock market. what does it all mean? well, it has a lot of different meanings, doesn't it? some ways you could look at ipos and what has been perhaps the lack of animal spirit. we're all waited for the ipo market to rebound. certainly, facebook has helped. but take a look. if you x out facebook, and i have it there in orange, you will see that we are at low levels in terms of ipo volume, in terms of new companies and/or exiting companies being able to come back to the market. and become public. why? well, when you have outflows from domestic mutual funds, typically you don't have as much supply aus might like. that's a look there, as well. again, if you want to look at the longer term trend, there is a line there. you see that white line? that's where we will be without facebook. you can club it if you want, but it was $16 billion. it gives you, again, the perspective. what do we have in the pipeline as far as ipos? empire state realty trust, chesapeake oil field services.

micha michael stores. all of these looking to come back. >> i think that's outback steak. >> no. >> i think it is. >> delicious. >> fabulous, isn't it? >> that's like 10,000 calories. >> in my old days when i used to eat meat, that was one of my favorites. >> and they've been taking less risks. we talk risk on, risk off. take a look at leverage. it is a protection of the willingness of hedge funds to take risk which, of course, can translate into the markets. nets are down 40% right now. that is the lowest we've seen in 2010 and 2011. we're back at that low number again reflecting the risk off trade. where does all of this end? where do we wrap up? chip one may ask back there in the studio, with volume. take a look. the trend is very simple. now, if i could draw a line, you'd see it. take a look at the black.

lower and lower and lower we go. when you talk about this, as in the end of equity investing, isn't it always the reverse? >> this is weak cover in 1982. >> so we can only hope. >> volume up every day this week, higher and higher. >> yeah. and then we have the greek elections on sunday. >> i'm feeling better already. wow, it's going to be some father's day. that is super. i now feel great. >> taking them down in the dumps. >> that's what i was here for. that's what i was hoping you'd get out of that report. coming up next, find out what is at stake as we look at your portfolio. take a look at the early movers on wall street. saci, up 3.6%.

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welcome back to the "squawk on the street." i'm aman afterers where we are waiting an extraordinary move from the obama administration. at 10:30, we're expecting more details on an immigration plan by the obama administration that would stop deporting younger illegal immigrants who came to the united states under the age of 16 and are currently below the age of 30.

this is obviously an election year move that would defect a significant political voting block that's important to the obama administration. the associated press reporting now that this move would affect as many as 800,000 immigrants and the rules would apply to illegal immigrants who would be immune from deportion if they were caught in the united states before they were 16 or younger than 30, have been in the country for at least five continuous years, have no criminal history and have graduated from a u.s. high school, earned a ged or served in the military. this would be a sea change, guys, in u.s. immigration policy and we are awaiting more at the tails on it on a 10:30 korns call later this morning. back to you. >> thank you so much, ayman. high speed traders, intelligence system webs they wall work in the dark and they're impacting your money and your portfolios. scott joins us here on set. it's great to have you with us.

>> thanks for having me. >> you make it clear that in the exchanges make it clear that dark pools serve a function, but there is a fine line between it serving a function for investors in the market and it goes overboard. what is that fine line? >> my contention is not that dark pools are harmful for investors, but that the entire market now has gone dark. and that's because the entire market is run by computers. and i've got to tell you, i am amazed at how quiet the floor is. i used to cover the exchanges for the "wall street journal." this place at this time of the morning used the be buzzing with action. now it's just like a tube. and i actually think what it is is a fake studio set for you guys. i don't even know if this thing would exist any more if you weren't here. >> you realize you still have to get out of here safely. >> yeah. well -- >> it's an extension. >> they do listen, as well.

your point is an interesting one. the machines are running things, fair to say. >> yes. >> high speed and high frequency trading still running things, so to speak. colocation, if you will, getting in between the bid and the buyer. >> yeah. right. colocation is where computer firms put their servers next to the exchange matching engine. and i don't have a problem with that. i think, you know, that's the future. that's the way things are going. what you have to look at and what i have done in the past three years in researching this book, "dark pools" is really look into the dust of what's going on inside the markets. and, unfortunately, there are some very disturbing things happening. and i think you can point to the exchanges. you can look at the exchanges and see what they're doing with these firms who are providing all the volume. they're giving them benefits. and those benefits help them outrun and outgun regular

investors, even mutual fund investors. >> the book has great stuff, eliminated a lot of comps. >> yeah, well, that's probably the worst things that's happened is since the flash crash in may 2010, investors have been fleeing the market like crazy. >> i covered that for the "wall street journal," by the way, and i researched it for months. and i was astonished. i had been looking into this stuff for the journal and i actually thought it was -- there was nothing wrong with that, but that was a real eye opener. >> high frequently trading. >> scott, thanks so much for coming by. scout's new book is called "dark pools." meantime, breaking news on the consumer plus six in 60 when we come back. ♪ on the road ♪ and we know that it goes on and on ♪ [ female announcer ] you're the boss of your life. in charge of making memories and keeping promises. ask your financial professional how lincoln financial can help you take charge of your future.

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welcome back to "squawk on the street." we have the june preliminary reads from the university of michigan confidence index. it is not pretty. 74.1. our last look at 79.3 was the loftiest level since the fall of '07. 74.1 now can change. it is preliminary. but that is the softest read based on final reads going back to december of last year.

so the lowest read of 2012 as it stands on a preliminary basis. and we continue to see yields slip under 160, but the equity markets are holding on. the reasons why have been debated largely. back to you. >> all right, rick, thank you very much. something that's never preliminary, of course, is 6 in 60. six stocks in 60 seconds with jim. we're going to begin with jpm. >> there's been embarrassing stuff about london, but the court business is fantastic. big, big drop off in delinquency loans, charge-offs. we have cash rich confidence poor nation. >> miller taback raising their confidence on disney. >> we have new theme parks that has historically driven traffic. bob iger. >> gas prices, too. weakness at boeing unjustified. >> boeing, don't forget, this is a company winning orders from airbus. i truly like it. >> equity says people are too negative on oracle. >> this is incredible.

melissa was talking about the idea that techs are not doing well. a buy, a dicey call to make. >> down from 2.5 to 3.5 wing sprint is getting its act together. >> percheski, he was a guy who actually worked with icahn, let's call him a protege. what's coming tonight? >> it's a favor family night. we try to do mass names. i'm going to talk about coach, going to talk about michael coors and under armour. these are big family names. >> happy father's day, jim. >> same to you. to you. when can he woman back, we'll talk about this weekend's greek elections and it's been about four weeks since facebook went public. both the venture al capitalist and the shareholder will weigh in on the company's future. keep it here.

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welcome back to "squawk on the street." say hello to the central bank put. investors taig being taken for a wild ride. as we gear up for the greek elections on sunday, we're going to lay out some of the best ways to position amid all this volatility. >> and facebook closing in on its one-month anniversary of its going public. shares are down from its ipo price. do you continue to steer clear of the social media trade? >> plus, gold is up 7 bucks heading into the key weekend with europe. with bernanke heading into the weekend, what is next? >> and the legal battle rages on between wynn resorts and the japanese tycoon kazata. okada has been fighting to gain back his 20% stake which wynn bought at a steek discount. and reports in the slowing in the month of june as the manufacturing index declined

sharply to 2.3 from a previous 17.1 in may, clocking in as the worst reading in over eight months. >> and the tablet wars battle, heating up once again. several sources today saying amazon may be close to cutting the price of its seven inch kindle fire, perhaps a move similar to apple's strategy of cheapening lower products to make more sales at the end of the market. microsoft is set to head the close as the company could release its very first tablet. this notion of microsoft going into the hardware business is an interesting one. some say better positions in terms of creating an ecosystem like apple does. but at the same time it becomes a competitor to the very same companies that it supplies windows 8 with. so there's sort of a push and pull here. >> there are two meetings. >> one on monday which is after the market closes. so that's viewed as a nonfinancial event because it's aftermarket hours. and then there's one on thursday which is going to be a phone event which is said to be the

key event next week. >> according to one analyst. >> according to one analyst. >> market shares are up by about 2%. and the fass dak, as well. so there is, perhaps, some response to the market shares. >> why didn't they just buy nokia. that's where the partnership is, isn't it? with nokia. why don't they together do a tablet and -- >> because nokia did so well doing phones. >> nokia was a great company for a very long time. >> and so was kodak, but times change. >> polaroid i liked personally. >> very hard for companies to buy companies in distress. you'll rarely see that. although there may be intellectual property and whatnot, motorola mobility probably very happy that they got bought by google. >> meanwhile, the buzz in athens this morning, with reports suggesting a secret poll is showing probailout parties as front-runners over the weekend.

the country has strict guidelines on what can and can't be said about polls right now. michelle, i would say happy friday, but i know you have a long weekend ahead. >> oh, yeah. it's a really tense weekend. you can see all the headlines that we saw in the last 24 hours related to central banks. i know there's some doubt as to just how much validity there is to them as brought up by steve liesman. there is no doubt europeans across the continent woke up this morning to see headlines talking about leaders very worried about the outcome of the elections on sunday. just below me in constitution square for the last 12 hours, there have been workers furiously building a huge stage for what will be the final rally and the final speech of the conservative party that's going to happen tonight. you see it right around street signs time when the leader of that party takes to the stage. this mirrors what we saw last

night with elected socialist party led by alexis tsipras making their speech about the same time. i would say this is a competition between hope and fear. the leftist peter is offering hope that things will be difference. the leftis party is offering that if you don't vote for them, things will be worse. both could be right, both could be worse. we did have a chance to speak with renna. she's an mp with the leftist party. we had a chance to speak with her about why it is they are so against the austerity measures. take a listen to what she said. >> this will keep going with all this austerity policies. if we keep going with -- in this path, i mean, the same now liberal path, the gloves, you know, at the end of the day waits for us.

>> she's suggesting that society will collapse under the austerity measures. if she looks family to you, it's because you've seen her already. do you remember this on-air brawl that happened last week where a member of the fashus neo-nazi party started beating up on one of the mps? she was the blond woman on the right that had been part of this two-hour cable panel discussion. at one point, the facist party member threw water on her. she really didn't want to talk about the incident. she was exhausted by all of the coverage. i can tell you that all of the candidates are extremely tired. they've been working like dogs around the clock just like you would see in the united states. no different as we go into these final election owes sunday where the outcome is still so incredibly unclear. back to you guys. >> for them, michelle, let's hope that this is an election which they can form a government and they don't have to go through it gn. i've got one question.

we talk a lot about the anger that you see in greece. is the anger aimed at austerity? i saw the answer you did at the beginning of is "squawk box" this morning. or is the anger aimed at the fact that the professionals and the rich people in greece do not pay their taxes? >> i think both, absolutely both. austerity clearly has caused -- look, they've raised taxes and cut spending. who have they raised taxes on? people to whom they can see their tax monies. if you're salaried, that's who is getting taxed the most. the wholing bracket has dropped dramatically. it used to be if he maud 12,000 euros or less per year, you didn't pay taxes. then they dropped that to 8,000 and then they dropped that to 5,000. so if you make only 5,000 euros per year in greece, they're going to pay taxes. by the way, they imposed it retroactively.

so your tax bill this year is for this year and last year. and, of course, when you raise taxes and cut spending, what do you get? you get a recession. it's been horrendous. unemployment is above 20%. youth unemployment is above 50%. there's also, though, i have to tell you, a lot of unwillingness to do a lot of the key reforms that might make things better. opening the professions, getting rid of barriers to entry, increasing competition in all of the various sectors that would lead to more job growth. there's a lot of fighting among the population about that, as well. it's not easy. this is going to be rough. no matter who wins, it's going to be exceptionally difficult to lead this country. >> all right. michelle caruso cabrera on the ground in athens for us. thank you, michelle. with the greek election coming up on sunday, what does all this mean? jim, great to have you with us. what do you think about these reports that there would be coordinated central bank action depending on what happens over

the weekend? and, jim, it's interesting because the markets are a curious creature in what is bad may actually be good. in this case, perhaps, if the pro bailout party wins, which would be a good event, maybe the twalg action won't happen and that would be actually bad. >> yeah, yeah. >> how did you decipher this? >> i think that the central bankers this week, mario draghi, mervyn king in kick did not say anything you would expect them to say. which is if liquidity was short and if it was a run on bank, well stand behind them and do something to provide liquidity. that's essentially the role of a central bank. there was no surprise there. i thought the reaction of the market yesterday to their comments and the g-20 allegedly was actually probably short-term a bit irrational. ultimately, the greek election has the potential to go fairly dramatically either way. you could have a socialist victory, which would lead to market instability and another poker game, this time between athens and berlin. ultimately, though, i think that

poker game would not lead to everyone holing their position. you would get a compromise, just like you did between ms. merkel and mr. rakoli two weeks ago. i think they would find a way to dispense the funds. even on a negative scenario in the election, i think you're ultimately in more sour muddle through in europe rather than cataclysmic event. >> you don't see it as a -- a vote is a binary event. >> yeah, it is. >> but your saying the contrast will be more gray suspect. >> i think it will be much more gray. it's a binary event, absolutely, carl, but there are two views clearly head held by the greek electorate. one is that they hit the austerity, they don't want it. the but the other is they want to stay in the euro and be part of this european project. now, the fact is on the rhetoric that's coming out of particularly berlin, that is actually not a consistent set of

views. it needs the compromise. that's essentially what i'm saying is that at some point in the next two or three weeks, i think you're going to see moves towards that. >> i would come back away, if i may, the way melissa started and be quite contrarian about this. if you got a really bad result sunday night, it will bang heads together and we will get some movement. the danger is, you get a wishy washy outcome, the central banks don't particularly come in which will be bad for the markets and you continue to have a dead lon lock amongst the leaders. >> what's a wishy washy outcome, though? the vote is the vote. >> but there are three possible outcomes. >> you're talking about coalition buildings. >> but they may not be able to form another coalition government. this is so fine, you could me ander at 2-0. and we spoke before. you really think that spain is going to have to go through a full bailout and a restructuring of its debt. >> yes. i think the problem with all this line of argument and, simon, you're right, a very

negative result in the election for markets would be met by central bank action. the problem is, providing liquidity is not solving what actually is the structure issue. and the structural issue for all of these countries, greece, spain, portugal, italy, is not only excess debt, but lack of economic competitiveness, which means they can't pay that debt back. and their tragedy is they're locked into a hard currency. it's a bit like the gold standard in the 1930s. they can't devalue to get out of it, which would be otherwise the medicine. so i think in those circumstances, providing the political will to hold the euro together, which i think is an 80% probability for the next year or so. what you are going to see is some some compromise over how the monetary policy is operated, but i think you inevitably see all of those countries having a debt rescheduling sometime in the next two or three years. >> but you're describe ago nightmare scenario in which you have a black hole of time in

which we actually go through major crises, country by country by country until we get to some master plan further. you just described a really bad scenario for investors. >> i've described the next five years looking like the last two. a drag and a headwind for the global economy. but remember at the same time we have the jennings of a recovery in the u.s. at the moment, that being distracted from by the fiscal clips. i would say the fiscal clip, the tax changes that are scheduled for january are the reason why u.s. employment, the u.s. consumers are not looking as good as they were two or three months ago. >> but if we're dealing with europe for the next five years, five years, are we going to continue to see the start and stop in our markets and the lack of confidence and then some confidence which means just what we've been going through every summer for the last -- >> as we go, we said there isn't enough money for spain and italy. >> which means that they ultimately will have to

reschedule their debt. now, many people would say that's a nightmare, that's the lehman event. well, greece rescheduled. a lot of people said they'll have to pull out of the euro or be a lehman type event. it walls neither. they're still in the euro having rescheduled. i think the political will to keep the euro together, very unpredictable how long that holds, but it seems to strong. >> and that's assuming merkel gets re-elected. there's a lot that could change between now and then. >> well, that's true, but the opposition to merkel is even more pro integration than she is. >> finally, on the federal. if we're looking at a repeat of the last two years, again and again, does that mean they can afford to stay intact or do they need to have a roll this weekend in the vote goes a certain way? >> the -- you mean the federal european -- >> no, the federal reserve period. >> oh, no. okay. no, the federal reserve here, i think there's a lot of talk about qe3. my own view is that qe3 would be a very bad thing.

qe, qe2 both led to higher commodity prices, increased u.s. costs for business. that's bad for employment. i would say that the least damage they could do is to continue with operation twist. that is what i hoped they will do if they feel they have to do anything. >> jim, thanks for stopping by. appreciate your time. >> thank you. facebook's one-month anniversary since going public is on monday. as the stock remains down, it will be about 25%. we're going to look at evaluations, strategy, competitions and the social media trade next on cnbc. laces? really? slip-on's the way to go. more people do that, security would be like -- there's no charge for the bag. thanks. i know a quiet little place where we can get some work done. there's a three-prong plug. i have club passes. [ male announcer ] get the mileage card with special perks on united, like a free checked bag, united club passes, and priority boarding. thanks. ♪ okay. what's your secret? [ male announcer ] the united mileageplus

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melissa, thank you. i know you guys have talked about the drama of rtf that was majority owned by repsol of spain. huge fight ensued. guess what? the world's richest man, carlos slim reveals that he owns an 8.4% stake in ipf, recently bought that stake. stocks down 75% over the past five months. carlos slim stepping in, taking an 8% stake in ypf, those are the numbers. probably not happier today than the president of argentina.

ypf shares are higher today, guys. back to you. >> that's a good story. thanks so much, brian sullivan. facebook, since the ipo in mid-may, share of the company down 25% since then. what lessons can be learned from the way they approached going public? bill gurley joins us here at post nine this morning. good morning to you. good to have you. >> thank you. >> in general, your take is they tried to be a little too cute. >> if you look at how they structured the ipo, they did a number of things to try and increase floats. if you look at the tech ipos, a lot of them have been criticized for being too low float and, therefore, you get this big hop afterwards. so they took a lot of efforts under way to increase the size. they gave inside investors incentive on early lockups to participate. so they pushed the float out there. maybe that took that too far. >> the time b might have been misguided, too. we need they were resistant to going pup in the first place.

>> i had made a comment earlier in the week that maybe they waited to long to go public. amazon went public with a $500 million market gap spinning off its sales force we know public with a $5 million market gap. >> there was plenty, i'm sure, in the pop line back in your home neck of the woods in silicone valley. are there lessons booeg to be learned here or are we going to see a lot smaller floats? >> let's hope there's a middle ground, right, and you can tune these things in a little bit. there's a lot -- i think there's a lot of huge, big companies that are coming along. the revenues that all of argue start-ups are doing extremely well. there's a lot of disruption with the cloud and the smartphone. you're going to see a lot of good companies. i think service is on file. they have great numbers. i don't think the facebook thing is going to be the end. >> the one reason why facebook was able to wait as long as it did was they could get liquidity

for some of those who did it. isn't that going to still be the case for a number of companies that may be still somewhat reluctant? >> maybe. if you look at and talk to the ceos and cfos who have their shares actively trading on second market, it's more of a nuisance than it is a positive. it creates a lot of the downside to being public without the benefits of being public. the second thing i would say is there are a lot of ceos that view it as an opportunity to take their company forward, to be a competitive weapon, to get out there early. i mentioned vinnie who i don't think has ever complained about oh, my god, you don't have to be public. >> in terms of the next big thing, is there a next big facebook out there? what are some of the most promising themes out there? and given that a lot of these businesses are a few years old in the process, have they been influenced by the economic times since the financial crisis? >> i haven't seen that affecting our companies. you know, we typically are

dealing with some type of systemic technology disruption. and we're typically taking 1% of a really large market, so we're not really set up to be exposed to economic swings like that. the biggest thing happening is the smartphone switch. you know, people think that within three years, the number of smartphones we'll replace will be bigger than the number of desktops. and that has huge implications. we have a company called uber who was born of the smartphone. a smartphone for the consumer, a smartphone for the driver, a big network that connect that's group together and removes tons of inefficiencies and creates magical moments for the consumer and the drivers and it's growing just like this. >> and just to come back, it seems to me there's a big divide between the east coast and the west coast. facebook was a point where people are taking a realistic view of profit flow. on the west coast, to which you're speaking to, you still

have to huge amount of money and people willing to pay it forward. you want to encourage the next generation and huge amounts of money float around in a blue skies way. and i just wonder what that division between the east and the west coast actually means moving forward. because it seems to be potentially very problematic for america. >> if we're too happy on the west coast versus the east coast? >> i didn't say you're too happy, but you're throwing a time of money around on ideas, right or wrong. it's nom going to suggest it's a bubble, but it's a very different atmosphere who what is clearly happening on the east coast. >> that is true, although that has been cut back in the past 30 days. >> instagram was given a price tag of $1 billion. >> when you have these locations like the move to the smartphone, like what's happening in the clouds, it creates something for these large companies. they have huge piles of cash. they need to do something with it.

so you have incumbents who see these shifts. they want to get in front of them. that's instagram right there. >> we started the conversation with facebook, just to tie it up. this gap between the migration of the consumer and being able to get money from that consumer, is that tightening? and do you think investors are going to be patient enough to sdik with a name like facebook? >> one i think you have to go back to a facebook, it is the largest internet site in the world. 900 million users all registered and half of them check in daily. these are things that all of our companies would dream of. and if one of our companies happens to get a magical tie in with facebook, the usage goes like this. so this is a major platform. i think they're going to have tons of ways to mon size going forward. they've been under duress here for 30 days. it's a special property. >> joe gurlly, great to have you. please come back soon. what is the headline driven market certainly this week.

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welcome back to "squawk on the street." i have breaking news.just one the past few minutes, the s.e.c. has released a wrath of new correspondence gives ug a behind the scenes peek between the dialogue of facebook in advance of the ipo. the documents are here. we've begun to review them. so far, what we can see is that the s.e.c. was pushing facebook to disclose more about the nature and number of its users, also the impact of zinga to facebook's bottom line and the impact of mobile use on customers and the impact of that on facebook's revenue and bottom line, guys. so 589 here to digest, but we're getting a look at exactly what the s.e.c. was asking facebook to disclose in advance of the ipo. and ta gives you a sense of why there were maybe so many amendments to facebook's filing before we did see that ipo,

guys. back to you. >> ayman, any read on how far these correspondences go back? >> the earliest one i see here is march 17th, but that is to say -- no, i'm sorry, i have one here, february 28th. so it's the early part of this year and basically it's the ongoing dialogue. this is automatically disclosed 20 business days after a company goes effective. that's a standard thing. and i'm told that basically what we're looking at here is the kind of correspondence that would happen with any ipo, the s.e.c. is very careful to review what the company is telling the public and frequently issues letters like this pushing them to disclose more or refine their disclosures. >> so, ayman, what is the s.e.c. releasing this? this is normal correspondences between the company going public. >> it's an automatic trigger. 20 business days from when the company goes public, they're now releasing it. >> okay. ayman, thanks for that.

we appreciate it. facebook shares, by the way, up 2% in today's session. still to come, shares are down actually 25% since it debuted about a month ago. but what about the value of that surrounding silicone valley real estate? we're talking about the relationship between facebook stock and home values, straight ahead. at merrill lynch, we understand the importance of your goals. today, our financial advisors lead from a new position of strength. together with bank of america,

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♪ >> one hour into trading, the stories we're squawking about, the university of michigan's consumer sentiment index falling to six-month low webs down more than five points to a mid-june reading of 74.1. shares of whole foods hitting all new time highs. and the vix is up more than 6%, hitting the 23 level. >> we're one hour into trading. want to head into chicago and get more on the market moves this friday. ira, always good to have you. happy friday. >> same to you. thanks for having me. >> we've got a lot to process as we make our way into the weekend. talk to me about gold this morning, up ten bucks. a lot of debate about how it might be buffeted by the results in greece if they have to sell because they do move to a different currency. what's going on? >> well, i think that what gold is doing is finally grabbing traction and getting a story.

it's realizing that no matter how greece goes, we have spain and italy right behind it. maybe portugal one more time. the u.s. possibly at more quantitative easing. and then i was looking at some factors for the show. gold is outperforming the ten-year bond. it is up more than that ten-year bond since the beginning of the year. so people don't realize it because there hasn't been stellar performance, but it's up about 357%, 4% on the year. that's not bad at all. >> you do think we have now seen the lows in nat gas? >> i think nat gas has seen the lows. i think yesterday's day was a watershed event. i think that the surprise number that got the market, how the market rallies, that was it in my opinion. so until that's taken out, i prefer to play on breaks, buying the market. >> talk blths bit about the central bank headlines that drove the rally late yesterday. i mean, we keep hearing about liquidity. cramer this morning called that

pavlovian and that's going to leave the shorts to cover and maybe some longs back in. but overall, it doesn't do a lot to set a new platform for growth in the future, right? >> i don't know. you know, anything this weekend and anything right over the next week and a half is going to be very dangerous to make statements about. we have the greek election. we have the g-2037 we have the fomc meeting want we've got meetings with iran, trying to sep set up how anything is going to work over the next couple of weeks and where growth is going to be or not going to be. i'm having a real difficult time with because i don't know what's left on the table. if we all start printing money, where does that take us? it has no issues at all, it just cushions a very bad system, but it doesn't solve the problem. so i don't know how you get to the growth factor. the new york fed nebs today were nothing short of draftsus. so i think things are table right now. >> so shorter term at 1335, i've heard some people say they're going to fade as we get into

1340 if that happens. what's the level we're all going to stan dance around? >> well, basis the s&p, i think you have two numbers that are extremes. i think 1400 on the upside if you start a move that has any traction and 1260 on the down side, at least that's what our research group is talking about if we keep falling down. >> ira, thanks so much for the time. talk to you later. ira epstein joining us from the linn group. >> let's bring in dan greenhouse. what happened you say going to investors intoog into the weekend? >> you and i have been talking about this. something we're seeing in the vix this morning, there's a fair bit of nervousness going into the weekend. my good friend, doug cass, is among the many saying perhaps this is discounted. but i think something i've been talking to jim anello is exactly the opposite. when you talk to clients, there's an enormous sense of

uncertainty out there as to what the potential outcomes are for greece. i don't know, but quite frankly, neither did anybody else. >> presumably, the risk to the downside, all that talk about some sort of central bank action, can that done fer a rally from here and we were hearing earlier in the program, it could go on for three or four years. can the market rally against that? >> well, sure. nothing goes up or down in a straight line. if the goal in the short-term is higher asset prices, that goal can be achieved. the question, aus insinuate is whether that has any or makes any difference with respect to the long-term structural problems. the answer is no, but you are, by definition, buying time and kicking the can down the road. that works if you make the necessary adjustments required. if you're just buying time doing nothing, ultimately we'll revisit the situation in six

months, six years. >> from a trading perspective, the notion that central banks could come in in a coordinated fashion, it's done. that trade was over. it was done yesterday. >> i would disagree. the one that is true is, in theory, if there is a global coordinated response or even a one by one -- and let's be clear, the boj, the boe, brazil central bank, the federal reserve, everybody is inching towards easing. i would disagree that this is somehow priced towards market. >> you mentioned the proverbial kicking the can, which, mean, we've used a lot over the last couple of years. nothing seemingly has changed, hates, stan? is there anything that gives you an indication that tomorrow will be different than yesterday? >> i would disagree with ta, to some degree.

some things have changed. sylvia berlusconi is not in power any more. in italy, that is pretty dramatic. if you look at what's going on in greece, italy, spain, they are making ajumt justments. >> eye tilean gdp is lower. money is flowing out of the banks in greece. what are you talking about positively here? >> well, hold on. i'm not saying that it's positive. you asked are there changes, is anything different. >> no, my point -- and perhaps you didn't understand the question -- was in testimonies of the policy responses, are you seeing anything that is different today than we've seen in the past? >> oh, i apologize. i agree. no, nothing is different today than was yesterday. but, again, if you're the prime minister of portugal or greece or spain, you have to -- it's quite a juggling act, so to speak. you have to balance external interests, particularly germany,

obviously, against nationalistics, the demands of your people. if you look at what's going on in greece, the economy, for better or worse, is imploding on itself. if you look at what happened in the fourth quarter, they've gone through that, that quarter, for about three years now i would say issue with both of you. i think a lot of has changed. we've had a trillion euros pumped into the banks in europe. you've got the civil servants in europe throwing up plans for a banking union. you've got some movement towards the politicians towards some sort of euro bonds. i think we have made a huge amount of progress. >> time is running out, though. >> yeah, but we are moving along a line. let's not suggest -- >> we're moving along a line? you really believe that? >> for the europeans, if you think of it -- i mean, gdp and the economy and wages were all higher than they really should have been. and the correction down, either to the mean or below, is going to be painful and it's going to

take time. there's no avoiding that. >> we need to wrap it out. lay it out for me, though. do you think the fed is likely to act on sunday night when we think the ecb might say something or would they wait for the tuesday/wednesday meeting? >> very quickly, when we talk about the federal reserve acting wg, there's a difference between easing policy and liquidity. certainly, if something goes wrong, liquidity injections are quite -- going to be required to some degree. but in terms of accommodative policy, another quantitative easing program or something like that, our scenario has been september or q3 all along. i think they wait and if they do need to add additional policies, it will come in the fall, irrespective of the political repercussions. >> john, have a rest of the weekend. it could be a busy week next week. brian. >> busy week next week, but a busy decade. i think we all need to inject

some liquidity after everything that was going on. navistar. one of the proteges upped its interest. you've got guys that work together that fought over lion's gate now kind of on the same team around nivistar. that stock has been hammered over the last 12 months. but now you've got icahn and one of its proteges taking stake. i know you guys are younger than i am. simon, what is it called, frenemies? what does your generation call these people, frenemies? >> how old is he? >> older than you think. >> he looks fabulous. >> how close are you to carl icahn? >> what do you mean? i speak to him, interview him.

>> he's on fast money all the time. >> he's on often. >> thank you very much. >> up modestly on safe havens for this weekend, big greek elections. with bernanke on deck, what is happening in the metals and oil markets? laces? really? slip-on's the way to go. more people do that, security would be like -- there's no charge for the bag. thanks. i know a quiet little place where we can get some work done. there's a three-prong plug. i have club passes. [ male announcer ] get the mileage card with special perks on united, like a free checked bag, united club passes, and priority boarding. thanks. ♪ okay. what's your secret? [ male announcer ] the united mileageplus explorer card. get it and you're in.

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gold prices rising modestly this morning ahead of the greek elections this next weekend. our next guest is prodifficulting a major come back in gold. great to have you back here at post nine. >> yes, it's excellent. >> you are a gold bug. you say that there's only a win-win situation for gold because it's either going to benefit from the fear trade or the love trade. either way, you're a winner. >> correct. and if you take a look back at the pacht 2,000 years, whenever

there's massive monetary and physical policy imbalances, gold starts to become an attractive asset class. the lost trade has to be rising gdps. and that starts in august. so this process and the poll through, it's a seasonal pattern towards gold. so we're coming to a bottom. short-term, the dollar is overbought and gold is oversold. if i went back and did -- it looks like the 60-day rates have changed and it's like a co-sin wave. there's many reasons for gold to be attractive. >> at the same time, that theory didn't work from about mid february until the middle of may or so. why do you think that there was that breakdown during that period where it was neither a love or a fear trade. it was a bad trade, period. >> two things. india came out and had attacks

on consumption of gold jewelry. they've removed that. so all of a sudden, you have the demand picking up again in india. and the other part is, historically, gold rallies until chinese new year. that's the peak. and then it falls off, a lot bit of rally until june or july. we're now coming to that trough period on this seasonal pattern of gold. >> frank, didn't you write a book in 2008 when you said don't try to get rich with gold because the corresponding risk is too high? >> no, i didn't write that. >> you did not? >> no. i said there was a rebalance each year. and i wrote when looking at gold stocks and the picking of gold stock and understanding the life cycle of gold stock, that was what i wrote about. >> do you think you think the skeptics on gold, there's always a reason why you should buy gold, it's always the answer to every question? >> i don't think it's the answer because it's not 100%. it's like car insurance. you want to have insurance in case you have an accident.

and the same thing with having a small portion. think of this, yesterday was a record low for 30 year in government notes at the inflationary rate. so you can turn around and buy goal at no cost and you get the upside. you're not going to see fiscal discipline. >> europe. and it's 50% of all the deficit last year was monetized by the federal reserve. and the negative interest rate. >> we've had a terrible six months, so much has happened. and our chart there shows that gold has barely moved in that six-month period. if it was the answer to all our problems, wouldn't it have rocketed through that? >> it's not the answer to all of your problems. >> but it's the love trade and the hate trade and the fear trait trade. >> and it's far outperformed most of the action classes in the past 15 years. >> actually, bonds are up 60% over the past five years. >> and so is gold. quite often, when you look at it in bonds, it should be 50% of your portfolio.

i never tell people that they should put 100% of their money in gold. it's to capture the volatility that takes place when there's poor government policies leak we're experiencing in europe today.india, two economies slowing. we don't know by how much. does that make the love trade any less impactful. >> it does. it's important to follow the gdp per capita. it's slowed down modestly in china. still, tremendous tim lsu, differently than took place in 2008. we're seeing bank reserves dropping, money supply increasing in china. the new premier, she and chin are coming in. li and shi following train freight, a package to get the economy going with jobs. >> thanks for stopping by.

frank fang homes. >> what do facebook, silicon valley and real estate have in common? why homeowners are waiting for that. rick santelli the next hour "squawk on the street." some big guest toss come, rick. >> simon, santelli exchange is going to be at the bottom of the hour. at the top of the hour, commissioner. there's a huge industry affecting this industry. it's regards to research. we're going to dig down deep. every broker out there in the futures business, a must see bottom of the hour. we'll talk about the financial times. you may be shocked to see what it is. all coming up in the next hour on "squawk on the street."

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tweet. greeks head to the polls for an election. nothing short of a nailbiter. complete the title of the next chapter in greece's story, the greek tragedy: -- what. >> the greek tragedy, act 7, different this time. dave writes, the greek tragedy, my big fat greek bailout. thus spoke austeritus through his messenger merkulus. you can almost picture a mythical character. >> cause trouble, birth place of democracy. it is the first country, of course, athens, five centuries b.c. >> very poetic, simon. >> i like that. >> we have a special edition of money in motion ahead of the greek elections. dr. gloom doom himself mark

farber. >> i hope that's broadcast in athens. i hope they get to see mark farber so they see the seriousness of the election. >> so they go and vote. >> it's the undecides that will swing it. >> there are swing states in greece, if you look at the break down of the country. interesting to see the vote. we'll be watching the returns. see you later on, david. if you're joining us, here is what you missed early this morning. >> announcer: welcome to hour three of "squawk on the street." here is what's happening so far. >> in order to save ibm, we have to take on some pain. you cannot turn around an economic problem without some pain in the beginning. >> a central bank can keep the thing afloat but it can't solve the market's real question about whether the debt is sustainable. that's a fundamentally good question. >> the challenge for a ceo turning around what had been a successful company that had run

into trouble. the challenge is understanding the culture. you have to get the culture realigned with a new strategic direction. >> i think we're all living in a really stupid world, so to speak, in the sense no one thinks is this the time they really get it together in europe? instead what they say, wow, they may have a master plan. if we know one thing, it is a euro confederacy of dunces. >> they do not have a master plan. that's something we know. >> industrial production drop 0.1 of 1%, the mere image of what we were expecting, up .1 of 1%. >> you would get a compromise just like you did betwetwo week. they would find pltically a way to advance the funds and avoid a disorderly bankruptcy. >> good friday morning. welcome to "squawk on the street."

let's check friday. we started the week with s&p down 1% on monday. the past few times that's happened, the week has not gone well. of course the dow is now at its highest level since mid may. volume has been up four straight days. that 118-point swing in the last hour yesterday, biggest last hour swing in four weeks. gold climbing, poised to extend gains to sixth session in a row on news there could be fresh economic stimulus from world central banks. gold up 3% in the last week. airlines some of the big losers today. all the big players in the red, delta, united, jetblue, southwest and lcc. commissioner bart chilton join us live. how facebook is affecting real estate in silicon valley. find out why homeowners in menlo park are watching every move that facebook stock makes. plus the tablet wars are back. microsoft reportedly set to unveil its own product.

amazon cutting prices on the kindle. find out what that means for ipad. california's debt problems piling up. one of the biggest profitmakers, the movie industry, taking profits elsewhere. kat golden state hold onto big bucks. that coming up in the next hour. first start with greece, the country in financial turmoil ahead of the election this is weekend. our chief international correspondent has been on the ground in athens the last few days and bringing us a picture that's hard to get unless you're actually there. what's going on today? >> well, carl, tell me if you struggle to hear me, we can change microphones. there are preparations under way for the rally held in a couple of hours by the conservative party. this part of the final political theater that happens as we head into sunday's elections, which suggests the numbers are too close to call. that's the first headline. numbers still too close to call,

even though there's rumors and reports that perhaps the pro bailout party is in the lead but not by enough to say for sure plus so many undecided voters, at least 15%. show you some other headlines that happened in greece. they have been pretty tough. first of all carre four, second largest retailer after walmart abandoning greece, selling out the 50% joint venture they had to a family in greece that owned it. they are selling it but taking a quarter of a billion euro charge. so clearly it wasn't a big moneymaker. they are taking a loss on the situation in order to get out of here. obviously the situation on the ground here is extremely tough. i think rick santelli will talk about this a little bit. greeks are furious about the german version of the financial times a front page editorial urging them to vote for the pro bailout party, the party holding the rally tonight. they are angry because unemployment is at 22.6% according to the most recent

numbers. 600,000 people long-term unemployed. youth unemployment is above 50%. we are seeing increased use of soup kitchens, for example, cnbc europe our partners went earlier this week to one soup kitchen where back in 2009 they were feeding 400 people a day. that now works out to 1200 people a day. there's 76 soup kitchens across athens feeding 20,000 people a day. we have seen poverty on the rise as people lost their jobs and also seen salaries cut dramatically. we're going to carry live coverage of those events later today. you want to be sure to tune bo this nailbiter, carl, which has clearly got all financial leaders around the world on emg. back to you. >> michelle caruso-cabrera in athens. we'll come back to you later on. thank you so much for your hard work. bring you in to get the effect later this week. good to see you, art. >> you, too.

>> this is obviously difficult to read. you've got the most tenure of just about anybody around here. how do you think it's going to play? >> i haven't changed much from our discussion earlier in the week. i think greece will simply be, however the election goes, an opportunity to reopen negotiations. i think that started when they decided to do the spanish bailout with no details. even the most wild eyed in greece will say, okay, we'd like to lessen the austerity, keep the burden on people a little bit lighter. so i think this is another kicking the can down the road for a while. i'm far more concerned about the election in egypt. i think that could be a big surprise. if it goes the wrong way, it could turn the middle east upside down. >> market did not react to it yesterday. >> market has ignored a graeme geopolitical risks that are out there. chavez in venezuela. there is a whole variety of things. they have become so obsessed

with the grecian problem, nothing else seems to matter. >> headlines on central bankers that crossed yesterday. a lot of discussion about the validity of those news reports, whether this was a routine announcement ahead of a meeting. whether they are on stand by in a new and interesting way. what do you think? >> i suspect, like the road to hell, it was based on good intentions. i think they probably put together a kind of lifeboat drill, a crisis situation that if something really went wrong -- for example, the people overreacted to the results, a run on the bank began, things began to move, i think they may have gotten together and say what do we do in a crisis situation. there may be plans for limiting the amount you can take out of an atm in one day. there may be capital controls to prevent things from moving across borders. they may be some of the things there. i think somebody probably with the best of intentions, hoping

to reassure people said we have a coordinated plan. things are good. everybody misunderstood it, think it was a qe, whatever, but i think it's probably an emergency plan. >> interesting. finally at 136, what did the past few days tell you and what does the increasing volume tell you? >> increasing volume. you have to be careful. quadruple exploration and there's a rewaiting today. we'll see how that volume holds up as we go into the close. perversely for some, yesterday's rally improved the charts greatly. we're in a potential springboard here. if we close well today and get an opportunity on monday with no negative surprises, they could be back in control for a while. >> a big if. see what happens monday. thank you, art. >> my pleasure. >> my pity to them this weekend. back to rick santelli for a

special guest on regulations. >> before i tell you who my special guest is, you probably know. dodd/frank in july, two years since it was passed. a lot fleshed out, which is the topic of this discussion. research in commodities in my opinion didn't have much to do with the '08 crisis. bart chilton, commissioner of fdic didn't write dodd/frank or volunteer to fill in the blanks but we still have to deal with it, don't we? >> absolutely. >> here is my question, in this industry the telephone rarely rings, commodities, futures out going calls. for a customer you have to onshow them ideas. that is going to be affected by regulation dealing with research in this industry? >> not by firms that have researchers working for traders, rick. we do have firms out there that sell their research. it's a separate business unit. we shouldn't allow that business

unit to be giving privileged and confidential information to the traders so they can potentially go out and royal markets. that has to stop. >> that makes sense to me. if you're a giant firm, have you research. there's a charge for research, spitzer aftershocks gaming or jumping in front of it before you get to the clients. i get that. fair and level playing field. in this industry if these guys have a badge, talk to their client, here, i'll send you a chart, it's okay. >> it will be okay. there's a de minimus standard, $5 million. anybody with a small firm, 10, 1 2 team people in their shop, absolutely. it would be like having one eye closed if you don't allow the research opportunity. we think we've struck the right balance, implement it in 45 days. we think we have the right balance. if not, we'll change it. >> go to the bigger firms. there are bigger firms, car hill's adf, all over middle

america. will they be affected in your opinion. >> we treat commercials differently for obvious reasons. they don't sell their research as a separate business unit. it's really big banks that have business units that just do research. it's a moneymaking center for them. those are the guys trying to set audiotape firewall between them and trading and clearing folks. >> let's switch gears a bit. yesterday was a noteworthy day regarding mf globally bankruptcy in the united states, $130 million was directed to be paid back to clients out of a larger pot by the cme. there's still $744 million in the uk. you were telling me that the trustee, giddens hired a bars r barister to get the money. >> it's still ours. once that 744 crossed the pond, it lost its identity as customer

money. i think we probably nooer need our own lawyer over there. sometimes you would hope our interest would be aligned with the trustee. i'm not so sure that's the case. i think we probably need -- >> why don't you think you're aligned. anything popped up from the uk side that would send you the message you're not necessarily on the same page as this quote, unquote, uk barster. >> i was told i was going to be deposed. >> friends don't depose other friends. just as a final tombstone on the dodd/frank, once again, it really seems as though when uncertainty looms large in effecting hiring and it's all about hiring, do you think two years is too long to fill in the blanks? did you get handed a real rat's nest of regulation? shouldn't they have done a better job, more brief, more specific thoughts? >> there was a rush to get it done because it had already been two years since the calamity. in order to get it done, what

congress does is they don't fill in some of the blanks. they give you a blank slate because that's how under the circumstances to a compromise. ten lobbyists, members of congress in the financial sector, ten for every member of congress, those descended upon me and colleagues and regulators. >> when i vote for congressmen and senators in november there should be an asterisk, i need to know who is doing the work, their name should be on the ballot. thank you, bart chilton. >> thank you, rick. when we come back, the surprising relationship between real estate and facebook. find out why they are playing for a facebook rebound. after this break. >> announcer: monday on "squawk on the street," it's facebook's one-month anniversary as a public company. we'll be checking in on its status. joining us dallas mavericks' owner and facebook investors mark cuban as well as financial

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utilities doing the worst right now. interesting both utilities and telecom sitting close to their highest levels since 2008. take a look how materials are doing as well. sector up almost a percent up to 218 on that index. meantime palo alto the home of tech startups also the home of social media giant facebook. it's been booming but with the falling price of facebook we're saying good-bye to silicon valley's home value. michael dreyfuss. >> good morning. >> you had a lot of sellers expecting this ipo waiting for homes to go up, then list with buyers with a lot of cash to go

around. it hasn't worked out that wachlt. >> it hasn't. we've seen a little increase in our inventory because of it, 30% in menlo park and palo alto. practically speaking going from super low to low. what's interesting is how the conversation changed with our sellers. >> how does that go? you say it's given you a lesson with which to impart to your sellers. what do you say? >> sellers are an optimistic bunch. they look at the upside and think how much more they are going to get for their house. the facebook effect fed into that. it made it difficult for us as real estate professionals to have the other part of the discussion, hey, stuff can go the other way, too. valuing your house is a very -- looking at both sides of the coin. hard to do that when facebook was out there and everything so much better. now made our sellers reflect on that and makes it easier for us. >> what do you think the impact

is going to be on prices? >> you know what, practically speaking, none. facebook about this aura of money falling from the sky. in the meantime we're selling houses to a very broad-based tech sector that is doing really well. that is the story of our economy and our real estate fundamentals are really good. it's about jobs and people coming here. that's still happening. facebook is really more of the future for us. >> we had a venture capitalist on in the last hour. it's amazing how many nationwide trends are the inverse where you are, employment, housing. they can't -- houses can't get expensive enough and can't find employees quickly enough. >> i wish i had that apple one you guys were talking about earlier. maybe i should look for those in my client's garages. we have a very special place here. the apple one is a good example. we're making those kinds of

products. we're seeing what i hope the rest of the country will see eventually, the demand that built up after the crash is coming out here. we're seeing people that put off decisions to buy homes, put off job moves, that's driving us. >> have you heard from sellers who think facebook and the way it's performed in the past month are a harbinger for things to come -- it's been good -- but perhaps it won't be as good in the future. >> this is a pretty optimistic place. they are used to this. as much as they jumped on the bandwagon, pointed to riches coming, i think at the same time they are in this economy and they are working for all these exciting companies. i think it's still a very positive vibe here. there's a little disappoint in how it performed but i think overall this is a place that rebounds pretty quick. >> finally before we let you go, let's say i'm newly hired, a newly hired programmer at one of

the big firms out there. what kind of price level? am i in the millions automatically? >> absolutely. >> it's hard to get anything nice for under a million dollars. >> yeah. that's pretty much our entry level at menlo park and palo alto, three-better two bath, 1900 square foot house a million eight to two two. >> amazing phenomenon out in california. thank you so much for your time. >> my pleasure. >> michael dreyfuss with dreyfuss properties. we'll count you down to the close in europe where housing isn't nearly as well. we'll bring you the action when it happens. we'll be back after a short break.

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like a free checked bag, united club passes, and priority boarding. thanks. ♪ okay. what's your secret? [ male announcer ] the united mileageplus explorer card. get it and you're in. welcome back to "squawk on the street." take a look at a company called xxvi, looks like xxvi.

i called the company, it's pronounced 26. make chemicals into optical lasers. an odd business. a metal going into this stuff -- i'm learning all kinds of new stuff on the stock debt. they had issues on pricing for that, cut guidance for the quarter and fiscal year. that stopped is walloped down 12%. pennsylvania-based xxvi tell orrium. the other periodic table. >> i want the symbol when we come back. >> carl quintanilla. >> the jetblue pilot that left the cockpit and disrupted a flight has been ruled competent to stand trial. interfered with a flight crew, underwent an exam. he ran through the cabin screaming about religion and terrorists. twenty passengers sued over that incident. bell about to sound across

europe as they are about to hear the bell before the elections in greece. what to expect on sunday and the impact here on the states after this. ssionate belief and the foundation on which merrill lynch has been built. today, our financial advisors lead from a new position of strength. together with bank of america, they have access to more resources than ever before. a steadfast commitment to help you achieve your financial goals in life. that's the power of the right advisor. that's merrill lynch.

maybe 56 hours, something like that, we're going to get an answer perhaps to that question that has been largely academic up until now. that is where the eurozone, simon, can withstand the departure of one of its members.

i'm curious how you think sunday will turn out. >> i'm impressed you calculated 56 hours until we get the results. i have no idea. you know what's really interesting, the power of the rally. in europe, the last few minutes now for people to basically position for whatever might happen over the weekend. you've seen what i suspect is actually a short cover rally coming through. with all the central bank talk, the event risk, what might happen over the weekend, you might want to be short on the market. i find it hard to believe people are buying into the big banks in anticipation the world will be a better place on monday. most of the markets around europe have risen during the course of the session. you see here particularly true of paris and frank fort, milan and frankfort. the one that's not done well is spain which appears to be falling into the close. partly because bank has moved further into negative territory. in broad terms across europe,

it's a healthy rally. let's look at the map as we prepare to close you out. a lot of these companies are coming from a low base. it's green right across the screen. you can interpret that as optimism for the weekend. i think more likely it's short covering. >> the european markets are closing now. >> and to elaborate on the short covering theme, let me show you what the big banks have done, particularly in the uk. last night you had that announcement from the government of the bank of england, $158 billion of extra measures into the uk economy trying to get cheaper loans to home builders, some businesses and prospect of further qe in the uk. they already have massive qe, don't forts that. look at world bank of scotland up here. that's also a way to short and to play concerns around the rest, notably in ireland. short covering there. lloyd's is higher, barclays is higher. a lot of european banks have

done well. don't forget, this is important for american banking. finally have long awaited down grades from moody's, for example, ing coming through overnight. we wait todd if they do bank of america, morgan stanley as you'll be aware next week. down grades, multiple, still things today. that surely is short covering. what have we learned overall for the week in it's a very important week, of course, for the bull mashrkets in europe. let's look at spanish yields. a week since we have that credit line, 100 billion euros potentially coming through for the spanish banks. the yields on those spanish bonds has gone only one direction into arguably 7%, the danger zone. whatever happens with the greek election on monday, as we've heard through the program, we're going to be talking whether spain needs a bailout. they haven't quelled fears there. italy, there for the week, broadly we've moved in one

direction with a little respite coming today. this week, we learned may not have political support for the reforms. wait to complete that. this is really interesting, yields on german bonds rose this week. that is because if there is a solution perhaps germany might impair creditworthiness. fascinating there. let me leave you of pictures, clearly opened the way to the prospect of interest rate cuts. the risk for eurozone, president of ecb, to the downside. no inflation threatening. will we get interest rate cuts, most probably. will we get an announcement sunday night, who knows. carl, let me leave you, we do have conference call, going on now, about to go on between the leaders of germany, france, uk, organized by european commission or council more accurately.

sunday night we know european finance ministers have a call after the greek election. we'll see if we get anything there ecb and whether that will be in concert with central bank or not. >> a lot of conference calls over the next several days. simon, thanks a lot. see what happens over the weekend. same to you. see at the bottom of the screen a verdict in the case general rajat gupta apparently has been delivered, should be announced within moments. of course, gupta former head . maximum sentence of 20 years. bertha coombs joins us in manhattan and jones us now. they just got deliberations yesterday, bertha. >> reporter: they did. they got deliberations a little before 10:00 in the morning. yesterday afternoon just after lunch the jury sent back among the substantive notes, they wanted to hear -- see the testimony on a trade on procter & gamble, which is the sixth

count in here, a trade that occurred in january of 2009. after that they asked for a clarification on what was the last count that was listed on the verdict sheet on the conspiracy charge. in all mr. gupta faces six counts, one count of conspiracy, one count of fraud. two of those involved trades involving that september 23rd warren buffett $5 billion investment back in 2008 in goldman sachs. one of the things that the prosecutors had told the jurors, that if they believed the testimony of karen eisenberg, the secretary for raj rajarat m rajaratnam, after the goldman sachs board meeting and trades that happened at galleon at the time, then it was over.

the fact the jurors went to the last two items on the list seemed to indicate yesterday what is always very circumsuspect about speculating. they had quick work of it and had gone through either way. as far as mr. gupta is concerned, this trial has been wearing on him. his family and about a dozen friends have been here the entire time. this morning he spent a lot of time with his four dawes and wife who seem to be offering him quite a bit of solace as he awaits this verdict. back to you. >> we will see what happens. of course as you mentioned before, bertha, prosecutors had only a few wiretaps to work with. much unlike the raj rajaratnam case, everyone watching the u.s. attorney in this case, if, in fact, his winning streak may come to an end, if, in fact, there's an acquittal. we'll see what happens when the verdict is announced. we'll come back to you for that. mary thompson. >> holding onto steady gains,

dow 15 points below its highs of the day. s&p very close to that. basically what we've seen is the markets hold onto gains on expectation for stimulus either overseas or here in the u.s. in large part because of the weak data we received on industrial production, empire index or empire state index and consumer sentiment all, of course, fueling expectations when the fed meets next week we could see added stimulus provided by the central bank. the leaders today, risk on trade back in vogue today. we've got strength in materials, energies, tech stocks also strong today and industrials. also keep watch on the aussie dollar, another indication of whether or not the risk on trade is on, which indeed it is today. you can see it bounced off that year-to-date low it hit at the beginning of june. since then it is up well over 4%. the weak area today is the banks, which is unusual because, of course, as simon was mentioning earlier we saw some strength in the european banks.

not the case for european banks. if you look at the major banks, citigroup underperforming the others. we've made some calls on that, haven't been able to nail down why citi is performing so much worse or more poorly than the others. the others have just turned higher recently. they were a little lower earlier. i stand corrected. citi is the biggest drag on the s&p 500. what isn't a drag on the s&p 500 is microsoft reports it's buying yamer, a social networking area for business for $1.2 billion. it is one of the biggest winners. again, the dow is holding the gain. back to you. >> rick santelli is watching europe as well and what's going to be an eventful weekend, rick. >> absolutely. sometimes the best of intentions, well, they seem to have consequences that are unanticipated. something very peculiar happened this morning. i would never have guessed it's

gotten the legs it's gotten. i walked into a bunch of e-mails from website ftd, financial times deutschland. what has happened is that is a german version of the paper but they print add story in greek talking to the greecians and i'll read an expert. dear men and women of greece please realize you need to make a leer political decision, vote for political and structural reforms your country needs to stay in the eurozone. only with the parties accepted conditions made by international predators can you accomplish this. withstand the dem ogry, do not trust their promises that you can discard the agreement without consequence. well, maybe this intent was to win some friends. as i am getting e-mails and i could read you a few excerpts, i urge people that are interested and thinking maybe this will give them a better insight into the outcorks the comments, i

couldn't find one positive comment. i was flabbergasted. computer translated, it was written in greek. here are some comments and i only pick out a few. i would be very glad for staying out of your business. unfortunately you want our money so it's now our business, too. another comment. no, we want our money back. another one, it's not your money and you know that they are not getting into our pockets. this doesn't sound linebacker a group of people that are going to be voting the way the germans want. but obviously it's not a sample that we can count on but i find it very fascinating that such a strange process would result in so much tension. back to you. >> all right. rick, we're going to have to wait to see what this weekend brings. thanks very much. want to remind everyone we are expecting a verdict in the trial of rajat gupta now. the verdict has been delivered and we'll see when it's announced. when it happens we'll bring you that as soon as possible. coming up, tablets wars, a microsoft tablet called a

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ttd#: 1-800-345-2550 syou know, i've helped a lot off people save a lot of money. but today...( sfx: loud noise of large metal object hitting the ground) things have been a little strange. (sfx: sound of piano smashing) roadrunner: meep meep. meep meep? (sfx: loud thud sound) what a strange place. geico®. fifteen minutes could save you fifteen percent or more on car insurance. i'm i'm bertha coombs at the federal courthouse in lower manhattan we are getting reports from reuters out of the courtroom where rajat gupta has been found guilty by the jury in four of six counts of securities fraud and conspiracy. we have not yet seen which of

the counts. but among the counts he's charged with, a march 12th, 2007 tip to an upside surprise of goldman earnings, two counts surrounding a tip to that $5 billion warren buffett investment back in 2008 involving two massive trades at galleon when galleon had never really had a major position in goldman sachs before that. a 2008 october goldman sachs warning for the first time that it was going to post a loss. that is one of the counts as well. at a 2009 series of trades involving an organic sales warning from procter & gamble. again, four of the six guilty. carl, at this point it would mean mr. gupta faces up to 25 years in prison. the most devastating evidence around two counts on the buffett tip. the time line there galleon had

never had a major position in goldman sachs. as soon as the goldman sachs conference call for the board members ends saying that warren buffett was taking that $5 billion investment, a couple minutes later a very quick call to galleon, then these massive trades just before the close of day. next day raj rajaratnam the galleon chief told a trader he had gotten a tip a couple of minutes before the close of day from a board member on goldman that something good was going to high pressure to goldman. that has been the major focus of this case and the two very critical ones that i would imagine are the ones that the jury did find him guilty of. i've got to imagine it's a very emotional scene there over the last couple of days. he's gotten very welled up at times, his daughter as well. this a big loss for the goldman

board member and a big win for the prosecution. >> talk about jury board, four men, eight women, not many with a background in finance. >> not too many. they elected for the foreman a gentleman who is a nonprofit executive in westchester. he also had a business consultant. that's one of the men. a woman who serves on a nonprofit here in manhattan who has a bachelor of science in mathematics and runs a program for math and science. you do have people that have a math and business background. among them a retired librarian, a couple of school teachers, physician's assistant, a nurse. it was a very mixed jury. again it was a majority female jury in this case. >> bring in honorable judge

served in the district between 2002 to 2012, presided over the trial of raj rajaratnam. judge, good to have you on the phone today. >> good to be here. >> i won't are if you suspect this most contentious claim by the prosecution, phone call regarding buffett's investment in goldman, do we know that is one of the counts on which he's found guilty. >> i don't know that. but it wouldn't surprise me. that was very powerful circumstantial evidence that the government introduced with respect to that phone call. and once the defense made the decision not to put mr. gupta on the stand, i think the outcome on that count was probably predictable. >> okay. >> we had you on the show not too long ago and you said the prosecuting was doing the job they end interested, executing on the strategy they laid out.

how much of a victory is this for the u.s. attorney's office and all the successes they have had over the past 15 months? >> well, it certainly is a great success for them in terms of their continued attack on wall street business ethics. as i say, it's not a surprising result. actually, the prosecutor did a great job, of course. but these cases generally turn on circumstantial evidence, on time lines and trading reports. the raj rajaratnam case was unusual because of the wiretaps. if you look back over time, you'll see conviction after conviction based on facts very similar to the ones you saw in the gupta case. >> yeah. i've heard some lawyers say when trying to decipher what gupta's

defense might have been that the wrong place and wrong time defense works once, maybe twice, but awfully tough to fight on six different counts. do you agree with that? >> absolutely. you don't need to be a business person to understand an insider trading case. it's not a sophisticated crime that's difficult to detect. it just takes common sense by the jurors. there's a very powerful charge the judges usually give in these cases. i'm sure the judge gave in this case. the jury should understand circumstantial evidence can be just as powerful as direct evidence. use common sense. that's a charge jurors take to heart and apply it with these types of results. >> we wondered as the case got started whether or not the defense might be aided by the argument that, look, there wasn't a profit. you didn't make the money.

that didn't work in this case. >> yes. i don't know of any situation where it has worked. the law is such that you don't really have to show any kind of a profit when you make a tip. the courts have interpreted the requirements under the statute to be quite general. and so all you need to do is get some type of benefit. it can't be a nonmonetary benefit. so you tip a friend because they are a friend and you want to maintain that friendship. that's sufficient under the law to win a conviction for the government. here, of course, they had far more evidence, not only of friendship but deep financial relationships between the two parties. so that really was not much of a hurdle, in my view, for the

prosecutor in this case. >> bertha? >> indeed, carl. that is one of the issues yesterday when they asked about conspiracy, the judge said that it didn't -- the conspiracy didn't need to work. the overt act didn't need to be successful, necessarily, for their to be a conspiracy. when they asked for clarification. that is, indeed, one of the charges on which they have found mr. gupta guilty along with three of the securities fraud charges. an interesting thing about this case, i was talking to a reporter with the indian media. there is tremendous interest in this case in india. you have to remember mr. gupta came to this country, had been orphaned as a young boy. he worked his way up, got an education, worked his way up to the top of the ranks at mckenzie. after that he was very much a corporate shaman on a number of boards, both philanthropic, procter & gamble, amr, goldman

sachs. always founder of the indian school of business, which is among the best school of businesses regarded in the world. so that reporter was telling me people in india, while they understood the raj rajaratnam case because they heard him on tape double dealing, they were still hoping that mr. gupta would be found innocent. they didn't want to believe this has happened. >> judge, obviously on the sentencing, i wonder what the guidelines say here. it's interesting this comes on a week where alan stanford was sentenced to 110 years, clearly the judge there trying to make an example. raj rajaratnam, as you know, serving an 11 sentence. if the maximum here is 25, what would you expect? >> well, that's hard to tell without looking at a very

substantial decision, probation report. the judge isn't going to simply focus on the statutory geithner lines sentence. those guidelines are no longer mandatory. the judge is a thoughtful and careful judge and he'll make look at a lot of different factors before he decides what is an appropriate sentence in the case. he'll consider the defendant's background and other things that he's done in his life as well as the crimes of which he's been convicted. >> you're no longer on the bench, you might be more free to speak about something like this. the incremental impact on a goldman or mckinsey, proctor, once used the services. are they any worse for the wear

because of the verdict? >> it has had an impact on mckinsey because they make a living conferring with their clients on highly sensitive information. they are unfortunately in the situation where a former chairman has done precisely what he shouldn't have done, although it appears he was no longer there when he did it. it is a blow to their reputation. i'm sure they will have a lot of work to do to persuade their client this is aberrational situation and won't happen again or won't happen to any client. >> bertha. >> you know, the interesting thing, carl, the counts on which he was found guilty in terms of the securities fraud involve

goldman sachs at the height of the financial crisis. the two counts involving the buffett and the third count involving the goldman sachs earnings warning. what's interesting is even though this was a circumstantial case very much based on the trading records and phone records, on both of those cases there were recordings of raj rajaratnam talking about having been tipped off. while the defendant himself mr. gupta, was not heard on tape talking about it, the jury seems to have found the raj rajaratnam tapes, even though they did not know he was convicted of insider trading, they seem to have found those tapes compelling along with the circumstantial evidence. >> bertha coombs in manhattan. judge holwell thank you for your input, the 30-second call galleon tried to buy stock in the final minutes of trade on september 3rd, 2008.

we'll keep an eye what happens happening in lower manhattan, dow up 63, "squawk on the street" back in a minute. te. laces? really? slip-on's the way to go. more people do that, security would be like -- there's no charge for the bag. thanks. i know a quiet little place where we can get some work done. there's a three-prong plug. i have club passes. [ male announcer ] get the mileage card with special perks on united, like a free checked bag, united club passes, and priority boarding. thanks. ♪ okay. what's your secret? [ male announcer ] the united mileageplus explorer card. get it and you're in.

take you to a live shot of the courthouse, southern district of new york, rajat gupta found guilty on four counts of conspiracy fraud expected to come out any moment. our bertha coombs watching the trial since the beginning. a lot of discussion, bertha, as we take stock in the evidence.

circumstantial evidence sometimes said, if you put enough together, can work in a case of insider trading. >> reporter: tr: ts traditionally how insider trading cases have been tried. the circumstantial evidence here in particular for the three counts of securities fraud involving trade surrounding tips on goldman sachs was very, very strong. the jury did not buy the trade on procter & gamble because in that case it was not a strong phone chain record. they also discounted an earlier tip on goldman sachs. but as far as those trades that happened in 2008, the evidence there very, very strong. our producer says mr. gupta was very composed and stoic as the verdict was read. his daughters, though, burst into tears and his wife just covered her face with her daughters consoling her and surrounding her. it's been very emotional for the family. they certainly have been very

supportive for him there. they have been there every day of the trial. one of his daughters testifying in the trial talking about the fact her father had had a falling out with raj rajaratnam because he had lost money, but the jury did not find that argument terribly compelling. >> we are expecting gupta's attorney gato speak and the u.s attorney. overall impressions about the case going into it was because of the relative lack of wiretaps, especially when you compare it to the raj rajaratnam was going to make the sledding a lot tougher for the prosecution. that appears not to have been the case. >> it wasn't the case. i will tell you, they did a very good job of laying it out. it was four weeks of testimony. some of it very dry. at some point have you to establish the custodial records. in that close using multi-media, they showed here is the timing, here is the call, here are the