>> "wall street journal," in the book review. >> jonathan kyle, an abc news reporter. the article only takes the article and obama's articles and lets you draw your own conclusions. the most important article possible for the romney campaign to take to the public. >> jack, thank you so much. time for "squawk on the street." ♪ good wednesday morning. welcome to "squawk on the street." i'm melissa lee with jim cramer and david faber. carl continues off this morning. the fed in the spot light today, wall street waiting to hear in ben bernanke will announce more stimulus measures this afternoon. as for the action over in europe, some relief there, as yields start to ease off, but a mixed picture there.

also a wait-and-see motor to see what the if. omc does. the decision will be released in just a few hours from the fed, followed by the quarterly press briefing. consist senses is the fed will extent twist, but what could the q&a reveal? >> what happens to the fed could be a key to the rally. five-week highs, the best four-day streak we've had this year. procter & gamble cuts full-year guidance, citing head wince. p & g specific? and facebook stealth rally, the stock is up 21% since june 8th. could it be in for pressure? today hearings get under way to try to get to the bottom to find out exactly what happened. the federal reserve wraps up its two-day policy meeting. today the watch is on to see if fed chairman bernanke and his

commit why for announce additional stimulus measures. a number of economists are suggesting an extension of "operation twist" which allows shorter term securities by longer-term bonds. cnbc will have special coverage of the decision at 12:15 eastern time. as well as chairman ben bernanke's news conference when begins at 2:15 eastern. we always forget, of course, that change. been about a year since we started to hear from the fed chairman. how much of a rally, jim that we've seen perhaps even yesterday and last week is because of expectations of the fed and not because somehow europe feels maybe a slight touch better, even though i'm not sure it is. i actually think most of it is europe. i think the federal reserve -- we can talk about a lot of things, what we all to be talking about is there's not a

lot of juice. he cannot create jobs or force wells fargo to make loans to people who don't deserve them. my personal view, when i saw done, meaning they don't fit the pattern, and i feel very strongly that the idea that europe off the front burner for a couple days allows us to focus on companies that are doing quite well. there's a lot of people that hate to be short ahead of the word "liquidity." >> at the same time if twist and any incremental measure is seen as incremental, not having as much impact, if he doesn't extent twist, will that effectively -- some economists argument it would be a de facto tightening. would that hurt the markets? >> i think it has to there's beg trader, high frequently traders, machine are literally set to words and titles. you you get oil go up, there are

machines that buy. if you hear that there may not be something involved liquidity there will be machines that sell. we're trying to define what high-frequency trading is, i think it's mindless, numb, bad word "sell." that can only be defeated by individual stock analysis after the futures take us down. >> i still look at the ten-year, 164, something like that, we're getting accustomed to it, but it's stunning. >> do you think at 1.3 i'm going to jump into action? we used to hear our parents, my dad comes back from world war ii, and they get a 3% rate and you say, that's a chump rate, yeah, what is the fed going to do? >> 1.6. >> do it over libor now. >> you are mr. libor.

>> the federal reserve is we'll cover the first three months. got to be articles more realistic. the federal reserve is a terrific organization that's done everything it can. it's really scotty on the "uss enterprise" giving it all they've got. >> we shouldn't forget about spain, italy, and jpmorgan. >> well to go to some breaking news. kate? >> reporter: some news that would appear to be favorable for jpmorgan. i understand they have managed to sell off between 65% and 70% well london whale position. it's a corporate debt index, an investment grade. this was the position that ultimately lost money. within the last three, four weeks they've been able to sell down more than two thirds of it,

since they made a change in leadership. the market is talking about this this morning. part of it is that the bttc released some dat that within the past day or show, showing a lot of activity, so a lot of talk in the market about it. of course the market moved against it initially and made them difficult to sell out at a reasonable price, but they've been doing what they can, and of course it's still in progress. i'm sure we'll get more details. >> kate, it's david. we're watching shares actually rising premarket here on your report. do we have any sense to what the loss then will really be given at this point they're almost close to done exiting the position? >> that of course is the multibillion dollar question, jamie dimon has not deviated from the estimate. of course, we have all seen reports seeing $3 billion up to

$5 billion. they haven't addressed the quality of those numbers, but there were people on day 2, after the thursday afternoon announcement of this initial loss that were telling me the markets moved away to the tune of another billion on day 1. other people have told me it's overblown, but i think we can assume we're talking about a multibillion dollar problem. i'm sure it could reach -- if they've been able to sell off the majority of this position of course there were other aspects to it, but this long position is the guts of it. if they're largely out of it, they're obviously in a pretty good place right now. that's a very long-winded answer. >> mash the markets move with them and there's been more liquidity, so as you say, they were able to get out of most of this position in the last few days, but we'll be keeping an eye on jpmorgan shares, up about

2.5% since you started bringing this news to us. >> anything that limits this loss, anything that makes it seem that if you've been short and shooting again jpmorgan, i've been talking about i don't care how jamie dimon has done in front of the senate or the house, i care about this position. this is what is required for jamie dimon in my mind to go to loser to winner. >> what's so great about this report is that it brings some clarity. in the next conference call we'll hear from color to what exactly was sold, how much is left, and how much that loss was. if it's 70%, you've got a handle on it. >> and it may be more than that by that time. >> of course. >> i assume they'll be entirely out of the position. the key is, what's the lost? as kate said he stuck around that $2 billion, but will it be three or more? one might assume that things have been a tiny bit better in the bond markets in europe. that may have helped in terms of

this hedge that went awry, but, you know, before we get to procter & gamble, i did once again come back to europe if we can. we do tend to focus on the ten-year in spain being belieu 7%, falling very well, but it's the shotter end of the curve where a lot of people say we should be focused. they can't continue to fund themselves at 18 months. that is not sustainable. it may be as much that that is motivating talk out of the g-20 that says they've got to start buying these bonds as a ten-year at 7%. >> that's why it's more important than the federal reserve. the dow jones industrial average has reacted to the italian ten-year when it went to 7 in november, the spanish ten-year. whenever you see these bond yields pull back, that's very hard for people at home to understand. but spain needs to fund itself. if there's a way to fund itself,

suddenly we'll take a hard look at caterpillar and say, you know what it may not be that bad. >> foreigners have withdrawn, they're not rolling stuff over. that creates this funding crisis. that's why -- we'll see, but let's not forget, it's not about the ten-year. moving things back domestically. and fiscal year beginning june 1st, citing what it calls market share softness in developed regions and negative impacts from foreign exchange rate changes. it seems between 75 and 79 cents a share, below the previous forecast of 79 to 85 cents a share in earnings. jim, you have been talking about this name for quite some time negatively. you don't like the man who's running this company. i don't know what you have against him. >> the same thing against any

executive. if the stock goes down a lot, i'm not crazy. it's nothing personal with me. what the heck is going on at p & g? >> and it's not just this past year. take a look at the stock for the past six years. it's done nothing over six years and lost market share. so they have a very well-known brands, to which consumers are very loyal, yet they still haven't gained traction, innovate enough to keep it witness their market share category, and they have lost. from an investor's standpoint, you have lost too. >> 3.6% year old. >> that's what's going to -- >> it's better than a bond i guess. >> that's why it won't go to 58 today, i believe. this is a slow death salami

slice cut, organic 6 to 5, 34 to 2, why doesn't the stock go down? it has a tres different record, it's a blue-chip name, about you let's deal with the specifics of, say, toothpaste. colgate has out-innovated david you're probably thinking how can it be a technology company? they have built a better toothpas toothpaste, okay? >> i have scanned my shelves at my local cvs, and there are a number of choices units sometimes they put them next to each other. i'm totally mystified. these are great american brands. you start thinking can it really matter who runs these companies? >> that was a question you and i were having, right before our show began. this is an enormous company. a.g. laughly, lauded as a ceo, and now mcdonald, and you like

this guy gorski. can it make a difference? >> catalyst of change, trying to look at what the company does and realizing that you can kill some sacred cows does matter. we have burger king on later. sacred cows is okay to talk about. they kill a lot of cows there, but i want to emphasize to people when you have a ceo that comes in new, takes a fresh perspective, no longer is wedded to certain divisions action that's when you can make the change. a new ceo at prokter. >> it's sick years now of nothing. there are plenty of stocks that are similar. >> i'll bet you the board is horrified. it's a real board, a company with a great tradition. i'll bet they're looking closely saying maybe it is time for a change. >> in terms of the space, jim, what's your favorite? >> at this point i like the

companies that are restructuring the fasters. my trust own kraft. couple times from a long tradition of recognizing what the market wants. >> so you like the split-up there? >> i think it's fabulous. you've also at least brched the idea for pepsi? >> pepsi no, because i think there's a major turn going on there. i like that it was not international. terrific interview the other day about coke cogga. carbonated soft drinks have made a comeback. it's been a very price competitive market. pepsi was not international. some companies look dumb, because they didn't expand quickly enough. now the once that aren't in europe, color ross, pepsi, they have the edge. >> we have to say in premarket trade, they are trading lower. maybe there's cues from the

p & g quarter that are some concerns. we're seeing them trade as a cohort. >> but organic growth will turn out i believe to be better. a good guy running unilever, but colgate will have to spend the next 48 hours calling people saying we are not problem terr. i think that's important to look at. i don't think you'll see a mass downgrade, i think you'll see aof colgate. and floundering simply because problem terr is -- let's talk facebook here. i don't know if you have noticed, but it's been on a tear. the stock is trading above $31 after posting lows two weeks ago. despite the stealth rally, it's still down about 16% from the

ipo price of $38 a share. you've been to wonder whether or not the worst is behind facebook especially as the wall street is reporting there are two major advertisers publicly in support of facebook, coke cola being one of them. they have been on the forefront from very, very early days, because there have been some pop you list used of facebook fan pages to express love. these are things they didn't pay for, but they've seen the power of facebook for themselves. ford also coming out. >> because pepsi has not seen that kind of positive push from facebook, buffalo wild wings has, domino's has. i mention that, because these are companies that have tried very hard to have an internet presence, because ordering online is far more profitable than when you pick up the phone and describe the pizza. facebook is still an issue. and when you start seeing maybe

be able to make some money on mobile, that is going to be what drives thing. the three cent earns s-1 david remains for me the single worry. it is a profitable company, like many of the internet companies, but you need to see earnings momentum to sustain what is a high multiple stock, and i don't see it yet. >> we'll see what the quarter looks like. at the end of the day, we don't have much more information than we had a few weeks ago. but as time goes on, we will get some answers. >> burger king, what an opportunity to ask how are you doing? by the way -- >> they have a large international presence. >> there is a tremendous effort on the part of ceos to sound and look like they're part of the next generation, so the refrain has been, hey, we love facebook. to say you don't love facebook is to stay those people don't

know what they're doing. >> very good point there. coming up next, burger king back on wall street with a new listing. we'll have an exclusive with the cfo after he rings the opening bell here at the big board. and another look at futures as we await the fomc decision. much more from post 9, when we come back. y i walk into the office and somebody asks me a question about the volt. what really blows them away is when i tell them i almost never go to the gas station, despite the fact that they see me driving to work every day. i fill the volt up once every -- maybe once every couple of months. and that feels absolutely wonderful. i'm hardly using gas, but it's there when i need it. anybody that thinks that this car doesn't have solid performance, hasn't driven it. there's no other car like this on the road. ♪

as we as we mentioned earlier, the federal reserve decides today whether it's going to expand operation twist beyond what has been a $400 billion program form the plan lets the central banks buy longer term bonds. that brings us to this morning's squawk on the tweet. what should the fed really name this plan? operation, blank? we're going to air your responses throughout the morning. >> i can't thing of anything. >> i think twist, and then cheesy bread, put my foot behind

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time now for raymer's mad dash. we talked a lot about it. today the analysts weigh in,

reading some of these reports, jim, most of them fairly negative. >> it's amazing to me, david, to see a company, a great american company, where people are just saying, what the heck are they doing? and the shareholders don't really have a say here. >> no, they don't. yesterday we mentioned the multiples being 11 times, but we did not mention that you don't get a vote here if you're a shareholders of walgreens. if you did, you might not vote in favor, our go along with it, frankly, one way or the other. >> can i just say if they had made a deal with express scrips, this stock would be at 39, not 29, because that's what the street wants. they don't want acquisitions, they don't want to move into europe. >> that's the thing, they're getting exposure to europe now. maybe that will end up bess a positive thing, but certainly

not in this environment. they had to know that will still be an issue now. it's not like the crisis started the other day. >> the amazing thing is this is the best brand in -- cvk has been taking it to them -- express scrips has been taken it to them. this is so not a buy right here. i'm aghast. look. when a company does something that's mystifying to everyone, it won't overnight become less mystifying. the deeper people dig, the more they're concerned about walgreens. >> in 15 seconds we'll toss to break. we'll talk adobe after the bell. of course, the opening bell now about 3 1/2 minutes away. another big day of trading ahead. more "squawk on the street" right after this. [ male announcer ] if you believe the mayan calendar,

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right right now, with the opening well, as we await in quite some time. here we go on this wednesday. opening to the green, there's the big board, celebrating we'll speak to the cfo in just a few minutes. david, i see you have -- is that the bacon sundae? >> no, this is caramel. it's pretty good. >> i brought my blood pressure medicine, i did not bring my lipitor. i think you should take it with it -- >> i do have the generic version. >> do you pop it before you go to burger king? >> maybe they could incorporate it within the actual food. >> i think that would be a positive. >> i'm glad they got rid of that king. he freaked me out.

>> it's good to be the king. that clown -- i mean, ronald mcdonald, the clown, but the king with a mask. >> giant rubber head. it was too much. >> would you prefer a picture of a heart? ba-boom, ba-boom. we do see the open for jpmorgan higher ben 1.8%. kate kelly breaking the news. jim and i were talking about what is causing this push higher. when they first announced the loss, also announced the suspension of the buy-back program, the assumption now would be that now that the loss -- there's a light at the end of the tunnel when it comes to getting out of this trading position, but there will be a resumption resumption of the buyback program, and therefore that will be the catalyst for this stock. >> melissa, i think that is the home run call.

is he understand how well jpmorgan is doing? this stock is now behind since this happened. that's the story of the day. will he buy back stock in that's how he becomes a winner, not a loser in my eyes. >> we'll get more details. it's still a while ago. and not before that. it doesn't appear at least at this point in terms of details, even after they close it out, key being the lost. we really haven't gotten any updates from jpmorgan that we've had lots of people all over the map assuming various numbers. we'll see. >> but in a way that works in favor of the stock of those big numbers are up there.

i think that the main thing that's going to happen with jpmorgan is we're going to go back to banking. this is something that john has emphasized over and over again, the ceo of wells fargo. how are you doing? >> we're bankers. interesting, the question, are they gamblers? they were not gamblers at jpmorgan, yet this position was a gambling. >> no doubt, and a market that does resemble las vegas. where it's simply making bets on things without owning the underlying. there are still a lot of questioning about that. >> vegas, you're out there with that. >> well, that's true. >> it's a big comment. >> we know that's always been

the case. listen, when we talk about the cdo market, and synthetic cdos and what goldman and many others were doing? what was that? that was just gambling. it's just a bet. >> blackjack is 508.5 for a silver player. that means the odds favor blackjack. i didn't see the odds favoring the whale, particularly when your position is this outsized, david, you speak to me, in the old days, when you're in appears clearly going against you, it is probably open season against youivities right. >> everyone knows it, everyone shoots against you. i don't think people realize what it's like when you have a position and everybody knows that position is going to ride. it is free money. jamie dimon was part of a free money operation for everybody else. it looks like that's ended. >> let's talk about adobe briefly. down to about 6.5%.

it's amazing how they do a new iteration, and you hate them, because they stop the site cold. >> in terms of the slight accounting adjustments they had more in subscription services in future -- >> divide by 12, right. >> and they're struck by the european problem. 29% of the revenues from europe. europe is weak. this is the poster child of why investing in do misticly oriented companies has been so popular in the past quarter or so. it's because of this very reason. when 29% of your revenue is from europe, you're going to cut your

full year. >> and oracle had a lot of europe, and people liked it. they got the ubs and the soci y research in motion was diminishing as part of that business, and just a contrary to abobe for a second. the european banks there. -- >> they changed that symbol. >> how do you change it -- >> one of the greatest ticker symbols. >> why would s.a.n. be more attractive? >> i don't know. >> me neither. >> i won't go there. let 'check out bob. what's going on? >> well, we started positive. but we've lost most of that.

banks are still -- did you see what game out of the g-20? a lot of nothing. again they're talking about the need for bringing down borrowing costs in europe. oh, really? the idea floating around is that the bailout funds are going to go out and buy sovereign bonds. everybody here that i talked to this morning said we know what the problem with this is. it's going to southbound order nate all of the existing, the private bondholders. it will increase the anxiety for people. that's not a real solution, but that's the only thing coming out of this. the bottom line here is that risks is being transferred from private hands into the public hands. that is going to continue. just talking to some of the guys here about what we're expecting from the fed. the consensus down here is pretty clear. some kind -- they're expecting some kind of nod toward easing, whether it's an operation twist extension or actual qe-3. part of this rally we have seen in the last three, four days is clearly predicated on that. the market is going to be

disappointed. speaking of the markets and the exchanges, all the being exchange executives, ceos, they're all in washington for a being hearing. this is not about the facebook debacle. there might be some mention about that, but i've taken a look at some of the testimony. tommy joyce, been here many times, this is what he's going to say the equity market is the beck functioning and fairest globally. but the first sense -- investor confidence is at its lowest point since the great depression. how do you reconcile this? they're all saying we have the best market in the world, and they're all say confident is at the lowest since the agree depression. the answer is we still have a rickety market structure that needs to be tuned up. the s.e.c. knows this, they've instituted a few minor changes, than brings in changes to the

single-stock circuit breaker. they just announced that, but jim, they have to go a lot further. a quick comment on procter & gamble. too much emphasis on expanding their operations in emerging markets and not enough on dealing with expanding operation are and profit margins here. he's been talking about the need to be more innovative for three years? i think he owns this problem at this point. the only thing that trader felt was likely to come was a lot of price wards. this is not good news for the industry as a whole, certainly good news for consumers. jim, i know you've been critical in the past, i think there's good reason for that. >> there's a lot of ceos that i think deserve criticism. you say, well, geez, the

johnson & johnson guy didn't do well. to point these things out is to remind people at home that a new ceo can change things. thank you for that report. traders are bracing for the words from the fed. rick santelli with more from chicago. rick? >> thank you, jim. of course, the fed is always important, they have a lot of power. the issues aren't what they can do, the issue is why should they do more? we'll leave that for later in the session. hey, look at a two-month chart of bund deals. as you can see, their lowest closing yield was 117, so we're a little over 40 basis points above that established low yield close. now you can see 145 was our closing yield a couple fridays ago. we're currently at 166, about 20 over. the real issue is, what is moving yields higher? if you look at the difference between bunds and tens it's

about five basis points, but eel see not that many months ago it was a 50 over. u.s. was 50 over. is that coming down because there's less safe harbor issues, that stability in europe? forget a solution, has given them more time, or is it that there's nervouses in that germany will blow up their pleat? i can't tell you, but this is the spread to watch. back to you, jim. >> yeah, it is. i have my eyed glued on that. we were talking about the fed versus what's going on in europe? i say europe is preeminent. the latest news in energy and metals. court any reagan? >> oil traders not pays much attention to what happens out of fomc. 17-month lowing because of that spanish bond yield. still it's unsustainable high levels, and that's what's really moving brent. if you look at crude oil, we're sliding lower, but again it's

not because of the fed, not because of the what ben bernanke may or may not say about possible further easing, but more on fundamentals. today is inventory day f we see another drawdown that could help prices. oil trailer moving past what the fomc has to say. gold a bit of a different story, again moving toward the short-term support level. the lower level below that is 1560. they think they're not going to see much of anything. a little different. david, back to you. thank you very much, courtney reagan. did want to look at one of the few contested ma situation. quest software, the ceo associated always now with two private equity firms as well, vector capital, and insight venture partners has come back with an offer to top what was a 2550 offer from an unnamed

strategic buyer that many of us believe to be dell. kayla tausche reporting, and the question now, of course is will dell or the unnamed strategic party come back and try to top this offer from this management-led group, if you will. of course the current ceo controls about 30% of the company. this is an interesting case, not so much because there's a contested situation, but actually because the special committee to the board and adviser morgan stanley has handled this quite well. they had kept him at a distance, put him in position a before taking the new offer that would have allowed or nullified in a sense his 30% position if in fact he was opposed to a deal by having them issue 19.9% additional shares to that buyer. they have ramped up the breakup fees, but still only about 1%.

you know, so often we see in these deals, a go shop provision, but regardly do we see it end up with another bid. so kudos to the special committee there and the way it's been handled. so often, jim, they don't do the right thing in these situations where you have a ceo go to private equity and say, hey, we want to make an offer. boards don't typically handle it wale. you have to try to level that playing field. interesting question whether dell will come back. bnc software, there's been a lot of talk would dell by interested. they have elliott agitating, but from what i hear, no way would dell step in there, plus they put in a dividend which would cost them money. >> who is on the board? what makes a board smarter and better and -- >> that's a very good question. >> i don't know the answer specifically to why the dynamic

would be different in cases such as j. crew, for example, right. >> and others, but it's very important these boards understand exactly how to keep a ceo at bay and not have them influence the process when they want to try and buy the company. we don't often see it orchestrated well. >> we hear so often boards are rubber stamps. why can't quest be held up by people and say, this is how it should be done. >> and it should be. perhaps we'll see more of it. not saying the companies donnell handle these processes welt sometimes, but it can often be a dangerous process, and one where shareholders don't feel like they got the best price. >> we want to go to michelle caruso-cabrera who has phoned in. the greek prime minister is being sworn in at this hour. what is the latest? >> reporter: you're seeing him about to be sworn in as prime minister. this is a very traditional greek ceremony with greek orthodox

priests, the archbishop will see him as well. this is the first step in the process. tomorrow they swear in the rest of the government. after he swears on the bible, greece will finally have a government after six weeks. this el can hopefully get on with the process of trying to figure out their budget and negotiate with the european union to any leniency of dealing with the bailout package and making payments on time. they have lost tax revenue. due to all the uncertainty but not having a government and who was going to lead the country. so what you see here is an important step for this country to try to get back on its feet and move forward, and still try to stay in they you aro. the vote for antonin system amaras was seen as the people wanting to stick with touch measures and see the euro as. we'll see the finance team leave

tomorrow for brussels to try to convince the european union for more leniency. >> michelle, thank you very much. again, one step in what could be a long road for greece as well as the entire your ozone. coming up, burger king is public once again. we'll be talking exclusively with the cfo, celebrating its new listing. take a look at the early movers on this wednesday on wall street. looking for a better place to put your cash?

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i'm never at the gas station unless i want some coffee. it's the best thing ever. as a matter of fact, i'm taking my savings so that i can go to hawaii. ♪ the the opening bell, joining us exclusively is the cfo of burger king, daniel schwartz. burger king is celebrating the listing on the nyse. the stock is up 2.3% in the early going. dan, nice to see you. >> thanks for having me. >> burger king was taken private back in 2010 by 3g. what's the next major step in

this transformation. is it shifting to this asset-like model? >> 3g acquired the company back in 2010, made transformational changes, repositioning the business domestic. and lastly the fliching. we will be focusing on running our brands, our operations, and it's a good strategy. it puts our restaurants in the hands of the -- >> mcdonald's moved toward the model, yum brands has been on that model, and this allowsing them to assign a higher valuation theoretically? >> yes, for us moving toward the franchise mix action it crazy a more cash flow genre tiff, stable, predictable stream, allows us to focus on the

brands. >> foul ball foible, everyone wants -- what percentage of your advertising will go toward facebook this year? >> that's a good question. so when we look at our entire marketing strategy, what we have done over the past 18 months, we've brought in the communication messaging to a much wider araid of people, targeting american families, both with our new product offerings and the -- >> facebook, what percentage of money. >> today it's very small, but i think we have the opportunity to do a much better job with our social media -- >> is that something you want to do increase the dollars on facebook? are you dedicate to do that platform or sew social and mobile as a business swath and not really sure what is best for burger king? >> i think it's definitely an

opportunity for us to improve. as far as the exact percentage in the long term, that's hard to say now. >> been opening between 200 and 250 units a year, but judging from grut projections it looks like opening as many as 1,000 restaurants a year. >> we put a new strategy in place for the international growth. we believe we can be growing multiple times the pace, so presence in over 80 countries today, we're putting the right structure in place, partnering ourselves, partnering with a strong mobile operator -- local privatic wit firms, i know jim saw this last friday, we made an announcement on china. >> big. >> we partnered with a great local private equity firm, good management team, put the right structure in place.

we're so small today. for us it's just up side. >> average revenue 1.2 -- mcdonnell's a 2.4 million. how long will it take you to close that gap? >> i think what we have done, really repositioned the position in north america, moved away from the heavy discounting, narrowly focused to a much more broader communication messaging. and over time, as we execute on aural plan in north america, we believe we can close that gap. we're fortunate that our guests prefer if the food. we have a unique flame-grilling platform, and we think we can capitalize ago close the sales gap. >> real quick, how is europe doing? you're more exposed to europe than other competitors. >> we have a good business in europe. we've seen trends continue to be positive there. >> there's no softening, not seeing effects -- >> well, objectly the foreign

exchange rates move from time to time, but on a same-store sales perspective, we continue to see the big be strong. that's why we like the market in general. it's generally a noncyclical business, growing year in/year out and it's our job to grow faeser than the industry. >> daniel, thank you for being with us. i appreciate you having me. tdd# 1-800-345-2550 resistance, breakouts, tdd# 1-800-345-2550 a few other tricks that i'll keep to myself. tdd# 1-800-345-2550 that's how i trade. tdd# 1-800-345-2550 and i do it all with charles schwab, tdd# 1-800-345-2550 because their streetsmart edge platform tdd# 1-800-345-2550 helps me trade quickly, intuitively. tdd# 1-800-345-2550 staying on top of the market is key! tdd# 1-800-345-2550 and the momentum tool, tdd# 1-800-345-2550 it lets me do it at a glance, tdd# 1-800-345-2550 so when things shift, i'm ready. tdd# 1-800-345-2550 then to track the stocks i have my eye on, tdd# 1-800-345-2550 i turn to schwab's high/low ticker. tdd# 1-800-345-2550 so i can spot a potential breakout tdd# 1-800-345-2550 before it breaks out. tdd# 1-800-345-2550 and get this...i can even trade, tdd# 1-800-345-2550 change my orders or check out my positions tdd# 1-800-345-2550 right on my chart.

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time for time for six in 60. >> if you think oil is done going down, usual ignore this call. jc. penney. >> he is a big higher. watch this guy. cvs. >> it's very consistent franchise, been one of the great names. second-half advertising. rockwell collins was downgraded at goldman. >> watch out for defense spending. there's a lot of talk it will come down. >> they need to come on the air and explain why it's so weak. jabil.

>> they said r.i.m. -- this is one to buy, not sell. >> stat oil, why is stat oil so important? they've been expanding more aggressively, i want to find out why. "mad money" 6:00 and 11:00. seek you tomorrow. >> thank you. more on "squawk on the street." could today's fomc decision kill the momentum, or will it bring a further boost? that story is right after this. ♪ [ male announcer ] aggressive styling. a more fuel-efficient turbocharged engine. and a completely redesigned interior. ♪ the 2012 c-class with over 2,000 refinements. it's amazing...inside and out. see your authorized mercedes-benz dealer

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good morning. welcome to "squawk on the street." let's get to the road map. the countdown is on to the fed's decision, so as speculation rose, whether ben bernanke extend operation twist? we'll sit down with the u.s.'s top economist for her take. and the banks seeing a major rally today. we're zeroing in on the financials, and telling you how to trade the big bank bounce. >> plus facebook picking up two big-name advertisers in its

fears over the on-side ad efficiency, so good gm have it all wrong? that's next. rio tinto is looking to invest $4.2 billion to develop the tier 1 iron ore business, focusing on projects to generation, and are resilient under any probable scenario. geez, isn't that what we're always looking for in returns? >> the embattled blackberry maker research in motion confirming the rumored layoffs, cease head count reduction. r.i.m. previously said it would save money by -- analysts expect 2,000 to 3,000 jobs in total. kate kelly reportic that it's sewed off nearly -- the bank has sold the majority of

its long holds in the cdx ig-9 ten-year index, we still don't know the exact size of that loss. that is yet to be seen when the company reports its earnings, but jpmorgan shares are up right now. when you look at the trading patterns, how many stocks have leaned into that stock? rich peterson sent me this stat, since june 12th, jup morgan has added $8.7 million, so quite a nice turnaround, but against a big market rally. let's not forget. what i this i is interesting behind the scenes traitoff has been between cutting those positions as rapidly as possible. against the desire to not be --

there's a trade-off between speed and loss, i imagine. >> yes. >> true. >> but they've got extraordinarily large and somewhat illiquid market, so the exit has been something many people have wondered about, but kate kelly reported that roughly 70% done. i would assume the cio gog back to being a portfolio-designed hedge, essentially and generate moderate returns, as it has in the past. why they were paying everybody so much money is beyond me. >> they should still be able to prop trade, unless they make a big loss. >> it's just a hedge, though, simon. >> i know. >> the being question is will it resume the share buyback program which it had suspended. that had been in place, so that could be part of this lift in the stock in today's session.

meantime, opposite of lift, p & g down about 3.5%. as well as the full fiscal year of 2013, the world's largest, and sliding u.s. sales. joe al tobello reiterated his rating, and joins us on the "newsline." is this a procter & gamble-specific problem? are they losing share? >> it does seem like a specific issue. if you look at other companies, they've done just fine recently in terms of growing the top line. it's been procter the lag guard there. >> is it time for the ceo to change? >> well, bob mcdonald has been there for quite some time, about three years, he knows the company well, you know, he's done a decent job i think in a

tough environment. obviously the board, you know, will make its own decision, but i think clearly patience may run thing at some point. >> could you just elaborate why you think this is a p & g problem, specifically when it's talking about impacts, because the dollar is higher and slower growth in developed regions. isn't that what you would expect for all of them at the moment? >> no, but those are two of the three issues. the big has come from -- for a faw reasons, one is the company has recently raised prices across the board. and unfortunately some of their competitors didn't match, so they lost share there. i think also and probably the most worrisome thing, procter has often gotten out-innovated. like energizer, for example. >> also they're being

out-innovated, losing market share, it's p & g specific. what is going to change this dynamic then? >> yeah, good question. obviously the company is scratching their heads here as well. they've done a few things or even announced a few things, one is toward their bigger -- for example, it's bigger, more impactful innovation across businesses, which obviously will take time. third is a $10 billion restructuring, which the company is in the early stages of. >> what about the stock itself, given the latest earnings warning, if we want to call it that. i mean, is this fair value? should the multiwall continue to contract, given they seem to be on a poor course here? >> well, that's our view, is that you probably will see some multiple contraction. i think earnings growth will be minute pal next year and probably the offset, at least in

our view. the thing that's probably going to keep the stock afloat here is the different yield. obviously investors are looking for safety and income. >> at the same time, though, joseph, when you look at shares of unilever, for instance, they are just a couple bucks off the 52-week high and the dividend is higher. are there better ways to play this space still with that punch of the dividend yields? >> absolutely. i mean, our favorite name right now is probably church and dewhy. it's not cheap, but it's executed extremely well, mostly north american and also got a pretty value-orientsed portfolio which benefits from trade-down, figure. >> joseph, appreciate your time. >> thank you. the clorox p & g start there was interesting. ending the day yet certainly at the higher level, and surging

over 11% in the past 11 trading sessions. as we gear up for the fed this afternoon, huge excitement. will the bank rally continue? stay with us. on december 21st polar shifts will reverse the earth's gravitational pull and hurtle us all into space. which would render retirement planning unnecessary. but say the sun rises on december 22nd, and you still need to retire. td ameritrade's investment consultants can help you build a plan that fits your life. we'll even throw in up to $600 when you open a new account or roll over an old 401(k). so who's in control now, mayans?

a a quick market flash. bertha? >> hey, melissa. tesla has the new car smell

today, thanks to a note out from goldman, raising the price target from about $36 to $50, saying the new sedans are likely to attract more attention, also the fact there's a big short position in the stock. they say it does make it attractive for more up side from here. they also think $35 calls are attractive, but with today's move, maybe up to pick a price higher than that. david, back over to you. >> we want to zero in on the bank stocks. at the kbw bank index has risen to a one-month high. david katz is at matrix assets advisers, and david, would love to start with you. largely positive on the long term on the banks actually would will be your reaction on the news to getting close to at least the losing trade out of london. an opportunity to buy the stock

in. >> if it's true, it's a nice positive surprise, you've had a few better thing, jamie dimon's body language in congress was more and more confident, the fact they're going to size the loss or update on the quarterly report. we think the sell offwas excessive, so we would be a buyer. we think short term, if this is true, you have three or $4 more up side. longer term we think they should be 3% to 40% higher over the next few years. >> jason, you came into this year thinking current value ways the risk -- than owning them. do you still believe that's the case? >> we do. the group has rallied somewhat of late. valuations are below -- despite they seeing improving quality. >> jason, your specific thoughts on jpmorgan and the news this morning that most of the loss is in fact covered at this point.

what's your expectations of when the buyback program would be presumed and/or dividends increased? >> yeah, i mean, the dividend increase, they raised it earlier this year. with respect to the buyback, you know, what they have told us is once they feel the losses are, quote/unquote, boxed they'll resume the activity. so getting this trade closer to stereo is a long ways -- is a big step toward accomplishing that theme. >> david, where are we on the fed? what difference will the decisions and the commentary we make this afternoon have on the way in which you recommend or don't recommend bank stocks? >> that was to who? >> to you, david. >> the fed keeping rates low for a prolonged period of time is sort of a mixed bag in terms of the exact effect. for most bank it is it's a negative, because the net interest margin goes down. if it's good for the capital markets, good for the economies over the intermediate terms, it's better for the banks, so we like it in terms of it helps

ultimately the capital markets, but do expect a bit of slowdown in earnings. companies like a schwab, which we do like and are a buyer, will be hurt by lower interest rates for a longer period of time. >> the commentary is if the fed can convince the market and these big banks that rates will stay lower for longer, then they might reduce the margin, the spreads, that they're currently charging even on the refinancing of mortgages, because they won't believe they're going to get called out quite so soon. could you lead us specifically through that area, jason? >> clearly low rates have an adverse impact on banks, and for some of these regional ones, that's a majority of where they get their revenues from. i've been covering the industry for 17 years and the margins have gone down for 13 or 14 of those. i think the bigger thing to look at is loan growth. to the extend you can get stimulus to get the economy back on, and loan growth accelerates,

that would be a nice positive. >> do you see that anytime soon? do you see anything from capitol hill that might perhaps help that? >> you know, loan growth has actually been okay of late, if you look at the weekly data, balances are up about 2%-ish quarter to date, so as an acceleration point you saw in q1, but clearly the more stimulus you get, certainly it can help toss figures. >> will they ever become investments again? it does appear the banks sectors are trading vehicles. we see volatile moves in them, but very few people want to own them for the long term, perhaps unlike you? >> well, that's a great point. actually the whole stock market hasn't been an investment, it's been a trading vehicle form the cycling of three months, either good or bad. we think that the market ultimately will settle down to a more normal time, so you'll have 12 and 24-month trends. we think in terms of the banks

group after a nice six months and after a lot less pressure from the government, there will be investments. a company like wells fargo is a simple type of business model, the mortgage market is starting to pick up. the bad loans from housing is starting to decline, so something like that we think will grow earnings very nicely. we think that should be an investment. a regional bank has said their loan activity is picking up. florida is picking up, led by miami, things like that are going to leave people to start put money into investments. it's going to take longer term for the brokered firms to get people to invest in them rather than trade on them, but it's so cheap even as a trade you should may 50% to 100% when not under pressure. >> well, when not under pressure being the key there. david katz as always, and thanks to jason as well. we do want to check on burger king just quickly. shares up about 7.25%. we interviewed the cfo recently

on the hissing here. he talked about the move to sell nearly all the co-owned restaurants to become the franchisor. >> and dunkin' donuts to a certainly extent. >> we point this out. this is a tremendous outperformance. we're watching mcdonald's trade lower. dunkin' brands is down, and yum brands is down. so nice performance by bkw on the first day of trade. moving on, it is of course fed magic day in many senses. what will ben bernanke pull out of his heart late in the session. and there's big-name firms jumping to very big conclusions next. we'll talk to socgen's chief economist. she thinks there will be a mass injection called for today. stay with us. [ male announcer ] this is rudy.

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big day for the markets. let's get ahead of the trade with a "money in motion" segment of the program. andy, good morning. what's at stake here as far as you're concerned for the dollar? >> sure, simon. anytime we have the fomc, we have the potential for them to act. the weak economic data is kind of indicating we will. so i have a little playbook for you on how to trade the fomc. >> go for it. >> let me run there it. if the fomc address to the qe, we want to buy euros and sell the dollar, if they just do the twist, we'll see the opposite. and it's just really clear, additional quaint at a timive easing would lead to a surprise to the market. that's going to hurt the buck overall. >> interesting, and interesting you should play it against the euro, because that is a more

complicated question at the moment. the latest we have is that perhaps tomorrow the finance ministers may look again at the way in which they're attempting to subordinate debt there. that's a positive thing potentially, a very positive thing for the private sector and the euro. >> exactly. that's why i prefer to try to trade the euro from the long side. that's what my trade is. i want to buy at 127, limit the stop, looking at profit at 128.5. i've been on the show for the last three weeks acting to buy risk-on, and it's worked out quite well. even though the last two sundays, whether it's spain or greece, we've seen the euro sell off sharply, but each time we see it base out. that's why i continue to want to buy euros on dips. >> thank you, andy. andy busch there from bmo capital markets in chicago. be sure to catch "money in

motion countrily trading" on fridays. and go to occurrencely class at cnbc.com. and the long euro trade, that's been a trade that's absolutely been working the past month. up 2.6%. >> can i mention one thing that i like really interesting that came through overnight, at 2:00 this morning, that the prime minister of china, on his way back from the g-20 in mexico, is going to stop off in teniriff, owned by spain, to meet with the finance minister. maybe he's stopping for refueling, but i just wonder, we've spoken so much about china, would they help the your ozone crisis, would they not, and they've failed us at any point. could it be that finally china puts its money where its mouth is on its biggest trading partner. >> it could be, except the language of late, you take a

look at what the sovereign wealth fund of china has telegraphed, they have said they are stepping back from european assets. so maybe that's just -- >> i'm just saying -- i would love to be on the tarmac and hear what's said. >> go for it. >> i'm not fluent in chinese. >> or spanish? >> i can sort of -- [ speaking foreign language ] >> there you go. >> very good. coming up next, breaking news, and it is a question on everybody's mind, is the fed ready to twist yet again? we'll prepare for today's fundamental omc's decision. >> that's not the right movie for twist. what are you doing?

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i'm bertha coombs. apple shares down over a dollar, and this morning apple losing one of its patent battle in a dutch court, the court ordering apple to pay damages to samsung over patent violation in the netherlands. the damages, according to the court should be based on dutch sales figures since august 4th of 2010. that's the date when apple could have known it was violating samsung's patent. this comes as apple is back in court in chicago trying to salvage a lawsuit against google's motorola ability, they have injunctive relief hearing this morning. we'll see whether they prevail

on that one. basically it's good to be a patent lawyer in silicon valley these days. we want to go to courtney reagan. crude is down by a little more than a buck a barrel. >> reporter: that's right, and we are getting the numbers right here. i'm going to look over and see, it looks as if we do have a buildup, 2.8 million. that was not expected. we were looking for crude to fall by about 600,000 barrels, so we'll watch these prices. as far as the rest of what we've got here, a gasoline also, 900,000 distillate. we'll see how this reacts in conjunction with what we hear from the fo some. c today. so far we are watching prices moves. we went negative for the year just yesterday, so we are lower today than what we have seen in some time. it looks as if we are going to continue to fall. crude oil still reacting below

$83 a barrel. back to you. one hour to trading, we're talking about 7:30 on the west coast. whole foods, hershey and cvs among the stocks hitting all-time highs. some wall street analysts expressing concern about the drug story chain buying up allyian foods. the fast foot change returning for wall street this morning with a new listing with the ticker symbol bkw. and chesapeake up. there's a new articles saying it was -- billions of assets of chesapeake, in fact last week was in oklahoma doing due del engines in conjunction with potentially any deal. we're watching shares move higher by almost 4%. marching towards a very big afternoon for the markets. and of course the news conference to take center stage.

we'll carry it live for you here. steve liesman will pull us through the whole process. he's live from d.c., what are we thinking? the fed will have reached the height of insip i hadness? >> simon, a lot of doubt about that. a lot of people don't think bernanke does the least of anything. i would describe it as a squirrely consensus of the market for this operation twist extension, but widespread disagreement on how far the fed -- we've got to walk you through the explanation. there's extending operations. remember, under twist, the fed sells short-term securities like three years and under, and buys long-term once that's scheduled to expire in june. this is the squirrely consensus that the fed could extend that. there's a more powerful quantitative ease. no offset here, treasurieses or

mortgagesing with no offsetting sale. finally one other idea is tech extend the guidance. it will keep interest rates exceptionally low -- something could extend that tomorrow into 2015. that is a minority view. several economists who say the fed will do nothing today. steven stanley, larry meyer, former fed governor, they say the fed may prefer to wait until the european fed -- we also will get new projections from the fed today. let's look at those. they are important. 2.65, going to be very hard to hit that number, would not be crazy to think that number comes down today, watch what happens at 13 and 14. also, watch the unemployment forecast. 7.9%, remember it went up last time. does the fed now raise their projections? the extent to these revisions will ultimately determine

policy. if the fell marks down gdp and next marks up unemployment, that would be the underpinning for a more serious move. >> steve, i just wonder, in terms of the idea of outright purchasing, how much impact could that have when we already look at profiles, so much securities that have never been lower? >> i think that's a great question. i think the phet has to look at a couple things, two things exactly, cost and benefit. the cost to the fed is that it's harder to get out of the policy. the cost would come in credibility if it does something and has no effect. then the benefit would be, what if you're 1.6 on the ten-year note, 30-year mortgage ratings, they could come down more relative to the ten-year, but corporate borrowings are very low, i think they'll have to ask what benefit will it have? what strikes me, it's come down more because of the outlook of the economy than it has any

expectation for the federal reserve. >> if the fed does nothing, including does not extend operation twist, is that de facto tightening and therefore bad for the economy? >> the fed has addressed that question directly. it's an excellent question. their take is this, that the effect on the market comes from the stock of securities that it owns and the makeup of that balance sheet. so that if it has taken all these short-term notes off the market -- taken the long-term notes off and put the short-term out there, as long as it holds on to that, that is not a de facto tightening. i think the other impact is what's the impact on the -- the level of the stock market is one of the few things the fed chairman has going for him, and he would risk disappointing the market by not doing anything. >> i'm sorry, he would risk not doing anything? >> he would risk disappointing the market -- that would be a huge risk for him.

>> he will get -- >> but the other side of that, simon is doing something that would be seen as ineffective, i think he would risk that. >> all right. >> so it comes back to an extension of twist, which has low cost and low effect. >> right. >> and apeat the market. >> appeasement. >> steve, thank you. you heard steve going through the various scenarios. according to economists, at societe, generale, we have -- inetta calling for purchases of, what, mortgage-backed securities and treasuries. why? >> well, i think the fed can actually build a fairly compelling case for acting now. you know, it's true that the economy is still sort of moving sideways.

but remember we're going at 2%. the fed's mandate is full employment. 2% is just not going to get us there, so i think looking purely at a domestic situation there's a fairly strong case to be made for additional accommodation. on top of that we do have risks emanating from europe. so i think the combination of those two factors, a downward revision, which probably will push up the term nat forecast for unemployment, that will come down probably quite substantially, and that combined with downside risks i think builds a fairly strong case for a more aggressive action. >> and we should be clear, your calling here for a mass injection qe-3 is way at one end of the scale. you are calling for more action than most people in the market

think is likely. let me come back on, for example, for what joe la vornia is asking, one, how does the economic situation detearated more rapidly? his conclusion is on the beige book, probably not a lot. the second question he asks is -- what actually can they do? what effect will they have? he points out, as david has been saying, if you look at where we were in january, march and april with those fed meetings, interest rates at the ten-year are 40 basis points below the point at which they were for each of those meetings. so in answer to the first question, it's not a great deteriorati deterioration. in answer to the second question, we can't actually have a huge amount of effect here. how would you respond to that more consensus view? >> well, on the first point, remember that as of april, the fed projected gdp growth this year, the midpoint was around 2.6, 2.7%. it looks like we'll come in at close to 2% on average for the

first half of the year, which means that we would need to see growth of 3.5% in the second half to actually hip that april forecast. so i actually think that the situation has deteriorated since april and the fed will revise down that forecast and not trivially. on the second point, yes, it's true that interest rates have declined since the april meeting, that in itself is more accommodative, but remember at the same time, the broader financial conditionses have tightened and the dollar has rallied, so you have to look at the different market impacts. in fact the twist only addresses the interest rate channel and monetary policy. it does that not to reflay the broader risky assets, and it does nothing to weaken the dollar, so if the fed wants to offset the other two effects that deterioration that has happened largely as a result of the european stress, i think that actually qe is a more appropriate tool than twist.

>> so to boil it count and to answer for people sitting at home who simply want to know if the stock market is likely to go up or down from here and their choice ways of playing that, what would you say? does the market rally from here or the stock market fall from here? >> well, if our call on that -- today's outcome is correct, that would most likely be positive for the markets in the near term threat. i think the medium term outlook will continue to be driven by the european event. >> so if we get the consensus, which is an extension of operation twist, do you think the market falls? because it isn't a big bazooka? >> i think that will be fairly neutral. that essentially is what the consensus is priced in at the moment. >> aneta, thank you for your time and insights. >> thank you. >> you're welcome. we want to check out shares of cisco on the rise, basically a flat tape. shares are higher by about 2%.

b mmt o saying the stock is undervalued, moving the price higher. they say that they have stymied competitors, and steadily gained share in the core of its business, which is routing equipment. so pushing cisco shares up by more than 2%. ahead on the show, it is a big afternoon, we have all the news amid the markets leading up to the big fed decision and the aftermath. stay with us on cnbc. rishstudents blossom. that's why programs like... ...the mickelson exxonmobil teachers academy... ...and astronaut sally ride's science academy are helping our educators improve student success in math and science. let's shoot for the stars. let's invest in our teachers and inspire our students. let's solve this.

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our cloud is made of bedrock. concrete. and steel. our cloud is the smartest brains combating the latest security threats. it spans oceans, stretches continents. and is scalable as far as the mind can see. our cloud is the cloud other clouds look up to. welcome to the uppernet. verizon. welcome back to "squawk on the street." ite bertha cooperation. agrishares lower this morning. the company responding to a lawsuit that claims its meats, including hebrew national, are not kosher. according to the lawsuit, a certifier said they witnessed non-kosher procedures at the meat plants. conagra says there's been

closing supervision of the food packaging, and the suit is without merit. wow, that's huge. >> when your advertising says you report to a higher authority -- >> and you don't. >> imagine what the higher authority will say about that. almost as bad as alleging there was no meat in taco bell. >> it is. it is. they're tasty dogs. it's a big day on capitol hill. thank you, bertha. where concerns or facebook's initial trading glitch are expected to take center stage. kayla tausche is live in d.c. with the latest. good morning. >> good morning, simon. of course, the sxekdation were the very reason why the ceo bowed out of the hearing, long -- whether they do the job they're supposed to do. all panelists agreeing the u.s. markets are superior, more efficient than any others in the world, but noting that

high-profile setbacks like the flash crash, like the facebook ipo, have killed confidence for investors, but other major themes in today's hearing are the role of high-frequency trading, whether that actually creates more price volatility for investors, bl that volatility also affects smaller issuers more son than large-cap company that is experience high volume and more liquidity in their stocks and how markets can respond better to those small issuers. and finally are the markets too frag residented? competition is a very, very important topic, regulators have been concerned for decades, but a lot of the participants today saying the high fragmentation is probably a bad thing because of the lack of the oversight, so-called dark pools now some 1200 securities have more than 50% of their volume traded in these dark pools. duncan niederauer says that's

not a good thing. he attacked that idea head-on. >> however, these reforms have also had unintended negative consequences. the reforms created lower barriers to entries, some of which lacked price transparency. these alternative venues also operate under a less rug his regulatory framework. we are rapidly approaching a by fur indicated market structure in the united states. >> reporter: and because of that bifurcated market structure, niederauer saying these exchanges are not able to compete as surefire in a way, they can't innovate as quickly and can't protect against stressful events, bauer they're rapidly rushing to innovate. the margins are decreasing, and they can't safeguard against those potential very stressful events, of course, stressful events is a vague term. facebook as a word left largely off the table today. guys, back to you. >> interesting that niederauer

would take the more high ground when there were so many questions about the high-frequency traders and nyse's relationship to them. both ford and coke have made headlinesly coming forward to support facebook, saying as far as they're concerned, the present marketing deals they have offer real value. is that potentially, do you think a game changer on fb stock, the commentary that we're likely to get on it? >> reporter: i think we'll see a lot of very different ideas come out about facebook, because it's really about each corporation learning how to use facebook in the best way for its consumers and for its product. the big argument about gm was maybe they didn't know how to use facebook. the sponsored stories product came out in march, it's going to take several months for these companies to figure out whether it works, how to use it if in fact it works, so we'll see

stories both negative and positive. >> kayla, thank you very much, live from d.c. of course, guys, one week from today is f-day, the day when the lockup finally expires -- don't look at me like that. >> i didn't know what was going to come out of the your mouth. >> part of the ipo process for facebook i believe can publish their results, the 40-day expiration. >> the underwriters can come out. >> my question is, given that they came through with the issue price, did then undercut the commentary that would issue, if there's actually nothing new from foible toby itself. >> why not? >> not if you're morgan stanley or -- >> or whoever else, why not? >> it's an interesting point you raise. >> how do you get to the issue price? >> valuation is valuation, and

you have no new information per se. of course, we have something new every day that can form an opinion. whether it's news about pepsi like be. >> we are in the market. >> came out with $38 price target on the stock, that's not undercutting anything based on nothing new. fair value, that's that. >> right. as for our overall markets today, by the way, we're off fractionally on the someplace and walgreen's down again 4%. many analysts coming out negatively about yesterday's huge deal, $7.7 billion cash, boost three year's time they will acquire the remainder, dedicating free cash flow for the next few years towards the eventual purchase of what they won't own. shareholders voting with their feet as you see there. it's off the low. >> phenomenal return for private equity players. >> nice return.

>> tkr had it marked $2.7 billion. as of march that's their equity stake. 2.5 to three timer. they have owned it seven years. not one of the greatest investments they have made but we'll take it. >> in the environment -- >> shares were up sharply yesterday in part on the realization of some of that investment. >> just quickly, expedia yesterday in the news today. also in the news big news to the downside, down more than 3%. yesterday a downgrade by piper jaffray to neutral citing european exposure. remember a couple weeks back downgraded but continues downward move by 3%. price line by the way, heavy european exposure, that's down 1% in sympathy. >> all right. that ten-year, you know where it's sitting right about 1.64%. oh, yeah, that's a rough yield if you're on a fixed income.

talk the market moves ahead of the fed top wall street panel in a matter of moments. first rick santelli, what have you got, next hour, "squawk on the street." >> talking to frank, does he benefit from the fed's easy moneys? i'm not sure. what i tried to do was compile a list, those who benefit and those who get dinged with easy policy programs. i'm not sure if it's the same list you have, but the only way you're going to know for sure if we're on the same page is tune in top of the hour. [ tires squeal, engine revs ]

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tweet time. tweet time. as mentioned earlier, federal reserve decides at 12:30 whether to expand operation twist beyond 40 billion. the market flat as you saw in anticipation of that. the plan, twist, let's central banks sell shorter term securities and buy longer term bonds. the idea is flatten the curve. that brings us to this morning squawk on the tweet. what should the feds really name this plan, operation black. tweet us at cnbc@squawkst.

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>> let's get to it. time to squawk on the tweet. federal reserve decision whether

to expand operation twist beyond $400 billion. the plan, as you know, let's central bank sell shorter-term securities and buy longer term bonds. melissa lee back in the house. just pick this up. anyway, brings us to squawk on the tweet. what should the fed really name this plan? operation blank. dax tweet operation control+ p. operation at least it's not open fracture plan. jane gets the prize here, operation wedgie. >> jane is always so clever, isn't she? >> she's a clever woman. >> very much so. we'll see, won't we? as i say before very long, i'm looking forward to watching coverage at 12:00, 2:0030. >> not just the coverage, announcement at 12:30, then projections. >> q&a can be the most revealing thing of all.

>> i'm always rooting for steve liesman to have the first question. no pressure. >> he obvious does. >> if somebody else gets it, it's like -- >> first doesn't necessarily mean best. >> he's usually first and best. >> he will at least be best. >> he will always be the best. >> david, we'll see you tomorrow. >> okay. >> if you're just tuning in, here is what you may have missed attachment a look. >> announcer: welcome to hour three of "squawk on the street." here is what's happening so far. >> what might make sense is to extend twist a bit. typically what's been done with other programs rather than have them fall off a cliff. >> if you look at the eamericaing markets, india looks like the u.s. under jimmy carter in the '70s. >> the federal reserve is a terrific organization that's done everything it can. it is really scotty onto u.s. enterprise, give it all you've

got. >> the news would appear to be favorable for jpmorgan this morning. i understand they managed to sell off between 65 and 70% of their new london wales position. >> the single worry, it is a profitable company like many internet companies that have become public. you need earnings momentum to sustain a high multiple stock and you don't see it yet. >> moving more towards the franchise mist, creates a more cash reagain tiff, stable, predictable stream, allows us to focus on the brand, operations and improves the operations of the restaurants as well. >> we think that the market ultimately will settle down to a more normal time, so you have 12 and 24 month trends. after a nice six months and a lot less pressure from the government on them, there will be invest men's again. >> good morning and welcome to the third hour of "squawk on the

street." let's get a check on the markets here. we're pretty much flat line as we await fomc decision at 12:30 and then the quarterly press briefing at 2:00 eastern time. the bigger story here, markets are pretty much holding onto gains, s&p and nasdaq had their best four-day streak and all three close above the 50-day average. here we are maintaining as we wait and see what the fed does. meantime burger king returning to nyse. jumping 5% on its first day of trade. procter & gamble the biggest loser as it slides 3% after the company lowered earnings guidance for the next quarter and full year. >> let's get to the road map of the final hour of "squawk on the street" this wednesday. just another imitator, sampson galaxy s 3 goes on sale tomorrow but we will have a first look now. see if it can live up to the

hype. would you buy one? as wall street watches the fed, wets a preview of exactly what we're expecting the market. see what ben bernanke has in store for traders and the economy and what it means ultimately for your money. plus facebook takes center stage on capitol hill. house financial services committee holding a hearing on the trading dliches ongoing the company's ipo day more than a month ago. we'll talk to one of the witnesses appearing, ceo of cowan & company. we'll get his take on what happened and what he's saying. plus why ceos across the country are more than a little bit worried now about jobs and the economy. we have an exclusive look at new data. all that and more coming in the next hour. we start with squawk on the beat this morning. samsung's new smartphone is the iphone's biggest competition. expectations are sky high. john got his hands on it early

and joins us. how is it? >> reporter: this is kind of the biggest deal android launch yet. samsung. they have one brand, one product across the entire world. that might not sound like a big deal, apple has been doing it since the first iphone. others haven't been able to do it. this is the most focused to date. samsung shipped 43 million smart phones q 1, apple 35 million. samsung and apple together have 50% of the smartphone market and about 90% of the profits according to abi research. right now pretty much a two-horse race. there's a lot of players trying to change that, at the windows summit today. samsung in effect has a three to four-month jump with this phone here. i've got it right here holding it up with the iphone. you can see the size difference. one of the thing samsung trying

to do tout its screen technology. it's the biggest displaymaker for phones and tvs as well. it's got a number of interesting features. apple is going to have to come out with something probably in october with ios 6 to compete. samsung making bigger inroads with this phone right here. of course for the competition i'll be tweeting live at noon eastern for microsoft's windows phone summit, guys. back to you. >> let's boil it down, john. we know samsung is going to have a major market and push a lot of it around summer olympics in london. will it be samsung summer in your view and what does it mean for apple? is this really going to affect the next quarter's results potentially? >> i don't know if it will affect the next quarter's results for apple. apple has been doing battle with samsung for quite a while. this is a follow on to galaxy nexus, done well with galaxy s2.

what samsung has managed to do, put a the lo of effort into software. there's voice command to compete with siri, facial recognition. if they can really do that, they can set off a margin type rival in the long-term to affect the race. >> john, we'll enjoy the coverage. thank you very much. joining us from san francisco. there is an iphone killer potentially on the loose, at least that's what some seem to think about the samsung galaxy farther phone. joining us an analyst at evercore partners. how worried are you for apple with this new device, set of devices. >> not to be worried. not to be silly. this the latest, greatest android phone out there. there's always going to be latest greatest, etc might argue with the latest, greate. it's apple's ios competing with android and ios holding its own. unit standpoint twice as man android as ios.

really at the high end owning that cream of the crop, i think iphone is still the one. >> no risk epa at the margins this time when there's no new product from apple and in a vacuum and waiting for iphone 5 that there isn't the margins share take by samsung from apple. >> i think you're right. you make a good point. we're more than halfway into the iphone 4s cycle. there's a lot of anxiety waiting for iphone 5, which will come september, october. we are in a bit of a lull here while the old iphone starts to scale down and getting ahead of the new iphone ramp. really that has very little to do with the samsung phone. that's just more apple product cycling. >> on that note of the lull here we're seeing more and more analysts on the street say that the deceleration in iphone 4 is deeper than anticipated. are you concerned at all? does that just mean sales of the iphone 5 will be that much

better if people are holding off? >> yeah. if you look at it, investors really focus on it and do have some anxiety because iphone is at the end of the day two-thirds of apple's profits. have you a slow period in june quarter and likely september quarter as well. i expect that's completely fixed in the december quarter where i'm expecting a huge number of iphone 5s to sell. >> rob, as we look further out, do you see a tipping point at some samsung could impair business, do you see it crossing. >> less apple versus samsung and more apple versus android. so if android as a platform can keep gaining momentum but really sort of at the high end of the market, maybe that would be concerning. it's when people start choosing android over iphone that would ab concern. i don't really think samsung having the latest android phone today, htc the next day,

motorola the next day. each individual phone is not the competition. at the end of the day it's not hardware versus hardware, it's software versus software. >> interesting. before we let you go, which gets bought out first, nokia or rim? >> i wouldn't hazard a guess on either to tell you the truth. >> rob cihra. >> thank you for having me. >> quick alert nation's ceos downgraded outlook for the next six months. they expect their workforce, spending and sales all to shrink through the end of the year torgd to ceos economic outlook survey. only 30% ceos expect their company's employment to increase, 6% increase in hiring expectations from the first quarter, 43% project an increase in capital spending and that is down 5% from the last survey. 75% expects sales to jump in the next six months. that is a drop of 6%. we'll have the president of the

business roundtable john engler live. let's check in with rick santelli from the santelli exchange. hi, rick. >> hi, melissa. i don't know about viewers but i'm a list person. i like to make lists. i'm going to move quick was i have a long list. fed policy, programs, who benefits, who doesn't. on the benefit side i would say u.s. treasury benefits. why? they have lots of outstanding debt. they are probably going to have lots more. lower rates have a lower services cost. they benefit in a big way. the current administration. here is one you don't hear very often. here is the quick story. if you talk to anybody out there who can refire, can buy a house, what they say is 30-year mortgage, why interest rays are low. extend, extend, extend. why is the government -- they have extended a bit through some of these programs. why aren't they issuing 50 to 100 year bonds lowest securities higher yields, kind of masks the

deficit a bit. large institutions. i'm not talking about mental hospitals, i'm talking about the big financial centers involved in the commission business, trading business or large institutions like big banks and companies. why? the big companies can reifi. many government programs sprinkle lots of transaction costs buybacks, above average households, if you can refi you're one of the lucky ones. businesses, why? we allocate capital at too low of an interest rate. think solar companies, where are they going to be when rates go up, less sophisticated, not an insult. the optics of doing something appeals to some that don't watch the markets like we do. come right off. those that get dinged. debt hawks. debt hawks and young people. they get dinged. why? our congress has no will power. you get lower rates, they give you a pile of paper. that's the way it goes. the prudent. the fiscally conservative.

think about that neighbor who probably made more money than you, but he didn't buy the big house, didn't go into hawk. they aren't doing well. also, this includes savers and retirees, huge. under and unemployed, why? all these programs have created piles of money that aren't making it to the ones who need it the most. insurance and pension funds have no long-term product due to these buybacks. finally, a new one, counter-price to the fed's balance sheet. what if the market takes control and rates go higher. what about the street, pockets of two-years. watch out below, melissa lee, back to you. >> thank you, rick santelli. let's go to market flash with bertha coombs back at headquarters. >> reporter: hi, melissa. chesapeake, always volatile, today getting a boost on a report from the financial times that chesapeake is apparently under consideration for a multi-billion dollar asset

purchase. sino pec chief food chain was reportedly in oklahoma as part of the company's due diligence to take a stake in chesapeake. back to you. >> thank you, bertha coombs. coming up next, two experts weigh in on big ben and what we can expect this afternoon. is there more stimulus in store? find out right after this. ...with the best math scores. ...the united states would be on that list. in 25th place. let's raise academic standards across the nation. let's get back to the head of the class. let's solve this.

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sponsored by interactive brokers. interactive brokers professionals gateway to the world's markets. concerns over europe and a weakening u.s. economy two key topics in focus for day two of the fed meeting. let's bring in diane swonk and stephen, chief economist. thanks to you both. i want to ask both of you first of all whether or not what the stock market does and expects, whether that matters. i ask that because right now sitting on top of a massive 1 a 11-day nasdaq. both have best four day gains for a long, long time. diane, does it matter what the fed does, in terms of what it does, does it matter what the market expects? >> actually i think the fed is trying to set the tone for

market expectations. it's a question, is the cart before the horse or horse before the cart. i think the fed has set the tone through various speeches they are willing to do more. ben bernanke more cautious, laid out a detailed speech in early june on exactly what would precipitate additional moves. that's why the market is expecting at least an extension of the twist and maybe clarification on communication policy raer really matters what voters within fmoc, the central tendency of the fed, what the forecast is, not all the noise of the people at the table. >> steve, is the fed forced, because the fed is not forced to do anything but is the fed forced to do something like an extension of twist because it has to do something because that's what the market expects. if not, the fed p could have a massive market selloff. >> they are in a position to

have to validate what happens at the long end of the treasury curve, less so with the equity market. i think the equity market will be disappointed by what comes out of the federal reserve today. extension on twist or changes in communication are not doing to be enough for this equity market. i think this equity market wants an outright qe 3. i don't think they will get that. >> today, diane, one of those quarterly briefing days when the press has the opportunity to ask the fed questions. i'm wondering from your perspective, what would be the one question you ask, the one question a lot of the market participants are going to want to hear and have answered. >> i get a lot of questions, one critical question is ben bernanke's terms ends at the end of 2013, feds hoping to keep low until 2014, maybe later degree on the recast. what does that mean with a change in chairman. people like john taylor has come out and said he's a very

credible candidate to replace bernanke if mitt romney wins. he's come out and says he doesn't agree with any of the fed policy even though they are using taylor rule, how would you think about that in communication. we have to think about that if the fed extends over that extended period to keep rates low. trying to say we want you to get out of anything cash, make more productive investments in the u.s. the communication issue the fed will struggle with going forward, how strong is it versus the chairman. >> steve, from your standpoint, is the commitment standpoint a question for you. >> when you're looking at the situation regarding the chairman and what will happen going forward with the guidance, one thing you have to be very, very careful of, the chairman is one person on the committee. if they are extending going forward the new incoming chairman is not going to carry

the clout an outgoing has. they are bound by what the committee does. this chairman put the committee ahead of himself while alan greenspan put himself ahead of the committee. that's an important point. john taylor would do exactly the same thing. even though he disagrees with basics if the committee were to extend the guidance, he would go along with it as well. >> diane, quickly, your thoughts on that. very good point. >> i agree with them. john would have to square what he said with what they are communicating and how long would that be in place. do i agree that the institution of the fed, and this is a really important point for financial markets, institution of the fed is important for any fed chairman who enters. that said we can see it change a lot over time depending who the fed chairman is. >> going to leave it there, guys. thanks so much for your time, diane and steven. coming up next, board of trade weighs in on regulation and more, coming down to the closing in europe.

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welcome back welcome back to the third hour of "squawk on the street." i have a really special guest. he's an icon in chicago, legend of lasalle street, former chairman of the chicago board of trade and current chairman of a platform that trades equity options. >> great data, analytics and execution for equity. >> all right. let's talk some equities. you have thoughts on ipos, listings and countries. why don't you take it from here. >> rick, notwithstanding the listing of burger king in new york today, listings are down 43% since 1995 on american shares. ipos down sharply and volume down sharply in america. conversely volumes are up in

frankford, london, volumes up and ipos up. we're moving financial markets offshore because in my opinion because of excessive regulation, compliance and taxation. >> now, you've outlined something i've heard several thousand times before. but you always have ideas. how can we impact what is wrong in this arena and maybe point out some of the glaring issues. i know you were talking about sarbanes-oxley. how can we move it in the right direction. >> many causes, not just regulation compliance, spitzer's cutback on research of small firms is a problem. but the real elephants in the room excessive compliance and taxation, sarbanes-oxley is one of the elephants, dodd/frank is one of the elephants and new one fatca is a problem, imposed this year, which requires disclosure of the identity of recipients

from financial institutions from american countries whether recipient is belgian or american taxpayers, tremendous compliance and bookkeeping costs on the firms and probably cost companies foreign institutions not to do business in america. we need to soften up, lower our regulation, lower our compliance and make it more friendly and free to the raising of capital. capital is the life blood of capitalism. raising capital. money moves where it's treated back, frankfurt or toronto, that's where it will move. >> we don't have a lot of time left. we believe in regulation. it's just that you and i believe in less good solid regulation. you're not anti-regulation but anti-mountains of regulation that do very little that get at the crux of what they are trying to regulate. >> exactly. in spite of this regulation compliance and security we have, we haven't been able to catch madoff, corzine, stanford.

>> we're helping unemployment. all those regulators are at least getting a check even though they are not finding other people's checks. >> we can't find a dice game in the phone booth. >> only pat has those one-liners. melissa back to you. >> thanks. european close up right after this. , our town had a "brilliant" idea. support team usa and show our olympic spirit right in our own backyard. so we combined our citi thankyou points to make it happen. tom chipped in 10,000 points. karen kicked in 20,000. and by pooling more thankyou points from folks all over town, we were able to watch team usa... [ cheering ] in true london fashion. [ male announcer ] now citi thankyou visa card holders can combine the thankyou points they've earned and get even greater rewards. ♪ and get even greater rewards. sfx: sounds of marching band and crowd cheering sfx: sounds of marching band and crowd cheering so, i'm walking down the street, sfx: sounds of marching band and crowd cheering just you know walking, sfx: sounds of marching band and crowd cheering and i found myself in the middle of this parade honoring america's troops. which is actually quite fitting because geico has been serving the military for over 75 years. aawh no, look,

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european close just moments away. let's head to simon. >> it's very much about the federal reserve here on this side of the atlantic and also in europe.

the prospect that we will get some form of extension of qe lifted european markets. the fact that you've seen greeks pick a new prime minister and swear him in hasn't hurt either, done harm. >> the european markets are closing now. >> mainly green across europe as can you see. a lot of peripheral europe has done well. i just want to touch on the way we've made gains throughout the session. we see that on the biggest markets, london, paris and germany. here on this particular screen they have all made gains during the course of the session. one small caveat before we go any further. i must explain to you some of the insurance stocks in europe in particular have done well today. this is because the european commission suggesting it might actually delay or ease in some of its capital requirements. store brand, this is up in the north of europe scandinavian region that's done really well, up 13%, other insurers, big insurers were positioned for this. not so much a problem for them.

obviously weaker ones have done well. i mentioned spanish and italian banks have bounced across europe today. here is some of the main gainers you have. the bank in italy up 7%. banco popular. things in european thought you need to watch going into important meetings tomorrow and friday. you'll see to that end the spanish bond market rallied again today. the yields are coming down. this is important. the three things happening here, in fact we have the spanish budget minister up before parliament talking about these very things today. the first thing is there's a growing belief that perhaps the esfs or bailout funds may be able to directly, automatically buy italian and spanish debt if they fall or cross a certain level in the market. in other words, they might underwrite the market in some way. now, will the germans accept

that? we don't know. we have a finance minister's meeting tomorrow and a big summit on friday. the second big thing that's being talked about in europe is the idea these bailout funds potentially will no longer subordinate other people in the market. it's technical, it's complicated but it's important. if you get money from the bailout funds it means if there is some sort of restructuring they get paid out first like imf. that scares off private entrance. if they change the rules on sub ordination everybody knows life with the margin is safer for them. the third thing happening that will not get much traction, at the finance meeting, look, the $100 billion euros you offered for the banks, put straight into the banks. don't let it buy sovereign, let us take responsibility for it on the balance sheet. germans will probably say no way on that. there is a perception on the first two the buying of bonds not sub ordinarinating. other players might get

progress. we'll see some angela merkel is up. tomorrow is the day germans play greeks at football in soccer in poland and angela merkel will turn up to the match. >> really? >> angle, a merkel sitting in the stand with the germans with the greeks on the other side of the stands and a soccer game in the middle. >> how ironic. >> i would love to be there. >> in poland. >> yes. head to rick santelli for your take, rick. >> i think my take is going to be a little different than everybody's. on a fed day when i'm going to continue to watch and handicap is how relative value of safe, sovereign harbors like boones, like treasury's align. at the beginning of april you had a difference in the benefit 45 basis points. that's been whittled down 5

basis points in the mid 160s and the boone at 160. why is this important? because what we really need to figure out at some point, how long safe harbor will keep interest rates low. if that reverses, what's the catalyst? is the catalyst narrowing and on top of each other, the germans, the perception they will overextend their balance sheet. is it the markets, proactive european market safe rate dropped know fast and too far and things are realigning. this is of huge importance to the fed. we think fed controls interest rates. they control a small piece at the front of the curve. in the end the markets can get willful and we have to try to pick up early signs of that willfulness. this is potentially one of those signs. back to you. >> huge amount of commentary why it might be rising. they might double next year. also maybe i read the way they

have been intervening on the swiss franc and the way the swiss using the proceeds of that intervention and shoving into the bull markets in europe and maybe using dutch banks rather than sovereign. a huge number of reasons why it moved so rapidly. >> there is a bunch of stories hedge funds. they don't tell us or send us a memo of why they are doing the trade. they are all over this trade looking for the european rates to actually move more aggressively to the upside and have the spread go negative. >> all you need is a commitment to europe down the line. we'll come back to that. thank you very much. a flat market. >> a lot of debate what is more important eu summit june 28th and 29th or the fed. you can make arguments both ways. what's undoubtedly important the big rallies.

the rally components are. s&p, last five days. this is a nice rally. yes, we're flat. simon is right. this is about a 3% move. that's statistically consistent. what's been the market leadership? what's been pushing the market forward? the stocks would benefit if you cleaned it up. materials and financials in the main market leaders. s&p up 3% remember. so that lends credence to the idea europe is equally important, these are sectors that would benefit on something positive on the 28th and 29th. let's look at some other moves. important thing, financials, jpmorgan, good news for them. elsewhere most of the sector on either side of positive or negative. same thing with materials group. the dollar has generally been weaker this month. most of the big, big names are up 4 or 5%. tremendous reversal compared to prior two months. put up stocks in the group.

energy stocks. can you see stocks on either side of positive or negative. modest moves here. same thing with material stocks despite the horrible months that steel stocks are continuing to have, u.s. steel a bit of a bounce today. you can see very, very modest moves to the upside here. elsewhere, gold, you know what, they had one good day this month. that's been basically it. gold flat lining. at the beginning of the month, going nowhere, moving to the downside. gold doesn't have energy either. want to appoint out furniture stocks as lazy boy came in below expectations. bottom line, 12% on the downside on la-z-boy. >> certainly an expectations they are doing something there. >> an extension of the twist.

>> i'm not sure an extension would satisfy the market. europe could play additionally in here. a lot of hedging going on here and i think it's a good point. >> a lot going on. thank you, bob. >> send it back to headquarters. check in with bertha coombs for a market flash. bertha. >> as soon as tomorrow we could get a ruling from the supreme court on the health reform law. this morning we are watching hospitals outperform in a flat tape. susquehanna, community health, health management, hca with a buy. if you look at this sector, melissa, it's actually up 8%. the number of analysts, short coming, folks trying to position themselves ahead of the supreme court ruling. >> all right. bertha coombs, thanks for that. straight ahead an exclusive look how the country's ceos feel about the economy and it's not good. find out why america's corner office is worried and why it's affecting big business right after this. [ male announcer ] trophies and awards lift you up.

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microsoft expected to give a sneak peek of its new phone at the top of the hour. those details and more. >> nice to have you back. thanks so much. one of the important questions you can ask at any point what do ceos think about the economy we're in now and what are they planning about it. the business roundtable out with second quarter economic outlook survey. before we get to the results, let's just hear what macy's ceo told us from one of those business roundtables. >> we had a terrific run. up 4.3 on same-store sales this year. last year we grew 5.3, year before 4.6. those are increases of over a billion dollars a year on same-store sales growth. that's what the business roundtable does. we come together as ceos with a common interest and that's to create jobs in america and stimulate economic growth. we've got ideas and we're sharing these ideas. >> okay. let's take it more broadly and talk about what the 150 ceos. john engler joins us, president

of the business roundtable and former governor of michigan. good morning to you, sir. thank you for joining us on cnbc. what is the view of what these very important economic players are saying? >> i think it reps, as the chairman, ceo of boeing said a few moments ago, a softening of confidence, outlook, a little down, expectations relative to sales, hiring, capital investment. a little bit down in terms of gdp estimate over the next six months sort of on consensus 2.1%. so all i think reflecting just growing uncertainty as the end of the year approaches. the fiscal cliff looms as we watch events play out in europe. >> sure. your survey sample is important, of course, because they are not just impartial observers. they affect the economy in which they are operating. i'm looking here 36% expect a hiring increase 4.3% expect an

increase in capital spending, 75% expect sales to jump. that actually looks almost glass half full to me reading it that way. >> i think you could say, you know, it's still not bad. but when we look at the last couple of quarters moving higher, now we've receded a little bit, fallen back. i think that represents a lot of concern. we had 100 ceos in washington last week for our quarterly meeting. the concern was palpable in the room. everybody is worried about the things that are out of their control. they think they are doing a pretty good job in a lot of their companies. our ceos represent a lot of economic sectors, a consensus, not just manufacturing or not just financial services or energy, it's across the entire breadth of the u.s. economy, $6 trillion in revenues. they have got a pretty good handle on things and they are worried congress keeps wanting to put things off until after

the election but maybe europe doesn't allow us to wait. certainly i think for leadership purposes we shouldn't wait. >> governor, i'm wondering if there's a difference in opinion in terms of the business outlook when you talk to ceos more internationally oriented versus ones that drive more revenues domestically. >> melissa, that's a good question. most ceos have international business. we have a significant segment more domestically focused. even domestic, health industry, they are awaiting a big ruling from the supreme court that will have implications. if you're domestic in terms of energy, you're kind of wondering what the regulatory policy will be. if you're domestic tied to housing, what are we going to do with freddie and fannie. everywhere we look an epidemic of uncertainty. political confidence on all of this can be dealt with in lame-duck session or later is

not born out, that confidence not shared by ceos. we've been watching, waiting not much done. >> what's wrong. when i first came to the united states, a big businessman told me basically big business runs america. when capitol hill gets deadlocked big business gets on the phone and says you need to sort this out and they bang heads together. ultimately that didn't happen with the debt ceiling. what you'll say now with the fiscal cliff it's also not happening. is the power of the business on capitol hill ultimately waning and why? >> that's a provocative question, a good question. no question we laid out in many areas things we'd like to see done. nothing is happening. not as though something is happening and business is opposed to it. business is saying look, elected

leaders, you've got to come together. interestingly there are articles about states with partisan splits. democratic, governor, republican legislature. republican governor, legislature. state by state making decisions. the political paralysis is almost unique to washington. have you to conclude it's a leadership question and different people assign responsibility in different ways. but no budget for three years. >> that would be in front of s.e.c. >> hang in there governor. thanks for joining us. thank you, sir. >> a big impact small businesses have on our economy and why they might be too important to let fail. back after a short break. [ male announcer ] at scottrade,

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so so true for new york, certainly manhattan where we're looking at possibly 100 degrees tomorrow. it is the first day of summer and the east coast is really beginning to feel the heat. temperatures expected to hit the mid to upper 90s today and then climb from there. let's get a check from the weather channel meteorologist eric fisher. he joins us from washington, d.c. eric, how hot do you think it's likely to get? >> the hottest day of the year for many of us here, simon, no question about that. it wasn't a comfortable walk to many, 95 corridor, boston, new

york, philly, d.c., started the day well up into the 70s, already up to 90 by lunch time. newark, 93. one spot we'll watch to see if they hit triple digits. not just here but westward toward chicago, detroit, cleveland, down to the deep south, southwest, everyone over 90 degrees right on time for the first day of summer. bottom line with humidity increasing, heat indexes high tonight. the kind of sunshine you don't want to be outside over time. lay off sugary drinks, lay off whatever you grab to cool off. water the way to go. sugar, coffee, alcohol can dehydrate you. if you know somebody that doesn't have air conditioning, organize a sleep over, get nem in the ac. probably won't drop to 80 degrees overnight.

that's tough for the body to take, especially the first big heat of the year. >> thanks, eric. a view from the weather channel. >> my air conditioner doesn't function at these temperatures. i will organize a sleepover. >> where will you go. >> to your apartment. >> organizeing a sleepover at my place. you're always welcome, simon. >> i'll be there around 7:00. >> i'll make up your bed. another hot topic, small business, the importance to the economy. tonight, getting back to business, a cnbc town hall event. brian sullivan the host of the town hall here with a preview. brian. >> let's move onto what's happening tonight. a cool event, guys. we've already taped it so i know what's going to happen. i can just tell you this month. pretty cool. we put together five smart, successful people, a couple hundred people in the audience asking questions.

they have problems, panelists providing answers. we had some fighting, laughing. we laughed, we cried. here is a preview. >> small business. we hear about banks being too big to fail. why is small business too important to fail? >> well, small business really is the backbone of the economy. everybody knows it now. but the numbers are pretty interesting. half of the people who work in this country own or work for a small business. that's half the jobs. and even more important two of the net new jobs come from small businesses, particularly the high-growth fast growing small businesses. as we know government doesn't create jobs but we have a job to do. our job is to make sure entrepreneurs have the tools they need so they can get the

capital, they can get the advice. they can find their way through all of the mazes that you have just heard about. that onto apprehend yours face. they can have success, hire more people, create jobs. it's really america's secret sauce. >> head of the epa, karen mills. we have steve case, kevin o'leary sold his company for $3 million and sarah blakely, the founder of spanx and youngest self-made female billionaire in american history. i think she's 41 worth nine digits, not bad. airs at 9:00 eastern. >> inspirational. thanks. we look forward to it. >> that's sorted out tonight's entertainment. >> at the sleepover. i'll be popping popcorn while i get your sleeping bag ready, simon. >> and -- >> so demanding of a house guest. feds decide whether to expand

operation twist. banks sell shorter term securities, buy longer dated ones. we want to know what should the fed name this plan. operation what? tweet us. we've got some of your answers right after this. [ male announcer ] this is genco services -- mcallen, texas. in here, heavy rental equipment in the middle of nowhere, is always headed somewhere. to give it a sense of direction, at&t created a mobile asset solution to protect and track everything. so every piece of equipment knows where it is, how it's doing or where it goes next. ♪ this is the bell on the cat. [ male announcer ] it's a network of possibilities -- helping you do what you do... even better. ♪

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all all right. let's get to your tweet. we're asking you instead of twist, what should the fed name the plan, operation what? tweets operation hail mary. jonathan tweets operation drip drip drip. peter tweets, operation twisted. a lot of good responses here. again, the decision at 12:30. >> i imagine that description would appeal to you, rick santelli. >> it's funny you mention that. i was going to go to that exact same spot, drip drip drip, twisted, but for a different reason. it isn't only me that wants to poke at this to see what kind of benefits these programs have but think mervyn king, mpc, monetary policy bank of england. we learn in a closed vote.

quantitative easing, notion of buying securities in that inc t incestuous relationship. the size of the balance sheet has taken the sheet off the marketplace. more how they affect the market by what they are holding at this point to anything they may continue to buy. >> rick, you know, the uk is a real example of where they have done massive qe and a whole debate whether it's actually benefited the economy. arguably some would say not to the extent it might have done. >> exactly. are you surprised the euro -- granted it's 127 handle. its range much smaller than many doomsday scenarios. >> we have to run. thank you very much, rick santelli. fast money tonight? >> a lot depends what happens.