triple the val sglu sheila bair said something very similar, better for returns. >> michelle, thank you for being here. >> pleasure. >> thank you for being here. make sure you join us tomorrow. "squawk on the street" begins right now. good morning and welcome to "squawk on the street." i'm melissa lee along with carl quintanilla, david lee. we'll have s&p's david blitzer to take us through the numbers in a few minutes. let's get you caught up on where futures stand the day after a big selloff. dow jones looking to add, as for europe a disappointing auction, rising borrowing costs, spain and italy, but red arrows across the board. >> roadmap starts with the market selloff. dow is down three out of four

days. s&p flirting with going negative for the month. meantime the borrowing cost in spain spain have doubled, even tripled as euro leaders get gear up for the summit. goldman getting more bullish on jpmorgan, cutting morgan stanley down to a neutral, jpm shares are trading higher pre market. news corp. may be splitting into two. could this free the company to make a run at bskyb. facebook names coo cheryl sanberg to its board amid complaints that the board lax diversity. this comes just a day before they say underwriter firms are free to initiative coverage. meantime stocks in general will try to bounce back from yesterday's 138-point selloff which left three major indices with slight gains for june. european debt crisis on the back

burner. it seems like the hopes dissipated yesterday and we're seeing a bit of a bounceback today, jim. >> yesterday, if you had beta -- i don't know what they call it now. if you have stocks that go up a lot, they got clobbered. there's a decision made by big portfolio measures, don't show oil. don't show anything oil. everything has to be sold because that's the obvious commodity that went down. i don't know whether that's going to pan out a week from now. boy, the selling in it at oih, everything was ferocious. it was almost as if everyone decided oil is going to 706789 i don't think oil is going to 70. >> interesting. today is the first day -- would be the first day since october that crude intraday has not cracked 80. so a seven-handle throughout the session. we'll z see how it closes. that's a big deal, jim. >> it's a huge deal. i was talking yesterday on "mad

money" if you knew there was a tax on the american people of say $80 a week and obama said, you know what? scrap the $80 tax, the stock market would take off. yesterda higher by 1.3%. the places where consumers are free to spend, maybe the lower end of the retail spectrum, the stocks are showing it. >> but macy's has been clobbered here. >> that's true. >> a lot of the big discretionary plays that we think of, harley-davidson, today weaker, obviously bed, bath and beyond has been a fee os kovacs. amazon holds up and walmart holds up. those are the two strongest. i want to point out the strength of amazon because throughout this selloff it has been one of the great performers. it does not come down. >> what about the idea that earnings growth is slowing

overall, that we have seen more warnings than we saw last quarter. you mentioned bed, bath and beyond. we had procter & gamble and fedex to a certain extent, although that's harder to pinpoint. thatry company only, or is it indicative how things are at p and g? >> i think there's a deceleration. i think the employment numbers indicate a deceleration. i think when oil came down, don't forget the biggest job creator in this country has been oil and gas. a lot of drilling has ceased. a lot of wells that it just doesn't make sense to drill. housing is doing better. we'll get some case-shiller numbers. don't forget, boy, are they firing a lot of people at the government level. >> second day in a row you mentioned the impact of oil and gas on the job market. claims have basically made a

round bottom, starting the come up a bit. i think i think a 30% chance that the next farm number is sub 100 again. >> look, this is going to become a big political issue. we're not, gratefully, a political show. i do believe the worse these numbers are and if you get a verdict for the supreme court which says that obama care stands, and we talk all day about fiscal cliff, you start thinking 2013, i'm cutting numbers 2013 everywhere. >> the impact of obama care, think about who currently may not be insured? probably the younger, the healthier people who opt out of insurance because they don't need it. they're young. they don't have any problems also. >> they can't afford it, also. >> or they can't afford it. all of a sudden they have to pay for and that's a tax on the youngest people in society. >> some don't pay for it. that's the key. then they end up in the emergency room and then we all pay for it. >> they did extend that age. i remember getting -- i remember my father saying go ged a job,

you need blue cross blue shield. >> that would not change if the supreme court strikes down just the individual mandate, although it's unclear what future the law really has depending on what we hear from the supreme court. >> a lot of negatives. against the negatives you'll have periodically companies trying to do things that bring out value and they've been working. yesterday bristol-myers had a pushback of maybe the most important drug which is an afib stroke drug. the stock gets clocked for a man none second and comes right back. i think that's important. darden, horrible numbers. stock gets clocked, comes right back. domestic companies still doing well. goldman sachs making a call on banks, the firm adding jpmorgan chase to the conviction buy list saying the bank has the capital structure an earnings power to withstand the $2 billion trading loss. on the flip side, morgan stanley downgraded from conviction buy

on the speculation that earnings could be hurt by market activity. they say longer term on morgan stanley, unsure how they perform in a post moody's environment. >> boy, we talk a lot about it. the cloud over morgan stanley, this is going to increase the cloud. in the meantime they do say that jamie dimon's testimony emitted the long-tale risk. people love to use the terms that the public doesn't understand. >> the worst is over. >> i was waiting for -- this is the kind of piece, dead in the summer piece where they come and switch it. the only thing they didn't address, captain morgan. >> captain morgan. >> captain more gar gan. >> the rum? >> i'm saying, look, swapping the morgans, come on, come on. they're all cheap. if you like one, you like them all. >> how about phil purcell in the journal today has been cautious,

some say it cost him his job, saying shareholders, david, need to call for the big banks to be split up. >> interesting point of view. you're throwing your hands up? >> the international bank stocks all trade the saechlt i focus on u.s. bank corp, bb &t. i'm hear bbva may try to sell come pus. literally because of housing coming back, we're seeing domestic banks doing well. we focus on these their do well international banks and don't talk about wells fargo with 30% of the mortgage market. we don't talk about the winners. we just talk about the losers. >> we do mention it all the time. wells fargo. >> if you're a believer that stock market is going to have a rand, it is the morgan stanley's and goldman sacks over the world -- you risk downsides

also. >> i'm just talking about that there has been underneath a remarkable move in some of these bank stocks. bb &t has been a huge win for people. mr. king comes on and no one even pays attention. what he's done is remarkable in this environment. wells fargo -- if you try to get a loan in the city, it's either wells or some bank you never heard of. that's the same thing in philadelphia. wells is lending and lending and lending. they're solving the problem with bad loans. i think shaun donovan, say let's give the whole problem to wells. wells is remarkable. we don't talk about it enough. >> listen, the fact is as we continue to talk about europe and today again with italian yields going up and not particularly good options for spain, these are the banks that will most reflect risk on, risk off. >> eventually you are going to come around on the big banks. >> jpmorgan -- the most important thing is jpmorgan has

underperformed radically, down 15%. that is wrong. jamie dimon is just not that bad. i thought jamie dimon -- >> if i asked you this -- >> fire away. >> put it away for three years and not talk about it again, would you say buy it or not? >> i would buy it, but i'd by u.s. bank corp first. >> that's a three-year holding. >> yes. i think u.s. bank corp -- richard davis is a remarkable manager, quiet, unassuming, will be retiring. just fantastic. here is what's happened in this country. this terrible moment has led to a level of agglomeration and market dominance that the government has fought for years. no one was ever supposed to have 9.9% power in this country. once you release the banks to have more than 9.9, they price control mortgages. wells fargo has more than 30%. in the meantime wells fargo, down 11% for the year.

that's crazy. i think it should be up. morgan stanley, i don't know. when you ask john stump, ceo of wells fargo what he's up to, he comes back with a remarkable answer. do you know what it is? >> we lend money. >> you know what we're doing? we're banking. they're not whaling, not ahab, not starbucks. >> yesterday the strategies of the chief investment officer changing, that they're not going to get into big risky trades. >> i didn't know they had a chief investment office until now. it's like a police force within a police force not unlike what they had in 1937 in bra zirl. a reference to magnum force and clint eastwood. >> i didn't get that. >> i was thinking about the de niro movie. >> no. it's clint. he's also a winner. i look at these banks and see the amount of money they can make, if housing comes back in this country, and it will be remarkable. yes, there is a trade to be made

in the morgan stanleys when the smoke clears. right now it's ak rid smoke out there, it's like smog in europe. in the meantime u.s. bank corp does not know where europe is other than it's cater projection where greenland is really big. >> greenland is huge. it really is. >> remember when you were little and it's like greenland is really big. >> u.s. bank corp is struggling with the idea of where is europe. that's one of the greatest things that ever happened. the same thing that happened with church and dwight. >> best thing that ever happened to them. >> that's my rant. captain morgan. news corp. considering splinting into two companies, one consisting of film and tv businesses, the other the publishing divisions. david, we've heard this before, this is a possibility. finally there are reports that perhaps murdoch is warming up to the idea, coming around to one

that chase carry favors. >> in the "wall "waeet journal," it was owned by news corp. they wouldn't be reporting the moling. we've confirmed it multiple times at cnbc we can say as well. listen, investors have embraced the idea of a split of this company for quite some time. in fact, in speaking to people many years ago, it was a plan that had been at least partially undertaken way back in the early 2000s, the idea being that perhaps murdoch's kin could take over the publishing assets. never got there. now investors look at it and say, listen, publishing is an anchor around the growth trajectory and the multiple of this company. you push it out and perhaps you even throw some debt on it because you could potentially lever it up, that's a real positive. we'll give you a much higher multiple on the film, entertainment, most important cable businesses all being together. and it will be overall very

constructive for the complete share price, plus you could conceivably throw a lot of debt on it, buy back more stop. >> you're talking viacom. >> yes, except viacom and cbs, one was not an anchor around the other. so you had similar multiples there to a certain extent. it's a negative -- there's a negative multiple associated with it. it's not getting any multiple at all, the publishing business, which still makes money. they've got a couponing business in there, a bunch of stuff in there. when it comes to litigation risk, maybe that goes to a certain extent with it while the overall risk may not. you kind of segregate that to a certain extent. a lot of reasons why it would conceivably make sense. no doubt investors will call investor relations and or chase carrie, the cfo or rupert and say, we love the idea. the end of the physical year is just a few days away. >> any sense as to which side

karey will take? >> definitely with with the media. and rupert would be chairman. you'd be talking about a chase carrie led entertainment company. there's no doubt it would get a higher multiple. a blended multiple, maybe it gets up to aechb to eight times. that's not bad. >> it's been a winner to begin with. this guy is a great guy to bank with. this has been a good year for murdoch. >> not to mention t papers will keep deteriorating. >> seven to eight times what? >> even. >> is it the kind of thing that could be replicated at time warner or is this a ploy specific to news corp. >> time warner doesn't have specifically those kind of assets not valued at all by the company deteriorating quickly. there was an aol once. they managed to split that off. at this point time warner is film studio and cable network --

>> in terms of the multiples assigned, what would they be most comparable to in the marketplace? >> that's a good question. questioning, i'm not sure what the peer groups -- you certainly know what news corp. would be, it would be time warner, it would be viacom, it would be those as the comps. >> who would not want to own that? that's a great piece of paper. all great growth, right? >> yes. those are key questions. can you off-load the debt? what's the future of bskyb? if they do this, does it ill improve not only their ability to hold but the potential to buy in at some point down the road? no doubt it's going to be up today. >> i think it's terrific. it's great to see these companies take the bull by the horns. i've been pushing this for j&j, i'm been pushing it for proctor which is harder because they don't have anything i really want. nice mix of u.s. stories, not just all about europe. when we come back, we'll go inside the s&p case-shiller numbers. finally got positive metrics on

those. are home prices rising in your neck of the woods. david blitzer on the winners and losers. before we do, more "squawk on the street" live from post nine in just a moment. more than 50% of ceos reported they canceled the delayed initiative because they didn't have what they needed.

back to this key housing data. the results show on average home prices increased 1.3% in april for march for both the 10 and 20-city composites. here david blitzer their man of the s&p 500 index committee. good morning. >> good morning. >> you pointed out it's been a long time since we enjoyed such broad-based gains, seven months of declines and finally encouraging numbers. what's the most en damaging thing about this report? >> clearly the big headline is we went up. 19 of the 20 cities saw gains. detroit was the only exception. no city made a new low which is no surprise since 19 of them went up. across the board it looks like a very solid report. some of this is probably because this is the spring selling season really hitting its stride. certainly not all of it. my guess is at least half of what we're seeing are real gains, not just seasonal shifts. >> you say even the seasonally adjusted data is good.

it's not just about the spring. new homes yesterday, two-year high. are you -- at what point are you willing to say we've actually turned a firm corner here? >> you know, long bitter experience with housing and other statistics, you remind yourself you can't draw much of a line through one point or you can draw any line you want which is the wrong way to do it. this one really does look good. it comes after several months of a lot of signs of improving sales, a lot more people looking. home builders getting a bit more optimistic. a lot of local reports. in the last few weeks we've seen stories about phoenix and las vegas, both a lot of building, pricing going up. homes selling at above the asking price in phoenix. these were two of the worst-hit cities in the country. so that suggests we are coming back. and this looks like a solid turn. it's going to take a few more months to cement all the evidence in place. but it looks very good. >> david, one of the things

that's been most bother some and i talked to last banks the area and the phone companies is atlanta. this looks like the first time we've gotten something good in atlanta, because it's down 17% year over year. can you get optimistic about atlanta after this month? >> atlanta has been hit with a tidal wave of foreclosures. that seems to be what's done it in. we don't know enough about atlanta, the details, way into the details to know how much of this tidal wave is passed us or whether there's another hit to come. across the country foreclosures continue to be a very big factor, something like one out of every four sales. so that's a problem. mortgage availability, not the interest rates which are low, but qualifying for a mortgage, especially from people who are under water and they want to sell and move to a different house, all of that remains to be a difficulty in a lot of parts in the country.

we're beginning to see, we're seeing the beginning of the end instead of still suffering with the end at the beginning. >> interesting. you also talk about atlanta and phoenix being the ying and yang of this housing market. >> like two yangs i guess and no yings. >> david, thanks a lot. >> thank you. >> david blitzer. up next, grabbing a bull by the horns. cramer will show you the way. get ready for his "mad dash." as we kickoff this tuesday morning trading session the dow looking at about 20 more points. more "squawk on the street" straight ahead. ♪

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♪ ♪ about four minutes before the bell on this tuesday. let's get cramer's mad dash ahead of the open. we know what commodities have done. foreign has acting differently. now leading to stock plays this morning. >> i think the traders are going to grasp this call and take these stocks up probably right at the top. this is because corn is higher because of this drought. people are going to buy dear and go back to the furts. if people remember, fertilizer led us, they'll take deare up. all i can tell you, the moment we get rain, this trade is over. you know what carl, people are desperate for a trade. this group will provide the action. i say be careful because, wow, corn can go down, too. >> yes. that's a good one. a lot more with jim after a break. will the bulls bounce back from

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♪ we are off to the races on this tuesday morning. trading has opened. take a look at the cnbc realtime exchange. finally green on the board. sun necks corporation, a business process services company at the nasdaq, tyler perry's "madea" does the honors there. >> you see that? sctv, american tv, splash, you name it. >> that's a lost reference for me. you had the eastwood refers earlier. >> "magnum force" is one of the great movies of our time. lots to watch. we're at the oechlt facebook up by 1.7%. we are the day before about two dozen analysts are unable to

initiate coverage of this. the 40-day quiet period expires. so then they can go out there and say it's a great buy. >> i think it will be like barney. it was a superdy duper you love me buy. i think people will say, you know what? i'm going to go by it. it's been levitating for a while. not a lot of negative news for the moment. >> until the quarter comes out. possibly, who knows -- >> it will be interested to see what scott deaf it at morgan stanley says. he's the analyst that had the internal report. >> the widely disseminated call that everyone in retail got. >> sarcasm alert. >> then they're saying sanberg being added to the board. zuckerberg says she's been central to our growth and success. it does answer some of the complaints that big institutional share hold earls had early on.

>> remember, there were institutions clamoring for this to happen as opposed to worrying about how they do for their pensioners. the main focus should be how you do for pensionr inrer pensioner. >> why don't we focus on capital gains and how many pensions aren't doing well as opposed to who is on the board? >> i think the presence of a woman on the board may change the entire dialogue. >> it's positive. look, it's great she's going to stay. >> not to mention she knows the heck what the company is up to. >> she's a no-hoodie grownup. >> independent directors to be the key on many of these boards. orbits. if you're going on orbitz on a mac as opposed to a pc, looking at rates 20% to 30% -- $20 to $30 higher than those who don't

use a mac. they found on average mac users are more likely to book a four or five-star hotel. it's a weird debate. if it's technology, why should they not cater to what they think your tastes are, jim? when it doesn't mean the lowest price, that puts a wrinkle in it. >> you can still sort by price. if it's the same listing, apples to apples. but using predictive analysis they can tell if you, carl, book on a tablet, you're more likely to spend more money in general. forester found that as well in terms of online retail. most tablets out there are apple tablets, ipads, you tend to spend more money. that's just the spending behavior. why not cater to that and try to capture the extra dollar. >> i think a lot of people are very naive about this. there's been a big revolution. in the old days you google something and the best deal came up. everyone has had to try to make so much money because they're all public. it's now when you look up

something, i'm very suspicious. the top four of everything i look at feels paid to me. you have to keep scrolling down before you get to anything that may be actual. the web has become very unsatisfied factory for those of us who are users verses the companies which are just trying to charge and bang everybody who lists. >> a lot of gaming these days that maybe didn't exist before. how many people have written in to boost the star ratings on any hotel or service? got to do your home works. >> we talked about facebook a moment ago. we'll get our first taste of ipos this week, everything from nat gas companies to cloud computing to biotech. i wonder, jim, if you think the stain of that ipo more than a month ago now is beginning to fade, if people are beginning to get over it? >> i think each time you have a terrible blow to retail, you get more people to leave the market. i think that the facebook taint is going to be with us like the flash crash.

people just say you can't trust this thing, it's for rich people. >> so that memory doesn't fade? >> no. another step down in the number of people who care about stocks because they were enticed, they realize it's a casino without rules. there's no nevada gaming commission which is more effective obviously than the sec because they knock you out of the game. the s.e.c., are they still holding hearings? they love holding hearings. >> news corp. shares at a 4 1/2 year high. haven't seen this level since december of '07. up about 6%. we talked a lot about news corp. a bit back, the idea they may be splitting the company up into basically what would be newspapers and everything else. everything else being film, tv, particularly the cable networks and, therefore, garnering a much higher multiple. getting rid of what many investors believe has been an anchor around the company in terms of its ability to grow. there it is.

they get an increased stock by back perhaps because they control more debt on the publishing company and segregate the litigation risks having to do with the hacking scandal. >> dare i say it, but there are a lot of companies undervalued in this market that are being brought down by the general only wee, whether it be facebook or europe. companies take action, the stocks tend to react. murdoch says my stock is cheap, i'm going to do something about it. and you can. you can because stocks are cheap. they are cheap. >> brian shactman on the floor this morning covering for pa san any. seeing what's moving. >> very tight range with futures. the dow 15 to 30 points to the supp side at the open. we have case-shiller, we get consumer confidence in little bit. thursday, i want to remind people what we have in store for thursday. the eu summit, more italian

auctions, the health care decision, jobless claims, gdp going to be a very big day. maybe a sideways trade leading into that. fascinated by the goldman sachs. they take morgan stanley off of it. the stock down 27% since they put it down in january. add jpmorgan to it saying that the losses of the london whale can be over come. also, we talk about case shaler already quite a bit. fascinated by the article in the "wall street journal" about the possible $1.7 billion loan lennar might get from china development bank. fascinating because china lending to u.s.-based companies is one, and maybe a little bit less focused on their own. but more focused on lending outside of china. also could have 20,000 units to san francisco, could really transform the real estate landscape there which is extremely tight right now. finally, delta was down a couple percent in the pre market. it has since bounced back, saying 8% to 10% margins which is pretty good for that business. also saying they're paying more

than they expected for fuel in june because of hedging losses. as we see fuel come down strongly and quickly, we might see a little more of that, cramer, in the airline space. back to you. >> okay. thank you very much, brian. we're talking, just so you know, looking at the domestic stocks. retailers doing well. >> walmart another .8% gain on top of yesterday's gain. >> when it was the only dow component higher for the day. >> this is a remarkable move. >> after a decade of doing nothing. >> a move that started with "the new york times" story pointing out aggressive practices in mexico. maybe people said these guys know how to do business overseas. time for a look at europe and the europe from a fixed income standpoint. rick has more. >> we closed at 160 yesterday, no great shakes. i think it's worth noting that there's been an awful lot of

stability, not so much if you look at intraday ranges in our fixed income treasury market, but if you look at the closing ranges, a bit more volatility in europe and the question on everybody's minds, of course, should optimistic stories emerge out of europe, how much higher would boone rates go? they seem to be more spring loaded than treasury rates. the spread, of course, ten basis points in our advantage right now. if you look at a boon chart, you can see 153, elevated a little more than a half dozen basis points. the new notion is the range that pay attention to boon's 145 to 165 than there is come place sen see under 145. this is fascinating. you clearly see on a one-month chart there has been a lot of trade down in the euro. you would expect that considering the headlines of the day. if you take a step back and really try to be objective on a ten-year chart, we are clearly in a zone that is elevated to a lot of the left side of that chart which really demonstrates

that the credit markets have been a better line, a better telegraph line to the woes of europe than the foreign exchange markets in many ways. and we'll continue to monitor that dynamic. today, the first of 99 billion in supply in the u.s., 35 billion two-year notes at 1:00 eastern. jim, back to you. >> two-year notes, i'm telling you what is one of the most popular assets. let's check out the latest news in metals. we go to sharon. any relief in metal? >> we go at geopolitical tension that is seem to come into focus for the brent crude market. tensions concerning syria. the fact that nato condemned syria for attacking a turkish military jet last week. also keep in mind that we are looking at some people who may be just trying to book someom profits here from their short positions for this month, not only in oil, but in a number of

commodities. so that may be some of the action we're seeing as well. the actions impacting what we're seeing in the brent wti spread, that has firmed up after falling about $4 or so this month as that seaway pipeline has gotten under way and transported those cargos from the middle of the country to the texas gulf coast. in terms of the metals market, a little breather here for gold prices, and silver is a little lower as well. we are seeing silver etf holdings are at the strongest pace we've seen for the month in quite some time, since september or so. this is despite the fact that silver prices are down about 4% on the month. when you're looking for a safe haven play, it appears many investors are looking at the slv etf and looking at the etf as the place to be. the energy stocks are finally trading higher despite the -- actually crude is now higher by 38 cents a barrel, wti

at least. approaching $80. but still below, for the fourth straight session in fact. an interesting move. >> remember these stocks have been horrendous performers. the one i have to tell you is how poorly schlumberger has traded. this is a great international company, the bell weather in the group. it's been a one-way trade down. it's influenced a lot of stocks. exxon holds up better because it's a bit of a bank. but the anadarko and the apaches have been horrendous. >> you mentioned shares of aig. that supp again today. they have had a very successful sale of the portfolio that the fed -- new york fed roans maiden lane three. this was the most toxic of the assets they took on, the cdos and the like. yesterday another 4.2 billion

sold. this time credit suisse was among the lead winners there in terms of the options. the proceeds would appear to be at a level that aig will be able to pocket significant money. that has been helping those shares move higher. >> ben mow shea, terrific ceo came on "mad money" and said we're going to buy back all that stock, get the government out. our stock, it's 50% of bulk: i happen to think the world of him. i think ben mow shea is the most bankable executive. no offense to jerry fishman who is unbelievable in travelers. but ben mow say is the star. >> i like how yesterday at this time we were joking about seagate and today being added to the s&p 500. >> absolutely. david was going to make phone calls. >> remember, i told you. monster beverage is down since it was added.

>> i noticed that, too. the day after it was added, it was down. >> incredible. coming up, breaking into the boy's club. cheryl sanberg added to facebook's board. inside their culture with a former facebook employee. take a look at this morning's early movers on this tuesday on wall treated. street. tomorrow live from chicago, it's mcdonald's ceo jim skinner's last week on the job. he'll be talking to us about his tremendous tenure. join us for the supersized interview. you'll be loving it. tomorrow on "squawk on the street." this is new york state. we built the first railway, the first trade route to the west, the greatest empires.

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it was ten it was ten years ago that

telecom giant world come filed for bankruptcy. four years later, the company ceo was sentenced for 25 years in prison for orchestrating an $11 billion corporate fraud, the largest in history that we broke in cnbc. "the rise and fraud" of world come, i spoke with evers. he gave me his side of the story. >> i'm not going to say that i was the best manager in the world. there may have been somebody that could have dong a better job. i don't know the answer to that. but i don't think that was the reason for the downfall of the company. >> what was the reason? >> just what i told you. revenues were starting to decrease instead of increase. not only by us, but everybody. >> wow. brings you back. brings you back. >> gym teacher? >> yeah, originally, basketball coach. >> should have stuck with that gym teaching. >> it is reflective of the times. that company created and built and helped along by jack rub man

and all the people who helped it acquire and acquire. man, bernie ebbers. >> buying that thing for nothing was a great idea. >> people forget world come was forcing its competitors to do something it wouldn't have done, whether it be verizon or at&t. >> i think keselowski, skilling, we put these managers on pedestals because the growth was so tore rid, even though nobody could explain it, it was a period of naivete. >> it was a period of euphoria. worldcom was one of the benefits of that throughout the mid to late 1990s. just hard to imagine over ten years ago it went bankrupt. >> we did recover. great she cainry.

you were kind of a criminal reporter for a while. >> those were fascinating times. for a reporter in terms of trying to understand what was going on, yeah, watching one after another. whether it be adelphia or worldcom. >> we should mention here, news corp. confirming what we've been talking about all morning, it's considering separating its business into two units as david has been talking about all day. interesting to hear the company say it themselves. >> that stock up 7.5% now. >> almost a five-year high. my question on worldcom, david, do you remember when you about to go on air and break that news, doubts, nervousness, jitters? it was -- if you were wrong, it would have been bad. >> it would have been bad. i had no doubt i was right. on a story like that, you absolutely know either you're right or you're done, right? i remember it. it was about 6:00 -- of all the

stories i've ever done, people will still stop me and say i remember where i was when i heard that news. it was about 6:00 eastern time. many people had gone home. i had been working on this thing for a few days and finally got to a point where i was comfortable reporting it. >> madoff and this were the two. i remember where i was when you did it. it was like you got to be kidding me. >> it was a confidence killer. >> unbelievable. dow up 13 points today. a lot more "squawk on the street" in just a moment. up next, it's cramer verses cramer verses cramer verses -- well, you get the points. six stocks in 60 seconds when "squawk on the street" returns. and a fast acting formula. so you can kill bugs inside, and keep bugs out. guaranteed. ortho home defense max.

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♪ not the last good-bye, the first hello to simon hobbs this morning. >> good morning. the calm before the storm on europe. we'll talk about that in the next hour of the program. plus zinger unleashed. the game plan for growth there. biting the public sector pension

bullet in rhode island. the state treasurer will join us. meantime a chance for six in 60. six stocks in 60 seconds gave or take a few. hershey. >> this is an amazing stop, since they rationalized manufacturing, it's been one way up. when oil goes down, that means more for chocolate. >> autozone upgrade sgld doing remarkable things. i'd buy it. >> millennial media recommended mechanic cord. >> if facebook is going to have good mobile, you'll see that reflected. >> needham says buy ebay. >> this is an amazing story. their credit cards taking america by storm. you bont believe it. >> hardly davidson on squawk earlier in the day. >> this is one thing i cited for weakness in the economy. raising the target on nike. >> this has been football time and again. i'm very worried about

inventory. what a great american growth company. let's hope it gets hit and you get a chance to buy. >> plus olympics. >> yes. you've got that moment in between where it might go down in the quarter and come back with the olympics. we'll obviously be covering the olympics heavily. i can't wait. the most exciting thing that happens -- >> always a blast. what's coming up on "mad" tonight? >> we have jay bill on tonight. why does it matter? a contract manufacturer among many different industries. they make things. timothy main has been unabashed. when things aren't good in certain areas, he tells you. this is a guy who is a no nonsense guy. there's manufacturing slowing around the globe. let's hope we gives us some hope. >> only a couple weeks left in the quarter. are you seeing warnings come, pre announcements come? >> i got to tell you bed, bath and beyond, that just struck a lot of growth investors right in the front. don't forget starbucks didn't

dough what people wanted. growth stock investing is so hard right now. it's so hard, carl. a lot of people are just kind of saying, you know what? i can't take the pain, chipotle, pane panera, that they stopped moving, we need that group to get hot. >> we'll see you tonight 6:00 and 11:00 eastern. breaking news, consumer confidence in just a moment. ♪ ♪ ♪ [ male announcer ] not everything powerful has to guzzle fuel. the 2012 e-class bluetec from mercedes-benz. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services.

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jabil. welcome back to "squawk on the street." we have two june numbers out, consumer confidence expected to come out 63. arrives at 62.0 from a slightly revised 64.4. if we look at 62.0, the last time we were down in that neighborhood was january at 61.5. now let's look at june. richmond fed manufacturing index, expecting two, last look four, this read minus three, minus three is the worst read since october of last year at minus six. so somewhat of a split decision. not in one good number one bad number. one close, one miss. the equity markets have given up a little ground but still trying

to hold on change. interest rates are up a little bit both here and abroad on the safe harbor trades. of course, trying to handicap all the stories flying around europe going into the summit on thursday and friday. carl, back to you. >> rick, talk to you in a little bit. let's get the roadmap for the next hour. monday's global selloff giving way to a higher start on the street today. two points on the dow as the looming eu summit awaits us on thursday. what's next for u.s. equities? >> news corp. back in the headlines today, confirming that the company is looking to split into two separate parts. will this be enough to appease shareholders on the heels of the hacking scandal. zynga gearing up to introduce several new game titles. will the new offers be enough to drive up the pickup and usage? we'll take you live to the scene of that craze zir event. have you seen the pictures of people dressed add ghouls. now on to coca-cola which

has doubled its investment plans for india as it looks to benefit from the fast growth of the nonalcohol drinks market in that country. coke says it will spend $5 billion by 2020 in india rather than just $2 billion by the end of 2017 as the company previously stated. red box owner coinstar saying it's cutting its profit outlook citing the cost associated with the ncr dvd assets saying it expects to take a charge of between 40 to 50 cents a share. coinstar shares trading down right now about 1% or so. the euro trading at a two-week low as doubts remain whether the eu leaders can agree to an effective action plan on the sovereign debt crisis at the thursday-friday summit. this on the back of cyprus asking for european aid. spain for its banks and moody's. in the papers today there's a lot of talk about the plans that will be put before the leaders on thursday/friday.

chief in that is the idea that they're going to give up some sovereignty to brussels on their budgets. that isn't new. that's what the germans have been talking about for months. the new thing is on friday the french said we won't give up that sovereignty that you want us to unless we have more solidarity from you now, unless we have burden sharing from you now. in other words, euro bonds or that there will be european-wide bank guarantees. the germans on monday, this is important, said no to both of those. that fundamental split is all that matters between the french and the germans going back to this protracted issue. the big 20, heads of state thursday, friday. >> a new greek finance minister after the resignation yesterday. even as the meeting take place, lots still in flux. >> yes. as monument securities is suggesting the day, all very

well talking to -- to the point you make about greece -- having great overall controls of budget. they already have targets and control and already missing them because gdp is falling away so fast. what is the point of having this supra national authority if the enforcement of that is going to force people further into recession to hit those targets and you have then unrest on the streets and people leaving the euro. it almost becomes self defeating as a plan oopsz because the gdp is contracting so fast. >> we'll keep an eye on the summit as it gets closer. meantime, focusing on the markets, dow is up 12, trying to hang on to gains here this morning after yesterday's losses. very slight gains on the back of yesterday's selloff. chief market strategist with alliance bernstein. he joins us from new york. always good to see you. >> good morning, thanks. >> looking for only modest appreciation between now and the end of the year. trying to exploit some themes on the back of that. among them, what is the most promising? >> there are a number of themes.

let me first start why i only expect modest gains. the market will remain highly skittish and will continue to be driven by perception of risk rather than valuation on itself. as far as the themes, a few strike me as most attractive. the one i'm focused on right now is energy stocks. you've seen energy equities decline far more than the oil prices. i think that's an opportunity. secondly, right now oil prices are below the cost of production. that will in time change. so for anybody with six to 12-month horizon, i believe it's the most attractive option today. >> when you take a look at oil prices, what do level do you think is already factored in at this point? >> a very good question. if you look at performance of the oil stocks relative to commodities, you would conclude somewhere in the 70 to $75 for the wti. >> okay. so it's discounting this. got it. >> you make the point that part of the worry surrounding the marktsd is reflecting these

fears of a broad-based economic slowdown. we just got pretty miserable confidence numbers. housing appears to be okay. some of the regionals, the surveys have been okay. how clear is it to you that we're in for a shorter-term pattern of slower growth? >> i think the growth will be very modest. i don't see a lot of pent-up demand and opportunity outside consumer durables and house that would give us the 3% to 4% type of growth. what is happening to the market and the pricing of assets is the market keeps shifting between the fears of slower growth, deleveraging and deflation and when you get a monetary stimulus, all of a sudden the market starts to discount reflation, montization of debt, et cetera. a lot of this is t things happening in terks ufrnlthsz summit are not going to resolve that type of skittishness. >> isn't the question we should be asking whether or not the united states is actually now in a depression and the effect that those policy tools are having? if you look at what -- steven

lewis points this out this morning, the federal reserve is at a more lose stage that before lehman. $800 billion more. the united states is likely to run an astounding budget deficit at 7% of gdp. in other words, all your stimulus is forelon and still we have growth slowing in the united states. if you are in depression or going into depression, you need to look at japan where over five years the stock market is halved in value. is that where we're heading? >> i certainly hope not. that's also not my base case. you're absolutely right. we've provided the tremendous amount of liquidity, yet we have not seen that liquidity move to attractive investment opportunities. the fear and the risks remain high and prominent in investor's minds. the one thing i would caution people to become perhaps too

pessimistic is i do think that once we see a path, a greater clarity on how the government chooses to deal with this, whether a pass of reflation or austerity, market can adjusted to whatever scenario it is. a much greater problem today is that uncertainty of which way we're going to go. >> that is an act of faith. faith that they will come through with a decent plan. politicians in europe haven't been able to do that. why do you think after the november election that suddenly the way will be clear and we'll go one way or the other? the more likely solution, surely, and this is what the market may be discounting is more deadlock and more trauma as we go from deadline to deadline? >> i think the first places you'll see a solution are the places experiencing the greatest crisis. that's probably not united states where muddling along will probably continue. i do think in europe we'll see action. i will expect to see deposit insurance. without that, you have true

crisis. i'll expect higher capital requirements in some of the banks which would lead to slower growth. i see the areas experiencing the greatest crisis are the ones we're going to look to to see the action first. >> finally, i love this bit you have. if you applied historical rules of economics, you'd find the number of attractive lbo or mna candidates would be the highest in almost 30, 40 years. >> since essentially milking time when you introduced high-yield debts to try to arbitrage private and public value. it's the highest in 30, 40 years. >> not happening though. i guess because of the uncertainty you just talked about. thanks so much. >> thank you. >> thank you so much, va deem. let's check with brian sullivan for a quik market check. >> fertilizer stocks to buys from sells or at least from on cf from a sell to a buy.

they're concerned about an unfavorable corn crop planting which you think might be dad. dal man rose saying it's going to push more planting acreage out in the next year. they say listen, if things aren't that bad this year, farmers have to buy more fertilizer. they view it as a win-win, more positive on the pricing as well. so agricultural chemical stocks, aka fertilizer strokes getting upgraded. up 17 points on the dow in the wake of the data we had ten minutes ago. up next, news corp. a big focus after the company confirmed it is thinking about splitting in two. check that out, a 7% gain. is this the move shareholders have been waiting for? we're back in two minutes. tomorrow live from chicago it's mcdonald's ceo jim skinner's last week on the job. he'll be talking with us about his tremendous tenure. join us for this supersized

interview. you'll be lovein it. tomorrow on squawk in the street. the first trade route to the west, the greatest empires. then, some said, we lost our edge. well today, there's a new new york state. one that's working to attract businesses and create jobs. a place where innovation meets determination... and businesses lead the world. the new new york works for business. find out how it can work for yours at thenewny.com.

as as we've been talking about all morning, news corp. is considering dividing itself in two, separating the public group

from the entertainment division. the fact it has been confirmed where we've heard this possibility in the past many times, we've never seen news corp. actually come out and confirm it. certainly it gives credence to the idea that it may happen. let's go to kayla tausche and see what he has in terms of the likelihood as to whether this will occur. >> david, a deal that has been talked about for years and finally coming the a head and fairly soon. news corp. confirming it is in talks to restructure into two publicly-traded companies, my sources say could be announced in the coming days. the company is here in new york discussing the last final details of this. but what we do know is a split would retain control at the top for the murdoch empire but separate the high-margin cable and entertainment division from the low-marin and high-risk publishing unit. that would include education and book publishing and the dow jones company.

revenue will remain roughly double that of the publishing unit going forward. that's what sources tell me. investors have long pushed for a separation of these businesses. that's a desire that only increased since a scandal over phone hacking at the newspaper level reached a boiling point this past summer. the headline risk increasing the risk for the deal. in february ceo kae rhee staying i've had a array of discussions and i think certainly there are a number of parties who feel we push to look in a way to spin the publishing businesses separate from the rest. now that all parties are seemingly on board, timing, guys is no coincidental. next week is ripe with anniversaries, like the closure of "news of the world" and other hacking-related events. the following week is the allen and company conference in sun valley which most of the murdochs, chase carey and other executives go to meaning this

week t last week of the fiscal year is the year they hope to announce. we'll have to see if we get the final announcement on the deal. >> let's get more of the news corp. news and bring in barton crockett, a senior analyst at lazar capital markets. great to have you with us. when we're thinking about the two separated companies, what sort of multiple should we assign to each and what would be the most comparable in the market? >> i think the entertainment assets are great assets. i would think they should trade at the higher end of comparable td companies. i would rank it close to discovery, the faster grower in the world fox news is going through a great affiliate fee reset that's driving a lot of growth there. the publishing business, the other side of it, i think is interesting. it will be clearly small. but based on what we're seeing out of some of the other public,

this could be a four to five times company that could support a dividend yield. i think it's supportive of our $24 price for news corp. >> moving close to that already. many saying the entertainment unit would have the best profile in the group. you point that out. what about an idea that they may perhaps might try to lever up publishing. is that a possibility? would that allow entertainment to buy back more stock if that were the case? >> i think the publishing business could support a little leverage. comparatives, you don't need much cash to run this business, a few hundred million. i think that's really kind of ruineding error. i think the separation is mainly important because theme at cli you're separating a publishing story from an entertainment story which is great. i think it makes people more comfortable buying the entertainment piece of it and separating the businesses into

groups that can attract their businesses. >> we should point out it's going to take some time. this is not going to happen, even if they do announce it. i would say the chances seem fairly strong. it's going to take add least six months to happen. >> do you think a reflection of the ascendency of chase carey in terms of the leadership of this company? >> i think it's a sign of the times and a sign of chase carey. i think a lot of us are surprised they were taking their stepts. rupert's ties to newspapers have been so strong and historical, it was doubtful they would go there as long as he was calling the shots. but they are. i think that shows he's evolving with the times. >> barton, what does it mean for bskyb in the united kingdom where they're importantly trapped now as minority shareholders? in the context of british publish opinion, they may look at that entertainment group and say you can put lipstick on a pig, but it's stick controlled by the murdochs and they may not let the deal go sure.

>> i don't think the uk public is going to have a big say in this. this will be the news corp. shareholders. i think they have a public image problem with the newspapers in the uk, they're still selling a lot of newspapers. >> hang on a minute. there is a discussion in united kingdom as to whether or not the murdoches are fit and proper to hold broadcasting license, among them bskyb. if regulators find they are not, they certainly wouldn't be allowed to take over the entire satellite broadcaster. that's the public opinion i'm talking about in the uk, not a judicial system, almost politically controlled. >> i'm sorry. i didn't understand the thrust of your question. now i do. this is a decision that will be politically driven. i don't think news corp., anyone thinks they're by the rest of bskyb. the question is whether to hang on to the stake they have. i'm relatively ag nottic. if they sell that, they could buy back a lot more stock. i think bskyb is a great business, i would be fine with them hanging on to it.

it almost doesn't matter for the stock right here. >> down the road they might want to take another shot at it. perhaps this would give them another opportunity given it would be bought by the entertainment unit, not the overall company. >> if you're talking this year, next year, no way. the next five years, ten years, who knows? anything can happen. you have to see a big change in public sentiment for that to make sense. >> barton, one last question. we were joking earlier about how that time story regarding walmart ended up being a very odd catalyst for that stock in a good way. i wonder if the hacking incident, if you could make any argument that it forced this company to think differently, even despite the publicity costs? >> it's interesting. when a lot of this stuck broke i was on cnbc arguing this provided a potential for a rethink of the company, more share purchase, better strategic thinking about the structure. that's exactly what happened. we've gone from lemons to lemonade. it's something that will make news corp. a stronger business and a better stock. >> barton, we'll leave it there.

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♪ ♪ heavy, heavy pressure on oil. down now 13% over the past year, causing havoc on domestic and international oil stocks. is this selloff a buying opportunity? we're going trading the globe. ron shaw joins us from gina ventures. ron, you see buying opportunities here? >> absolutely. i think demand is week. we're seeing a slowing in china. always the overhang of europe. the demand has been weak. we're seeing a great value buying opportunity amongst oil stocks. several in particular in brazil and china. >> so it's the emerging markets

into which you take us? >> absolutely. what we do is we trade on two things, we trade on value and efficiency. unfortunately some the bra zirlian players have been inefficient. a big dip in petro grass yesterday. you'll see when the uncertainty is out of the equation in europe, you'll see that stock take off. in china we love cnok. >> we should be clear about the contrarian nature what you're doing. people are worried about recession and depression and going into the dollar. the emerging markets, the brics you're talking about are seeing a flight of capital, their currencies are down 10%, 15% over the last quarter. you're asking people to actually grab falling knives. >> not necessarily. china today reported great loan numbers. that means the loans are hitting the manufacturers and the

industrial firms first. the demand is going to come back in those markets. i think you've got to look ahead, look six to 12 months out. i think the demand is going tom dock ba. prices are going to come back and these are going to be good players. >> why is it a compelling buy now and not in three months? >> i think valuation. just today, ceos already up quite a bichlt i think you're buying at lows. petro grass is at a three-year low. they announced a price hike. it wasn't enough for the market. but we'll see another one come on shortly. >> ron shah from jina ventures. you can catch more global trades on "fast money" and tuesdays here on squawk of the street. still to come, we'll sit down with one of the first female facebook workers ever, katherine rossi for the inside story behind her new facebook tell-all.

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about an hour into trading on this tuesday morning. some of the stories we're squawking about, 7:30 on the west coast, 10:30 on wall street.

consumer confidence falling declining to 62 even from 64.4. jpmorgan chase up one percent, goldman adding the bank to its conviction buy list. reynolds america and brown-forman hitting all-time highs. let's cross live into the cme and bring in ceo of bull and bear partners. the dow is about 19. seems to be flat more or less across the board on all the trades, oil, gold. is this the pause that refreshes or do you think it's the calm before the european storm? >> just a bit of a pause. you the t plus three settlement adding a bit of a floor to the market today. remember we have the end of the quarter, the end of the half, the end of a lot of fiscal yeerts coming up at the end of this week. all that playing into it. it only makes sense that we're stuck right in the middle of what has been a range, maybe 1350 to up the side, 1250 to the downside. all eyes are on europe.

i think george sorls said it best, unless they do something absolutely ridiculous out of the summit, it's becoming one of the more important summits that we've seen. one of the things happening, we have to be very clear, with a lack of real leadership -- we're not talking about a lack of leadership here on the part of, say, congress which is looking at this fiscal cliff that we're talking about all the time, but also out in europe. even though we do see merkel coming out as a strong leader, she's not doing what's necessary, even with geithner and obama and everybody else trying to put a little pressure. it really comes down to a question of it being politics. really the question is whether they can work through this political process in time. the only answer is inflation. either you'll create demand or inflate your way out of it. a quick history lesson, in 1932 soy beans were 44 cents, in 152, $4.50. nothing different about soy beans. unless people understand that, they've got to be in the market

or else they will right now losing purchasing power over the course of the next few years. >> a nice argument. it's very neat. but i don't think that angela merkel and francois hollande will create inflation. >> simon you and i know it's a very difficult political pill for her to swallow, especially in an election year. but i do know this, and i think you know it, too, that the german economy is much better off with a june need europe than with a eurozone that's integrating. that's going to be the overwhelming desire. >> hang on a minute. they're having conversations up here, up in the sky about constitutional stuff they may or may not do six or seven years down the line. they're not dealing with the markets now nor are the central banks. you're not going to get anything for these markets coming out of thursday and friday. and if you think you are, you're on cloud coo-coo land. >> i don't think we're going to get anything significant, but we'll get another stepping

stone. you and i know the healing process in europe is messy. >> is that enough? is that constitutional stepping stone enough for the markets on monday morning? >> absolutely. absolutely it is. in fact, look, as a perennial bull i will say this, do i want to go into this weekend without protection? no. i want to be protected because there could be a large standard deviation mood. we are one headline away from the dow jones going up 500 points in a couple sessions. i don't want to be out of the market if that happens. >> jack perennial bul ber rougian, thank you very much. big day for zynga at the headquarters. julia boorstin is there with a preview of what to expect. good morning julia. >> good morning. the big event is called zynga unleashed. ceo mark pin cass will be announcing the company's pipeline of games and his strategy to join the next leg of the soefl game maker's growth. with the stock down about 36%,

investors want to know can zynga reduce its reliance on facebook? can it launch more hit games, including more hit mobile games and can zynga get more of its players to pay to play. today they will unveil a pipeline of title ts. we can expectancy quens to "farmville" and "words with friends" as well as a broad array of games, perhaps those focused on hard core gamers that play console games. some of the games are sure to be mobile, an area where the company is making a big push. another area for expansion we're hoping to hear news on this morning is zynga's platform. the stand-alone website aims to be the destination for play including games from other developers. on the heels of friday's announcement that facebook is serving social adds to zynga.com we may hear about the potential

for zynga to generate real revenue from advertising down the line. the presentation starts at 1:30 p.m. eastern. you can follow me on twitter and on my blog. we'll have a first on cnbc interview with ceo mark pin cass who will join us on "closing bell." >> to tag on to that, we have the yammer news yesterday with microsoft. it does seem yesterday that after the facebook ipo maybe it's starting to undo some of the damage from last month. >> i think what's going oranges especially here with zynga, way want to show they have strength on the facebook platform but can also diverse away from the facebook platform. as we've seen with zynga stocks, the stock was up a lot -- i think about 40% at one point. now it's down about 35%. it is starting to tick up again. zynga stock is up in anticipation of this presentation today. there is some hope for this

social sector. >> julia boorstin in san francisco. thank you so much. be sure to catch her live interview with zynga ceo later on today. meantime, joining us to talk more about zynga, deal doesh she, an analyst covering the event. neal, good to have you with us this morning. >> thanks for having me oovps. >> how concerning are the metrics from the last couple months when we looked at the decline in average daily users. how much can new titles remedy that? >> taus have definitely come down over the past couple months. if you look at it on a year-over-year basis, they've been relatively flat. it's not like people are not playing social games anymore. we've normalized for omg pop. they've been relatively flat. i think the new games will be really citing. we've seen a slowdown in their game development, launched about

12 games last year. they've launched about ten so far this year. we're really seeing a push towards mobile. if zynga can move away from social and more on to making social mobile games, we think that will definitely driven gaugement with its player base. >> neil, in terms of the matrix, if you take a look at some of the npd data, growing out of kager, compound annual growth rate of %, a 50% slowdown from npd's previous projections. when you add these two together, do you still see zynga is in a position where its business is going to grow as quickly as is baked into the stock at this point? >> i think there's couple things there. i think more people are playing games on mobile. i'm not sure if the npd data necessarily captures the mobile

mobile goods market. there's a lot of interest in monetizing games in different ways, through virtual goods, coins or energy or kind of gifting or helping friends when you play. so i think there's different monthization engines. zynga has been a big player. >> when you're pointing to the growth of mobile and the hope it's going to switch users to the mobile situation but you say npd doesn't capture the virtual goods market on mobile, how do you then get a handle on that number and factor it in? >> it's definitely been a challenge on the internet side. we've seen a lot of companies seeing their business shifting quickly to mobile and it's impacted -- it's had a near-term slowdown in certain growth rates for a lot of companies. we think this is probably a near-term effect. adds more and more people start to access mobile, we think the overall high should hopefully grow over time. >> you talk about some of the

key risks. one number i was fascinated to read, about 2% of players actually pay to play games, 2%. how high can that number go? >> we think that -- we did a little analysis. for every hundred bips zynga could probably generate about 100 million in bookings. we think that number could probably go to 3% or 4% over the next couple years and zynga could probably get to roughly another billion or two billion in bookings. i think a small change in that metric can generate good bookings and good profits for zynga. >> even if your price target at 12, would you advise waiting until some of these lockups expire? >> the lockups have definitely been a drag on the stock. i think one of the biggest lockups, we went through one of the biggest lockups at the end of may. i think there were a few things

that i was excited about. one we think valuation is pretty attractive, stock trades six times. secondly, if you look at the back half of the year, a lost the games zynga has launch land launch will contribute to bookings. that should hopefully lead to bookings acceleration. all this company needs to do is show a quarter or two of acceleration. despite the overhang from the remaining lockups, we or excited about it at this point. >> thank you very much. brian sullivan is back with another market flash. >> delta airlines, the good news first and then the odd nusz. you can maybe marinate on that if you l. delta coming out basically with numbers a little better-than-expected. revenue per sueat model was up. without fuel hedges. the numbers are being received positively. delta lost $155 million hedging

on oil. you hear that a lot with airlines, except they lost it because oil prices have fallen so much faster than they thought. they overhedged, so taking losses on the hedge that is are above likely what they hedged down. keep in mind, guys, this is the company that friday was given the keys to a refinery. let's hope they run the refinery maybe better than their hedging business. >> all right, brian sullivan, thanks for that update. up next, we'll sit down with rhode island's state treasurer who single-handedly drove a liberal legislature to pass the bowlest pension reform in decades. ♪ then we turned the page, creating the rx hybrid. ♪ now we've turned the page again with the all-new rx f sport. ♪ this is the next chapter for the rx.

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more people are getting coverage under the new law, they'll have to work more and receive less. joining us is the woman who spearheaded the reform, gina raimondo. great to have you on the program. >> good morning. >> this was a tremendous problem facing the state of rhode island, facing many states in this country. can you put this in perspective in terms of how big the problem is nationwide and how tough the decisions are going to have to be in order to tackle it? >> well, it is a tremendous problem nationwide, depending on the estimates you look at, there's anywhere between $2 and $4 trillion of unfunded pension liability nationwide. as you know, the t.a.r.p. bailout, the nation was prepared to spend $700 bill or $800 billion. it's one of the greatest financial issues our nation has to face. here in rhode island prior to the reform, our state was one of the -- had one of the worst

funded pension systems. it was really a broken system that didn't provide retirement security for our public workers. it was time to fix that system that we had. part of the reforms was decreasing the assumptions when it comes to the investment assumptions for the pension funds and also forcing people to work longer, raising the retirement age. are these changes that you think other states will have to embrace? >> you know, i do. every state is different and every circumstance is different. so it's hard to generalize exactly what reform will fix a particular system, but what we said here was this was about choosing the future, and this was about math, not politics. we had a system that was 48% funded. it was likely to run out of money in 20 or 30 years and just wasn't providing security for our public employees. furthermore, we were spending nearly 10% of all of our state tax revenue on the pension, and

that was slated to double. so we faced a choice. we decided the problem wasn't going to fix it self and it was the right thing to do to focus honestly on the math and the facts and fix it. we reduced our rate of return assumptions from 8.25% to 7.5% which i believe allowed us to more accurately reflect the size of our problem. >> madam treasure, the issue here -- a lot of states, of course, in the pew center has done a lot of research on this, most states have cut the benefits nor employees joining now future benefits. what you've done that's different is you've said you're going to attempt to cut the benefits of those who are existing employees with whom you've had a contract for a long time as a state. they're challenging that in the courts. how do you deal with the aspect of fairness given in your case and in other cases actually the state's never contributed to the pension scheme, what they should

have done over the years? this isn't purely about a recession. this is a lack of foresight on behalf of the state and it is in their view breaking the promises and the employment contracts that the state has had with its employees for years. >> right. excellent question, and there's issues of fairness all around this. but i do want to clarify. the state of rhode island has made its annual required contribution every single year with the exception of one year in the early '80s when we had a banging crisis. and we since made that up. the second thing is that there is no contract in rhode island. these pension benefits are set out via statute. and there is no collectively bargained for contract that is at issue here. the third thing is that our problem in rhode island, like many cities and states is the unfunded liability which by definition is the liability for already accrued service which

means you mathematically cannot fix that by only impacting future employees. you must impact existing employees. furthermore, you speak of fairness. there is an intergenerational fairness issue here. i believe it's deeply unfair to fix a problem strictly on the backs of the young and the new workers. what we did, we had 11 months of robust open debate statewide. the unions were at the table at every step of that discussion, and we decided it was fair to distribute the benefit changes across the population from the youngest to the most senior and in so doing the system is stronger for everybody. >> gina, despite some of these tough decisions your approval rates are very high according to brown university. there is talk that you would make a good governor. any plans to run for governor in 2014 this. >> it's a long time away and i

have a lot of work to do as treasurer. i believe my approval ratings are high because the people of rhode island were say, they dec unacceptable for us to have one of the worst funded systems in the country. it wasn't acceptable for us to spend 10 or 20% of state tax revenue on a failing pension system. by making these changes, not only do we have retirement security, we have an ability to invest in public schools, public libraries and higher education and everything we need to make sure rhode island is a thriving state. you know, this is about reality. we decided it was time to face the facts, make tough choices and move forward. i'm very proud of the general assembly and people of rhode island for having done that. >> gina, glad to have you with us. hope you'll come on. interesting, she was recently profiled in the "wall street journal." compared to governor chris christie. >> i was going to suggest chris christie and paul ryan, you could put all three of them in a

cabinet. >> that would be an interesting cabinet. >> it would. >> it's a story we'll deal with time and again. >> not just on a state level but corporate level. >> still 7% year, appreciation, got to go to defined contribution as opposed to defined benefit. >> next on the program, we'll talk about a new book with a fantastic title that might stick for facebook, "the boy kings." she'll join to talk about her firsthand account of what happens inside facebook. rick santelli on the next hour of "squawk on the street." >> we're going to have some fun, corner traders. perfect prop. we're going to talk about the "bucket list." how investors pick investments. do they look at balance sheets? they look how leaky bikts are. if you have a sieve that changes things as well.

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squawk on the tweet for tuesday morning. as we mentioned earlier, news corp. considering moving into two companies, one film and tv,

one "wall street journal" and harpercollins. our question is assuming one of the two businesses will be called news corp., what should murdoch call the other business. >> jrf writes, news from the regime. john writes spies r us corp. even though the stock does not reflect it, people still think about the investigation that continues in the uk. >> that's a phenomenal bounce, a phenomenal value on that report. >> it is. the fact they confirmed it gives a lot more credence to the probability of it, although we don't know and i haven't had a chance to do a lot of reporting. backed off now, 6%, clearly embraced by shareholders. something they have talked about quite sometime. chair delivering on desires from the shares in the past. >> murdoch discount coming out potentially. >> potentially. >> down the line, a figurehead.

>> he's still running things. controls the company may be aseeding to wishes of ceo and the wishes of the shareholder base. in some ways the hacking scandal seems to have forced their hand so a certain extent to pay attention. >> lemons to lemonade. >> the plate of foam bottom, all seriousness. when that plate of foam was thrown at him and wendy locked it, that was a bottom of the stock. >> it was. the time on walmart, a bottom on that stock. >> buy on bribery. >> exciting show coming up at 5:00. >> yes. we are talking channel check. remember that reports last week green mountain shares to lows not seen since 2009, channel checking is all the rage. check in with channel checker who issued that report on green mountain. lithium shortages because of all

these ipads manufactured there's a lithium shortage and a way to invest in lithium. so we've got that under the radar play tonight at 5:00. >> that is interesting stuff. we'll see you tonight, see you in a few minutes, see you tomorrow, guys. thanks a lot. welcome to the third hour of "squawk on the street." dow down 20 points, pretty narrow range so far. this morning s&p up fractionally homes up 4%. home builders rise after a surprising report, kb home, toll all seeing solid gains. the biggest loser of the s&p after lowered estimates on the stock, hog down 4% right now. let's get to the road map for tuesday, news corp may polit into two. what does the future of the news giant look like. the latest from a journalist following the company front-runner years. then cheryl sandberg finally getting a seat on the facebook board, one of the company's

first female employees. joins us live to talk about her experiences and what it was like being a home in the facebook frat house. plus he advised three different presidents on the economy now talking to us. john taylor on the company's economic future and what we need to get on the right track. the state of social media, deals with some of the biggest players in the industry, who is doing the best job. the president will be with us live in the next hour. cme group, rick santelli will give his edition of santelli exchange. i think there's a bucket involved. >> of course, whether it's the dirtyest shirt or cleanest in the laundry bag, i like the bucket analogy. although it's humorous, it's also depressing. carl, there was a time not so long ago, look to the market, read the whispers, kept up with

fundamental, if you invested with gold, sometimes economic or financial reason. if you looked at spots, wasn't so much liquidity. to that point we're going to talk about the "bucket list." of course, when we have our bucket here, i find some fascinating issues we should be paying attention to. the first issue, of course, is the sector. so we want to talk about sectors, especially whether it's commodities. you know, like right now, you look at the grains. definitely fundamental to the grains. it's called heat. there's also a fundamental of the dollar and all the factors of the euro and how they affect the dollar and notion of commodities that are underpinned by foreign exchange of the u.s. greenback. there's also above and beyond sectors, we have to think about countries. okay. which country are you going to be looking at. the dynamics of europe, the dynamics of japan, demographics

of japan and politics embedded in each. maim, we know the bucket has leaks. water is coming out of this bucket. we need to see what's going into the buchblgt the first area going into the bubt, of course, is the fed. the fed is putting in a lot of water. really the rate the water is coming out is very key. we know when looking at equities when the fed is putting water in, even though there's leakage rate they tend to move higher. the other area we want to pay close attention to is the public area. the public area is important. why? policeman, firemen, all these issues supposedly are going to help consumption spending. but we all know the problem with that part is it comes with some debt. the best area you want to pay attention to, of course, is the private sector. this is where all your real growth is going. the biggest problem left when you look at the dynamics, better tax policy, a band-aid isn't

going to stop the leak. whether it's europe thinking they will print more money and stop the leak or ecb or germany will stop the leak, another area, energy policy, under the circumstances the point, we have to quit with the band-aid. what's going to really solve these leaks are not on the monetary side, it's going to be on the fiscal side. in many ways whether in europe or the u.s., we're going to have to wait potentially for a new crop, not corn, a new crop of politicians that aren't going to be looking at band-aids but real solutions that don't dissolve in leaky water. back to you. >> we could all use a crop of corn given what that commodity has done lately. rick santelli in chicago. news corp., one business would consist of film and tv, the other publishing. will this be enough to appease shareholders on the eve of the scandal. author of "the war at the "wall street journal."" nice to see you in person. welcome.

>> thank you. >> i've read a couple things today. one is given their history never going to happen in the view of some. others say because they commented so quickly after reports, they may or may not. what do you think? >> i think this is something they have discussed clearly for a long time. i think because the story was in the journal, because they confirmed it so quickly, i know they are considering the unconsiderable. i think it's more likely for it to happen. if it does happen, which it seems like now rupert -- rupert can always change his mind but he's lost some power to the shareholder base that he's always sort of told exactly what to do in the past. so it's a real sea change for the company. >> people talk about chase kerry likely to take the media side, who would take publishing, i've seen lockland. >> that's the person rupert has in mind eventually for this

division. i don't know if that's something -- last i heard lachlan had no interest in moving from australia. he was very happy there. he had a run-in with being part of his father's company and in new york and coming up against roger, but this is clearly one of the reasons why rupert would accept wanting to do this in the face of shareholder pressure. he could see this as a path for his kids to have a major role in the company. lachland, obviously james or elizabeth, not now. i'm talking from rupert perspective, not the actual perspective. this might be the thing that would make him be willing to do this. >> implications? >> it would help it be a fit and propertier owner of itself.

it would distance it from this scandal, which started with the newspapers. it was a year ago when the hacking scandal blew up. the idea is if they wanted to own part of bskyb, they are going to have to distance newspapers from bskyb. >> we talked this morning about the irony in what melissa just called the foam pie bottom, meaning that day, in front of that committee, and what seemed like the first chapter in a terrible story, the stock up 57% from that low. now we've got a company on the face of it appears to be more willing to listen to shareholder concerns. best thing that could have happened to them? >> best thing that could have happened to them if you're a shareholder. i think if you are somebody who values the kind of old rupert murdoch swashbuckling ceo kind of making decisions based on the seat of his pants, that's dying

with this. this is clearly -- it is literally breaking up the company but breaking that culture. you look at somebody like viacom, viacom stock, both of those stocks have done very well since the split. shareholders have to be happy about this announcement. i don't know if you're an old time news corp.er if you see this as the end of a legacy, the end of that era. >> it's been bandied about maybe as you decide what goes where, you put something like a fox news into the publishing unit to give it a growth asset. do you think that's going to be an interesting debate if this all happens? >> clearly one of the big problems with this is you have half the country in the entertainment -- that's the side that's the strongest, growing. the newspapers, the heart and soul, what rupert loves, will be a total dog of a stock. no one wants -- there's no growth there. how do you make that more palatable. initially when people were bandying this about, they would sell off newspapers.

he bought dow jones five years ago for $5 billion. you might want to try to find some way to make that more attractive. it will be a very interesting discussion to hear what roger would want to do with fox, fox business, split fox business from fox news. that would be a whole different kind of fish. >> interesting day. we'll see where it leads us, sarah, good to see you here rather than london. sarah ellison, "vanity fair." just a few years ago facebook in its infancy. when we come back we'll talk with one of the first female employees and find out what it's like to be in an office dominated by young men. >> announcer: tomorrow live from chicago, it's mcdonnell ceo jim skinner's last week on the job. he'll be talking to us about his tremendous tenure. join us for the supersized

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katherine joined facebook in 2005 as employee number 51, one of only two female employees. she started in customer relations and eventually rose to become mark zuckerberg's

personal ghost writer. "the boy kings, a journey into facebook." katherine, good morning to you. fascinating read. just to give people some history. your joined in '05, zuckerberg has only been in california from harvard for about a year. you describe this sort of frat boy culture. how far would you go in saying openly hostile to a woman? how aggressive from a male standpoint. >> i don't think it was overt l hostile to women. it was just there weren't a lot of women there and we had to work hard as far as being valued in the workplace. >> eventually cheryl sandberg comes along and sounds like she changes the game for people who work at facebook overall. >> she met with me when she started. she said i really care about this stuff and want to make some

changes. she really d all the women there are grateful for that. >> quick exert into the book. also had an issue with an engineer who behaved by turns dismissal or aggressively toward female product managers. as i said to sheryl about the situation i was told by an engineering director, go in and talk to the guy and try to resolve the situation myself. when i did that, the engineer twisted it around, called me a bad feminist to distract from the conversation at hand of the conversation didn't go anywhere. it was pretty unpleasant. is that the message of your book? >> i think the message is as a woman in the workplace, you kind of have to have a thick skin. you face all kinds of different situations. i think if you believe in yourself, you can really get through them and succeed. >> sheryl's point, which has been widely talked about this week, especially with competing article in the atlantic, women can thrive in inventors like this as she has and until you

did until you left and still have it all. where do you come down on the debate? >> we all face challenges. there's many things women are being asked to do these days from having family to being the coo as sheryl is or doing all of them. the workplace has to evolve to get to a place where we can all succeed that way. >> you talk about some of the early days when it really was just a few people working. you left in 2010 when it was obviously not just a nationwide phenomenon but global phenomenon. how would you say working changed in those five years. >> i think facebook went through many phases. in the beginning it was tight-knit. we were pretty good friends, close at times. that was fun. as the company grew and became more successful, it changes the culture. it becomes a bigger environment, more people, more personalities, just different phases throughout any company's career i think that's what happens. >> i'm not sure how closely you're tied to the company now,

having been away for a couple of years. any sense how things or attitudes changed since it went public. >> facebook has always been focused on long-term growth. i think within facebook people aren't as considered as the market. people are focused on the long-term as they always have been. >> there haven't been too many insider accounts. yours is one of the first. i wonder how your book -- the publishing of your book is going to be received by the company, by mark, for instance. >> i think he'll find it interesting. i think there's a lot in it that will resonate with him. i think there might be things he hasn't spent a lot of time thinking about. i hope the issue of women in the workplace will be something facebook and many companies will start talking about. >> you mentioned something that he had printed on his business card, which i'm not sure i can say but you probably can. >> i don't know, can i? >> i think -- basically it said i'm coo and then added another

word, as if to rub in the point. >> yes. >> finally, did you participate in the ipo? were you given shares early on? has the ipo meant anything materially to you? >> yes. without going into detail, i think i would say it has definitely improved by financial position. >> any bitterness toward how the ipo eventually went out? >> no, not at all. i think everyone is grateful for what happened and will look forward to seeing how the company grows in the future. >> which is likely to be a longer term story as we all know. interesting read, katherine, thank you so much. >> thank you. >> the book is, "the boy kings, a journey into the heart of the social network." when we come back, he worked closely with three presidential administrations on economic policy, now talking to rick santelli about his rules for america's recovery. we'll take you to the close on

europe coming up. "squawk on the street" continues in a moment. we asked total strangers to watch it for us. thank you so much, i appreciate it, i'll be right back. they didn't take a dime. how much in fees does your bank take to watch your money ? if your bank takes more money than a stranger, you need an ally. ally bank. no nonsense. just people sense. [ male announcer ] aggressive styling. a more fuel-efficient turbocharged engine. and a completely redesigned interior. ♪ the 2012 c-class with over 2,000 refinements. it's amazing...inside and out. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services.

welcome back to stock on the street. up 2% after being upgraded to outperform at neutral. i show this, celgene whacked. they with drew an expanded offering in europe. competitive fears of taking a hit. cowen to the defense. stock up. back to you. >> thanks very much. hope over to rick santelli talking to a very special guest. >> absolutely. i really liked an article john taylor wrote, the rules to the road for the american recovery.

welcome john taylor. you really have quite a tradition being involved in so many administrations. maybe you could give us a quick summary how you were so enamored talking about austrian economics, 1944 works, road to serfdome. give us an idea how to get the country back on its feet. >> more predictable. a lot of uncertainty about fiscal policy, cliff. we don't know what's going to happen on the rules side. policies that are predictable, businesses can make plans on. i think there's a lot to be learned from that work. >> now, if we take some of the negatives that face the economy, what is more important? if there are issues that need mending like tax policy, let's take that, for instance, even if the progress is slow, even if

you avoid the band-aids, isn't it your opinion based on high austrian economics, predictable is more important than taking shortcuts to fix the ails of something like taxes. >> it is more important. the shortcuts by definition aren't predictable. you want anything you put in place, by the way tax reform would be good, getting the spending down would be good. those are all good things. you want to do it in predikt addictable ways. you think about the sense of uncertainty, we really should be addressing that, at the same time make more fundamental reforms which are needed. >> you also talked about the oa crisis. unlike many, we always hear on many different news broadcasts that all economists agree on issues before, during, and trying to mend the crisis. you seem to stand out a bit. i recall one line you said when it comes to things like freddie and fannie, it wasn't even that we didn't deal with trying to fix them before the crisis, we

didn't apply rules that were written already much less new regulations. can you expand on that. >> absolutely. so often you hear complaints we need to have more regulations. what i've observed is existing regulations, existing rules were basically not enforced. a lot of supervisors, regulators, you had hundreds on the premises of financial institutions and unfortunately they were not adhered to. that's a good example deviating from rules-based policy, even the rule of law, causes lots of problems of we need to address that before we think about lots more rules. >> see, now let's get to the real crux of the matter. the end of the article gave me goose bumps a bit. you said and i think it brought you to the conclusion there's a real bias in power to those underneath them that are strict enforcers of rule-based policies. i think the issues you brought up regarding the crisis take this to heart.

i think it's a dynamic we're experiencing in man ways right now. >> it is, dynamics are you've got to do something, got to do this. any good strategy, long-term strategy, adhering to the rule of law, entails actions, entails if you like enforcing those rules, entails actions. you are doing something. the more the policymakers can say we've got a policy in place, sticking to it. we're not going to have short-term interventions which are just confusing, the better off things will be. i think you can learn that from looking at a lot of hayek's work. >> for the final conclusion, the toughest of all, seems when you elect officials to represent you, politicians to represent you if they are strict enforcers of rule-based methodology, they don't seem to get reelected very often and become the scapegoat for ongoing situations.

are we going to change that for the foreseeable future? >> i think it's the opposite. you look at short-term stimulus, go-stop monetary policy. those people didn't get re-elected. if you look at strategies sort of more consistent over time, didn't try fine-tuning things, if you like, they did get re-elected. i think politicians can learn from looking at history that there's really some payoffs and benefits to following strategies and i think they will be rewarded in the elections, if you like, if they do that. >> john taylor, thank you for being our guest today. carl, back to you. >> all right. rick santelli, thank you very much. want to show you an intraday chart of what the dow has done. moderate selloff sparked some believe out of the headline out of reuters saying germany's angela merkel says europe will not share total liability for debt as long as she lives. as long as she lives, according to sources at a coalition party moving. meantime closing bell about to sound across europe.

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the eu summit later this week. headlines more interesting. simon hobbs as they pertain to angela merkel. >> how many times does the germany chancellor have to spell this out. there's not going to be euro bonds in her lifetime, there will not be euro bonds in the

german chancellor's lifetime. so what are your expectations going into the summit. really? there will be no euro bonds. let's look at the european close. >> the european markets are closing now. >> it's actually relatively flat today. may be the calm before the storm. we've not moved on the equity markets. do notice, however, spain and italy underperformed. down at the bottom and, indeed, portugal, down on the far left. not only has angela merkel been speaking, it's quite clear you're not going to get agreement on the big issue. you're not going to get it on euro bonds, bank guarantees. that's what the germans are saying. on top of that, very interesting, the italian prime minister has been in parliament and also saying press coming

through, he's not about to rubber stamp what you're reading in the papers either. bar that in mind. what's interesting, upside of the markets. amonte is saying in parliament he's prepared to stay until sunday night, a four-day summit instead of two in order to get mechanisms by monday morning that control the market tensions. maybe you won't get a deal on the big stuff, maybe on smaller stuff, bailout in the markets. we'll see what they come up with. what is important, the merkel comments carl highlighted hit the euro. can you see this one-week track on the euro we continue to head into negative territory. arrows all over the place. all over the place. what's interesting is actually that the markets have not been

too fazed -- equity markets have not been too fazed by what's happening. the top monthly chart of top 50 blue chips around europe compared to, for example, s&p 500, you'll be over this three-month track, this very dramatic underperformance from european equities down 16, 17%. in anticipation you what might want from the summit, which they have been talking about for weeks if not months. let's look where we are on the spanish banks. downgrade from moody's on the spanish bank. cut to junk status. they are why i showed you the italian and the spanish markets in negative territory. those banks continue to fall. that's what you see here today. on the bond markets, had the auction, not as interesting as everybody else, the depression of the ten-year. you do have this move down -- this is all over the place, the

move down in the yields recently, we are spiking higher. that is a nervous concern. you're not going to get the measures you want to. let me show you italian banks. italian government now said it's coming back into the market like the spanish and support banks, guarantee, 2 billion euros bnps, it can't raise money itself. those banks falling. italian yield to repeat what i was saying you see the yields beginning to rise back up to the levels we had last year. we thought we had respite coming through but that changed direction on expectations, potential measures from that summit. summits go, meetings come through, top four finance ministers meeting tonight, then the entire 27 finance ministers meeting by conference call tomorrow. amonte meeting the spanish minister in advance of the heads of state meeting thursday and

friday. >> in other words, get ready for more headlights. >> i'm so glad i'm going on holiday. i will not be here sunday night. let the boss be aware. i am not going to be here on sunday night this time around. >> let's bring in brian shactman working every day on the floor of the nyse. >> whatever they need. we went down 50 points or so headlines out of europe. i got more than a few chuckles out of reference murkel comments. we improved, 50 points on the down since the close in europe. now the only down 12 points in dow. sector wise turned tail in most sectors. interesting enough consumer discretionary still the strongest sector. energy turn tail was the number two inching its way back toward the flat line. obviously the market getting a lot more cautious in the last hour or so. still pretty strong.

yes, case-shiller, better than expected talked about the loan out of china. dean baker, center for economic policy research saying, quote, at this point all the signs housing has hit a bottom and started an upswing. we get pending home sales tomorrow. we'll see if the trend continues. a lot of strength that. for profit education, love to follow this sector, apollo's numbers strong, strayer, career education corinthian not getting a pop. they are not getting enough people to work maybe. they may not get the federal funding they have had in the future. sea gate well in the s&p 500. i don't know if you talked about it but kraft largest company to switch listings, officially trading on the nasdaq anticipating its split into two companies listed on the nasdaq. stock bowden 1% and no longer at the nyse. >> thank you very much, brian

schachte manslaughter on the floor of the nyse. for more market insight dan greenhouse, chief global strategist and cnbc contributor. dan, good morning. good to see you again. >> good morning. how are you? >> good. finished talking about merkel. you make the point she's as important to your portfolio as any company specific factor. if she's being so explicit about saying never in my lifetime, why does the market even at lower levels appear to be trying to front run her changing her mind. >> a couple of things. first of all when she says never in her lifetime she means her elected lifetime. quite frankly if she loses an election, unless she's going to subvert a democratic process from the outside through nefarious means, i don't know what impact she will have. generally speaking we all know this process ends. we know where we're going. it's with shared liability of debts. i don't actually blame the germans. what's interesting, everybody freaking out about the

performance of the market, can't go higher, should be higher if not for europe. i don't blame the europeans. i blame the germans. this is what they are supposed to be doing. if they are going to play daddy war bucks in the situation, i think they should be extracting as much as possible from the periphery. >> is that what you think is going on, positioning themselves to be daddy war bucks? >> listen, they are the deepest pockets, strongest economy. one thing people seem to be missing or forgetting, especially germans, i talked about this morning, from 2000 to 2004, this was not a particularly strong economy. they were among the first to break rules put in place to govern budget deficits. they to some degree owe the periphery. quite clearly the largest beneficiary of the euro project through exports. while i don't blame them for when they are doing, there's short sightedness as well. >> let's talk levels, 13, 14 as we speak. continue to watch 1290 as we've

seen the last couple of years. trying to use the 200 day as a short-term -- >> yeah, i'm certainly not in the bullish camp by any means. but i think 1290 represents owe steadily increases, give or twa moving average, a lot of our clients and we are paying attention to that level. represents an important level off the october low. as long as that holds you do have, as you've seen in numerous summers, not the least of which the last three, a horizontal trading action. what's interesting with respect to portfolio performance in the market generally is what happens the end of the year. the last couple of months of the year the strongest for seasonal equities, run against the fiscal cliff. we think there's a little more volatility on that front. >> interesting. there's been some reports senators are trying to find some early agreemts behind closed doors. some big republicans are trying to breathe new life into simpson-bowles. percentage likelihood we really are dealing with that cliff when

it comes around? >> well, our working -- we put out a couple of notes on this. we've been talking about it for quite sometime. the ultimate drag on gdp somewhere around 1% not the 4 or 5% that would occur if all the cuts, all the spending reductions were put into place. but from an investing standpoint, we really shouldn't get too bogged down in the mathematical side of things. at the end of the day getting back to the debate that occurred between rick and john taylor, the uncertainty, lack of a rule-based policy mechanism governing markets is really what can drive markets lower. as you see right now, there is a fair bit of uncertainty, whether you think the primary reason equities cannot appreciate or primary reason bonds are strong or not, the lack of clarity is a major problem. so again, whether the whole cliff takes effect or part of it is not the secondary point. what matters is we have no idea what's going on in washington.

>> song title to describe today. >> yesterday was soul shakedown party by bob marley. i'm still working on today's. i'll let you know later. >> no merkel no crime. >> you can never use enough bob marley as far as i'm concerned. >> thanks, dan. when we come back, the company has handles customer complaints for groupon and tesco, what they think about the state of social media companies when we come back.

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up up at the top of the hour on halftime, goldman sachs adding jpmorgan to conviction buy list. should you listen? surprising numbers about goldman's track record. what's next for news corp., the key questions surrounding a possible spin over, is the s&p heading for 1575? chief strategist says it will happen this year. he'll make that case, carl, we'll see you in about 15. >> wow, love to see that conversation. thanks a lot, scott. cuss service getting in on the business of social media with facebook and twitter becomeing a way for customers to connect with favorite companies. managing tweets and posts can be overwhelming. a new customer service company helping businesses like groupon, mcdonald's and sephora manage the flood of facebook posts and tweets from their customers. running the company, ceo joins us this morning. josh, good to see you. >> hi. >> talk about how quickly the

phenomenon is happening. in the old days you had a problem, pick up the phone. as e-mail became more common, send an e-mail. this is all replaced by teams this work on social. >> absolutely. so over the last year almost every company we speak to is setting up teams of customer service responding to complaints on facebook and twitter. not one or two but thousands. we have companies who have teams of more than 30 agents just responding fulltime to questions about orders, deliveries, addresses that were wrong all on the facebook page and twitter account. >> comcast isn't a client of yours but they are our parent, widely known to be a pioneer. who does it well? >> we've done a number of studies in this space. safe way on the west coast do this amazingly. they are not one of our customers. one of our customers, fashion retailer do an amazing job, sephora does a great job as well. a few companies sucked into this over the last year and ahead of

the game. everyone else is trying to catch up. >> you say in 12 months everyone will be in the pool. >> they will have to. if someone phones you, no one sees that. on facebook and twitter, it's fully public. we did a study with new york university last year. 88% of people said they would be less likely to buy from a company if they went to the facebook page and saw they were not responding from questions and complaints from customers. >> how big can some of these teams be responding on the platform. >> we have customers now with teams of more than 30 customer service agents fulltime on facebook and twitter. we think this could grow to hundreds in the next few years. >> leading your growth in what kind of way? >> exactly. over the last six months, more than 100%. forecast growing more than 100% more than in the next six months and faster growth in the next few years. we think this is a massive market developing. every company in the world will need a customer service team, that's what our service has. >> you started in '09 when you

were dealing with the depth of the crisis. why did you see the potential? was it from working there previously? >> yes. we had been building facebook apps, doing stuff on social media. i had a fundamental belief online communicating was smifting into social media. that was an ongoing trend. that was fundamentally going to change how companies communicate with customers. we wanted to build software to help companies do that in the best way. >> tomorrow, a lot of analysts from banks who led the facebook ipo will start to unveil their analysis of the company and growth and stock process. do you believe monetization from mobile will happen? >> yeah. >> money will follow the migration. >> absolutely. facebook actually recently released stats with tdb digital, higher cpms, able to make more money on mobile advertising than advertising on the website. facebook has so many revenue opportunities.

they are becoming the main communication channel for the world. there's so many tupts to monetize that, payments, advertising, other forms. they will find a way. >> finally, you're privately held. >> yes. >> would you try to ride the public market wave or somebody down the road. >> focusing on growing a big business, growing fast now. we can see fast independent growth for the next few years and focusing on that. >> co-founder of conver-social. >> what at stake if congress doesn't act to save it in a moment. [ male announcer ] how do you trade?

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the the looming fiscal cliff threatening parts of our economy, the defense industry could lose thousands of jobs if congress doesn't act. jane wells in california outside a lockheed facility with more on that. jane, good morning. >> carl this is called aerospace valley. they make a lot of cool things.

the problem is ver very expensive. lockheed the largest employer in the county, out going ceo says if sequestration happens it will be like, quote, blunt force trauma, could lead to 10% cut in lockheed's 20,000 strong workforce. california will lose the most defense jobs not only with the half billion in defense cuts already planned but the half billion more sequestration happens. look at these numbers, golden state where unemployment is near 11% is estimated alone to lose 112,000 denver related jobs, 148,000 in '14. coming in second virginia predicted to lose 87,000, 115 the year after. one in four jobs in fairfax county virginia defense related. government defense projects brought in $18 billion last year but most of those defense jobs are white collar, considered less at risk than manufacturing. >> it's been enormously important to us not just for the

jobs and tax base generation but the recognition it gives us and the kinds of people that companies like that bring to the community. >> if more cuts come, everything is on the table, even the newest fighter jet, f-35, the most expensive program in pentagon history that will impact texas. lockheed tells reuters it could face tens of millions in claims, maybe more from suppliers if work cut off from sequestration and they plan to take bills to the pentagon to demand some relief. >> you do understand that some industries have already started to express some concerns about what sequestration would do to their contracts. we certainly understand those concerns, think those are veiled. have we factored it in yet, no, we haven't begun to plan for sequestration. >> that's right. the pentagon has not been directed to plan for sequestration. captain kirby says that could start this center. rcb capital market says second

half of the year will be volatile for defense stocks. carl, it believes an additional $4 billion could cut 10% for estimates for the top players. back to you. >> those are some serious, serious numbers, jane. thank you so much. jane wells in california. speaking of the fiscal cliff part of the cnbc yahoo! poll today, which is the biggest headwind for the economy right now. go vote, watch power lunch at 1:00 p.m. eastern time for results. big news in the sports world. an announcement for an official playoff system for college football. darren ravel with rovell with a have talked about for years. >> years and years. might be tonight a four-game playoff -- four-team may have system for football. four teams face each other in a semifinal game with winners advancing to the final. as far back as 1966 there's record of talk of a playoff

system for college football as a more complicated computer system for bcs emerged, and as you alluded to, confused for late '90s to today. the call to do something more fair like ncaa basketball tournament got much louder. then, of course, there's the money as there have been nothing hotter than sports tv rights. espn paying $155 for bcs package that expires at the end of 2013 season. projections a the four-team playoff could be worth between $350 and $500 million. there's so much controversy about the bcs system that one could argue it was good for the game, contributed a buzz and kept football top of mind. now the sport will have a selection committee to find the final four. with so much on the line, crazy fans, i think you better hope that the security is tight, carl, around those decisionmakers, because you know people are going to argue now about team five and six.

it's going to happen. >> yes, their personal security may be at risk. going to be fascinating to watch, we know you'll be all over it darren. news corp. considering splitting into two companies, one film and tv, the other publishing in the wake of the huge hacking scandal. we want to know assuming one of the two businesses is called news corp., what should the other business be called. twitter hasn't is cnbcsquawkst and your answers are after this break. in your car. now count the number of buttons on your tablet. isn't it time the automobile advanced? introducing cue in the all-new cadillac xts. the simplicity of a tablet has come to your car. ♪ the all-new cadillac xts has arrived. and it's bringing the future forward.

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tuesday morning. news corp. considering splitting into two companies, one film and television, the other publishing, "wall street journal" and harpercollins. assuming one will be called news corp., what should they call the other business. >> ralph tweets star and tmz. francois writes it could be named news plot. an interesting take with a minute and a half to noon. rick santelli watching what will happen in europe since markets here appear to be close to the flat line. >> they are. i don't think anybody out there

watching or listening thinks i'm hugely optimistic they are going to come up with a solution in europe. it is fascinating to watch. we learned in the private meeting the esm was voted through and with a giant plurality. we also see headlines from merkel as to the limitations from all of these would be positives. in the end trading the euro, hot assessing europe, you're not going to get rich. look at these charts. down a bit today. the entire month of june, an anti-european month of june, you can see on this one-month chart we keep bouncing off 124 1/2. that's based on closes. if you did granular bar charts we'd bounce off many times. >> i know you're the king of charts, rick. interesting. someone handed me a report looking at the history of monetary