stock of the day today has to be mcdonald's. carl's going to have a lot more from the company in a moment. brian sullivan, thank you for joining us today. join brian at 2:00 at "street signs." right now it's time for "squawk on the street." ♪ good wednesday morning. welcome to "squawk on the street." live from the new york stock exchange. carl quintanilla is in chicago where he'll have an exclusive interview with the ceoo mcdonald's. good morning. >> good morning, guys. as you probably know, there's no big cap ceo in this country with more success on a financial front, a stock front than jim skinner and after taking the job in 2004, this weekend he officially retires. we'll talk to him in the 10:00 hour here in downtown chicago. a lot to discuss.

jim, we'll talk about the worries in europe, the u.s. consumer and talk about why it is the worst performing dow stock so far this year. big exit interview coming up in the next hour, guys. >> certainly look forward to it. >> geez. >> what a run under skinner, jim. a skez story. >> skinner is about shareholders and carl being there is going to be what i regard as being the kind of interview that we need to hear from ceos. good deal. he understood dividend a long time ago. consistency. this is what we want. not tech. not finance. we want consistency. and tech and finance don't have it. can't wait to hear it. >> mcdonald's moving higher in the premarket. may durable goods orders helping that rise. the dow looking to 20 points. s&p looking to add 2. as for europe, still a wait and see when it comes to the eu summit starting tomorrow. green arrows for now.

our road map this morning starts with facebook. it is finally the day, the day to initiate coverage. morgan stanley starts with an overweight and $30 price target. the most bearish, bmo with a sell rating. >> and another potential sign of recovery in housing to, lennar out with numbers. the spots have performed fairly well and could it be time to look for an exit. >> google may unveil the tablet today and starting at about $199. will the goog tablet be a kindle killer? this is a day we have been waiting for. more than a dozen wall street firms initiating coverage of facebook almost six years after the rocky ipo. morgan stanley with an overeight rating and jp morgan which has a

$45 price target. citigroup, barclays, b of a with a neutral rating and bmo with an underperform on facebook. $25 price target but it is interesting, of course, morgan stanley, the lead. $38. price that the ipo has not seen since its ipo back on may 18th. >> these are very lukewarm. go over jp morgan, $38. wells 37. i mean, look. where's the thousand dollar price target? when you read through the coverage, it is amazingly tepid. there is no one here that feels they have the holy grail. there is no facebook fatigue as one line i read. maybe mobile is more of an opportunity than it is the achilles heel. i think, wow, no one's even thinking about earnings per

share or breakout or anything. >> as i like to remind the viewers, relying on stock picking prowess of analysts is giving you a sense of the key areas of differentiation and their opinions and of concerns. so where in your -- in looking through the notes do you see that, jim? >> i feel that when i go through it i see risk, risk, risk. >> yes. >> maybe there's more risk here and melissa starts out with price target. here's morgan stanley. they priced the deal at 38. and what's the price target? 38. yeah. i wrote a book called "getting back to even." down 40%. >> a firewall between investment banking and analysts. >> don't take away my thesis. >> maybe this proves there is no wall. >> cfo, calling a meeting right now and saying no business.

no business for this bank, whatever they're doing. finished! >> price target of $38 and wouldn't price it at $38. >> from now on, called jamie dimon and saying 100% of the business. you have the highest price target. >> my point is maybe the analyst felt it was a lower price target and pressure to move it up to 38 where morgan stanley priced the deal. >> right, right. >> maybe the price -- >> that's no endorsement with a 12-month -- >> no way. >> and the price your firm just did the deal. >> the earnings per share all over the map here. obviously jp morgan trying to establish the high end here. 92 cents. not expensive. not expensive versus the cohort which is just wildly overvalued. this one actually has some earnings. look at the cohort. what is it? zynga. >> what is it? >> home away.

>> google? can that be a cohort at this point? >> undervalued company by -- >> oh, yeah. >> you could say google on advertising. what you're talking about. >> such a battle brand. terrific piece today in "the washington post" talking about how they're using the survey that people are doing for facebook and, you know, common sense media, chief advocate. i don't know. talking about how children of 13 to 17 get on facebook and you see explosion and then talking about tremendous, tremendous penetration when it comes to teens so you would think that someone would say, look, colgate, procter and gamble with this and in 2015 a gigantic earnings explosion an i didn't read that in the pieces where the opinion differs, bmo with the underperform rating saying that slowing user growth and mixed advertising sentiment cuts in to revenues saying that the

issue of being able to monetize mobile use and is flagged by the other analysts out there and not a facebook specific problem. this is faced by all of its cohorts in this group so that's not the real reason. the real reason is just the sentiment of advertisers. we heard from some big advertisers saying it's not working for us at this point. that's a problem. >> that's the citigroup. they're talking about limited appeal to advertisers today based on their 800-person ad age citi panel. got to use any bit of evidence we have, david. >> that's right. that's our own. >> they also talk about the things that you are scared about. the dual classes of stock. this is not a show me the love. this is a show me the like day for facebook. and frankly, i'm kind of mystified. i think david talked immediately about the idea there's the firewall between. this is a claymore mine between

the investment bankers and research. i'm quite shocked. >> there is that. nobody's out there with the crazy price target. jp morgan with the highest. get them the business in the future. >> taking out morgan. 2013 on this. >> they need to worry about with dealing with companies and opinions on them. for example, they can get cut off. that can influence what it is they say, how they go about saying it. they need access to put together earnings estimates. >> i feel like they get a free pass with facebook because the ipo so botched, sentiment is so negative. stock down to 25.52 in june and free now with no penalty to come out and really say what or at least say closer to what they need if not what they need. >> feels like a feel fire zone. >> be negative. you have the chance here and no penalties. >> used to call it showing up, a

ted mack amateur hour and this was the essence of that show. subsequently you have "dancing with the stars" kind of things. this would not make the first commercial and maybe not even to los angeles with another show's declining but upward stocks program. >> got it. >> wrap up news corp. as if we should forget about that. that's yesterday's fish wrap. >> no fish wrap. that's a fish itself. >> that is. >> that's a big one. >> oracle meeting today. as i said yesterday, announcing it tomorrow. >> congratulations on scooping it. they listen to faber. >> i wish i had the real one. should we talk housing? >> let's do it. >> one day after stocks rose on an upbeat shiller. shares of lennar are up sharply.

second quarter earnings 21 cents a share, ahead of street forecasts by about 4 cents a share. lennar says evidence from the field suggests the for sale housing market has bottomed and begun a quote slow and steady recovery process. you know, you put that together with those quotes from blitzer yesterday joining us at least starting to see real gains. >> hearing from toll brothers and other builders. >> the stocks reflecting a lot of move. you see toll, lennar even more so. but you hate to even say it and venture it. really, a bottom? has it really occurred? >> building the number of homes we built with half as many people. a major demographic shift in this country not talked about and argue that people stopped having new household formation and used to be 865,000 no

matter. you have 330,000 homes every year destroyed by fire, flame, flood, overuse. you come and say, wow. there may be a recovery because they're not building many houses. >> and the new house ownership should not have been close to 70%. >> wasn't spain 140% plus? >> much closer to the rental as you pointed out the market is strong and multi-family homes. >> apartment investments. >> year of landlord. >> trusts are amazing. stewart miller i think has done a remarkable job. new orders up. lennar, miller. >> cfo. >> used to cover him as a broker as goldman sachs. very strong company. up 61%. good orders. do you sell the group? that's been the story.

and the group's been pretty terrific. >> there's other ways to play it. home depots or the supplies, u.s. gypsum, u.s. pacific. a lot of stocks have done well this year. >> i like gse. home depot is levered to the supreme court decision we forget about. >> with health care costs. >> the court of appeals of d.c. which is the most important regulatory court, this is not necessarily on the -- this is a divergence of the road map. >> scenic route. >> a google maps. take the scenic way. what i'm seeing is court of appeals decision about the epa having all sorts of power. mark my words. there will never be another new coal plant started in this country ever again. >> ever? >> that's how important the ruling is. done. king kong is --'

>> already in pain. >> peabody has comments, notes. lowering the cap x butaccelerat. it's a dheem in this country and a rock bed of fuel. >> china is importing more fuel. >> this is just from peabody. >> certain areas to look good. >> indonesian coal. look. one thing to point out here is that coal is dead. n 5t gas is supreme. whether it's westport with gm. stay focused it it does break out above three. >> all right. let's quickly touch on google here expected to unveil a new tablet and the company kicks off the developer's conference today. there's speculation the device referred to as the nexus 7 with a 7-inch screen and priced $150 to $200 to compete with the kindle fire tablets. the question is, can it pose a

challenge? can it be the kindle killer as amazon is ready to unveil a next generation kindle in july as reports have said? >> maybe there's room for everyone. we want to present this as being -- >> that is true -- >> -- an either or game. the market is more robust and android is -- >> zero sum with handsets looking at rim and nokia and apple. you feel like it is. >> there's some for dumb phones. zero sum for dumb phones. with google, once again i hear that this is invidia's chip in it. there's momentum. i think the quarter is terrible. do not necessarily buy it this quarter. semiconductors i think bad this quarter but continues to pop up. >> google owns a handset company now. motorola corporation.

many may be laid off over time but expecting maybe there's a way to incorporate certain technology in tablet. there's a lot of ipo there. >> google not expensive. >> nokia hitting a new low yesterday. there's a report that the ceo has said essentially that microsoft is not working on a smartphone and we had that report on information week of microsoft denying the report so seeing a lift. 40 cents is a big deal for a $2 stock. >> yeah. i like to play $2 but usually that's when i'm playing the lottery or at the racetrack. the $2 from nokia, remember, it's a river in finland and that's what it will be known as when this year is over. >> yes. all right. coming up next, carl, of course, in chicago with mcdonald's ceo jim skinner giving the final interview as the leader after eight years on the job. let's look at futures.

much more "squawk on the street" straight ahead. i don't spend money on gasoline. i don't have to use gas. i am probably going to the gas station about once a month. drive around town all the time doing errands and never ever have to fill up gas in the city. i very rarely put gas in my chevy volt. last time i was at a gas station was about...i would say... two months ago. the last time i went to the gas station must have been about three months ago. i go to the gas station such a small amount that i forget how to put gas in my car. ♪ constipated? phillips' caplets use magnesium, an ingredient that works more naturally with your colon than stimulant laxatives, for effective relief of constipation without cramps. thanks. good morning, students. today we're gonna continue... at a hertz expressrent kiosk, you can rent a car without a reservation... and without a line.

now that's a fast car. it's just another way you'll be traveling at the speed of hertz.

live from the rock & roll mcdonald's in chicago, here's carl quintanilla. >> welcome back. i'm carl quintanilla live in chicago with the rock & roll

mcdonald's downtown and we'll talk to jim skinner, the ceo since 2004 and this weekend retires. stock's been an amazing performer over the last couple of years. talking with the guys at post nine this morning, jim, melissa, everybody there, two notes. reiterating a buy on mcdonald's saying the market's underestimating the cash flow and experience of mcdonald's. goldman downgrading to neutral. seven big reasons the headwinds. too great even for a titan. jim, what do you want to know today? >> my charitable trust loaded the boat up. the stock dropped 14 points. cheapest it's been in years. i think a bad downgrade. i want to know depth of bench. i want to know why we should have the same conviction with the new ceo that we have with skinner and i think he'll give

us that flash-out and costs, beef count gigantic. can't we raise estimates in the second half of the year? >> the prices? >> no. the inflation tailwind. >> i think input costs, carl, are a huge question. but also, what other new products and cat lialysts with new beverage or a new burger or breakfast item? oftentimes looked at mcdonald's as an executer. at this point, if we rely on the executi execution, what else is there to power that story higher especially with other alternative stocks out there for investors to look at like a burger king and listed here on the new york stock exchange which is a turnaround story. so you have that upside of the turn around possibility. >> carl, at the mcdonald's on friday night, i was struck by the fact that late evening -- >> you were not there on friday night. >> i was so. mcdonald's -- >> after you went to costco?

>> no. on the way -- >> seriously. >> wait a second. on the way to -- >> checked out. thej. maxx, walgreens. >> one of the best. exit 70 mcdonald's. fantastic. >> what did you see there? >> i needed something. around 8:30. wanted something to take out. i didn't see anything to carl. >> not even a snack wrap? >> no. an interesting question, david, i would love to hear your opinion on this because the only worst performing stock i think this year is mcdonald's. the other one in contention is hewlett-packard. you see historically companies synonymous with the leader, the leader leaves like at coke, for instance, or schulz and takes years to reignite that mojo. >> that's a different case with

hewlett-packard given the many leadership transitions taking place over the last couple of years and meg whitman made it clear. i hadn't noticed that hp down so much lately. she said many times and heard it from others, it is a multi-year turnaround for that company. and so, certainly shareholders of mcdonald's hope there's nothing like that in their future. >> carl, one of the things we don't talk about enough, this balance sheet. the balance sheet is better than any country's. there are very few companies to borrow in the end, carl, that balance sheet means that they're always beating the competition. even if the stock's down this year. >> great point. we were just talking -- i was talking to my producer todd about this the other day. skinner not only didn't complete college, he didn't go to college. he was a navy man for ten years. went in to a manager trainee and considered one of the most sophisticated managers of a big

cap corporaterate sheet. i would be interested for opinion on him how he managed to learn how to make it work for a complicated global company. >> great. >> that's amazing. true american dream right there. >> just a great story and the fact that it's down is really -- really has much more to do with an unbelievable performer. >> buy, buy, buy the stock right here. terrific. >> all right. carl, see you later on. and coming up, getting a head start to the trading day. one of the ways to do just that. mad dash is next. look at futures again. looks like a higher open across the board. [ male announcer ] we imagined a vehicle that could adapt to changing road conditions. one that continually monitors and corrects for wheel slip. we imagined a vehicle that can increase emergency braking power when you need it most. and we imagined it looking like nothing else on the road today.

then...we built it. the 2012 glk. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services. how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea. throughout our entire lives. ♪ one a day men's 50+ is a complete multi-vitamin designed for men's health concerns as we age.

♪ it has more of seven antioxidants to support cell health. that's one a day men's 50+ healthy advantage.

♪ ♪ all right. we are four minutes from the opening bell. we are taking a look at a fascinating diver intelligence of retail and the stock market. >> dollar general analyst meeting. you know walmart better than anybody else. 52-week high. saks, citigroup says be careful here, macy's and nordstroms. this is the cash rich, confidence poor. they call it the empty pocket thesis. these stocks are down a lot. i want to be careful here. dollar general is -- >> benefiting from lower gas prices. the higher end pulling back? >> that's -- look. >> you're --

>> it's been true. coach and tiffany's is weak. nord strorm's is coming. >> one of the many you visit in a day. visits more retail establishments in a day than i do in a month. >> definitely. >> right after this. [ male announcer ] what if you had thermal night-vision goggles,

like in a special ops mission? you'd spot movement, gather intelligence with minimal collateral damage. but rather than neutralizing enemies in their sleep, you'd be targeting stocks to trade. well, that's what trade architect's heat maps do. they make you a trading assassin. trade architect. td ameritrade's empowering web-based trading platform. trade commission-free for 60 days,

and we'll throw in up to $600 when you open an account. wednesday trading session has begun. here at the big board, midstream partners with the ipo today at the nasdaq. maker of rapid hiv tests marking hiv testing day. one of the first to go since facebook. one of the ice breaker deals. pricing between $19 and $21 per unit. it is in the business of transporting, pipelines, nat gas primarily. one of your big themes here. >> absolutely. you want to look. eqt, very well run company. a company hurt by way too much

natural gas. bloomberg talking about how this is the great opportunity to be able to move it to westport, up strongly with the gm thing and all part of a piece. too much of the stuff. everybody's trying to make money off it. companies that ship oil and gas doing quite well. >> a lot of them appeal to investors looking for yield and mentioned many, many times as one place to go. >> yes. >> unless, of course, interest rates start to back up on you. >> westport up by almost 10% here on the extended deal with gm to develop further natural gas technologies. also to minimize co2 emissions in the engines and up nicely here on the day. >> light duty trucks. westsport a heavily shorted stock. i have had david demers on many times. people think it's a matter of time before it rolls in.

cummins is their partner. i have that denied. please understand, though, short squeeze. >> facebook shares down by almost 3% and compare it with past recent ipos where coverage is factored in. coverage with the bullish sentiment of linkedin. the stock is lower but again 40-day, 40 days now since the ipo but the bigger day perhaps could be the lock-up, 55 days. two more weeks to go until it expires and a lot of shares coming on the market. >> be curious to see how many of the shareholders choose to sell, especially seeing where the stock price is at that point. still well below the ipo price, may be a reluctance on the part of shareholders. if you bought it in the secondary market at 32 or 33, chances are you're not going to

be. >> these are incredibly lukew m lukewarm. i know there's people that tried to play the trade. you can't do it with a stock like facebook and figure you a get a lot of buy recommendations and people stupid enough to take it up and blow it out to them. that's a very 2000, 2001 trade. doesn't work anymore. stop with that ridiculous playbook. that doesn't work. >> no. nothing from 2000, 2001 really works. >> nothing, nothing. it shouldn't. >> yeah. >> montasantos trading higher this morning saying that the planting season is strong and saw strength through may, particularly an increase in corn acreage and helped monosanto and corn prices now close to nine-month highs with dry weather in the midwest. you have potash with another 2%. remember, this is a group upgraded on monday. yesterday mccorey with positive

comments on the group and tacking together a string of very strong gains here. >> this is one of those things where you are to be careful. we get rain. we get -- what people want to do with these, everyone's anxious of a trade. this is a boring, miserable period and something to talk about. we get rain and that's something erodes and move on to the next season. monsanto is a fabulous bio tech company in this period and i think it's important to point out what they have done with their stocking method for corn is produce a tremendous crop when you add it in to the fact that ethanol's no longer made as much in this country. corn prices plum met. i don't want to be long corn for the record. >> on a day relatively muted in terms of europe, we haven't discussed it. >> how many minutes in? >> a big summit tomorrow and i'm sure -- >> tomorrow we'll talk about it. >> without a doubt.

>> merkle did a little over my dead body action yesterday. >> not an official quote but apparently said, i don't think so i live there won't be euro bonds. >> paraphrase. >> but the banks as you might expect given a relatively quiet reaction to europe, not doing much today. >> a lot of good stories about the -- about the overseeing of spanish banks and whether they were really allowed to run amuck. look at what's going on here. you have to understand that the equity, what a contrast our country for a moment with europe. our banks were forced to raise equity at hideous prices, forced to take money from the government, the good and the bad. look back and there was a tremendous intervention by the u.s. government and the banks and the european banks, don't worry. be cool. >> raising equity at the wrong time and then -- poor spanish citizens feeling it was a duty.

what in god's name did we get ourselves in to? they have handled it poorly as you say. perhaps we do fail to appreciate the amount of equity raised that went on in this country in that period you're talking about. beginning early '09 and on from there. >> the administration always very reluctant to talk about it. it had the bailout vision to it. it's very successful. >> t.a.r.p. started under the bush administration anyway. >> something good to help bankers. fat cats. don't have votes and be careful of the banks and the bailouts and a loser theme. he ought to embrace the fact we are not europe and doesn't seem to resonate for him. >> s&p up 7 points. check in with mary thompson on the floor in for bob this morning. hey there. >> good morning, melissa. dow up 50 points. early gains across the board

with the exception of retailers showing weakness on a wednesday where investoring look for news out of europe and of course they're reflecting or waiting for the latest piece of data at 10:00 eastern, that be pending home sales and disappointment on an earlier report of durable goods. going in to that, you saw a bit of a rally. euro looking higher. it sold off in the wake of that. of course, the big news here at the new york stock exchange is that the ipo drought is finally ending and starting after the facebook ipo. eqt midstream priced at the high end of the range. indicated to maybe opener at 23 to 23.50 is what i'm being told and a big crowd around the post today. also, we're keeping watch on home builders and retailers. home builders moving higher in the premarket in the wake of better than expected numbers of lennar.

also, of course, on the back of the better than expected numbers of kay shiller and watch on retail earls, specifically the high end group. citi downgraded macy's and saks fifth avenue. contraction of spending of high-end consumers. confidence has dropped and april and may sales were weaker than expected. the dow now off the best levels of the day. the nasdaq is holding on to just about a 15.5 point gain. >> thank you. rick san tell will in chicago. go ahead. >> thanks, jim. we all know that we have another day of supply in the u.s. today it's five years. yesterday it was two years. you know, it was an average auction yesterday. remember, on the twist, buying the long end, selling, you guessed it, the short end. might explain part of it. dealers taking 60%, pay

attention. that was the case yesterday. looking at the ten-year, pretty good durable goods data but it was good. better than expected on a headline especially. but if you look at the trends over last several months it is a split decision and most analysts with the comments on durables. they start off basically saying reversing a major three-month slide. maybe explains why interest rates behaved the way they have. they have moved down. maybe -- oh, maybe about europe again. look at the currency, started to give up ground. seemed to have led and now equities coming back, maybe it's changing a bit. there's a boatload of headlines in europe. i don't believe half of them but the market speculators, they have to believe them at least sometimes and the last chart i think is very important. keep an eye on the boon in front of the summit and the finance guy out of europe. a lot of headlines this morning. david, what are you working on this morning? >> you know what, rick, looking

overseas, as well. not a the markets per se. but at m & an activity. did want to mention the ipo ringing the bell, eqt midstream partn partners, there it is. nice pop at the open. >> not facebook. >> no. >> just kidding. >> better hope it's not. >> thanking their lucky stars. >> opens on time. no glitch. no arrogance. >> with the hype of -- >> overconfidence. >> talking about it for weeks. >> media hype. >> oh boy. okay. you know, i did want to take us overseas where rick was to a certain extent. but in this case, to m&a because there's a deal causing pain for investors particularly with risk arbitrage. largest hospital operator in germany trying to buy another

hospital in germany and didn't laws. 90% of the stock tendered. looked like they were going that way and paulson in the name and look at what's happened. why? another company by the name of -- oh boy. sorry. i'll try it once. >> i had that for dinner the other night. they have -- >> good greek food. the point being, when there's not a lot of activity here, there's movement over there and so there's also pain here for those funds that actually are expecting that deal to get done. they're saying they're not going up in price. they need to amend the bylaws and doesn't appear the deal's going to happen and so, for example, the paulson funds. can't get a break. >> fernius is a good company. >> there's a look at john. one of the biggest deals by far

period. also in trouble. glencore in trouble. there, big holder of xstrata saying we don't like the terms and you have that opposition, you have also got widespread opposition to the pay packages to come along with the deal were it to close and real questions about the deal and the glencore deal. $65 billion. >> 65? >> billion dollar commodities deal. the biggest we have seen in quite sometime in jeopardy at this point. we'll see what they do in terms of a potential renegotiation and eliminating the pay packages. >> china. not a place to be doing mineral business. right? i mean, just the worst timing. you see some of these deals breaking down. you recognize, again, talking about eqt midstream partners and looking at where they rang the

bell. ipo's awful and m&a, awful. the spark this year is breaking up. undoing. undoing is something to talk about. >> that's a very good point in the case of news corp. and others and a couple you advocate for. that's true. that's what corporate america is embracing and taking apart rather than putting together. >> an incredible moment. a moment of negativity. a moment where people saying, look, i'm a good company. >> goes in phases. the building of conglomerates and then the unwinding of assets to unlock value. >> bankers making money both ways. they don't care. give me the fees, babies. >> no callbacks for people that skree up, i'm fine. >> news corp., 1.5% added on, on top of yesterday's gains. let's go to carl in chicago. >> melissa, just a little less than an hour's time until the exit interview with jim skinner

of mcdonald's who began at mcdonald's around 1971. when the uniforms looked something like this. remember this? talking to skinner about those early days and how far the company's come. this is new york state. we built the first railway, 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. 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. [ female announcer ] it's time for the annual shareholders meeting.

♪ there'll be the usual presentations on research. and development. some new members of the team will be introduced. the chairman emeritus will distribute his usual wisdom. and you? well, you're the chief life officer. you just need the right professional to help you take charge. ♪

♪ ♪ here's some of the stories we're squawking about. barclays paying $454 million to settle charges that it tried to many anyplace late libor rates. mortgage applications fell 7.1% last week. this according to the mortgage bankers association, citing a big decline in refinancings. stockton, california, set to become the largest american city ever to declare bankruptcy. officials were unable to reach a deal to restructure debt.

it could come as soon as today. wow. >> they have said there weren't going to be municipal bankruptcies. >> this is the biggest, though. >> they're not enormous but they're happening. >> in california, there's a real problem with the pensions, giveaways. still fewer than we thought. >> and whitney predicted. >> not done with it as something to be concerned about. >> i like whitney. whitney savings bank where my daughter's going to open an account in the fall going to tulane. >> was there a nbc sitcom called whitn whitney? >> not sure. let's change the topic. >> let's do that. >> can i follow up quickly. retention awards, and they're both laughing at me. >> we're not. >> no, we're not. >> with you.

>> i'm going to be removed from the show and brought on a nbc sitcom. they're now making 100% of the retention awards subject to performance criteria. and all the awards will be paid entirely in shares in the combined group and trying to address that aspect of what's opposition to this enormous deal as for whether -- a very large shareholder in xstrata in mollified in terms of a higher price remains to be scene. >> mollified. love that. i know molly corp. you go mollified. that's fine. >> down 1%. >> that's also the potash. there was this great theme in 2008-2009, the day of the market, where we finally had leadership and it was mosaic and potash. is that a top? and xstrata glencore. >> how about apple? >> how about apple?

>> you were saying it should be moving much more. >> yes! i mean -- >> prevent it to be sold in california. >> i remember when it came out. >> ipad killer. >> yes. ipad is looking a lot like -- dare i say it -- the ipod. game, set, match. i don't care what google does. the apple ipad is -- >> earlier you were saying it's not a zero sum game. >> no. no, kindle, on the kindle book reading it is not a zero sum game. >> oh. okay. there's room for kindle and room for google is what i'm saying but with the ipad, they did get an injunction. i mean, it is like out west, nobody seems to care. i'm focused on it. >> yeah. markets across the board higher. it is worth noting, too, oil once again 80 bucks a barrel and wti and the energy stocks are trading higher. we have much more straight ahead.

up next, we have six stocks awaiting their wait and jim kramer is ready to give it to them. six stocks in 60 seconds. [ tires squeal, engine revs ] ♪ ♪ ♪ [ 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.

welcome welcome back. let's get over to simon hobbs for a look at when's coming up the next hour. >> good morning to you. the exclusive interview carl with the outgoing ceo of mcdonald's, that's going to be big. of course, today is f-day, 40 days since the facebook ipo. finally, the 33 banks this took it to market saying now about owning the stock. that's going to be fascinating. and why you can make 40% potentially on google's stock. as, of course, it prepares to launch its new tablet. >> i'll stay tuned for that. all right. six in 60. newscorp. >> i would have expected more people to upgrade. i'm using 25, 27 as a target. >> all right. there it is. again, up today.

procter & gamble downgraded. >> maybe it's to hard to turn around. you know how i'm feeming about this. >> netapp. >> i don't know why a buy. emc is kicking their butt. >> gnc, sales are strong. >> a lot of people worried about the supplementals. this is very positive because people thought it was going to hurt them. a great growth stock. >> o'reilly automotive. >> blaming the weather. not a lot of damage done to cars. >> hasbro. >> incredible to me. this is a name and remember when you broke the story they might go private? >> yeah. i think so. >> you did. it was at 46. why do i remember your story? anyway, they should have. >> that doesn't happen very often. companies going private these days. best buy. >> it was a best buy. what an opportunity for schulz. >> a big number even with a 20% ownership of mr. schulz and roll in to any particular deal.

>> is that -- how quickly go ly linens n things? i'll give them a fairness opinion. for $500 million. >> 5 million bucks. >> i won't do that. i make jokes and then say they how can you take the 5 million from the best buy people? >> sarcasm doesn't always play. what's on "mad money" tonight? >> okay. we have got ken powell from general mills. i think that's very big interview. one of the great real estate trust ceos, ventas, unbelievable. they're -- >> they don't make anything. >> yes. right. you covered them extensively. >> i have. >> senior -- >> yeah. very impressive lady. >> really impressive. no one talks to her. it's a mistake. >> see you then. 6:00 and 11:00. tomorrow morning, a big supreme court decision, too. back out to carl in chicago. >> hey, thanks very much, guys.

hey, how do you sum up a successful run as a ceo? we'll find out when jim skinner talks to us live and exclusive when we continue. rdrive. zagat just gave hertz its top rating in 15 categories, including best overall car rental. so elevate your next car rental experience with the best. it's just another way you'll be traveling at the speed of hertz. in your fight against bugs. ortho home defense max. with a new continuous spray wand. and a fast acting formula. so you can kill bugs inside, and keep bugs out. guaranteed. ortho home defense max.

welcome back to "squawk on the street." i have breaking news from the niceal association of realtors. here we go. signed contracts to buy existing homes jumped 5.9% in may. this pending home sales index is now up 13.3% from a year ago to the highest level since april of 2010 when buyers were rushing to beat the deadline. remember, this is signed contracts, not closings so it's an indicator of the existing home sales for june and july. originally up 4.8% in the northeast. up 6.3% in the midwest and up a whopping 14.5% out west and 1.1% in the south. in the west, they're driving the distressed sale contracts. banks are still working through a huge backlog of foreclosures and negative equity keeping a lot of sellers from listing

their homes on the market. we have plenty more on on the blog. melissa? >> thank you so much, diane olick. markets firm on the back of the data. got to get to the road map for the next hour and of course starts with mcdonald's. carl quintanilla with jim skinner. >> of course, it's f-day. the moment the street is waiting for. the facebook lock-up expires. analysts able to finally tell us what they think about fb. we'll get one analyst in particular talking facebook. >> and tech tigtan with the conference today and rumors heat up, will a tablet be unveiled? we have your preview with a few. we are checking with carl quintanilla all morning long for an exclusive final interview

with ceo jim skinner. running the company for eight years and been there for 41 years. carl? >> good morning, david. yeah. what an amazing run and coming an end this weekend. he officially ends at the end of the month. you can see the banners. jim, thank you for 41 years of service. one thing to talk about profits at mcdonald's. doubled them in the time he's been here. stock tripled. come back a bit so far and topped out this year at $22.22. investors paid attention to that. but it's easy to forget the condition the company was like when he took the job in 2004. he was already part of upper management and the company lost two ceos due to health reasons basically in the span of six months and we asked him what it was like coming in to the office under those kinds of circumstances. >> i call 2002 the year of the perfect storm where all of the things in the strategies that we

were pursuing, the growth strategy we basically hit the wall in 2000. >> we hit the wall in 2002. at the time, mcdonald's, guys, opening a lot of stores but consistency was suffering. he reintroducing discipline in to pricing. fought back on super size me and changed the way they outsourced poultry and transfat in the fries and added mccafes and smoothies and coffee and the question is, guys, where's the next breakthrough product? what kinds of challenges does don thompson face and what about europe in a recession or depression? all questions for him talking to jim skinner in the exit interview. this could be a franchise in just about half an hour's time. >> where ceos go to give their final word on tv. >> yes.

that's right. you can't check out until you talk to us. >> you have done the documentary on mcdonald's as we have said. from your experience with the company, do you find the great ideas, the snack wraps, the drinks, the coffees, does it come from within or ceo driven? how much of the next big thing is on the next ceo as opposed to the deep bench that mcdonald's has? >> yeah. i mean, look. a lot of analysts not as bullish on the stock anymore argue he's used up a lot ofgood ideas. right? there's not clear where the next innovation comes from. they have a test kitchen and trying new things all the time. oatmeal, one of the most recent examples and fared pretty well. we'll try to pin him down on what's in the pipeline and i'm interested to know also what products that did succeed or didn't did he have to be most convinced of. which things tested well he thought would not. which things posted poorly he thought would be home runs. find out at 10:30 this morning.

>> we look forward to it. meantime, the lock-up of facebook shares officially open today. they have a mixed bag of ratings from unperformed. here is jason helfstein with a $41 price target. great to have you with us. >> great, thanks. >> i want to get some color. has there been anymore information as an analyst you have gotten to help you form the initiation of coverage? facebook went public at $38 a share. you were part of the underwriting syndicate and saying in 12 months it is only 41 and only $3 above where it went public. >> sure. also, remember, the stock just 33. still reasonably good move. as far as information, we have nothing new out of the company. we have to wait until they all

right earnings for updated financials. we have new product announcements. there's things with respect to mobile and how advertisers can pay to buy their way to the top of your wall so i think that's new from fundamental standpoint but not a financial standpoint. we have the additional industry information. suggesting that time spent on mobile devices using facebook up 10% month to month in april. if you analyze that, that's 90% growth year over year and found out mobile is growing very strong and the question's how does the company monetize it? >> would you say that the primary driver of the $41 price target is the fact that facebook traded lower after the initial public offering? >> no. i mean, the way we do our modeling is we do a model out to 2018. you can say how does anybody know what earnings are going to be in 2018 when you don't know next year? and that's a totally true

statement. what we have to think about is how does this company's financials play out strategically over the long term and use other metrics and look at user penetration of google relative to where facebook is today and can go to. advertising rate today. facebook on average 20 cents per thousand impressions. you know, you have a number of other companies getting 60 cents, $2, $5. so that's a lot of upside both from a user penetration sto standpoint and then ickexecute we have to guess at the future. >> jason, this must be an interesting moment for you guys, a bit like i suppose the swimming trials that we have been watching on the television where suddenly you're all out of the traps today and seeing everybody else for the first time. i have got here that i have looked at six buys and three neutrals from your colleagues,

average price target. $39. what do you think of where everybody else is kind of stacking up or diving in if you like? >> sure. you know, it's interesting. right? you wonder, you know, for those firms who, you know, unless they have a price target at around where the stock is, what are they telling the sales force marketing the ipo? while i leave that to you to figure out, but yeah. look. this is where, you know, you had consensus estimates out there. to firms not involved in the deal. now build a consensus estimates with firms in the deal. we think the estimates out there previously too high. the revenue estimate is 8% below where the street is for the quarter. 3% below for the year and all reset now adding the numbers in to the pool for analogy and then the question is, is that bar set low enough? this is not a sprint.

this is a marathon. >> sure. i see that morgan stanley and controversially, of course, led the flotation come out and actually valued the stock at the issue price. >> you know, look. i think you have to ask the analyst that. i have not seen that research report. you know? we do our model. my estimates have not changed since we -- you know, we were participating in the deal. and we think $41 is a reasonable target. it's not terribly aggressive with our long-term estimates. it can still be upside to this. we think the stock will be an attractive opportunity for those and based on a 12 to 18-month horizon. saying buy the stock? no. we think you buy the stock, hold it for a year or so and we think it's a money making opportunity. >> jason, i know that you're driven by fundamentals, data.

niche report is something like 25 or 26 pages long. at the same time, there's sentiment associated with how a stock trades and right now since the stock is ipo'd it's largely negative. in terms of what you're hearing of clients that baugts ought ine ipo, what you are hearing. >> people that bought in to the i 3o probably didn't hold their stock and typically when the ipos if they trade down right away, everybody wants to -- nobody wants to catch a falling knife and everybody backs away to see where it levels out. it looked like the stock leveled out. it's up off the low. the low on the stock was about $5. now 33. i think you're at a point where the stock stabilize and this is where i think a lot of clients say we'll do the fundamental analyst and decide to own a

position there. not trying to catch a falling knife anymore. there's questions on what type of guidance the company will give. we don't know. quarterly or annual guidance. what kind of user metrics and then the lock-up. the only ipo'd 20% of the company and a lot of stock could come over time and there's the questions trying to figure out right now. >> jason, thank you for your time. >> sure. >> of oppenheimer. want to get to bertha coombs. >> thank you. watching westport innovations. it's got a second deal with gm to put nat gas engines in light vehicles. no word on the value of that deal but you can see shares are jumping. i'll caution you, however. there's a very sizable short interest in this stock. it's still well low the annual high of 50 bucks a share. simon, back over to you. >> thank you very much.

the dow up 92 this thursday morning. wednesday morning. next on the program -- >> wednesday. >> for a moment. up next on the program, how to make 40% on google stock as the company apparently prepares to launch a new tablet today. also ahead, carl in chicago with mcdonald's ceo jim skinner who's giving cnbc his final interview after eight years as the fast food giant's leader. it's a "squawk on the street" exclusive and we're loving it. new york state. we built the first railway, 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.

♪ ♪ all right. take a look at shares of zynga if you can. i believe it was up yesterday briefly and ended the day down, as well. you know, a new gaming lineup introduced. doesn't seem to impress investors. sometimes does move in sympathy with facebook shares and down 2.5%. still, yesterday, a 5% drop. today, another 4% for znga. >> it is a big day for google shareholders potentially. the annual software developers' conference kicks off in san francisco and a lot of talk to come through with a tablet of all things. let's bring in the managing director of institution

aleckties. ken, good morning. what do you think the tablet will look like and priced? >> well, i think it will be priced competitively. we think they'll launch a tablet. it still remains to be seen what kind of content features rolled out with the tablet and what will they do to entice developers for apps and a big question users and developers will have today. >> why is google launching physical hardware products in the same way as microsoft is doing? and risking their existing relationships and which actually for google is significant because the android certainly a mobile phone is a huge success. why, why did they have to come through with their own hardware? >> right. i think definitely a concern for investors to kind of walk that delicate line of competitor and partner. when you look how it monetizes,

it's the disparity that google needs to be fairly aggressive in terms of services it rolls out, the experience and ability to attract developers to the platform and moderate success in terms of going the partnership route. >> ken, there are also reports of amazon launching a kindle fire 2 in july and a 7-inch tablet and also have a back-facing camera. are we to the point where they're so commodityized and the margins so low and so thin that it's actually going to hurt the likes of google and amazon? >> yeah, i think so. both of them have platform ecosystems that stand to be disturbed somewhat by mobile and people in how they shop and search. and willing to invest in this area. of amazon, they compete on the basis of content and shopping experience. google has a substantial r&d

resources around mobile and the google advantage is assuming they can walk the line between hardware partners and helping support them for new products themselves i think it's an advantage at least so they don't have to run through the expense through their pnl as much. assuming they can't improve the montization on mobile, google will pursue it aggressively. >> google has motorola mobility and reports of partnering with a taiwanese manufacturer and that it will be co-branded. why aren't they using motto orm? >> i think what we have been trying to argue is motorola in part to beef up the r&d and support to provide to the hardware manufacturer partners. assuming that that doesn't work out, that you can't drive higher montization on mobile or create a better use ek experience to drive products in to the hands of users google has a back-up option in terms of basically

going at it themselves but i think assuming to get the job done going through partners then that will be the preferred path for them. >> yeah. and to that end, the e cosystem, there's possibly a deal with the satellite provider sirius xm and howard stern. you have a $170 price target on google, 40%, ken, higher than where we are now. you characterize it with that with a major sleeping giant. why? >> i think our reason for that upside is nothing to do a tablet today but valuation and six times ebitda. 12 times earnings and expect it to grow 20% year over year and excludeing the, you know, mmi acquisition and i think there's still strong upside but all around value. >> all right, ken. thank you very much for joining us. >> okay. >> thank you. >> thank you. all right. well, still to come, the interview you have all been waiting for.

mcdonald's jim skinner sits down with carl for the exclusive and final interview as the fast food chain's outgoing ceo. [ male announcer ] how do you trade? with scottrader streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start. try our easy-to-use scottrader streaming quotes. it's another reason more investors are saying... [ all ] i'm with scottrade. it's another reason more investors are saying... syou know, i've helped a lot off people save a lot of money. but today...( sfx: loud noise of large metal object hitting the ground) things have been a little strange. (sfx: sound of piano smashing) roadrunner: meep meep. meep meep?

(sfx: loud thud sound) what a strange place. geico®. fifteen minutes could save you fifteen percent or more on car insurance. but they can also hold you back. unless you ask, "what's next?" introducing the all-new rx f sport. this is the pursuit of perfection.

[ male announcer ] introducing a powerful weapon in your fight against bugs. ortho home defense max. with a new continuous spray wand. and a fast acting formula. so you can kill bugs inside, and keep bugs out. guaranteed. ortho home defense max.

we have we have got about one month to go before the kickoff to the london olympics. let's check in on the developments. michelle? >> hi. i almost don't know where to begin as this we see something new every day. just this morning, we saw the big rings unveiled on the side of tower bridge. really now, one month out, it's about putting the icing on the cake. we went out to the olympic village a month ago and it was a construction zone, although impressively, all the venues were built and some tested. and looking great. now, though, they have to make everything beautiful. the facades on the venues, planting thousands of trees.

the good news is everything seems to be on schedule or even in some cases ahead of schedule, even though this is casting much, much more than originally planned. it is up to now $15 billion approximately, although some estimates put it over $20 billion when all is said and done and a you marks. will communications work? what will the traffic be like? will the absolutely enormous security undertaking go off without a hitch? of course, will the weather comply here in london? melissa? >> michelle, as a londoner for 20 years or whatever, i hear the main concern there at the moment is actually how people are going to get to the stadium and that the transition from the subway system, the jubilee line to the railway, i hear internally there's a concern of two hours to do that trip, to make that train change and therefore people might have to leave four or five hours to get to the

venue. >> exactly. i mean, that's been a worry from the beginning. we really saw a sort of trial run. i mean, not a much smaller range for the queen's jubilee event. people not necessarily going to the same part of town, anonymous sources within security and the government saying, you know what ? that really didn't work that well and with the olympics 300,000 people each day going in olympic park. we were concerned a month ago and getting at least a that's when nothing was going on inside the park except for construction. so it remains to be seen. but with so much complaining going on well ahead of the events, one would hope that a month out the things are worked out as best they can but people already ready to get out of town for the olympics, sadly. >> on the question of them leaving after the queen's jubilee, i had a friend in the crowd and heard the round subway

stations to break the line and ultimately people took the barriers down and defied the police. that's the concern people don't stick with it in stressful situations. >> yeah. i mean, when you have crowds of that size and that frustrated and, you know, who knows what the other circumstances are going to be, what other limitations put on getting around, but i would say with the amount of security that's expected to be in place during peak times, 30,000 security personnel during the peak hours, it's hard to imagine anybody being able to really get away with anything at that point. they're -- when you look at the security operation, it is jaw dropping. an aircraft carrier. snipers from helicopters. with high resolution cameras. even reports now they're going to have security vehicles that they're going to be able to stop with remote control in case they're hijacked. remanes to be seen.

>> in the meantime, we are loving the trials. not sure if you see them in london. michael phelps, fourth time in the fourth olympics. extraordinary. thank you. seeing you more through the summer. i hope it's a hot summer in london. >> and dry for the olympics sake. you have to wonder if the city, the financial district, prepared for the bottlenecks and operations and markets will function -- >> markets will function. physically the people get there and et cetera. next, breaking news on the crude oil inventories. first, as we are moments away from mcdonald's ceo jim skinner's final interview. got to get back to carl in chicago. >> thanks a lot. just a few minutes away from jim's final interview as the ceo of mcdonald's. anything you ever wanted to ask the head of mcdonald's, we are welcoming you to tweet us with a question or two. "squawk on the street" live from chicago continues in a moment.

you have to dig a little. fidelity's etf market tracker shows you the big picture on how different asset classes are performing, and it lets you go in for a closer look at areas within a class or sector that may be bucking a larger trend. i'm stephen hett of fidelity investments. the etf market tracker is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea. [ 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. through mercedes-benz what happens when classroom teachers get the training... ...and support they need?

schools flourish and students blossom. that's why programs like... ...the mickelson exxonmobil teachers academy... ...and astronaut sally ride's science academy are helping our educators improve student success in math and science. let's shoot for the stars. let's invest in our teachers and inspire our students. let's solve this.

♪ ♪ and one hour in to trading here with the stories we are squawking about. pending home sales up 5.9% in may. that match add two-year high according to the national association of realtors. coca-cola and disney among

today's biggest gainers on the dow. an upbeat debut for one of the few companies to go public in the u.s. since facebook's ipo. eqt midstream is up as much as 11% from the offering price which was $21 a share. the energy partnership operates pipelines for natural gas companies eqt corporation. it is a moment we have all been waiting for. carl quintanilla is joined by none other than mcdonald's ceo jim skinner, ceo for eight years. this is his last television interview. after 41 years, skinner will officially retire on friday. carl, take it away. >> all right. thanks so much, melissa. hard to believe it's been that long since he began in carpentersville, illinois. jim skinner joins us at the mcdonald's in chicago for the exit interview. thank you for being with us. congratulations. >> thank you. >> can you believe it ends this week? >> yeah.

it's beginning to dawn on me that i have a couple more days at work and then 41 years with mcdonald's and i'm history. >> no one's asking you to go. some have argued you could have stayed as long as you wanted. you said it's the perfect time. why? why is now the perfect time? >> i think all ceos have one obligation. and that is, of course, to grow the business and to sustain the growth of the enterprise for all the stake holders but most importantly to provide leadership for the future. and i'm -- i've done that. i think we're prepared to move to the future and time for me to step down and hand it to the younger guy and team to lead us in to the future. >> you came in to the job. the legacy you followed is well-known and you helped implement and execute the plan to win. we know what's happened with the company since. we know what's happened to the

stock since. do you feel like you won? >> oh, absolutely. i think the system won. i think that's the most important thing. when i became ceo i said i want to reward the system for their performance and through my leadership and we have done that. the alignment of the system. it's been significant in terms of our revitalization if you will and as you mentioned shareholder return is just one measurement but the performance of the franchisees and employers and suppliers and been rewarded financially and proud to be part of the system over the period of the time. >> you said the degree of the success surprised even you. did you say, wow, we are doing better than i thought we'd be doing at this stage of the game? >> i think from the beginning of the revitalization before i was ceo focusing on brand mcdonald's and eliminates the distractions, the brands we were involved with, and we're focusing on same

store sales growth on the top line but being better and not just bigger. that the same store sales growth in the very first year of 2003 was significant and we were on track then through '04, 2012 now to continue to grow, same store sales, and i think we were all a bit surprised by that. that focus and the alignment of the system leveraged that strength and jetisonned the distractions. >> looking at a plan to win. multi-platform philosophy. but if you had to pick -- i know it's like asking you to pick children but if you had to pick one element, nutrition, value menu, the way you approach foreign markets, mccafe, is a there an element that's driven the growth? >> one element that's the people. the people are most significant thing in any enterprise and

specifically at mcdonald's. because when you look at a 1,700,000 people around the world driving for an expectation and the performance around that, clearly the most important thing. so the talent, management, leadership development, the other things, the products, the protocols around innovation and any change that you see regarding the restaurants all comes from people that are continually improving on what they do for the brand and so i think that's the most significant thing. >> people say skinner's getting out while the getting is good. recovery showing signs of topping out. talking about european challenges later on. is there a feeling this is the best hand you have had and time to fold? >> no, no. i don't think so. i think melissa asked us that question sometime back and saying i still think the best is yet to come for mcdonald's because when you look at our

business model and the way we are working on the evolution of the menu and access bltd of the restaurants and modernizing, the restaurants, the most alignment and talented leadership team as we have ever had in the history of the company and, yes, of course, around the world the economic environment is not very good right now anywhere but we are prepared to perform just as well in that environment as we have in the past and when things turn around we're going to be in the best position of anybody to continue to grow. >> anything you haven't been able to get to in eight years? >> i would say no. >> you left it all on the field? >> left it all on the field. >> any innovation that surprised you, either up or down? >> not really. i think we -- the thing that i'm proudest of is processes and protocols around the innovation and we have increased consumer insight process and know everything about everything. more than any time in our

history. >> what do you mean by that? >> we know more about our business than any time in our history. but knowing things is one thing. knowing what to do what about them is the most important thing in execution. and so, that when we increased our testing process around new products and innovation, technology, equipment, reimaging and then picked the strategies that were going to work best for us, we won on almost every front because of the diligence around the process. >> you have added apples to happy meals. made the fries transfat. you changed the way you source pork. made it a chicken company instead of a hamburger company. is mcdonald's always blamed for making people fat? >> probably. i think that most people that are trying to legislate behavior have to have someone to pick on. and since we're the biggest and

the best, that's where they have to go. but as you know, it's much misunderstood in terms of what mcdonald's actually contributes to the every day balance active lifestyle. this is why that's a three goal to educate the public and the consumers in general and adding choice on the menu to feel good about the visit to mcdonald's. >> somebody told me, i don't know if it's true, in the early days of the company, the largest drink, smaller than the smallest drink on the menu now. why come out and oppose bloomburg's soft drink proposal? tipping the scales of 16 ounces or more? >> i think general opposition to the idea that people are trying to legislate behavior is important for mcdonald's because i think it's important to life that we shouldn't have people legislating choice. and trying to drive behavior. because first of all, it doesn't work. and won't work. i mean, the idea that you can't

get a 16 ounce drink, what would a person do to drink more liquid? buy two drinks. and so i think it's bad form to try to legislate behavior in society. >> stock's down about 8% since the day you announced the retirement. is that flattering or worrisome? >> think it has anything to do with my announcement. >> really? >> no. >> a lot of other people believe otherwise. >> it's flattering to hear that but i think the people that know the business and investors know how strong our team is and that if people had the idea that i did all this by myself over the last eight years and were able to get 1,700,000 people marching in the right direction, executing to the extent we have, then i would be doing something else for a living. i could phone my scores in. without having the team around me, and i do take great pride in having created that team. but that we're in great hands as

a company and shareholders should be pleased with what happens in the future. >> you'd worked in every region of the world when you took the job. don thompson is going to be ceo and has not done that. how much can you learn traveling around? >> even though i was international and basically was accountable for those markets, i did it from chicago myself. i traveled outside the united states. i never lived outside the united states. and so, yes, i was in those markets a lot of the time and helped develop 55 or 60 countries around the world and did that with a team. and don now having been the chief operating officer for a couple of years that's their job. that's when i did most of my travel. chief operating officer and getting the countries and they're the operating leader and so it doesn't take long to get that experience and i believe that, you know, running mcdonald's in iowa or germany is not dissimilar.

right? it's not that complicated. we're all about the same thing. >> we'll take a short break. a lot more in a moment. if you have a question for jim, you can always tweet us. we'll pin him down on europe, on some of the recent comps and, yes, the mcrib. ly, countries took part in a science test. the top academic performers surprised some people. so did the country that came in 17th place. let's raise the bar and elevate our academic standards. let's do what's best for our students-by investing in our teachers. let's solve this.

a living, breathing intelligence helping business, do more business. in here, opportunities are created and protected. gonna need more wool! demand is instantly recognized

and securely acted on across the company. around the world. turning a new trend, into a global phenomenon. it's the at&t network -- securing a world of new opportunities. ♪ begins with back pain and a choice. take advil, and maybe have to take up to four in a day. or take aleve, which can relieve pain all day with just two pills. good eye. which can relieve pain all day with just two pills. this is new york state. we built the first railway, 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. welcome back to "squawk on the street." the market holding on to the gains. energy stocks higher off the back of a higher trade in wti. now above 80 bucks a barrel. energy stocks up by about a percent across the board. better than expected earnings out of lennar and may pending sales data. it is the day we have been waiting for. exwe ration one of the of the lock-ups and firms initiating coverage on shares of facebook and shares down by about 2.5%. and from the newly public company to the time tested for a

company, jim skinner just saying the giant is well positioned for the future, the best is yet to come. let's get back over to carl for part two of the exclusive with mr. skinner. carl? >> melissa, thanks so much. here with yim in chicago. someone handed us the annual report, jim, from 1971. the year you began and some of the metrics in this are hilarious. $25 million in profit for the year. >> right, right. >> how's the business changed since then? >> first of all, the business predominantly in the united states then. 1,900 restaurants at the end of the year. 480 company owned. we were in canada and puerto rico in '67. i think we had 60 restaurants or something like that in canada. >> there's a picture of you, as well, at the grill. >> yeah. that was -- that's later than '71 but very flattering, i think. don't you? and we just went in to japan,

jemny, netherlands and australia in that year and embarking on the international business and the revenues 280 million, profit 25 million as you mentioned and just remodeling rest rapts and putting seating on restaurants. called an r-1 conversion and a right side conversion. and putting seating on the right side. all the restaurants were red and white then. starting on the change. a lot of changes. >> you mentioned europe. we all saw the comps last month. you always say you're not an economist. i want to know how bad it is. how bad's europe? >> you can get how bad it is from the people on your show every day. but i look at it from the mcdonald's side of the business. we're very concerned about austerity around europe, particularly in southern europe and the sovereign debt issues in southern europe and it's having

some impact now on france in terms of the austerity. uk and australia continue to do well. if you have the right strategies and right marketing plans and you are really making sure that you have every day affordability, in those markets and communicate that effectively we'll continue to do well. we are taking market share basically everywhere so we're doing better than the rest. and i expect we'll continue to do so but europe's got a long slag ahead of them in terms of getting themselves out of the rut that they're in. and the u.s. is still got some issues. >> yeah. which i want to talk about in a minute. we have heard from some companies discussing various hedges against euro collapse. is that a part of your strategy at all? >> no, no. i can't really opine on whether the euro will survive or not. i'm fairly confident in the european union and the central bank there. i think that the euro actually came about on my watch when i

was in charge of europe out at 1.17 and 85 cents and stayed there for the duration of my tenure there. but i think that as greece has decided, you know, to go after the austerity and stay in the euro, i don't expect it to collapse. but we're not doing anything overt to sort of hedge that. >> u.s. comps for the first time in a few years, you're -- not outgrowing rivals in terms of average of burger king and taco bell, kfc. worrisome? >> we are outgrowing them. when you look at the base of same store sales growth congressmaning from, ours is growing for over nine-plus years. and so, the gap between the average daily volumes is so significant between our brands that we're still in good shape there. and the comps are slowing a

little bit because of the headwinds we have had and the economic issues to deal with. but nothing that is not going to be able to be cured by, again, having the appropriate messaging and marketing plans and communication around every day affordability. just as we had to do in '07, '08 and '09 and so, we're working on that now. don's working on that, on the teams. jan's here in the u.s. and getting our expectations in the right place in terms of what we are communicating about. >> and some analysts have warned investors to be prepared for an earnings miss, some say. some downward guidance. >> yeah. >> likely? do you think comps bottomed for the year? >> no. i couldn't talk of expectations of earnings or june sales because, you know, we are in a quiet period right now. earnings come out on the 23rd or 22nd in july. i don't know. i won't be here. but still my quarter. >> yes.

>> and so, i don't -- no, i don't think they've bottomed out for the year and i think the headwinds as we have in the las quarters, second half, will be a little easier than the first half. commodity costs. >> commodity costs. >> expectations and p&l. >> we did cfo talk about the consumer here in the states being more cautious. >> yeah. >> it's one thing for, say, harley to say that. but for mcdonald's to say that. >> right. >> that's a big deal. >> you have to define cautious. it's a matter of degrees for us. it's not about somebody coming out and having to buy a motorcycle. it's just a matter of making a visit to mcdonald's for $5 average check. i think our every day affordability will win that battle over the next five or six months. >> we'll hopefully get a little extra after a short break for the time being. send it back to melissa. >> all right, carl. thanks so much. still to come, talk to one of

facebook's first five employees ever hired for the inside scoop. find how he's helping other internet entrepreneurs find the same success." more you know, the better you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. our teams have the information you want when you need it. it's another reason more investors are saying... [ ] i'm with scottrade. ♪

♪ ♪ [ 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. in your fight against bugs. ortho home defense max. with a new continuous spray wand. and a fast acting formula. so you can kill bugs inside, and keep bugs out. guaranteed. ortho home defense max.

this time tomorrow we'll have the decision from the supreme court on obama care. health stocks will be shifting. interesting on the eve of that decision they are a gaining sector in a market 76 on the dow. that's basically because we have a very defensive play today. utilities doing well, energy also has rebounded as you mentioned earlier melissa. >> yes. we do have a lot of leadership amongst the oil stock wti above 80. strength in coal stocks. coal stock have been obliterated as late. big gains. cramer mentioned bottom from peabody, btu peabody up, alpha natural higher. pretty nice gains in coal. also take a look at fertilizer stocks off monsanto, better than expected earnings, third straight gay for gains for a lot of guys, potash, intrepids of the world, gains there. david, lots of media stocks gaining as well.

>> it is interesting to note, melissa, not only news corp. shares, which are up 1%. the board will meet today and an expected announcement tomorrow about the pursuit of a split of the company. it will take at least nine months, i'm here probably closer to 12 months for it to become effective. viacom up 1.3%, time-warner up 1.5%, disney up 1.5%, cbs. so there is a real bid in the entertainment sector right there. i know publishing also, even some of the newspaper companies. not clear why any of them would necessarily be benefiting from the plan to split off news corp. >> "new york times" is higher by 3%. i asked david of rbs, analyst, some intrinsic reason it would be split across the board. >> it's a trade. >> right now it is working. got your final thoughts from mcdonald's ceo jim skinner right after this break. hi, i'm phil mickelson. i've been fortunate to win on golf's biggest stages.

but when joint pain and stiffness from psoriatic arthritis hit, even the smallest things became difficult. i finally understood what serious joint pain is like. i talked to my rheumatologist and he prescribed enbrel. enbrel can help relieve pain, stiffness, and stop joint damage. because enbrel, etanercept, suppresses your immune system, it may lower your ability to fight infections. serious, sometimes fatal events including infections, tuberculosis, lymphoma, other cancers, and nervous system and blood disorders have occurred. before starting enbrel, your doctor should test you for tuberculosis and discuss whether you've been to a region where certain fungal infections are common. don't start enbrel if you have an infection like the flu. tell your doctor if you're prone to infections, have cuts or sores, have had hepatitis b, have been treated for heart failure, or if, while on enbrel, you experience persistent fever, bruising, bleeding, or paleness. [ phil ] get back to the things that matter most. ask your rheumatologist if enbrel is right for you. [ doctor ] enbrel, the number one biolog medicine prescribed by rheumatologists. [ doctor ] enbrel, the number one biolog medicine forty-five states have joined together... ...to ensure consistent academic standards across america.

these internationally recognized benchmarks... ...are unlocking a better way to prepare our children for college and their careers. because when our kids do better... ...america does better. let's reach higher. let's invest in our teachers and inspire our students. let's solve this. you have to dig a little. fidelity's etf market tracker shows you the big picture on how different asset classes are performing, and it lets you go in for a closer look at areas within a class or sector that may be bucking a larger trend. i'm stephen hett of fidelity investments. the etf market tracker is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea.

let's send it over to carl one time in chicago as he wraps up the big day with mcdonald's, exiting ceo jim skinner. carl. >> thanks, melissa. want to mention ronald mcdonald house ribbon cutting in the

u.s., one of the biggest in the u.s., jim, an incredibly important cause, ronald mcdonald house.com, if you want to donate. >> big event, 86 rooms, the biggest house in the u.s. >> your favorite menu item still? >> today it's grilled snack wrap with no sauce, chicken. >> your least favorite? >> i don't have a least favorite, carl. >> competitor you most admire? >> sorry. >> item you're upset you passed on? >> i don't think there's any items that i passed on that i'd be upset about. >> will mcrib ever be all year long? >> in germany. >> why not in the u.s.? >> it's just not a sandwich people buy every day. it has its own period of time, typically in the fall. the repeat business after a few weeks is just not there. >> are you going to miss doing this kind of interview?

>> i like doing this, especially with the success we've had. these are not that complicated. >> jim, come back any time. we're going to miss you. >> thank you. >> congratulations. jim skinner, 41 years at mcdonald's, live in chicago. simon, back to you. >> that was a great interview, carl. melissa was very disappointed about the mcrib, hate to be said. >> it is solace to me in germany it's a permanent item. one can always go to germany for mcrib. >> if you're tuning in, here is what you missed so far on "squawk on the street." >> announcer: welcome to hour three of "squawk on the street." here is what's happening so far. i think europe really needs to stop the kind of fumbling and bumbling we've seen. summit meetings solved this thing, it would be solved a long time ago. >> i think you'll see, i predict, some indication that dimon is walking the plank on this. >> much better than expected on

headline, up 1.1 on may durable good orders. >> talking about a tremendous, tremendous penetration when it comes to teens. so you would think someone would say, look, colgate, procter & gamble come in big, 2013 a giant disclosure and i didn't read that on any pieces. >> trading has begun. >> on mobile devices, facebook up 10% month to monday incident april. if you annualize that, 9% growth year over year. mobile is growing very strong. the question is going to be how does the company monetize it? >> it's beginning to dawn on me, i have a couple of more days to work and then 41 years with mcdonald's, and i'm history. a shareholder return is just one measurement. when you look at performance and franchisee and contribution and suppliers and employees and they have been rewarded not only

financially but very proud to be part of the mcdonald's system. >> good morning. welcome to the third house of "squawk on the street." let's get awe check on the markets where we stand right now. the dow higher by 87 points. s&p adding 10. nasdaq up by 22. a ray of hope here, home builders making some of the biggest winners in today's session after positive economic data this week. we had pending home sales better than expected, len ar beating quarterly estimates. rip roaring rally, mdc up 5. take a look at suppliers. chipotle and panera, biggest losers. >> road map for the next hour, another big bank behaving badly. barclay half a billion dollars for manipulating a key london interest rate that affects the larger market. to washington for the latest on

that one of facebook's first executives will join us live to talk about his time with the company and how he's now helping other internet startups find the same success and where you should look to make profit. plus it's been called instagram of video, cinema gram gaining popularity. the founder has a look at what the future holds for his business and is an ipo in sight. plus last word from mcdonald's outgoing jim skinner. he only has until friday on the job. how you should play the stock. mi mickey d's down 11%. that and more. start with the news on barclays. the bank will pay $454 million to settle allegations that it tried to manipulate the libor rate, a key international interest rate benchmark on which so many others have to trade.

ee eamon javers. >> what they are accused of is just what you say conspiring to manipulate libor overnight interest rate. the question here left based on what we know as of now, exactly what was involved here. they hint in documents, federal officials do, that there were other banks involved, senior management involved at barclays and cftc's bart chilton on our air earlier today. he explained just how significant this was for the global economy. >> these libor rates impact the credit rates, interest rates that people pay for everything, individuals and businesses. whether or not it's mortgages or credit cards or car loans or even students loans. so it's hugely important. >> chilton explained exactly what they found, which were documents relating to the way barclay's reported what their borrowing costs were to government and other employees.

take a listen here because chilton explains he was astonished by what they found. >> when you start to see some of the e-mails we've uncovered, it's pretty amazing. these guys, the traders were sort of barking orders to the submitters like they were at a fast-food restaurant. i'll have a number five. >> guys, one of the key questions for barclays and any other banks that may have been involved in this is what is the civil exposure here in terms of potential class action lawsuits there. have been several class action lawsuits filed in this arena already. i just got off the phone with an expert in this issue who explained that anybody making a class action case here might have a difficult case because they would have to prove that a specific submission by barclays on a specific day affected interest rates, and therefore there was a net gain or loss. you'd have to prove a loss in the case of a class action suit. it might be very, very tricky to work all that out.

you can be sure, guys, there are trial lawyers who are looking forward to making that case. simon and melissa back to you. >> we're out of time, but i would ask you, are the other banks involved in the investigation including citigroup now clear or does the international investigation continue? >> we don't know who else was involved in the investigation based on what the documents were that were submitted this morning, the department of justice says it has a criminal investigation ongoing and also says barclays has been cooperating in that investigation, simon. >> thank you very much for that. the view from washington. time for sidewalk on the beat, auto parts stocks, retailers of those parts dropping sharply today. is this an indicator of bad things for the industry. phil lebeau has more. >> they rallied, take a look what happens happened since the warning yesterday that june sales coming in at the low end of expectations, up 2 to 2.5%. that's why we're seeing the

selloff today, not just with o'reilly, across the board. auto parts lower on softer demand. the reason that's a concern, for sometime wall street has been bullish on this sect or on the idea we have aging vehicles. therefore, these guys are in the sweet spot of the market. take a look at all of the major auto stocks, retail auto stocks, auto parts players over the last three years. all of them have had a spectacular run with the exception of what's happened over the last week to three months. so when lou at this, here is the idea behind aging auto vehicles. experian automotive out with new data. look at this chart, this says it all. 21.5 in united states, 21% 16 years or older. a lot of these vehicles on the road. the idea is, the auto parts suppliers should be in the sweet spot of people wanting to take

care of stocks. this spooked investors piling into these stocks over the last three years. >> when take you a look at used auto and new auto dealer such as auto nation, they move according to how auto stocks are doing, vehicle sales are doing. doesn't matter if they are selling aged -- used or new vehicles. >> traditionally they do move in lock step with new vehicle sales. having said that, melissa, when you have a number of older vehicles out there, eventually when they come in, it insuranche market. they may not buy new or used but churns, that's what people are waiting for in the auto sector. >> phil lebeau, thanks. let's check in with rick santelli. >> i'm not fond of talking about europe. we're not going to talk about it the same way. i don't know about you viewers and listeners, i hear plan after plan. supporter, how long has this stuff going on with greece

thinking he would tell me three, three and a half years. he said since 1838, he believes that was their first default. it's hard to take the euro karat crats, technocrats, finance ministers, maybe the only person angela merkel. they reversed. one thing sarkozy did raising the rate, lowering it down. talking about reforms. not reforms going in a market friendly direction. these are reforms trying to perpetuate the welfare state. this really is in many ways europe's noble quest, which made me and a lot of my friends think of a great movie in 1975, the holy grail. but in this case, the issue really isn't the quest and trying to arrive at the holy grail, it may be more of a holy fail. now, as you watch the scenes from that famous monty python

movie, let's try to set the stage. you can't help but find humor in this. you have the knights of the roundtable coming in on horses, finance ministers, all the bureaucrats, analysts, economists, they are basically all saying, yes, we have a plan. we're going to work this out. it's all going to be great. you have that black night, europe's old school ways standing there guarding the old guard, limb after limb is gone. all the reforms they need to do, they are chopping away. what you have left is nothing but the torso guarding the old ways. you know what the final word was from the black knight, a, running away, europe's old school ways are not going to die easily. the humor and watching this quest to try to solve it, i think the market is running out of patience. but let's not run out of humor. i know it's a noble cause. in the end, do you really think all this is going to come together in a timely fashion?

i don't think so. carl, melissa lee, back to you. >> all right. thank you very much. rick santelli. >> let's get a market flash from bertha coombs. >> simon, to continue the monty python theme, something different. monsanto shares rallying after top and bottom line, $4.2 billion driven by strong sales of corn. if you take a look at corn these days, corn strong. corn futures up about 18% this month. they expect next year they will see 5 to 13%, 10% increase in corn seed pricing. back to you. >> thank you, bertha. up next on the program, one of facebook's first five employees. now of course in venture capital, he's going to speak out about his time during the company and the very first days when he met mark zuckerberg and how he's helping other internet entrepreneurs. where you should head as an

investor.

eight years ago four students sat in a harvard dorm room and created the biggest social media company in the world. today there are more than 3500 employees at facebook. matt, one of the first five employees hired at facebook. matt, great to have you with us. we're just discussing how you got to facebook. you're part of the founding team at linked in and got recruited over by common friends. >> that's right. silicon valley works as a network and ecosystem.

i was fortunate to be part of the team at linked in. when mark and dustin dropped out and went to silicon they brought in peter and peter the team recruited me to facebook from linked in in 2005. >> i think a lot of investors at this point are wondering about zuckerberg and the team and wondering whether they have shareholder interests in mind. from the early stages, was that a primary goal. i'm sure there's a lot of silicon valleys out there whose goal from day one is to bring the company public and have shareholders. did that surface in the early days of facebook. >> mark is an extraordinary entrepreneur and leader. the team there is extraordinary all the way around. i think the company has always been focused on the right things. >> meaning shareholder values, shareholder interests, increase in shareholder values. >> there's a lot of things the company needs to do right. >> right? i get the impression they are

just focused on being cool, having cool stuff and not profit maximizing in the long-term. >> i don't think the company concerned itself with being cool. i think it concerned itself principally with it's users, platform developers and advertisers. >> how sustainable do you think the business is, when we see them paying a billion dollars for instagram and rush to capture the startup, is that an indication of instability at the heart of what they are doing, a realization the industry moves so fast they could be overtaken. >> instagram a benchmark investment, where i'm on the board of directors. instagram and facebook are great examples of net work affect business, really focused on and passionate about at benchmark, something i'm passionate about. >> what does that mean? >> network affect product of business is where the value of the service increases exponentially as the number of people increases yearly. those types of product models are incredibly strong and

lasting. we have a lot of examples with network models, instagram, twitter, yelp, drop box. it's a very, very powerful product and business model. >> the uk regulator is investigating this decision to buy instagram. there is a concern they could restrict or limit other app' ability to upload to the site and prevent apps, other photo apps from operating optimally. do you think mark zuckerberg has that killer instinct? is he has competitive he would like to block others? >> i'm not an expert on some of those issues. far be it for me to try to speak for somebody else. >> you know the man, though. what is the nature of the man? would he seek to gain that competitive advantage? would that be the reason for the business? >> mark is a great example of the sort offent present your we look for at benchmark. he's very much a missionary and vision area. he has a long-term focus on trying to achieve what he's

trying to achieve. we're very fortunate to be able to work with people who have those qualities at benchmark like jack dorsey at twitter. i have the great privilege to work with mark at facebook and reed hoffman at linked in before facebook. whether it's jack, true drop box, dustin at ensanaa, it's a quality that we look for in every entrepreneur we back. >> matt, i want to ask you about one of the biggest issues one of the analysts today have flags as they come out issuing coverage, monetization of mobile. having been there at the founding of linked in and been there at facebook, also the founding of that company, i'm wondering if monetization is inevitable, just a matter of how long, linked in seems to be on the more successful side of making mobile work, having users use mobile and having that make money for them as opposed to a facebook. i don't want to knock facebook.

a lot of companies having problems shifting those users to mobile and making the same amount of money off of them versus pc user. >> the emergence of mobile is very, very exciting trend. it's very real at this point. there are hundreds of millions of iphones and ipads shipping in the market. analysts saying sampson galaxy s iii the new smartphone will ship tens of millions of units in the market in short order. so much demand they are having supply issues. no question mobile is important and exciting. >> making money off of them. some are more successful making money off mobile users than others. that's unknown for facebook. >> mobile is tied into social and local. people talk about all three very often. we see a the lo t of convergenc among those trends at benchmark. we have eight companies in our portfolio which derive the majority of revenue from local, tied into mobile, that revenue represents an aggregate of $800

million currently. these are small startup companies. the things emerging in both mobile and local are extremely exciting to see. >> matt, we're going to have to leave it there. thanks for stopping by. >> thanks for your time. an exciting time in the valley. at benchmark five ipos and nine m and a in our portfolio alone. there's a lot going on in silicon valley. >> despite the market, despite the disappointment on facebook. >> if you find a crystal ball, plse ship it to me out in california. >> we look forward to the ball arriving. matt kohler. >> gas prices continue to fall, counting down the close in europe. back after this. ♪ on the road ♪ and we know that it goes on and on ♪ [ female announcer ] you're the boss of your life. in charge of making memories and keeping promises. ask your financial professional how lincoln financial can help you take charge of your future.

♪ ♪ oh, oh, all the way ♪ oh, oh [ male announcer ] introducing a powerful weapon in your fight against bugs. ortho home defense max. with a new continuous spray wand. and a fast acting formula. so you can kill bugs inside, and keep bugs out. guaranteed. ortho home defense max. so you can kill bugs inside, and keep bugs out. guaranteed. this is new york state. we built the first railway, 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.

welcome welcome back. i'm bertha coombs at the market

desk. we've been watching chairs of chipotle mexican grill getting hit this morning on comments from analysts at itg research. they are cutting their forecast for a revenue growth at chipotle. they think these days it's more driven by price increases rather than organic growth and they now see for second quarter, which they will report next month, that same-store sales will be up 7 or 8%. the consensus is for 10% increase. melissa. panera is also hurting on the same type of observation. back to you. >> bertha coombs, thanks so much. let's head to rick santelli in chicago. let's take a look at energy and commodities. rick. >> i'll tell you what, melissa lee, wasn't that long ago in april, we did that natural gas conversion of a ford f-150 truck. so i like nat gas. porter, he's really come around, my guest, and he read an article on monday that helped convert him. we don't agree on everything, you'll hereby the end.

porter, what was it about the article, who wrote the article, and how has it brought you into not dark side by the light side, the better side of energy. >> liam denning, comparative gas prices and natural gas. he used the price of $91 for brent at the time and natural gas, barrel equivalent price 16 0. that's six to one spread difference. you and i being floor guys when you see a spread that wide and you know there's fuel and supplies coming out of everybody's ears, everything to do with shale, that's going to come in. not a price rate purchase the price dynamics aren't as good as when i did in april, but still wonderful. what's grabbing you about this story? what are you excited about it? what has to happen? what has to happen that hasn't

happened. >> what has to happen, i just filled up last night at $3.60 a gallon. take one-sixth off, we're talking $0.60. the cost of doing business anywhere in the country completely changes. fertilizer changes, delivery food changes, all of it, a deflationary event, money in the consumer's pockets. how it gets there, might be a little messy. that's where you and i agree, single fuel, an option on all ford's commercial vehicles. not yet for the consumer. you're talking about dual fuel. >> that's where we disagree. pictures of various vehicles made by ford. we know honda makes various vehicles. their mono fuel, only run on nat gas. if you're not by a station you're out of luck. dual fuel is the answer. anybody listening out there? back to you. >> european close right after this.

forty-five states have joined together... ...to ensure consistent academic standards across america. these internationally recognized benchmarks... ...are unlocking a better way to prepare our children for college and their careers. because when our kids do better... ...america does better. let's reach higher. let's invest in our teachers and inspire our students. let's solve this. and sounds vying

for your attention. so we invented a warning you can feel. introducing the all-new cadillac xts. available with a patented safety alert seat. when there's danger you might not see, you're warned by a pulse in the seat. it's technology you won't find in a mercedes e-class. the all-new cadillac xts has arrived, and it's bringing future forward.

simon down to the european close. >> for europe, one thing really they keep in their irons that's the thursday-friday summit of 27 heads of state. i mean, actually where we are now, expectations seem beaten down. i would argue actually the likelihood, some sort of positive surprise coming out thursday, friday. it may just be that's about bailout cash being able to buy in the secondary market.

esf, efn, going into spanish bonds potentially or perhaps covering ecb come in increasingly. that's what -- >> european markets closing now. >> unless everybody waits for that summit. it's very interesting the way you've had a broad-based rally right across europe. if you look at london or frankfurt, for example, two-thirds of the stocks in the national indexes have risen. all of the cac 40 in paris higher. a lot has to do very much with the open we had here on wall street and the fact we bounced almost triple digits, of course, at the open. we sold into that. the other news overnight is speculation china might ease further. that has helped some. merkel, however, up today in parliament and german chancellor quite clearly taking the big stuff off the table for the thursday-friday summit. it's imperative germans don't promise things they can't deliver and implement what they

have agreed. joint liability, she says, can only happen when sufficient controls are in place. euro bonds off, by indication also probably means, of course, joint bank guarantees will be off. however, they will come through with some fans. don't let that confuse you while i'm away on holiday. let's look at the yields. of course the story of the market coming into, as the summit advanced, people thought maybe there will be more help. maybe there will be joint liability, euro bonds will come. everybody was talking about. remember the redemption fund we were talking about? that pushed the yields down. markets ready, bond market rallied. disappointment pushed yields back up. that's where we are on the ten-year in spain. it's a very similar picture if you look over in italy where you have that rally in the italian bonds and eventually sold into that. summit does represent an event

risk in the market. so you would expect or fear something could happen that the shorts could cover. that isn't what you've seen across europe today. i can show eubanks that have actually risen during the course of the session to far. these will be the italian banks that have done well. it's not the rollicking rally. people see positive news, not where people see the market coming out. i would argue the risk is for positive upside though not at a big level. did i explain that? >> i get you, simon. i get you. he let's head to mary thompson on the floor of the exchange. >> melissa, as simon point out we're well off the highs of the day. basically broad-based halry today pending home sales numbers helping the market in today's session. also helping dow jones home index approaching a three and a half year high.

not only pending sales numbers strong up 5% in the month of may, also had decent earnings from len ar, better than expected from lennar, then on the back of important pricing data, positive from case-shiller yesterday helping to drive a number of home builders to multi-year highs in today's session. among them ryland, two-year high, standard. lennar, a closing high, intraday high for the year on the back of those better than expected earnings reports, orders, as well as lennar up for the fifth car in a row. this should be giving a positive lift to the consumer discretionary sector because of weekness, macy's, weakness in auto parts. this is a lagging sector in today's session, others utilities, industrials, health

care. those are leading the broader markets higher. within the energy sector, continued strength in a number of natural gas stocks. cabot one of the performers. as natural gas stays within a five-month high, the fuel helping to drive the natural gas stocks higher as well today. we do want to note energy, which is a member of the utilities index higher, record demand in texas because of the heat wave there. that's driving utilities higher. dow higher as well, melissa, do you up 70 points. >> let's get analysis. richard bernstein, cnbc contributor. richard, where does the market go from here? >> morning, simon. i think in the near term, you said a few minutes ago, could be a positive surprise, a negative surprise. in the near term continued choppy market. i personally think longer churn outlook, six to 12 for u.s. market is quite bright.

not sure of emerging, europe but true for the united states. >> why do you say that? to me i think a lot of people increasingly are discussing whether or not advanced markets developed countries are in depression. you know, the united states is really, let's not forget here, a budget deficit of 7% of gdp, fed flat out. its balance sheet is as big as it's ever been, still we're losing traction on the economy here. >> first you mentioned one thing. you mention a whole bunch of things. i'm going to hone on one thing, the fed's balance sheet. let's be honest, ecb's balance sheet is bigger than the fed's. the people's bank of china, their balance sheet is 50% bigger than the fed's. maybe the u.s. is the smartest kid in summer school. but if that's true, that's very good for u.s. markets and very good for u.s. assets. >> that's not the question i was asking you. i was asking you why the economy isn't doing better here. the answer to that question is

important when you're picking stocks. >> no. i'm sorry. that's a very good question. look, i think we went through monetary and fiscal policy, a lot of monetary and fiscal stimulus. we could argue whether that was as effective. the reality is traditional monetary and fiscal policy is geared towards credit sensitive sectors. we had a bubble in the credit sensitive sectors. history shows very clearly you can reflate a bubble. not just in the united states but around the world, we're trying to counter-act deflation sensitive sectors, that is not going to work. history shows that very clearly. i don't think it's a matter of monetary policy or keynesian, that's where the bubble was, have to look for a new solution. >> you made it clear you like u.s. focused stocks, trying to

avoid multiics national banks specifically. does it work to focus on u.s. focused banks at this point? one data point we heard out of lennar one headwind is very conservative lending standards which gives you the impression perhaps it's harder to get a loan out there and maybe banks aren't lending as much and therefore not making as much money for domestically oriented banks. >> melissa, your point is another good one. look, let's compare to 2007, 2008. no bank is going to be as lenient as they were in 2007, 2008. i think what's important to the markets is are credit standards easing on the margin. i think they are. you're seeing that in terms of refi data and malbusiness lending data where that is beginning to pick up. is it robust? of course not. is it improving? yes, it is. that's what the markets are paying attention to. i think you're seeing that in housing stocks and other deep cyclical stocks. >> this is all about psychology. i know we're out of time.

this is all about psychology. if there's one thing that could turn this around, what is it? >> if there's one thing that could turn this around. i would argue if you can only follow one economic statistic, you want to follow weekly initial jobless claims in the united states. i think that is the key for household cash flow. if we see u.s. cash flow improve, i think we'll see u.s. markets improve. >> every thursday, rich, thank you for your time. rich bernstein joining us, cnbc contributor. thank you. >> let's go back to headquarters check in with bertha coombs with a market flash. >> consumer discretionary sect or up 7%, but a notably weak point are the department stores. citi removing macy's from conviction list saying it's concerned about the high-end consumer slowing down. they downgrade saks and nordstrom's. you can see all three are down on the day. back to you. >> thank you, bertha coombs. straight ahead the hugely popular app well on its way of becoming the instagram of video.

we'll speak to ceo and co-founder of cinemagram next. you have to dig a little. fidelity's etf market tracker shows you the big picture on how different asset classes are performing, and it lets you go in for a closer look at areas within a class or sector that may be bucking a larger trend. i'm stephen hett of fidelity investments. the etf market tracker is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea. he speaks a weird language. [ gargling ] [ gargling ] he drinks green stuff. he says he's from albuquerque. i'm not buying it. i mean, just look at him. and one more thing -- he has a spaceship. [ whirring ] the evidence doesn't lie. my dad's an alien. [ male announcer ] the highly advanced audi a6. named to car and driver's 10 best. ♪

named to car and driver's 10 best.

recently, students from 31 countries took part in a science test. the top academic performers surprised some people. so did the country that came in 17th place. let's raise the bar and elevate our academic standards. let's do what's best for our students-by investing in our teachers. let's solve this. welcome back. welcome back. coming up in just a bit, halftime face-off. whether this stock is a buy. retailers in the red following citi down grades of the analyst who made the big call is our special guest. the trade of the month as nat gas keeps moving higher. we'll reveal the best names to play that rise. melissa, back to you. we'll see you in about 20

minutes. >> look forward to it. facebook acquisition of instagram led to a new trend in mobile apps and the race to become the next instagram. we think we found a contender, cinemagram, combines filters and network features of instagram but laos users to animate features. since the launch march 8th, cinemagram attracted users making it the fastest photo sharing sites. temo chalasani is with us. hi, great to have you with us. >> hi, melissa, great to be here. >> in terms of the number of users, an impressive ramp. how are you seeing it now months after you launched? the same sort of trajectory? >> where our growth is actually accelerating, we're doing better every week. people just love expressing themselves in this new media. >> how do you make money? >> for the moment, we just want

to make cinemagrams, a very popular way to express themselves. we're not focused on monetization. it's an entirely new medium that is potentially useful to tens of millions of people. that's our entire focus for the moment. >> at the same time longer term it's got to be in the game plan to make money if you're going to operate as a business, temo. what are possibilities in terms of monetization. >> certainly. like most social networks, we need to reach a critical mass and a large size before we think about monetization. but seeing that where we're creating a really short video snippets, there are a lot of opportunities around monetization especially with advertising. >> but don't people usually -- i can understand people wanting to share photos of themselves, particularly good photos. don't most people when they look at videos of themselves not like it as much. they won't be as prone to sharing it as they would

pictures. this is not the same as facebook arguably, is it? >> no, it's not. it's a very good point, simon. video s are traditionally difficult to do on mobile devices. that's why we're hitting on something new people love doing. what we propose are actually very short segments of video, two to four seconds in which the majority of the video is actually a still image. it almost looks like a photo but some part of the photo comes alive all of a sudden because you pick that region to be animated over the course of two seconds. so there's a surprise element to it. it's neither photo nor video, really, it's a stunning hybrid between the two medium. >> what about people who say there's a bit of a bubble in this area. you've got social cam individuali, plenty of others around. you're all chasing the same -- you're chasing the same critical mass, really, aren't you? >> yeah, it really is up to

people to figure out what medium they love expressing themselves in at the end of the day. there's definitely a bubble in the area, especially after the instagram launch. but companies that are providing something new and something that's valuable to users will be around well after the bubble disappears. >> all right. so you, yourself, temo, just said there's a bubble in this area. we've been calling you the next instagram. how far can we go with that analogy? are you looking for somebody to scoop you up at bubble prices. >> yes, please. >> you don't have a game plan to monetize now, it would be a great time to be bought. are you for sale? >> no, we're not for sale. we're actually just focused on getting millions and millions of users. we actually see a way to replace a large number of digital photos with cinemagrams. there's no reasons for images online to be the same as images in print.

that's the goal we're chasing. we're not looking for short-term acquisition. it's really early to say whether or not we'll be the next big photo community. only time will tell. but the indication -- the enormous appetite for people to create and consume these cinemagrams are a great indication. >> all right, temo. we're going to leave it there. we hope to speak to you again soon and give us an update on your business. temo chalasani on cinemagram. >> on the west coast, you don't have to monetize, bring it to market, sell it, just have to be in it. >> look at fundamentals, how companies make money. >> you do. >> for shareholders. >> the east coast does. >> consuming cinemagrams, i keep thinking of koourm consuming cinabuns. mcdonald's outgoing ceo jim skinner. >> speaking of buns.

>> plus the stock moving forward. don't go anywhere. this is new york state. we built the first railway, 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. sleep train's 4th of july sale is ending soon. time is running out to get the hottest deal on a new mattress. right now, save on sleep train's

most popular posturepedic and beautyrest mattress sets. plus, pay no interest for 36 months on tempur-pedic and serta icomfort. big savings and interest-free financing? these deals aren't just hot... they're explosive! sleep train's 4th of july sale is ending soon. ♪ sleep train ♪ your ticket to a better night's sleep ♪ earlier on the show jim

skinner outgoing ceo of mcdonald's, exclusive exit interview, a lot to say about his time with the company, eight years, 41 years from the time you started there, how it performed over the years. take a listen to this. >> i think all ceos have one obligation. that is, of course, to grow the business and sustain the growth of the enterprise for all the stakeholders, but most importantly to provide leadership for the future. i've done that. a move to the future, turn it over to the younger guy, younger team to lead us into the future. one element of the plan, the one that's driven growth, the people. the people are the most significant thing in any enterprise, specifically at mcdonald's. around the world the economic environment is not very good right now anywhere but we are prepared to perform just as well in that environment as we have in the past. when things turn around, we're

going to be in the best position of anybody to continue to grow. >> is mcdonald's going to be blamed for making people fat? >> probably. i think most people that are trying to legislate behavior have to have someone to pick on. since we're the biggest and the best, that's where they have to go. and the comps be slowing a little bit because of the head winds we've had and some of the economic issues we've had to deal with. but nothing that is not going to be able to be cured by, again, having the appropriate messaging and marketing plans and communication around every day affordability. just as we had to do in '07, '08, '09, the last few quarters, second half will be a little easier than the first half. >> jim skinner, we wish him well at cnbc. what is ahead now for that business as mr. skinner steps down. of course don thompson now takes

over. managing director and senior analyst joining us on the program. mr. skinner outlined there the difficulties they have, the comps to a certain extent looking weaker. they might have to reposition, reemphasize the value aspect of the business. the stock is down 11% so far this year. what happens from this year. >> he's cautious, continue the plan of investing during a downtime. concentrate on taking share. when economies around the world improve they will be the leader out there. in this market they know the playbook. go to value. you're seeing that in germany, france, japan, areas where you're seeing austerity measures such as spain and portugal. i think they are smart holding onto their shore. the category, as he hinted, contracted. it's a time you're seeing slower comp sales. >> of course the stock has been

a phenomenal performer, especially last year. i know it's dividend player, that's why people like it. what would reinvigorate price action from your point of view. >> you're correct. it has been a staple in nature. certainly new product lineups. the beverage launch phenomenal compounded same-store sales growth. remodel campaign in europe drove out sized comp growth. you need a catalyst like that. don hinted at looking at regions in the world that he could take products that sold well and scale them across the system. that seems to be his focus is to try and use that scale across the system to drive same-store sales success. >> matt, what specifically is going to be the catalyst for a year in which mcdonald's seen an 11% decline. if you take a look at a more u.s. focused quick serve restaurant such as jack in the box you covered, that vastly outperformed mcdonald's so far this year.

what's going to cause that turn, catch up to other buy rated names in your universe. >> we do have buys on both of them, we like jack in the box more, certainly for the near term catalyst you have. we will see the continuation of remodel campaign driving same-store sales growth at mcdonald's. they have more european exposure. global sales will be lagging. more domestic focus peers, pause in the share. dividend is important. when we start to focus on 2013, there is a large portion of g and a expense that will not be repeated. it has the promise of coming back to being a 10% or better eps in 2013. >> that's a long way away. what's your top pick now as people are looking to focus more on united states oriented companies as opposed to companies with a european exposure. >> right. i like starbucks here. they do have european exposure

but it's very small. they are actually investing to position the brand better coming out. i think they have commodity cost tail winds already as well as panera is another one that has taken a little step back on evaluation front and also will start to see the wheat commodities work in their favor as well. still very good expansion domestically for them. international is a longer term opportunity and they have a lot of cash on the balance sheet to make potential acquisitions. >> that's panera you're talking about. >> that's correct. panera. >> matt, thank you for your time. >> some final thoughts on market action right after this. introducing gold choice. the freedom you can only get from hertz to keep the car you reserved or simply choose another. and it's free. ya know, for whoever you are that day. it's just another way you'll be traveling at the speed of hertz. so what i'm saying is, people like options. when you take geico, you can call them anytime you feel like saving money.

it don't matter, day or night. use your computer, your smartphone, your tablet, whatever. the point is, you have options. oh, how convenient. hey. crab cakes, what are you looking at? geico. fifteen minutes could save you fifteen percent or more on car insurance. in your fight against bugs. ortho home defense max. with a new continuous spray wand. and a fast acting formula. so you can kill bugs inside, and keep bugs out. guaranteed. ortho home defense max. in every way, shape, and form. it's my dream vehicle.

on a day to day basis, i am not using gas. my round trip is approximately 40 miles to work. head on home, stop at the grocery store, whatever else that i need to do -- still don't have to use gas. i'm never at the gas station unless i want some coffee. it's the best thing ever. as a matter of fact, i'm taking my savings so that i can go to hawaii. ♪ so that i can go to hawaii. high schools in six states enrolled in the national math and science initiative... ...which helped students and teachers get better results in ap courses. together, they raised ap test scores 138%. just imagine our potential... ...if the other states joined them. let's raise our scores. let's invest in our teachers and inspire our students.

let's solve this. ntelli, taking a look at etx versus the dow. >> as we look at the dow jones chart on the screen now, obviously we're trying to make a comeback. look at the right side versus left side. remember, treasury yields are low, prices high, interest outside, corporate securities. the next chart, high yield. you can see it's also up on the year. it's come out of the chute stronger. the winner, investment grade lqd

on a tear here. i think this speaks volume, a community of fixed income investors even in the etf world looking past treasury but not past fast income period. >> etfs may be the way forward. thank you, rick. what's coming up at 5:00. >> speaking of etf hits the market, take a look whether that's a great way to eat beat the summit. number one analyst mark schoenebaum tomorrow. an mlp investor will give us his buy list for all those out there looking for yields. >> that is huge tomorrow on the program, the decision from the supreme court on the obama care. will it be struck down? if so in our time. huge reaction to big moves on hmos. >> hmos, hospital stocks and medical device is. three buckets w