but there's one... one that's always eluded me. thought i had it in the blizzard of '93. ha! never even came close. sometimes, i actually think it's mocking me. [ engine revs ] what?! quattro!!!!! ♪ welcome back to "squawk box." let's get back to our guest hosts for the last word. they've done so much in japan in terms of buying reits, the things you never thought the central bank would do, that

maybe buying s&ps is not that crazy. bob's all for it. do you want to run the dow up to 30,000? >> 100,000. >> 100,000? performance would be phenomenal, right? and we'd all be rich. >> the japanese have the equities, reits, they bought a whole bunch of investments. >> why are you such a stick in the mud? >> i guess i'm a traditionalist. >> look at the wealth creation. >> yeah. i'll leave it to bob to -- >> thank you. >> it might not work, bob. >> we've got to get back to the real economy. we've had too many companies report better than expected earnings, revenues that have been this much better, and give negative forward guidance. that's got to turn. we complained of a lot of things. we haven't put the earnings on the table. in the meantime, we've got low inflation and a global economy that's growing moderately, and central banks that are, back to your point, giving us all kinds of ammo. >> thank you. >> we've got to go. "squawk on the street" begins right now.

it was a year ago that this vision you're looking at right here became reality. we're talking about our home at post 9. the first set on the floor of the new york stock exchange. back when the dow was about 1,000 points lower, ushering in a new era for cnbc, nyse and "squawk on the street." i'm carl quintanilla, with melissa lee and jim cramer here at the new york stock exchange. faber is off today. bernanke's on the hill again. durables were a miss. the cap x component was a blowout, the highest in a year. italy had a not bad ten-year auction. nikkei had a second straight day of loss, but otherwise mild gains in asia. the day after the second triple-digit gain in three sessions, helped by the fed

chairman's assurances that the qe is here to stay. he continues the second day of testimony at 10:00. we'll that live. the agenda may look like a snoozer, but will shareholders demand answers of what apple will do with the cash. target shares trading lower premarket. confusion on whether to include or back out the cost to launch in canada. priceline shares soaring with revenue growth better than expected in latin america and asia, and resilience in europe. >> wow. >> believe it or not. we begin with a big question, where are the markets headed next after the 216-point drop. the rally coming after fed chairman ben bernanke told a senate panel he supports continuing the bond buying program. bernanke returns to capitol hill in about an hour from now for part two of his semiannual

testimony on the hill. the testimony is expected to be largely the same as given yesterday. of course, it's q&a that will yield different responses, maybe different nuances on qe, and the cost of qe. >> this is a tough bernanke. this is a bernanke that basically said listen, guys, i did my job. what have you done. i'm trying to get employment to rise. but at the same time you may worry about inflation. but the lowest inflation since any fed chief since post-world war ii. very sure of himself. not afraid to take on anyone down there. if you felt that the fed minutes, you sold stocks on the fed minutes that were a month old, that's clearly wrong. there's good reason to take a profit maybe, but it was certainly not a rational reason. >> right. >> a lot of pressure on him yesterday, jim, to lay out, how are you going to unwind $3 billion in portfolio size. this committee on the house size, a little more aggressive, for releasing documents that

would lay out how that exit happens. he didn't give away any clues yesterday. >> no. at some point someone said are these bonds safe. their treasuries and mortgages. but are they safe. it's like, wow, you could be -- you could kind of play a larger skeptical word game and say no, they're not safe because you bought so many of them. but obviously the credit's safe. does he have to tell more? i think that until he gets this employment somewhere near his level, i think he's going to play it very close to the vest. >> interesting, fitch out today with a note saying if the sequester happens, even if there's a shutdown, that in and of itself is not enough to bring a aaa down to, say, a double a. that there will be a deal to make it necessary to keep the aaa. >> i have a aaa car in my wallet. they're very reliable. >> really? usually it takes a couple of

hours. >> no. you've got to get jersey to play. they're there in a jif. honestly, i think it's an overrated issue. the market sold off 19% the last time we went there. i remember going to the eagles training camp. they were obviously not focused on winning. i said, you ought to be worried about the redskins and cowboys. the giants won the super bowl that year. i do want to emphasize as much as you might want to make that an issue, i come back and say, where do you want to put your money? in french bonds? grab some of the italian bonds? how is that comedian doing? i didn't think he was that funny. >> do you speak italian? >> that's probably the problem. >> lost in translation. >> i'm a cross between lennon and -- >> on the one hand you have what fitch is saying. some people say why do you care about what fitch is saying. and what bernanke said yesterday. sequestration will be a headwind for the economy, consumers faced the headwinds with the gas prices at this point.

that is first and foremost in terms of the market's minds and how you treat stocks. at this point, jim, with the fed chairman saying we stand by qe, we're here to stay, at least for now, does italy, does what's happening there come more center stage at this point? >> i used to tray started trading treasuries they were 13% for the 30, 7% was the -- when rubin was treasury secretary. so i don't want to go for the scare tactic. i don't want the euro going down, because when the euro goes down, the dollar goes up, oil goes down, and people say there's a recession. i tend to focus on what home depot says. frank blake, that was some quarter, and he's going over the different divisions that are doing well. i'll go to target and i'm like, wow, they're headwinds there. >> shares of target falling in

the premarket. some confusion about the results. it all comes down to canada, and whether the costs of launching there are included. sale of credit card receivables. even thompson reuters, analysts are not in agreement on what the numbers are supposed to be. >> people might say, how is target at 65, the initial number that came out was, it had items in it. it's funny, because it's like, stop, there's items! items meaning it did look better than it thought. the contrast to me is between target and dollar tree. >> yes. >> dollar tree, the previous time the dollar companies all reported, they said there's going to be margin pressure. margins expanded 70 basis points. suddenly you've got a group that's beaten down. and they're rising from the ashes. coach-like, but that's a whole other story. target has run. and if you're going to run, you better deliver. and target did not deliver. walmart, by the way, did deliver. i think it's important to point out walmart, home depot, standouts so far this quarter.

>> you said the 70 basis point increase driven by increase in gross margins, 15 basis point increase in gross margins. sba expenses coming down by 55 basis points. they're selling items at $1 or less and are still able to bring down sg & a. that's a strength for dollar stores in general. it's funny, because of late people are questioning the strength of the dollar stores with walmart. now we have dollar tree, a very good quarter. >> these were heavily rated stocks by short funds. they said, if dollar tree says this, then dollar general will say it. then dollar general actually said it, and that kiboshed the whole group. there has always been a strong sector here. but they did start taking food stamp. a lot of chatter is food stamps would be curtailed. maybe that will hurt them.

tobacco wars, these stocks have a lot of room to go higher, if dollar tree goes -- >> tonight, limited tonight, some crazy rumors going around about coach. i don't know if we want to say it out loud. >> the stock is moving -- the stock is sharply higher pre-market. in that way these rumors, it's a takeout target. but, you know, so what. >> i struggle with it. i thought -- i struggle with the dimension. because it's so unfounded. that even if you mention it, perhaps it gives it credence? i don't know. like journalism 101. >> do you participate or observe. that's the problem. >> the stock's down a lot. it's been a horrendous performer. >> i mean, i think that our sort of thinking is if the stock is moving in response to something, and it's circulating the street widely, then you have to address it. but, you know, again, we don't know. anybody could be floating this

rumor out there. >> we do know that that high end, i've been calling it the gatsby index, that there's lots of fire power among the high-end companies, especially in europe when they decide they want to come over and buy coach. does frankfurt want to sell? it don't know. but this has got to be the most hideous stock of the year. and it was just ripe for rumor, if not for reality. >> well, it's got some competition in apple. the shareholder meeting getting set to get under way in about three hours. this, as the stock has fallen more than 35% from the september highs. the watch is on to see what tim cook might say about that cash hoard and re leading some of it to shareholders. there have been analysts who say they're going to double it. although it's the -- the meeting is not generally where news gets committed. >> no. tight-lipped obviously. big reversal interday. i do point out there was also a decision in an east texas court. i point out east texas because

it's historically an insular area. that's driving apple down in pre-market. because i don't want people to know, well, someone knows what tim cook's going to say. the decision came down late yesterday, no one was focused on it. i saw frenetics spike up and apple go down. don't necessarily read that the stock is telling you what apple's going to do today. >> it hasn't been that long since the goldman conference where cook was interviewed. he defended their cash strategy. i wonder, does he double back on any of that today? do they try to keep this as by the book? >> wouldn't that be an incredible misdirection play, if you will, in there. and basically changed everything and said, look, we're going to double the dividend. obviously the lawsuit, if that happens, einhorn could declare victory. i know he wants the preferred. i want growth. i keep hoping for the bid for netflix. >> twitter's worth $10 billion.

>> they tried getting that for 10. where's apple social initiatives? they need to be more social. >> if they come out and at least increase the dividend, jim, do you think that transitions between a growth stock and provide a floor for the stock and accelerate that transition so it's in stabler hands? >> i think it's the level. there's a lot of talk that intel might be coming back. intel yields, every time it yields, stocks go down. maybe this is going to sound a little dire, and i don't mean it to be, but maybe it makes apple stop going down. it's got a lot of people very beleaguered. people say what's happened in this market this year that has really started to make it better. it is the huge number of days that this thing is below the moving average. i think if it stops that, stops

the little bit of -- the salami cutting -- >> go to the doctor, hitting my head with the hammer, it hurts when i do that, stop doing that. >> i used to throw a chair every day. >> every day. >> and my doctor -- i went to my internist and said, listen, every time i throw the chair, my back hurts. well, guess what he suggested. it never happened again. >> on a related story, since we have a minute left here. google, price target sounds awfully familiar now, $9.20. >> i was hoping for $9.22. that is less than expected of this target boost. >> a buy at this point? >> come on, that's the first thing i said. give me a break. this is not -- you want to say to the guy, hey, listen, partner, what's the secret? timing. timing is bad.

i'm sure the person's a nice person and i'm sure the person probably gets it correctly, had a nice dinner last night and comes and does this. i want to say, come on, man, face it, this is not the time or the place to make that target increase. >> his bonus was probably good, since we're back to the $20 billion level of bonuses. which we'll talk about in a bit. >> how about that. fewer people. >> even as they're laying off workers by the thousands, jim. >> more money, more problems, carl. >> after jpmorgan yesterday which got spicy for other reasons which we'll talk about later, too. as we celebrate the anniversary of post 9, we mark the milestone. building footlongs and businesses in this economy. we'll talk live with the man who doesn't talk a lot. one more look at futures as we begin this wednesday morning. mild losses here. "squawk on the street" live from post 9 when we come back.

shares of priceline.com rising premarket. reporting better than expected fourth-quarter earnings. this is international bookings just 40%. priceline showing strength in the rental car and hotel bookings businesses. simon hobbs will have an exclusive interview with jeffrey boyd later on today on "power lunch" at 1:00 p.m. eastern time.

strong quarter. the highlight, international bookings increased, but it also showed a sequential increase, first time in about a year where they were able to do that. >> this was a monster quarter. i think people keep thinking this thing has to end. but it's an emerging market play. in europe, they don't have the hilton and double tree and windham. they have disparate brands. people have to look up and get the best price. i know from the summit, when the europeans come, they're so price sensitive. why did you pick our inn? well, you're $10 less than the other guy. >> and got 30% discount through the currency? >> it's amazing. they're very price sensitive. bookings.com has been a big win. this was quite an impressive quarter. and europeans are still spending. it made me think the downgrades for starwood symbol were hot, premature. marriott vacation, that's also i think premature. this is a hot industry.

very hot industry. >> you would think they would be able to sandbag easily, given so much of their business is done in europe. but the revenue growth guidance was strong, above consensus, even though they did say the variability on guidance was wide because of the uncertainty in the global economy. >> i think when you go through this, you'll see numbers like, you're just not used to seeing. gross, 43% gross bookings, 46.2 million worldwide hotel night reservations. people are traveling. they're just traveling. nothing's slowed down among european travelers. they are still holiday makers to the nth degree. >> you've got to wonder, we had confidence better than expected. results up to the past couple of weeks. not including italian elections. you've got to wonder what now

happens in europe in terms of the traveling, and the confidence among -- >> a lot of one-way tickets out of italy. >> priceline will tell you that they still take their vacation, it's just that they're even cheaper and chintzier. they just can't -- they have a lot -- remember, they work a different schedule from what we do. they work like a 42-week work week in some of these countries. right? we are like a 362-day work week. we're incredible slaves to capitalism there. they're in the era of socialism. >> try to take a sick day around here. when are you coming back? >> i know. i promise tomorrow. monday was the worst trading day for stocks. how can you profit from today's session? cramer's "mad dash" is coming up next. apple shareholders tell us what they want to hear from ceo tim cook at the annual meeting. let's look at futures one more time setting up for the wednesday's session.

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let's get the "mad dash" here a few minutes before the bell. relatively bullish calls on dri. >> red lobster, olive garden, the company reported not such a

great number last week. you thought the stock should be down a lot. then they had a two-day analyst meeting. they said the worst is over. they're making some changes. but the overall theme of the meeting was, listen, we hear you wall street. we've got to make changes in olive garden. we're going to do it. it's an inexpensive stock. >> new uniforms at olive garden. >> that's right. when i go to olive garden, you can't get in. it's always crowded. and i've got to tell you, if they get it right, you've got a real rocket ship. >> jpm. >> a lot of people say, listen, we really liked what jamie dimon said. i wasn't as sure, because i like growth. obviously they're cutting a lot of people's jobs. i never like to sew that obviously. but credit suisse is taking estimates up, reduce credit risk and the extremelining. this is a great company. also it's been a winning stock

from since -- this was the captain ahab period. you've got the whale thing going on. that's all past. what i want to see is all the banks have been soggy here. we can't mount a serious advance unless wells fargo goes up, jpmorgan goes up, morgan stanley goes up. maybe something happens here. i was encouraged to see people did raise numbers. >> interesting, too, one of the takeaways from the bernanke hearing was elizabeth warren asking why banks like this don't pay more for the protection that some believe they actually have. >> that was a little -- you know what. she is -- she remains a firebrand. i've met her -- look, what can i tell you. she stands for popular strain in the economy. a lot of people feel like these guys got away with murder and she is is not going to let this issue go. i think when you look at the bonuses, you say, wow, those guys make so much money, and i make so much less. and there's still a level of anger, but it's not as great as it used to be. >> it would be hard to top a couple of years ago, that's true. "squawk on the street" has

reached a milestone. >> and here we go. a new era for cnbc and the nyse. [ applause ] >> congratulations. >> that is our boss unveil the post 9 set exactly a year ago today. nyse ceo duncan niederauer will talk about the future for the big boards. look forward to another big day of trading.

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that's why the stock hasn't gotten hit. when they get this thing right, it's going to be a juggernaut. >> one reason for the miss on durables, two planes ordered in the previous month. the headline number was a bit of a miss as a result. >> we're watching what's going on in europe. and the euro is one to watch. it's had a big swing in the last couple of days, down about 2.5% against the yen, in two trading sessions. a big swing in the european currency. and of course, still not dictates, but does have a big influence on what happens here in the u.s. markets. >> there's been that linkage trade that people love to do. the euro gets -- the euro gets weak, but sell everything. i think that the problem, i'm being a little hyperbolic, but let's just face it, that doesn't work as well as when our country, the domestic consumer is not doing well. >> there is the opening bell. and the s&p at the top of your

screen. at big board, wall street rocks, nonprofit supporting war heroes and first responders, over at the nasdaq, a provider of cloud and marketing software. we've been over target -- the retail action continues. i wonder if you step in front of the names that are going to be reporting after the beg tonight. >> you know, jcpenney, i think it's an aberration. macy's and sachs, these companies are still not growing. they keep talking about their online business being incredibly strong. they had sandy. people were shut in. did a lot of business online. the overall tone of all these, with the exception of auto zone, who says the last two weeks of the quarter were hurt by delayed federal tax refunds. and they went on and on about that $30 billion that didn't get to the consumer. you throw that in, you throw the gasoline prices, you throw in

the tax ending holiday. i got to come back and say, geez, the consumer is strong with all those things going on. >> if you look at the list of gainers right at the open here, you would think consumers were doing nothing but shopping, eating out and travel. >> right. >> family dollar, priceline, coach, penney, macy's. >> dollar tree up 8.5%. >> people have to understand at home, there's a lot of what's known as thesis shortage. consumers tapped out. you go after the rth, after the etf or retail. pick individual retailers you think will have compression in gross margins. therefore, you go after dollar tree. the facts just don't fit in the way of the story, and you have to cover it. because now you don't have anything to stand on. >> hence, we're seeing the sharp rise to the outside as shorts go in to cover. it's partially the results but partially shorts being squeezed out of their position. the entire space is on fire in

today's stegs. >> when macy's did that really good number, when walmart didn't come down, after that negative guidance, what you begin to think is, geez, maybe post-fiscal cliff, maybe the fiscal cliff froze a lot of america. when you go over home depot's quarter, you get a sense that people have to spend, sandy, a couple hundred million, but there was this tremendous january pentup demand. we're going into the big black friday season for depot, which is the planning season. but one of the best i've seen, maybe the best this year. i think it's important to point that out. >> take a look at zynga, one of your -- >> i've been recommending zynga of late. >> governor christie signing the piece of gambling legislation into law. >> i don't know how often every state goes this way. obviously you have to be in the state, which -- i'll go over there to englewood cliffs later,

i guess, and just be online blackjack player. but i've got to tell you i think the zynga story, the negative story has kind of dissipated at this point. >> caesar's trading higher by 2%. a lot of these players say it could take six to 12 months actually to get this started. boyd is another one to watch. >> remember the international game technology? that's had a little bit -- not that much of a move. this gaming segment has been under a cloud for a long time. i think ever since the winn management had the tussle with the big shareholder. a lot of moving parts. people love to play the gaming stocks. i find that you have to have so many different things that matter. gasoline matters when it comes to vegas. and it's a really hard group to play. i think people at home, you're stymied, las vegas, sands, why isn't it going up. it's just a difficult group of metrics you have to worry about. >> you talked to the ceo mike

sutherland quite a bit, fiscal first quarter beat a surprise increase in revenues. maybe finally the restructuring efforts at the company, showing some results here. >> that's good. >> yeah. you know, saying that they're growing examples of the commodity fundamental picture, turning positive. >> i liked the fact that jpmorgan is up. they're cutting jobs, but they're also adding jobs. they're continuing to loan. i'm looking at a market that needs to be bought up by cyclicals and financials. growth story yesterday with expense cutbacks, the fact that maybe they like joy, maybe we can craft a scenario here, where we get beyond the euro. get beyond italy. we look at the banks as domestic plays. and we start warming up to china again, with the change of government. this march -- i'm very excited. >> march is coming up. the joy global point leads us to why copper and gold and crude have not kept pace, jim, with

what equities have done so far this year. >> i know. copper is a conundrum. everybody wants to see copper go up. the day rate has been fixed at the 790 level forever. copper has always been an important buffer. there's also an etf trying to put together for copper. that would use more than the largest copper mine. it would be taken up by this etf. so the cross currency, again, i find are mixed, mixed, mixed. i think that's why it's so hard for people. i like the fact that lumber is doing great. so you can go and make a bet on lumber. then i come back and say, wait a second, if gasoline goes higher, won't they stop going? i mean, we've got to get gasoline lower. but there's no initiatives in that margin. >> unleaded, up again. >> isn't it something? >> unstoppable. >> it does seem unstoppable.

even though oil goes down because of the weaker area oh, the stronger dollar. people keep waiting for the price break at the pump and we're not getting it. you have to keep that in mind, especially in new york where you're not filling up all the time. i'm back in the shock phase. >> yeah, $3.75 will get your attention. that's average. >> in california, it's obscene out there. >> let's check in with bob pisani here on the floor with what's moving this morning. >> look, we're flat. we're 48 hours away from the sequester that everybody's so concerned about. and the markets don't seem very concerned about it. boehner is out saying there's negotiations under way to keep the government funded beyond march. but there doesn't seem to be a lot of urgency around the sequester issues. it may well just happen. there's good news today. great numbers on capital spending. january durable goods numbers, transportation up 1.9%. aircraft up 6.3%. capital spending going on here

away from transportation numbers. that's pretty good news overall. italian auctions, another reason for at least some good news. it went off really well. high bid to cover ratio, fully subscribed 10-year yield. maybe it was a half a point higher than it was a month ago, at 4.3%, but still, that's pretty remarkable given the turmoil that goes on right now. that's helping europe calm down a little bit. let's talk about the united states. target's down about 3.5% here. they beat same-store sales, weaker than walmart. the guidance is very confusing. guidance of $1.10 to $1.20. i don't think that's comparable for the analysts' estimates. dilution from canada here, a one-time gain on sales. it looks like you pull all that stuff out, the first quarter guidance is below expectations. that's why target's down 3.5%. boyd's up 3%. zynga up 3%.

let me just comment on apple, a company that i have -- i own all their stuff. owned every one of their products. apple investor day, can we hear a little bit more today about how they're going to turn back the tide of competition to the iphone and the ipad and a little less from the value vultures who want to figure out a way to split up the $137 billion cash hoard. can we hear a little bit more about what they're going to do over emerging market countries where they're losing share right now? did you hear what was going on at barcelona? it was all about this whole wave of new competitors for the ipad that are coming. what are they going to do to turn that around? in the iphone, over in china, still no deal with whine a mobile. they've got to deal with that. how about a cheap iphone to compete with the hoards of competitors that are out there. how about an iphone mini? call it the 5-s, i don't know what you have to do, but they have to make it more competitive overseas. can we hear a little bit more

about how they're going to deal with the competition and less about splitting up the money? what do you think? >> i think you're absolutely right. but i don't think we're going to. >> i'd like to. just a thought. >> yeah. no, no, look, you've been spot-on this whole time, bob. you also have people freaking out during the period when people said italy was coming to an end. >> but i get it that it's not a hyper growth stock anymore. i get that. the growth guys have abandoned it. but it doesn't mean we have to let the value guys take over. there's still growth in this company. >> i know. and people hate it. that's what it feels like, doesn't it? people just hate it. what can i say. let's shift to the cme group in chicago. rick? >> thanks, jim. if we look at interdays of our fixed income market, you can see tens. obviously down a bit. 30s, down a bit as well. what's fascinating here, though, is, of course, we've had pretty good data in the morning. yesterday was new home sales. today it was durables. the headline wasn't good, but the proxy for capital investment

was indeed good. and that is important. but there is this lingering anxiety that's back in the credit markets. look year-to-date chart of 30s. closed at 295. it hasn't selds under 3% for 2013. we're getting very close to that. all the articles i read are saying, hey, high yield, stay away from it. that may or may not be true. but the rally in treasuries certainly seems to be drawing the yield seekers back. look at this etf year-to-date, moving back up rather aggressively. let's look at foreign exchange. let's go back to that yen trade. whether you look at the dollar/yen, starting in september, when it was basically at historic value for the yen, a lot has changed. or look at the euro/yen, we're at some key areas. and i'll tell you why. technicians are always about how many steps forward versus how many steps back. so you have your proactive wave, you have your correctionals. right now, 90 seems to be the area you want to pay attention

to on the dollar side of the yen. but 120 is the important technical aspect to the euro, and it's slightly below it today. an important day to pay attention to. >> thank you, rick. let's check out the latest news with sharon epperson. >> we have gold slipping a little bit this morning, after the best one-day performance that we've seen all year for gold. it was up $28 yesterday on fed chairman ben bernanke's testimony. it looks like there's not going to be an exit out of quantitative easing anytime soon. we're watching 1610 as a key technical level again. that gold needs to close above to really maintain momentum traders say to the upside. we're also watching what's happening with brent crude prices. flat right now. perhaps getting a little bit of support by the fact that a lot of people are still concerned about what is going to happen in terms of talks over iran's nuclear program. the talks with six world powers ended yesterday with no real conclusive agreement. they're going to resume talks in march. now there's a story from a london newspaper talking about an iran facility that is using

plutonium. perhaps being able to make it into a nuclear bomb. so there's a lot of concern about what iran's nuclear program is. keep your eye on the wti contract as well. after we saw that fall to 2013 low, we'll get the inventory data out at 10:30 a.m. back to you. >> thank you very much, sharon epperson. still ahead, the co-founder of the subway restaurant chain, is he worried that the fallout from the sequester could take a bite out of his business and the consumer? duncan niederauer pays us a visit at post 9, after it made its debut one year ago today. ♪

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the floor. today marks the one-year anniversary of our set, post 9. duncan niederauer joins us here at post 9. duncan, great to see you. >> congratulations. we wanted to give you guys something to commemorate the occasion. this was a long time in the making. it's hard to believe it's been a year already. >> it has gone quickly. what do the optics say about all of this? i mean, it wasn't universally applauded by some on the floor. a year later, what's the impact? >> look where we are now. when we first did it, the area surrounding this was still in the midst of the renovation. so i think this is a great combination of the innovative space here, freshly renovated space behind, more technology. i always felt when you guys were up in the balcony there, if this is the cold face, we were the

only ones with the cold face. what we've done in the last six months, taking advantage of the spot. you bring the cameras right into everybody's living room, right? it's all about transparency. i think this gives us that opportunity. i think the naysayers are on our side now. >> in terms of great combinations, not just cnbc, and you, this combination that you've done, the new york stock exchange. the stock is up -- you guys are up gigantically even after the merger. that's pretty exciting stuff. >> i think the market clearly likes the deal. stock up 20% basically since the announcement eight weeks ago, to see the progress we've made already. i guess everything happens for a reason. it was the right time for both of us and it's working out real well. the market seems to like the deal a lot. >> there are recent reports that cme is talking, carlisle approaching nasdaq. will there be fewer exchanges? >> you always think there will be. we're in a scale industry.

we've always known that. it does feel to me, though, melissa, that the conversations that you're hearing about that allegedly happened, that all feels like just a reaction to our deal. you kind of wonder if any of those conversations were to happen if we didn't announce our transaction. i think a lot of those folks are looking for a place to go, and you've seen the movement in some of the stock prices that jim just referenced. some of those stocks are up 15%, 20% since our announcement. no apparent news other than people speculating there will be a lot of consolidation. i've always believed it's a scale business and that's why we're trying again. >> how would you characterize it year-to-date and what is the outlook for the second half? >> you guys report on it every day. it's really a tale of two cities, right? you've got the market feeling great from the get-go, mutual fund inflows. you feel the market wanted to go higher in january. it carried over a little bit into february. but there's been no follow-through really on the volume. and the other metrics you would

look at. a little better on options. so it's interesting. now the question is, do things like sequestration and what's going on in italy right now throw us a few curveballs we don't really need right now. >> or maybe our volume levels are down for good. >> could be. >> people just say that's the wave. >> the investors are certainly turning over their portfolios less than they were. they're moving into higher asset classes now. maybe we have to get used to a new normal on volumes. >> derivatives strong, divide that up pretty good in the yields. that can work for everybody. >> i think the strategy in the merger really is a divide and conquer strategy. stapling on our interest rate complex to their commodity and energy franchise. gives us more time to focus on the nyse assets here. so i'm excited about that opportunity going forward. and then the european reaction to effectively spinning out and

ipo'ing in europe is positive. i think it adds up to a good equation for the time being anyway. >> how do you fight back against the perception that some of this is still cosmetic? right? that it is still a showroom for what is being done by computers? >> i realize people will continue to say that. they've said it since the day i got there. the first interview i did with one of your colleagues who is no longer with you, they said, in five years is it still going to be here? i want that guy back here to say, here we are five years later. there's always going to be some suggestions about that. the bottom line is, post 9 here is proving there is a lot going on. is it quiet in the middle of the day? sure. are there still plenty of reasons to have this, whether it's the open, the close, other periods of time, having the options about to move into the front? there's plenty of reasons the icon's intact. >> people say, jim, i'm coming to town. can you get me on the floor? can you get me on the floor?

it's a repetitive thing. it's still the great face of capitalism. i'm glad to hear it's not moving to atlanta. >> it's not moving to atlanta, don't worry about it. >> you've got it so there's a halo above my head. >> yeah, the circle there. >> we've been trying to find -- we put the work day symbol right behind you there, because it was the closest thing we could come to for a halo for you. >> duncan, it's been a great year. >> it's been a good year for you guys, so congratulations. >> the landlord that you love. >> it's a great partnership. a special shout-out to mark hoffman. we couldn't have done it without you guys. thank you. >> duncan, thanks a lot. priceline out with quarterly earnings. stocks getting a big lift on those results. is there still time to go along for the ride? but first -- coming up, there's no doubt that this market can be rough. but there are ways it can be tamed. 6 stocks in 60 seconds when "squawk on the street" returns.

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good morning. in the next hour of "squawk on the street," it will be live from day two for ben bernanke's testimony on capitol hill. tim cook is going to take on apple shareholders today. and the franchise legend, fred deluca of subway fame will join us live. carl, back to you. on the list again today. >> 33 million shares. this is a great housing play. do mortgage insurance. >> nice beat from guide wowire. >> sales force.com reports tomorrow. >> solar is the biggest loser. >> they're saying pricing's bad. china coming in slashing prices. i don't see a silver lining to this one. no playbook. >> raymond james. >> everyone always wants to call the bottom in everything. they're saying the worst is over. i'll believe it when i see it. >> all scripts. >> i like athenahealth.

they're trying to come back. medical records. >> then credit suisse buy on mark west. >> i have wynn energy tonight. they say gas liquids are down. i think wynn saying the opposite. we'll get the true answer. >> where are we here after the roughly couple of days, right? a bit of a claw back. more of a tussle here between the bulls and the bears. >> i'm watching the financials. i really need to see that group. i've been doing a lot of group lately about what has led this market since the march of 2009 bottom. you cannot get a market that goes higher, sustained, unless you see the financials break out. so wells has to go to 37. jpmorgan has to keep going higher. nice rally so far today. you need the brokers up. that's what i'm watching. because if we get those going, and the cyclicals going, then i think we're going to forget the whole italian election, stop thinking about the sequester. >> yeah. you mentioned lynn. what else tonight?

>> we have richard pops, he's got a way to be able to deliver a couple of drugs where you take them once a month. i'm focused on his anti-alcoholism drug. and then this is very controversial. baron's is calling them out. the product is doing fabulously. the stock is headed higher. >> see you tonight at 6:00 and 11:00 tonight. >> thank you. back in a minute. [ male announcer ] i've seen incredible things. otherworldly things. but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second.

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welcome back to "squawk on the street." i'm diana olick with breaking news from the national association of realtors. the pending home sales index rose a strong 4.5% in january. month-to-month, the expectation had been a 1.8% rise. the index now 9.5% above where it was in january of 2012. remember, this index is based on signed contracts. closings were essentially flat. this bodes well for february and march as we head into the spring season. the realtors still complaining about short supplies of homes for sale. they say that they will see a

surge in sales this spring, but they are not expecting the rise in 2013 that they had been in home sales. they expect it not to be as big as 2012. but they do expect prices to go far higher than they expected because of this short supply situation. pending home sales regionally up 8.2% in the northeast, up 4.5% in the northwest, 9.9% in the south. flat out west, just up 1.9%. the supply issue out west, remember, that market was based entirely on distressed sales and there just aren't a lot of those properties left out there as so many investors have bought them up. this has a very nice beat for january, 4.5% increase on the home sales index. >> what a week for all the housing data. thank you so much, diana olick. a happy anniversary at post 9 here at the new york stock exchange. it was a year ago today that we welcomed our brand-new set. you're looking at a time lapse video of the construction, which seemed to take forever. of course, it's what we call

home now. and as we've said, there's no substitute, guys, for being on the field of play. as duncan niederauer said a few minutes ago. >> are there still plenty of reasons to have this, whether it's the open, the close, other periods of time, having the options, guys, about to move into the front? there's plenty of reasons the icon is intact and it makes a lot of sense. >> thank goodness the producers haven't decided to do time lapse photography of us yet. >> now let's get back to ben bernanke, the fed chairman getting set to address the house financial services committee in day two of his testimony on capitol hill. he said the low interest rate policies are giving crucial help to the economy burdened by high unemployment. the testimony is expected to be largely the same as was delivered yesterday. >> after yesterday, and bernanke defending the fed's easy money policies, what can we expect to hear from him today? our steve liesman joins us. given it's the house, i'm not

sure the questions will be the same. >> i'm expecting a more combative hearing today as the fed chairman is likely to come under more pressure and criticism of government spending, and the fed's wide-open monetary policy. ben bernanke yesterday offered a totally different take on the sequester from what they're saying in washington. politicians care about what is being cut, and how it's being cut. bernanke's big concern is the cuts are taking place at all. asked by senator schumer whether it made a difference, here's what bernanke said. >> in terms of whether or not rearranging the cuts would be beneficial, it could be beneficial from the point of view of more efficient allocation of the cuts, or cuts that are more consistent with the preferences of congress. but that, of course, is a congressional decision. i have no input there. other than to say that i think the near term effect on growth would probably not be substantially different. >> guys, the fed's view on government spending is probably best shown in this chart from

fed vice chair janet yellen. it shows the government spending in this recovery has been below the 2001 recession and the post-war recovery, when you add up the total for two years and three years running, since the beginning of the recovery. only in the first year, the first four quarters was it on par. that's why bernanke, he's urging long-term cutbacks, but he's saying fiscal and monetary policy are really working at cross-purposes in the short term. now, expect at least some pushback from house republicans on the importance of cutting deficits and doing so now. just a quick word on durable goods. up 6.3%, suggesting that durables were durable. despite policy uncertainty out of washington. dan greenhouse saying, say what you will about government dysfunction, the sequester and budget debate, but the fact remains the capital gains appear to be holding up very well. bernanke starts with three pieces of data in his pocket to back up his contention that the

fed's policy is working. you have the housing numbers yesterday. and today durable goods and housing numbers together. >> coming back to ben bernanke, he is at odds with what american public opinion seems to suggest. have you seen the cnbc "wall street journal" poll today? a fifth of those polled think that the sequester is a good idea. and a large number of those who oppose the sequester, nonetheless, show strong support for deep cuts in federal spending. public opinion here is for federal spending cuts. >> you know, i assume that it's clear that the question had to do with short-term. bernanke's trying to run the economy. he's trying to get the economy going. he sees that it's doing 2% without the government. you're going to take off another half. i don't really think that bernanke much cares what public opinion is, because i don't think public opinion affects the math, simon, does it? >> no.

>> and his point would be that you need to have a certain level of growth to bring down the unemployment rate. i'm sure if you ask the public if government spending results in higher unemployment, government spending cuts lead to higher unemployment, then how do you feel about it. that's how he looks at it. >> steve, thank you very much. >> thank you. >> let's talk about the technology world this morning. apple set to hold the annual shareholder meeting today in california. obviously investors, many of them are anxious to hear exactly what ceo tim cook will do with the cash. what do you think he'll say? >> reporter: well, we'll see whether public opinion affects the math here, when it comes to the cash. i'm sort of calling this the cash and china meeting. because those are the two overhanging issues, on the one hand apple's got this enormous cash for a number of shareholders wanting that returned. on the other hand, growth prospects are in china. investors have gotten afraid that maybe apple won't be able

to maintain its margins as it tries to grow in emerging markets like that. but over the past year, if you take a look at apple's one-year chart, it's really interesting, because we're about $100 below last year's levels. this is significant because this is the first time sort of in the post-ipod era that apple's been down year over year when the market is not. take a look at the board of directors. all of these guys up for reelection. interesting to note, al gore and mickey drexler got the fewest votes a year ago. they had around 18.5% of votes withheld. that's significant because this year directors need a majority of votes in order to actually be reelected. that's new this time. i've got to say, though, a couple of shareholder proposals that will come up today that are interesting, one has to do with the number of shares that apple executives are required to hold. there is a proceeposal that the

have to hold on to a third of their shares until retirement. apple wants to vote down this proposal. another proposal on the ballot has to do with requiring apple to have a human rights committee on the board of directors. apple says we care about human rights. our board already deals with this. we don't need a special committee for it. apple wants that voted down, too. i'll be in there covering it live. back to you. >> jon, we'll see you in a little bit. meantime, new jersey governor chris christie signed a bill legalizing internet gambling, the third state in the nation to offer online betting. sending shares of zynga and boyd rallying. julia boorstin has the details on that. hey, julia. >> good morning to you, carl. christie approved online gambling to help the struggling casino industry. zynga shares higher today, and moved sharply higher friday after nevada approved online gaming. investors seeing some potential there.

now, about 30 million people play zynga's poker game on facebook alone every month. so even if a small percent of those are converted to gambling with cash, it would provide a much-needed boost to zynga's average revenue per user. the ceo saying in a morgan stanley conference on monday that he's not going after the hard-core gamblers, but looking to bring the gambling experience to the masses. with the stock off about 75% in the past year, and ongoing layoffs and restructuring, zynga is pushing to launch this new business, but it's not going to happen so fast. it could be a year before its application for an operator license in nevada is approved. now, new jersey's move also offers big expansion opportunity for companies like poker stars, the world's biggest online gambling company, as well as others like party poker.com. in this new arena, poker stars and zynga will face other competition from the casino companies, which are looking to bring their operations online. caesar's and boyd are both

trading higher today. new jersey may be the third state to approve online gambling, but it is the largest by far. we'll see if it sparks other states to follow. carl? >> julia, another good one to watch. after the break, a looks at how the fallout from the sequester could affect the subway restaurant businesses and the consumer. we'll be joined by fred deluca in a first on cnbc interview. priceline jumping after fourth quarter earnings topped the street. but as gas prices continue to rise, and consumers get hit by the payroll tax hike, is priceline's momentum about to be stopped in its tracks. with the spark miles card from capital one, bjorn earns unlimited rewards for his small business.

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let's get a quick check on target and tjx. >> target's fourth quarter earnings looked like an overwhelming beat. target shares rallied pre-market on the initial headlines. the fourth-quarter results in 2013 guidance include items that analysts have excluded in the past. that makes comparisons a little muddy, to say the least.

once analysts and the street have time to do thoughtful accounting analysis, it's likely neither one of those will be comparable to the consensus estimate of 148. guidance making it also hard to compare to current estimates. no sales forecast was given, the ceo said he's pleased with the fourth quarter in the retail environment, and continued consumer uncertainty. tjx companies beat the street on the top and bottom lines for its holiday quarter. posting earnings of 82% per shares and revenues of $7.7 billion. the earnings guidance range for the first quarter is below street consensus. announcing a $1.5 billion stock buyback and increasing the dividend 26%. but it's not enough to turn around the stock at least at this point. they're joining other retailers as it stops reporting monthly same-store sales in the second quarter. it's been one of the names

that's been consistent with its reporting as far as those high numbers every month. carl? >> courtney, thank you for that. something we'll all be watching. as we count down in fact to sequestration. how the cuts could affect consumer spending, jobs and the economy. fred deluca joins us at post 9 tonight. welcome. >> good to be here. thanks for having me. >> all this discussion about payroll tax increases, and sequestration, and consumer angst. is it visible day to day? is it showing up in the numbers? >> it is. everybody says the payroll tax increases have caused sales to decline. >> characterize how bad it's been, and how direct an impact and how long you expect it to last. >> i tell you, i've heard people in the industry, they say about 2 percentage points off sales. we're seeing the same thing. >> do you think this is going to be something that the consumer gets adjusted to, or do you think this is a permanent

pullback in spending? >> there's a lot of pressure on the consumers. i think business will adjust to it. >> just how? is it about menu innovation? we keep looking at other -- mcdonald's is another example, where people are worried about the pipeline of new items especially here in the states to try to drive traffic and keep pricing under control. >> i think for consumers, it's really all about value nowadays. people have limited amount of money to spend. they have to get good value wherever they spend their money. >> if you are at the value end of the market, then what do you feel about the proposal to raise the minimum wage? the nbc poll this morning says 55% of americans support raising that to $9 an hour. is that good or bad for your business? kind of on both sides? >> i think the minimum wage has to go up over time. i think a sharp raise all at once is probably a bad idea. you know, people working at minimum wage levels deserve to make more. so a little bit of an increase

makes a lot of sense to me. >> do you pay -- what are your entry level workers earning? >> it depends on the market. in some markets they get hired at minimum wage. they might earn $10 or $12 an hour. >> do you think this puts pressure on the franchisees not to hire more? >> it will cause the franchisees to increase prices. no question about it. wages directly translate to price increases. >> the other pressure could be obama care. do you think that they will expand to employees but no more? what is the impact that you see? >> that is the biggest concern of our franchisees. they don't have enough information. they don't know what they're looking forward to. it's causing a lot of concern. that, too, will also pass through the consumer. >> would it be a big subway outlet, wouldn't it? >> single store has about a dozen employees.

>> it's 13 years since you wrote the book "start small, finish big" which was about grass roots entrepreneurship. do you think the environment for those chasing the american dream by setting up their own business has gotten worse or better in those 13 years? >> it's continuously gotten worse, because there's more and more regulations. it's tougher for people to get into business. especially a small business. i tell you, if i started subway today, subway would not exist. because i had an easy time of it in the '60s when i started. i just see a continuous increase in regulation. >> do you have to change the franchises, or is it more generous to startups? do you advance the money where you didn't before? >> back in the old days? >> no, now, in order to generate growth. >> we're in a different position. we've got so much demand for the franchise. we're a big brand. but smaller brands are hurting. they're not getting the leads, they're not getting the development that they'd like to. >> are you saying -- i mean, people talk about people's appetite to start a new company.

are applications for franchisees up, down? >> our lead level is at all-time records. we've got over 200,000 people last year with franchise information. huge interest in starting businesses. but they say they can't get loans. there's a lot of challenges out there. >> people may not be aware in new york city there was a bit of a hiccup this year regarding the size of a 12-inch sandwich. >> a foot-long. >> yeah, which you issued an apology. i think we have the text of it. the essence is, we tried to hold our promise. the sandwich is a foot long. it should be a foot long. walk me how you responded to that. did you consider it a crisis? how did you think about how we're going to answer this charge? >> yeah, it's interesting. we bake our own bread in the store. it's not like punching things out of the factory. the bread might be a little bit more or less than 12 inches. but they're foot-long

sandwiches. it is possible for someone to come in the store and come out with a short roll. it could have an impact. some people might be hesitant. they think, oh, my god, am i really getting a good value at subway? subway is the best value out there in fast food. it's fresh, healthy food, gigantic. put a fut-long next to big mac -- >> when you wake up in the morning and see the guy in the new york tabloid holding a sandwich with a tape measure, what was your reaction? >> i was in australia when that happened. a guy put a photo on facebook that wasn't even his sandwich. it was from a photo from months ago. i thought, well, this is the world of social media. things like this break. and sometimes become big news. >> fred, interesting times. thanks for coming in. appreciate it very much. >> thank you for having me. enjoyed it very much. >> if you just joined us, we want to make you aware we're

keeping an eye an chill. ben bernanke on day two before lawmakers. the countdown is on to the apple shareholder meeting. will tim cook address the massive cash balance. we'll talk to one shareholder. in honor of post 9's one-year anniversary, take a look at the wall here. where these guys are trading exactly one year ago today. amazing how things have changed. back in a moment. keep my eye on her... to but, i didn't always watch out for myself. with so much noise about health care... i tuned it all out. with unitedhealthcare, i get information that matters... my individual health profile. not random statistics. they even reward me for addressing my health risks. so i'm doing fine... but she's still going to give me a heart attack. we're more than 78,000 people

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but it almost feels that way. homewood suites by hilton. be at home. welcome back to "squawk on the street." i'm josh lipton. big five sporting goods, ripping higher here. part of the reason, guns. the retailer swinging to a fourth-quarter profit. the company benefiting from the increase in demand for firearms and ammunition. we have seen many retailers benefiting from this demand for firearms. it began when president obama was first elected. fear of gun control legislation. and it has only accelerated. big five also guided

first-quarter materially higher than consensus, and raised its quarterly dividend. that stock now up some 100% in the past six months. simon, back to you. >> yeah, okay, speaking of stocks doing extraordinarily well over the years, priceline is higher again this morning following results last night that beat on the estimates of 23 cents a share. let's bring in mike olson, senior research analyst and managing director at piper jaffray. good morning to you, mike. >> good morning. >> the issue here, nobody doubts priceline is a well-run company that is expanding at break-neck speed. the issue is, the ceo laid it out in the conference call explicitly last night. they believe the international opportunity is too great to approach an a tentative manner. therefore, they're investing heavily and their margins are under pressure. what is your judgment, therefore, on the stock? >> i think if q4 showed us anything, it's that the online travel market is huge, it's growing and not saturated to any

degree at all. i think priceline is doing whatever they can to take advantage of that. they're increasing their marketing spend, doing more in emerging markets. they're also doing more domestically to gain share with their booking.com brand. i think to penalize them for increasing marketing spend internationally would be short sighted. we think it's the prudent thing to do. >> they are forecasting margins will fall in the first quarter, and they won't give guidance on what their margins might be. explicitly, they won't give divide answer after q1. that will unnerve a lot of people in the markets. >> you know, they've never given guidance beyond one quarter out. that's not a change in strategy. i think the key takeaway here is that there's a huge opportunity for them. they have leading share. going into this quarter, expedia had a really strong quarter a few weeks ago that they reported. they showed accelerating bookings growth. that had some people concerned that maybe expedia was taking share in the market. then we see priceline growing, or accelerating their bookings

growth in q4 as well. it shows the market can support multiple major players. again, i think if it impacts margins to some degree in the near term, it's still the thing to do given the potential for growth and where we are in that whole transition from offline to online bookings. >> why, mike, are they paying $1.8 billion for kayak? again, that's something they don't want to discuss at the moment. is there a technology that shows all of the different sites together? that they can feed back into the bigger priceline model that boosts their return on investment? >> yeah, you know, we see two major growth drivers in online travel over the next few years. one is international, which we just talked about. but the other is really the growth of online travel advertising spend. and kayak is one of the key beneficiaries of growth in online travel ad spend. i think what priceline's thinking here is let's diversify to some extent outside of our traditional bookings model, get exposure to online travel ad

spend. kayak is the biggest player in the search, so it's a good way for them to do that. >> when priceline issued the guidance for the year, they cited variability of guidance is elevated because of the uncertain global economic environment, especially in europe. given what is going on in europe with the italian elections, given what is going on in the united states with higher gas prices, and the possibility of sequestration, in terms of the guidance for the year, do you think it's to the down side at this point? >> you know what, i think priceline takes a conservative approach to how they look at kind of the macro environment. they continue to be worried about the europe market and just the macro environment to that extent. so i would say that in general, you know, again, they take a conservative approach. if you look at the last three years of their guidance, on average, they've beaten the mid point of their eps guidance by 13% in each quarter, since the beginning of 2009.

so their approach is going to continue to be conservative. i think they're taking into account macro uncertainties we're seeing across the globe basically. >> mike, we're running out of time. it is a $34 billion stock already. you're calling another $100 on the price target. why is that? >> i think the earnings growth is going to continue to be north of 20% over the next couple of years. if you look out to 2015, which is a long ways out, but assume they grow earnings 15% to 20% over the next three years, you can easily get to eps of $50 per share by 2015. throw a high teens multiple on that and you're at a $1,000 stock. i'm not calling for that 6, 12 months from now, but i think over the next 18 to 24 months, it's doable. >> good to see you, mike. thank you for your time. >> thank you. breaking news here on crude oil inventories. let's go to sharon epperson at the nymex. >> hi, melissa. after oil prices fell to the lowest levels of the year, yesterday we are looking at a little bit of a recovery here. we'll see how long that lasts.

we are looking at crude supplies that built by less than analysts' expectations, 1.1 million barrels. crude supplies according to the energy department were up by 1.1 million barrels. analysts were expecting an increase of 2.6 million barrels. but we did see the american petroleum institute report less than 1 million barrel build yesterday. we're looking at fuel supplies that were up by half a million barrels. just the fuel supplies rose by half a million barrels. gasoline supplies fell by 1.9 million barrels. gasoline supplies were down by 1.9 million barrels. looking at prices right now, oil prices basically unchanged since the number has come out. keep your eye, though, on gasoline. we saw gasoline was a huge drag on the energy complex in the previous session. we are seeing a number of refineries restarting operations, particularly out of texas. that could weigh on the gasoline market. we did see a big decline here in

gasoline supplies over the last week. that may offer some support. back to you. >> sharon, thanks for that. sharon epperson. the threat of deep spending cuts intensifies, that sequester deadline just two days away. we'll talk about how you play the risks ahead. in case you hadn't heard, the fed chairman back on capitol hill. the q&a will kick off in a few moments. clients are always learning more to make their money do more. (ann) to help me plan my next move, i take scottrade's free, in-branch seminars... plus, their live webinars. i use daily market commentary to improve my strategy. and my local scottrade office guides my learning every step of the way. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade... ranked "highest in customer loyalty for brokerage and investment companies." a talking car. but i'll tell you what impresses me.

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the fed chairman is set to prepare -- or to deliver his testimony in front of the committee on financial services. could get interesting. jeff, of course, chairman, michele bachman is on the committee. it might be in different in tone than what the senate gave us yesterday. when the q&a begins, we'll take it live. the apple shareholder meeting today. the david einhorn drama is sure to take center stage. the senior vice president and asset management which owns more than 20,000 shares of apple. chip, great to speak with you. >> thanks for having me. >> you say that the company is quickly moving from growth to value. i think a lot of investors and analysts out there would agree with you. in order to be a true value stock, though, does apple need to do something with its cash, to reward shareholders, such as increase its dividend? >> yeah. that's probably a likely scenario. with regards to einhorn, absolutely he's raised the bar a

little bit in terms of putting some pressure on apple. i wouldn't expect a lot of this meeting today, but it's certainly a possibility you'll see the dividend increase. beyond that, roughly 2.4%. but it absolutely has become a value play. the stock's down 36%, 37% from its high. off 15% from its -- >> chip, i'm sorry to interrupt. we've got to get to chairman bernanke. chip cobb. here's the fed chairman. >> especially about the future. i assume you will admit to being human and being fallible? >> yes, sir. >> that causes some of us to question how much confidence we should have. and it's not -- as the gentleman from california, mr. campbell pointed out, it's not just members of committee, but the voices of doubt in the fed are growing more vocal.

jeffrey lacquer, i think further stimulus is unlikely to increase the pace of economic expansion, and that these actions will test the limits of our credibility. bloomberg has reported that charles plauser of philadelphia fed president, plauser said he favored halting the bonds because the benefits are meager and there are lots of risk. closer to home, richard fisher, president of the dallas fed quote, i'll be asking myself what good would it be to buy more mortgage-backed securities or more treasuries when we have so much money sitting on the sidelines, and yet have no sense of direction for the future of the federal government's tax and spending policy. how can additional monetary policy be stimulative, unquote. i clearly believe you disagree with these fed presidents. is that correct? >> yes, sir. >> let's examine the benefits of

your current policy. again, we know we are in a slow and weak recovery. here's the question i have, mr. chairman. according to fed data, banks are sitting on $1.6 trillion in excess reserves, and in the latest quarter that i have data, third quarter of 2012, nonfinancial corporations are sitting on $1.7 billion in liquid assets. so arguably, that's over $3 trillion of capital sitting on the sidelines. i believe i have this right. at least for the last data i have on i believe qe2. 80% of that qe ended up as excess reserve. so given as much capital is sitting on the sidelines, since we are essentially in a zero to negative real interest rate environment, why do you believe that further quantitative easing

is somehow going to cause entrepreneurs and job creators to put all this capital to work? >> thank you, mr. chairman. first, on the disagreements on the committee. we have our debates more or less in public, as you know. i would hope you would take comfort from the fact that a wide range of views and points of view is represented on the committee. >> i do take solace and i hope you listen to them carefully. >> we do discuss all these issues. of course, the significant majority of the committee is supportive of the policies we're taking. you're also absolutely right that predicting the future is always dangerous. we're not talking about a forecast of the future, what we're talking about is the tools that we have to unwind the balance sheet. we have a variety of different tools, including not just selling assets, but other tools such as raising the interest rate, we pay in excess reserves, and other draining tools which based on the experience of other central banks, would be effective in allowing us to unwind that policy. of course, doing it at the exact right moment is always

difficult. >> chairman, my time -- i'm about out of time. i'm going to attempt to set a good example here. i want to ask one last question, but you can submit the answer in writing. you've mentioned earlier that, i believe, as i understand it, data -- reports from the fed is that you will cease remitting profits to the u.s. treasury. and that under your own analysis, the size of deferred assets -- i'm always curious how a loss is a deferred asset -- could peak at $120 billion. but other economists say it's closer to $372 billion of taxpayer money that could exacerbate the debt. so in writing, i would like for you to respond whether or not, indeed, the debt could be exacerbated by $372 billion under a worse case scenario. at this time i will recognize the ranking member for five minutes. >> thank you very much, mr. chairman.

again, mr. bernanke, i would like to thank you for further explaining and educating this committee on quantitative easing. the policy that you have provided leadership on. and i'd like to make sure that the members of this committee understand that this discussion about all of this dissent is overblown. as i look at the voting on this action, it appears that you, mr. bernanke, mr. william c. dudley, mr. james bullard, elizabeth duke, charles l. evans, jerome h. powell, sarah bloom raskin, eric rosengreen, jeremy c. stein, daniel k.turello all voted to support you and the policies. there was only one person dissenting, and that was esther george. so it seems to me you have strong support for the actions

that you're taking, and the leadership that you're giving. and i'm very appreciative of that. i -- you know, i am surprised at myself for, you know, the confidence and support that i'm showing, because you know i've disagreed with you in the past on a number of things. but i also find myself a little bit surprised that i am focused a lot on what happened with a recent research note that was released last friday by the bank of america's chief economist ethan harris, where he warned that harsh budget cuts due to start taking effect this week would hammer the economy, potentially dragging the country back down into a recession. mr. harris wrote that he expects this painful shot of austerity to slow gdp growth to just 1% in

the second quarter, with job growth averaging less than 100,000 per month for those three months. we also know that many republican and democratic state governors are demanding immediate action to stop the automatic spending cuts, expressing concerns that sequestration would force their state economies back into recession. so, while you have explained to us monetary policy that you are providing this leadership on, and while you have, you know, given us great information today about what you feel would happen with this economy if we did not stimulate it somewhat in the way that you're doing, i want to ask you, can you offer any insight, or more insight into what the potential impact would be to our economy recovery if sequester were to take place as scheduled

on march 1? and can you elaborate on why you believe it is more important to focus, as you have said today, on deficit reduction over the long term rather than blunt austerity measures in the short term? i'd like to hear more about this. >> yes, ma'am. i cited in my testimony to the congressional budget office, which suggests that fiscal measures will reduce growth this year by 1.5 percentage points. which is very significant. if you look at the path of the deficit projected by the cbo, you see for the next few years, progress has been made. and the debt-to-gdp ratio in particular doesn't look like it's going to be rising for the next few years. where the more serious are further out. our aging society, rising health care costs and so on, together with other costs begin to bite. so my suggestion for your

consideration is to align the timing of your fiscal consolidation better with the problem. that is, to do somewhat less in the very near term when it will have the greatest impact on growth in jobs, and where the federal reserve doesn't have any scope to offset it, and instead to focus on the longer term where the real problems i think still remain. >> and so you are not against cuts, and you're not saying that we should not be involved in making cuts where we can make them, but what you're talking about is the level, and the amount of the cuts that perhaps are being made that will slow down the growth in the economy, and you think that if we concentrate more on job development, and stimulating the economy, that we should take a long-term approach to the cuts. is that basically what you're

saying? >> i am very much in favor of getting our fiscal house in order. but i think it's a long-run issue, and that i would be supportive of a less front-loaded set of measures. >> well, i think it's important to get that on the record, because i've heard some discussion about your statement, even as it was made yesterday. and i think some people were confused, and thought you were saying we shouldn't make any cuts. i think you're very clear about what you are proposing. and i thank you very much. and i yield back the balance of my time. >> thank you. >> the chair now recognizes the gentleman from california, mr. campbell, for five minutes. >> thank you, mr. chairman. and unlike the ranking member, i generally agreed with what you've said in the past. but now we -- >> we're listening to the q&a portion of the fed chairman's testimony from the house financial services committee. just listening to ranking member max even waters. let's bring in steve liesman

with more. ms. waters bringing them into the whole notion of how deep the budget cuts need to be. >> that was the easy part for bernanke. i think they generally agreed on this notion of pushing ahead budget cuts. it will be interesting to see how the republicans question and go after the chairman on that issue. the big difference right here, melissa, is that the fed chairman says, yeah, get the federal house, fiscal house in order. but do so over a longer period of time. don't front load it. you talk about 1.5% decline in gdp from the federal cuts. i thought i saw a note of frustration on the part of the fed chairman when he was asked what were a series of good and tough questions, but didn't give bernanke a chance to respond saying, please respond in writing. i think bernanke wants an opportunity to respond to the issue of potential losses to the fed balance sheet. obviously that's an issue of importance to the congress. >> yeah. mild budget cuts is what the fed chairman is recommending at this point in terms of not front-loading it, and i wish somebody would follow up and

say, what does mild mean. >> right. and i think the other follow-up is if not now, when. that's an important question. i think it's a judgment on the economy, and how much we're going to grow. and i think it's a judgment how much the private sector's going to be able to contribute to growth. what bernanke said yesterday, and we'll see if he repeats it today, is the notion of the fiscal side and monetary side, essentially working at cross-purposes. what you have essentially is probably a more wide-open fed, because you have a less wide-open fiscal side. >> steve, stay with us. much more live coverage of ben bernanke's second day on capitol hill right after this break. [ engine revving ] ♪

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we continue to monitor the q&a with the fed chairman on the hill in front of the house committee on financial services. dow up 62. s&p up about 7. want to get to the cme as well. rick santelli with the santelli exchange. hey, rick. >> thanks, carl. in today's edition of the exchange, will tie in some of what we just heard. i, like steve liesman, pointed out a few minutes ago, was very fascinated with chairman hensarling's questions, and i was also somewhat fascinated with ben's answers even though the time allotment didn't give

us the chance to hear full answers by the chairman. and i guess what it reminds me of, and many viewers and listeners on satellite radio will be able to grasp this, ever have the big religious discussions at the thanksgiving or holiday table with all your relatives, it is never a good idea. but beyond that, there is never anything that gets resolved. so chairman hensarling brought up great points that are discussed on this trading floor constantly. what about losses in the portfolio? a $3.1 trillion portfolio. imagine if one of the big hedges had that, eventually we know there is going to be a normalization of interest rates. but the chairman's answer always seems to be run off and timing and exit, just like you're never going to get the type of debate that is enlightening because nobody knows the outcome. even more than that, the losses, they're just going to be considered accounting, but not

true. there is going to be many reporters like myself, when it happens, who are going to look at the portfolios exactly the way we look at them if they belonged to a hedge fund. and, believe me, on that magnitude, it is a lot like the lack of mark to market that was going on precredit crisis in some of these derivatives. you can fib about it from an accounting perspective, but eventually the gravity, the weight of these losses will be significant and will be out in the public venue. the other issue is the purchases. with the fed purchasing so much, why do we pay attention to interest rates at all? unlike the vix, we don't really look at volatility in treasuries. the bigger the positions that the fed gets, and the significant percentage they buy, several weeks after primary auctions and the secondary market, really is the big thumb on the scale. but, look what happens when we get news out of europe. interest rates go down. look what happened after thanksgiving and into january. interest rates went up. it still has a pulse.

and these pulses are actually much smaller than they would be, but they're huge clues as to how this will play out. the real venue is interest rate differentials to the next level and that is foreign exchange. that is the battlefield, these interest rate issues will play out in, carl. back to you. >> rick, thanks so much for that. talk to you soon. rick santelli. >> live shot of the house financial services committee. we'll have much more live coverage straight ahead. itt ] you know what's impressive? a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is, what it's carrying, while using less fuel. delivering whatever the world needs, when it needs it. ♪ after all, what's the point of talking if you don't have something important to say? ♪

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fed cherairman making a coue of headlines. there are no significant problems in mortgage-backed securities and treasury markets. we continue to monitor for further headlines. we bring you them as they come. >> one of the great trades over the last few months is shorting the yen. has that come to an end as a result of the italian elections. kathie lee joins us from bk asset management. welcome. >> thank you. >> the yen going lower was not a one way bet. suddenly the euro looked vulnerable and cash poured back into the yen. >> that's what we're seeing now, simon. the yen is rising against all the major currencies.

i think in terms of the story about why the yen has weakened so much, i think that's not over yet. in fact, i think that current levels in dollar yen represents a huge bargain and some ways you could say maybe a fire sale on dollar yen. that's because the fundamentals have not changed. the bank of japan still needs to ease monetary policy. they're probably going to go much more aggressive action in april. and i think that when we get the boj nomination, which can come tonight, tomorrow, that we're going to see a knee jerk rally in dollar yen, followed by a stronger move once the new governor comes out and reaffirms that he's going to take aggressive action. >> the italian elections. we got a 5% move on euro yen on monday. that's a huge move. >> and -- >> what happens if you're -- we do get trouble in europe, does that kill the yen trade? if it gets worse? >> i think that in terms of additional trouble in europe, take a look at the euro now, it is not falling as much as you would think. because we had a sharp decline

in italian bonds and then the yields spiked yesterday, we still didn't see the euro crack ben low 130. there is stability there. the safe haven bid trade will play a role in dollar yen, but i think that the longer term story is still going to be a weaker yen here. i think there is opportunity for more qe. so i think around 9125 is the area you want to come in. we got orders in for our firm to buy dollar yen as well. 9125 wouldn't be such a bad idea to come in below current levels with the stop at 90 and a target right below the key pivotal 95 level at 94.50. i think that -- those are levels that could be achieved within the next week or so. >> are you having a good week? was it fun on monday? >> fabulous. when volatility increases in the fx market, that creates a lot of opportunities and for us it is always good. >> good to see you. kathie lee, thank you so much from bk asset management.

catch money in motion on friday at 5:30. a lot going on there, especially in italy. meantime tonight -- >> a lot of after hours action, all over the results from jcpenney and groupon and why the number one growth fund out there is ranked by morning star sticking with apple. thinks it is a growth stock. and celebrity stock picks, we have the one and only regis philbin, a fan of "fast money" for many years and we'll get his -- he's actually a very astute trader. you would be surprised. >> and doing live television. >> he's on tv more than any of us combined, all of us combined. >> more energy than you'll ever have combined. i shouldn't speak for myself. he's a force of nature. if you're just joining us, bernanke kin continues. here's what you missed early on. >> welcome to hour three of "squawk on the street." here's what's happening so far. >> we have had a huge gain from the fall.

it is not year to date that we have to focus on. really come from the fall. we have come a long way in a short period of time. i think we're taking a rest. the market is tired. >> when they're speaking at the committee, they are set. this is the policy stance. they're going to stay with it. it is going to be a long time before this changes. >> until he gets this employment somewhere near his level, i think he's going to play it very close to the vest. this is going to sound a little dire, and i don't mean it to be, but maybe it makes apple's stock going down. because apple has been this chinese water torture drip, drip, drip and has a lot of people very believed. >> there is the opening bell. >> wanted to give you guys something to commemorate the occasion. this was a long time in the making and it is hard to believe it has been a year already, right? >> it has gone quickly. >> if i started subway today, subway would not exist because i had an easy time of it in the '60s when i started and i just see a continuous increase in

regulation. >> i wouldn't expect a lot of this meeting today, but it is certainly a possibility you're going to see the dividend increase beyond that roughly 2.4%. but it absolutely has become a value play. good wednesday morning. we're live at the new york stock exchange on the first anniversary of the set being built in that time lapse video. the first set on the floor of the new york stock exchange, a symbol of a new era for cnbc and "squawk on the street" which went live a year ago today. in the meantime, check on the markets here. seeing nice gains here as bernanke continues to testify in front of the house committee on financial services. dow is up 81. that's close to session highs. s&p is up almost 10 to 1506 and the nasdaq getting 24 points. gaming stocks on the rise as new jersey governor chris christie signs an online gambling bill approved by the state legislature. the law allows atlantic city casinos to handle online bets

within the state but they are expected to form partnerships with online gambling firms. and then there is target, sliding more than 1% after reporting a 2% drop in fourth quarter profit, hurt by investments tied to its entry into the canadian market this year. retailer also giving a disappointing full year outlook with a midpoint of its guidance range missing estimates. let's get to our road map today, the fed chairman facing tougher questions on the second day in a row. this time from the house financial services committee. we'll get an update on the q&a and find out what ben has to say about qe 3, the economy and more. tim cook facing his own tough questions from investors of the company's shareholder meeting. we'll take you live there and get the inside story from a shareholder about what cook may say. then, more water, less buzz. that's at least what some consumers are saying about anheuser-busch. a multimillion dollar lawsuit being filed accusing the brewer of watering down its beer. we will get the latest details on the suit and tell you if your favorite beer might be affected.

we'll start with the fed chairman, as we said, testifying before the house financials services committee right now. steve liesman following the q&a and emphasis on the q, i guess, steve, if you listen to the likes of maxine waters. >> let me turn down. what's interesting here, carl, is i'm waiting for the fireworks. we both, i think, you and i expected a little bit more caustic questioning today, but i'm not hearing it and i'm wondering what is happening to the republican objections to quantitative easing and to the pushback that i expected on bernanke's comments on austerity where he basically argued that this was not the right way to go. i'm not hearing it. either they don't think it is worthwhile to argue or debate with the chairman and the chairman's testimony doesn't matter in this regard, or they just don't have the, i don't know, the will to bash the fed that they had in the past couple of years. so we have had a bunch of democrats now talking, but the only tough and i thought good questioning was from hensarling, but he wanted bernanke's

comments in writing. we're missing that debate right now, carl. i continue to monitor it. he said interest rates are -- mortgage rates or interest rates are low enough to help the housing market and, again, he defended quantitative easing policy, but not the back and forth that we expected up to this point. but that's why i'm listening so you don't have to, carl. >> we like to listen too. dell is up almost triple digits here, steve. we saw a similar build during the q&a yesterday. is he saying anything that would lead to equity strength. >> he's repeating his support of quantitative easing and keeping the impression in place that there will be no change in qe -- qe immediately. and talking about the benefit so far. and maybe part of this, carl, is the idea that they're not really laying a glove on him, so they're not -- the market may be picking up this lack of political pressure from the federal reserve. i'm just guessing in that regard. >> i think some people may be

nodding in agreement with that thought. we'll keep an eye on it. come back to you in a bit steve. thanks. now to apple. in less than an hour tim cook will face shareholders at the annual meeting and will likely be under pressure to answer questions about apple's cash. john ford has the latest. before he goes in the room, john? >> reporter: cash, top of mine issue. $137 billion and counting of cash and equivalent on apple's balance sheet. david einhorn has been after that cash. part of the reason we have been saying this for a while, year over year apple stock is actually down. the first time in a very long time it happened that apple stock is down year over year when the market is actually up. not everybody here, though, that concerned about the cash. take a listen to this shareholder we caught up to live. >> i don't need the cash, so i hope they keep it and use it for something that makes them a better company. >> well, you know, that's pretty nice. i'm sure tim cook hopes a lot

more people like that show up here today, but we'll see. take a look at the board. these are the people up for re-election. chances are they will be re-elected with some room to spare. last year al gore and mickey drexler were the two who got the least votes. but still they only had around 18, 19% of votes withheld. so i'll be in there. giving you all the dispatches as much as i can. the meeting is scheduled to start at noon eastern time. back to you. >> no cameras in the meeting as we know, john. but we know you'll be sending out the missives as they happen. appreciate that, john fortt in cupertino. shares of apple this morning, all this talk about cash, jeffries has an interesting note saying the need for cash in their words is larger than many believe. as faster chip production, bigger data centers, better media content, the financing of hand sets, make for what they're calling a potentially rough next two years. their point is, hard to give

away too much of the cash if you know you're going to be facing rammed up costs in the next couple of years. they say dividend and stock buyback may be the safer way to reward shareholders while keeping flexibility. want to get shareholder perspective, joining us, kevin landis for first hand funds. good to have you. good morning. >> good morning to you. >> where do you come down on this cash management issue? is einhorn right to bring attention to it or is he going too far? >> well, he has a very interesting point. look at it this way, if the u.s. treasury sells you a cash flow stream, what they're saying is a dollar today is a dollar of annual cash flow is worth hundreds of dollars. on the other hand, a dollar of apple's earnings is worth somewhere in the low teens. if you transfer that low pe cash flow into very high multiple bond flow, that's great. his proposal is essentially that.

take part of apple and make it look more like a bond. in theory, that could add value. >> you sound like you're behind that. i wonder if you think the company can be brought around to that point of view. >> well, you know, it's -- it is probably not in the top 1 or 2 things i think about when i think of apple. i think of innovation and the competitive situation. and i also try to draw a distinction between the cash flow, which really is a measure of what kind of a premium they can get for their products versus their cash hoard. the cash hoard is the spoils of past victory. the positive cash flow, that's a measure of how competitive the products are and really how much you're willing to pay for the design, so it is not just a cost plus kind of a product. >> yeah. >> everybody agrees it is a high quality problem to have. >> yeah. absolutely. no one is saying that this is a tragedy by any means, but a lot of the message out of barcelona, this mobile congress, knowing what samsung has put together, knowing what google has put together over the past year, i

mean, the competitive landscape is different, kevin, and i just wonder if you think the -- >> carl, you said -- >> as we know it today has the wherewithal to carry them forward. >> look, carl, you said it exactly right. you mentioned the right two companies. google and samsung. i don't want to sound dire, but if apple were to stop innovating today they would eventually find themselves in a vice. the two sides would be samsung for hardware and google on the os and services. and that's what they should really be laser focused on, really. the other question to ask yourself, though, is if we have seen the last great new product out of apple and all they do is just good incrementals, polish what they have got, then what do you think the stock is worth and how much lower do you think it would be than where it is right now. if you want to comment as a value investor on the stock today, it is almost already priced like it is never going to have another great product. >> i think a lot of apple bulls would go along with that idea. if jeffries is right, kevin, and

they are going to have a big need for some of that cash in the way of cap x over the next couple of years, what will it be spent on? do you think it will be spent on some -- on organic growth, will they make a large purchase? >> you know, most successful technology purchases are of innovative companies that are just getting ready to gear up and roll their factory out, come up with a manufacturing strategy, and all that. they tend not to be too expensive. when you see the big acquisition deals, those usually are kind of -- remember hp buying palm. let's hope they don't resort to something like that that's usually what companies do, they buy revenue and lack imagination. i hope they don't do big m&as. but it is hard to say how far down the food chain they'll go and integrate into, because, you know, it sounds crazy, but, you know, samsung owns a fab. multibillion dollar fabs, they build their own ships.

apple could afford to do that. they probably don't need to, but they could afford do that if they wanted to do. >> it would be interesting to see a vertical apple if at some point down the road that's where they're headed. kevin, appreciate your insight ahead of a important meeting. thank you so much. >> thank you. >> kevin landis. we're going to continue to monitor the fed chairman's hearing on capitol hill as the q&a continues. we'll bring you the highlights. rick santelli is gearing up for a discussion on gold and what a week to do it, rick. >> there was a time when the saying was trying to spin straw into gold. i think in this new world of etfs, the more appropriate phrase for the 21st century is turning gold into paper. we're going to talk about that securitization process with frank lesh. when you're wearing a jerry garcia tie, you want to listen to this guy! bottom of the hour! with fidelity's new options platform, we've completely integrated every step of the process, making it easier to try filters and strategies...

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welcome back to cnbc. breaking news on flowers foods. the company was selected as the lead bidder for the majority of hostess's bread brands. we learned from sources that an auction set to take place for those brands tomorrow will not happen because flowers remains unchallenged. bid of $355 million in cash, and potentially up to $360 million total if certain licensing rights are included. that is the bid that will stand, unchallenged. so flowers remains the winner of those five bread brands including wonder bread and 20

bakeries and 38 depots. there will be an auction tomorrow for the beef stake bread brand at $30 million, so somewhat smaller, but as of right now, carl, flowers foods is unchallenged for those hostess bread brands. you see the stock moving up about 1% in reaction to that. the market had expected it because it had been named as a lead bidder in this auction, but it is confirmed now by sources that they will be taking those home. carl? >> as long as they can start making those snowballs very quickly, kayla, that's all we care about. >> we have a couple of weeks left for that news, but we'll be watching. >> okay, thanks a lot. fitch commenting on the looming sequester and how the implementation of the automatic spending cuts may force u.s. ratings action. fitch saying the failure to raise the debt cerealing inilin threaten the status. david riley joins us on the news line. david, welcome back. always good to talk to you. >> good to be back.

>> you say implementation of the sequester and a government shutdown and your words would not prompt a negative rating action. i can understand why this sequester. why is a shutdown just as harmless, so to speak? >> well, the financial agreement on continuing resolution to keep the government waiting would be a negative signal. it would highlight the gridlock in washington. but in itself, it doesn't -- the debt service capacity of the treasury would likely be short lived. we have seen government shutdowns before. it wouldn't be good, but in itself it is not something that would trigger a downgrade from fitch. >> you go on to say, such an outcome would further erode confidence, that any agreement can be reached, that is -- that would retain measures necessary to keep aaa. it sounds like any crossover these deadlines, you would be

worried about the directional impact, not the absolute impact. is that fair to say? >> that's right. and what we have done we have just published is we set out, updated protections for the next ten years and made estimates as to what would it take to stabilize and reduce the level of federal debt in the united states. and what would be the kind of triggers for potential action from fitch and whether the u.s. would retain its aaa from fitch or face a downgrade. and we think that they need to, at an absolute minimum, put in place $1.6 trillion of deficit reduction over next ten years on top of the sequester. the issue on the sequester is it is ugly, it is fund loaded, it is not good for the economy at this juncture. if they reprofile it and make it more targeted, more smarter, then that would certainly be a positive sign. but the bottom line is it is

more or less -- they can't abandon the sequester and put nothing else in its place. they would do that, that would likely result in a downgrade. >> so, david, that $1.6 trillion, i guess the simplest way to ask is how much time will you give them? what is your method ology suggest in terms of the deadline they have to meet to keep aaa? >> they need to put in place a plan during the course of this year, we said that we will resolve the outlook, one way or the other, during the course of 2013. if you can't do a deal in 2013, sort of when is a deal going to be done? and further delays in reducing or reaching agreement on -- of reducing the deficit will just imply, you know, a bigger deficit and higher debt going forward. i mean, there is some silver lining that the reality is is that the deficit has been coming

down. there was agreement during the last debt ceiling crisis of august of 2011, which did commit congress to more than $4 trillion of deficit reduction cuts. the fiscal deal did reduce the deficit based on what we were projecting by around about 600 to 700 billion. so there is progress being made and the scale of 1.6 or $2 trillion of deficit reduction over several years for an economy the size of the united states is very, very durable. this is not european style austerity. >> right. >> this is bringing the deficit down in a gradual manner, consistent with economic recovery. >> yep. very well put. david, thanks for the time. appreciate it very much. >> sure. good to speak to you. >> as apple's tim cook prepares to face shareholders, we'll talk to the man who called the top on the stock, basically, comparing their stock to rca in the '20s. tom mccleland is up after the break. [ male announcer ] you are a business pro.

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apple is down 35% since its closing high. and gary kaminsky has touched on it a few times. bringing back the guest who called this top, wouldn't you say? >> he did call. we were there that day. you've been asked by many people and i've been asked by many people to bring tom on so he can share with us what was so controversial and you get that hate e-mail when you say something negative about it. but tom mcclellan joins us. thanks for being back here. give us the -- do you want -- i don't know if you want to look at apple rca or apple microsoft chart first, but what did you see back then and what do you see now as it relates to where that stock should be trading and where it should be going. >> sure. the whole genesis of the idea was back in september, thinking about apple as the tech darling of the moment of this decade and thinking about, what about tech darlings of the past and rca is

the biggest one from the 1920s. rca was putting a wireless in every living room. it was the hot new thing. and so i got my hands on the data from global financial data.com, they gave me the data for what rca stock price did back then. i lined it up and compared it to apple. and it was a really good fit. they're dancing the same dance steps to include the decline that happened since then. it is not so much about calling the top but calling the decline. when i first started talking about this, apple was at 700 and people were arguing about whether it would go to 1,000 or 1200. now it is down at 449 and people are arguing about how much lower it can go. >> we brought the chart up. bring it back up, so you essentially see from the -- looking at the technical analysis now, looking at apple rca, you would believe, i guess, you tell me, that apple has further to fall here, right, looking at that chart? >> if it follows those same exact dance steps, exactly, then, yes, it has further to go. that was during the great

depression. there say lot of chance for apple to jump off of this script, but right now we're at the point where rca's pattern shows a countertrend rally and that's an important thing to note. >> you did join us and you mentioned about february 19th being a day when you looked at apple and microsoft in terms of what happened with microsoft sold by the growth investors and transferred hands to the value investors. let's look at am and microsoft and what does that chart tell you now? >> it is exactly the same idea. microsoft was the tech darling of the 1990s and into 2000. and apple share price pattern happens to follow the same dance steps that microsoft followed on its way down. it, too, is calling for a countertrend rally now. if it followed exactly what the bottom date would have been the 19th of february, we're past that, but not materially past that, what is more important, though, than whether we get that turnup on schedule is apple going to break its downtrend line. there is a really well defined declining top line that is right at about 465 a share right now.

so apple is at 449. i would much rather buy apple at 465 or 470 than at 449 because at 465 or 470, apple is a stock that can break a downtrend line. at 449, it is a stock that is still on a downtrend and why would you want to own it? >> the bottom line, tom in terms of apple, a lot of fundamental news later today. watch the technicals, don't do anything until you see it hold above that downtrend line? >> until you see it close above about 465, wherever that downtrend line is. the risk in waiting is you can get a big recognition wave of buying as everybody sees that trend line break and everybody piles in. and then the opportunity is gone. that's the risk. >> tom, before we let you run, i know you look at -- you did great work with the charts. you have an s&p chart as well you wanted to share with us in terms of the overall market as it relates to the fed. what does this chart tell us? >> well, it is all about what the fed does. when we were in the mid dle of e 3, the fed would be buying one day and selling the next and

buying one day and selling the next. now all buying all the time and sure enough the stock market is responding in kind when you see the fed pumping in money really fast, it has to go somewhere and so it goes into stocks. >> all right, confirmation that don't fight the fed. tom, thanks for joining us. other viewers are happy to hear it. carl, back to you. i have to mention one thing, we did have tom join us when he essentially called the top on apple. i'll be on closing bell later today with bob osteen. long time cnbc viewers probably remember he called the top in cisco, he's done extensive would, he has analysis on another widely held stock that he's going to tell you today that has made the ultimate top and better be warned not on a technical basis but fundamental basis, don't miss that later today. >> he was tell meg this the other day, wouldn't tell me what it was. can't wait to hear it. thanks, gary. see you later. few minutes left until europe's trading day comes to a close. we'll get that close and some of the details on italy forming a government. we'll see. simon is up after the break.

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european markets are closing now. >> you are going to see a little green around the continent today. a decent auction in italy, but simon hobs is going to put some of this into perspective. >> i think this is a bernanke bounce you're seeing in europe. it is catch up from what we had yesterday in the united states and then some. this is a very defensive market. you to understand and appreciate where we have come during the course of the first three days of the week, a defensive market that is still prepared to reward

cash. two stocks stick out today. the maker of airbus planes coming through with good cash generation, a 6%, 7% pop there. and week, a telecom, but maintaining the dividends and a 12% spike there. the falls we had on monday and tuesday really stick out. take a look at weekly chart where we have been on the italian market, we're down well over 4%. and in general, those top blue chips around europe still negative for the week overall, down about 2.5%. and the italian banks have been at the helm of those losses. check out where we traded for some of these guys, down 10, 12% on those first three trading sessions. that's important. now, yes, we have had an auction in italy today. they successfully auctioned at the ten-year duration, and they paid the highest yield they have done for six months. 4.83%. the bond market hasn't fallen away. but the tensions are clearly evident. there are -- sorry, back to you

carl? >> i think we wanted to dip into bernanke briefly. scott garrett, well known congressman, questioning the chairman. >> -- and that in turn will cause rates to rise in a sustainable way. if we were to raise rates prematurely, we would kill the recovery and rates would come down and we would have a long-term situation at very low rates. >> wouldn't you have, a, provided for the uncertainty in the marketplace? earlier you said some risk taking in the market is appropriate. that was one of your opening comments. sure, risk taking is appropriate, but appropriate when there is actual price discovery. when you have a market that is distorted as it is right now by the fed's monetary policy, you really don't have true price discovery. and so when you do risk taking now, it is based upon i not knowing what the appropriate value is of land prices, equity markets, prices are, so risk taking now is worse than risk taking is when the fed's actions do not distort the marketplace. if you say -- thank you. >> time of the gentleman has

expired. the chairman recognizes the gentleman from new york, mr. minks, for five minutes. >> thank you, mr. chairman. mr. chairman, thank you for all of your work and what you do, with reference to our great country. in your opening statement, you talked a lot and you indicated about jobs and i think that's the going subject matter, everybody is concerned about jobs on both sides. and the creation of jobs. yet we had 35 straight months of private sector job growth, but we continue to have, as you said, high and stubbornly high unemployment rates. >> all right. we continue to watch the hearing there, the house committee on financial services, whether it is hensarling or some others. garrett, steve liesman, has anyone been able to land a glove on them? >> exchange is the most

interesting so far, carl. scott garrett clearly knows a lot about finance and has always shown that. he was the first to give bernanke an opportunity to discuss this issue of remittances which we made a big deal of earlier this week. we thought it would be a bigger deal in front of the congress. what these remittances are is the federal reserve owns a lot of paper right now, a lot of interest bearing paper, and has been sending a rather large check to the treasury. the thinking, one of the big concerns on the federal reserve is that as this portfolio grows, but interest rates rise, and the fed has to pay interest on reserves, that number is going to come down. and there is some concern on -- on congress or in congress about that check coming down. the numbers right now are $80 billion being sent to the treasury. and, of course, they're arguing over $85 billion in the sequester. so bernanke saying under almost all scenarios we will continue to send checks to the treasury substantially higher than the norm. he's also saying that the federal reserve has a lot in

reserve, essentially, that it can use in case there are losses, but i think one of the things that might have been missed by the market yesterday is this commentary from bernanke on the exit strategy where he said, you know what, we can exit without selling any paper and let the balance sheet run off naturally. we have heard talk of that, but i'm not sure the chairman has said so quite explicitly in the past. it makes the exit strategy a little less cumbersome and worrisome, perhaps, to the market, than it was when the idea was they'll be out there selling some of their paper. >> you're referring to letting some of the things run to maturity, right, steve? >> there is two lines, carl, that's the right level of reserves. first is the line of the -- of the assets that will run off over time. the other is the line that comes up, which is the appropriate amount of reserves in the economy. so these lines would eventually meet over some 5 to 7, maybe ten-year period. assuming there isn't a big inflation problem in the economy, the fed can let it run off and let the amount of reserves rise to where it should be over time in those two lines

will meet. >> all right, steve, we know you'll continue to tweet about it. at steve listmesman. bob pisani is here, what is moving on the big board. >> on friday, we erased all the losses here. i don't think it is mr. bernanke. we're getting good economic numbers moving the markets today. we had a stable europe. the italian bond auction did very well. but look at the gap up we had in transports. remember what happened earlier on here, very strong durable goods report, ex-transports. look at these transports up, 5%, 6%. kansas city, a little news out there, chatter they might be on the verge of a big agreement with a third party to build a crude oil facility in port arthur that would transport crude from canada, western canada. that would be a big deal, right across the country. but all the others -- that's a historic high. jb hunt historic high. gatx, ryder. they gapd up right immediately.

those are durable goods numbers. we had pending home sales numbers coming out, supporting home sales numbers from yesterday, better than expected. builders are up again, 2%, 3%, all the building companies, material companies to the upside as well today. they're moving on actual fundamental news today here. if you look at the overall sectors, the industrials, nice move, caterpillar up nicely, energy is up, financials. jpmorgan up 2.5% today. that's the big leader in the financial group. so overall if you look at what is happening here, we have erased all the losses. put up the dow. we asked for a dow chart here. we closed the other day, this is only a four-day chart, we closed at 14,000. that was on friday. and essentially we're back to 14,000 again. we erased all the losses we had on monday. bottom line is this, carl, if you just look at the data, the economic data, i think the -- steve liesman made a good point that mr. bernanke is a little

bit boosted by the economic data he's had in the last couple of days. we had above expectations numbers for pending home sales, new home sales, consumer confidence which was yesterday, and today's durable goods numbers, ex-transportation, all a little bit of a help. i think that's what the markets are responding to today, not necessarily what mr. bernanke was seeing, irrespective of what he's seeing. >> cap figures astounding, yes. thanks, bob. gold, meantime, retreating after its biggest one day gain of the year. to rick santelli on how trading gold has changed over the years. something you know a lot about, rick. >> absolutely. and i like to welcome frank lesh, my guest, with futures path. frank and i have worked together on many occasions. we have done radio shows together and as carl was alluding to, i traded gold futures, '79, '80, when adjusted for inflation made its true high i believe in february 1980, ajust for inflation around the 2300 level. what's changed in the gold

market over that run, frank? >> one of the biggest changes we have seen in the market is the fact that it has turned into a security here. evolution of etfs. what this has done is enabled a lot of people to participate in this gold market that never would have been in it. there is only a few people who really want to own gold bars and how many coins do you really want to have? and what do you do? restore these? where are you going to keep it? you're paying storage. there is just so much of that demand for gold there. and, of course, we trade as a currency in gold. trading against other currencies in gold, but with the evolution of the etf, there is a lot of people who, you know, it took the complication out of investing in gold. you can buy it. it is on paper. you know where you're long at. >> did it take the whole point away to some extent, frank? i hate to interrupt you. when i was trading gold, the newspapers used to have on the front page of the tribune, the gold watch, the silver watch, people were taking antique silver sterling that was passed

down and melting it. it is not the same now. if you trade paper, the notion of many who trade gold, the ine randers, if the financial world comes to an end, they're going to have the gold. if you're playing in etf, you're going to have a piece of paper. you're not going to -- so it takes away some of what i perceive are the driving forces behind the run-up in the early stages after the crisis. your thoughts. >> well, yeah, all of this is true because you're not going to be able to get at that gold in a crisis easily. >> just my opinion, folks. but i don't know in the garage of the etfs if all the gold that is supposed to be there is there. i know that may be heresy. >> there is people out there who wonder how much gold is in fort knox as well. >> i think the germans have questions about where the gold may be as well. >> they didn't get to see all of

it. >> that's true. >> it turned into a security. and you can buy and sell it on paper. >> so in the end, if you're trading gold, one sentence, we're out of time, how should the average investor now look at gold then? >> well, you know, buy it the same reason you buy an equity, price appreciation. if you're not getting that price appreciation, why hold it? that's one of the things we're seeing right now. liquidation of this paper asset. >> thanks, frank lesh. carl, back to you. >> rick, talk to you soon. rick santelli. when we come back, find out what investors want to hear from apple's ceo when he answers their questions in less than half an hour. the shareholder meeting begins soon. "squawk on the street" will be right back. but we can still help you see your big picture. with the fidelity guided portfolio summary, you choose which accounts to track and use fidelity's analytics to spot trends, gain insights, and figure out what you want to do next. all in one place. i'm meredith stoddard

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you need an ally. ally bank. your money needs an ally. top of the hour on "halftime," the dow retakes 14,000. stock s enjoying their best two-day gain since the start of the year. can it last? apple's shareholder meeting about to start. we'll have a live report from the company's headquarters on what tim cook may say today. we'll bring you all the headlines. carl, see you in 15. >> all right, sounds good, scott. thanks. headlines crossing about target's february sales. josh lipton has more on that. >> target, the discount retailer, slipping into the red

here. one problem is guidance, which is murky, but now we're also getting headlines off that conference call that february sales were softer than expected, but some improvement. target down 1.1% right now, carl. >> yeah, there was a little confusion about the guidance earlier this morning. but that is quickly coming into focus, given some of the comments, saying the u.s. economy is growing at a painfully slow rate. want to get back to bernanke on the hill. >> want to read your words as reported relative to too big to fail. you say the subsidy is coming because of market expectations the government would bail out these firms if they failed. period. those expectations are incorrect. that's a quote from you. is that a fair -- >> yes. >> okay. so am i reading this correctly, do you believe that at least through legislative purposes, that too big to fail is just nonexistent anymore? not through the market, but

through the long? >> we don't have the tools that were used in 2008 are gone now. what we have instead is the liquidation authority which among other things would wipe out all the shareholders of the company being liquidated. now, if we had a large, important firm to fail tomorrow, it would still be very damaging to our economy and -- >> i understand. but the law currently as drafted, after dodd/frank, today we do not have the tools we use to -- >> the tool the federal reserve use ready not longer available to us. >> i'm glad to hear that. i also agree with you that regardless of what the law says, some people in the marketplace, especially some of my friends on the other side of the aisle, like to believe that it is still in existence. and i accept that not as a legal point, but as a fact of reality. i mean, some people think the moon is made of cheese, and

that's fine. to them, that's real. so for some people, too big to fail is still there, though there is no scientific or legal proof it is. i guess what i'm asking is that what do you suggest that we do to address that misconception of the market and the misconception of some of my own colleagues that too big to fail is still here? because i think we all agree that we don't want it to be here, it is not here, how do we aggress that misconception to make it a reality? >> well, dodd/frank has a strategy, it involves making big institutions internalize, take account of their systemic costs by tougher regulation, higher capital charges and so on. the orderly liquidation authority and strengthening the entire system. there are steps we're taking moving in that direction. i think the markets will come to see that these steps are effective. of course, we can communicate it, we can say it, but -- >> i've been saying it for years now and some people refuse to

believe it. do you accept the general, again, not the dollar, but some studies put the subsidy that the alleged subsidy that is there for the too big to fail, doesn't exist anyway, but that market perception of a subsidy -- >> yes, i'm sure there is still some -- >> i accept that. >> we need to be working -- it is declining, but we need to be working in the direction of eliminating it entirely. >> do you think that subsidy can be quantified? in a reasonable way? >> with lots of assumptions and so on, you can compare what large banks pay in the market to what small banks pay and that gives you some sense. >> be prepared to get a request from me later on to try to do that quantity fiction. >> senator warren cited some sources to me yesterday. >> that's not your study. i want yours. >> time of the gentleman expired. the chairman recognizes the gentlemen from north carolina for five minutes. >> thank you for your service to our government, to our people.

to follow up on my colleague from -- >> as he goes for a drink of water, which is all the rage in washington these days, little more comment, steve, on too big to fail this time from the house side. >> i'm looking forward to that study. senator warren cited a study yesterday saying there is an $83 billion subsidy, essentially because the markets believe that the government will bail out the too big to fail banks and there was a response this morning on one of the blogs i read that say it is not positive 83, negative 16 billion and a lot of assumptions that are required to come up with understanding what that subsidy may or may not be out there. and if the fed chairman is asked to do it, i think that could be one of the more definitive ones that is out there. he was asked by capauno, reading the policy report gave him a headache, do you think sequestration is stupid and bernanke said i wish you wouldn't say that, but bernanke went on to say, i don't think

you should cut so much now, i think you should cut more in the long-term. >> an echo of what he said yesterday too. thanks, steve. come back to you later on. when we come back, apple ceo tim cook set to take the stage in about ten minutes at the shareholder meeting. we'll find out what he needs to say to get the company back on track with investors.

minutes away from the apple shareholder meeting in cupertino, california, where the cash hoard is sure to take center stage.

joining us to talk about it, francesco guerrero, columnist at the wall street journal. on the cnbc news line joining us from hawaii, of all places, mikey campbell is the editor at apple insider. good morning to both of you. francesco, what are you hearing in terms of whether or not news actually gets broken at this meeting? wouldn't be -- wouldn't fit with the historical norm, right? >> i think actually it is going to be one of the quietest meetings on record. tim cook is not expected to make any fireworks. and that in a way is going to disappoint shareholders. shareholders, as we know it, investors in am, want a piece of the cash pile, $137 billion burning a hole into apple's pockets. from recent investor activism, there is a lot of demapds nds o that cash pile. the other big issue will be whether there is a stock split. yesterday it was all the rage on the twitter sphere, announced or denied. and some talk about the products. there is a lot of talk about the less expensive iphone, will he

say something? the expectations are not very high. in a way, it is all set for him to match them or even exceed them if he says something more. >> hasn't stopped some analysts from putting a flag in the ground and saying they're going to double their dividend in some cases. there is obviously rumors about other balance sheet actions they could take -- that could happen. but you're saying you don't expect to hear them at the meeting itself. >> apple is a very secretive company as we know. it is very difficult for anybody to read them. a lot of analysts are conveying or channeling what investors want to hear. to a certain extent, there will be a lot of wishful thinking. the interesting thing for me will be the expectations being solo, anything they say could almost have a positive impact on the share price. >> yeah, it is true. mikey, you got some -- i don't know if you want to touch the balance sheet side or the new product side, because you have written about some renderings which unfortunately i don't think we can see, but lead us to some -- lead us to some clarity, perhaps, on what an iwatch may

look like, right? >> i think that would touch on both sides. apple has traditionally banked a lot on their, you know, breaking new ground. creating new technologies. shareholders have in the past actually, you know, made huge decisions based on announcements and things that they thought were going to be launched. so i think it does play an incredibly important role. nothing like that, i agree, is going to be -- is going to be said today. in fact, i think tim cook is going to be even more cagey than usual. if that can be possible. but as, you know, the whole einhorn case, i think he's just going to be really hush-hush about his plans. he may say that, oh, yes, we're

thinking about ipress and what we can do with all of this money, but, you know, i really don't think anything is going to come of it today. >> yeah. >> but -- >> there definitely has been so much conjecture, this good note out of jeffries, they may want to hold on to a large portion of that cash for their needs over the next couple of years. we're short on time. i appreciate both you guys coming on. we'll see you soon. >> thanks. >> thank you. when we come back, one social media stock investors are gambling on in just a moment. revolutionizing an industry can be a tough act to follow,

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