looking at a more diversified bunch. i know you probably don't know any of the specifics about this, but when you look at wall street in general, are there still big conflicts of interest? >> sure there are. but i'm not speaking of that one specifically. but the -- people selling securities are often selling things they make a lot of money in. the first question you should ask of anybody selling securities is how are you getting paid and how much are you getting paid. and the truth is, you can own index funds with a very, very low cost. and you will end up getting the same performance that you get from people who charge you a lot more. so you'll always want to look at costs. and when somebody comes around, even says i'm going to sell you this wonderful security but there's this big chunk in it for me, you get suspicious. as they say, when a person with experience meets a person with money, the person with the money gets the experience and the person with the experience gets the money. >> okay. any last thoughts, very quickly, we have just about a minute left?

>> i think that, you know, we live in the best country in the world, and we will solve our problems, and the people that own equities, purchased over time, not just when they get all excited about it, in a low-cost manner are going to do fine. >> warren, have you noticed that that ketchup bottle was already shaped like a ukulele? have you thought about that? like a custom-made -- i mean, you could have one easily made and when you play the ukulele, you could be pushing your products. >> we're going to see how this one sells. and if it performs like i anticipate, they probably will put me in charge of new product development. >> red e-made for -- that is my favorite i decided, when i looked at both of them. i do like the -- what's it say? >> preferred by hot dogs, and then it has your picture. >> that i like. >> we're in business, joe. >> all right. warren, and becky, great job. warren, thanks so much for all your time.

phenomenal as usual. we appreciate it. becky, get home safe. we'll see you tomorrow. make sure you join us tomorrow. but for now, "squawk on the street" is next. good montds morning. welcome to "squawk on the street." i'm carl quintanilla, with melissa lee, jim cramer and david faber at the new york stock exchange. ism services tomorrow. nonfarm payroll on friday. got some selling in europe. general softness. some of that fed by shanghai overnight down 3.7%. the worst session in the year and a half as the chinese government announces new restrictions in taxes to clamp down on real estate prices over there. in asia, the hang sang, look at the nikkei, pretty nice day. road map for this monday morning starts off with warren buffett. three hours of conversation with our own becky quick.

the oracle weighs in on stocks. sequester, housing, and what apple should do with the cash. more signals of slowing growth. two big stories in the newspapers about how companies aren't adding jobs, and the rich are the only consumers spending money. barclays saying markets underestimating the value of the stakes in alibaba and japan. the company says it will no longer support the blackberry 10. is that product in trouble. samsung releases a teaser video for the galaxy s-4, or as cramer calls it, the galaxy. 52-week lows on friday. we'll start with the oracle of omaha. warren buffett spending the morning with becky and joe, saying he's on the hunt for more elephants. says stocks are still a good bet for investors. >> we like buying businesses and we like buying stocks. you get more for your money there than you will get -- the

dumbest investment, you know, in my view, is a long-term government bond. >> the dumbest investment. great weekend. always great bedtime reading on a friday when you know that letter is on its way. don't you agree, guys? >> common sense is so much fun. you sit there and think, heinz is good. i think heinz is a great company. does he want to buy more companies? yes, versus treasuries. geico, he praised over and over again. obviously we see geico constantly. they make a fortune so they've got a lot of money coming in. it's about doing something with the money versus going to buy a business. he's a buyer. >> i hope the chinese weren't listening when he said don't buy u.s. treasuries. or i should say -- >> you want chinese -- >> which we will get to. i am being somewhat facetious. it's interesting, because it's a point we've made many times here which is, how can you buy a treasury, the risk that you're potentially taking on if the economy does pick up steam. and we see that increasing in

interest rates. always interesting reading that the letter and as much more interesting listening to mr. buffett. sometimes i think we forget he runs an enormous company. the largest market cap companies in the country. in addition to being the oracle of omaha, and wanting to listen to him for stock advice. they own burlington northern. >> i know. >> quarter of a million -- >> you can go over and over it again. he represents american business basically and american finance. >> berkshire was pointed to as performance, and for him a great barometer of the u.s. stock market overall. hitting a record high last week. that is really reflective of where the u.s. stock market is going. because of the diversity of warren buffett's portfolio. in talking about treasuries being the dumbest investment around, that's a judgment call on where he sees cash.

cash he would rather go buy an elephant, as opposed to having all that cash on the balance sheet. that is sort of a backhanded slap on apple, sitting on $137 billion in cash. >> apple only down a little bit today. it's monday. usually apple is down four or five. tuesday it's down three, four. i'm trying to remember the pattern. look, if they don't do anything, they have become the anti-buffett. don't cross the oracle of omaha, lightly. what they're doing philosophically is crossing the omaha. >> the key to so much corporate activity in so many ways, if you have cash on your balance sheet, you're earning almost nothing. comcast, our parent company, for example, deciding to buy what it didn't own of nbc, they do it now. heinz, 3-g saying, we're willing to buy this company at 14 years

worth of earnings, depreciation, amortization. why? because we're going to get a decent return on that money. >> his argument is -- that's extrapolated to households, too. the best thing you can do right now is buy a new home, borrow, borrow, borrow, stretch it out 30 years. >> if you're in corporate america right now, and you have a lot of cash trapped overseas, you may want to borrow here against that, and go out and buy something. believe me, every banker is calling on people to say, do it now, you'll never have lower interest rates. >> weren't you shocked that he didn't look at the futures and get negative? you come in and look at the futures and say, holy cow, i want to sell everything. he did not play that game. he was using common sense. he talked about physicists. why is he so out of whack from what we see every day? i mean, come on. >> vix jumped 5%.

>> i didn't say him say risk on, risk off. what is with this dinosaur with the railroads. it amazes me he's not willing to play the on again, off again, buy call, sell call thing. he is so stuck in this world of making big money by buying stocks. >> he does buy companies. >> buying stuff. the buy low, sell high thing, he doesn't have to sell high, he can hold on to it because he's so big. isn't he a breath of fresh air like you can't believe? >> he is a breath of fresh air. >> you can buy great american companies and make money and not worry about -- did he talk about the italian elections at all? >> he said he and munger have not talked macro to any substantial degree for decades. 30, 40, 50 years. >> he doesn't have time to lose money. >> now, there's going to be some out there today, he's invited them to talk at the meeting today, what he calls the subpar performance. once again, lower returns in the

s&p. one more year and he misses for five years in a row, something he's never done before. >> look, he's got a big portfolio. his portfolio is very housing related, by the way. that could be coming back. look, i felt that, yes, maybe he is underperforming, but his portfolio is uniquely set up for an american renaissance. it's entirely possible that he is in the sweet spot right now. even if he wasn't before. >> a lot of it is predicated on the companies as opposed to the stock picking. >> right. >> we tend to think of a wells fargo -- >> no longer from wells fargo around coca-cola -- >> or ibm. those have not done that well. coke, pepsi. look, we own the stock. >> you would? >> yeah. >> really? would you own it five minutes from now? >> that depends on the futures. >> jim, you asked him a question, specifically about nat

gas, burlington northern, which buffett addressed with beck. >> the railroads are definitely experimenting with converting to natural gas. it's not a simple matter. and i can't tell you the technicalities of it. but it's real enough so we're spending real money. in fact, i think we ordered a couple of units that we're working with. so when you get natural gas, $3.50, and you look at where oil is, you've got to look at converting any kind of an engine to natural gas. >> i think that when you start hearing big industrialists, and i'm calling warren buffett an industrialist in light of the conversation here, switching to natural gas, you have jack welch talk about it on our network, many executives saying this disparity is too great, what that tells me is we have so much natural gas -- >> lack of an energy policy being made in washington, it's going to be the markets that dictate it. >> well, keystone on friday, the

state department seemed to think there's no objections. >> that's not about natural gas, though. >> that's about oil. >> and that's not chinese oil. >> what's heading to china, we don't take it. i was gratified to hear it. because what happens is the railroads use -- they're diesel. and the goal of any environmentalist should be to get rid of diesel. because it is awful. mayor bloomberg being the greatest environmentalist, he's a practical man. he is not trying to tilt -- he's not don ki yoquixote. like buffett, clean up the skies, and use natural gas. >> just get up, listen, feel great. this is better than the cnbc alarm clock. wow, this man is not troubled by the problems. >> no. he just spent $340 million

buying newspapers. >> that is, by the way -- >> that's pocket change. literally pocket change for warren buffett. >> what did he say, his perspective is always interesting. >> his demeanor -- >> even when it comes to newspapers. >> local is still important. >> if he still likes stocks and likes companies, shouldn't people at home like stocks and companies? he's a thoughtful man. i like him. >> let's talk about the markets overall as we start the week. the dow starting within 75 points of its all-time closing high. the markets are facing some headwinds. you have continued wrangling in washington over the sequester. data showing the wealthy shouldering the load in consumer spending. futures are lower after a sell-off in the shanghai market after beijing announced new property buying restrictions. you add all these things together, jim, and you think slowing growth around the world. we also, of course, got the terrible pmis on friday which

showed slowing in europe, across europe. >> the best performing groups, augmented by the purchase of heinz, are these companies that do really well in a slow economy. kimberly, clorox, they're very stretched on a valuation basis. when you look at campbell's soup, you're talking about companies selling well above their historic level. >> there's this notion these are the defensive areas of the market but stretch the on valuation. does this make other sectors the new defensive sector that you need to be in this market environment? >> i like the housing sector better because of the lower interest rates. i think that these stocks will get -- look, that interview with becky quick was an important interview. i think people are now going to start saying it is going to be clorox, his next buy is going to be kimberly. he also said he's not about to pounce tomorrow. i would trim those, i don't want to sell them entirely, but you

still get a 3% yield in kimberly which is better than in treasuries. but i do feel this trade has become, as you say, safety into momentum. and i don't like momentum with slow growing companies. and it's where people want to be so badly. >> yeah. meantime, shares of yahoo! moving higher in the premarket as well. barclays saying the stakes in alibaba and yahoo! japan are undervalued. yahoo! announcing it's planning to discontinue seven of its products including the blackberry app. they have a business alliance to share and co-produce editorial contented. i think barclays goes to a $26 target. then this issue of apps that are customed for the 10, jim. seems like there's another one going away every day. >> i continue to be impressed with what she's doing. i think many thought yahoo! was a great brand. she's making it a great brand. monetizing different things. i have been so impressed by this

idea of, listen, you've got to stay at work. you can't be someone who isn't part of the culture. we need to reinvent yahoo!. i think she's doing a remarkable job. >> i think she's leading, which i -- >> but that's new. >> well, it is. i think we'll -- i'll reserve judgment. on whether or not it works. >> why? because you are a skeptic by nature? >> yes. yeah, i am. by the way, to go into the point of the research reports, what you think alibaba is worth, what you think japan is worth, all fair points. and that continues to be valued. let's see if and when we get an ipo from alibaba, and what it's really worth. that will certainly be important. as to the core business of yahoo! it's being turned around -- >> starting this streak in '96, it would be fabulous to deal with the same person. i always find that, oh, that person left. now that person left. now that person's on leave.

that person -- that alone would change how people view yahoo!. >> yeah. >> stability. stability, david. i'm not a skeptic about stability. >> you and i are rock solid on that. stability, right here. >> we've got to cue that up next. >> what did you buy this weekend? >> maybe it's over. my father -- we got runts. i know you like runts, right? nerds? these are candies. >> fun dip. what else are you on right now, jim? >> i didn't get the juji fruits, because i have a dentist appointment on wednesday. i don't have to explain myself on that. apple share prices suffer, tough session on friday. samsung releasing this, a new teaser video for the galaxy 4. could this change the playing field for mobile phones?

one of the top analysts on how to play financials. how he's sneaking his way on the conference calls and a lot more, later on. taking a look at futures. we have sold off on every monday so far this year. although we've been up every friday. interesting pattern. we're currently in the red. a lot more "squawk on the street" still to come. ♪ ♪ here we are, me and you ♪ on the road ♪ and we know that it goes on and on ♪ [ female announcer ] you're the boss of your life. in charge of making memories and keeping promises. ask your financial professional how lincoln financial can help you take charge of your future. ♪ ♪ oh, oh, all the way ♪ oh, oh but we can still help you see your big picture. with the fidelity guided portfolio summary, you choose which accounts to track

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ap million falling in pre-market after ending the week

by hitting new 52-week lows. the stock is 38% below the sppt highs. samsung is upping the ante for the launch of the new galaxy s-4 smart phone. march 14th, a lot of people say the competition is really going to start getting tough. >> well, apple is just absent, because they've got the cash hoard, and they can do something -- samsung has become the new favorite. it's interesting, the press has viewed it as being the underdog. samsung worldwide is actually the big gun. apple does not feel compelled to do anything in reaction to this. what people think, maybe apple doesn't feel that way, but i continue to think that samsung has the momentum. and apple seems to be trapped in a world where they think they're king. and cash isn't king. and they're not king. >> those are harsh -- >> it's reality. wow, up a couple hundred.

>> they still sell a lot of stuff. >> look, i'm saying the perception. i still do not -- you'll have to pry my cold dead hands away from my apple -- that's an nra plug there. >> understood. >> mossberg looking at apple's cash saying they have enough to buy facebook, twitter, linkedin, pandora, yahoo! all at once. >> netflix, they should buy netflix. sorry, pop, i couldn't get the netflix to work. it's on all your clickers now. these would all be a sign of a pulse. we need a pulse. paddles. >> the stock doesn't have a pulse. the price action on friday was terrible. stocks were close to new highs, struggle higher. apple shares closed on a low of the session, new 52-week low for apple. >> first of all, asking -- >> if you took a look at the

chart and didn't know what stock it was, you would say, what's wrong with the stock. >> making acquisition of some -- it's not going to happen. that's desperation. >> why is it desperation to own -- >> how about come u another product that everybody loves and wants to use. >> at the same time, if you want to really have itv, if you own netflix, i think netflix is an undervalued story right now. you keep reading about, say, amc. what an amazing article this morning by david carr about amc and how when they realized you need netflix to get the back stories, you can get right into your favorites and mine, walking dead. >> netflix is about a week's cash for them. by the way, amazon should run netflix, not apple. >> okay. so you want apple to come up with something. i'm saying that apple could do something with its cash that's not that big. buy netflix. and suddenly, all of a sudden they would own itv. netflix is doing everything right.

content. social media. we need a little -- social media would be good for apple. twitter would be good. >> none of these are elephant acquisitions, these are mice for apples. >> teeny tiny. >> they are. they are, but then -- but not what the company does. at least at this point. >> you like it when the company said they're considering what to do with their cash? they've had a lot of time. >> they have. i assume we'll hear something one day. >> presumably. >> i like to go out on a limb on that. >> one day we will hear something. but don't tell them when. >> that's outside the corporate -- union parcific woud be outside the core. opportunity now for a new trading week. cramer is fired up. the "mad dash" is coming up next on this monday morning. let's look at the futures. s&p looking at a lower open, about four points. much more "squawk on the street" straight ahead. [ woman ] if you have the audacity to believe

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five and a half minutes to the bell on a monday. mad dach looking at what some people are not too sure of the 3-d printing thing. >> you're so right, carl. lots of people feel this is a bubble. okay? so when stratis comes out with a fantastic number, 3-d printing, you've seen it, it is all the

rage among a lot of our viewers, this has caught a lot of short sellers by surprise. and i have to tell you, carl, i think the industry is a bubble, too. that said, if you want to play the bubble, stratis clearly has the momentum over 3-d. >> what lead you to -- >> they made an acquisition. it gives them mind share, market share. you'll see a lot of people trying to find a tech stock that has momentum. in an apple world where the air seems to fall out, seep out of the balloon every day, 3-d is the -- let's say that that's the segment that is of innovation. when other people feel tech lost its innovate power. >> is that psychology contained to this particular space? >> vaguely. this morning tech data reports, they tell you that there's a terrible mixed shift going from server to tablet, and that that is hurting -- and cell phone -- that's hurting everybody's margin. so tablet and cell phones, people aren't that crazy about,

and boy, are they crazy about 3-d. be careful. it is a bubble. but if you want to play the basketball, stratis is the one to lay. we're on dow record watch. a new day of trading. [ male announcer ] i've seen incredible things.

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from td ameritrade. you are watching cnbc "squawk on the street" live from the financial capital of the world on a monday morning. opening bell set to ring in about 45 seconds. the s&p, by the way, guys, is sitting exactly 3% below the record high. that is to the hundred death of point. >> wow. what are the odds of that. i don't think you can push it today. >> no. i mean, that's quite a ways away. the dow is much closer to a high. apple in the dow. apple in the s&p 500. apple in the nasdaq. much farther away from the all-time high. so, you know, that's how apple affects it. >> there is the opening bell, as

we kick off, a look at the top of your screen. louisiana pacific, manufacturer of wood building materials celebrating its 40th anniversary. over at the nasdaq, united tennis association celebrating tennis night in america. and a great thing about summer, the u.s. open gets a little bit closer every day. one of the great events. >> one of the great companies. this company has been on fire. timber is on fire. you go back over the conference call, timber, lumber, doing so well. it's great to see these guys -- they have been -- plywood -- it's great to see them make it. boy, it's been stuck in a range for a long time. >> when you talk to the home builders, when we spoke to doug yearley, he said it is the lumber costs that are rising. that's the behind wind if -- headwind if there is one. boise cascade, watching those

stocks today. a lot of retailers in the coverage of roughly a dozen of them. this is what they like. ulta, that's david's favorite stock. coach. limited. tj maxx. they like the inventories there. inventories look like they're in solid shape at these particular companies. growth is underappreciated. kors initiated a neutral rating. they are worried like so many others about the valuation, even though the stock keeps going higher. do you call it out on valuation or just go with the momentum? because it has been performing and executing very well. >> you met michael kors. >> yeah. >> sold the 25 million shares. it has been pancaked since then. people don't want to buy his -- if he's a seller, people don't want to be a buyer. >> he's got all his eggs in one basket. when you see something like a michael kors sell, you also think that -- a large percentage of his wealth, including his own

livelihood, is tied up in one company. which is not a smart diversification. >> i've been trying to figure out coach, which lacks catalyst, and kors, a lot of momentum. what i worry about here is that coach -- remember, it was the takeover rumor last weekend, i mean, valuation in coach is so low. valuation in kors is so high. does the twain meet. >> where do we meet respectively? >> three times the -- >> really? >> take a look at this, page two of the journal, all about wealthier consumers holding up their end of the spending bargain, so to speak, and more, as gas prices, food prices, whatever, is harder on the lower end. jim? >> yu house is going up in value. that makes people feel good. the wealthier are not lacking for jobs. their stock market portfolios, 3% down on the s&p. they feel good. the major wealth effect is

really taking hold among the wealthy people. it really makes them emboldened to be able to buy newer cars, to be able to feel better about their portfolios and to spend at nordstrom's, buy kors bags. i think this is the key to our economy right now is the wealth effect. >> is it enough to sustain the overall economy, especially if you're talking about people hit by higher gas prices, who are still adjusting to the payroll tax that is now a part of what they're paying again? >> the dollar tree was big last week. walmart can't be kept down. walmart guided lower. the stock is a rocket ship. i'm waiting to see, other than jcpenney -- how about warren weighing in on jcpenney. >> how he used to work there. >> he said i was not fired from jcpenney. >> one more quarter, though, right? >> i don't know. >> i went with four months -- >> i think it might have been a little more there. great blog this weekend, i was reading about a great writer who

went to washington jcpenney, and they saw nothing happening there. jcpenney, i don't want to dwell too much on it, but warren buffett pointed out, it's hard to turn around a retailer. he knows retailers. >> you don't want to talk about apple, all day, every day, but it's hard to ignore at $4.27. >> numbers are being cut. it can't be cheap. no stock where the numbers are being cut is cheap. >> a new 52-week low on shares of apple. so that's certainly one to watch. >> i want to mention shares of lbs, las vegas norm "times" story. people may have seen -- in their own press release, they say we're firing back at press reports suggesting the company violated the anti-bribery positions act.

it said news reports stating otherwise, such as "the new york times" story are both inflammatory and defamatory. >> inflammatory and defamatory, yes. >> look, i look at this and i say people don't get too scared about the practices act. haliburton had the biggest amount of money ever paid for one of these. and didn't skip a beat. people at home might think it's the worst thing in the world. even if it is true, and i don't want to say it's true -- >> no, it's not true. smokin' joe. >> i was thinking of the rumble in the skrung will. i was thinking about the gorilla in the manila. >> it always crimerhymes. >> are you serious? >> about 64 years old. >> how cool is that?

>> that's fabulous. >> nobody's afraid to talk to him. >> i would give you some berth. unlike the knicks got a little -- >> what does he wear by the way? >> i asked that, because he is known as a -- >> i would think his work clothes -- does he wear fur? >> he got the name clyde because he was a fancy dresser. he was named after clyde barrow from the movie in the '60s. >> i might call you clyde. >> whatever you want. >> just don't call me late for dinner, right? let's check in with bob pisani, somewhere here on the floor. >> right behind you, about 60 feet. happy monday, everybody. a sour start to the week, dow down about 40 points. mainland china down almost 4%. they're trying to tighten up the property market there. 20% capital gains tax on the sale of second homes. higher down payments, higher interest rates. this is having a few ripple effects. the australian dollar, for

example, has weakened. from the looks of it, it doesn't look like a sectorwide economy squeeze that's going on here. it's very limited to the property sector. there's no indication they're going to tighten credit everywhere else. the property market has been on fire. they're concerned about losing control of it. so i think it's limited right now. japan stocks, do you see them near a four-year high, nikkei up, the new proposed head of the bank of japan says 2% is the inflation target and he's going to do everything. so he's basically backing shinzo abe up. that market doing well. in italy, down about 0.6%. no progress toward making any kind of government over there. the keystone pipeline story on friday is a marginal positive overall. i hope you saw it. it came out after the market. the draft environmental impact statement released by the department of state. they said it will not result in any substantive change in greenhouse gas emissions, nor change the development for oil sands. this is marginally positive for

pipeline developers and for the main company there, transcanada, which is an oil development company. trp is the symbol there, up fractionally this morning. marginally positive for the pipeline developers as well. there's a 45-day comment period, and who knows, maybe july, august, we could get a presidential permit. that's still very much up in the air. that's what some of the people behind it are certainly hoping for. i looked at the notes here, you know, the earnings of revenues were below expectations, seeming to blame it all on the borgada. it closed for five days because of hurricane sandy. i looked at the numbers. i saw the midwest and south was down 20%. this is not just related to them. this is clearly related to softness in the overall casino revenues where people basically not coming in the doors. borgado is down as well. the midwest and south numbers were very weak. big week for central banks. we'll find out whether with get

any rate changes. everybody's watching the european central bank later this week. possibly rate change, moves to the down side. bank of england, everybody's watching whether there might be additional asset purchases. remember, we're also going to get stress test results from the bank at the end of this week, and then find out whether banks the following week can raise dividends, or even increase their buybacks. that might help them as well. >> bob is right, there's a lot of chatter about ecb cutting rates. i don't think they're going to do it, because they've been slow to do it. that would be significant to explain also why the europe -- let's hit the bonds and dollars. rick santelli in chicago. >> thanks, jim. you know, overnight, we reached a 183 yield interday. look at a two-day chart of 10s. it's not changing much, but we are at the lower end of the yield range. and even at 185, where we sit right now, we're only nine basis points away from where we closed at the end of last year, 1.76.

if we look at a dozen-year chart of the jgbs, japanese government bonds, and look at their yields, you'll notice just that much above 60 basis points. you know, they are embarking on the road of easing. and of course, as counterintuitive as that may seem, think of all the countries involved in that. go back to '03 to show a lower yield. let's switch gears a bit. today i see the pound and yen are a bit higher. a bit of a reprieve. i know we have central bank's meeting thursday. i just heard the table discussing whether the ecb will lower rates or not. there is a lot of traders selling the euro versus the dollar versus the yen a bit, as we start to maybe see not only the printing presses but the lowering of rates to further economic growth. we know what the collateral

damage may be. all of this is good for the dollar index, not necessarily by design, maybe not to brag about, but it is what it is. open the chart up to december, we're at the best levels in the dollar for 2013 and at about another three weeks to that. jim, back to you. >> thank you so much, rick. let's check out the latest moves in energy and metals. bertha coombs at the nymex. >> good morning, jim. we've got oil modestly lower this morning. you would think it would be a little bit more supportive with brent, brent pipeline overseas is shut down for technical issues. nonetheless, we have seen over the last few weeks or so, we've seen a number of funds starting to cut their long outlook when it comes to oil. down 16% when it came to net long positions last week, according to the cftc. we're seeing a bit of asset reallocation in these days. and one of the things that funds are doing is going net long the dollar, for the first time since november 27th, according to regulators. gold, however, today is getting

a little bit of a breather. and looking a little bit higher. we're a little bit higher across the metals complex. it defies the speculation when it comes to real estate today. copper still a little bit firm, but metals have really been taking it on the chin over the past few weeks, david. very interesting, especially when you look at that piece last night on "60 minutes" that saw the entire cities empty. where people have bought up condos, but nobody lives there. >> yeah. at least not yet. you never know. things can move fast in china. bertha coombs, thank you very much. i want to hit on hess. the stock is up, the oil company under fire, of course, as viewers know, from hedge fund elliott associates, selling about 4% of its shares and nominated five directors. the meeting will be held on may 16th. most importantly let's get to the news this morning. hess fires back with a lot of different developments of its own. a significant restructuring of its business, and six new

directors that it is nominating. as for that, here it is. they want to exit the downstream business. those hess stations that you go to still, they have over 1,000 of them. also the toy trucks, yes, they're going to be getting out of that. thailand, not a significant play for them. monetizing the bachen mid-stream assets by 2015. the bakken transforms itself into a pure e & p company. something it has been doing for a while. it was 55%. as much as 90% now, going to 100%. they're increasing the dividend to $1 a share. repurchase plan, $4 billion. and the six new independent directors. they've been under fire for both the composition of the board, saying there are few too independent voices there. many of them subservient to longtime ceo john hess, who, of course, was the son of leon hess, who founded the company.

there's a look at the bakken shale production. we expect this battle will continue. but these are significant moves by hess at this point. but they say they have been under way long before elliott got there and showed up, which was at the very end of january. take a look at john hess. interestingly, they're replacing directors, they just added sam nunn, who was added in august, is now out. that guy's on more boards. probably pretty busy. sam nunn also out. an important vote, don't forget, relational investors. this is a shareholder base that has been somewhat wrested in the past. significant no votes and vote to destagger the board. neither of those actually occurred. but we'll see what happens. elliott says go back 17 years, look at the underperformance versus peers.

lately the stock has been performing very, very well. >> look, these guys want the company for sale. you would have to pay north of a hundred for this. amarada hess, the predecessor, they discovered the bakken. many people feel they got the best assets in the bakken. every company around the world wants to own the bakken. i understand the heat, because the company is worth a lot more than it's selling for. >> you've got to obviously do a good job of getting it out of the ground and finding the most economical ways to do that. >> i think this company -- this company is going to be under pressure because it's worth considerably more than it is selling for. that said, i think john's doing all the right things. if it were to remain independent, but i think these guys want to sell. >> we'll see. this battle continues. but today, very significant

developments when it comes to hess. coming up next, mike jackson, hear what the head of the nation's largest auto chain is saying about stronger auto sales and whether he is wor ritd the sequester will halt that momentum. as we head to break, look at this morning's early movers on wall street. look at lexmark, up 5% today. ♪music plays

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always good to bump in with ashford. becky did a great job on squawk woks with warren buffett, auto nation, the retail giant reporting an impressive month in sale. mike jackson is the chairman and ceo of auto nation. mike, good to see you. >> jim, always a pleasure to see you. >> thank you. you've got some terrific things, as always, in your conference call. and i want to point out, in the mood here, goodness, that you

said that we are just beginning to recover in 2013 from the used car market which is a gigantic market for you. that's the most bullish statement in your most recent conference call. >> yeah, it's a really good time in the auto business, jim. for once in my life, i'm in the right place at the right time. i certainly paid my dues to get here. for the month of february, we announced retail sales, new vehicles, of just over 21,000. that's a 6% increase on a same store sales basis, plus 3% as we have some acquisitions in there. some of the bright spots are that our premium luxury business was up 16%. our pickup truck business was up 16% also. and believe it or not, the state of california was plus 10%. for the industry, the sales were at an annual selling rate of 15,400,000. that's the fourth month in a row above 15 million. it's really a trend and it really confirms that our

forecast of mid-14 million for new vehicles is solid this year. and yes, jim, you're absolutely right, a strong used car residual values are definitely facilitating trades. we're able to give a lot of value to customers. you combine that with great financing, great new products, and genuine replacement need, this recovery in autos is plowing through all the headwinds. >> mike, one of the things we've been puzzling, and we did it during the break, is who keeps spending here. that's a huge number of autos that are going to be bought. and you simply can't be bearish if you hear that kind of number. >> no, you can't. i think, though, the auto recovery has to be put somewhat in context. we had a depression in autos, not recession. sales came to a standstill in '08, '09. i'm a great car salesman from new jersey, jim. but i tell you, if there wasn't genuine replacement need with an average age of 11 million, our

average trade, 160,000 miles on it, that's the foundation of this. and there's millions upon millions of pent-up demand for january replacement need. but we also have great financing used car values. and paradoxically, for once in life, a risk factor, namely high gasoline prices, is actually supporting sales. now, how often does that happen in life. because the new cars we have from the manufacturers have significantly improved fuel economy without the usual tradeoffs in size or speed. but i think the biggest message is, the consumer, jim, to your point of why they're spending, is looking at washington, d.c., and saying, you know, you've got a soap opera going on down there and i'm not going to sit in front of my tv transfixed and paralyzed because of what's going on in a dysfunctional washington. i got my life in order in '08, '09, i've had my own personal

austerity program and i need to move on. you see it in housing and you see it in autos. that bodes well for the economy. throw in the energy factor, if washington could really get out of the way, i think there's a chance for a much stronger growth in the u.s. economy. >> well, mike, i tell you, it is always affirming to hear you. i'm glad we got you this time. that's "squawk box's" loss. thank you for being on the show. >> jim, always a pleasure to see. >> mike jackson, auto nation. what a company. take a look at that chart, look at that stock. listen to him. he's got great common sense. "six in sixty" is coming up next, carl. >> yeah. ♪ ♪ here we are, me and you ♪ on the road

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we'll start with tsra. >> the deal.com reports that starboard taking a 10% -- thoe say that starboard's blackmailing the board into firing the ceo. this is an amazing story. >> fera? >> i know these deals are small. keep in mind the nice synergy and foe taking it out of its earnings. the stock going higher. not enough for carl icahn.

>> braidian. >> this is incredible. backing away from doing a lot of mortgage insurance. it's been on fire. >> price target up on eaton. >> a cyclical stock that has been a place in the high. really on fire. >> finally, ksu. >> oh, man, this is the trunk line, bringing cars from mexico from where my place is, guadalato right to the united states. it's on fire, if you want to visit mexico. >> a lot of talk about the rails after buffett today. >> wasn't that great? becky quick, the best there is. >> i know. >> i was jealous. >> what's on mad tonight? >> why do i focus on these companies? because these are where america's doing well. real estate investment trusts, people don't understand how strong the country is until you bring these guys on. they just finished a merger. what they're telling you is, look, we're out of space. we need more building. commercial real estate may be the way of the future in this country. that could be the next leg of this u.s. economy. >> see you tonight at 6:00 and

11:00 today. >> thanks, buddy. we get more from becky's sitdown with buffett in just a moment. (announcer) at scottrade, our clients trade and invest

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the oracle of omaha weighing in on stocks. the sequester, and apple specifically saying stocks are still a good bet for investors. should you follow suit? two top strategists weigh in on buffett's take. apple shares closing on friday at a new 52-week low. hitting another 52-week low in today's session. is the bottom finally in for apple? black rock head of the muni bonds, the inside scoop on why they're blowing off the sequester and the fiscal emergency in detroit. president obama getting set to speak on several key personnel changes to his cabinet. we'll bring you the comments live. becky quick sitting down in the suburb of omaha, nebraska, this morning for three hours with the oracle of omaha himself, warren buffett. becky joins us now with a little more on what was a three-hour sitdown.

how you convinced to happen, becky, i do not know. >> good morning to you. this is the very first business day since the sequester officially kicked in. washington, we know, has been really kicking around about this whole thing. huge reaction there. the market reaction has been a bit of a yawn. when we heard from mr. buffett this morning, his reaction has been much of the same. >> the sequester in effect reduces the amount of stimulus to the economy. they talk about stimulus and they say, this is a stimulus bill and vote $800 billion and say this is a stimulus. stimulus is when the government operates at a significant deficit. that is stimulus by definition. we're operating at $1 trillion deficit roughly. the sequester reduces that a little bit. raising the taxes at the start of the year reduces that somewhat. but we're still operating at a deficit that is 6% of gdp.

and by canes' definition, that's a pretty fair amount of stimulus. so it's just -- it has the effect of reducing stimulus. >> now, buffett said that, yes, this brings the deficit down, and that is a good thing. he pointed out this is not a pretty way of getting there. it would be better if there was a better way to get there but it ultimately brings the deficit down. after the big dropdown in the economy at this point in the return, at this point in the rebound in the economy, we should probably start to see a real bringdown in the deficit. of course, that still leaves the fed with the massive stimulus out there, not only with qe-3, also everything else the fed is doing to bring out more stimulus. now, he has said in the past, buffett has said in the past that he is a fan of ben bernanke. he credits him with saving the financial world back in 2008. but he says at this point he would like to see the fed maybe doing a little more to at least have a plan to get out of this huge balance sheet that it's got. he said what bernanke does next

is what the market is really watching. >> all over the world, everybody that manages money is waiting to catch the signal that the fed will reverse course. and, you know, i think they're on a hair trigger. so i think the fed will try to give little signals here, and all that. but in the end, there are an awful lot of people who want to get out of a lot of assets, if they think the fed is going to tighten a lot. >> guys, i don't know if you were listening, but through the course of the interview he did say stocks relatively speaking are the best place to be putting your money. if you're looking for the dumbest investment, probably long-term government bonds. he thinks that's the worst place to put your money relatively speaking. carl, we did try to get his take on herbalife. we've seen what bill ackman and cart icahn have been doing. he said he's not read through any of the filings that they have with the s.e.c.

he says, though, that both ackman and icahn are members of the giving pledge, so he would like to see both of them make a lot of money so they can give them to charity. >> it's a wealth of information that you got out of him, as always. i wonder, though, having been to a few of these meetings, having sat with him in a context like that, is he -- would are argue -- even marginally less enthused about stocks, because of how far we've come? >> he said he likes stocks better when they were cheaper than he does right now. but he said he's still buying stocks now. all things being equal, he's looking at this as being the best place. but he doesn't think they're as much of a great value than 2008, because they were a lot cheaper then, but he's still buying. >> great stuff, as always. i know you've already had a long day, beck. thanks so much. talk to you soon. >> thanks, carl. >> do you want to point out google here? >> new high on shares of google. and some point point to apple

hitting a 52-w low in today's session. they have a theory that funds from apple were going into google, as google kept chasing these new highs here. we have another one for the monday session. >> that long google, short apple trade. continues to power on today. reaction from buffett's comments. portfolio manager at dynamic mutual funds. and manager of principal with douglas c. lane associates. great to have you guys. >> good morning. >> good morning. >> is buffett telling us something we already don't know? >> he said people who keep putting money into the bond market aren't listening. especially the government bond market is the wrong place for long-term money. if you look where the market is today, we're back to where we were in 2007. but if the s&p earns 112, $113 this year, earnings are 40% higher, or 38% higher than they were in 2007. bond yields, in the meantime, have gone from 4.3% to 1.9%.

yeah, i think he's saying something, but people aren't listening. especially if you look at the flows into bonds. >> keying off of serat, if you would do what buffett is doing. he bought heinz, a valuation some would say stretched compared to itself historically. i'm wondering as we enter this period where markets are chasing after new record highs on the dow act least, would you go into some of these staple names that have a lift in terms of premium valuation on the back of the heinz deal? these are staples now turned into momentum stocks. or would you stay away from them and go into other sectors as defensive plays? >> very good question, actually. if you look at some of the comps for heinz, like campbell's, general mills, great companies. but their premiums now are so high, they become really growth companies with momentum buyers behind them we've actually cut those back. that's not something i would want to chase in the consumer stap plle

staples. maybe something like colgate or mandolay. where you get the real growth in the three to five years, you want companies that have great balance sheets, good cash flows, global growth, and industrials and cyclicals are two areas. especially the auto companies, that's where you'll see a lot of growth. you're coming from depress the sales and you've got companies that are just going to keep on growing, especially cash flow. >> let me pick up on the point that both of you have now made about corporate profits. isn't the reality that the stock market is reaching to record highs precisely because america's unemployment remains so stubborn. and if we get 700,000 more jobs lost through the sequester, then that reinforce, the stock market's rise. i raise it in that way, noah, because this morning's front page article in "the new york times" says we're in a golden age of profitability, precisely because ceos don't have any wage pressure, they don't have to take on any extra workers because their productivity continues to rise. and in that environment, you

have a federal reserve that is doubling down. saying we will further stimulate monetary conditions, and the stock market, noah, for as long as we fail to bring down unemployment, which still they continue to do. is the market rising because unemployment is so bad? >> well, i mean, if the federal reserve is trying to stimulate the stock market, it's done a fairly poor job. we've gone nowhere for nearly 14 years. equity-like returns have been achieved through fixed new york stock exchange. the stimulus from the federal reserve has basically been in the bond market. corporate profits have gone higher, yet we've gone nowhere for nearly 15 years. i think we're on the cusp of the handoff. i think the federal reserve will keep interest rates as low and stimulus going until we get that handoff from stimulus towards the economy reacceleratreaccele. that's dependent on the u.s. housing. as buffett said this morning, housing is turning up. that gets the u.s. closer to the

4% gdp. i think we're in that stage. that's a positive stage for stocks. as we go from low interest rates to accelerating earnings. and so -- >> sarat, do you agree with that? >> i agree with it. and the other point, given that equities have gone nowhere in 15 years, but the multiple has been cut in half, you get earnings growth that's just 6%, 7% plus the dividend yield, you're looking at high double digits in the next three to five years. if rates do back up, which we're all expecting, companies today are flush in cash. what does that do to them, a, they've turned out their debt, b, they're going to get higher yields on their cash. nobody's talking about interest rates on cash at all and going down the road for companies that are financially structured well. now, the issue is going to be companies that aren't, that are very dependent on short-term markets. so you really have to be careful not just on the bond market, but on financial -- companies that are really dependent on

financial markets or short-term funding. that spigot could stop. >> you know what, noah, actually, i want to get to google, all-time highs. my memory is not what it once was, but if i recall, you have been positive on that stock for a long time. give your take here, 815. >> yeah, you know, i think that the baton of innovation is perhaps being passed. i think when investors got excited about the stock is you saw some pretty significant declines, double digit declines in cpc for google. i think what google showed in the last quarter is the ability to monetize mobile. the reality is, they paid $1.6 billion for youtube. last year they sold $5 billion worth of ads on it. the question becomes, how do you monetize android and mobile. if you look at the multiple of google, i never thought i'd sit around my office and say, gee, if google could get the same

multiple of heinz. but that's kind of the market we're in today. i think the stock's got longer to go. it's one of my biggest positions and i continue to like it a lot. apple can be fixed, too, if they make the right moves there as well. >> got to start somewhere. heinz is one place to start. noah, sarat, thank you, guys. good insights. >> thank you. let's take a look at this chart. i'm sure this is a chart that people are saying, if apple could get the same multiples, a fresh 52-week low in today's session. $425.15 is the low. shares down over 39% from their september highs. meantime, samsung beginning its galaxy s-4 campaign. could there be a light at the end of the tunnel for apple. mike mayo talks about his dustup with jamie dimon. his best ideas for 2013. plus president obama about to make some key personnel announcements. we'll take you live to the white house when it happens. stay tuned. [ male announcer ] the lexus command performance

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president obama set to nominate walmart foundation head sylvia matthews burrwell to be his next budget director. she previously served as budget director during the clinton administration. let's bring in chief washington correspondent john harwood. hi, john. >> reporter: hi, melissa. the president's rolling out three appointments today, sylvia, and ernesto of m.i.t. is the energy secretary.

this is an attempt by the president to show diversity in his cabinet, but also a high level of competence. sylvia burr well has a good representation for her service in the clinton administration. it was tweeted out this morning she was a strong choice for budget director. not a change in policy. but a choice for competence. ernesto is very interesting as energy secretary. an academic like steven chu who he replaces. he's somebody who has a record of supporting all energy sources, nuclear power, fracking, carbon capture, things that the administration can use to make the case for its energy policy and negotiations with republicans, especially on issues of climate change. and gina mccarthy, head of the epa, is a comparable choice to lisa jackson, who is the outgoing head of the epa.

>> i don't know whether it's too simplistic to argue, but coming in at a time lik this when we are in the age of sequestration, is it a baptism by fire? >> yes. matthews is going to have a difficult time -- sylvia burrwell, she is going to have a difficult time dealing over the next few months. i assume she will be easily confirmed as head of omb. but pruning $85 billion in a short amount of time to a budget you just took over is not going to be easy for her. but sequester's already in place. and she'll have to deal with that. >> john, does the sequester stay in place? is it a done deal? i see that over the weekend, sources were suggesting that mr. obama, president obama was offering to cut entitlements like medicare and social security. possibly as a deal out of that.

>> well, he's always been offering to cut medicare and social security in a negotiation with republicans that includes more tax increases. if republicans say yes, we'll consider tax increases. i talked to house and senate republican sources over the weekend, they said don't rule it out down the road. but they collapsed in their corners after boxing over this for months. i do think a sequester will stay in place for at least weeks, perhaps months. and we're going to have to see after that. one thing a republican source in the senate reminded me over the weekend was that it's only sequester through the end of this year, in the sense of being arbitrary and across the board. once we get to the next budget year, which the house and senate are now beginning to make plans for, then agencies can smooth out the process. it is less difficult over time. the most difficult part is going to be over the next few months. >> all right. john, when that event happens at

the white house, we'll take it live. come back to you. thanks a lot, john harwood. the head of jcpenney, ron johnson, back on the stand again today over the legal rights to sell martha stewart products. courtney? >> hi, good morning to you, carl. ron johnson finishing up his testimony today in the courthouse behind us. we did catch johnson as he walked into court this morning. >> no comments on earnings yet? >> no. thank you, courtney. >> thank you. >> we also asked johnson about those -- when we asked johnson about the disastrous fourth quarter earnings, you can see, still didn't have much to say about them. johnson just actually finishing up direct questioning from the jcpenney lawyers in the courtroom behind me. martha stewart living omnimedia did ask johnson to call home depot ceo frank blank when they were trying to ready this

agreement with martha stewart, to discuss the idea that both retailers would be selling window related products. johnson testified that he did indeed call blake. and when his lawyer said, while you were calling these ceos, why did you not pick up the phone and call terry lundgren? he said because martha stewart's company didn't ask me to. now, regarding johnson's comments in e-mails, testified earlier in court, saying that terry lundgren would now have to work. johnson said he does regret some of his word choices and that he was just boasting a little bit. he didn't mean to imply lundgren wasn't working, but when a competitor tries to step up a game, perhaps someone else's game will also have to be changed. interesting stuff playing out here again today. it's not over yet. >> courtney, before i let you go, i want to get your reaction. everybody's talking about the company, and ron johnson, including buffett today, who talked about his own experiences as well. once working there. take a quick listen. >> when you start arguing with

your customers about what they want, it's not a good idea. and, you know, it's -- they've got a very, very tough game to play from this point forward. i mean, they've obviously turned away a very significant percentage of their customers, and the thing about retailing is your competitors are always moving. >> you just don't normally hear buffett talk in explicit terms like that. >> yeah. exactly. i think, again, this is one of those cases that many people are following very closely, whether or not you have a vested interest or investment in it or not. ron johnson is trying to do something to very much change the game of retail. but so far, it doesn't appear to be working. i think buffett is right, he has turned away many of the core customers, who are confused about what jcpenney is doing. those who don't follow the story as closely, i thought there was no sales, now there is sales. there's a lot of questions still

on wall street about what happens from here. >> and a beautiful day in lower manhattan, courtney. enjoy it while you're out there. >> thank you. >> thank you very much. the latest from that particular court case. still ahead on the program, will one of this year's best performance sectors kill the rally. the stocks that could undermine the new highs we've been making certainly, certainly at the end of last week. plus, making sense of the sequester with a former washington insider. find out which industry steven ratner thinks is underregulated. investor. yeah, i'm a serious investor but i'm a busy guy. it used to be easier but now there are more choices than ever. i want to know exactly what i am investing in. i want to know exactly how much i'm paying. i want to use the same stuff the big guys use. find out why nine out of ten large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus which includes

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which isn't rocket science. it's just common sense. from td ameritrade. there's a live shot of the white house here as we're awaiting the president's remarks on key personnel changes to his cabinet. nominating two omb, sylvia mathews burwell. she's worked for the gates foundation, walmart foundation, then secretary treasure ruben, under clinton. i'm not sure anything, though, prepares you for running omb itself. >> no, and certainly not at this

extraordinary time of standoffs that have been persisting for two years. the sequester process that nobody wanted to happen. it's now happening, and on your watch and you're responsible for it. as i mentioned before, she had a reputation as a very steady and competent hand in the clinton administration. so i think president obama is likely to be well served by his choice. i wouldn't expect to see any significant republican resistance to her appointment. >> anybody else that you expect him to address specifically today? >> well, he's going to announce the ernesto muniz for energy secretary. gina mccarthy for head of epa. i don't expect an announcement on commerce secretary, which is one we've been focused on. penny pritsger, the hotel executive, is one who has been talked about for that job. white house officials have been indicating it will be a while before they complete the process for that selection.

one of the things to keep in mind, as the president appoints two women, and one hispanic to his cabinet today, is the idea that he got a lot of flack for having appointed a bunch of white men and having not enough women in the inner circle. and the president always said, wait until i appoint my entire cabinet, and this is what he was talking about, his appointments like the one today. >> as reuters says, burwell in particular brings an outsider status to the white house inner circle. here is the president. >> everybody have a seat. have a seat. well, good morning, everybody. this afternoon, i'll hold my first cabinet meeting of my second term. and there will be some new faces, and there will be some familiar faces in new jobs. but there will also be some seats waiting to be filled on a permanent basis. today i'm announcing my plan to

nominate three outstanding individuals to help us tackle some of our most important challenges. one of those challenges is building on the work that we've done to control our own energy future, while reducing pollution that contributes to climate change. and a few people have played more of a role in addressing these issues than current secretary of energy, steven chu. steven's helped us to speed the transition to more sustainable sources of energy. he's given more of our brightest young scientists the opportunity to pursue the ideas that will shape our future. so i could not be more grateful to steve for the incredible contribution that he's made to this country. and now that he's decided to leave washington for sunny california, i'm proud to nominate another brilliant scientist to take his place, mr. ernie moniz. there's ernie right there. [ applause ]

now, the good news is that ernie already knows his way around the department of energy. he is a physicist by training, but he also served as undersecretary of energy under president clinton. since then, he's directed m.i.t.'s energy initiative, which brings together prominent thinkers and energy companies to develop the technologies that can lead us to more energy independence, and also to new jobs. most importantly, ernie knows that we can produce more energy and grow our economy while still taking care of our air, our water and our climate. and so i could not be more pleased to have ernie join us. and he will be joined in that effort by my nominee to lead the environmental protection agency.

over the past four years lisa jackson and her team at the epa have helped reduce emissions of the dangerous carbon pollution that causes climate change. putting together the toughest standards in two decades. lisa is ready for a well-deserved break and i want to very much thank bob, who's not only been a great deputy administrator, but has also been acting as the acting administrator. so please, bob, everybody give bob a big round of applause. [ applause ] as we move forward, i think there's nobody who can do a better job in filling lisa's shoes permanently than my nominee who is standing beside me here, gina mccarthy. [ applause ]

you wouldn't know from talking to her, but gina's from boston. one of her proudest moments was yelling "play ball" at fenway before a red sox game. but gina's got plenty more to be proud of. as top environmental official in massachusetts, and connecticut, she helped design programs to expand energy efficiency and promote renewable energy. as assistant epa administrator, gina's focused on practical, cost-effective ways to keep our air clean and our economy growing. she's earned a reputation as a straight shooter. she welcomes different points of views. i'm confident that she's going to do an outstanding job leading the epa. so these two over here, they're

going to be making sure that we're investing in american energy, that we're doing everything that we can to combat the threat of climate change, that we're going to be creating jobs and economic opportunity in the first place. they are going to be a great team. and these are some of my top priorities going forward. but as president, one of the things you learn very quickly is it's not enough just to talk a big game, the real test is whether your priorities are reflected in a budget. and that's where the rubber hits the road. that's where my third nominee comes in. since i took office, jeff sits has served as america's first chief performance officer, and the deputy director of the management of -- director for management of the office of management and budget. he's made our government more efficient. he's saved taxpayers a lot of money. he stepped in as acting director of omb, not once, but twice, including leading up to the

fiscal cliff. and so there's no question that jeff's skill and versatility has served the american people very well. i expect it will continue to serve us well in the future. in the meantime, i am confident that my nominee for omb director, sylvia mathews burwell, is the right person to continue jeff's great work. [ applause ] in the 1990s, when she was, what, 19, sylvia served under jack liu as deputy director of omb, part of a team that presided over three budget surpluses in a row. later she helped the gates

foundation grow into a global force for good. and then she helped the walmart foundation expand its charitable work. so sylvia knows her way around a budget. but as the granddaughter of greek immigrants, she also understands that our goal, when we put together a budget, is not just to make the numbers add up, our goal is also to reignite the true engine of economic growth in this country, and that is a strong and growing middle class. to offer ladders of opportunity for anybody willing to climb them. sylvia's mom is here. and i -- sylvia loves to talk about her parents, growing up in west virginia, and the values that they instilled in her as educators. and i think that reflects everything that sylvia now does. and so i'm absolutely confident that she's going to do a great job at omb. and those values are especially important to remember now, as we continue to -- >> listening to the president, president obama nominating three new cabinet positions. let's go back to john harwood for a quick wrap-up here.

epa, omb has new secretaries. >> some of the notes we expected. gina mccarthy, who has been at epa, represents steady as she goes. somebody who will reassure democrats that the president isn't giving up his environmental values in climate change, but in ernie moniz from m.i.t., he also has somebody with a record of looking at other sources of energy, including fracturing, hydraulic fracturing, including nuclear power, things that are designed to enhance credibility in association with republicans. and with sylvia mathews burwell, he gets somebody with a reputation for competence and that is going to serve him well over the next few months, assuming all three of these nominees are approved by the senate, which i think will happen. >> if you're talking to a ceo

today who has had run-ins with lisa jackson or steven chu, does their life get any easier as of this moment? >> no, i wouldn't think so. you know, i think the biggest thing you trade when you go from steven chu to ernie moniz is somebody who has a little bit of a reputation as an environmentalist, perhaps more in the political center. steven chu also was a -- was an academic who didn't necessarily take to the political aspects of the job. moniz has served in the energy department before, although he's a fellow academic, but maybe that experience will make him somebody who is better able to deal with people outside the department. >> great insight, john harwood, outside the white house today with the cabinet nominations. steve liesman at national association of business economists conference in washington, where the hot topics are central banks, and their money policies.

how to jump-start global growth. he joins us this morning with a special guest. hey, steve. >> yeah, carl, thanks very much. i'm here with the chairman of jpmorgan chase international, former governor of the bank of israel, chairman of board of trustees in europe. thanks for joining us. >> nice being here. >> vice chairman of the fed saying this morning to this group right here that she doesn't see any costs right now that would stop her from quantitative easing. ben bernanke making similar dovish comments over the weekend. you have a chart in your presentation, interest rates around the world are negative right now. central banks are wide open. is this the right policy, in your opinion? >> well, given the circumstances, it seems to be the right policy. but we need to realize that this is not sustainable for the very long run. the presentation of janet yellen was well reasoned, an excellent presentation, basically justifying the policy stance of

the fed. but the way in which you read now the situation, the fed is going to continue with its accommodative policy for years. >> one of the reasons to continue with it, jacob, is to bring down the unemployment rate. you talked about the unemployment rate. will this policy be successful in bringing down the unemployment rate. >> unemployment rate today is about 7.9%. all forecasters are basically saying that it will take about two years for the unemployment rate to reach 7%. so if you aim at 6.5%, it's a very long period. but we need to remember that unemployment rate is an average number for a very complex economy. in the u.s., if you are a college graduate, your unemployment rate is less than half the national level. if you are less than high school degree, your unemployment rate is much above -- >> what about the policies? >> what it means is, first of

all, that a lot of elements in the unemployment are structured. and it is, therefore, not just the business cycle. if you look at the duration of unemployment today, almost 40% of the individuals who are unemployed have been unemployed for more than 27 weeks. that's a long period, which means that it is not so easy with the recovery for these individuals to enter the employment pool. so i am concerned that the reason not of structure and element in the unemployment rate, which means that we may see a period with negative real interest rates for a long time. >> structural unemployment is not something typically that central banks should be adressing. a structural problem, the government should address it. it sounds like if you're saying if the problem of the unemployment is structural, then what ought to happen is the fiscal side ought to address it, if you're right about the

education numbers, which i'm sure you are, they need to educate people to reduce their chance to being unemployed. >> we have had a situation not only in the u.s., but also in europe, of overburdening monetary policy. excessive burden was put and is being put on the fed here, on the european central bank in europe, that's not healthy. it is a good strategy to give time to the governments to do their jobs. but you cannot give too much time. it's not healthy. >> you talked about mega trends today. one of the biggest mega trends is what's happening with the global population. it is aging here in the united states, but not as badly as it is in japan and europe. while other parts of the world are getting younger. what does that mean from an investment standpoint? >> well, the central gravity of the world is changing very rapidly. and it is related to those countries whose population is growing, and getting younger. it will be the destination for

the future. it is in this regard that if they get their acts together as far as health is concerned, they may become the most productive future continent, because in terms of size, their population is very, very young and growing. but by the same token, if you look today at japan, you know, in japan, if you want to see more friends in 20 years, you need to be 80 years and more. because the fact is, they're shrinking. that's a serious matter. it will also have significant budgetary consequences. look in the u.s., within a few years, the proportion of the population above 65 will be rising and growing, leaving very little room for the government to do the right things, given that a good proposal goes on social security, medical. what is left.

>> we have to leave it there. >> thank you. >> thank you for joining us. carl, back to you. jacob frenchel here at the conference. >> talk to you soon, steve. when we come back, dwindling cash flow, and potential for de flauts. the threat of sequestration could send the munis into a frenzy. that's after the break. [ male announcer ] when it comes to the financial obstacles military families face, we understand. our financial advice is geared specifically to current and former military members and their families. life brings obstacles. usaa brings retirement advice. but at xerox we've embraced a new role. working behind the scenes to provide companies with services... like helping hr departments manage benefits and pensions for over 11 million employees.

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new 52-week low. warren buffett weighing in on the stock in a conversation he once had with steve jobs.

>> when steve called me, it was a few years ago, you know, i said, is your stock cheap? and he said yes. i said, have you got more cash than you need? he said a little bit. >> the senior research analyst at jnp securities. alex, great to speak with you. >> thank you. >> the stock in today's session, for instance, severely underperforming its peers as well as the broader indices. what's your take on why the stock can get out of its own way at this point and wlorchether ot you think there's a spiral, where it's underperforming the technology peers? and there's more pressure perhaps for managers to get out of this name and reallocate toward growth earnings like a google? >> i think some of the near term pressure has been how apple uses its cash and returns it to shareholders. a little bit of a disappointment last week. i don't think that's the central issue for apple, though. it's competition, being in the

way of getting earnings back on a track to growth. so history has a funny way of repeating itself. we go back in time, like you just did, with warren buffett, we know that microsoft and ibm together with a lower open licensing model, and way of going about business, put macintosh computers in trouble. we're seeing the same thing happen with android. android is more pervasive than ios globally on smartphones. apple doesn't have an answer for that right now. samsung coming soon with the galaxy s-4, a processor from qualcomm. apple is not executing as crisply as some of the competition. >> what happens if they emerge with a new category, that reinvents something that gets everybody excited? does it not push them back to being a growth stock, because the iphone is such a high proportion of profits? >> simon, great point here. they do need to come out with some new products. i think they need to be able to

address the new markets. apple needs to find a strategy for that. in terms of new product categories, like the iwatch or itv people talk about, we have to see. tim cook recently said they are a company that is focused. and if they focus in the wrong areas, they lose. if they focus and innovate in the right areas, they can get on track. right now, what's central to them is the iphone expanding that product category, and getting that product category back to earnings appreciation. so profitable growth. >> in your sector, alex, which stocks have better upside potential than apple at this point? >> we like playing the components right now, because they're a diversified play on whatever wins. we're recommending qualcomm because they're so dominant in the apps processing and lte world. we're also recommending skyworks, the category leader in connectivity. we're playing the smartphone and

tablet trend through the vendors. with apple we're saying, let's see what they've got. let's see what the competition has in store coming up march 14th when the s-4 comes out. >> alex, thank you for joining us. appreciate it. >> thank you so much. now that the sequester notices have been sent out, when will we see the true impact on the broader markets, and indeed, on the municipal bond market. good morning, peter. >> good morning, simon. >> i guess in terms of from your standpoint in terms of munis, the rubber meets the road in those states that have the greatest exposure to the federal government. it's obvious, what are you looking for here? will there be downgrades, do you think? >> i think across the united states, states in general receive an awful lot of aid in the form of federal outlay. there will be an impact. but the impacts are going to be felt differently in different areas. for instance, hawaii, alaska, y

d.c., high dependency on federal spending and federal employment. so you'll see impact there. but i don't think it's necessarily going to translate to downgrades which we're more likely to see is the agencies put some of those states where the dependency is heavily on negative watches, perhaps review, maybe in some cases where the dependency is particularly high, you'll see some one-notch downgrades. typically that doesn't result in a big change in the value of a bond. >> so you don't think it will be hugely responsive? in other words, people don't have to rotate away from those areas where there might be trouble in your view? >> i would agree with that. i think the effects are going to be -- first of all longer term. it takes a while. notices are just going out. it takes a while for decisions to be made and cuts to be implemented. and they have throughout the entire year to make those cuts which takes us until september. they're disbursed in different areas like education, environmental conservation, wildlife, defense obviously being one of the heavier ones with about half of the $85

billion being made up there. so i think that diversity, that d disbursion probably has a minimal effect. >> let me ask you specifically about detroit which may get an emergency manager over the heads of elected officials over the next few weeks. i'm assuming since detroit has been sputtering for so long, that, too, is an outlier. >> i hate to say that, but i think it's been well telegraphed and well handled. it's a good point because it brings into question this idea of bankruptcy defaults. there's only a subset of municipalities in the country that can use chapter 9 for bankruptcy. but you have to look at some of the steps that states are taking to avoid that and why they do so and detroit's a great example. this has been coming for quite some time. it has been well telegraphed and well publicized. i think people understand it. but an emergency manager to make the cuts instead of a bankruptcy think is very, very important. and an important message to the market and investors. >> you know, peter, i imagine

that the bigger issue at the end of the day is whether or not munis are going to lose their tax-exempt status, particularly under an obama administration for those that oearn a lot of money. there is an intense lobbying i understand from the cities and counties to prevent change in that. do you think they will be successful? bbying effort.retty substantial and it's important because if the tax exemption is lost -- and by the way, that's not our view, we think it's a low probability that happens -- but nonetheless, if it is, that means higher borrowing costs not just for some constituents but everybody in a taxpayer's jurisdiction. i think that's what you have to think about going forward. i think it's a low likelihood. they have talked about the possibility of a cap. but the u.s. tax code is extremely complicated. i look how far apart the two sides are on some issues like the tax reform and the fiscal cliff at the end of the year, the debt ceiling coming up, the sequestration cuts, how they could possibly get through tax

reform this year just seems like it would be a very difficult proposition. >> particularly with a notable allies that they have. peter, we've got to leave it there. have a great week. >> you, too. thank you. straight ahead, santelli and the sequester. we'll get rick's take on what the budgets could mean for your cash. that's next. ♪ [ male announcer ] staples has always made getting office supplies easy. ♪ another laptop? don't ask. disappear! abracadabra! alakazam! [ male announcer ] and now we're making it easier to get everything for your business. and for my greatest trick! enough! [ male announcer ] because whatever you need, we'll have it or find it, and get it to you fast. staples. that was easy. tdd#: 1-800-345-2550 markets on the rise. tdd#: 1-800-345-2550 companies breaking through. tdd#: 1-800-345-2550 endless possibilities. tdd#: 1-800-345-2550 with schwab, i search the globe for the big movers.

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welcome back to "squawk on the street" and monday's edition of "the santelli exchange." well, friday at midnight, well, it's come and gone. what's the market doing today? interest rates are pretty much at the same place. low end of a range over the last several weeks. 1.86. we see that the japanese are really continuing the strategy of not only quantitative easing but trying to do anything they can to try to get their economy going, currency be damned, that's going to continue. but what we don't see in the market is any of the aftershocks of the strident protests that we've had from many officials regarding where we would be. and i'm not happy today. because i look at what's going on as just absolute feckless fiscal policy. there's just no plan for

anything. today we have some new cabinet appointments going on. look at the last energy czar that we had in the form of mr. shue. many times he said $10 gag would be a good thing. it would force people into other alternative non-fossil-type energies and also force them into the poor house. i tell you what, i think people out there want jobs. keystone, i don't hear much about keystone. you know, we had a pete yore a we meteor that passed within 17,500 miles of this planet. there in my opinion is a more significant danger to the world ending by a meteor or i have a better chance to win the lotto, take care of our planet, but oh, my gosh, we need some energy policy and, by the way, how can we look to the markets to try to divine a signal post-sequester -- and i know this is old news, but

unfortunately we've become anesthetized to it. the house can't pass it. but truly, if this administration really cares about the unemployed, really doesn't want them to starve because we're not putting out energy that runs the economy, the absolute least they could do for the markets and for everybody is to pass a budget, for crying out loud! even if the house doesn't pass it, wouldn't it be nice -- harry reid, are you listening? doubtful. hey, we're going to a commercial break. but i'm going to have mr. jim bianco at the bottom of the next hour to talk about the economy and where he thinks it's going. make sure you tune in. at fidelity, we do it by merging two tools into one. combining your customized charts with leading-edge analysis tools from recognia so you can quickly spot key trends and possible entry and exit points. we like this idea so much that we've applied for a patent. i'm colin beck of fidelity investments.

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of treated men had their t levels restored to normal. talk to your doctor about all your symptoms. get the blood tests. change your number. turn it up. androgel 1.62%. welcome to hour three of "squawk on the street." here's what's happening so far. >> we would expect to beat the s&p in a so-so year or a down year. we expect them to beat us in an up year, but our job is to beat them over time. the idea that a year and a half ago you create some monster and then you say this monster is going to be so scary that we're bound to be able to work together with that hovering over us. and then you let the monster --

it kind of moves. it is crazy. >> he is so stuck in this big world of making money of buying stocks. that buy low/sell high anything, he doesn't have to sell high because he's so big. is he not a breath of fresh air like you can't believe? i have been so impressed by in idea of listen, you've got to stay at work. you can't be someone who doesn't -- isn't part of the culture. we need to reinvent yahoo!. i think she's doing a remarkable job. >> and there is the opening bell. >> we're able to give a lot of value to customers. you can buy now with great financing, great new products and a genuine replacement need. this recovery in autos is plowing through all the headwinds. >> housing has turned, and it's turning up, and that gets the u.s. closer to 3.5%, 4% gdp. so i think we're in that stage.

>> good monday morning. we're live here at post 9 at the new york stock exchange. get a check on the markets. as usual, we are down on a monday. the dow's been negative every single money this year. today's no different, down 42. s&p's down 2.5. nasdaq down 6. yahoo! hitting a multiyear high after overweight from equal weight in barclays, firm citing the holdings in ali baba and yahoo! japan, stock reaching its highest level since july of '08. mining stocks some of the biggest losers as the gold index plunges to a new year. index hitting its lowest level since may of '09. buffett says he is bullish on stocks. should he be, too? we'll talk to a market manager about his market strategy and if he thinks the oracle is right. then one of the most respected bank analysts, mike mayo, says

citi is in need of big shareholder activism and also tells us about his big dust-up with jamie dimon. steven rattner weighs in on the whole economy will be affected by sequestration. and malibu is making it official. the city getting license to its own brand for use on everything from t-shirts to volley balls. but what's in it for malibu? jane wells will tell us later in the hour. first let's get to some points buffett made on "squawk" with becky. the oracle of omaha saying he still thinks stocks are a good bet for investors. >> we like buying businesses and stocks. you get more for your money there than you will get. the dumbest investment, you know, in my view is a long-term government bond. >> let's bring in david kelly, chief global strategist. good morning to you. always good to see you. >> good morning. >> buffett's point appears to be the same one he's made for i don't know how long. buy american. buy equities.

don't go long bonds. if you have money, buy a house. mortgage it to the hilt. any reflections on the stuff he brought us this morning? >> i completely agree with all that. i think the one thing that people aren't talking about is, you know, the federal reserve is not really fixing the economy. but in another sense, they are fixing the markets. they are fixing it so that investors in cash and investors in long of-term government bonds really can't make money going forward in any significant way. and because those are being taken off the table as good long-term investment alternatives, that's what's pushing money towards stocks. it's not that stocks are so cheap. it's that treasuries and cash are so expensive. and that's why i think you should still be in equities. >> if stocks aren't cheap, where is the point at which even the decent macro data we've been getting doesn't push us that much higher? >> i think provided the macro -- provided we don't have another recession in the united states, provided the economy can sort of survive the sequester, and i think it can, then i think

overall during the year, earnings will gradually move upwards. and again, so long as it's support the by the very low interest rate environment, that will push money into equities. it's still moving into the equity market in a way we haven't seen for years. i think that will probably continue even in a sort of mundane economic environment. >> yeah. you know, the buffett -- buffett always gets a lot of play, and he deserves it. we had drunkenmiller on the show not long ago who said something very different and that is the bond market will run out of patience. that can happen quickly and has big consequences not only for the low interest rates you're talking about that are supporting all of this but for government debt payments and so forth. that's an ugly scenario that he paints. where is he wrong? >> well, i think you have to distinguish the level of interest rates which are too low in real terms and credit issue. though it's approaching this

issue of spending the wrong way, and they really are, we need to do long-term spending reform rather than the sequester. the reality is the budget deficit is coming down. it's going to be 5.3% of gdp this year. once we get it down to 4% -- and that will happen -- the debt-to-gdp rate stops rising. the idea that we'll end up greece, i think that is just at an extreme, and it's not true. where i don't really disagree with him is, i think actually the economy will survive the bad decisions being made in washington, pick up a little bit of steam. and when that happens, real rates will begin to rise. i'm concerned about so many investors are waiting for the day that rates rooif because of an improving economy. they're all with their hands in their coats. when they move for the exit at the same time, then you could see a significant rise in rates. i do think the rates will rise but not because people lose faith in the full credit of the u.s. government, but rather because the economy's getting better and rates are just in the wrong place. >> good point. and a lot of people believe that

day is ahead of us. thanks so much. talk to you soon. >> anytime. speaking of buffett, a quick programming note. if you missed becky's exclusive this morning, you can catch it on "power lunch" today, 1:00 p.m. eastern time. meantime, crude oil dipping below $90 a barrel. bertha coombs at the nymex for us. >> we are near the lows of the session right now. and when you speak of investors moving towards the exit, we've been seeing that when it comes to net long positions in crude, according to the , the week ended february 26th, we saw funds drop their net long positions by about 16%. overall we've also seen a drop when it comes to open interest. it seems a lot of investors have been moving out of commodities taking some profits there and moving it elsewhere. where have they been moving? the cftc says net-long positions in the dollar went net-long last week for the first time since the end of november 27th. we're below 90 bucks for the first time since december 26th

on nymex crude, carl. back to you. >> thank you so much for that, bertha. a lot going on around the airlines sector. the airline index hitting a 5.5-year high. buffett weighed in on that during his sit-down with becky and ruffled feathers on twitter. phil lebeau here at post 9 to talk about that. >> a lot of people have said the airline industry is changing, and it's a new way of doing business. this morning somebody tweeted in a question that becky quick then read to warren buffett essentially saying would you buy an airline? would you invest in an airline? listen to what he had to say. >> the airline business has been a terrible business over time. if they ever got down to where there was one airline, it would be a very good business. maybe if they get down to where it's two. it's got all the ingredients of a bad business. >> i saw that while i was flying here. i tweeted it out. and henry harteveld who is an analyst, and he wrote back, listen. the old way the airline business maybe buffett's right, yes.

but the new model, new, smarter pricing, maybe not. and a lot of people retweeted what henry had to say to me. saying you know, he's right. the interesting thing to keep in mind is there's no doubt that the airline index and airline stocks have become a darling for investors over the last three to six months. look at the xal. it is up to its highest point since 2007. then when you look at specific spots, i want to point out delta. this morning at the jpmorgan conference here in new york, they made a couple interesting points. first, the first quarter this year, carl, will be the company's most -- first profitable one in more than ten years, in fact, the first profitable one since 2007. and remember the trainer refinery they bought outside of philadelphia at the time? they said listen, we're going to be doing our own refining. that's basically their way of hedging the fuel market. they were break even in the first quarter and they expect to be profitable in the second quarter. that's part of what some people are looking at saying it's a new way of doing business in the airline industry. >> you wonder at some point if

consolidation were to continue, if oil remained tame, if he would have changed his tune. having made a run at usair a long time ago and having learned from that -- >> and he still talks about it. still says it was a terrible idea. but things have changed in the industry. the question is, is it truly different this time? >> that's a great argument. fascinating that it caused a stir. thanks a lot, phil. good to have you here today. >> good to be here. financials might be the best performing sector of this year, but the sector's still down about 50% from the '07 peak. one of the street's top analysts, mike mayo, joins us after the break. plus, why he thinks shareholder activism is still needed in that sector. first rick santelli talking to james bianco. >> wednesday and friday are big days because we get information on the employment situation. there's a lot of things we could do to create jobs. there's a lot of things we should have done a long time ago to create jobs. i want to see what jim thinks of

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voters in switzerland backing a plan giving shareholders authority over executive pay. our carolyn roth is live in zurich with details on that. morning, carolyn. >> reporter: good morning to you, carl. yes, if enacted, these will be

some of the toughest curbs on executive pay in the world. but let me just walk you through the details. some 68% of the voters voted in favor of the proposal, which basically forces swiss companies to give shareholders a say in executive pay. now, it also means an outright ban on golden handshakes and some of these massive signing bonuses. and carl, get this. if the managers don't comply with these rules, they could be facing up to three years in prison. yeah, you heard me right. the outcome of the vote, that's interesting, was surprisingly clear, and it certainly reflects the growing anger over the fact that here in switzerland, ceos get some of the highest salaries in the world, and they also get these massive bonuses. just remember the recent public outcry over that $78 million golden handshake for novartis's outgoing chairman which was later con selled. pro-business lobbies are concerned about the impact this will have on swiss competitiveness and whether it

will drive away talent. but for now i think we have to wait and see whether these laws will actually be implemented in full or whether they'll be watered down. back over to you. >> we keep looking at the differences between pay policies in europe and here in the states. fascinating. thank you so much. one analyst wants to give more voice to shareholders. mike mayo says we need more shareholder activism and he's here to tell us why. mike, welcome back. always good to have you. before we get to that element of this, the sector overall, a leader for so long, so far this year not so much. why not? financials in general? >> oh. well, i think there's certain names that are star performers such as citigroup and morgan stanley. stocks that have been down for a number of years, that are feeling some pressure from shareholders to change the way they do things, and the stocks are reacting. >> yeah. and so you're beginning to lead this effort by taking on a de

minimis stake yourself, right? >> well, look, i've analyzed the banks for 5 years. i've gotten beaten up at times. i've been on cnbc. i testified to congress. i wrote a book. and i'm still not seeing the degree of change i think we need. now i've bought very small stakes in companies, just 100 shares. i'd buy one share solely so i could have a ticket to the movie, a ticket to the annual meeting, and ask these boards of directors, how is the way they oversee the company, how is that creating shareholder value? because you sure haven't seen that the last 10 to 15 years with the big banks. >> which companies, and what is your top priority right now? is it citi? >> citigroup right now front and center. as you know, very negative on them for five years. with the change in ceo, i group graded my rating. i think the change could wind up being epic. it could be an epic change because now you have a ceo who's not a deal maker, who's not a lawyer, who's not a hedge fund

manager, but a banker. but having said that, if they haven't gotten the memo at citigroup, you also have shareholder activism there. tr tril lium would report back on results. i think it's in citi's best interest to take control of their destiny, take action before being forced to do so by shareholders. >> where is the line -- i assume you're getting asked this a lot, between being an analyst, right, where your job is analysis and essentially becoming an activist yourself? >> well, i'm reflecting what many shareholders already say. look at citigroup and the big banks the last 10 to 15 years. they are less efficient. they've had less revenue growth, greater earnings volatility, more risk, a lower arwe, worst stock price performance and lower valuations. so i don't really think of myself as being too far out there. having said that, i never have a chance, in my 25 years, to ask the directors, the chairman of

the board, questions such as, how does this pay encourage shareholder value creation? basic questions like that. so that's why i'd like to go to some annual meetings for the first time and ask some basic questions. >> speaking of q&a, every time there is one, you're involved, mike, you tend to make some news. here's you with jamie dimon the other day. take a listen. >> i think what i hear ubs saying in their presentations, if i'm an affluent customer, i'll feel a on the lot better going to ubs if they have a 13% capital ratio than another big bank if they have a 10% ratio. do you agree? >> you would go to ubs instead of swrchlt p morgan? >> i didn't say that. >> that's why i'm richer than you. >> that's why i'm richer than you. i mean, those words echoed around the street for days. does that make you better, having exchanges like that? does it make you a better analyst? >> i think it's the job of an

analyst to hold management's feet to the fire, ask questions such as, you know, should you have more capital or less? how are you going to return that capital? how are you going to create more value for shareholders? by all means, that's every analyst's job to do that. in fact, i don't think it's been done enough of with regard to wall street. look, when you look at the financial crisis, investors weren't doing their job, regulators weren't doing their job. nobody was minding the store. so we have a choice right now. either we, investors, can step up to the plate, or you're going to have more regulation. i prefer the former. that shareholders may other analysts like myself, the investors, speak up such as that annual meeting. >> for any other analyst in any other analyst who is stiff-armed, so to speak, by a company, would you say the solution is buy 100 shares? >> the head of cfa, john rogers, said zero tolerance for bad behavior. if any analyst is getting

stiff-armed or treated unfairly, it's up to that analyst to talk about what's happening, bring it up to the public view, go on cnbc, give you a call. hey, for that matter, give me a call. if you're being untreated fairly by a corporation, give me a call and let's find a solution here because that's not the way the system is supposed to work. >> mike, always good talking to you. >> thanks for having me. when we come back, google hitting another all-time high today. stocks up nearly 15% this year. versus that 20% drop for apple, that long google/short apple trade continues to work. do you buy in at that and at these levels? we're back after a quick break. the patient, presented with a hairline fracture to the mandible and contusions to the metacarpus. what do you see? um, i see a duck. be more specific. i see the aflac duck. i see the aflac duck out of work and not making any money. i see him moving in with his parents and selling bootleg dvds out of the back of a van. dude, that's your life. remember, aflac will give him cash to help cover his rent, car payments

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welcome back to "squawk on the street." i have a market flash on raidian group. after an upgrade from kbw. the firm taking the stock from a market perform to an outperform.

the new price target, 12 bucks, a $6 price target increase. rdn, a company that provides mortgage insurance, another example of a stock moving on the perceived housing recovery. carl? >> thank you very much, jackie de deang deangelis back at hq. google hits an all-time high. does slow and steady win the race? james dix joins us. james, good morning. >> good morning. >> rotation going on here unless something is fundamentally changing at google as we speak. >> yeah. i mean, obviously, in the large-cap tech world, you know, there's a relatively limited universe of stocks which portfolio managers can focus on. you've mentioned apple. you've mentioned google. there's a couple others that they can look at. but i think clearly since they reported their first quarter -- their fourth quarter results,

the sentiment has turned to be more favorable on google in the near term. >> you wrote, last note i have is from the end of january where your target was 7.70. have you moved up since, and if not, to where do you go? >> no, i mean, i think right now the stock is trading at probably around 13 times earnings if you exclude cash, and that's on a 2014 estimate that i have of around $53. a little over $53 a share. you know, that's a reasonable valuation. again, the market itself is up. so generally with a higher beta, google should perform better than the market. especially since it's largely advertising driven, right? and advertising is a cyclical business. so if people get a little more encouraged about the overall advertising market and the global macro market, google should benefit. >> the discussion that we seem to be having for so long about the cpc declines, about the

losses at motorola people are still having those conversations, aren't they? >> oh, absolutely. i mean, you know, fundamental trends in the business don't change, you know, every quarter. motorola mobility, that was an acquisition made for, you know, over a horizon of years, not quarters. so that concern will continue to be there. i think the mobile cpc, you know, the impact of mobile on cpc was somewhat of a red herring. you know, the bottom line is i think marketers are going to spend more to reach you if they can reach you by mobile phones as well as desktop, and search is still a good way of reaching you especially for a product or service. >> fascinating to watch. james, appreciate the time very much on some short notice. thank you. >> anytime. >> james dix joining us from wedbush on google. bells about to sound across europe. let's get that close and the details on the impact. that's coming up after the break.

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the european markets are closing now. >> a tough day overnight in asia at least for the shanghai. got a little more green in europe today, simon. >> yeah, a nice bounceback coming through on some of the utilities and telecomes, particularly in france, particularly a squeeze on the largest water treatment plant in the world. two major factors that i want to emphasize coming out of this european session for you. the first is china. and that downdraft you had with

them tightening mortgage restrictions over the weekend and also some disappointing data. and that rippled through asia and into europe. and you see those global minors listed really bearing the brunt of that selloff and falls as a result. the second thing i want to draw your attention to coming out of europe is how much worse european earnings are doing than american earnings. the latest today was hsbc. at the rally on that bank, though it's been very good, has stalled. today they missed on their profits. this is the important thing. half of companies reporting in europe this earnings season have missed expectations. and year on year, their earnings are down almost 10% according to thompson reuters. here in the united states, two-thirds of companies have beaten earnings expectations. and their earnings, their profits, are up over 5% year on year. and that's a very big difference between the two blocks. i just want to bring that to your attention.

meanwhile, keep an eye on what's happening in italy. will we go back to elections there as a result of the standoff that there is between the parties? actually, the bond market is being held kind of in check by that promise of the ecb, that it would ultimately intervene further down the line. and we have the finance ministers meeting today in brussels. what's important there? i'll send it back to you, carl. >> thank you very much, simon. want to go to scott wapner, has breaking news. scott. >> thanks, carl. as it relates to carl icahn, 20.1 million shares. today transocean, ticker symbol rig, let's look at the chart. announced it would be restarting its dividend with a payment of $225 a share for the year. icahn has been calling for about $4 a share. i called him today. he told me that this announcement from transocean, in his words, is too little, too

late. shareholders deserve the capital. and that this company needs new blood on the board. and we plan on putting up a slate on the board. so the stock, carl, is down 60% over the past five years. it's down year to date. it's underperformed the market as well. so it appears that carl icahn is gearing up for another fight. this one with transocean over what the company should do with its cash. they announced again today, a dividend, a restarting it of $2.25. icahn wants more than that. for what it's worth, herbalive is up, too, about 1.5 and up about 9% since carl took his public position. >> he's got a number of plates spinning. >> he does. we're trying to keep up with them all, carl. >> thanks a lot. a check on energy and commodities with bertha coombs at the nymex. >> we still have nymex crude trading below $90 a barrel. that's a two-month low. we have seen this move out of

oil, a lot of the net-longs, fund managers that may have gotten in late in the run-up now taking some profits, with the expectation that we may not see much more demand. certainly the picture out of china with the data being somewhat soft and now the sequester hitting here. no one really knows exactly how that's going to work out. it doesn't seem like that's going to boost demand. gasoline is really the biggest loser on the day on a percentage basis. it's one of the areas where net-longs had been in part because of refinery issues. but i was talking with a couple traders who think that maybe that run-up had been over and done. that's where we're seeing a lot of the profit taking. nat gas holding up. coal forecast this week, big snowstorm that's been hitting the midwest. we're expected to see some of that weather here on the east coast. that's positive at least for today. and take a look at gold and the metals. seeing a little bit of relief after some relentless selling there over the last couple of weeks, carl.

back to you. >> bertha, thank you for that. bob pisani is here at post 9 keeping the conversation about commodities going. >> yeah, we're in a little bit of what i call a growth scare today. remember, the markets had been moving rather aggressively on the idea that china improving would be helping the commodity markets, commodity stock market. now we see china putting its brakes on the property market. there's no evidence they're trying to put the brakes on credit everywhere. it's really limited to the property market. but it's kind of spooked people a little bit. china's down about 3% today. if you look at commodity-rich countries here, this is china, new zealand, south africa, brazil, australia, all down about 2% with the exception of australia. australia is looking top heavy. that's had a fantastic run. ewa had a fantastic last year but looking very toppy right now. commodities in general have been having a tough time since the middle of february when things started getting concerned about china. put up some of the commodities stocks, material names. we see, for example, the

aluminum companies here. cliffs natural, these are iron ore companies. maybe the idea is china's not going to be allowed to grow as fast, they'd have a problem, down 3% or 4% today. sterlite industries, a big copper company. i'll show you some of the energy stocks. bertha was talking about the weakness in oil. and while nat gas is up today, don't kid yourself, the trend is to the downside. if you look at all the big names, mcdermott, for example, this is one of the big offshore equipment companies. that's down. they had a very weak revenue forecast on friday. diamond offshore, also weak. big offshore driller. baker hughes and slumberger, all down 1% to 4%. the key point here about where we're going right now, though, is the earnings are still holding up relatively well. simon mentioned this earlier. we've had a spectacular year. 2012 is essentially over, folks, except for a few retailers. we had a record year, $103,

that's up 4.5% on earnings. they're still figuring out a way to squeeze money all the way through the bottom line. 2013 estimates up 7% or 8%. probably that will come down. it usually does. so the big question is how much more earnings will we be able to squeeze out if we get a relatively flat top line? again, if you take a look at these multiindustry companies, these are the ones, carl, that i look at to see where the concerns are in global growth because they move every day on global growth concerns. you can see them down about 1.5%. these are the companies that wouldn't matter if china slowed down, for example. so let's just call it a little bit of a growth scare today. that's what's weighing on the markets. >> yeah. it's all over the mainstream media and mondays haven't been that good for us anyway. thanks, bob. let's get to rick santelli in chicago with a look at markets in the economy with james bianco, rick. >> absolutely. we're going to play a little game of miythbusters. i've given him four double espressos. we're going to go fast. number one, the economy's doing great. and you say? >> i don't know what measures

they're looking at. economist measures, they're expecting 1.8% growth in the first quarter and the same for 2013. and that's with an expectation of good housing numbers that are going to surprise to the upside. 1.8% is not a good number. anything over 2.5 is a good number. that's not good. >> earnings are doing very well. that should be the backbone of the stock market. >> they're not doing very well if you look at a consensus estimate. first quarter's expected to decline from a year ago. so we're looking at earnings contraction. now, you go out to the end of 2013, we're expecting 6% or 6.5% earnings growth but that's down from six months ago, and that number falls almost every week. these are not good numbers if you're expecting the stork market's going up because earnings are getting better. >> most government intervention is to help the working poor, young people, lower class. intervention is working to do that. >> i wish it was the case. let's take cash for clunkers, for example. two years ago, we had the program. what did it do? it pulled forward sales in the

car market. it also took a lot of used cars off the market. today what we're seeing is the highest prices ever for used cars. who buys a used car? somebody who's of lesser income. >> but these were the people they were trying to help, students, young people, people that don't have -- below the median income. they're not being helped? >> they're not being helped because of high used car prices. the average new car is $31,000. if you can't afford that kind of car and you want to pay $15,000 to $20,000, that's the car. they don't exist. cash for clunkers has created a shortage. >> austerity, we have to avoid it at all costs. >> that's what people say all the time. we look at europe and we hear about the arguments for italy, let's look at ireland. ireland, when they went through their financial crisis two years ago, did everything the eu asked them, did all the austerity. they took the pain. and what's happening with the e irish economy? they have lower interest rates than spain and italy.

they went through all the pain that spain and italy refused to go through, and they're coming out the other side with stable unemployment high but stable not getting worse. and an economy that's doing better. >> i have two words for your assessment of ireland. eaton corp. do you remember where they announced they were going to move to? >> ireland. >> unrealized profits by the shareholders will have to pay taxes. now, what happens if many companies do this? now, i know that it's very shameful to do things for tax purposes. although it seems though everybody that was opposed to it jumped on the bandwagon as we approached the fiscal cliff. we even have a treasury secretary that was involved in many of those same issues. why do we have anybody in washington who's pushing corporations like eaton corp away to avoid what they look at as a rat's nest of tax policy? >> you know, it's a mystery to me as well, too, because a lot of the companies that are moving to europe and especially to ireland for taxes, it makes a lot of sense why they're doing it. and unfortunately we keep

pushing them away, and then we keep screaming with they leave. >> is our economy ready for a nonfossil fuel energy base? >> no, it's not. >> wait, we're out of time. no, it's not. so then why would politicians push us in an area when we need jobs, knowing full well it's not ready to carry the load? does that make any sense? >> no. >> back to you, carl. >> all right. thanks, guys. rick, i'll see you later. when we come back, former auto adviser for the u.s. treasury, steven rattner, weighs in on the effects of the sequestration and what it means for the economy. plus why he thinks the world of start-ups and venture capital have been dangerously deregulated. back after a quick break. ♪music plays thank you orville and wilbur... ...amelia... neil and buzz:

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welcome back to "squawk on the street." i'm jackie deangelis. ticker panw. the stock is down more than 4% today on heavy woman. it looks like there were some sellers out there taking advantage of an ipo lockup expiration today. the company started trading on july 20th last year at $42 a share. now it's trading at $56 and change. might not be a bad time as we're seeing selling. carl, back to you. >> it was one of the big winners last year, no question. if you're confused how sequestration will affect the

economy, you're not alone. john boehner said he wasn't too sure how those automatic spending cuts would work. >> i don't know whether it's going to hurt the economy or not. i don't think anyone quite understands how the sequester is really going to work. >> here to help us make sense of it all, steven rattner, chairman of willit advisers. steve, good to have you back. good morning. >> good morning, carl. >> certainly cbo thinks it's going to hurt to a significant degree. who's right in >> i don't think there's any question it's going to work. 4.5% off gdp this year. then on a microeconomic level, unemployed people will immediately see benefits go down by 11%, furloughs of federal workers, et cetera. i'm totalny in favor of fixing our debt problem, as you know, but this is not the right way to go about it. >> you write in "the new york times" about it. i know critics say there's two types, stephen. there's the kind who actually

want a meat cleaver to be put onto this economy. and then there's the others, the jack welchs of the world who say any ceo worth their salt could easily cut 2% to 3% of their costs without hurting everybody. where are they wrong? >> well, which one? i think the meat cleaver guys are wrong because i think as jack welch said, the way you want to do this is to find the right places where you have excess costs and cut those. so then you come to jack welch's notion that anybody should be able to cut 2% or 3%. i think that is generally true over time, but not when you're running the national economy. and so these are now, as you know, $85 billion of cuts, although less will happen this year, but crammed into the end of this fiscal year, and then more next year with no real thought, no chance to prepare people. no chance to phase them in so the economic effect is less. when general electric cuts 2% or 3%, it doesn't affect the national economy. when the federal government cuts 2% or 3%, it does affect the national economy. you need to do it in a more

measured way than the way we're going about it. >> the president, of course, spoke last week and said a couple of things. among them was this notion that there is a silent group in the gop caucus that agrees with him, that is not speaking up. i'm wondering what's it going to take to bring them out? wouldn't some large symbolic move on entitlements, even though it would upset a large part of the president's party, wouldn't that speak volumes? >> first, i'm sure there are some republicans who agree with the president, but this is the one it the republican party seems to have latched on to that's popular in the country, that they're essentially united on and that they can use as their mantra for the moment. i don't think it's going to be easy for the president to peel off some republicans. and while i do believe the president is prepared to do business on entitlements, i don't think just throwing a bid out there in the midst of no negotiations, no discussion between the sides, is what i as somebody who's negotiated for a living for 30 years would recommend to the president. >> yeah.

it's certainly not the way you would do it in a business negotiation or in presidential poker. that said, if we are going to start to feel the slow burn of these effects, even on a local level, steven, is there something perverse about the president trying to wield public opinion over the republicans even as he knows it's going to hurt certain americans slowly over time? >> i think the president's been very clear that it's going to hurt people, carl. so i'm not quite sure what you think he should do differently. look, what i'm most worried about in this situation at the moment, slowing the national economy, not good. effects on individuals like the unemployed, not good. but in a way, one of the worst things we have at the moment is that both sides have agreed not to have a fight over the so-called continuing resolution, over a possible government shutdown. i don't believe the republicans are going to have another fight over the debt ceiling when that comes up because that is a losing battle politically. so my problem at the moment is i don't see any triggering event. i don't see anything that's going to force these two sides

together into some kind of grand bargain which is what we really need to fix this debt problem. >> you make it sound like the equivalent of a low-grade fever. can you walk around, can you go to work, but you are mildly sick and will be for a fairly long period of time. >> i think that's a great analogy. and just to torture it a little bit, we could take a couple aspirin, if it turns out that we have an air traffic control problem, they could patch that up. if you have a problem with the national parks, they could patch that up. i don't see anything that's going to create what some of us had hoped that would be that fiscal cliff moment for a big deal, deal with entitlements, add some revenues, cut spending, and really make a meaningful difference in the budget deficit in a measured way over a longer period of time. >> and not to mention the heightened vulnerability to any external shock should we get them later on in the year. >> well, it's a crazy way to run a railroad. i think it's embarrassing internationally for us.

i don't know how the president or our leaders can go to a world meeting and start to lecture other countries on how to conduct their affairs when we can't conduct our own. >> thanks so much. see you soon. listen up, everybody. malibu, california, wants to make it official. i'm not sure what that means. our jane wells is live in malibu to explain. jane. >> reporter: carl, it is home to some of the wealthiest people in the world, but even malibu needs a little extra revenue. so to help out malibu, would you be willing to buy an officially licensed pair of sunglasses? we'll explain after the break. if you think running a restaurant is hard, try running four. fortunately we've got ink. it gives us 5x the rewards on our internet, phone charges and cable, plus at office supply stores. rewards we put right back into our business. this is the only thing we've ever wanted to do and ink helps us do it. make your mark with ink from chase.

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♪ coming up at the top of the hour on "the half," a warning of another financial crash and a respected market watcher is here to defend his call in just a few minutes. whether the rally can keep going even as china rattles the global markets. and should you buy one of this year's best performing stocks? two traders debate safeway's next stop at the top of the hour. carl, see you in about six minutes or so. >> all right, scott, thanks for that. today at 1:00 p.m. eastern time, warren buffett, if you missed becky quick's exclusive interview with him on "squawk box," catch it on "power lunch." once again, 1:00 p.m. eastern time here on cnbc. here's something warren buffett e top three of nce 2000, placed

"forbes'" annual list of the richest people in the world. the list includes 1,426 billionaires with a total net worth of $5.4 trillion. clocking in at number one, carlos slim, number two, bill united states, number three, ammancio ortega and at number four, there is mr. buffett himself. meantime, malibu wants to make it official with their brand, that is. the city is hiring a branding company to help it begin negotiations to license apparel, beauty products and other goods as officially malibu. but why? jane wells. man, what a gorgeous vista. has more on that. morning, jane. >> reporter: hey, carl. you know, even here in paradise, they could use some extra cash. so reclusive, private, richie rich malibu is officially going to license apparel, swimsuits, watches, maybe even volleyball. does malibu need money? >> every city needs money. you know how it is now with the

economy the way it is, it goes up and down every day. so having more revenue sources gives us the opportunity to do more for the environment and for public safety, which is always a problem. we've got 15 million visitors that come here a year. and we want the water to be clean for them. we want the streets to be safe for them. we want the pch to be safe. those are the kinds of things that we would use as revenue for. >> reporter: malibu is contracted with xl branding, did $100 million in sales at its peak. its had other similar accounts. its least successful may have been attempts to sell the brooklyn bridge, at least the t-shirts. but malibu is very evocative. >> we did some research, and malibu is one of the few names that actually probably will have a stronger presence in the licensing business that we do internationally than it will in the united states. it's not bayonne, new jersey, as some might think. >> reporter: he thinks malibu

could really more easily translate to apparel than, say, new york. what is new york clothing? all black? the city is working on its official logo, hopes to have its first apparel line in stores by 2014. a style described as hollister meets abercrombie meets the gab sold at urban outfitters. you've got chevy, malibu barbie. he says customers will buy the official stuff, especially if they know a portion of the proceeds are going to things like clean water. back to you. >> seems like a bit of a stretch, jane, but time will tell. great story. thanks so much. jane wells in malibu. google historying an historic high. 814 earlier in the session. china showing signs of weakness. what happens to shares of the company known as the google of china? that's coming up next.

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