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stock of the day today -- men's warehouse. retailer getting a boost after they are considering alternatives for its k and g stores. this is one of the company's weaker performers. >> jay juror done, you don't wear anything from men's warehouse. >> don't think so. >> you've been doing business in china for about 20 years. we just saw the big "60 minutes" piece about what may and bubble or not. what's your view? >> nobody knows. first place, you can't really trust numbers that you receive. china has to convert an outdated economic model, basically driven by investment and exports to a domestic consumption model. their export markets are not going to disappear but substantially appreciate. the r an d is going to appreciate and they won't have the same competitive advantage.

they have to grow their domestic consumption. now what we saw on cbs was a building after building, real estate, empty. >> thanks for joining us today. mike, thank you. that does it for us. right now it is time for "squawk on the street." ♪ good morning. welcome to "squawk on the street." live from the new york stock exchange. futures are toying with another addition to the dow's winning streak. now nine days running. jobless claims were a nice beat, got mild core wholesale inflation as well. europe nice morning there especially in italy and a relatively mixed session in asia. our road map begins with a dow streak that might be tepid but it sure is stubborn. cramer who says he used to actually own a bull is here to explain the bulls's behavior.

>> norman the bull. apple gets a long awaited upgrade this morning to a buy as samsung gets ready for its moment in the spotlight when it reveals the new galaxy in new york city tonight. jpmorgan cuts amazon to neutral. is it time to re-evaluate? cramer added to his gatsby index. we'll run down who's been added. the dow posted an all-time closing high for a seventh consecutive session riding a nine-day winning streak. the longest since '96. the s&p, 11 points away from its own record high with futures moving higher. the watch is on to see if more market history will be made. two points, jim, on the dow. i guess you count it but they're certainly cutting it close. >> they always say the most exciting, maria -- it's the most exciting three minutes.

have you seen that discussion we have to wait to see it settle? i will say that it is once again transport driven and that makes a lot of people who are old -- what a tie. i'm sorry. he's a great dresser. i'm trying but i'm not in your league. i didn't mean to be -- >> that's okay. >> it's men's warehouse that made me think of it. transports always make an old fuddy-duddy like me feel better. they've been the leader. that makes a good impression on the rest of us. >> transports and the small caps, russell, closing at record highs as well. confirmation for dow theorists in this move in the dow jones industrial average. we should note materials lagged in yesterday's session.

that has been the laggard so far in this bull advance. >> last night jim you say bulls rest, bulls can be lazy, bulls can even go down to the turn shed when it rains. because you know this. >> when i ran into star norman, he cost a fortune to do what he had to do. farm out in jersey. every time it rained the guy ran into the shed. cows won't even be out there. didn't kind of perform the way it was supposed to. maybe the situation wasn't ideal. but bulls do rest. we have the image of bulls always climbing, in a ring, or pamplona. no. i like the analogy only from the point of view that resting is working here. you mention the materials haven't perform that well. when you go back to the 10007-2008 advance, what led us? peabody put on 50 points between january 2007 and june of 2008. cliff national went from 124 to

120. freeport was a huge bull, 33 to 61. i think -- last one before i stop boring people. pot ash had a miracle move. 30 to 113. i don't want those stocks doing well and they're not. boy, are they ever a nightmare. when you get u.s. steel putting on 100 points, when you get ak steel being a leader, that's what happened last time. i love this leadership had -- it is not those companies. >> but you want those groups to participate. maybe not lead but you want them to participate. you want technology to be trading at a lower pe than the rest of the market. >> there's room for tech to go. i just don't want us to be led by a company like an ak -- like chesapeake. 27 to 69. apache doubled during that period. those are inflation stocks. i love this piece in "the journal" talked about natural gas being low and the energy boom is keeping a lid on inflation which make the dollar

stronger for good reasons, not bad. i guess i'm saying i still like the backdrop of the economy more than most and was gratified proctor cooled yesterday, k kimberley cooled. >> there is the sentiment, some anxiety things have been quiet, almost tranquil in a way. >> it's a western? the man who shot liberty prokt sfer. >> invariably something always comes. i don't know whether it will be. geopolitical as we worry or wonder or watch things in iran or north korea. i know. i'm just -- >> 1996. it was pretty darn good for a while. wasn't until the asian contagion, nine months later. >> then we got long term capital, then the fed lowered

rates by 50 basis rates. off to the races like never before, ever. that being said, this is 20 13. not 1996. >> we're doing stress testing on banks like we weren't doing back then. we'll get more results tonight. >> we don't have the internet just beginning to blossom. >> no, but we do have situations where -- i'm reading about the elephant in the room which is the galaxy. suddenly they've got a keyboard -- i've been trying to get that keyboard. it does not get me wrong every single time. it remembers what i've got, what i want. you see the keyboard, israeli keyboard that deemphasizes some keys because you don't use them often?

let's gatalk about samsung. debuting the galaxy at an event tonight. apple is down playing competition from samsung's new smartphone and slamming the product. he tells the "wall street journal" fragmentation in the android world is plain and simple. android is given as a free replacement for a feature phone and the experience isn't as good as an iphone. the timing of this the day before the launch of the galaxy and him coming out saying, that is a lousy experience when the numbers don't necessarily bear that out. >> money talks, something else walks. buy that stock, raise the dividend, come up with a better machine and buy netflix. okay?

there. all right? is that so hard? this upgrade we got today is very good. let's give them $5 billion worth of product that we never heard of. that's old days. they're working on something and you don't believe it. you don't feel that anymore about apple. >> think maybe they're working on hiring a great money manager and creating the largest hedge fund that we've ever seen. you can manage $150 billion. you've got money coming in all the time. you can generate a 10%, 12% annual rate of return on that money. at some point -- amen. >> you're saying that if bernanke lets rates go up you're raising your price target on apple. >> i say maybe go the asset management route. generate all the cash on the side -- >> isn't that how it is already? >> compound tax free offshore, then eventually return. >> you want to see how much they own in real estate, in goal, in forex? >> right.

we're going to talk about -- exactly. bridge water -- oh, how is apple doing? >> the analyst out of btig is on the 11:00 hour this morning with us. to his credit he cut the stock when it was $634 last april. missed some of the up side but missed a lot of the downside. he does point out they're probably going to miss. guidance is probably going to miss. management doesn't know what to do with this money. there's products we don't know if they're in the pipeline or if management will even pursue them but he's giving them a huge benefit of the doubt. >> i thought this was one of the most brilliant upgrade i've ever seen. it starts off by basically saying this company is going to blow it. that's why i like it. the reason why i say it is important, this stock has become very psychological. he's basically saying -- he's been at the top before. we know in another bull market he was in there at the top. >> yes, he has the advantage of experience. >> he's saying i'm not going to

doom to repeat history here. when everyone was getting really enthusiastic i didn't. now when everybody hates it i'm on-board. you know what? i think this particularly ironic upgrade is going to work. >> really. >> yeah, i do. i think this man has learned. >> it feels like sentiment is changing on the stock, for sure. >> we have the galaxy coming out. that's got to be the point of worst -- liket comes out. unless galaxy sells 42,337,000 new galaxy s44 ss, people are going to be disappointed. it is time for people to start being disappointed about samsung before we see the numbers. >> the expectations are 10 million units sold in the first month on sale. with the s3 they had some supply issues. they lost $2 million in sales. they say they've remedied that this time around. but there are hiccups that could be seen with samsung.

is the s4 anything revolutionary? no. >> that was the discussion yesterday with the analyst on at 11:00. there's no form function that's going to be revolutionary at all in hard way. until they figure out how to make a benable screen or something. bells and whistles are getting harder to come by. >> don't you think we should create a whisper number of 10 million? we can create our own disappointment right here right now by fomenting a number that's impossible for them to reach then literally say that's disappointing. boom. we've created a bottom right on the show. what do you think of that analysis? >> i think that could work, though i don't think samsung's stock prices moved quite as much as apple's might have been. >> to the up side it has. >> it has. as a composition of their overa all profitability smartphones have become an enormous part of

that. >> what would happen if apple cape out tomorrow and said i just talk to intel, they got a new ceo, we're switching away from samsung chips because we've had it for them. at the same time we heard the whisper number is 12 million on "squawk on the street." they did 11 million. you know you got a bottom. it can be that facetious. we shall just do it here. why do we have to wait for wall street to create a consensus? how wrong have they been? >> it's a consensus of four we could create right now. >> i haven't come to my number yet. >> i went to europe also and was shocked by how many galaxy notes they had there. he does say that in his note. >> channel checks. >> let's wrap up with amazon. moving lower in the premarket. jpmorgan cuts to neutral from overweight. target goes from $333 to $300.

they point out 45% gain last year, 10% year to date. is sentiment changing here the other way? >> i read this. i said -- i keep thinking about bob oldstein saying amazon in the end will just implode. i come back and say amazon is household enough among younger people it is not going to implode. the stock itself has defied -- this is the one when you people at home say what's expensive, this is the one that's defied the parameters that we know in terms of trying to gauge the worth and value. >> it's one of those stocks where you could have made the valuation argument against the stock for the past 100 points at least. >> exactly. therefore it is suspect when you try to call a top in this. at the same time it's had a big move. i don't think it's wrong to think if you've been right about it now to pull back a little. when we come back, a lot

more. cramer's gatsby index, the sequel. find out which companies he's added to his own index of companies that sort of pivot around the behavior of the wealthy in this country. also ahead, a bear takes a swipe at the record run in the markets. why he thinks stocks are, in his words, way overextended. futures though look moderately positive here as we kick off a thursday morning. a lot more "squawk on the street" from the nyse when we return.

rn.

unveiled his gatsby index to give you a snapshot of the high-end consumer. he's added some companies to the list and he outlined them last night on "mad money." take a listen. >> so far our original gatsby index of michael kors, panera. >> lewis: lululemon has lagged. we need something broader, more representative. i'm adding the tol, the bc, the sax, and estee lauder to the list. call it the great gatsby index from now on. >> in addition to kors, ralph, lulu, nordstrom. with tiffany and coach you got some names in there people are concerned about. >> took a lot of heat immediately on this by even

saying coach belongs. kors a different price point. that was immediately -- that was like a heat seeking missile. people hate it. i say your image of coach now. maybe it's lost a little luster. lauder is incredibly overpriced and gets it. that's a sign of a luxury purveyor. toll, $575,000 house. brunswick is boats. last time i looked, how many do you immediate? sax is a high price point and they made a darn good suit. >> the great ones are all european. burberry making a comeback. prada is doing well. america is not the -- at the

locust of high fashion. but if people go to whole foods over kroger, if they buy lululemon versus athletic gap. gap's doing some good things but this is a good judgment of people who spend too much and a lot of times my nephew, said we got to call it the great gatsby. he pointed out correctly, this is just truly everything you do not need in life. do you need any of these things in life? >> guess it depends on who you ask. >> you need a place to live. >> why can't you go to a polte home? >> you don't have to live in the terrain. >> i lived in a ford fairmont. you save a lot on a homeowners insurance. other than that, i'd rather be in a toll. david novak lived in his car. >> as did you. >> with norman. >> norman was the most -- he was

completely asexual. he wasn't exactly what you paid for. okay? >> no norman juniors. >> you turn on the barry white or nothing? nothing worked? >> norman had the least drive of anyone i had ever seen. this is like the luxury index. he was the lowest cost rental. it's true, david, you get what you pay for. i mean this guy could not have been less interested in fine touch or ambush, the two i thought maybe he would have a good time with. >> fine touch. >> and ambush. here comes the mad dash. find out if things are worth your money. another look at futures as we attempt to extend our winning streak. right now the dow is up 27. more "squawk on the street" straight ahead.

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♪ ain't nothin to me ♪ ain't nothin to me [ crowd murmurs ] hey! ♪ [ howls ] ♪ btig is going gaga over a couple of names. upgrade of apple, the initiation of penny with a buy. >> going against the grain on two different calls. jcpenney they're saying buy. there's more than meets the eye.

talking about how there is a legacy business that's not that bad. market's undervaluing some of their locations. i like a contrary call but it's got to be backed up by the fact. right now we don't have any momentum to sales that makes me feel comfortable saying that this is a good upgrade. >> tomorrow is a big day. joe fresh day bus. huge priority for ron johnson. some analysts say at this stage of the game him leaving is not a clear positive. >> i went on the joe fresh site. this stuff looks good. one of the problems is that apparel is so good these days. if you look at -- j. crew's site it looks good. what i'm saying is that it is more whom mhomogenized. joe fresh is not enough of a standout to turn this company around. a lot of people are saying mastercard gave a nasty present aation, saying ebay's fees have

to be raised a little bit. a lot of talk about how paypal will not feature as promising as a new galaxy samsung. jpmorgan says buy, there's also concerns about the core business of ebay away from paypal and whether it is strong. i don't want to touch it. i think the money's been made in ebay. i like the company, i like the management. but the stock's been an incredible perform person let's find things that haven't been. the dow aiming for a perfect 10. the blue chips looking to keep their winning streaks going, set record highs in the process. account s&p tag along. opening bell in just a few minutes. recognize me.

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[ male announcer ] this is karen and jeremiah. they don't know it yet, but they're gonna fall in love, get married, have a couple of kids, [ children laughing ] move to the country, and live a long, happy life together where they almost never fight about money. [ dog barks ] because right after they get married, they'll find some retirement people who are paid on salary, not commission. they'll get straightforward guidance and be able to focus on other things, like each other, which isn't rocket science. it's just common sense. from td ameritrade. after going up nine straight sessions the dow shooting for ten today. again the first streak like that since november of '96. still working on when the last 11-day streak was. but people are starting to talk about the quarter, guys. when the first quarter for the dow is up 8%-plus the past 12i7b

stances since 1950, the dow ended the year higher 100% of the time. >> isn't that some stat? hard to argue with that as being anything other than a black and white stat. they can't find an instance. >> in most cases double-digit gains for the year. some of the numerology people still hate it, people still want to fight it. but those are the facts. >> blackhawks, miami heat, dow jones industrial average these are very hard to go against right now. >> they are. >> teams that have won 20 -- it's -- almost seems like when you read the dow it is a sports story. it's just got that momentum that defies this kind of like four walls of valuation. it just doesn't -- let's just say one day the heat will lose. >> opening bell's here.

top of your screen. the apollo tactical income fund. if lebron is to the heat what is to the dow? what is leading this dow? coke with an upgrade again today? >> no. it's been lagging. >> i think one of the great things about this team is it's much more like the fab five in michigan. like some of the great celtics teams. it is like each day someone steps up. isn't that what's so great about this? it is not a dream team necessarily. like the sixth man, the seventh man. find me a team that's this well versed. '83 sixers? the lakers? kareem? i don't know. this is every day it is a new

guy that leads, the transition guard, then it is the post. can you help me here? will you just help me? >> where would you like me to go? what sports analogy would you like me to come up with? >> an nba team where the sixth or seventh guy played a role there. >> you mentioned a number of them. you have the celtics teams with havlicek coming off the bench -- >> he wrecked my life. i was 6. >> larry bird also did that with dennis johnson. coke is the best performing dow component today as it is upped to outperform from underperform. >> this stock has been lagging in 2013. has not participated in the bull market. if you're thinking the dow will go higher, eventually you would think you'd have a catch-up performance by some of the laggards, including a coca-cola. >> that's part and parcel of what i'm talking about. you want this market -- if this market were being led every day

by the same stocks, we'd feel very i think 2007-2008. it wouldn't surprise me tomorrow if someone find some way to recommend intel and microsoft because they're lag. is coke a rigorous upgrade? i don't think so. a lot of it is bloomberg failed, multiple expansion. but each day someone combs to the fore and surprises you. like the movie "hoosiers," remember the movie, basketball, where the guy 00 comes up and he -- everyone played a role. there's many people playing roles. >> i'm tearing up right now as we speak. >> blackberry shares trading higher today. we actually haven't mentioned this yet. yesterday up 8% on a press release saying that one partner of theirs placed an order for a million units. we had a nice time yesterday's session. it's backing off at this point. it had been up 1% right after the gate. that's something to watch especially as verizon tries to

take pre-orders for the berry. see if that holds up. the day of samsung's big release of the galaxy. >> goldman sachs up about 1% as we await the aforementioned. after the close we should get the actual permission or lack of permission -- or how much the banks will be returning in terms of excess capital after last week's stress tests to shareholders. but important, very important for those who are invested in the banks or might consider doing so. >> if you're going to see -- you talk about this notion of a broadening market. bank of america was a leader, bank of america has paused. it would be time for bank of america to come to the fore. maybe something good happens there. >> interesting "journal" story this morning, something we were also aware of, which was there is not a great deal of discussion between the fed and the banks in terms of the metrics that are being used, how intricacies of the test. perhaps because they don't want them to then prepare for the

test so to speak but a number of the financial institutions were a bit off in what they thought versus where they came in on the stress tests. even goldman sachs off quite a bit. >> goldman sachs does not act well here. >> no. doesn't act well. even though it is up -- >> no. morgan stanley, goldman, they seemed to take it on the chin from last week. i think -- it has not acted well since that and wells fargo which was regarded as not being that good has acted well. what do you make of that? >> morgan and goldman have had nice moves since the beginning of the year. >> but it could be very nice. >> fair enough. we're six points away from the record closing level of the s&p 500. of course as we are eking out this streak of gains on the dow we're still on s&p record watch and we are inching ever so close to that 1,565 and change level here. >> what would -- which group

could power the s&p? >> technology. that would be the easiest. that would be the lay-up here. >> i got to come out tomorrow and recommend microsoft. imagine if you're a microsoft analyst right now, do you have anything? does your kid like xbox? i mean have you paid for skype even though you're not supposed to? there's got to be microsoft analysts all over country right now saying, please, please, windows 9! make us windows 9! >> how about just a 10% free cash flow yield? isn't that enough to say why not? >> thank you, steve ballmer. sure. >> want plea to do a little monkey dance for you? >> yes! you can do like a btig on the apple and say, i know -- kind of like what senator mccarthy used to say about the communists. i have a list in my hand of $5 billion worth of revenues that steve ballmer's going to have that you don't even know about. then i'm going to upgrade it. >> that's not going to happen. >> why?

because the takfacts -- >> yes. >> you demand facts. >> sometimes i do. >> you're rigorous. a lot of people don't want the fookt get in the way of a good story. how about upgrade on he's about to be fired. that's probably a rumor ballmer's going to be fired. >> that would be hard to do. >> 7.5% up? >> yes. >> we're joking, by the way! >> it amazes me without tech you you can't get to the s&p breakout. you need bank of america or intel. you know what i mean. we were talking to someone yesterday, bullish on the s&p. sees 1,600 but make the point utilities are trading at a higher multiple than technology. do you pay growth valuations for utilities over technology? that's what's happening right now. >> the cisco kid used to be a friend of everyone.

it's 11 times earnings, for heaven's sake. cisco has to break out. okay? it has to break out. >> cisco kid was war. wasn't it? >> yes. what was war good for? absolutely nothing -- boom! guy comes to play. >> say it again. >> we could have had that cue. you just got to give us some warning. >> some people call me maurice. >> what do you make of all the q1 gdp raises we got in mesereau, credit suisse, deutsche is at 3 for q1. >> they wait for retail sales to come out, then they erase. well, thanks for nothing. why don't you do a little ground-up and realize the sales were -- it's so funny. when i come out, i said something positive about macy's the other guy.

i said how about target? it's all jcpenney. walmart. jcpenney. jcpenney must have had $400 billion in sales and lost it to everybody. i had a guy on last night from spirit air. he was talking about them being the dollar general or the dollar tree. >> of airlines? >> i thought talk about other companies that have clearly benefited from jcpenney -- spirit airways. right? is there any company that has not benefited from the downfall of penny's? name me a company that hasn't won because of jcpenney. >> caterpillar. >> cisco. >> guys, you got me. i can't figure out -- how's caterpillar sales increased because of jcpenney's failures? >> i have to think about that. >> one company has not benefited from penney's demise.

herb aal life. the departments of justice. >> fascinating. let's get to bob pisani here on the floor this morning. >> penney's up 1% on that btig upgrade. we're up 45. notice we're up 45 every day. the rally goes on and on and on and on! every day. look at numbers for the dow this month. 35 up. 38. 43. 67. 50. two and five. those are the numbers we've been up every single day. sounds like a football huddle. put january and february in you got a 10% rally. there are no hedge funds that are up 10% so far this year. they're all getting dragged in. what's characteristic of this month, almost every day we get a little piece of economic data that's a little bit better than expected. that's forcing the market to the up side. better economic news every day but hedge fund are all pulling

their hair back. pullbacks, stop asking me about pullbacks. i got an e-mail full of when is the pullback going to come. we had it. 3%, end of february, it's over. it's already happened so stop writing about it. the big story is divergences. nobody's talking risk on and risk off. there were splits out. the divergence is out of emerging markets and into the united states. emerging markets led by china have been underperforming the markets for six weeks now and the u.s. has been the beneficiary of that. there is a big guerrilla that's in the room. that's the strength of the dollar. it is playing havoc with people who are trying to invest u.s. money in the overseas markets particularly through etfs. have you seen the nikkei rally? it is through the roof. it is up 19% this year. try to buy into this rally. you cannot. go buy an etf.

the big one, the ewj, that's the japan index. it's up 7% this year. huh? how can this be? that's because the yen is weakening. you're buying it in dollars. hedging, there is a huge rush to try to find hedging vehicles. fortunately in japan wisdom tree's had a huge success with their japan hedge equity fund, hedges out the currency. that's up 19% just like the nikkei. but there aren't many of these hedge products that are out there. i'll talk about some of them in the next few hours but there is going to be a need for that, believe me. there is a big etf thing that's coming in the very near future. whatever happened to quadruple witching? we don't get volatility anymore. the reason is it is not a big event anymore. low volatility reduces the need to get a lot of hedging. two, people have found other ways to hedge. there's etfs.

you can go long transports, short financials. you don't need to buy options. s&p options. there are vix options out there. many other option products you can use besides the quarterly explanations, expirations we are seeing out there. i'm not expecting a particularly large quadruple witching. remember when you'd get big volume wednesday, thursday and into friday? that's not happening. >> i remember 2:35 we used to get a look -- 2:35 wednesday we'd get a look of how friday would be. now we have many options. let's get to the bonds and rick santelli from the cme in chicago. >> it's always important not to draw conclusions. i like to watch the market not only on dailies and weekly charts but literally second to second, minute to minute. this morning of course we had a 332,000 initial jobless claims

number. we had a 330,000 number in mid-january. prior to that you had to go to january of '08 to find a lower number. but the point is, it's been a gradual decline and if you look at the charts, it wasn't a higher headline inflation, wasn't claims. we were already up to fairly similar levels, 204, 205 yield. open this chart up. this is fascinating. see the pattern here? look at the pattern with the 10-year bund over the same short period. reason this is important, that spread continues to widen. we've been talking about it. "journal" had a good article on it today. let's look at the euro in terms of yesterday. we talked about how any violation that 1.2965 close to be big. it is a key level. watch this pattern. if we look at the dollar/yen,

opened up to a one-year chart. that's what a bull run looks like. we are at the best levels on the dollar/yen in 43 months. jim, back to you. >> you keep track of this stuff. currencies have been just incredible here. can't talk enough about them because they're so crazy. the late easy news in energy and metals, sharon epperson at the nymex. >> the dollar is having impact on many commodities. brent crude is higher on the session. that has probably more to do with the oversold condition that's been in for the last several days. we are looking at the end of the four-day slide here in brent for now as it had fallen below its 200-day moving average. also looking at the may contract, that's most active as april expires today. we've also seen the spread between brent and wti oil futures widen a bit after dropping dramatically over the last several sessions. that's happening as we look at the flat price of wti, basically flat on the session today above the $92 mark.

keep your eye on the gold price as well. we continue to see the rotation out of gold and into equities. gold is still unable to get above that $1,600 level. that's going to be key for momentum in the gold price and really a settlement price above $1 $1,625 is what momentum traders are looking for. i'll bring the natural gas number to you live. coming up, is apple about to regain its shine? we'll talk with the analyst behind that call and why he says to buy apple right now. this afternoon on the closing bell, watch steve leisman's interview with new treasury secretary jack lew. look at this morning's early movers on wall street.

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♪ war yeah what is it good for ♪ whole foods looking to expand its healthy food offerings into a lifestyle. to include an upscale health resort within the next three years. fill in the plank -- if whole foods want to be successful with its health resort it needs to include -- blank. tweet us at squawk street. we've got your responses throughout the morning. what do you think? include -- >> trader joe's wine. >> trader joe's wine. >> take some of groupon's brazilian business. >> full-service resort. >> fly down to rio, man. right? brazil? >> amen. brazil. >> of course they do have the whole foods in denver, the colorado whole foods have spas already. doing quite well. >> oh, really. >> yes. the stock's making a comeback here, part of the greater gatsby

index, tortured by fresh market and the last quarter. >> i'm going to denver next week, spring break with the kids. my mom lives there. i'll report live from the whole foods spa. >> could you also report live from the denver broncos? >> hello, wes welker. >> we are pretty psyched. he's got some miles on him but he is tough. we know that from having gone to new england several times and lost. >> have a great time in denver. >> not going yet. the s&p about .3% from a record closing high on the s&p. 1,565.15 is the number you want to watch. 1,560.85. are stocks way overextended? veteran market watcher tom mcclellan will join us later on in the show to explain. but up next -- coming up, cramer has stocks to critique and he has just

seconds to do it. ♪ in 60 and he knows it >> find out if he can when "squawk on the street" returns.

let's get six stocks in 60 seconds. vm wear. >> stock was up, people are still jumping on the bandwagon. emc is the majority owner. >> stern doesn't like nike ahead of the quarter. >> they say western europe is not that good and they're worried about china. be careful. >> morgan stanley cuts air gas. >> air gas has been one of the great performers. no need to leave it yet. it is still well run. >> men's wearhouse up again. >> kng, if they get rid of it,

it goes higher. you got a battery company, also an seeding company and car -- too much. break it up. goes to $40, i want to buy jci. radian coming on the show. can you believe it? technology has to move to keep this move up. >> overall at night you've been advising home gamers to wait for the stepback, i said, you can still pick technology and finance. i don't think you're missing -- if you're coming in proctor right now, i think you're wrong. if you're coming in these 19 times earnings stocks, you should be in the 11 times earnings stock. they have more up. i feel like i'm missing

something, yes. >> you said you don't have a problem with that. >> no. i can't come in at 18, 19 times earnings and tell people that clorox is going to 100. i can't do that. i think clorox is a great company. i can't come in right now and tell you i think this is the level to buy kellogg because it is going to go to $70. or general mills going to $50. that would be the highest valuations i've seen since the '87 crash. i can't do that. >> see you tonight. 6:00 and 11:00 eastern time. simon, what's coming up at 10:00? >> we have an upgrade on apple. btig will be here to talk about their $540 price forth. we'll also talk about which banks will be able to return what cash to shareholders. and a major hotel owner will be on the program to tell us that the likes of marriott and hilton are failing to do what they're paid to do. that and more in the second hour of "squawk on the street." rent , you can rent a car without a reservation...

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this ge locomotive can tell you exactly where it is, what it's carrying, while using less fuel. delivering whatever the world needs, when it needs it. ♪ after all, what's the point of talking if you don't have something important to say? ♪ four points away from an s&p closing record. let's get the road map for the next hour. the rally won't stop. dow looking to clock in with its

tenth straight session of gains. while the s&p is inching closer to that all-time high. are there still names worth buying into? btig daring to upgrade apple on the day of samsung's galaxy launch. the fed set to release their results on big banks today after the close. which names could surprise the street the most. as carl mentioned, we're on s&p watch. we want to tell you about the key levels we are watching today. the s&p all-time intraday high, 1,565. we'll keep an eye on those numbers throughout the day for you. want to talk about the dow looking to make its ten-day winning streak ten straight. s&p closing in on a record closing high of its own. is today the day market history will be made or will economic data hinder this rally? chief economist with moody's capital markets research group

is with us, john, good morning. >> good morning. >> every time you want to get a little more skeptical you get claims or something else today that gives the bulls a little more field. what do you make of it? >> that was a big surprise. fewest jobless claims since early 1 ii how to 8. that's got to be good news for the equity market bulls and it tells us a labor market is improving. the question is whether or not we're going to get enough in terms of business sales growth and earnings growth so companies continue to add workers. >> what's the answer to that question, john? >> i think the answer is we're going to see an expansion of payrolls. we're going to see the unemployment rate drift lower. in general rates are going to climb. if that's true profits will grow by enough to sustain share prices at the current level and perhaps allow for a further gain of 5%. >> you look at some of numbers out of the business roundstable, for instance yesterday, hire

plans are nowhere near expectations for sales growth, cap x growth. some still argue the year could be great from an equity standpoint and still and jobless recovery. >> that's what the ceos are saying. i looked as a release of cfos released yesterday and they had a relatively strong number for prospective increases in staff. we'll see how that plays out. i think what it boils down to is that we have to see an improvement by business sales. we've gotten some good news on retail sales. that's got to continue. if sales grow by enough, we'll see companies continue to add the stat. not in dramatic fashion. we won't go back to the type of jobs growth we had in the 1990s but jobs growth ought to be great enough to sustain the consumer spending at a level that will demand that companies continue to add to staff. >> john, you mentioned retail sales numbers. yesterday on the basis of the

big upside surprise we saw in that number a lot of firms out there upgraded their expectations for gdp for the first quarter. but did not do anything to future quarter expectations indicating that maybe they donned see the read through. are you still skeptical decide the upside surprises we've been getting in some of this economic data that it may not translate into gains for second quarter, third quarter, fourth quarter gdp? >> a healthy dose of skepticism is warranted in this environment. could be instead of growing by 2% expected gdp it grows by 2.5%. nevertheless as we move forward we ought to see real gdp growth of at least 2%. that keeps us safely distanced from a downturn that otherwise would be very damaging to hiring activity. as i stated earlier, going forward the news will not be spectacular. but it may be good enough to justify further modest advances

by equities as well as a further narrowing of corporate credit spreads. >> let's bring in david spica, good to have you with us this morning as well. your main point is that investors know everything john is talking about but they forgot some of the risks. >> i think that's a great point, carl. when you look at where we've come in the last six to nine months, a lot of risks we worried about six to nine months ago clearly aren't being priced in today. what's being priced in is all the good news. there is legitimately good news but when you see this kind of advance in the market that's when risk increases. you have to be much more focused on managing risk. we've seen correlations come down. it's much more about selecting securities today. but given where we are today there is a lot more risk priced into the market now than there was six to nine months ago. >> david, what is the biggest risk there? the newspapers today are full of two things. one is the debate over the deficit and the ceiling that we're approaching. the other thing, major thing,

that people are talking about is a stronger dollar. which of those is the bigger risk for the market, do you think? >> well, honestly i would say neither one. what concerns me is europe. i think we've really put europe on the back burner. we saw in italy with the election that there really is no appetite for austerity and there has really been nothing changed there outside of the pledge by the ecb to do whatever it takes. so my concern is that we have another sort of event in europe like we had had a year ago that would impact confidence here in the u.s. the fundamentals here in the u.s. are good and i think it justifies and upward movement in the market though we do need to some additional earnings growth, expectations raised. but if somebody happens in europe that creates a loss of confidence here in the u.s., you're going to see money come out of the market. you'll see a correction. >> david, when you look at the headline number, the move in the dow or s&p 500, for instance, you might be able to make the point that the market has not priced in risk. but if you look at specific sectors you can make the

argument that we are in fact pricing in risk because the areas where we see highest valuations relatively to the s&p 500 are the defensive areas of the market. dividend growers, utilities, we have underperformance by the more cyclical areas like technology and materials. do you really think when you dig beneath the headline number we are paying a premium for defense for a reason? >> yeah. that's a really good point. i think that's a very good point what we could see -- again, we aren't bearish. i'm not trying to make a case for being bearish. i'm trying to make a case to be much more focused on the risks inherent today given what the market has done. you're seeing sim cyclical sectors, whether industrials or technology, trading at very fair evaluatiovaluation valuations. in addition of the strong inflow into equities that could keep

this market at a level without seeing a significant correction. we want to know what the risks are at westwood and we want to manage those appropriately so we've got to be aware of that. >> it is a risk. john, let me come back on the main point that david makes which is about europe. i spend an hour, two hours reading into what's happening in europe every day. i don't see at this stage a lot of people put a heavy concern on europe, even within europe. it seems very well contained, that tail risk. would you agree? >> yeah. the european equity market is moving higher. i think the bigger risk might be something going wrong in china that has become very important as one of the primary drivers of world economic growth. the other risk we're overlooking is interest rate risk. to a considerable degree, this equity market reality is the byproduct of expectations of a zero interest rate policy well

into 2015. who knows if that's necessarily going to remain the case? >> well, you listen to some of the fed officials -- at least those on the fomc, john, you got to get down to 6.5, some say 5.5 before policy changes in a meaningful way. you think they will wait that long? >> they'll wait that long provided that inflation in the financial markets allow them to show such patience. if we run into a situation where inflation is moving higher and the dollar is sinking, which is not the case today, the dollar is strengthening, then perhaps the fed is going to have to pull forward it's bas abandonment of zero interest policy. for now investors seem to have it right. why not go into equities in get that higher dividend yield of roughly 2% as opposed to keeping the money in a bank money market fund and earn just 0%.

>> interesting to see opinions diverge here as we reach some of these critical levels. great seeing you guys. it is a big day for technology. samsung will unveil its latest galaxy s4 smartphone tonight right here in new york at radio city. archrival apple is striking back ahead of tonight's launch. in a rare interview, apple's marketing chief, phil schiller, attacks samsung and google's android software calling it frag manied. analysts say the comments highlight the extent of the pressure on apple right now. it is a bizarre interview in many senses. it is very defensive in its nature. >> it is very defensive. he criticizes the operators of android and says twice as many operators switch to ios. that's not translating into games for ios. it still results in gains for android. can you cite all the figures you want but the market bears out a different story. is there couple that with some

of the management changes google made yesterday where the android chief basically took on chrome. they're clearly not worried at least in the long term about android. >> they don't seem to be. android is a very important system for google and the relationship between google and samsung is an interesting one and one to watch closely given the power that samsung may have as a result of so many of its smartphones being in consumer's hands. yeah, that was a very important personnel change. they are linking chrome and android on the phones themselves. >> as far as the you new samsung galaxy is concerned, do we know if it has this eye scrolling technology where it looks into your eyes -- >> purported to have it but we don't have confirmation. >> wow. big launch tonight. we should note we have analysts at btig who upgraded shares of apple this morning to a buy and a $540 price target on the day of samsung's big launch. we'll have him on at half past. in about 20 minutes.

after the close will we get any surprises? it is all about who can return what cash to which set of shareholders. we'll talk about that. plus, clash of the titans. samsung unveiling its galaxy s4 tonight. it will be the catalyst to steal more market share away from the top competitor, apple?

welcome back to "squawk on the street." e-trade is down hard this morning. the news citadel, its largest investor, is selling its stake to citigroup. some investors might feel like in citadel is selling, does the hedge fund know something they don't? still analysts who are bullish on e-trade tell me this wasn't a huge surprise. the relationship had been rocky. they say they still like the discount brokerage. a ton of leverage to an improved environment. e-trade up some 23% this year but down just about 6% this morning. melissa, back to you. after the bell today, new results of the bank stress tests

are set to roll out. with the fed okay the capital plans for the big banks and which companies could up their dividend and share buybacks. guys, good to see you. david, you say based on preliminary results citi came out looking the best. what are you expecting from citi? >> citi's already disclosed that they're merely asking for $1.2 billion stock buyback to offset employee dilution. they got denied a couple of years ago, but this year they came out looking good and they probably could have asked for more. >> you also say goldman sachs and morgan stanley look the worst. are expectations lower for them at this point? >> the fed's methodology was skewed against securities firms. they take a huge hit first, then build back capital very quickly. there's some other technical factors that i won't get into. i think morgan stanley merely wanted to get approval to buy

the full ownership of smith barney which i think they will get approved for that. it was a fairly maul thi lly sm ask. goldman will probably get approved as well. >> jeff, regarding stress tests, you say qualitatively it is always a wild card. what do you mean? >> there's only really two things they need to see. a, the banks individually creating capital. b, that the feds allowing them to return a reasonable amount of it to shareholders. the rest of it is almost kind of just timing and semantics, whether citi can buy back $1 billion of stock this year or $2 billion. as long as the capital is building and the fed's letting for pretty big returns, i think that should be good news for all the stocks. where the quantitative things come in is you don't quite nou know how to interpret how they're going to interpret the nonstress test numbers. for instance, a bank of america or citigroup that's had much more volatile earnings over the last couple of years relative to

a jpmorgan is probably going to be allowed to return less capital. so the numbers i think were pretty comfortable with and should be good. it is kind of how the fed interprets some of those nuances that i think could lead to any surprises today. but that being said i don't think we'll get a lot of surprises at the close today. >> we tend to lump morgan stanley and goldman sachs together even though they seem to be diverging in terms of their strategy. i wonder if you agree with that. morgan's focus on wealth management. morgan's still striving to talk about it as though it is aspirational. >> big differences between the two are, retail brokers and a private client is a big business for morgan stanley. within the investment bank at morgan stanley it is very similar to goldman sachs. but certainly goldman came through the crisis similar to jpmorgan in much better shape than its peers.

that's put them in a position to be better capitalized and to actually take advantage of a tough environment, weakness in some of their peers. they've been generating returns. morgan stanley hopefully will generate their returns. the question going forward for goldman, when account 10% roe become a 14% roe and can morgan stanley get there. >> regardless of whether these banks will be able to return a lot of the capital to shareholders, do you agree with that sentiment? >> well, we just had a meeting with the cfo of goldman this week and it's tough. they themselves don't really know where and when returns will ultimately go. there's a big mystery as to whether you can get to 15 or above.

i think the risk weighted assets are going to be take some time, take about two years before we really have the answers. it is a bit of a leap of faith. the fundamentals right now if you look at current conditions, m and a is doing great but it is not a big business for those guys. trading is kind of sluggish and everything else is just okay. >> we'll leave it there. thanks for your time. want to note that treasury secretary jack lew will make his first official trip today, heading to atlanta to visit a se siemen's facility. catch that conversation at 4:15 p.m. eastern on cnbc. will the s&p cross the all-time closing high level in who better to ask than art cashin. he's after the break. if you think equities are the only things moving higher these days, wait until you hear

about the wealth gaps between the millionaires and the merely rich. stick around.

the dow is up for a tenth

straight session as we stand at the moment. our next guest says we may all be losing perspective amidst the happy hype. ash carbon joins us. why so pessimistic? >> i'm not pessimistic. this is moving toward those new highs without excitement. it is almost a sense of inevitability. they're plodding along in baby steps and that's my my concern. my concern is the level of profit margins. they're an all-time record. american manage the has cleverly found a way to do more with less which is the reap why wall street's a little happier than main street. and the history of profit margins are that they can get to these levels but don't usually stay at the levels.

>> but isn't it different this time around because the crash was so -- >> be careful of those words. different this time around. >> but it was so painful. they were able to cut to the bone. can you cut american workers and not appear to be unpatriotic. it was that sort of environment. this is if you get growth back into the economy, surely the profit margins can grow from here. isn't that what we're learning? >> well, that doesn't really look like what history has told us in the past. number two, we're going to take a pretty lock look here. we've seen payroll data came out, the work week is getting extended. that means they're taking those workers and saying i need more out of you, i need you to work a bit longer and once you start paying people time and a half, and if you have to do that on a sustained basis, then you say, well, maybish hire that kid simon that's been looking for a job around here. >> i'll leave that hanging.

>> you raise a great point. you say we're all excited about a double-digit gain year to date. we've done that in recent years. last year at this stage of the game. >> actually, i plagiarized dan greenhouse from his terrific note last night. and he pointed out we were almost exactly here last year at this time with almost exactly the same kind of performance. >> in terms of percentage gain for the year. >> right. right. and everybody's, wow, we're up 10% already? been there, done that. okay? >> on the date you reversed, importantly, which is the point we made last week, the payroll data was not sustained. >> right. >> because of the pull through on the warmer winter which may be the case this time. >> well, that, again, may be the problem. we've seen that happen in the past. are we going to repeat the same thing? and again, one of my old themes -- there is not a

geopolitical risk in this thing at all. if there's a surprise offshore, then the market may have to take a look. i think we want to sit back and enjoy it and everybody believes it's inevitable. we'll wait and see. >> everybody's also hoping for a pullback that bob pisani happened at the end of february. it came and it went. >> absolutely. >> if you're waiting on the sidelines on the premise that the rally will continue, you're waiting for that pullback, it's not going to come, in your view? >> if everybody's waiting for the same thing, it is highly unlikely. as i said on this program a couple of weeks ago, what we're seeing is the dip that disappeared forcing people who were waiting and waiting to see, nuts, i've got to get some performance in here, and that's what's brought us to these highs to some degree, that postpone buying suddenly became unpostponed because the dip suddenly disappeared. >> isn't that something that is

a little different from 2012 where portfolio managers -- they are getting screamed at for being in too heavy a cash. right? that dynamic wasn't as pronounced 12 months ago. >> there's no question. and it is not to say that the market doesn't have attractions. the yield on the s&p is very competitive with the yield on the 10-year. you are looking and saying, the fed has forced us all to scramble to find some rate of return. so those portfolio managers are somewhat desperate. they're doing it grudgingly. it's not quite hold your nose and buy them but nobody's rushing in. that's why we don't see the big volume, that's why we don't see the surges. we are moving to new highs in baby steps. that's because they are intellectually reluctant. >> the voice of reason. nice to see you, art. art cashin from ubs. as the dow is on track for its tenth straight session of gains, we are watching shares of ibm. in today's session hitting at

least a 52-week high, $214.89 was the new high up by 1.3%. after the break, the analyst who dared to go against the grain, btig upgrading and the to a buy on the day of samsung's galaxy launch. next. is trouble brewing for america's big lodging names and could it affect the hotel business model as a whole in stay tuned. [ kitt ] you know what's impressive?

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welcome back to "squawk on the street." i'm sharon epperson. a rally under way in the natural gas market, up more than 10 cents rallying on today's storage report from the energy department showing a decline of 154 billion cubic feet. that's much greater than what analysts had anticipated. analysts were looking for a decline between 133 and 137 billion cubic feet. meanwhile it is about three times as much as we normally see for this time of year. we are seeing colder weather that's in the central part of the country. we're seeing colder weather in the new york area as well but we're about to get into the shoulder season for natural gas. traders are a bit skeptical about whether this rally will last. right now looks like we're looking towards $4 for natural gas. rally on the storage number. on a day that samsung's launching its most anticipated smartphone, one analyst is making a bet on apple.

btig says the time to buy is right now. walter piecyk is the analyst behind that big call and joins us right now. >> thanks for having me. >> it almost seems like a contrary sort of upgrade because you do say that they could miss on revenues, they could give disappointing guidance but you're willing to step in a little bit early. is that fair? >> yeah. you've seen a ton of cuts really. $10, the fiscal 2013 estimate has come down from the peak earning estimates. more recently you've seen downgrades and more increment cal cuts. where is the sell side relative to the buy side. a lot of people see this opportunity for earnings growth in 2014. they're clearly fearful of the june guide which could be kind of ugly. but if you're going to buy on the june guide, then maybe the downside is limited as a result. >> in terms of the june guide, is that impacted your view of it and how it may disappoint the street, clouded by what samsung is doing tonight? >> i don't really understand why

consensus is still so high for june. we talked about this in january that the revenue estimate was over $40 billion. it's been pretty clear that the compressed product cycle is leading to seasonal declines unless they come out with a new product. unless analysts are expecting a new product in the june quarter, the revenue estimate just shouldn't be north of 40 billion as far as revenue is concerned. i think the buy side gets it. i think as the sell side brings their numbers down more maybe the stock feels a little bit more pain, maybe when apple does provide their june guidance the stock can sell off a little bit. but i think the buy side wants to get that out of the way and looks towards 2014 when there could be earnings growth. >> but for viewers watching now you are predicting they are likely to disappoint and therefore the stock will go lower. although you have the buy recommendation in practice this may not be the entry point for the evidence that you're bringing to the table. >> depends on how you want to do the entry point. can you risk it and say i don't want to own anything today or you can buy a little bit today.

the risk there is that apple comes out with a large announcement on what they're going to do with their cash in the next couple of weeks. then maybe the samsung announcement today is not as great as all the hype leading up to it, that maybe they do announce a new product for are that june quarter. by not owning the stock you're taking the risk that even though they've got this difficult june or difficult even march quarter to report, that the stock is still not going to rally on other items that could take it higher. >> but into that you're also assuming product launches and that they will capitalize on them. you're actually putting figures on that. >> yeah. beyond june, i think at this point the street went from basically thinking tim cook has to provide some revolutionary product to now assuming that he won't even do the obvious things to generate revenue. right? there's clearly a revenue opportunity with a low priced phone. i have no idea whether they're going to do one or not. they should be doing one. they're talking more about payments right now. they will broaden the market. i think it is logical that they

will or fine some other revenue opportunities to grow 2014. if they don't, we're probably looking at a different management team for 2014. >> once other companies get into these smaller phones, why is the argument stronger to buy apple if we see a future in the next three quarters where the biggest products will be introduced are actually products that will further commoditize the space? >> i don't think samsung's s4 is going to be priced at $300. i'm guessing they're also going to price their phone very expensive like apple does and the profits samsung generates is from those high-end phones. what the market opportunity for apple is that they don't address right now is the 7 0% of the global subscriber base that's prepaid that doesn't get subsidized phones. they want an iphone. we just talked with gazelle that

buys used phones. in their words, there is an insatiable demand for people buying a cheaper version of the iphone in china, africa, india and thailand. if apple can address that market by bringing a lower priced phone to the market, that is incremental revenue and profit opportunity. >> so we're basically saying that the apple story is a buy story on volume because the margins are going to get lower and more compressed. >> the margins on the new product will get lower. assume the low priced phone is a $10 billion product. i assume that's 1,500 basis points lower in gross margin. that's not going to impact the overall corporate margin more than two to three basis points. you'll still have the high-end product just like samsung generates a lot of profit from their high-end profit. but you'll have a lot of revenue opportunity apartment the low end. what i think schiller has talked about, at least yesterday in that interview, you have all these customers on the latest version of ios. this presents a service revenue opportunity, whether it is in payments, maybe they go out and

buy twitter. there's other things that apple can benefit from by the fact that you've got so many people staring at their products with their most up to date software. >> good point there. walter, great to speak to you. thanks for coming to "squawk on the street." walter maybe early on this call. he was early on a downgrade back in april -- >> before predicting a blowout quarter. yes. >> and the stock has been down 32% since then. >> yeah. i think the stock was $634 when walt took it to neutral from buy. the market rally translates directly to wealth. gap between millionaires and the merely well off appears to be widening. joining us here on set, our resident wealth editor, robert frank. the stock market is the largest producer of millionaires in america and it added a lot of them last year. america added 300,000 new millionaires last year. it's now almost 9 million millionaire households in the u.s., just shy of the 2006

record. we define millionaires as people are investable assets of $1 million or more not including their primary residence. we are seeing a wealth gap emerge even between the wealthy. there are now about 14 million households worth a half million dollars or more. that's actually down $1.4 million from the 2007 high. we're seeing millionaires rise. let's call them half-millionaires decrease. what accounts for this difference? well, it's stocks and investment strategy. over the past four years, millionaire households have actually increased their stock holdings over the past few years. stocks account for three-quarters of their investment portfolio. for the affluent it is down one-third from more than 50% in 2005. the wealthy have increased stocks, the affluent have lowered them. in short the rising tide of these markets are lifting all boats but the bigger boats are getting a bigger lift. >> is that because the ultra

wealthy had the wealth to invest? >> it could be just about the money. the wealthy have more money to afford to keep it in the market. they've been the biggest beneficiaries of this. but also if you look at just risk profile, the wealthy had a more aggressive risk profile. they were more bearish early on in this recession than the non-wealthy. again, some of that could have been just money and discretionary investment money. but there was also just a big difference in who was bearish and who was bullish. >> maybe better advice? more sophisticated wealth management? >> did they make that decision on their own -- >> no. clearly the wealthier you are, the more likely have you advice and the wealthier you are the better advice you tend to get. that's a big part of it. >> the more likely you've driven down the cost of your mortgage early through refinancing so you have additional disposable income every month that you can put into the stock market. >> that could have been part of it. for the wealthy houses and housing wealth doesn't matter that much. it is real lit investment

portfolio that accounts for a half of their total wealth whereas for the rest of their population houses are their source of wealth. >> just within the wealthiest, is it also dividing even more where the wealthiest amongst the wealthiest are getting even wealthier? >> that's a great point, david. if you look at where the biggest inoquality is in our quality right now it is between the billionaires and the mere millionaires or the people worth $100 million versus the people worth $50 billion. really this is all driven by stocks. you've seen the fortunes of some of these -- not just new fortunes like mark zuckerberg, but people who lost a lot of money, coming back through this crisis. we are really seeing inequality even within -- between the rich and super rich increase a lot as well. >> sounds like we need another wealth reporter, robert. one is not enough. >> the super wealth reporter. >> and the half billionaires. >> robert, thank you. we have a mover in the

retail space. let's get back to hq for a "market flash." >> they may like the handbags but investors, no fans of the stock at least this morning. vera bradley is down hard. the problem -- the forecast. first quarter results below what the street was looking for. distributors say they have too much product, reorders have slowed significantly and timing of summer orders pushed back. the street reacts, key bank and stern ag both cut their ratings on the stock. carl, back to you. straight ahead -- why the hotel business model as we know it may be in dire need of a major overhaul. plus we'll keep an eye on those markets. the dow on a record breaking run. are stocks overextended and is the bull run giving way to some exhaustion? a wall street veteran with a name you know, tom mcclellan, thinks so. he'll join us later on. come on, nowadays lots of people go by themselves.

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mostly green. of course, take a look at, yes, the s&p 500. back up a little bit here but we are closing in on that all-time high. 1,565. >> that's the closing high. the intraday high is obviously higher than that still. in the meantime, trouble is brewing for america's big lodging names in their biggest growth market. some hotels owners in europe are beginning to openly accuse the likes of starwood, marriott and hilton of failing to drive revenue and profits at the properties that they pay them to run. is it a revolution and could it spread here to hotel owners in the united states? one of the most vocal critics is anders nissen, ceo of 160 hotels. thank you for joining us. what essentially is the problem from your perspective?

>> well, you know, one of the big trend in the hotel industry the last years is that hotel company has changed their business model from being operator to brand companies. which means that they had focus of creating revenue but not profit. >> so why are they not driving -- i mean a lot of your 160 hotels are branded. why are they not driving profits at the hotels that you own to the degree that you want them to? >> well, they -- you can say that their brand had became when they now had changed the model to be more brand company, they are good at creating revenue but they lose what they gain on profit side because the performance as operator had been worse and worse.

today they had loss no skill meaning the problem for them is not revenue, it is gaining profit. >> they don't have the skill to to run the properties is what you're saying. >> yeah. well, that's for sure. the hotel company, specifically the big hotel company who just changed their motel to just tiny management contract and franchise agreement, they had focus on brand standard, they are focused on pipelines and they had lost their old very strong dna of being operator. that's for sure. >> you see, i put the -- you actually ignited a conference in berlin last week with the comments that you were making and i had the opportunity on this show to interview the ceo of starwood earlier in the week. this is what he said to the criticisms that you're making. >> when we take a hotel into our system that was previously

independent because of our reservation systems and our loyalty program, because of our revenue management systems, we see increases of 10%, 20%, 30% for those hotels. we're a great bargain for hotel owners. >> in summary, then how do you think the hotel industry is likely to change? what's your criticism now coming from stockholm mean for investors in the big lodging brands here at the new york stock exchange? >> well, go back to what the ceo of starward said. their focus is on revenue. like a football team who scores seven times but the other team they score ten, they lose. because can you not have only focus on revenue. you need to be -- have both. you need to be good at revenue and you have to be good at profit. meaning that you have to run the business with high productivity. and that sort of skills which

was what we remember the big hotel company had before, they have lost because they have changed their business models. >> got it. anders, thank you for joining us then. we'll leave it there, sir. thank you. speaking of travel companies facing difficulty, carnival cruise lines is back in the news today after the captain of the carnival "dream" notified the company of a problem with the propulsion system. it is currently moored off the caribbean island of st. martin so things aren't as bad as they might be. there were brief interruptions to elevators and toy leiletoile yesterday night but the ship has full power and they're working on a technical issue. in february an engine fire crippled the carnival's "triumph" leaving 4,200 passengers without power and the ship had to be towed to a port.

carnival shares down more than 5% since then and down slightly this morning. big problem with the carnival -- cruise line companies have is o line that company has on pricing and it's focused more on europe than the united states. >> they have already said they went to a heavier promotional load since the last event. >> and this is noticeably quite different. if you drop the price, people will come flooding. >> absolutely. auction buybacks and the federal reserve, oh my. when to expect the 30-year bond auction. that's next tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 gives me tools that help me find opportunities more easily. tdd#: 1-800-345-2550 i can even access it from the cloud and trade on any computer. tdd#: 1-800-345-2550 and with schwab mobile, tdd#: 1-800-345-2550 i can focus on trading anyplace, anytime. tdd#: 1-800-345-2550 until i choose to focus on something else. tdd#: 1-800-345-2550 all this with no trade minimums. tdd#: 1-800-345-2550 and only $8.95 a trade. tdd#: 1-800-345-2550 open an account with a $50,000 deposit, tdd#: 1-800-345-2550 and get 6 months commission-free trades. tdd#: 1-800-345-2550 call 1-866-294-5373.

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. welcome back to "squawk on the street," thursday's edition of the santelli exchange. last month we saw the u.k. downgrade. the u.s. was downgraded. and it always sparks good discussion, especially on the frading floor, but in a lot of circles. one of the main discussions, of course is, who cares? whether the u.s. or the u.k. the real question is, not who cares, the market doesn't seem to care. there's a big difference between a market caring and all the rest of us and leaders of various

countries that have been downgraded or could be downgladdownglade downgraded in the future. just because the market doesn't care doesn't mean when it does care it's going to be digital. whether you talk about inflation or downgrades, just because you don't see something now is no reason to not discuss it. think about your kid's report card. if you know your child has ha a lot of homework, you never see him doing it, but you only get a report card once every three or four months. do you wait? the reason it's no good is because central banks are printing machines, and they should print. the world wants to give them money at low interest rates. what's the sin with the that? it's the samed a the downgrades.

think about the people that have a lot of money, not a lot to do with it. central banks really don't like that. they are money machines. you have interest rates unbelievably low. borrow as much as you can. but bhen it changes there is going to be no memo. do you think they're going to be any more orless confused? should we have another crisis about this exact topic. like i haven't talked about it before, but i will tell you what really makes this hit home. maybe you'll think it's a phone number. 912812 9128 912812qz4. and we're auctioning to a

reopening of 13 billion today. yesterday the fed wasn't buying them. auction them four weeks ago. having another auction today. now think about all that. does that sound crazy to you? >> lowhole foods is looking to change your lifestyle. he plans on expanding the company to include an upscale health resort. if it wants to be successful, it needs to include -- blank. tweet us your answers. revolutionizing an industry can be a tough act to follow,

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with xerox, you're ready for real business. today is gonna be an himportant day for us.re? you ready? we wanna be our brother's keeper. what's number two we wanna do? bring it up to 90 decatherms. how bout ya, joe? let's go ahead and bring it online. attention on site, attention on site. now starting unit nine. some of the world's cleanest gas turbines are now powering some of america's biggest cities.

siemens. answers. let's get to it. grocery giant whole foods is looking expand it to a lifestyle. he plans to include an upscale health resort in the next three years. if whole foods wants to be successful with a health resort, it needs to include, blank. one says a mcdonald's for when you need to cheat. another says yoga and a grazing

cattle ranch. and dan says it needs a gym. with jim cramer's face watching everybody like big brother for motivation. >> 1994. >> and snow bird tweets, a personal shopper while you lounge in a mud bath. >> not sure if i want a personal shopper with a mud bath. >> with or without a mud bath, i want one. this is now the third hour of "squawk on the street," and this is what you have missed so far. >> welcome to hour three of "squawk on the street." here's what's happening so far. >> i think the key point is that the fed doesn't do anything quickly or dramatically, it's gradual and it's a process. >> if you take it incrementally, it is tougher. it gives everybody the opportunity to say, look, i like this, i don't like that. this is a compromise.

that's what democracy is about. >> i think there's a technology revolution going on. that is maybe as compel iling a the founding of the internet when al gore plugged it in. >> opening bell is here at the top of your screen. >> little monkey dance. >> i said something positive about macy's. how about target? >> it's all jcpenney. you know what, jcpenney is supposed to have $400 billion in sales. >> jobs growth ought to be great enough to demand that companies continue to add to staff. >> as long as the capital is building and the fed is letting

in returns, that should be good news for all the stocks. >> good morning, we are live here at the new york stock exchange. the dow making an effort to make it ten straight winning sessions. we are seeing the help of ibm contributing the bulk of the gains on the dow. let's take a look at the s&p 500. we are on record watch for the s&p. we are now just about six points away from that. ebay shares are trading higher than ever. the selloff is seen as overdone and mastercard fees are ammic the firm is now suggesting more material deceleration. and jc is lowering the price profit to amazon to $300 a share from $333. >> let's get to the road map for

hour three. inching closer and closer to those record levels. we'll talk to one market expert who says this market is overextended and investors need to be cautious. does it mean they will lose more market share to appl or not? we'll find out if the apple investors should be afraid on the program. and as a former treasury secretary and the former ceo of board members. lending club wants to replace the u.s. banking system. they will join us live here to tell us how he plans to do that. >> let's get straight to the man who says that the market right now is way over extended. tom mcclel lan is warning that the bear signal for the mark is

in. tom, always great to speak with you. >> good to be here, melissa. >> and many of the reasons that we love having you on is you always brick the charts along to show what you mean. >> it's more not that it's overextended but ge is so important. it's a bellwether. it will top before the dow will. and it's an unusual situation because ge is a component of the dow. and ge is not confirming that. and so this is like seeing a canary in the coal mine dying. the coal miners are looking okay. they are keeling over one at a time. it's a sign that you have the be looking for trouble. you have to be looking for a

downturn. we had the balance sheet shrinkin shrinking. >> the other indicator is copper. what's a concern there? >> right. years ago copper was an economic commodity. but in 2007 it's an interesting twist. we've already seen a top in copper. and we're not seeing that same effect in the dow. but copper says it's the same problem. >> tom, when a lot of people look at the dow, they are hardened by the fact that they see the transports skon firming. closing at a record with the dow jones industrial average. do you not put credence into the

dow theory in that effect? >> i wouldn't say no credence. but when the dow theory was invented, we're talking true industrials versus true rails. it's now full of a loot of airlines going up in prices for reasons other than moving a bunch of stuff around. this was a much different indication that you were measuring. >> tom, can i pick up on the correlation that you had with copper. i can understand why copper led to the market in the past few years. are we in a different world now where china is clearly slowing down or crashing. and that would not be copper

sensitive? >> copper is a commodity. in the olden days it was a very much sensitive to gdp. copper is a financial asset. it's used in china as collateral. so the demand in the world markets goes up and down with the command for financial engineering. it's still used in motors and telephones and cables. but it has another element to it that is making it behave much more like a financial asset. >> the markets are overextended, what is the next move? is it necessarily a correction? what happens next? >> well, as i said, we're seeing canaries peeling off one at a time in the coal mine. and the market is being kept up by the fed. the fed is a good choice for filling the role. but when there's only one thing.

and that can get pulled away. that's perilous for the market. i'm seeing a correction right now. probably should be higher in may and much more significant this summe summer. >> so then the latter half of the year we could be in trouble, right, tom? >> starting to get bumpier now. you will see it wobble and get more unstable. the spinning top will fall down in may. >> good to speak with you. thanks for your tom. tom mcclel lan. >> it is samsung's big day. there have been rumors of everything from swift keys to new colors. what we don't know is what samsung will unveil at 7:00 tonight here in new york. ahead of the galaxy is s-4 event, brian cooley is the

editor at large of cnet. what do you think we'll find out tonight? what will be new? what will be fresh? >> the things that may be the best rumors are this idea of a hover technology where if you just hold your finger above the screen but without quite touching it, you can cause things that are like a mouse over that you do on a computer browser. it could pop up an image. another technology that sounds solid is i-tracking. it will pause a video when your eyes move off the screen. the video will wait for you. those are a couple of bells and whistles. bigger is the five-inch screen. a four core processer in the u.s. eight core for other markets. faster everything. longer battery life. maybe thinner and lighter. >> so when blackberry unveiled the latest models, you could

guess what the headlines would say. they always find it very hard to impress the market. what do you think the headlines will say tomorrow? the key about this product launch is it's coming on the heels of the s3. they build samsung into a name brand household product. so the s4 builds on the preference page. this could be a strong launch for them. what does it mean for investors? samsung has to do a lot more to stay where it is. the expectations have fallen back.

>> of course. there's been a lot of pullback and enthusiasm as this superior product and more now along the s3 or s4. i also expect to see both of them going forward certainly on tying their screens together. they all have to go from tablets and phones and television. it all has to connect the dots. s that the next super innovation from either of the countries. >> so i'm wondering what your take is on android being fragment fragmented i will agree on the fragmentation of android.

apple doesn't have the issue. there's one ios and one hero phone from apple at any given time. this is a different strategy than others who simply make a cheaper phone, which apple may do. fragmentation with android is frustrating for consumers, who see a phone, go to their carrier and it works differently. i find it chaotic. you can't argue that it has not held back android's growth, regardless of the retreat numbers. and i'm not up to speed on that. >> brian, it's always an education having you on. thank you for joining us. we'll see what they launch tonight. thank you. >> coming up next, he met with

president obama yesterday on cyber security. today he is talking to us here at "squawk on the street." the president an ceo of seimens live joins us, eric spiegel. >> i really do. that's what we're going to talk about with our guests joe thompson. we're going to do a bit of change in audible. i really dread this. there's an exclusive report that says a chinese firm is on their way to the u.s. to do what? i've heard enough now! we're going to talk habit that.

take a look at this. it could be another record day for the markets. the all time day high, 1576. so we're seeing if we can close in on na today. energy, telecom are leading us higher. let's get a market flash with josh lipton. >> hey there, simon. check out mgm. this is already the biggest shareholder, owns 18.6%. now tracinda has filed to buy more.

they will point to a rebound in the list. including big names. jaun paulson. up about 4% right now. >> our senior economic reporter steve liesman is at a manufacturing plant in georgia where jack lee will be visiting today. steve joins us now with a first time interview with the ceo. steve? >> melissa, thanks very much. i am in alpharetta, georgia, where jack lou will be. we have the president of siemens corporation in the u.s. >> thanks for having me. >> it's not a small part of the

business, is it? >> no, we're about 25% of seimens. we have over 60,000 employees here in the u.s. and about 130 to 140 manufacturing plants like the one you see here today. >> tell me about siemens manufacturing in the u.s. and whether it's growing. >> well, it's been growing quite well. we have seen 9% growth in the u.s. we have also spent 25 billion dollars over the last decade. a lot of the that has been organic growth across the sector. we're big on wind, distribution, but also the industrial automake allowing things to make here are the drive lss. we also make motors and we have a big health care business. >> we're going to look at cool stuff in a second. i want to get an understanding of the business. are you growing employment as fast as the business is growing?

>> well, there's a lot of uncertainty in the market. we know a lot of customers who have billions of dollars of capital prujts sitting on the side waiting to see what happens. so we're hopeful. >> what do you think it will take to unleash your fund? >> big industrial plants, hospitals, people are making those investments for the long term. so if they're making the big investments, they want to see that the economy is settled. >> i still have more macro questions i want to ask you. what is this device? >> this is a low voltage electric drive. this is going to the city of st. louis for their waste water treatment plant. >> and what does it do? >> it basically controls the speed and varmt of matters.

>> this thing here is impressive. what does this do? >> this is really cool. this is auxiliary power system. this is used for the light rail train. we manufacture them in sacramento. but we make the auxiliary systems here. this has all the power in the trains. >> and there was some stuff here that you showed me before headed to china from the united states. so it's going the wrong way. >> yeah. we have a high voltage inverter that will be shipped over to go to a big mining truck in china. >> so, two things. what are the advantages the united states has in terms of why it's a place where things are built to exploit? >> we have low cost energy here. you know from the shale gas boom that we're seeing. we also have very productive workers. they are three times as productive as chinese workers.

the labor rates are going up. transportation costs because of energy costs around the globe were high, making the u.s. a very viable place. we need to make sure we have the skilled workers and the infrastructure in place to handle the increase work. >> would you hold on? >> hi, steve. it's simon. can i ask you about your industrial control units, the first to be targeted by the m malware around the world? that was a well documented story. you were right at the start of the cyber issues that we've had. what have you learned to do in response to that. you met the president yesterday. what are the recommendations that you're laying down for the rest of the american industry now? >> well, we have done a lot over last three years to improve the cyber protection that we have on our technology and also working very closely with our customers, with the governments, including working very closely with the

u.s. government and working with various researchers to improve it. we have gone out with various customers and put patches in. so more recently that can't happen. and we're developing more and better products so those things don't happen in the future. >> to many people it seems that we're way behind the game on this. there hasn't been the investment in security to invest in the nation. do you think there's a problem with the business model? the defense industry is able to put everybody along and hundreds of billions of dollars are spent. there's a deficit on spending on cyber security. how do we as a nation deal with that? >> i think we talked about that with the u.s. government, with other customers. i don't know if the u.s. is behind, but in some areas we are going to need to spend to put the latest technology in place. probably need to put some legislation in place. everybody has to up their game in the u.s. if we want to reduce the threat from cyber attacks.

and right now that baseline isn't very high right now. and then we're going to have to do more to avoid the bigger threats. >> from hacking, let's go to health care, another "h" word there. is the president's new health care plan, is that something that's an impediment to hiring, and are there other things that you think the united states government should do to make it easier to create manufacturing in the united states? >> we don't know where the health care reform will go. i think in terms of growing manufacturing, i think a couple of things. one is, we need to keep a continuous policy around r&d tax credits. a lot of manufacturing will be

software driven. we merry it very closely with the tax credit here. so we can encourage more people to mar tri the innovation. and secondly, we need a long-term energy policy. people will make big bets that we know. >> we look forward to coming back here and seeing the progress. >> thank you, glad to have you. simon and melissa. back to you. we'll have the treasury secretary. >> and that's a cool factory, steve. i was there. it's fascinating. love factories. 4:15 p.m. eastern time on the closing bell. an exclusive with the new secretary. >> still ahead on the program, will the big banks be able to increase dividends or buy back their stock to a greater extent this year? the second half of the fed's stress test are released this afternoon. we'll have a preview for you right next on cnbc. all stations come over to mission a for a final go.

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this afternoon we'll get the second half of the stress test. these will determine whether the banks will be approved to increase dividends and their buy backs. we have more of what to expect this afternoon. >> hey, simon. last week all bank holding companies were approved as well capitalized under crisis conditions. but just how well capitalized as determined by the federal reserve will decide how much each bank can return to the shareholders. on this measure, goldman sachs had the least cushion to their capital. citigroup fared the best and disclosed its request for $1.2 billion in buybacks. other bank executives have spoken clearly about their plans for fear of overstepping the plans. he merely said the bank has asked for more than 88 cents in dif sends and $4 billion in buy

backs it completed last year. they home to continue raising the bank's dividend. last year it shelled the $15 billion buy back in the face of the london well trading blunder. the f2 reports it asked for half of that or 7.5 billion. analysts kbpts them to ask the dividend to five cents for one cent. from morgan stanley, there's expected to be no change. they are estimating goldman sachs will announce a $4 billion buyback, though she lowered the estimate after last week's result. assuming none submitted too aggressive of an ask. that's the hope that the expectation has fueled the financial rally for the last few months. it's unclear what wound happen to stocks if the results are more dire. >> and just remind of us the timing on this.

>> 4:30 hm, sharm. >> thank you. >> one of china's largest private companies is investing millions in fuelling stations here in the united states. is a this a real step to energy independence or a step backwards? rick santelli discussions that next. your money. joe doesn't know it yet, but he'll work his way up from busser to waiter to chef before opening a restaurant specializing in fish and game from the great northwest. he'll start investing early, he'll find some good people to help guide him, and he'll set money aside from his first day of work to his last, which isn't rocket science. it's just common sense. from td ameritrade. sales event has begun. ♪ featuring the lexus gs and is performance lines. because control is the ultimate expression of power.

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good morning, two and a half hours into trading, here are the stories that kwooer squawking

about. 11:32 here on wall street. seven dow components are hitting new all time highs including ibm, disney and johnson & johnson. google is breaking up it's mapping and commerce unit. they are working on products including the self driving car technology and the google glass wearing computable device unit. jumping to 3.63%. that's the highest reading in almost seven months, according to freddie mac. however, my good friend and klieg melissa lee has already closed on her mortgage. >> 3.5, baby. that's all i have to say. let's look at the big board. >> ten days here. every day is a slow grind. 10 points, 20 points, and all the sudden you're up 3.5% for

the month. that's why people like index funds. they work out very well. and a lot of the markets are up. these are oil and gas sectors. sum of the risk on is up. risk on, risk up. really not good. there's been divergences. let me show you china versus the u.s. you can go this in etf. this is the main story that's been happening for a couple of months. and it's made it much tougher. the united states has been on the assent. much of this because the economic news is better in the united states.

here's the dollar index. a 5 pblgt move here. that's a huge move in six weeks. and that's making it tough for people who are investing and buying stocks and indexes overseas. take a look here and i'll show you what is happening. huge rally this year. wait a minute. suppose you want to get in on this. you buy an etf. try buying the etf. it's down 9% on the year. take a look at the yen versus the dollar. rick talks about this all the time. you see the move up here. the dollar has been up.

so take a look here. this is what is important. there is the upside. there is the etf that you're buying into. there's a very successful etf. now look at that. this here. this green line. look how well that mirrors the way the nikkei is working. and here is the big problem. i want to show you. there's not many products out there. there's very few edge products. this is the most successful one. there's an emerging market out there that's attracted to very few assets here.

the bottom line, the reason i'm bringing this up, this is really impacting investors' returns. and you'll see more of the hedge products going out if we continue to see this dollar route. when you get the dollar index blowing up, now you have problems when people are investing overseas. and we see folks talking ab the dollar, saying who cares? we do. >> the weakening yen is going to continue to be a story here. >> there we go. >> bob, thank you. >> thank you very much. let's check on the energy and the commodity space. bertha coombs is live. good morning. >> good morning. we have natural gas here today up at a three-month high after a stronger than expected draw down on natural gas supplies in the last week. $146 billion cubic feet withdrawl. that's really a testament to the

strength of the cold this winter. we've had a very normal, strong winter. that has put stockpiles down 20% from a year ago. this market is very much balanced when it comes to natural gas. we're seeing brent moving up after a four-day slide. there's much more action in the may overall. if you look at the oil complex. you are see how the strength of the dollar continues to be a head wind. and the the expectation that the economy is moving better. big headwind as well for gold. it had moved higher today. that's good news for those who buy commodities. back to you. >> thank you, bertha coombs.

let's get to rick santelli in chicago. rick? >> melissa lee, this story rips my heart out. you know, we did a conversion of a truck about nine months ago. i personally think everything in life should be about risk-reward. and this is just a no brainer. to see the chinese being more capitalist than us. let's look at the lines. one of large egs companies in china is rolling out plans to establish a network of a natural gas fuelling stations for trucks along u.s. highways. he's with the clean tech area. welcome, joe. >> thank you.

>> what's your thoughts on the story? i don't want to hit you with something. i hope my producer sent you a copy early. >> i doesn't take a lot of time to study where the chi need are heading. we were the world's largest car market and we continue to drive a lot of gallons. why not plan in our own fuels the way the chinese are planning to this? >> specifically to what you're working on. you're more into the auto gas, which is a propane. i like natural gas. propane is drier. maybe differences. tell us how good those were. how that product works. >> yeah, we took a hard look at this several years ago. we saw they were both more than

capable of being the bridge fuel into the future so we can declare our independence, sending $800 billion overseas. and we're seeing a lot of velocity in the space. we make light and medium duty trucks and vans that are ford-based products. and we're seeing a lot of fleets in north america, like dhl, dish america, bluebird school buses. we're not doing a pilot study. we're not doing an experiment. they have these products on the road and we're getting results from them today. driving a lot of jobs here in detroit. and we're keeping the american dollars here state side. that was 21 years ago. it's really nothing very new in terms of technology.

do you think our leaders by default will help this? is anybody in government going to figure this out? >> it doesn't -- the american economy, we like the heros to come out of obscurity. a fuel like propane has been considered a by-product that is mostly used in residential fuel. now it's being used as a transportation fuel. and the reasons you were picked up in a vehicle in europe that ran on auto gas is it's not uncommon in europe to pull up to the fuel station and pay $7 or $8 for gasoline. the europeans are way ahead of us on this he wanted $10 gas to make it more apparent. we don't need that. we already have the answer. we're out of time, joe. i'm going to come and visit you. thanks for being our guest. >> thank you.

>> melissa and carl, back to you. >> thank you very much, rick. the world will get the first look at the samsung galaxy s4. and later the startup that the former president calls the most important innovation of the last decade. find out while the lending club may be the answer to your investment or credit needs when the ceo joins us live here. we'll be right back. ack. i love making money. i try to be smart with my investments. i also try to keep my costs down. what's your plan? ishares. low cost and tax efficient. 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 investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal.

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coming up at the top of the hour, perfect ten, that's what the dow is going for as the rally wears on. what is the best way to play it from here. stressed out. a developing story on how much pressure jcpenney is under in the market. go long, america. he will tell you why and where. and carl, we'll see you in a little less than 15 minutes. >> thank you very much. 14 minutes and counting, scott. thank you. we are also counting down to the samsung launch of the s4 tonight here in new york city. what will it mean for investors in apple and others? charles, welcome to the program. are you putting figures on what we can expect here? >> no, we're not going a specific forecast on sales or volume on this device. >> is it, however, a game changer in your view, the s4?

>> i don't think it's a game changer. it's an evolution. samsung is taking a page out of apple's playbook in terms of this launch event. it will demonstrate how much more leverage they have in setting their own brand foremost in people's minds as the leading innovator. >> when they last launched a phone, it was all about the london olympics. it was a european thing. today it's squarely new york. is that because that's where opinion in the market is led from? >> well, i think it really reflects that the u.s. market is the leading edge of innovation and demand in smart phones. that's where most people have smart phones, by our estimate, more than half of people in the u.s. have a smart phone today. we think that will be almost 90% in the next few years. here's where the app developers are. it's really the leading edge of innovation for smart phones.

>> perhaps more importantly is the u.s. is really the center in terms of sales of the higher end and more profitable smart phones for samsung. what is your take on that area of the market? it seems like the entire industry in in trouble in terms of decelerating and growth. >> it reflects the change of smart phone users. we had the early iphone, the first models for the android, you know, side of the house was really about early adopters. people who had to have the latest and greatest. now with mass adoption, it's price that is a primary driver and factor in the newcomers to the smart phone market. so these high end sales are about more experienced users, people who can afford the really high-end device. and the volume is being driven at the low end. >> charles, we have run out of

time. if there was one feature that would turn people on, what would it be? i'm not sure. it's something maybe about the i-scrolling or touch interface or something different in the way you use the phone. let's just update you on the the carnival cruise line story we told you about in the last hour. carnival is going to fly home all passengers on the "dream" ship. it's stuck in port at st. martin with technical difficulties. they will give travelers a discount on a future cruise. let's check the shares. down in negative territory. hardly falling out of bed. >> yep. all right, coming up next, the pier toto pier lending club.

find out whoo the lending club is so confident it can do that

are you looking for an investment where you can earn returns averaging 10%? today's "squawk breakthrough" is trying to transform the financial system by creating a lending alternative to banks. the draw for investors, high yields. lending club is an online peer-to-peer network for personal loans. the company assesses a borrower's risk and allows investors to lend directly to

individuals. lending club has made nearly $1.5 million in loans since the company was founded back in 2007. we have founder and ceo of lending club, joining us here. great to have you with us. >> good morning. >> you don't actually personally take the book -- the loans on to your books, correct? the risk is not with you at all. >> that's correct. we really operate as a marketplace. so we have borrowers coming to us and the banks loan, and investors coming on the other side looking for attractive investment opportunities. and we do the matchmaking and perform important risk management functions. we underwrite, price, and service the loans on behalf of investors. >> and how do you make your money then? >> we take an origination fee from borrowers and servicing fee from investors. >> okay. what are your underwriting standards like? i would -- what is your typical person who borrows money from you as opposed to a bank? are they riskier profiles? >> no. so we actually have stringent underwriting standards.

we decline, unfortunately, nine out of ten borrowers coming to us in order to keep very high credit quality standards. and the borrowers who come are looking for a lower cost alternative. so credit cards, interest rates continue to be at a very high rate despite the low interest rate environments. and we can offer a lower cost alternative compared to a new street bank or credit card. >> if i want to lend money through the site, i know the identity of the individual on the other side? i'm in contact with that individual? >> no, you don't. >> right. >> really as an investor, you would invest in a portfolio of loans. and if you come in with 10 or -- $10,000 or $20,000, you would invest with 400 or 800 loans -- >> what happens if somebody doesn't pay? >> yeah, so if somebody doesn't pay, your risk is sufficiently diversified so that if the default or charge-offs come in as expected you would preserve

every high return. the average special -- >> but i would -- it would immediately show up on my return, not yours. you don't guarantee it, it's not insured. it's my loss even though i don't know who's on the other side? >> absolutely. investors take on the credit risk. and they capture the yield on the loans. >> you've got pretty high-profile board members, larry somers, former u.s. treasury secretary, onmajohn ma, ex-ceo, and you plan to go forward in the future. >> it's interesting. many private companies are pushed by investors or the board. in our case, it's customers that are telling us they're passionate about the service. and they would love to be associated with the growth of the company. and own a fraction of the company. so we pass it on to our -- >> to be clear, is this just an extension of the microcredit that muhammad unos won the no bethesda -- the nobel peace

prize for? is that an extension of the same family? >> there are some of the ideas of macro credit being applied in the u.s. domestically. i think it goes beyond that. it's really transforming the banking system and offering a low-cost alternative. as a marketplace, having a fraction of your costs at the banks are bearing. >> i have in my notes that you're planning to get ready for an ipo next year. is that correct? >> we think we will be ready by next year. we'll decide based on market conditions. >> okay. thanks for stopping by. appreciate it. the founder and ceo of lending club. the s&p hovering tantalizingly close to the all-time high. almost four and a bit points away. more market coverage next. [ laughter ] ♪

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