there are a lot of side effects. >> i think no. >> two stocks of the day, u.s. airways and aig. the company is run by our squawk news makers this morning. we had great conversations with doug parker and bob benmosche. >> that does it for us today. make sure you join us tomorrow. it's the last trading day of the week. "squawk on the street" starts right now. ♪ ♪ ♪ ♪ good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with melissa lee, jim cramer and david faber. we got on the dow yesterday mostly on continued worries from europe. more political chaos in italy. the five-year bond yield there the highest since october and take a look at what europe is doing this morning all of those overshadowing the modest gains in asia that we saw overnight. let's get to the road map this morning and it starts with our

own markets despite flirting with the record high in the s&p and are we in danger with the quarter end just two days away. >> italy's attempts to form a government fatters once again. no wonder eurozone falters since october. >> this time from credit suisse who moves more than $100 to $942 and the company giving google glasses to 800 contest winners. >> even as it admits it's likely to lose money as a result of the foreign bribery allegations in mexico. >> stocks did rebound yesterday and put the s&p within two points of its all-time closing high and the dow with another record high. if the blue chips can add another 111 points this week will dow will post its biggest quarterly percentage gain in three and a half years. something we keep dancing with, jim, but at these levels it's tough sledding here getting past

some of the headlines. >> we've had this morning where there's been a big flight to safety with the drug stocks and the soft goods. this has become a market where oh, there are problems in italy and i want to buy colgate. oh, i see. there are problems in spain? let me take down some clorox. when we open the banks tomorrow and suddenly cyprus is we. weir the world. we are one. >> we're all one. >> about 1.1 million people in that country. >> okay. 1.1 are the most important people in the world. >> every one of them versus say billion people in china? >> so, anyway, we have this problem. i put on my google glasses and i see big lines at atms in cyprus and i am supposed to imagine that there will be a banco santander bank because there will not be. >> because? >> because it's a different country. they, by the way, don't think that they're all the same

country. >> that's for sure. there's first class and then there's economy. >> good point. >> that's what the eurozone is turning into. >> what does it tell you about this market, jim, when you have pharmaceutical stocks reaching an 11-month high, multi-year highs, in fact, on some of these stocks and you have the performances of some of these consumer goods, spices, spam, that's what people want to buy these days even though the valuations are historically rich unto themselves and nobody wants to buy technology and materials. you look at copper and the s&p 500, that's a canary in the coal mine, but the highs that we're nearing on the s&p 500 are not being confirmed in moves in dr. copper. remember when we called it dr. copper? >> let's take mccormack for a second. that was a horrendous miss when mccormack reported. the stock goes from 68 to 62.

no support for the stock at 62. and then like magic, i say wait until the earnings, but we are in an earnings void and an earnings void will sued lean pay 3% for something because the fed has told you we're not going give you any interest. we always seem to forget that if the fiscal cliff was resolved with bountiful rates again for dividends and it's a flight to safety and i don't think that general mills are so outrageous that it trades at 15 times earnings that even as i know that it's historically traded for the last five years. >> some discussion this morning about hedge funds outperforming year to date which as some say one of the more bearish arguments you can make right now given that we're going to a seasonally difficult time of the year and other discussions this morning about the length of the bull market. average bull market is 3 3/4 years long and how are you going

to know even as things look good that this is getting too old and long in the tooth. >> one of the things you will see is you will see euphoria. i don't see people talking about things. david, you were on vacation. are people buzzing yet about the stock market or is the stock market still an afterthought? >> afterthought. i would argue that's still largely the case. those of us who expect somehow to see the signs when we get our fruit from a fruit vendor who day trades and these are things that occur or any of those things or the waiter or waitress that comes up and says i watch you all morning long. that's not going to be there this time and that's not necessarily going to be a sign either that we're at the top. by the way, that was '97 so we still had a while to go. >> let's take a look at general mills, big g, everyone knows cheerios. the market capitalist two-thirds of what it is now.

it would be yielding 4% if the stock had been static and 4% on a good balance sheet with nice buyback and 10% five-year growth, you have something that's better than a cd. it's just a relative market and the first national bank of generale bank of general mills and -- >> bank of laiki. do you liky laiki? >> we don't do that. people put their money in the bank and they get the fdic and you forget about it. >> no interest whatsoever on it which is one reason -- >> there is no interest whatsoever in stocks and no interest in stocks mindsetwise. interesting. what are people interested in? >> sports. >> let's talk about europe because certainly that's weighing on the futures this morning and could prevent the s&p 500 from hitting that milestone. italy, and concerns of political

uncertainty in the country weighing on the markets this as investors are already edgy after implications of the cyprus bailout. because we are seeing the losses accelerate a bit. we have germany down 1.3%. the move in the euro tremendous, below 128. these are the lowest levels we've seen since november 21st. this is below the 200-day moving average and this shows you the worry that exists over this area of the world. >> i think that the euro's headed lower. i think that if you were a very smart, wealthy individual or institution i would say i see the euro going lower. get me into the most stable currency in the world. get me into the dollar. i don't want to reach for yield in cyprus. let me reach for yield in verizon. typically fixed income does not turn over to stocks. that has not been the case and you're looking for fixed income and maybe you go for fixed income for junk here.

that's happened. and the reach for yield is unprecedented to a certain extent and you have junk issuers being able to issue coupons to 5%. it's shocking. >> that being said, the spreads have maintained and it's not the spreads to investment grade are not out of whack. >> but searching for yield puts you in cyprus where you get your money taken away or put you in junk for american companies where they can refinance and that's a better bet. that's a better bet. >> interesting that the play for safety hasn't translated to gold. >> we're looking at the first back-to-back quarterly losses since down 5.5% last quarter since 2001. we had all of these fears floating around about bank deposit safety and it has not translated to the yellow metal. it's amazing. >> i like gold here very much, and i like it because i understand that india has pretty much made it so it's difficult

to buy gold. i understand that in general, the play hasn't happened yet, but i would say that on the supply side when you interview the ceos from gold-producing companies they can't produce it. it's just we're either running out -- >> it's harder to produce and environmentally, obviously, it's difficult to get gold out without running a foul of the authorities. >> i think gold is a good bet and i understand it's not working and you talked about how the etf and the sector and it diminished the value of gold. i think gold remains valuable. call me a gold bug. i don't mind -- >> you're a gold bug! >> don't call you late for lunch. >> don't call me late for dinner. >> i like edgar allen poe. >> it will stabilize.

>> evermore. evermore. evermore. >> we've been hit by fire, by flood, by this. i thought it was a passover sale. >> it's that time of year. >> yeah. >> hey, everything with this and this, was there a play that didn't hit that guy? >> yeah. the last one. you don't want that. >> meantime google's $900 club and credit suisse raising the price target to $982 from $487. the ad campaign ad-bidding process will boost revenue. i think they still have the outperform and this has been going on forra i while now, the $912. >> we have this guy telling us to be careful with google and cut the search engine peaking and you have a crosscurrent even on the beloved. you mentioned that tech is unloved. >> generally. generally unloved. >> there was a day when intel

went up and suddenly there are heat-seeking missiles as if there was a north korean general gone haywire. >> saying it was going go to the teams. 5% dividend down there. i just don't think intel is the central place of worry. it's just a fixed income equivalent. >> is that what it is? and without any worry about the dividend being cut like a century or frontier or any of these huge dividend plays. >> and what they'll do is they'll cut capex -- capital expenditures, people are feeling it's too high for intel and they get a new ceo and they have a story to tell, but we don't have that story to tell yet. >> in terms of google and the run. take a look at the year to date chart. it's been an amazing run. back in february, that's when the stock gained momentum and the 200-day indicating a shorter near-term momentum on the stock and some people are worried that it is setting up to be like apple.

in that it's going to run higher and then it will hit headwinds and then we'll be at a point when investors are suddenly demanding google do something with its cash like pay a dividend. >> that's the kiss of death. sports illustrated. >> and they're just fwlomiglobi at this point. 982, 999. >> and everyone was shaky and now -- >> it was donelly's fault and amnesia. this is the amnesia market. >> but today may be a day when people look at that call and say i don't know, maybe it's not as good. >> more than the credit suisse 982 target. >> it's very precise. you play a little jc penney and raise prices. jc penney has raised its price target. >> meanwhile, this woman who left. she's a total hitter. this woman who left jc penney

went to home despot, and that's another sign to me that this company is teetering. teetering. >> teetering i think is an apt -- >> right? >> yeah. >> jc penney is probably not a place to hide right now. >> right. okay. >> other than from jc penney. yeah. gotcha. >> and if they raise prices for the slacks why go? >> as long as they don't raise them on the trousers. >> the gabardines. >> all right. here are some of the other stories we're watching ahead of the opening bell. boeing facing a temporary ban on long-distance journeys. the 787 dreamliner was intended to fly. the faa may shorten the permitted flight, once the revamped battery system is approved. prosecutors are examining the bernie madoff fraud case. the government wants to know whether the bank fully alerted

authorities about the convicted fraudster. jc penney has resumed raising prices and discounting them on their own brands and the move luring shoppers back to their stores and sales have slumped since the year ron johnson instituted the everyday low-price strategy just last year. >> when we come back, walmart taking on amazon. can the retailing giant's new strategy do the trick? also ahead, carmakers and the battle for the american consumer. live interviews with the auto show from the ceos of merceders benz and volkswagen's u.s. units. futures have a tougher sledding and it's almost 70 points and a lot more "squawk on the street from post 9 when we return.

walmart outlining a new strategy to boost the online business. starting this summer it will test having lockers order goods until shoppers peck them up from its stores. it has quick delivery of goods from online retailers such as amazon. walmart made it clear it will unveil this in a dozen store so small-scale test.

still, i know that you enjoy the in-store experience greatly, but a person like david may prefer to shop online and just go pick up the bag of stuff that he ordered. >> the problem is most people would prefer it get delivered to their door as opposed to having to pick it up, that's been walmart's strategy. order it online and come to the store to pick it up and that continues to be the case. they're competing with amazon or more essentially, i guess, in a lot of different categories. >> a huge percentage of walmart shoppers have smartphones and everyone wants to have a mobile strategy and a cloud. walmart has been forward and wanting to use the different social media methods and they're a forward-looking company. at the same time, i believe that someone who is from the age of walmart know how many people go to the stores right? each week. you still need people to come to the stores. the big box stores and the supercenter have strategies that

work extraordinarily well and this is the largest supermarket chain. you'll go for your milk and you'll go for a million other things, but be in your sight line and that is still the key for walmart whether it be here in the u.s. or frankly, anywhere around the world. how many shoppers are there that dollar general can have a great quarter and target, we have a price target. i mean, people are just shopping everywhere? >> i don't -- >> the fourth quarter place -- of which we do not speak. they started breaking out the $9 billion in sales for walmart and amazon 61. so is there room to run in terms of ramping up the competition. >> we will know when it's time to be bricks and mortar when amazon opens a store at your mall which is never. >> walmart's doing over $1

billion in sales a day. well over that. costco is great food. the new piece of news is meant to overshadow the disclosure in which they say it's probable because of the allegations of mexico with foreign corrupt practices. the story has not gone away and it has not affected the stock. >> one of the losses at walmart will have to payers have us the market cap gains. i mean, the losses that it will have to cough up are probably miniscule compared to what it's gained. >> a lot of smart people are telling me they're going to bring down the house of walmart. well, there's not even been an indictment. they didn't bring down the house. >> these things do take a long time, and the wheels of justice move slowly. >> this san old story and there is a statute of limitations. >> any time you see cpf

violations by the stock, immediately -- >> halliburton. >> great call. >> time to generate profits here the cramer way. jim's up next with his "mad dash" aheading of the opening bell and we look at how they're going in the opposite direction "squawk on the street" live from the nyse is straight ahead.

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six minutes to the bell on a wednesday. let's get to "the mad dash" with jim and we'll talk about one of the worst performing days of the year so far. >> morgan stanley goes to a sell and they say iron ore sales could be cut in half. this is one where the iron is locked in the middle of the country and it's not as easy to get to where other places are and they are saying that there will be a lot more iron being produced in the country. so, wow! i don't know what to say. these were very, very damning. goldman upgraded and they had a sell. congratulations to goldman. a really good play. >> cut in half. >> this is 2007 and i'm wait for example freeport to get it. we heard melissa talk about dr.

copper and that's not doing so well. be careful with these stocks. they're the polar opposite of general mills. >> the polar opposite. >> at the same time, the new york times has a piece on j.p. morgan, eight separate agencies investigating the bank at one level or another. >> fcc, cftc, attorneys general, fbi and their legal bill must be incredible. this made-up allegation which has been heard from time to time that they had an ability to know. >> or suspect. >> yeah. to me, i don't know. everybody knew, so to speak when they did their models. i think there are a lot of firms that were asked by clients that said can you hedge made up for me and that is the j.p. morgan case which s like, no we can't. >> sure. >> we can't because we can't produce that how he's doing it owe we can't hedge it. is that a case? well, i'm not a u.s. attorney and i know that j.p. morgan is an easy defendant right now. let's call them that.

they're a pitiful, helpless giant, a la nixon. jamie will come out and do plain speaking. >> as he has. >> everybody will like him again and it does seem to be coming back. >> when we come back, the s&p looking to take another stab at history as it has several times. will the broader index finally get past its all-time closing high. the opening bell in four minutes.

>> and you're watching "squawk on the street." we are live from the financial capital of the world. it is set to ring in three minutes' time. the cac is down by 1.8% and the dax is down 1.3%. we mention this because, of course, u.s. sessions tend to take their cues from what's going on in europe and this coupled with the move in the euro that we saw this morning could spell trouble in the early going. >> look, we're back in that

maze. cyprus, the lines tomorrow. spain, the italian bond and, just keep in mind that we've seen it before. it does knock our markets down. a couple of days go by and we tend to forget it. >> that is true. >> the opening bell on this wednesday morning. the top of the screen of the s&p 500 road map. cohen & eers. the income and energy opportunity fund. the ticker on that mie over at the nasdaq, dancing dreams a non-profit dance program that gives children with physical challenges a chance to dance. nice charity there, but a lot of red across the board there right at the open. we are watching blackberry. blackberry will report tomorrow before the open and it is trading higher amongst the satisfy red in today's session. there's interesting data released by the nasdaq yesterday saying that short interests on blackberry is at record highs and if you take a look at the

amount of shares short compared to outstanding, under 55 million shares are right now and that's more than double what it was a year ago. it could set up for a squeeze tomorrow if it does report. >> a lot of people are saying there is more out there. the morgan stanley guy was the sotp and telling people to buy. a squeeze, could it happen? i don't know. it's a pretty liquid stock. this is one where they cut the expenses very big. so even if things are statec, at 12 you buy it, at 15 you sell it and that's been the trade. >> the story out of reuters saying it's not a matter of whether the 787 returns and what's more worrisome it would limit the extended operations and amount of time the airplane can be away from the major

airport. they had three hours from the faa when it was initially approved and now could it be cut to two? they asked for five and a half p that is the business class for the plane. >> obstacles were put up and first it would never fly again and then it was six months and then three months and then we hear there is a new problem -- boeing's stock is telling you don't believe the negatives. this stock should be down two to three if it was really like that. it was almost like there was a campaign in the media against boeing and then boeing proves the doubters wrong. obviously, safety is everything. in a remarkable interview on squawk where he says i can't wait for boeing planes. they're a great manufacturer and people keep writing them off in the press, but the customers aren't writing them off. the customers like boeing. >> true enough. we are going to get some fed speak today. in fact, four fed presidents

evans at 11:00 and lacota haven't been market-moving events in recent days. we'll see what they say, but full speed ahead seems to be the mantra. >> how many people come on air and they say, look, i really like x on a pullback. we're getting a darn pullback. do they like x? will they pull the trigger on x? >> if this stock pulls back i'm a buyer and suddenly, oh, no, it's not enough of a pullback. i think this is a test of a lot of people who have been saying i've been waiting for a pullback. >> take a look at the financials with weakness in europe and we're watching weakness across the board and european financials taking it on the chin. we have santander down 3%. bbba down 3% and the u.s. financials are holding up and goldman sachs remarkably is in the green and that's a standout

in today's session and the ones correlated like morgan stanley and given the declines that we're seeing in the european financials, the u.s. financials are holding up well at least early on. >> it has done itself to -- i mean, one day people will recognize that they changed. the corpsmen have changed it. >> is this a different institution than it was years ago. you say management could have been an important known of this and now we're over with gary kaminsky. >> gary would be a great guy to go to on this. you have europe back and he would be able to relate it in terms of margin calls and hedge funds being up too much. i miss him. >> yeah. >> i miss him. >> morgan stanley also trying to get its head in the dell game, as well, which we'll talk a bit about advising blackstone.

>> well, we have to talk about that because it is so out of sync with what i'm seeing everywhere else. >> yeah. >> bullish guys saying this is a great opportunity. meanwhile, that world is just collapsing. >> yeah. very, very interesting. 5.6 in operating income is what dell was looking for internally in july and now closer to 3 billion. mea culpa on my part and experience and my reporting indicated led me to believe would blackstone try to jump this deal? is that something that we can expect to see and one of the largest lbos of all time and how do you get it done? you don't have the microsoft money and you don't have the participation of michael dell and they're willing to do it. as we know now, blackstone saying we will have an offer that's preliminary at this point and we still have a couple of weeks until we see the firmed-up offer by blackstone and then they'll have one opportunity to match.

and all of this will have the effect of delaying this and the vote now -- we'll see if that takes place. we haven't gotten the proks they we expected to get and much of that is now past tense, so to speak, because the background of the merger will be interesting with what's going on with blackstone and very interesting, jim, to see their willingness to take more risk and/or less of a reward on a business that is declining. it seems like every singlegle d. >> what can they do in a private market? >> michael's been buying and buying and the companies are saying don't worry about the near-term and that's exactly what you would do. he's doing a lot of things that you would do as a private company. david, here's my question. at what point does michael dell say sold to you! >> it is not clear what the discussions are between dell and blackstone are at this point. whether he's on the other side of the table, whether there were conversations about him joining the group. i want to get involved. i've been on vacation and we'll have to make a lot more phone

calls and we'll see where things end up. he did a good job. he has to vote in proportion to other shareholders, but he doesn't have to roll his equity as he is in the deal he's currently a part of with silver lake. he could say sold to you. give me 14.30, and blackstone should give you the opportunity should you choose to do so and say i'll choose to still be involved and they're not forcing you to. it's not a recap in that sense where other shareholders who don't want to be in the new equity, so to speak would have to actually take a part. >> what are they saying would boost the cash flow of a private company? >> i don't know. this guy johnson at blackstone. maybe he knows something. >> there is no secret sauce. >> that's my point. >> i know, and you've written about it. the concern had been on michael dell's part that, you know what? i can have a piece of paper and people watch it go down while trying to transform this

company? i'm a consumer company to a certain extent and people see that, businesses see that. are they still going to buy our product? that's a concern there. we've seen stubs before and sometimes they work and sometimes they don't. clear channel communications down 85% and we've also seen management buyouts and i know lee cooperman say it's a form of insider trading and we've also seen some, harrah's sold to you at 90. thank you very much. >> that's a very good point. unless these guys are going to go into mayonnaise, ketchup. bleach. right now that goes at 18 times -- and they can do that with the private. >> hp said come on in. the water's fine. some people said we might actually think about that. >> in the meantime, pinnacle foods comes public and it could buy duncan hines. >> they're not in the business of charity. they're not. >> david -- >> they clearly believe there is an opportunity here.

>> this is too far. >> financial services who sell that for 5 billion, they don't have to write as big an equity check if they have a stub out there. i don't know, but -- interesting that your take is it's a bridge too far. >> you talked about how there wouldn't be any and these guys come in. this is sean connery moment, one of the seminole roles, a bridge too far. >> not the bridge over the river -- >> genius, man, what have i done? it's not that one although it could certainly turn out to be that one. >> michael dell is -- >> it's more career-defining, wouldn't you agree? >> i can just sit here and say as business goes down in value every day and maybe they can change everything when they're private, but in the end they are a pc company with some server business and leave it to government spending and university spending. i do not want that business. michael dell, my advice to you, michael, leave. start a whole new company.

compete against your namesake. remember, someone else did that. steve jobs. >> i'm sure he's, like, noted. noted, jim. as you can see, the dow is now down for the week. we were down triple digits and interesting, we were down 90 on thursday and up 90 on friday. down 911 -- we were down 111 yesterday and the flip-flop continues and pisani is live on the floor. >> it's a crumby morning. materials, tech, industrials and all of the weakest and it's a risk off day, but boy, it's really starting to hurt. really starting to hurt over in europe. the important thing that's going on here is look at the banks. have you seen what's going on? put up the list here. i just put up a few of them and banco popular lost a quarter of its value in the last three weeks. banco santander, no contagion here. down 11% and alpha bank in

greece. this is three weeks worth of damage and don't worry. it's not a template for anything that will happen in europe. thank you very much. here's a problem, if you own european stocks and an index that's not showing up as much. here is the vgk and everyone knows about europe. it is only down fractionally in the month down 1.5% because it's weighted toward germany, france, the uk and the netherlands, but if you look at the southern european stock markets and put that up there and there's spain and greece just in the last three weeks and italy down 4%. you could see the damage and the bifurcation between the north and the south that's going on. jim, you were asking whether there would be lines with banco santander. there is a very specific reason why it's unlikely. most of these big banks in europe can get recapitalized without going to the deposit. they have very large levels of debt and equity that they can go to. people who are above them and they can seize that money so

it's a little bit unlikely that you'll see deposits. that wasn't the case in cyprus. however, that doesn't mean that banks aren't risky at this point. some of them are getting hit. speaking of italy, did you hear what bris brisani said. he was quoted as saying that only an insane person would want to govern italy right now. there is my favorite quote of the day. >> most of you mentioned copper. the whole this year, china has been weak and china -- copper has moved exactly in lockstep with china. there you see the green line. that's the chinese etf that you can buy. there is copper futures for this year and you can see they're moving in lockstep. finally, speaking of

commodities. did you see cliffs natural. the demand has been very weak here. look at that stock down 11% and there was a morgan stanley downgrade and there are still more supplies coming online and obviously, cliffs is having serious problems here with iron ore price and all of the companies are if you look at the big names. guys, back to you. >> thank you, bob. we're in the grips of commodity deflation. we're in the grips of bank linis and mean, this is all -- mean time, you have to do with the price to ratio of, yes, bristol-myers? nothing. the stay group in chicago with great comments about gold this morning, rick? >> i tell you, there are a lot of gold bugs that interact on the trading floors. they're great conversationalists and they like to eat beans and rice. what can i say? the great rotation continues into treasuries, into boons, into jgbs. let's look at charts and two day of tens and we're not approaching 2% and we're not

approaching 210. we're approaching 180 as we sit in the mid-180s. open up the chart a bit and you can see we're not far away from testing much lower yields, but listen, it will be a slow grind. where it sn so much of a slow grind is in the boon. open it up, lowest yields since august, but you think that's interesting, let's put up a 20-year chart of the jgbs. they took out a lower yield around 52 basis points. so the great question is if you're a japanese investor would you lend your money to abe for ten years? for half of 1%? somebody seems to think the answer is yes. let's look at foreign exchange markets. if you take a look at the euro

versus the dollar, 127 going back to november, the dollar index. open this chart up, fresh highs going back to august, but there's something technical here that's interesting and we talked about it the last couple of days. we're closing above 83. we're trading above 83 and we want to see if we close above 83 and this could get a bit of momentum going. jim, back to you. >> you have to refinance again. it takes a full day. let's check out the latest moves in commodities and go to sharon epperson at the nymex. >> jim, the momentum in the market this morning is definitely in natural gas. it had a breakout overnight boost $4 level and we're taking a look at the highest price since september of 20 len and prices have more than doubled since april of last year. of course, the cold weather is just a factor as well as the technical momentum that we've seen in natural gas over the sessions. we're seeing a slight pull back

of the ahead of the inventory data and crude over the past week. finally, take a look at gold because we're losing some momentum once again in the gold price. it's steady and the buying seems to have waned a bit and a lot of traders making calls for 2014 and not nearly as robust as ones we've seen in recent years. back to you, melissa. >> thank you very much, sharon epperson. jeffrey's peter micek ahead of earnings due out tomorrow morning. how much of a recovery are we seeing in silicon valley. the real estate market in the region known for high-tech innovation. that's straight ahead. ♪

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google is giving 8,000 people the chance to test drive google glasses firsthand. winners were chosen through twitter and google plus after they wrote 50 words about what they would do with a pair of their own. what did you promise google you would use the glasses to see or do? you can tweet us @squawkstreet. one person said they would wear the glasses to go back to japan so she can share what it's like to return to her homeland to her grandmother who presumably couldn't travel. >> i just want google readers, notice the two xs. maybe they can put little lights in them. that's what i need. i need readers, david. >> it would be a good look. >> always keep readers, i havvi

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dell's down 94. let's get to "6 in 60." people want to play residential realty. >> some echoes of the lululemon story. >> christine day. they're saying they being lose some customers. i disagree. i think they'll maintain the great customer loyalty. >> what's oeg?

>> eog accumulating more real estate in the most unbelievable area, eagleford production up 50% year over year. >> it's people looking for a place to hide. injectables. they own that market. >> big call from piper on chipotle. >> they did say there was a slight increase in comp numbers. this stock is not done. it's going higher. >> morgan stanley on viral pharma. >> or fan stocks are incredible and we've been recommending the stock and they have a drug that's very powerful. okay. this is a gut-wrenching moment because pbh, he bought the house of brands and i have the joseph aboud and the ck and people are doubting him. they're doubting the master like when they doubted him when he bought tommy hilfiger. doubters beware. he will have ago story tonight.

>> i wonder if he'll tell you about another from the color. >> eric weisserman is great and so many good people in the ishd stree, but the stock's headed down and a lot of people think this is the end until he integrates the companies. i don't know. he's the master integrator. i don't want to bet against manny. >> okay. >> by the way, he's a clothes horse. >> you and manny. >> the three of us. >> we'll see you tonight at 6:00 and 11:00. >> good morning to you, carl. we've got an action-packed next hour. we'll hear from j.p. morgan's chief u.s. equity analyst. is this now a selling point on the markets? live from the motor show, the head of toyota u.s., and the head of mercedes u.s. and the ceo of ihg, one of the biggest hotel groups live from london. internet free for all. it's the new big thing new on cnbc.

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welcome back. let's get to the road map for the next hour. we will begin with the markets. we're still flirting with record-high territory for the

s&p. with the end of the quarter and the end of the month and the flashing warning signs for dr. copper, are we headed for trouble? >> from the markets to the driver's seat, it is the kickoff and the carmakers are battling it out for the american consumer. we have the presidents and ceos of toyota usa and mercedes benz. >> blackberry's trading higher in the sea of red and it is now in record highs and earnings are out tomorrow before the bell. are we setting out for a major short squeeze. >> we have breaking news. pending home sales are out. >> pending home sales are down 0.4% in february. that is right along expectations, but january's numbers were revised down. the national association of realtors pending home sales index is now 8.4% above where it was in february 2012. remember, this is signed contracts to purchase existing homes so it's a future indicator of closed sales in march and april.

again, it is holding back sales in supply, lack of it appears to be growing in demand, but supply is holding things back. the national association of realtors' chief economist says the volume of home sales seems to be leveling off. and the level of index means little change in the pace of sales over the next couple of months. going regionally the index fell 2.5 in the northeast and rose 0.4% in the midwest. in the south it fell .3% and rose .1% in the west. that's all month to month. better news today was mortgage applications after two weeks of falling. they finally rose 7% week to week and that is as the 30-year fixed interest rate fell slightly. back to you, melissa. >> a lot of data out there and net-net what's your take out there based on what we got. it's always a supply and demand issue and we've seen that in traffic and it's this lack of supply across the nation and it's not just in those hard-hit markets and if you go to the

recovery map .cnbc.com. you can see supplies down across the nation and that's just hindering sales and we're seeing it flat going into spring. >> diana olick in washington. let's get back to the markets and they're pulling back from record levels and europe at end of the quarter and much more weighing on investors. let's bring in tom lee, u.s. equity strategist. always good to see you. >> good to see you guys. >> what's your take on europe and how it's impacting the u.s. marks because it's interesting to see the development seeing the impact on us from last week to this week. this week it does seem to be front of mind for all investors. >> that's right. i mean, you know, if you had to think about the global economy. one of the weak spots has been europe. the economy has been weak and we still have lingering questions about political systems and governments, and you know, i think at the end of the day i don't think this is a big enough threat to say you know what in

the bull market's over and global recession is starting because there's another financial crisis, but you have to weigh that with the idea that we've had a pretty big move since november and if investors are nervous or want to wait and see, europe would be an excuse. whenever we talk to one of your types, strategists and everybody is due for a pullback. is this cyprus situation going to be the the cause of the pullback everybody seems to be forecasting and everybody seems to be waiting for? >> well, you know -- and you're right, there has been a consensus view about a pullback. unfortunately, we've been in that camp, as well. i think that the risk/reward sort of becoming neutral is the reason markets get nervous and then in our view it really is going to depend on u.s. data weakening. if the temporary lifts in the q1 fade and q2 is weaker and that's the reason we expect a pullback. i think sign us have just a

reason to remind investors that europe is -- even though it's not adding to global growth and i'm not sure cyprus will be enough. >> i'm not sure people will be as intellectual in trading floors around the world. i'm not sure that we've seen a bank run live on television and tomorrow, that's what we'll see from cyprus. two or three years ago when we played the violence in the streets of greece, it did unnerve people. if people start selling as they are beginning to do on french and italian debt the two big bogeymen of this crisis, there's no way it can hang in there, can it? >> that's right, simon. if we just see citizens actually panic, that's going to take a different dimension. something important to keep in mind is if you have financial market effects you want to see how it affects the real economy. it's like when financial markets tumble and we see ceos pullback,

that's a reason to get concerned and you're spot on. i don't think that's the base case, but that's something to be mindful of. >> the data points at large. i mean, what we got on capex numbers and big america, the capacity being added at the rails and about as sensitive you can get on the small economy. in the preface of the big picture, absolutely not, a pretty major secular bull market, but at least another four years left by durable goods and the housing date is supporting this and we're in a durable goods cycle and something we have not seen for 50 years, but, in the short term the cadence to the market is still going to run a little bit on risk reward, and if the data doesn't weaken i think we'll be

wrong on the consolidation call. >> tom, your year-end target is 15.80 and in your latest note you add to the fresh money list of a bunch of small caps. is this a call on paying more of the growth story as opposed to the multinational company which are more exposed to a china or europe? >> melissa, that's definitely one element. we think small caps are a really attractive place to be and an upcycle, and small caps can perform the outper forring and that's why i'm not identifying some of these smallered whys. if the durable goods upcycle is as strong as it's going to be, the market will easily make new highs this year. >> ease low make new highs and what do you make of the move we've seen in the staple stocks. people are willing to pay 17, 18 times earnings with the companies with the steady

dividend and they sell things like toilet paper and toothpaste. that seems like that's the kind of market that we're in. people want to push these markets to new record highs and yet want to play it defensively. can you get behind going and meeting fresh money, too, for instance. >> i think there is something xoeted about the jen raerts and it is one of the outperforming factors and they have decent pricing power and good viciblity. i don't think it's just dividend, but it's the free cash flow and these companies have grown and over the long term they've been stellar performers. tom, we'll leave it there. good to see you. >> tom lee of j.p. morgan. simon? >> let's get a view of what the hedge funds and fund managers are saying. kenny talks to them on the securities. what is the mood out there at the moment? >> they've been cautious and they've seen the market rally

10% or a quarter to dae date and we're two days away from the end of the quarter and it's not cause for any one of them to make any major move decision because there's nobody out there affecting it and today there is an issue with europe crashing. >> so do you think there's selling now in anticipation. >> i don't consider that much of anything and we're stuck in the tight ban as we have in the last three weeks. >> we're bouncing below this all-time high, the triple talk on the s&p. >> and we keep bee the 15.44 support level. how can you get to a technical level & unless you have great news and where has that come from? >> we tried and there's been no momentum to push up in the s&p. the s&p is 500 stocks and the dow is 30, big, americana, dividend-paying, liquid names that people go into and almost in defense because they're

easing in and out when people are nervous. >> if a member of your family said kenny, what the hell do i do here? what would you say to them? >> i tend to be a conservative, right? so i'm much more into big, americana-type names. a broad range and a portfolio that is broad based, but names that you know, you trust and feel comfortable in that you can get in and out of. >> do we break above this top. i don't think we're breaking above it and we'll go above earnings season and theria a sense that you will look at profit margins will be and what are they saying about china and europe. i think they'll struggle a little bit. j.p. morgan or deutsche bank saying the economic situation is bad. if you start saying we're not going to get recovery possibly this year and then the bulls will exit. >> not necessarily true because you don't get a recovery in europe, they want to be in equities. the story in the states is that the second half of this year will be much better.

if you see panic in other parts of the world you may see money come to the states. >> you can't have it on stocks if one of the major trading zones is going down the path. we've been talking about europe and recession for 6 or 8 months. >> six quarters. >> six quarters. >> thanks, simon. when we come back, carmakers battling it out for the american consumer. we have a triple threat. live from the auto show with toyota usa and mercedes and volkswagen's u.s. unit. plus intercontinental hotels becoming the first to commit to free internet for all of its loyalty members worldwide. ih goings richard solomons will join us on a first on cnbc interview in just a moment.

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it's all about cars now. toyota took the wraps off the all-new toyota highlander. here to give us a look and the outlook for the largest automaker, jim lentz from toyota usa joining us from the show floor. welcome back. it's great to have you. >> thank you -- thank you for

having me. >> talk about the highlander. a lot of anticipation heading into the show. i think you're not far from it. what's it all about? >> the highlander is our third edition. it will be all new, made here in the united states, both the gas version as well as the hybrid version. it will come out later this year. production starts in december and it is an absolutely fabulous vehicle and moves to eight passenger and it will excite a lot of young families that need that little extra space. >> the year's going great for you guys, jim. year to date, sales up 14% and that's well above the industry and you just took your target up for the u.s. what is going on? what do you see in the consumer and maybe it's a currency effect that is resulting in these better projections? >> well, i think what we're seeing is we're seeing an overall industry that is improving. this industry is pretty simple. it's driven by interest rates and driven by consumer

confidence. interest rates are at historic lows and consumer confidence is improving and when you lay on top of that the fact that the average age of a vehicle on the road today is over 11 years old, there's a lot of pent-up demand and when you look at toyota with the great product cadence we've had last year as well as this year we think we will satisfy that increased demand. >> so, jim, how does that translate into average transaction price? j.d. power came out with that the average price came out $12,277 and that's an increase from 2008. what sort of increases are you expecting and what sorts of promotions should we expect to see on the showroom floors. >> i think despite the fact that transaction prices are going up, because the cost of money is so low today. the average buyer today is still a payment buyer. and as a result of that we still have cars and historic low

prices relative to income levels. now, the question is over time, what may happen. and over time we may not see markets at 17 and maybe 18 million because it will take some buyers out of the market especially as all manufacturers put more safety equipment and deal with these very challenging cafe laws coming up that will add costs to vehicles over time. so today i'm very comfortable that the average buyer will afford the car. i'm more concerned as we move later into the decade. >> jim, what are you saying internally at toyota about where the jobs growth will be in the future because we're in a new situation where a new bank of japan governor is intent on crushing the yen . it's a no-brainer for you for the lower cost space. are jobs here in the united states threatened? >> well, i think if you look at what's going on with the yen

today only about a third of global production comes out of japan, and it was well over 50% just a few years ago. if you look at the united states, over 70% of what we sell is now built here in the u.s. parts are over 75%. a vehicle like camry which is our number one seller, over 90% of the part comes from the united states. so we have insulated ourselves here in the u.s. to a grit degree against fluctuation in yen, whether that be up or down, and if you look at what we're doing in the future in the last 15 months we have announced investment of an additional $1.5 billion in the u.s. some has taken place and some have still got come and it will add 35,000 jobs to the u.s., as well. the yen doesn't drive my business. obviously, i have to react to what's going on in the marketplace, but we are a company that is going to produce where we sell and in the u.s.

that's going to be in the neighborhood of millions of toyota vehicles produceded right here and exported here. last year we exported about 145 -- 125,000 in the u.s. >> right. so, jim, when there are american lobbying groups representing the industry and you have your counterparts from american auto manufacturers talking about the impact of the weak yen and how they're competitively at a disadvantage to automakers like a toyota or honda. are you saying there's no basis for that that they're making a mountain out of a mole hill? >> well, you have to look at the starting point. the starting point of strong yen, historically strong yen and yes, it has moved relative to the dollar by about 15%, but your starting point is the strongest yen in history and as the u.s. economy continues to improve there's going to be a delta between those two currencies, but it's an exaggeration, i think, to say

that it's a disadvantage based on where the yen is today. >> jim, i can't wait to see more from the show. thanks for your time. >> thank you very much. jim lentz, the president of toyota usa and a quick programming note here. coming up at 10:30 eastern time, steve cannon, the president and ceo of mercedes benz usa. sales of the luxurymaker have been on a tear. interestingly, he mentions the camry and the accord has come on strong here and the games in the auto industry seeing if camry can maintain number one status. >> we have a mover here in the defense industry and let's go back to josh lipton at headquarters. >> on this down day, here's one in the green. saic, the u.s. government i.t. contractor reports better than expected fourth-quarter profit and higher revenue from the defense solutions business and basically i.t. in the defense space. also returning cash to shareholders approving a quarterly cash dividend and a

special dividend. saic up some 19% this year. melissa, back to you. >> josh lipton, thank you. yesterday's confidence number dropped as they questioned the strength of the consumer today. steve liesman is here with more on the debate overpay roll tax hikes and spending. steve? >> the question is whether or not they'll buy those toyotas that gm before was selling. taking a look at those confidence numbers and wondering if it will cause a drop in consumer spending. the blue line there is confidence and that's been down for several months in a row with the big drop registered yesterday. the second one in a row and there's the green line changing consumer spending tends to move together. i'm not sure that one tells you more about the other and the question is whether spending then drops. the all-america survey had information on this, and not definitive. 60% of the public aware of the payroll tax hike and they redoused their spending and

savings for some reason and only 8% because of the payroll tax increase and 5% said both and 48% did not reduce their savings at all. ian said, quote, the surveys don't ask people directly why they are so miserable, but it's not had to guess. the payroll tax increase implemented on january 1st has drained substantial cash flow from the consumers. drew mattis along with maury hattis saying the temporary 2% cut was not a big consumption booster why? because consumption is based more permanent income changes. they cite a study by the new york federal reserve in the last decade that suggests there is no big impact from temporary changes to tax rates. the big impact dollars permanent. capital economics out with a report in the past couple of minutes saying they do not

expect any sequester in the jobs march data. just so you know, the congressional budget office and this has been railed about by several fed officials expecting a 1.5 to 1.75% gdp growth and 750,000 fewer jobs because of the fiscal drag this year. simon. >> did you say a hit of at least 1.5%? >> and bill dudley yesterday said 1.75. >> i thought it was a half a percent. >> it's half and half. half comes from they is quester and the other point or so will come from the payroll tax hikes and also from the other bush tax hikes -- bush tax cuts expiring. >> steve, thank you very much. ahead on the program. should you keep your shorts on? blackberry out with q4 results tomorrow. the street's keeping an eye on two specific numbers and we'll talk about z10 shipments and

subscribers and that potential huge short squeeze. plus, is selling no longer the rule? we'll talk to the chief investment strategist. investment strategist. we're back in a moment.

hotel guests often complain bitterly about paying extra for internet access. the big brands are beginning to respond. ihg which owns the holiday inn, crown plaza and intercontinental brands are promising free internet access worldwide to all 71 million members of its loyalty program. apr, the britain's 30% in the last year massively outperforming rivals like starwood because ihg is also a restructuring play. ceo richard solomons joins us live from london. nice to have you along. marriott said it would put free wi-fi in all of its hotel lobbies, 100 hotels and marriott and hilton already offer free wi-fi to those loyalists at the top of their schemes. it's a key battleground for you

all. >> yeah, it really is. we've just done a recent survey and 43% of guests say they won't stay in a hotel if they don't have free wi-fi. so we know it's an issue and it's an issue for ourselves and we're rewarding the 71 members to give them free wi-fi consistently all around the world. >> i.t. experts are very worried about this that i've spoken to in the last 24 hours. they say it's fine for you to make this decision at boardroom level and frequent travelers may have three mobile devices and there will be within a hotel two or three real big data hogs. so isn't the service that some get going to be really hit by this kind of blanket offer to all members? >> well, it can be an issue, but we actually have wi-fi virtually in all of our hotels now and it's free in quite a lot of them already, so we need to manage that, but we put a big team of people right across the board

together from technology to operations to work it through. one of the reasons we got time to do it. and we basically give the internet service free and we'll do something different for the very high users. >> i would love to know what the owners of the hotel properties that pay for you to have your brand and pay for you to run them feel about you imposing a double whamo them. no longer will they collect revenue from internet services to guests and on the other hand, you're presumably making them pay it for rolling it out. >> it's a great point. we've been working with our owners. we have an owner's association that we work very closely with, so they've been part of pulling this together. on the other hand, genuinely as been investment because we know people won't stay if there isn't free internet in some of these hotels and they'll be able to offer something consistently and

they'll be able to track more guests and we're doing it at the same time as i think you're aware as renaming the frequency program to rewards club and we're taking another step forward to enable better cross sell and to offer consistent, better service to the customers and it's just another one of those things that you do to make your business more attractive and we see a revenue upside and it is not a cost, it really is an investment. >> let's cut to the chase as far as many investors are at the moment. they're excited that you and starrwood would find the window to accelerate the sales of the hotel. you have ten hotels worth about $1.5 million. if you offer to buy the barclay, in new york. we have a lot of interest in both of those hotels. what we did is we said last year that we've put our hotel on the market this year and we'll certainly do that. the hotel in new york, we actually just put on hold a little bit.

we were working with one buyer and that one didn't proceed so we've taken the time to, wo up a refurbishment plan at that hotel and we'll benefit from and we're going to move on that one. the markets have got stronger for high quality real estate like those two hotels. so by waiting we haven't lost interesting and nothing to report right now. >> and what would be the timeline for returning cash to shareholders. >> we have another buyback program urn way right now. so we'll carry on with that, but no news on that right now, earth. >> richard solomon was there, and let's get breaking news inventory. sharon is at the nymex. >> hi, carl. we're seeing crude inventories that have risen more than double what analyst his expecting. the rise in crude supplies in the past week up by 3.2 million

barrels and it's double what analysts survey were expecting and less than the bill that we saw reported by the american petroleum institute last night and that was a 3.7 million barrels and we're looking at supplies of 1.6 million barrels and a decline of 1.6 million barrels and it's in line with analyst estimates and the decline in distillate fuel supplies were much greater than analysts were expecting and down 4.5 million barrels where they were expecting a decline and we are segan uptick here in heating oil prices and oil and gasoline futures are off of their highs of the session. keep in mind, as well, we saw a build in supplies in cushing oklahoma. the key delivery point for nymex crude and we have seen some declines over the last several weeks from cushing and the 400,000 barrels and we're also looking at refinery demand picking up and the refinery

utilizati utilization. and we're continuing to watch what is happening which is a build for the week and after a five-week high with the wti price and we're looking at prices falling off $96 a barrel and now down 63 cents or so. back to you, melissa. >> looking to add luxury to your life? look at the ceo of mercedes benz has in the pipeline. we're live from the new york auto show straight ahead. and google giving the chance to test drive, after they -- we're asking you, assume you're among the 8,000. what did you promise you'd do with the glasses? tweet us @squawkstreet. we'll have your responses straight ahead. they don't have my yoga mat. and still, i feel at home. could it be the flat screen tv? the not so mini fridge? ♪ the different free dinner

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blackberry is out with fourth quarter earnings and the stock has doubled in the last six months and the interest in the phonemaker are at record levels and tomorrow will be the investors' first glimpse into the hail mary device the z10. we are joined by peter missic. always good to see you. >> thanks for having me. >> you have a buy rating on the stock. you're fairly optimistic and

what do you expect heinz to say about z10 e especially since the quarter closed on march 2nd so we have a couple of insights into sales of z10. he'll say he sold half a million units and anything more than that is a home run. they launched in 30 countries so far and they'll talk about the q10 which is going come out in april and europe and north america outside of the u.s. in may. so we think qualitative stats, as well. >> what sort of trajectory does that put them on in terms of penetration. they currently have a 2% market share and that's enough for blackberry to continue on this run. >> ultimately, they'll have four devices on the blackberry 10 platform and we think around 5% market share is a reasonable target. to put that in perpective,

that's around 5 million to 6 million units a year. we're not talking about the iphone or the galaxy s3 which are rushing orders. there's around 10 to 15 million enterprise subs still here in the united states that use blackberries that are three-plus years old and they'll upgrade to the z10 and the q10. >> what kind of tone do you anticipate to have on the conference call tomorrow, peter? it seems as he's gone further and further into his tenure and he's gone more confident even going so far as calling the iphone 5 a sleepy device, recently. will he be optimistic when it comes to the z10 and the sales that look like they're shaping up in the pipeline? >> i think overall sales have been better than their partners expected and they'll give a confident tone. i don't expect hard numbers for next quarter and the cash position will be next quarter and that comment about making

money next quarter is the real key here and no one on wall street expect that and that's the needle mover and i think the q10 will be a surprise hit in the u.s. it is not overly impressive in terms of massive numbers and lineups, but it was okay and the q10 will be the home run for business users. >> it sounds like it's a name even though the short interest as melissa sort of mentions. the name will trade in a range. would you say that if so, how long and how narrow is the range. >> the volatility is greater than 15% the next day. we expect them one way or another of 15% plus. we could see a very, very busy day tomorrow when they report. if there is any blemish on cash flow or subs, look for the shorts to double down and get even more aggressive and try to keep that dog under a certain level and it's a clean print with the qualitative guide and

look for this to melt up. >> peter, great to speak with you. >> thank you. >> peter missic of jefferies. >> a quick programming note here, blackberry ceo will be on "street signs" tomorrow at 2:00 p.m. eastern time for a first on cnbc interview. good time for merceders. sales of mercedes have accelerated at twice the industry average this year. up a grand 16% year to date. so it extends its lead of archrival bmw, steve cannon of merceders usa joins us live from the new york auto show. welcome to cnbc, sir. it's nice to have you here. >> thank you. good morning. >> good morning. >> you, i believe, are on the buildup within the next hour unveiling a much sportier version of the compact four-door that you highlighted during super bowl the amg version of the cla 45. >> that's right. >> who is it aimed at?

>> i'm sorry? >> who is it aimed at? >> it's aimed at bringing in a whole new generation of amg buyers. amg is such a special performance brand and it starts at $65,000. it's the most powerful four-cylinder on the planet and we think we'll make the amg brands the performance accessible to a broader array of buyers. >> from 0 to 60 in five seconds. >> that's right. it will show up in the showrooms in november. >> extraordinary. a lot of attention has been focused in the meantime. certainly in the press today "usa today," kw"wall street journal." where does that fit in the pecking order as far as you're concerned? >> you know, i'm happy that

cadillac is out there. they're really investing in new product and sprukt what drives the market. so the more better product that's out there drives the industry in general. i am not too worried about it because merceders benz is in the middle of the product defensive in its history. the product pipeline for the next seven years will have a new car launching every three months for seven years and with cars like the cla, cadillac will have a hard time getting market share from us. they'll have to go somewhere else. >> so as we see those 30 cars roll out. maybe you can tell us where you get the new s-class because a lot of people know that. as you see the rollout, what will the strategy be? >> well, i mean, when we introduce cars like the cla, it introduces a whole new price point of $29,000. we think we'll make the brand more accessible to younger buyers it will essentially recalibrate boom's percentage of

the brand. so many people have us on this territory is unachievable. that will be the tip of the spear for us to recalibrate consumers thinking. >> some people hear recalibrate and more accessible and they think the mercedes brand will be cheapened in some way, steve. how do you balance that? >> as long as we deliver with every new product on the mercedes benz value proposition, the best or nothing. i'm not worried about cheapening the brand or diluting the brand. the cla is every bit a mercedes brand and it will have a segment and we think we can produce the cla at 100,000 and still satisfy all of those customers. so we're not worried about diluting or cheapening the brand in any way. >> we look forward to testing that as we interview you presumably every three months

for the next seven years as 30 cars roll out time and time again. have a good show. thank you very much for joining us. the president and coo of merc mercedes usa. >> at top of the hour, jonathan browning will join us, the volkswagen president and coo, we'll ask him if he's working with the uaw with the -- help me out guys. >> chattanooga plant. >> thank you. >> you're welcome. any time. >> the market flash with josh. >> check out lululemon slipping this morning. analysts cut their price target from 67 to 62. it's following a survey in which one-third of respondents say they were less likely to buy lulu products in the future due to quality issues and lulu dealing with the problem of yoga pants that were too transparent which some are referring to as pantsgate and lulu down 1348% in

the past month. simon, back to you. >> you missed that one while you were out. >> no, i read all about it. that story has made its way to middle america. i promise you that. >> in more ways than one. >> we're getting interesting headlines on some of the capital controls that cyprus is announcing according to greek newspapers. dow jones carrying headlines that you will be able to deposit money when the banks reopen, but you will not be able to cachsh check. >> why would you put money in a bank when you can't take it out? >> you never know. it could be yes, it could be no down the road. >> that's comforting. >> a bigger dive into the ipos. that's pinnacle foods, the name behind duncan hines, bird's eye, vlasic. and they'll look at the valuation, the product innovation and the competition against pinnacle, plus walmart taking up amazon.

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>> as carl mentioned before the break, the market paring its losses and take a look at what's in the turnaround intrasession. morgan stanley and goldman sachs. it did look like it wanted to turn. here we are up by .08%. we should note that big-cap technology, yes, big-cap technology participating in this rally. we do have sizeable moves in amazon which is up by 1.4%. oracle is up by 1.3. facebook is rallying off the six-month lows and 2.5% in

today's session and health care, by the way, another gain here in health care. xlbd that tracks health care is up once again and certainly a sector that has been on a tear. >> that's been the one constant of the morning so far. >> this is a new one for xlb. >> pinnacle foods, the name behind duncan hines and bird's eye is one of the highly anticipated ipo. our jackie deangeles taking it. >> march saw a little bit of a slow start with respect to ipo activity, but last week we did see deal flow picking up with seven new issues and this week, one big one, pretty key. it's pinnacle foods for its debut on the nyse tomorrow under the symbol pf. pinnacle is best known for famous household brands including duncan hines, aunt jemima and bird's eye. the size of the offering is 29

million shares. at the midpoint of the range it's worth about $551 million. it would put the market cap above $2 billion. proceeds will be used to pay down debt. this ipo is backed by private ey firm blackstone, whose stake would be worth $1.5 billion. jim cramer, got to give him a shoutout. he botches everything. he had his eye on this, too. he e recently said he feels these kinds of deals have performed quite well. he pointed out 13 finance deals have popped up. on average up on trading. analysts like the company's strategic move. they are also cutting costs and also, the brands have mass appeal. the company says the products can be found in 85% of u.s. households. pinnacle also claims number one

or number two in 10 of the 12 categories in which it operates. >> interesting. it's been an interesting year for them. >> then you think of the deal with hinds and is that helped levitate the food companies. >> wrae, the bank of general mills just this morning. europe's recovery or the lack thereof. ♪ ♪ [ male announcer ] how do you engineer a true automotive breakthrough? ♪ you give it bold styling, unsurpassed luxury and nearly 1,000 improvements. the redesigned 2013 glk. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services.

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welcome back to "squawk on the street." yes, it's wednesday. so it's wednesday's edition of the santelli exchange. let's talk about a variety of issues and pretty much the common denominator is going to be europe. today alone i've probably heard six, seven guests -- smart guests, we only have smart guests -- talk about the european recovery. but here's the problem i have, eefb just saying that. a european recovery would imply that the flight path of europe is moving up. sorry, but that's not really what i see. i see it kind of going down. i think we're putting the carton

in front of the horse to talk about recovery. once again it's about being realistic. if you get total exports as a percentage of gdp in the u.s., these are furthermores lightly slesz than 10%. but when you think about multinational corporations, and their business in general. that's the big issue. let's talk about cyprus. it's hard not to think about the path of europe without talking about cyprus. we're going to really make this superficial. but there's preferred banks in europe. yes, you know what i mean. the german banks, the french banks, the dutch banks, the belgium banks. these banks have had the biggest problems. like greek banks. cypriot banks.

if you like at cyprus in particular, one of the issues that affected their banks and really put them behind the eight balls in many ways is their holdings weren't treated the same way as the preferred status banks as european leaders try to hold this together by moving all the pieces on the board so ultimately to buy time but not really pay a price to try to get solvency back in vogue in their banks. and now we see what happens. and the big issue these days is due process. and i'll tell you why that's a biggie. as many op-eds, and in the journal today he just nailed it. i have a problem with guarantees on everything. and the fact that the insured accounts aren't being tapped at this point, but it was talked about, that is not a good thing. but the uninsured accounts need to be much more discriminating

in where they put their money. so i don't really have a problem with what's going on in that regard, other than the fact that there's very little due process. who gets to make these calls? take it one step further. if you have any insured deposits, forget that a minute. it's the uninsured all over europe. at some point when religion hits there could be a bigger stampede of capital the european leaders are really walking on thin ice here. when it comes to the recovery in europe, think if you had your money in a european bank. would you think i'm going to take a vacation, not worry about it? i don't think so. >> thank you so much, rick santelli. how good a change in leadership and a brand new game affect his future?

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at a hertz expressrent kiosk, you can rent a car without a reservation... and without a line. now that's a fast car. it's just another way you'll be traveling at the speed of hertz. . the all right, as we mentioned the dow's loss is less than half of what they were last night. >> the earnings are up tomorrow. short interest record highs. what do you do with the stock

and once it does make the big move it is expected to make on the big earnings? so his view of what will make gold prices go higher for not cyprus? we'll get his take. >> that's a great question. it's tough for the past couple of quarters. >> not much. >> we'll see you tonight. simon, see you soon. if you're just joining us, here's what you missed earlier this morning. >> welcome to hour three of "squawk on the street." here's what's happening so far. >> we're putting these two earnings together and not reducing supply whatsoever. therefor, what will happen to prices, i don't know, but i know this merger is not going to happen. >> you need a regulator to oversee us to make sure that you don't go back to doing things that you shouldn't be doing. that's what you want regulators to do. >> put on my google glasses and i see big lines at atm and cyprus. which there will not be, but it

doesn't matter. it's a different country. >> i think gold remains valuable. call me a gold bug. i don't buy it. >> you are a gold bug. >> this industry is simple. it's driven by interest rates and consumer confidence. interest rates are at historic lows, the average age of a vehicle of the road today is 11 years old. there's a lot of pent up demand. >> i really think the q10 will be a surprise hit in the u.s. the z10 was a modest launch. not impressive in terms of massive numbers or lineups. it was okay. the q10 will be the home run for business users. >> good wednesday morning. we are live at the new york

stock exchange. the dow is trying to dig its way out of a hole. we were down 118 points at the open. currently down some 56 points. health care has been trying to lead the way. banks are starting to participate a little bit. take a look at humana here. one of the biggest gainers. web bush says season of volume growth in humana to upset the compression of more gins. starting to see a little bit more action out of goldman sachs. the uncertainty in italy sparks more worries about the euro zone. we'll find out how to protect your money. plus, electronic arts preparing for a big transition as the company's ceo gets ready to leave in a few days. we'll talk about how they plan to stay relevant in the gaming industry. and housing hysteria in silicon

valley. find out who is buying and how much they are paying. but first, markets trying to make a comeback today. stocks trimming earlier losses. want to bring in martin sheen, the chief investment strategist. mark, good morning to you. >> good morning, carl. >> a note from you on the 25th, i think, saying you thought cyprus was a unique situation and you were not necessarily averse to staying with european equities. a couple of days now since then. do you feel the same way? >> i do, carl. the fact is the u.s. economy creates a country the size of cyprus' gdp by lunchtime every day. so it's not an economic issue as much as a psychological one. we can't ignore the fact that it brings with it risks to financial institutions but we think it will largely be tempered by mario dragi's intervention. but as a consequence, i think if a country with the equity

markets is set up to benefit from a high beta trade it's europe. we think the evaluations reflect that. we find european equities very appealing. >> we're heading into it. tomorrow is going to be interesting, mark. once the banks reopen. we're already getting headlines about the capital controls that cyprus will keep in place. you still think it will be a local story? >> certainly the concern was they were going to provide a levy on those deposits, less than 100,000 euros. that would be problematic. but since they backed off of that, i think what can be viewed as unique in cyprus' situation is the fact that the banking system was eight times the country's gdp.

since the banks have very little debt, the only way to bail in the institutions was to have those deposits above 100,000 euros pay a price for it. either in the form of shares or a write down in the deposit worth. i think as a consequence again, that's a different situation than what may be applicable to other institutions and other countries. >> we have seen a lot in terms of u.s. equities. a lot of big guys raising the targets for year end. they always have one caveat. they expect a sag in the middle of the year or that we're obviously due for a pullback or a retracement to 1,500 and then things are interesting again. know wants to believe this could be relatively linear. are you in that camp? >> i happen to be, carl. i worry a little bit, though, what we thought was a decent probability, which is the market to move about 1,600 by year end is becoming consensus. and when everything becomes consensus, not that the

consensus can't sometimes be right, you look for where the outlieer opportunity might be. either that the end result is a number much lower than what is anticipated, or it's much higher. i think given the news of the day that we know about europe, we know about the threat of china's slowdown that has passed or the u.s. economy is facing fiscal issues. all the things could create ripples in the equity market but not necessarily undermine the trajectory that could lead to a number much greater than the european consensus for european targets that we're seeing today. >> are clients with you on that, or do they still insist on things going on sale before they jump into the rally? >> i still think there's a lot of trepidation out there. the fact of the matter is, while there's a strong interest this understanding objectively why

equities, particularly dividend paying equities make a lot of sense and are deemed omp limitary to deemed fixed income portfolios, i hardly gather euphoria about the equity markets, which leads me to believe there's still a lot on the sidelines to help ignite a move higher if we get buy-ins from individual investors. >> finally we're in a vacuum here. we're in between earning seasons. the macro data has been spotty here. certainly the markets have been up, down, up, down for the past five or six seconds. some call it an amnesia market or loss of memory market. is that healthy or not? >> it's due to the void that you spoke of. this is validation. we're up over 10% year to date going into today's session. and now we don't have earnings or any absence of real economic news, the market is waffling at the moment, which is probably a

healthy pause, given the trajectory the market has been on so far this year. but i think what we're going to see is a catchup with the economic day that that will be supportive of corporate profits aand low equity prices to continue to advance. >> the jobs number is not too far away as we wait to see what the sequester does to it. >>. >> when we come back, the president and ceo of volkswagen america joins us. we'll find out what is in the pipeline. first something regarding the markets and europe today. hey, rick. >> reporte >> we're going to talk a little bit about markets in europe. also a topic we haven't talked about recently. the political landscape has gotten quiet. remember when the tax reform thing was a big issue. then the word reform took on some nefarious undertones. we're going to have dan today about some big corporations that are moving outside.

corporate tax structure is the issue. maybe it's not too late for real reform.

take a look at the tech sector this morning. it has some lagers like apple and google weighing on it today. we want to go to josh lipton with a look at aol. >> aol this morning is rocketing

higher. the reason analysts like what they see. they upgrade it to a target increase from 44 to 38. saying thee see significant upside. aol returns to modest revenue growth and continues to streamline the cost structure. aol up some 33% so far this year. >> 3x is the market. that's impressive. after being shunned by americans for years, diesel is one of the buzz words of the auto show. vw is unveiling the 2014 golf gti a few moments ago. joining us for another first is volkswagen of america ceo. jonathan, good to have you. >> good to be with you this morning. >> kind of weird o be talking about diesels and wagons as the big trend this year. what's going on?

>>. >> there's a lot going on. the gto brind me describes the essence in many ways. >> do you believe that wagons, where they went through a period where they were not trendy, are they back and can it last? >> i'm sorry. i'm having a tough time hearing the question. sorry. please. go ahead. >> i wonder if you thought wagons were back, in not too many words. >> i'm sorry. are wagons back? sorry. i was struggling to hear that. in terms of the body style, obviously the crossover and the suv vehicles have been popular over a period of time. these hatch backs and other body styles are really -- jae, vehicles that generate a lot of

interest and enthusiasm in the marketplace. there's a growing and very passionate consumer interest in vehicles like the gulf and especially the gti. >> i'll talk more slowly in hopes you can understand and hear me. we all remember how good sales were for vw last year where you were tearing the competition apart. little more leveling off this year to date. is that to be expected? >> yeah, absolutely. we've had three years of very tremendous growth with the v volkswagen brand. we knew we would be leveling off in terms of the growth momentum this year. that's what we see still ahead of the overall market in the segments that we compete in. but we're putting in place the foundations for a much bigger

business in the u.s. we've invested in a new plant in tennessee. we invested in a new engine plant in new mexico. we're bringing new products to the u.s. marketplace. this is about putting layers of sustained growth in the market. and the consumers really love not only cars, but the technology in our vehicles with the clean diesel technology delivering great fuel economy and driving characteristics as well. >> you mentioned the plant in tennessee. and there's a lot of questions if vw is working with or behind the effort to organize that plant. where do you stand? >> we've been very clear from the beginning, we expect our employees to have a strong voice in operations all around the world. not just chattanooga, but any

facility around the world. the employees will decide if they want to be represented or not. but at the end of the day our employees will choose whether they want to be formally represented or not. jonathan, great to talk to you. we'll see you soon. >> thanks very much. >> speaking of the new york auto show, our colleagues at nightly business report catching up with ford's president of the america. talking about new vehicles being key to driving sale successes so far this year. >> we're seeing a number of first time buyers and buyers from other makes come into the showrooms. it's really being driven by the very fuel efficient vehicles that we're offing. and remember the outrageous ad from ford out of india grabbing

headlines? this one featuring silvia berlusconi in a trunk full of bound and gagged women. this one being pulled. they say they never requested the ads in the first place and gave us their reaction. >> well, we were shocked like anybody else. we know our ad agency partners dealt with the agency involved and we take it seriously. we were shocked like everybody else. >> shares of ford are slightly lower today. it's been a pretty good year for electronic art so far. but who knows what lies ahead. we'll ask the ceo when he joins us live after the break. a lot more "squawk on the street." we'll be right back.

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dow down sharply this morning. currently down less than ha half of that. s&p 500 is down five. health care has been hanging in there for most of the session. humana is doing well. dj is starting to participate a bit. gains of a little more than 1%. interestingly the dow has been up and down for six consecutive sessions. when we come back hundreds of companies are lining up in new york to hire veterans.

wooil tell you about the hiring heros initiative and later on, why the real estate market in silicon valley is causing buying hysteria some say. carfirmation. only hertz gives you a carfirmation. hey, this is challenger. i'll be waiting for you in stall 5. it confirms your reservation and the location your car is in, the moment you land. it's just another way you'll be traveling at the s of hertz.

a couple of hours into trading, some of the stories we're squawking about. 8:25 on the west coast. february pending home sales fell 0.4% from the previous month. that's according to the national

association of realtors. but the sales are still near three year year highs. target among the stocks rising to 52-week highs. now up 17% so far this year. and the vics is up 2.5%. up from the highs for the session. bob pisani is here. 13 is no dramatic number. you talk about it stayed low well off the curve. >> if it's below 20, don't worry about it. remember, we were at 75 a few years ago during the great crisis. there are sectors experiencing big damage. and not just the european banks. cliffs natural got a downgrade by mor dan stanley. the stocks had a disastrous

year. medicare advantage stocks on the upside today. some of the stocks are up today. there was a report saying there's expected rate cuts that may not be as bad as anticipated i've been asked a lot about natural gas. is that a multiyear here? this is the xop. basically it's oil and gas exploration companies that are in a single stock. and it's been a decent performer. there is a very good way to own all the oil and natural gas companies. elsewhere the story for the week is the bond market.

they're mostly up five days in a row. there's a long term treasury bond. and here's the big one. this is the one that owns baskets of all kinds of bonds. finally, i want to note the very serious damage being done in europe. look at these declines. italian banks, down a quarter. lost a quarter in the last three weeks. alpha bank in grease down 31%. yeah, tomorrow is going to be interesting to watch. let's get a check on energy and commodities as well. shair sharon is with us this morning. >> reporter: we're looking at mixed energy after we got the

supply data. that has kept pressure on food prices, but we're also looking at the big declines that we saw in gasoline and more so in heating oil. we're leerning from the energy department as well today. about breaking ground on two new refineries focusing on dee sill production. we're also watching natural gas. we'll have a storage report on natural gas coming out tomorrow morning. and gold prices with still a lackluster performance for gold. a lot of folks wondering if we'll see lower gold prices ahead, if, in fact, a lot of folks don't need it for the safe haven bid anymore. back to you. >> all right, sharon, very interesting statistic, as you mentioned yesterday on gold's back-to-back quarterly losses. the debate over corporate

tax reform is heating up in washington. santelli has a take on that. >> indeed. we have dan the man here today. reform, a number of years ago when you talked about tax reform that had the right feel to it. tear it all down. it's a bunch of crazy rules. make it more simple and streamlined. lately it seems to mean whoever gives you the most money gives you better loopholes than the people you don't like. let's talk about two corporations. eaton corporation multinational. eaton moved to dublin. eaton just has a small office over there. over the course of the move they're going to save $160 million in taxes that they don't have to pay. that the u.s. is now not having to get. this is serious money.

this is serious money. these are the two most glaring examples. something that has to be looked at seriously. right now it's about tax revenues. ultimately when you look at an eaton corp., they do manufacturing, correct? what if they move everything offshore, with regard to manufacturing, to really take full advantage. this could be a jobs issue as well, correct? >> right. we have to think about. anything that eaton produces in the u.s., that's taxed at the u.s. rate. anything offshore, and there's quite a bit, it's savings. what if they decide we can move this operation to ireland just as easily? you'll have the initial startup costs, but how much more are we going to save on this? we have to trust this issue. it's not good right now. and they have to talk seriously about this. >> now there has been some bipartisan support for really

doing reform correctly. but there's a lot of pitfalls. many people say we have the advertised corporate rate at 30%. so the savings may not be as dramatic. for mid sized corporations the issues are huge. if dave cant, a republican in michigan, and they're both trying to pull something together. the republicans want a revenue neutral. and the democrats would like extra money. and i like seeing those two people in the backgrounds. >> i have great respect for camp. camp is a sharp guy. it's always a pleasure. dan the man, back to you, carl. >> thanks a lot. our parent company comcast and nbc universal are teaming up with the u.s. chamber of commerce as they host a hiring

affair for veterans in new york city. hi, brian. >> last year on the u.s. intrepid, the u.s. chamber of commerce has an ambitious goal set for half a million jobs for veterans. they told us exclusively on cnbc this morning they've reached 100,000 with pledges for another 100,000. so that's incredible, progress, although there's a long way to go. here's the problem. the national unemployment rate is 7.7%. for post 9/11 era veterans, it's 10%. for those under 25, it's almost 30%. this effort is to change that and wal street is on board. over 1,000 for wells fargo more than 5,000 for jpmorgan since 2007. want to introduce you to owen finnegan. he's a success story here.

he's an ex-marine with a graduate degree. he landed a job with capital one last year. even for him the transition from military to civilian life was daunting. it was very overwhelming. i didn't know what i was going to do next. it was a massively scary thing. >> i've met a whole range of people here today, people with college degrees who know what they want. also those with college -- high school diplomas who don't know how to write resumés. people like citi saying half the jobs do not require a college degree. that's the next phase for them to try to get more veterans involved in the opportunities. the other thing i learned is

veterans who haven't taken advantage of the gi bill really need to if they qualify. it's an incredible benefit. i talked to one young gentleman who got two years of education in the military. now he is enrolled at columbia getting a master's degree in finance. it can be done. he took advantage of his opportunities. >> it's never been an easy transition going back to civilian life through history. brian shactman in new york city with hiring our heros. electronic arts are generating a lot of buzz recently. and the recent news that the company's ceo will step down at the end of the month. julia boorstin joins us with a special interview. >> hi, carl. thank you so much for having me. and peter is joining us from san francisco where the game developer's conference is going on. thank you for talking to us,

peter. >> pleasure, jjulia. >> you have lowered your outlook for the company. what is the most important thing for the new leadership to focus on? >> certainly the ze parture at the end of next week is a sad day. but he leaves the company in great shape for the future, as well as the movement to direct a consumer digital commerce that i think we're leading the world in video game publishing. this will be the queue for the next leader. >> what that really means here is really inexpensive social and mobile games. it's a very competitive market. what are you going to do to make sure electronic arts are not still losing customers. we had a number one publisher, but we've always in our legacy

is to be a publisher and developer of core games for core consumers. there are hundreds of millions of those around the world. now it's a balance. you're exactly right. there's a fragmentation in the marketplace. we're leading on all sides. there's a discussion that there is suddenly an easy pass with nowhere to go up. how would you put into context the challenges that remain under the new structure? >> i don't think it's an easy path, but less titles, bigger titles in the corps. generation that we're in right now. they really explode and take off. groub could be 50% in the western world. you have to remember to make great content and put it in every channel, every platform for every consumer around the

world, no matter where they are. >> if john left the company in such great shape, whoi did he have to leave? he said he left because the company wasn't performing where it should be. >> you follow our industry and it's been a difficult transition. we're at the back end of a very long cycle. but there is light at the end of the tunnel. we can see the future. we're on the brink of next generation consoles and our ability to take advantage is unparalleled in the industry. so john took accountability for a difficult year. and that's what ceos do. >> in terms of the new consoles, we expect to see a new x-box as well. do you think it will be different enough to get people to reinvest in traditional gains when there's so many alternatives. >> you talked about our launch in san francisco last night. we showed it running on our frostbite three engine.

1500 people over two showings. media vips were in awe of what we showed last night. it's a kwan tam leap forward from what we're currently seeing on with the consoles and pcs. >> now, quick question about gambling. some of your competitors are going to cash in. but the legislation and the issues we face around the world in the u.s., the legalization of gambling online. we'll keep a close eye on that. no announcements as of yet. >> great, thank you, peter. >> thank you, julia. >> when we come back, zsilicon valley may be a hot bed for technology. what about housing? we'll look at how much money wow will need to buy a modest home.

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all this week on cnbc we're taking a closer look at the

mousing market across the country. today we're getting a look at housing in silicon valley. the next guest says the market there is on fire. he's again kelman, ceo of redfin, a ceo of real estate business business. good to have you. >> thanks for having me. >> i'm almost afraid to ask about this market because we all have preconceived notions of how hot it must be. throw at me some of the most wild metrics you can that explains how this is on fire. >> the craziest metric is probably the number of homes that sold on the same day they debuted. we've had 1,000 listings sell on the same day they hit the market. so nearly 90% of homes are being sold in bidding wars. more than one buyer is bidding on the home. it's an absolutely wild market. >> how much is all cash? >> about 50% in the heart of silicon valley is all cash. most of the winning offers are

all cash. >> anybody who lives in new york city lives and dies by price per square foot. are we at some straj historic level in that country as well? >> right now the price per square foot is nearly $400, which defies all the laws of physics. normally you have a rational response, but in silicon valley, it's hard to calculate what a real number is and what an inflated number is. roigt now it's very high. >> let's start with a luxury one on hermosa way. tell me about it. >> well, this is a menlo park home. it's nothing that extraordinary. we listed it at $1.6 million. it sold for $1.7 million in less than a week. that's fairly typical of almost all our lizzings over the past few months. >> anything about it that would explain a 1. -- i mean, more expensive than any average house

in america? >> only that it's in silicon valley. i think it was a turnkey home so people could move in without having to do many repairs, and as soon as folks saw it they wanted to buy it. >> mid range on willow lane. this is san jose. it's weird to talk about mid range price home for 849. >> we priced it aggressively at $850,000. it sold for almost exactly a amount within the month. we knew we priced it aggressively. we also thought the market could afford it. sellers are saying i think i can get more for the property. now they're right. they're getting exactly what they want. >> interesting. and this is an example of a quick sale in san jose. went for a little over one, right? >> it went for a little over one.

it was on the market only two days. we hosted an open house. it was absolutely mobbed. we knew we would get multiple offers. people were coming in all cash. folks were offering all sorts of different incentives. eventually we sold it for $1.1 million, which was the best offer for our particular client. >> some people we know who live there say with every consecutive ipo that did well here on the street we would see technology companies, their employees, i mean, the prices almost did a stair step pattern. is that what you saw? >> it's a perfect storm of ipos and foreign investors. we also have the folks as google and zynga and groupon. it puts money into the market. you have different whales battling each other, thinking they are the only ones who can offer $300,000 over asking only

to discover there are plenty of other fish in the sea. >> and those open houses must be a mad house. thanks so much. >> thanks for having me. it was great to be here. >> glenn is the ceo of red fin. from buying a house to remodeling it, house has already transformed the world of home design. now it could be a job driver, too. how the social network for remodels could put people to work. [ 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.

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coming up on the half, our market watcher says now is the time to get more aggressive. ultimate stock picker, bill nigren. >> take a look at facebook this morning. we mentioned earlier that it had been hitting the lowest levels of the year, of course, after hitting a six-month high back in january, a pretty good action given the general tape today. it's up 56 cents, about 2.25%. that's with the dow up -- down 36. it is bucking the trend as has other technology names have been, too, netflix and oracle are also in the green today. still to come, our squawk breakthrough. we'll talk to the brains behind one of the fastest growing sites. [ kitt ] you know what's impressive?

a talking car. but i'll tell you what impresses me.

a talking train. this ge locomotive can tell you exactly where it is, what it's carrying, while using less fuel. delivering whatever the world needs, when it needs it. ♪ after all, what's the point of talking if you don't have something important to say? ♪ we're following up with a squawk breakthrough guest today, houzz, the pinterest for home design is back with news. the company released a new survey on housing. it is the largest survey ever

done on the u.s. remodeling industry. we have the co-founder and ceo of houzz. it's great to have you back. welcome. >> great being here. >> we're entering this time of year where, whether you do it yourself or not, remodeling is the name of the game. tell me about the survey and some of the findings you have. >> this is the largest survey ever conducted for the home remodeling and decorating industry. last year we did it, we had 30,000 people, this year 100,000 people, comparing to last year, we definitely see the confidence going up. two-third of our users believe that now it's a good time to buy a new home. majority of our users are planning to do a major remodeling in the next two years. and 53% of those are planning to hire a professional help to do that. kitchen and bathroom are still taking the lion's share of the remodeling money. >> oh, yes.

>> still kitchens and bathrooms. >> is it your sense that they are planning to remodel because they're going to be looking to sell down the road or because they think we're going to stay in this place for another few years, we want to make it nice. >> so this is very interesting. last year we had more people saying it's all about their lifestyle, making the home better for them. we still see this answer very, very popular but more people this year are saying they're doing it to improve their home for resale value. that's very interesting. that's probably connected to the increasing home value. >> i think certainly there's a seasonal aspect to it as homes get shown more when it's warm. there may be some people saying my neighbor's house sold for a lot more than i thought the neighborhood was worth. >> i think empowering users with this data make them believe in what they do, make better

decisions, for example, knowing that the average user on houzz spends $28,000 on average on kitchens or $10,000 on bathroom or what people are doing in different areas, this is really helpful when you're making decisions. yes, the neighbor comment is right. you want to know what other people are doing in the neighborhood. >> you were on the show, last time we talked about the launch of pro plus, i'm wondering how that business is turning out and whether or not there's any survey data in the offing from the professional side of things. >> so this has been picking up really great. we launch it at the end of last year in 12 markets and as i said, previously, that was sold out pretty quickly and we now rolled it out in 425 markets across the united states and canada. and we're getting great feedback from the professionals who are happy to build their brands locally. they can now optimize. we also empower them with

analytics tools so they can interact with the community better and optimize everything. >> one thing we keep hearing about in terms of the professional side, there were a bunch of people in the industry back when housing was hot who watched the collapse happen and left. and have not returned. and some talk about a big squeeze of supply in terms of new construction, there aren't enough electricians or carpenters. do you see that cycle reversing itself or not. >> we absolutely see that, from the beginning of the year when we had 160,000 professionals. until now we had 40,000 new professionals join houzz it's 200,000 active professionals. more and more people are coming back to this industry which is great. >> finally, we talked about how you've changed the game in terms of hooking up consumers with remodelers in general. the future for houzz, we've

watched it grow so fast over the past year. talk to me about the one to five-year business plan at this point. >> we just want to empower our uers. so we are going to take all the data we get constantly from our users and give it back to the users. we're going to keep building this technology, the transformation was really significant and will just keep doing that. as long as we keep innovating. and bringing the technology to this industry, people will be happy. both the professionals and home owners. this process should be more efficient, more fun, more productive for everyone. >> anyone who's ever remodeled or built a house agrees with that statement 1,000%. thanks for your time. look forward to having you back soon. >> thank you. looking forward to it, too. google giving 8,000 people the chance to test drive their google glasses firsthand. the winners were chosen through twitter and google plus after the applicants were given 50

words to share what they would do on their own. let's assume you are one of the 8,000. what did you promise google you'd use the glasses for to see or do? zack writes it could be used to show medical students and residents how to perform invasive medical procedures. i promise not to leave them on the restaurant table like the last pair of glasses i lost. you don't want to lose these. i don't know if we've seen a price point for these. take a look at the markets, google is down more than 1%. we've seen yet another $900 price target with be this time out of credit suisse and some say -- jim cramer called it the equivalent of the "sports illustrated" cover, something that might knock it down in the near term, 802.50 is the current price, down more than 1%. aol is the big gainer. josh lipton told us about this on the barclays upgrade.

stack is up three times what the s&p has done so far this year. today, an 8% move, up 293 to 3910. tim armstrong feeling pretty good today. that does it for us on "squawk on the street." and carl, thank you very much. welcome to the halftime show, four hours to go until the close. right there is where we are on the street. stocks off their lows, s&p and nasdaq in negative territory as well. the euro, 127 and change versus the dollar. short interest, it's at an all-time high for blackberry as the stock made big gains. what to do now. two of our traders will square off and debate it. on the mark, bill nigren on what tech stocks he thinks will work now. stocks getting to within two points a new