should watch? >> the big thing investors should watch are economists. the economy has done much better than anyone predicted. if you look at all of the things driving the economy forward there are more tailwinds than headwinds and people should be looking for a more optimistic outlook going forward as economists look at the rest of the world. >> thanks for coming. >> make sure you join us tomorrow. sk "squawk on the street" joins us right now. >> thank you very much. ♪ ♪ >> i could have just stared at joe staring back at the camera for a few minutes. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber. that gdp number trying to make a sense of which way to go. 158,000 that did miss. it was the lowest since october,

and we'll talk more about that ina i moment and meantime europe giving back some of the gains from yesterday and mostly red arrows across the continent there this morning. the dow and the s&p coming off of those record closing highs and we are now six points from the s&p intraday record and will that set us further away from record territory. weighing on the s&p today is conagra. it is leaving investors hungry for more. the company falling short of expectations and we'll talk to jim and break down what it means for your investments. >> the king of pop, michael jackson. we'll explain why pimco's bill gross is taking a closer look at the man in the mirror. >> plus, capitalizing on the boom in natural gas. one ceo sounding off to jim cramer last night on "mad money" and we'll have the details. >> first up, we'll begin with the markets the morning after. both the s&p and the dow set new record closing highs. the index within six points of that all-time intraday high of

1576. new jobs data, though could provide a hurdle for the bulls, it come in at 758, the forecast was for 192 and although they did revise it high are. we were talking about ism and gdp. maybe q1 was a rebound from q4 and the rest of the year will not beas hot as we thought. >> we have auto sales which was so important for the economy and phil lebeau has been covering it and they're on fire. housing remains incredibly strong and we had colder weather that threw people off and the hiring picture clouded further by sequester. i think that this all adds up to bernanke being right to be cautious and therefore you can continue the rally provided you get good earnings, and i've got to tell you we're not getting good numbers from the airlines. we saw a delta weakness and we saw a downgrade about

caterpillar. i think the downgrade is a little late, but it's a mixed picture and that's different from three weeks ago. the transports were leading and everything felt great. >> we're doing this in the face of what has been fairly significant, multiple expansion and it appears to be at this point and we'll start to get a taste of that and we'll do it with conagra and we'll get to that in a minute and we don't know. it's still a few weeks away. we're in that zone when we haven't heard from alcoa yet. i like klaas kleinfeld. it's that part of earnings season. he got his dress at kleinfeld. i would point out i suspect that would be disappointing. we'll come into the earnings period more worried about earnings in a long time because of how far stocks have gone. they've got to justify the movie earnings and i don't know if

they can. >> on jobs here, btig said it's pointless for you to try to alter your estimate on non-farm based on gdp even if they have improved their model over time. would you be thinking differently about friday? >> i like the stock adp. i don't like the numbers adb. it's like a zynga game. i don't want to put too much stock in that. i also think no matter what number you get wait until you see sequester. as delta said yesterday. yes. i was with a guy from west point that came to see the show recently. they laid off a lot of the civilian teachers at west point because you can't lay off the uniformed guys. is that going to be the story of april? >> it may be. i mean, listen, with delta it was largely government-related travel that they cited, i guess for some of the weakness. to be fair, delta's also raised

prices and whether they went too far, but it's the first we've heard of at least a sequester blame, so to speak. second, the dell proxy because they have a lot of government business, right? dell, double d and we'll see the announcement from dupont and it is owned by who? what is it? na nassco? delta still looking for a profitable march quarter and it would be first in a decade based on good cost-cutting. >> when u.s. air merges with amr there will be no price increases and the market will be incredibly competitive. do i sound like the justice department? when amr merges with u.s. air and they have the route structure which they can't play off one from the other and we'll start doing more driving. it will boost gasoline prices because it will cost too much to go anywhere. >> speaking of adp it is the

first week of a new month. you know what that means another chance for you to nail the number as we get closer to the jobs number. tweet us your predictions for march non-farm payrolls and our handle at squawkstreet squawkstreet, #nailthenumber. >> that case that you see jim signing, faber, myself, anyone else we can find here on the floor. >> yes. don't forget to include -- camera, i'm doing something. this is a hash tag. it is not a tic tac toe. >> practicing to be one of those guys on the runway. i don't know what you were doing. >> i did that on the aircraft carrier and i got to say to the guy you're coming too hot. you're coming in too hot. >> you say that to every single guy. coming in too hot. >> you have the release of the jobs number at 8:30 on friday.

will. >> monsanto shares higher on news of the company's better-than-expected results while conagra posted an earnings miss that sent the stock lower in the pre-market. it was taking a hit due to the acquisition of raw corp holdings. the company is saying that it is, quote, very exciting, unquote about its earnings potential over the next few years. raw corp, they came for it once and they came back when they had spun post off. you were very high on the deal and we're not getting a great sense from this quarter at all with the success of it, but 25% of it or more now are private label. >> right. >> what do we make of this quarter? >> tree house is doing well because private label is doing very strong. gary is a terrific exec, okay? remarkable ceo, but i'm looking at conagra as the test case for this particular multiple expansion. people paying more and more for earnings because conagra was the leader. it was the first in the food

group that got the multiple they got from technology. watch conagra. watch mccormack spice. that yesterday spiked and then went down because they 7% organic growth, but they didn't give a good outlook. i love the company mccormack. 15% off the bottom, but what i want to see from conagra is can they maintain, can the market continue to pile in to these stocks if we don't get upside surprises? is that 3% yield that the stock might go down to enough in the face of uninsured deposits around the world and they want to have yield and they come to our food stocks. >> it is amazing the slow growth. it is a slow growth kind of play, the marketing expense this quarter was a material to the miss, right? >> yeah. >> slim jims, hebrew national, what do you think there, healthy choice? >> hey, it's almost hot dog season, that's what i think by

those hebrew nationals. >> you would go straight to shake shack. >> absolutely. >> i was cut in line at shake shack, i would have been lynched. >> you can't do that. >> you can't cut in line. >> so often i stop on the way home, just to have a shake. just a vanilla milkshake. >> the danny meyer index. the hospitality index. conagra's key. >> what else is going to be key, before we leave this top snek if we're trying to get a real sense here as to whether there is a decision point coming, what would it be? >> it would be verizon and at&t which had moved up dramatically on yield 2. the utilities and the real estate investment trust and verizon at&t moved up on the story that you shot down. not hard enough and they were forced to, verizon and we're talking about the vodafone story and we'll take a look at vodafone after the market opens and it is down already and in europe it will be down sharply.

>> this is the story. this is the story. do the -- will people still come for 4% yield and a 3% yield if the earnings themselves like conagra do not justify paying more and more for them because they're not upside surprises? general mills was not an upside surprise, you can't pay up for these materials anymore and general mills came right back. >> a downgrade today on cigna and valuation. >> that's a valuation call that makes sense. >> cigna hasn't gained the advantage program. >> humana was a much bigger beneficiary than cigna. cigna has done very, very well. >> people were furious at me that if you wanted to contain medicare costs they shouldn't have jumped this to a big premium, but you know what? lobbyists got in there. >> sure.

>> this is american capitalism. late stage american capitalism and you get big lobby dollars and next thing you know, the price goes sky high. >> it sounded like david stockman. >> he still looks good for his age. >> he about 24. he was a young man. speaking of good-looking gentlemen. pimco's bill gross invoking michael jackson saying it's time for gross to look at the man in the mirror. the man many call the bond king says he's not worthy of the title and that many of the investors of our time can claim the throne saying it's more likely they benefitted from an incredible period that lasted a decade. all of us, warren buffett, george soros have cut our teeth during perhaps a most advantageous period of time, the most attractive epic that an investor could experience. his broader point, guys is what happens in the next epic if

credit doesn't expand, if there's scarcity of resource, if geopolitics stop regular capitalistic expansion from happening. >> some of these people did really well, and i disagree with this piece, and he's too hard on himself and too hard on the industry. he did mention peter lynch who got out at a good time. i sent -- when i was living in my car, sending that money to fidelity magellan fund and it ended up with six figures because he always kept his money in because there were a couple of days of the year that you make all of your money and the fact that there is such a thing called progress -- progress has been a reason to buy stocks. there's been tremendous progress and i disagree that it's a cyclical thing. >> it's the great bond market rally, so to speak that has gone on for 30 years. >> 1982.

okay, yes, it's true. >> by the way, i mean, early '70s, right? off the gold standard, the liquefying period. >> it's a similar argument to again, this david stockman piece that a lot of people talked about that was in "the new york times sunday review," the huge credit bubble was in that period of time. >> we had a period of tremendous up hefal called world war ii and we had incredible stagflation. go back to the '70s. nixon impeached, vietnam war, horrible tragedy, 35th anniversary not that long ago and tremendous protests in the country. whatever, thanks a horrible time. okay? are we going to see that kind of calamity occurring? >> he does raise the possibility that why are in his next yeara, ooh's continual lehman-type volatility. that would be a dhal earning

for's lot of investors who made money in a certain way in the last 20, 30 years. we had a crash of tremendous proportions and that was hardly a great period to be invested. the fact of the resilience of the market, and the market came back and it was 6200 when mark haines said, it's true. he's a bond market investor that has had an everlasting rally and the stock market, as we pointed out, you're lucky if you're flat. since 1976, i think it's 11%. if you're in bonds it's 7%. >> do you double on every five years? again, i read this piece, and i think it's a very thought-provoking piece. he's too hard on himself. he's too hard on the industry and there's been a lot of money made and people decide, that's over because they looked at the man in the mirror, okay?

>> i just miss the mustache. i miss that. no mustache. this piece is too negative. i like to go back to the jackson 5, when i was almost the beginning of the end. >> got to make that change. got to make that change as he would say. that raspy voice. >> you do bill gross and you do bond. rolling out a bill gross. i like it. we're going work on that. >> we'll go down to the masters. bubba watson going for a second consecutive green jacket. a live interview with the defending champion and we will talk about the hover craft at post 9. take one more look at futures this morning. a relative indecision after the adp number came in after the lower than expected "squawk on the street." back in a minute. everyone's retirement dream is different; how we get there is not. we're americans.

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>> welcome back to "squawk on the street." i'm mary thompson outside a federal courthouse. a source telling cnbc that former goldman sachs matthew taylor surrendered to fbi agents at the courthouse this morning around 8:30 a.m. and this

following a securities fraud investigation. he is expected to appear in court later this morning. it's unclear yet how he will plead. it appears to be related to an investigation or some charges that were filed against mr. taylor earlier by the cftc in a civil case back he was accused of defrauding his former employee goldman sachs. back in 2007 when he was a trader there he accumulated a huge position over $8 billion in s&p future which is cost goldman sachs over $118 million to unwind. he accumulated that position by bypassing the risk controls on goldman. goldman did flag regulators about this and he, of course, mr. taylor, later left the firm. goldman sachs declining comment and calls and emails to mr. taylor's lawyers have not been returned. >> thanks, mary thompson, for

that update. dominion resources has been capitalizing on the gas boom. last night on "mad money" ceo thomas ferrell told jim how encouraging it is to encourage drillers to keep on drilling for nat gas. >> i think we'll have enough done to make sure that the balance stays in the markets. gas has been volatile over the years. it's important to keep an underpinning under the price to keep encouraging drillers to dr drill for the gas. >> i mean, jim, this issue which we discuss here and you do so often on "mad money" so central. i don't think you can talk enough about it. >> thank you. there are two camps developing in this country. there is the dow chemical nucor camp which says we can't export this stuff. then there's another whole camp that says if we don't find more markets for it, drilling is still borne. the drilling index has gone down

so you've got this kind of, we won't produce enough if we don't have a market and we're not using it for natural gas vehicles, at the same time,sit ? and then we're dealing with $7, or $8, whatever it might be. >> shineer has the jump. it's really important. he has him who is terrific steny hoyer is one who will do the deal. steny hoyer very powerful, number two guy. don't think dominion will have that much of a problem getting that through. 3.5 billion, maybe 15,000 people put to work. >> what if we lose slow, natural gas prices for a lifetime.

>> then they start the music and we'll go away. >> that's exactly what's happening. >> cramer has a pair of stocks on his radar. does he think they're worth your money? we'll fiend out next in his "mad dash." futures kicking off to a quiet start. skwt squawk on the street" from the nyse straight ahead. [ 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? ♪

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>> a little more than five minutes before the bell on this wednesday. >> a couple of calls out of goldman. >> i have to tell you, the six flags. this company had a bankruptcy filing and a lot of people felt it was written off. no. they have a great yield and they have a great management and this stock has been hot. they start cedar fair and i love the stock with a civil fund. that stock has moved a lot and this stock can go higher. it is park season and it is a cheap and fun way to spend time with your family. the way it gets there is not to cut the dividend, but to go here. i love this initiation. >> gas prices in their favor this summer, we will see. >> meantime, they are cutting caterpillar to a neutral. >> yeah. the goldman sachs does not distinguish itself on this one. i think the time to cut it was up here and they're all worried about iron ore.

at 80 bucks you have to caterpillar. i would rather buy caterpillar than i would buy conagra. it's just a fact of life and i think gary is a better manager. >> they also cut estimates on joy. do you prefer joy to cat or cat to joy? >> joy is so well run, but they are so levered to china and caterpillar does have a worldwide basis and joy is coal, and there is no joy in colville. >> you got that right. >> when we come back, 1576, the number to watch. s&p within striking distance of the new all-time intraday high. we'll get the opening bell next. [ male announcer ] it's the little things.

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[ 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. >> you're watching cnbc's "squawk on the street" on a wednesday. the opening bell in 40 seconds. we worked our way back and recovered the downgrade. you want to touch on zynga before we get this? i know you think it's not the top story of the day. what worries me is zynga has to deliver some earnings and here we have the zynga casino launching and we need to see a bit of a management overhaul.

we need an adult in zynga. do you know any adults that would want to run zynga? >> i'll look into it. i'll look into it. >> all right. [ bell ringing ] >> there's the s&p at the top of the screen at the big board here this morning. data software company pros holdings doing the honors and over at the nasdaq texas-based independent bank celebrating its ipo. congratulations to them. auto sales, we got a bunch yesterday. autonation today. sales up 7% year over year. luxury jim, up 15. >> what did they? cut the rates for rich people? how much were the rates down? president obama must be thinking what was all of that stuff about the rich people complaining because they're buying cars like it's going out of style. look, rich people, i apologize that i said for a second that your taxes -- it's okay that you went up. no one likes higher taxes, but

it's not keeping people from buying cars. >> right. was this the strongest month for porsche ever? >> yeah. 4,000 -- last time i looked you don't need a porsche. you could buy a ford fiesta, but the focus had a good number. i mean, autos -- why do you look at me like that? you look ascans. >> i don't know. >> i think the auto market is a great tell of real consumer firepower. i know that the federal reserve is starting to make it so that you can securitize auto loans in a more aggressive fashion and that does matter. >> we do need to rely on ayer base of business than just the rich to propel the economy. which, by the way, the numbers yesterday, broader speaking, not porsche, but the big three. >> trucks. i bought a ford 350. >> recently? >> two years ago. used. got a great deal. those things are killers and the sales are coming back. >> do you tow stuff with it like

they do in the commercials? maybe you have your houses. >> i had waste management and they're saying the construction business is coming back both in florida and bec of sandy. when you dump, you have to get in line, and taking ren vagus from demolitions and it's coming back and they could be a real estate investment trust and credit suisse says it's okay. having been to the main waste management dumping point in new jersey. >> what's that like? >> it's beautiful. the seagulls mess it up a little. >> right. >> but they have a view of the empire state building at that landfill. trump could build on the landfill and we'd all try to get an apartment. >> the best view of the statue of liberty from the landfill. have you seen our view of the statue of liberty. you ought to climb that mountain and taka i look. >> they haven't capped that yet?

>> it's a prime piece of real estate anywhere. >> it's like a park. >> waste management has provided five times the energy of the solar industry. can you imagine that? >> the president doesn't seem to want to do a solyndra with waste management. >> i rest my case. >> up more almost 2%. we're expecting some big announcement tomorrow about a phone operating system. this news that the sec is going to let companies disclose on social media. >> i thought that was amazing. my charitable trust has been a miserable stock and a lot of people want to get out of it for the quarter and j.p. morgan says it's time to get back in. i know reed hastings turned out to be. he got in trouble for posting on twitter and now he turns out he was a bean ear. >> it's true. and it makes sense. the sec says as long as you make

your investors aware that you are, in fact, potentially going do it. >> that means everyone will have a face book account if you're going to own stocks. >> this is a national act and how information is disseminated in the world. so it makes perfect sense that in fact, you would be allowed. >> better than the corporate pr wire. there's a billion people looking at the wire. >> i know one of the sec guys said it was an interesting comment, right? they would look at the sec website. they all go to facebook. >> can you tweet, this would be an upside surprise? can you tweet that? is that okay? >> no. i'm sure we'll be wrestling with that question for the next two years. >> how about buy my stock, is bms. that's what it stands for. vodafone down 2.5%. yesterday we discussed this

strange story and we were somewhat skeptical. in britain the uk laws even when the ft or any reputable news organization comes out with a story, the companies are forced to actually say something one way or the other, so we did get that, 8k from verizon yesterday saying we're not talking to at&t. we're not talking about buying voted phone. we're not doing that. that does not mean that verizon and they said this is fine and they're want interested in continuing or trying to see if we can have a negotiating parter? to buy wireless it sdvsht already own. certainly the timing for that might be appropriate given how cheap money is. if you were to do a deal they would have to raise perhaps as much as $50 billion in the dsht

markets. >> you're saying it could get done. >> i've talked to how many vafrngors. this is for the 45%. this is not the crazy idea of buying vodafone with at&t. i mean, come on. the level of complexity and that's the world we live in. anybody can move the stock with anything. ? you have to go on twitter and say we're not talking? >> only in the uk, not here. they have very different takeover statutes. >> remember when the lat -- at coca-cola said listen, to a media report about buying snapple. you don't have a clue. that was the first time i ever saw a ceo just call up the meeting and say this is not happening. >> i'm really glad that wasn't my story. i remember that. >> the stock will keep levita levitating and coming down. it's got a big yield and we'll see what happens over time.

vodafone has to get its strategies and hey, we're all about returning economic value for you and it's not about what we would do with the cash and we would do it if it benefits us in the return and the benefits are better than the dividends woe will get from owning that 45% stake. we'll see. i'm sure we'll revisit this again at some point, but not with the at&t story. >> this is not the kind of deal -- every day i come to david and say did you see the pennsylvania-virginia deal? >> come on, i'll write that check. we'll look at m & a shortly and have discussion about that. >> before we get to pisani, do you want to touch on monsanto? i don't want to lose the chance. >> monsanto is another issue that is like conagra. they reported a beautiful quarter, okay? just fabulous, but remember, this is a corn play. corn is an incredible bear market. only 62% of the raw cost of cereal is corn, but if we're

having a bear market in corn then you don't want to buy monsanto as great a company as it is and it's starring hugh grant. hugh grant is not just the xe and he starz starts at ceo and issue careful, give know the fact that corn is in serious decline. that's why buffalo wings. >> they eat corn. they have checkens eating corn upon. that's not the way god intended it. >> they ripped up their next thing and that's all they left us. >> all they left was their bodies. >> that's what foxes do. they took the grave stone away, but they left the bodies! >> that's a good story. al most as good as marvin the bull? norman! geez! they have a weird way of finding out whether it's the right time

to -- many we should skip that. >> let's get to pisani. he'll save us. >> happy wednesday. we're flat and i'm amazed that we're flat. first we had a soft ism number and now we have a soft adp number. what the heck is going? is the rally in trouble at this point? i know everyone likes to talk about the mismatch in adp and they revised the methodology and since then the match has been better with non-farm payroll. adp's been stronger and this is the weakest adp number we've had and at least it's going back into october, and i think it's been clear here, particularly the pay in private payrolls. it was a big number on private payrolls on friday. if we drop over 200 there will be a lot of people squawking rather loudly. the question is is there a trend in the economic numbers

indicating a bit of a cooldown after a smut hotter period in the last few months here? it's been a strange rally. you've got to admit, the last two weeks i've been putting this out for days now. look at what's been going on. consumers stocks in the last two weeks up 3.1%. cyclical stocks, your energy stocks and material names and all of the big industrial names down 2.5% and steel stocks are a mess and energy stocks and the drillers are a mess right now. bank of america, citigroup trickling down recently and it's all about coke, mcdonald's, philip morris, april and your favorite stock, jim, general mills and that's what it's been all about. a couple of things that i think is going on here. particularly material stocks and commodity stocks with china. china is don this year and even the hong kong market is down with the s&p 10%. copper is down 8%. they all seem to move with

china. that's a major factor. number two, i think consumers -- >> traders are buying u.s. stocks and they're the place ways to be, but they want to buy in the ralliy and seek logically that does make sense. finally this goes into my them of the adp and so instead of people mae have 2% or 3% than we're seeing right now. that means buy defensive names right now. that's why we're in a defensive rally. >> you were talking about delta being disappointed? u.s. air came out with their numbers and the passenger revenues are flat for the month. that's a real disappointment again. this is the second one now that's been disappointing. they all were down yesterday and a flatter opening today. i'll have more on that in the next hour. >> i reiterate that the reason

why you want to own u.s. airways, it's because amr knew. rick santelli is over at cme group in chicago. good morning, rec. good morning, jim. we're back down at 184 and this is of course, what? the day we get fresh records in equities. it seem weise go from pom-poms to mortitions. to me you will hear the excuse e sequester and in the end it probably is the new normal. we had a guest on yesterday that thought 4% gdp is arne the corner and that's the low of the gdp since october, excuses, who cares about them? same thing, the markets on the fixed income are definitely tuned in to the weakness and there is weakness, but here's something fascinating. we continually look at the spread between the two. look at this four-year chart. do you see the work it's doing on this top in the mid-50s and

you look back at the tops over the four years. it's one speak. many technicians say this is the top of the spread. why is that important? because now you can watch you were and the u.s. there's a lot of information there and let's look at what's going on with the euro. we talked about 128 area being important. look at the continue to work there, it is like as close canning vealation, jgbs. how can you be worried when you're 55 basis points in yield. it's having's correction on the percentage basis. if there is anything inherent that goes wrong. that's the canary in the coal mine. jim, back to you. >> very good. i know that conagra barely down. caterpillar barely down. let's check out the latest news and energy in metal which is is

the reason why cat's going down. sharon epperson at the nasdaq. >> we're looking at oil prices and looking for hot spots. in this spring time, eerily quiet and that's a big reason why barclays is saying that the placid geopolitical performance, and they lowered to forecasts for this year from $125 a barrel to $112 a barrel and for nymex futures, $8 to $95 a barrel. of course, anything can happen in terms of iran, in tomorrows of israel, but right now it is pretty quiet and there's plenty of oil being produced to meet the demand that they seek for this time. we'll get a snapshot of supply and demand here in the u.s. out of 10:30. we'll look at gold prices that continue to be weaker here. we have seen technical pressure in the gold market and a lot of selling and reduction of

holdings for exchange-traded funds and that has caused for the weakness in gold, as well and silver is now in bear market territory at an eight-month low, david. back to you. >> thank you very much, sharon epperson. we never got to go over the m & a numbers in the fourth quarter. you remember, of course, we had the heinz deal. we had the dell deal and the potential deal from blackstone and comcast buying out what it didn't already own from nbc universal and ge and those added up to getting a lot of people excited that the day of the big deal was back. well, not so fast. as the months went along and the quarter ended you can see, not bad. not bad by any stretch and not what some had hoped forgiven the quick deluge we got of the big deal. where are we now? when i speak to bankers and senior managers at a number of companies there's not that there

isn't an expectation and there won't be a continued pace of deal making, that's fairly substantial, but there do seem to be certain things that continue to weigh on the decision-making of ceos who might entertain a potential transaction. confidence is always key, and if, in being fact, you are confident and you're seeing some of your competitors do deals, that may be the main votevation to do that deal and when you see a regulatory framework that you're unsure of, and it isn't necessarily that it is a big imposition, but the road itself is hard to see. that perhaps givious some pause. when you see not just activists and other shareholders in the dell situation come out and start complaining, proons because they don't see any downside and they want to get their pound of flesh if they can and whatever the deal may be. then you also, that bid includes

the other bid for dell. >> then you may also have another impediment. there are a lot of different constituencies and the ceo is left to say is it worth me putting myself out there. my tenure is seven years and i can lose my job if this isn't a beg deal. people will start yelling and screaming and i'll tell you yesterday, speaking to a number of bankers and a $20 billion deal out there fell apart and this happens all the time and it's not like conversation and it's just not worth it right now. >> conagra buys raw corp and the stocks are willing to overlook anything in the near-term if you buy a company. ooh been the response of the market to dealnd certainly bankers argue that, but you do have to consider these other factors of want just your activist investors and the typical mun coming out and saying what are you doing? >> u.s. numbers were stronger m

& a rather than the rest of the world. the rest of the world is pathetic. >> even with an incredibly strong bond market. >> i saw you come in witha i full head of steam and expecting to see new deals in march. march was very disappointing. good call. >> we want to get to scott cohn who has breaking news at head quarters? good morning. stephen cohen can't seem to catch a break and is certainly not out of the woods this time. this time a suit he thought he was done with filed four years ago from his ex-wife patricia accusing him of among other things, insider trading and hiding millions from him during their divorce, that suit was thrown out by a lower court in 2011. now a federal arc peels court has reinstated it and said the statute of limitations that was cited by the lower court is not an issue here. the case can go forward. patricia cohen's attorney telling cnbc in an email the suit has been reinstated.

this is a rico suit, and quote, we are delighted. no response yet from the stephen cohen camp. previously his attorney said that the suit was without merit. back to you. >> all right. scott, thank you for that. another development to keep a watch on. some positive economic news out of china and the official pmi index rising on the services side. we'll talk to ed chen, the head of asia pacific and he'll tell us the best way to cover the region he covers. pro golfer bubba watt sob getting revved up for the masters. the defending champion will pay us a visit at post 9. take a look at this morning's early movers, aol, carmax and some others. we'll be right back.

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>> time for "six in 60," six stocks in 60 seconds. >> a sell from citi, why? because they do a lot of testing and could be involved with the government. they're very worried and they mentioned sequester again. this is a company that didn't report a great quarter and it was the high-end luggage. maybe they're shopping it to me. >> upgrade to dollar tree. >> dollar tree, this is a dollar renaissance. it looks like dollar tree is an

expensive stock. >> downgrade of legg mason. legg mason has had not that great performance and the stock has moved up nicely. panera getting some love. now this is very interesting because this company has been flat lining. the business is strong. don't forget the raw cost, the crop market. bear market. >> finally merrill says time to buy valero. i would be careful and let that percolate for a couple of days. >> what's coming up tonight on mad? >> there was a guy kimco realty. david henry, he once heard me say i'm worried about kimco and amazon and that kind of thing and brian and i were going back and forth at 2:00 and he called me and he said we have a good story to tell. he is a jigigantic, gigantic operator of stores. every mall you see, it could be a kimco, and i've got to find out from the american consumer

because that is the conundrum. sequester will be an issue, but housing good, auto good, how about shopping? i need to know how good shopping is. >> interesting. i wonder, the sequester if we'll look back in a few months and say if delta was going to be the beginning of a new shelter. >> people are bomb barred and you leak the airlines, cramer and you're all washed out. i'm focused on u.s. air, but remember, consolidation means prices will be able to stabilize and it's only a matter of time before people realize, holy cow, to fly in the country, there's no cheap fare. >> you said that a couple of times and we talked about the theme parks. does this extend to tesla? tesla's controversial. there are people saying listen, jim, you have to look at the reservation numbers. they're not that good. i should have mentioned disney earlier when i mentioned cedar

fare and six flags. there is a theme in america, fun e isn't it? i saw cyprus, the stores are empty and to get 50%, 60% off for jewelry. >> finally, if the s&p, if it closes down today, that's ten sessions where it has reversed intraday in a row, and we talk about this amnesia market and in a way it's also an indecision market. i need the transports to get strong and the transports let us. we do not want to be led by general mills. general mills can only do so much work. >> when we come back, some breaking news on ism services and plus market reaction as the s&p continues to chase history. from going to the green to the quest for another green jacket. it's a live interview with defending masters champion bubba watson. don't go away. w property tax ca. and the lowest middle class income tax rate in 60 years...

and a billion dollars in tax breaks and incentives. new opportunities for business. over 250,000 new private sector jobs were created over the last two years. and 17 straight months of job growth. with the most private sector jobs ever. lower taxes, new incentives, new jobs, now that's news. to grow or start your business in the new new york visit thenewny.com

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♪ no two people have the same financial goals. pnc works with you to understand yours and help plan for your retirement. visit a branch or call now for your personal retirement review. >> welcome back to "squawk on the street." both the dow and s&p coming off the record closing high, but with the adps disappointment the

jobs friday looming on the horizon, are we further away from record territory? is the rally in trouble? >> plus it's the countdown to the masters and reigning august champ bubba watson is here, as he looks to the famed green jacket for one more year. robert frank here for the full hour and we'll fine out why young millionaires just might be far more aggressive investors than their parents were. got to hear that. >> first, though, some breaking news from ism services and for that we send to to rick santelli. it's a little late, but my man, 544? >> yeah. >> 54.4, that's the march read on non-manufacturing ism and the broader swat to the u.s. economy, the service sector. if we look at the adp's and the expectation for friday, its new read is 53.3 and twhafs last time, 57.2 so headline

disappointing a bit and the employment index disappointing a bit more and when was the last time we had a read at 54.4? that will be the weakest since november of last year? carl, back to you. thank you so much, rick santelli on that miss. let's get a check on the markets. 54.4 was a miss, lowest since november. the estimate was 55.8 and we have lost growth fund here. s&p down about four handles to 15.66 and the nasdaq down a tough to 15.51. >> jc penney saying its ceo did not receive a bonus or stock award after what was a dismal year for the retailer. courtney reagan has the details. >> 2012 was a rough year for jc penney, no doubt. they shed their value in the calendar year as they logged the first 11 months. ceo ron johnson and others felt

that hit in their paychecks. for 2012, johnson's base pay was unchanged at 1.5 million and his total compensation 1.9 million and he received no stock awards to compensate him for the apple stock that he would have invested had he stayed with the company. it did total 53.3 million with the stock awards worth $52 million. johnson wasn't the only one at jc penney taking a hit. none of the others got bonuses and due to the company's financial results versus its goals. the ceo received 44% of its target cash, the proxy said and the other named executive officers received collectively 55% of their aggregate target cash compensation. johnson still lives in california, but jc penney is headquartered in texas and johnson showed $are 344,000 in the corporate use of the aircraft. he had no comment beyond what was in the proxy. you can see the johnson's

$344,000 corporate jet usage is pretty usual for jc penney's use and it's below the amount that the ceo might owe the news as jc penney's ceo at his home in colorado. while jc penney and his sales weren't as troublesome as they've been under johnson and that's why that jet use has been a point of contention at least for some. david? >> thanks very much, courtney reagan. they are in early trading dropping offer the isn number this after the dow and s&p, she's the portfolio manager for the client private group. >> we were talking about the coming earnings season and he seemed to be worried as props

others have come down. how important is this going to be in fors of your view of the market and how to sustain this rally? >> i think it's important and a lot of expectations have come down. we're looking at very flat earnings growth and not much in terms of revenue growth and margins have been restored to a full measure and i think that had to do with the fact that the government had pumped large amounts of money into theeconom. it found its way into private finances and households and savings and profits were elevated at businesses and now that the deficits are coming down, we expect a flattening out of profitability and that doesn't mean the end of a bull market and that just means we're in for a slower grind. >> we had the esm manufacturing mi miss, are we in for a friday and we are well aware of that and

the numbers that we saw in the ism are not recessionary-type number. >> the employment index of the ism service is a pretty good tell on non-farm and it didn't look as good as some people thought today. one of the things that we've seen that's kind of interesting is that if you talk to ceos that were running businesses and the business roundtable just did a survey. if you ask them what they see in the future, they see sales moving higher and if you ask them about employment that number is fairly modest. that forecast is almost terrible, and when it comes to predicting it, the capex is a poor economy and the business roundtab roundtable. just go the other way. >> if you think about what ceos were doing last fall. they were concerned about the fiscal cliff and capital expenditures was well publicized

and it was good to see some hint of optimism as it relates to spending and we can't move into a more robust economy as it turns to capital expend etchures. you're not that concerned that if you get an earnings season that is mixed, let's say, at best that that is not going to stall the rally? then we'll continue to rely on multiple expansions and the yield is quite low. we're not at an inflexion rate because profit abity is very high. we do look at the underlying earnings in the s&p. we think that the market is expecting their 110, $115 of earnings and that may be optimistic by our math and weir thinking $105. even if we assume $105, you're hard pressed to conclude that the market is dramatically overpriced and you're at about 15 times earnings. so what we need to see now is we need to see a pickup in business spending which drives profitability higher from here and as the government -- for the

first time in five years pulling back these deficits, it is now time to transition to a more private sector-led growth and we may be in the early stages of that. slow, but steady, wins the race and to focus companies that can provide farm see results and we have modest growth in the economy is the way to play it from here. >> a couple of picks, accenture and walmart. >> accenture is a consistent performer and walmart, again, playing on improvement in the consumer, slow and steady wins the race and both fantastic businesses and well positioned for the role that we see ahead. >> have we blown through your equity targets for the year already? >> we're coming close. >> where are you? >> we're at 1575 for the year and we're pushing up against them and that's a year-end

target as we look out to 2014, we would see higher numbers on the 12-month basis and no question that the market is about fairly valued. that's the fair value estimate about 1575. you don't see yourself chasing it the way we've seen from a bunch of strategists. >>y no. i would sht run from the market, either. if we do hit an air pocket and we'll take a little breather. that's the pause that's not necessarily then of the bull market, just one that one owned at fwriter prices. >> very important day today. 40 years ago today a phone call was made on the very first cell phone. it was nine inches tall, weighed two and a half pounds and we were joking it likes like what the gecko is using on the beach. what words or advice of caution would the original cell phone give to the smartphones of today?

sweet us @squawkstreet and we'll get to your responses later in the morning. >> looking forward to that as i always do from our creative viewers. we have a big sell-off in one streaming media company and for that we send it over to josh lipton. check out netflix which is getting hammered. it is the worst laggard on the s&p 500. i checked in with mark newton of gray wolf for a quick technical take. the break of 175 was a big deal. technically, he thinks the stock could head to 142 from here. netflix down 1.5% right now. >> thank you very much, josh. >> still ahead, robert frank lays out the inside scoop on why young millionaires might be more aggressive than investors on the street than their parents. the lure of the green jacket at the masters. the reigning defending champion himself bubba watson will drive by post 9 and he'll talk about the competition and last year's miracle shot and why tiger woods

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welcome back to "squawk on the street." brian is here with us. >> let's face it. i don't know if you saw the video. we'll talk about the masters and eating breakfast as we used to, and everyone in our office wants to talk about the hover craft. the first question is is it real? >> yes, it's very real. >> okay. is it something from a business standpoint, tell me the story of how it came about and will it actually go into production? it's pretty awesome. >> i want to be associated with fun companies and for me it was

oakley. to me it was what can we do to grow the game and who doesn't want to drive a hover craft across the water and they were, like, yeah, let's do that. we did it. we didn't know if it would be a practical, cost efficient, but it was going to be fun and hopefully change people or want people play the game of golf because they were watching us having fun and goof around. >> it's roughly around $16,000. for the hover craft. >> before you customize it and put the golf roof on it. >> how does it hand snell. >> pretty good. like it's on air. it's one of those things, it's not like's car or golf cart. it will start getting away if you panic a bit. >> would it actually go into production? would courses accept it? everybody in the demographic watching the show would say wow! 16 grand, i could do that. that would be fun even if they don't have a golf course to go

to. >> that's the thing. the hover craft is made for hunters and things like that, so we wanted to bring it to the game of golf. the hover craft has been around for a while making them. they make about 10 to 12 a yore. there are companies out there, golf courses out there that have asked to buy a few. i don't know if it's practical. i don't know if it can be done, but you never know, though, we might chaemg the sport. >> talk about the golf champion, you ond adopted a child and won the masters. it was an incredibly emotional time. we know what tiger's doing right now. >> tiger is the man to beat. he's number one in the world. he's won that before. i've played well there and i've played pretty good. i like the golf course. it sets up really good for me and hopefully i can compete and have a chance to win on sunday afternoon. >> is your strategy to repeat everything you did well last time or will you alter that this time around? >> no, this time i want to hit

it on the fairway instead of on woods. >> it's the same mental focus i have, the same mental drive and the game of golf is all about the mental part of it. everybody can hit tee shots and iron shots and it's about staying focused, staying committed and not let the bad shots get you down. did you find a change in your attitude as a result of winning your championship? >> it does a first, yeah. it's such a high. to win it and then get the media attention and the fans and i adopted the child. to me, i can't wait to let my son be there for the first time and let my wife be there with our son and it was the par 3 the day before on wednesday. >> what's it like, honestly? is it weird waking up at the same house that tiger woods lived in? is that odd or is that easy to

get over? for people out there, you bought his house. >> it's not weird for me. it's a great location. it's on the lake. it's on the driving range. it's got the playground 50 yards from my front door. it has the tennis courts which me and my wife love to play. we changed the whole house. we changed about 95% of the house. new pool, the garages are facing different. we added rooms to the house so we changed it a lot. >> finally, you mentioned oakley. you want to be involved with exciting companies. are there others? what's the screen that you would put sponsors or would-be sponsors through. >> i've been with pink since i was 8 years old. they made the pink driver. eb ebay. i look at cars on ebay. i love cars. the only sponsor i don't have that would be fun for me would be a car sponsor. i love cars so why wouldn't there be a car sponsor? american, because i'm american,

and i love to have fun with cars. >> never took a lesson. >> no, i never took a lesson. just all look. >> it's got to be more than that. >> gift. i don't know if we have time to show the rap video? >> let's have a listen. if you don't know bubba watson out there, give a little bit of listen to this. >> identity away to cry, boo hoo. oh, how the birdies love me, love me, love me ♪ ♪ baby, got my spf on ♪ >> you didn't even trim the chest hair, did you? >> i'm a man. i'm not atrade of it. that's why i button it to the top so people don't see it, you know? >> three other golfers in the video. >> the game of golf when you look at it as a whole, it's outdated. it's boring and slow. for our brand, for the game of golf, for our brand, we want to show excitement and we raised

charity dollars for this, doing these videos and so for us it's about trying to get one person involved in golf that's not normally in golf because they see us having fun and goofing around and they say golf is fun. just trying to change the sport a little bit and help it grow. >> do you feel pressure? >> obviously, everybody likes you you haven't changed at all since you won the masters, because of your personality and because you're so accessible, is it natural? >> i love the game so much. without golf, i couldn't do all of these things i get to do. without golf i don't get to go to these countries. i don't get to go to the masters. i don't get the education i got in college, you know, i met my wife in college. if i wasn't playing golf, my parents couldn't afford college so i got a scholarship. all of the great things that happened to me is because of golf. i want to grow the game that's meant so much to me. i don't see it as a job, it's just a fun thing i do.

>> it's great having you down here. >> i'm sure everyone wants to meet you on the floor and thank you for stopping by. >> bubba watson. >> unbelievable. >> we wanted the green jacket. where is it? >> i just left it there, i let them press it for me. >> get the lint off it. >> thank you, guys. >> you're the man, bubba! >> there you go. you're the man. more from steve liesman's governor, daniel tarullo. he doesn't have a green jacket. the policy and a lot more. and the head of asia pacific and it will lay out where he's looking for opportunity now. he has a cautious outlook on the banks overseas. ♪ ♪

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the millionaires between the ages of 18 to 35. how do they stand up to their paeshs in terms of micromanaging as investors and where exactly do they get their financial information. who better to ask than the

resident wealth reporter. what's going on? >> generationwise is expected to inherit about $20 million from their parents and as investors forging a very different path from their parents. investors between the ages of 18 to 35, they are far more growth-focused. 88% looking for growth over preservation and two-thirds looking to take greater ricks for greater returns and the bigger difference is the use of vezors. this jn raising is far more self-reliant and about three-quarters of them saying they are, quote, self-directed and they told me that young people have far more information about investing than their parents did. most get that information from tv business news. good for cnbc, and only a small number from social media. that is due to the fact that the generation grew up in the loss

decade and they've seen the losses of their patients and they don't want to make the same mistakes. whatever this group does is 30 trillion. however they invest and it's's very important demographic. >> they grew up with a world view of investing much different than the parents. >> for advisers, there are billions of dollars at stake in fees here. a lot of kids do not want to use their parents' advisers. 90% of kids according to one study do not want to use their parents' advisers because they've made mistakes. if they are this aggressive that could be good news for the market. >> there was a great piece in forbes about carl icahn and the money he's given to his son and here's your money. i'm not going to give you special treatment, necessarily and i won't bring you special meetings just because he's

related. you don't inherit those instincts. >> no. it rarely trns lates. >> when it comes to the acumen. >> so the incentives for them to grow up in a culture of investing in stocks is just not there for a lot of these kids so we'll see what happens. >> interesting, provocative stuff. thanks, robert. >> all right. after the break, we'll have some breaking news on crude oil inventories and after the weakness that we've seen in this sector this week, well, will the data push us back up? that's a good question. >> also ahead, the nyse airline index seeing its worst two-day drop since june 2012 after trading up, of course, 20% year to date. so again, i'll ask you another question. is this the beginning of an even stronger pullback? welcome to the new new york state.

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i'm sharon epperson at the nymex with breaking news from the u.s. energy department on weekly crude supplies. we are expecting to see a build in crude supplies and that is what the industry reported last evening with the american

petroleum institute's report and we have seen oil prices come off a bit here as we're down about 70 cents or so ahead of this release. bee saw a big build in crude supplies from the api number last night, 4.7 million barrels and that brings the number in line with what we're seeing from the energy department, as well. we are seeing a build in crude supplies from the energy department of 2.7 million barrels and an increase in crude supplies of 2.7 million barrels. from gasoline supplies we're seeing a decline of 572,000 barrels, and for distillate fuel supplies, much bigger decline than expected and down by 2.2 million barrels and almost 2.3 million barrels and we're seeing oil prices come off more from when we saw from bill supplies and it was for a 2.5 increase

and we're seeing refined fuels as well and we're also looking at what's mentioned in those supply, down about 300,000 barrels. carl, back to you. >> thanks very much, sharon epperson. some of the stories weir squawking about at 7:31 on the west coast and 10:31 on wall street. a reading of 54.4. those numbers indicate services expansion at the slowest pace since august of last year. monsanto among the big gainers on the up 2.5%. the world's largest seed company posting better-than-expected quarterly earnings and they did raise their full-year outlook. biggest decline or the dow and it is down about 2%. i want to bring in briansha. we have news here on what was a shocking video of a basketball coach abusing some of his players, brian. it's gone the way many people thought it might. >> mike rice, the head coach of

rutgers basketball has now been fired by the institution. just for perspective, espn did a big report that showed him abusing players and throwing basketballs at their bodies and the actual incidents took place last fall. the backlash has been huge. don't forget, it's a state school responsible for a lot of things. the news is that this came out last fall, guys. so this happened and they disciplined him and fined him $50,000 and suspended him for three games and the president was in on this decision and the key here is are those jobs in jeopardy here, too, because people now that they've seen it and heard the insensitive comments and the anger at the player, what happens next? i will say he's been on air several times. to date he's been a great athletic director and he got rutgers, and he built up a traffic program and we'll see if

we stand up for him as well. >> people either say that's inexcusable as you put it and that's what tough coaches are like. if this were football would can be a big deal. they said smack me in the head once. i can handle that, but repeated treatment like this and you think about it, they're still kids. >> these are students. these are still students. >> and they're not at this elite basketball school. they're powerless, right? they really don't have a lot of power here. and the assistant coach who reported this was let go. so there are institutional controls that are at issue and you're right, there is a huge debate about, listen, it's not like he punched them in the face. he pushed them, threw the ball at them and was trying to make the team better, but the backlash was far too great. brian, thanks for that story. brian secretary of stateman.

let's go and sit back with exclusive interview. >> david, thanks very much. dan saying considerable work needs to be done. here's what tarullo said when asked about too big to fail and if taxpayers can once again be asked to foot the bill for a big bank. >> i don't think so, but i don't think anyone can be assured of that right now because this is a process. it's not a binary matter of a bank being too big to fail or not. it's a process of building up capital. of the fdic continuing to do its very good work and building up its resolution authority and as i say, us addressing the issues of funding. >> the progress, as he said, was made in creating that resolution at the fdic and higher capital ratios. asked about breaking up with the big banks he said that was a

matter for congress. the fed is looking for stringent liquidity agents and whole-sale funding. >> he saided u.s. will proceed with higher surcharges for the biggest bunching after basel agreement. it will push con con -- tar owe ullo was saying he was encouraged by recent economic data thanks not prompting an end to quantitative easing. >> we had some increases that lasted for a few months in job creation and then they were followed by valleys. so we had peaks and then valleys and i think at the very least what i would like to see is healthy peaks that had job creation well above the new entrants into the labor market followed not by valleys that

take back some of the progress, but at the very least by a nice plateau. >> at this point tarullo said you can count him among those who think the benefits outweigh the costs. carl? >> you are joining us on a day when we have a miss on data from the ism services. i wonder if that incremental misses bolster the point, if the misses are to the down side. >> i think that's right, carl. some of the work shows we've been overestimating the growth quarter growth for a long time. right now it's supposed to be 3.5% and over the last three years the first quarter has been revised down on average by a full percentage point, carl. the strength we had in the first quarter not only doesn't last, but it didn't exist to issue ginn with. >> excellent for tarullo. turning our focus to the asian mark, the nikkei is jumping 3%.

it's time to be more cautious on emerging market investing. i want to bridge in the head of the black rock's emerging markets and the scientific value. welcome. >> thank you for having me. >> you say it's time to be more cautious in emerging markets. does that refer to china, necessarily? >> china is certainly a big driver in the overall emerging market investment and china is slowing down visibly in front of everyone. i think the big question for investors is china's's intentionally trying to slow down, but is the world really ready for china to slow down? >> slow is 7.5? how slow is too slow? >> they can personaling the slow down intentionally in that slowdown may mean 6% to 7% from a gdp perspective. what's more important is due cot comp session of the slowdown, infrastructure spending and domestic position, is that what

is your sense is and what is the answer to that question. our view is the slowdown can come from the exporter and come from the infrastructure spending which has been a big driver for the overall china's growing story. domestic construction and there will be a gross driver there. the big question here really is the government going to beably to try to force people to buy a refraj rart to old -- in your overlay, the political significance is taking place and not to mention the increased tension with japan. there's a lot going on there, isn't there? >> yes. politically, it's at a very delicate point in the sense that there is a new leadership is gradually coming into power and the interesting thing about china is china will think on a ten-year horizon and in that

horizon i think everyone from the west thinking about china will see the movement to be very slow and the tension with japan, as you said is historically there has been a lot of tension and the events is certainly bringing up some of the historical hostility and that's a space that we need to watch out for very carefully. >> for years we worshipped this notion of the grits, russia has fall know out of favor and china is slowing down? what is the emerging market of the brick that's left? >> the pure folks out brick is overplayed. let's not forget about frontier market, as well. these are interesting growth stories in africa and in middle east. when you look at emerging market globally there are very interesting opportunities and i think the key here is to differentiate. it's certainly about china to a certain, tent, but the emerging market is a much wider net. >> which countries do you like

right now for growth? >> we're ghiet favor of brazil. not in its economy. the economy is slowing down visibly. we like the utility plays in brazil. we like the toll roads in brazil. there's not a boring place in some of these places. they have huge, interesting cash flows and the roes are very, very good. do you think north korea will be disruptive to global markets at this time? >> i'm an expert on north korean politics. i think there are a lot of attention-seeking behavior there. china be a big play over there. i do think that the disruption to south korea will be meaningful for an economy and long-term investment. >> they've done something right. what about japan? is it a second chance to finally get this right. >> it sounds how much longer this music plies and japan,

either you go back big there or it will come hom and the interesting thing is that japan is not only gathering the demand from a large part of the world. you can see the interplay between the korean yuan and japanese yen. japan is a place that i think is binary in terms of outcome. >> just very quickly, i want to come back to the idea of frontier markets and mentioned africa. given what i would assume is not a great deal of transparency or confidence you can have and not to mention liquidity. >> we do have etf shares and focused on frontier markets and that's a very easy, efficient way of getting exposure. liquidity is an issue and that's the reason we manage this professionally for investors and differentiation will be very

important and there will be winners and losers. these things always correlate and when there is a major crisis everything seems to move together. >> absolutely. thanks for you coming in. great to see you. >> stevie cohen of sec capital and we have details on that next. plus tomorrow marks the big day thai got their operating system and we'll show you what to expect after the break. >> want to show your ipad some extra love? why not use the cnbc cover signed by the entire "squawk on the street" gang, well, it can be yours if you can can guess friday's non-farm jobs number. tweet your guess to @squawkstreet and don't forget the #nailthenumber. oh, yeah, you have to be 18 years of age to enter. sorry, kid. go to sots.cnbc.com. you have until 8:29 a.m. friday

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>> some old allegations against sec capital stephen cohen getting new life. scott cohn has the details. >> just when you thought life was over for these allegations, this is not the biggest of stephen cohen's worries. it seems to be swirling all around him, but it's probably the last thing he needs right now. cohen's ex-wife pattish risrici him saying when they divorced in 1999, he hid -- that allegedly netted him $20 million. her lawyer sued under the rico statute which is reserved for organized crime. his lawyers said the allegations are false, without merit and the statute of limitation his run

out and the federal judge agreed, but now a federal appeals panel in new york said not so fast, reinstating most of the claims and putting the suit back on track. patricia cohen's lawyer says they are delighted and they called this a procedural rules and at this point decades old are patently false and entirely without merit in their words, this is going to trial if they don't settle first. >> thank you so much. scott cohn at headquarters. josh lipton has details on that. >> hey, carl. netflix is getting absolutely crushed here today. there is no fundamental reason for this. i will tell you there is speculation out there that carl icahn is selling netflix. however, i just called and spoke with mr. icahn about this. he generally doesn't comment on rumors, but he says this happened several times over the

past few months. he's starting to believe that there are people putting out rumors and trading on it. he told me he has not sold one share of netflix since buying it. icahn toll me he believes subscribers will sell more than the street estimates over time. netflix down 5% right now. back to you, carl. >> that's what they call ú value-added in the tv business. >> banks push to make more mortgage loans to people with weak credit. we're not talking about the financial crisis. this is a new report and rick santelli is on that case when we come back. we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed: the official retirement age. ♪ the question is how do you make sure you have the money you need to enjoy all of these years. ♪

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one name we will be keeping an eye on for the next several minutes. gets pounced earlier on the session over rumors ikcahn is selling shares. icahn says he has not sold one share. we'll see if that does anything to repair the damage today. rick santelli with the santelli exchange. good morning, rick. >> good morning, carl. we have some important data this morning, and we all argue whether some changes in the calculations of the adp jobs report are going to make it

correlate more or less to friday bureau labor statistics report, which it always precedes. but in it of its own merits, it was a weak number today. weakest since october. it really draws one in to the verbage that we get trying to explain, for example, the tail wagging the dog in terms of since stock prices are up for some hard to measure impact of fed policy but also positive impacten improving the economy. the economies do improve. especially the ig biggest in the world being u.s. it still shows us we have uneven issues related to jobs. we have to really be honest and ask ourselves how much job is joing on. how much new programs like health care are going to to keep people in part time jobs and split. we all heard about the 14

million on disability. this is really at the epicenter. the fed doesn't want to remove the training wheels. maybe this is the reason. if structural issues like a skill spread, as we talked about yesterday in jobs continues, it certainly seems that bloating the balance sheet for something you can't really impact, at least not for years and years until you prove education or find good incentives without government control to get business to start things like programs and apprentice programs. do you remember yesterday when i put the tie over my eyes because i can't believe that we're considers since fannie and freddie by the grace of god are making improvements in housing ha we made less we form, well, it gets crazier.

what is physical fitness and housing? lending and housing they have in common. think congressman ryan. insanity. i wanted to put my head in the sand like an ostrich. we saw on the "washington post" an article, obama administration pushes banks to make home loans to people with weaker credit. a frequent guest on my program said that would open the flood gates to risks and send us back to the path we were just trying to recover from. really? listen. young people, maybe it's better to rent for a while. when i was young, rates were 15%, 16%, you rent for a while. we don't need more tampering. it didn't work out the first time. back to you, david. >> it certainly did not, mr. santelli. what words of advice would they

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♪ ♪ no two people have the same financial goals. pnc works with you to understand yours and help plan for your retirement. visit a branch or call now for your personal retirement review. some somewhat disappointing news on the upcoming wedding of

n napster found you are sean parker. member suspected it would look like an episode of "game of thrones." they may not be the case. you are reporting as always. >> it's my job. someone has to do it. the wardrobe update, here it goes. we told you it would have a medieval theme. but he tweeted out, in fact, it's going to be more victorian flair and whimsy. he said they are hiring the designer for lord of the rings but just because we don't trust our guests to dress themselves properly doesn't mean we want them to look like game of thrones character. i have yet to receive my scroll invitation. any time you're dressing your guest for a wedding, this is a big deal. the wedding is fot until june. we're already talking about the

wardrobe. >> a lot of fitting between now and then. >> his fiance already dyed her hair silver. >> planning the catering and the cake is not enough. they have to issue the statements. >> they have to do the media planning. >> no. you know that i'm working on that. >> rich people problems. >> yes. >> 40 years ago today a call was made for the first time on a cell phone. that phone took ten hours to recharge. i don't know if it's different than today. that brings us to this morning's questions. what words of caution would they give today? chris writes, size does mear. is that true? lol, by the way. john writes you will be replaced by another another phone smaller with fewer buttons. you'll be in a donation bin before you know it. >> no.

i have no idea who my hair is. but they're very amusing. they're not insulting. i appreciate it. >> you remember these guys, i assume. do you own one of these? >> one of my friends bought this as a wedding gift soon after college. that was in the '80s. >> i guarantee these are going to start going up for auction for a large amount of money. any one who has those phones in good condition, start selling. the old apple phones are collectibles. >> we'll see you in the 11:00, too. if you're just joining us this morning, here is what you missed. >> welcome to hour three of "squawk on the street." here's what's happening so far. >> i'm very optimistic, u by think the next six month will be

tricky. i think we will see weaker job numbers in the next few months. one reason is the sequester. it will start to kick in. >> in accordance with the principle of increasing stringency for larger, more connected banking organizations. we need to do more particularly in the areas of liquid tid and wholesale funding. >> we're going to come into the earnings period worried about long-time earnings because of how far stocks have come up. i don't know if they can. this is a hash tag. it's not tic-tac-toe. it's a hash tag. >> they see sales moving higher. if you ask about employment, that number is modest. >> we did it. we don't know if it's practical,

cost efficient. but it will be fun. they're seeing us have fun and goof around. >> what is more important is the the composition will really be slowed down. infrastructure spending, real estate and domestic consumption. # mast where the big question is where the slowdown will come. >> good wednesday morning, we are live with a check on the markets on this wednesday. the dow losing ground here. up some 50 points. the s&p down almost nine after disappointing data. not just on adp, which was a miss. but also on ism services. another miss as the data lately appears to be disappointing with more and more frequency. a couple of restaurant stocks trading higher today. # and chipolte and panera.

phil lebeau will be joining us in a few minutes with more on that story. facebook's big announcement is just a day away. we'll find out what investors can expect from the bold move to handsets and what it means for the stock ls. plus, the airline sector was one of the best performances of the year. it lost more than 7 pblgt this week. should you stick with these names or hang on tight and ride through the turbulence? we'll talk about the octobers. also the sec embracing social media. now the companies can use facebook and twitter to announce news. we'll discuss what it means for shareholders and big business. zynga shares spiking almost 15% rite now. julia boorstin with a look at what is driving the stock today. hey, julia. >> hello, carl. it's about zynga cashing in on

online gaming. the sock is up dramatically as investors bet that zyga can translate the popularity of casino games into profits. both in the uk and the u.s. where new jersey recently legalized gambling. 18 years and older can play zyngo poker and plus casino, they are powered as download or web versions. zynga is looking forward to launching social versions for players on facebook and mobile games for the uk later this year. zynga shares are up dramatically on optimism about the potential for gambling to replace the decline in virtual goods for social games. today's launch is unlikely to boost the revenues, but it's a low-cast way to test erpting as it evaluates other online gambling opportunities. and they call today's move an

important first step to what could ultimately become an important source of revenue for zynga and something to differentiate it from other gambling companies. the biggest will come with mobile and social gambling in the uk, and then in the u.s., which may not happen for another year. carl? >> yeah, that would be the bigger payoff. we'll see. julia boorstin in los angeles. let's talk to sean, the buy rating on zynga and price target of four. sean, welcome. >> good morning. thank you. >> how important and how convinced are you that this will turn into a real revenue driver? >> it's an important first step. it's important because the market is so big. they already have tens of millions of consumers. the potential for expanding that down the road in the u.s. is important. this could be a very important source of revenue.

i'm not saying zynga is going to dominate the world. this is a way for them to possibly be a good partner for casinos that want to enter the online business. >> before we get to the uk run will go, julia, you heard her talking about the potential for the u.s. to change their laws, what is the percentage likelihood of that? >> it's rising. this would have been considered unthinkable a few years ago. but the justice department has clearly changed its tune. back in september saying it didn't consider all the previously prohibited acts to be necessarily illegal. some of them already approved it. it's likely some will never approve it. if you have enough with federal approval, or at least saying we're not going to prevent it, then you have a marketplace. >> let's say you're beginning to bet on a rising likelihood of things changing in the states. what in the uk will determine

for you whether or not this is a viable product. what sorts of suck less will you look for in the early going? >> the players, how many convert to playing really money gaming? how sticky is it? after the first couple of months of navlty and the costs are relatively fixed. if you get 10 bucks a month it's meaningful. if you get $100 a month from the users, it really starts to pile up. would you expect that to change? >> i expect they get around to it eventually. they're still an important partner of zynga. there's a test mark here. they would prefer not to share 0% of their revenue. >> finally, sean, if this works and we spent three minutes talking about how it's a big if,

that would be a huge vindication, would it not? >> it sure would. it would be a much needed win. they do have another hit in the market. is what is phrase? what is the phrase? they are certainly overdue for a hit. >> sean on zynga. a big move today. >> thank you. >> shares of tesla sharply lower after a new financing scheme that he calls revolutionary. phil lebeau joins us with more on that. the story doesn't end, phil. when you look at the the figure for the effective cost of leasing a model s that's what people have issues or questions with. here's the new leasing program for test la. it's pretty standard, similar to other leasing programs. it's 10% down, financed through a u.s. banks or wells fargo. residual value is guaranteed to be the same as a mercedes s class at the end of your lee

years. that's what you are guaranteed to have for the model "s." tesla says this will expand the market in terms of people who can afford to buy it. and a lot of people are saying what exactly is this program? you have to look at it, according to tesla over the long-term range. some of these are easy to understand. not buying gas, that's $284 if $5 a gallon is your gas price you're going to save every month. some of these, a lot of people are saying, what? i'm worth $100 an hour? you take that away from what it would cost you every month, and this is what you get. you still have to write the check. but the savings, $850 a month comes out to a monthly cost of $571. what is wall street's reaction?

not terribly impressed. while the program is likely positive, it may not prove a game changer in terms of demand. tesla has advertised $500 per month effective cost liberally employs a variety of strong assumptions many would not be eligible for. take a look at shares of tes tesla today. we're showing you the stock over the last week and a half or so. go back to march 22nd. that's when the first tweet came out where he said, listen, we got big news coming up, and then he said i'm going to put my money where my mouth is. he's personally backing the lease programs. well, it's now off today. what did you mention in the begin sng it's down 5%, 6%, 7% today? it's been down 7.5% today. that's the reaction to them announcing this leasing program. >> any idea if it goes live, when could i get in on that? >> it's now up on the website. if you're interested in going through the program, i am sure

that soon you'll be able to sign up for the down payment and they'll walk you through the program. >> interesting. we'll see if we star seeing more of them on the streets. thanks so much. in 1973 on this day, thf the top of the line cell phone technology. motorola 8000. now facebook is ready to release its own operating system. we'll get a preview of the announcement. first, rick santelli will talk trim tabs later on. >> up to love charles beterman. what a character. wooil talk about how equity funds may have changed due to cyprus. they also capitalize on their ununemployment rate in jobs. these are coming up at the bottom of the hour. teachers are great. this is linda from john glenn high school in indiana.

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dow is now down 66. also want to check in on netflix with josh lipton. >> netflix is down in the red for no apparent fundamental reason. there is speculation that carl

icahn is selling netflix. i spoke with in icahn about this. this has happened now several times over the past few months ch he told me he is starring to believe people are putting out the rumors and trading on it. he told me he sz not sold one share ch he said subscribers will increase significantly more than the street estimates over time. netflix still down off the lows of the session since we first reported this. back to you, carl. >> and we all keep in mind the gains more than doubling since the beginning of the year. a speculation on facebook's android event continues to grow. the expectation that facebook will unveil the first smartphone. for more, let's bring in jeff and mobile writer for forbes magazine. good morning to both of you. >> good morning. keep thinking babt to september when zuckerberg said, let's

build a phone. we're not. but if we did, we could get so many users. it doesn't move the needle for us. is this backtracking that in any way? >> we live in an industry where people can say one thing and do another. mobile is of critical importance to facebook. they have said themes that people are 70% more likely to sign on when they're on a mobile device than a desk top and everybody is moving their activities and everything to mobile phones and tablets. so he was to be there. i can't say i'm thrilled with the idea. but everything i'm hearing really indicated that they have worked with a partner. this is what we're hearing rumors. at&t with the skin over ann droid. again, zuckerberg was right in september, though. this is going to be a tough market to breakthrough and to really make a difference. >> i wonder what you think. i mean, let's say they are at least exploring the idea. will they stop at software, or is this a hardware story in the

end? bearing in mind that dominance that apple and samsung have in the market. and you look at how much investment that someone like microsoft has put in to breaking in that duopoly and they have 3% global market share with windows phone, so this is a really tough market to crack. and it wouldn't make too much sense for facebook to invest too much money. so facebook can be like the primary outlook on a phone. this is really what it needs to be if he wants people to engage. but something more that he had people use for messaging and phone calls. >> especially given what we know about engagement, and i don't want to call them warning signs,

but signals it is not robust as it was years ago, right? >> teens are moving away from facebook. they seem to go gravitate towards tumblr and competing platforms. facebook was the thing. it's not necessarily the thing. but something to keep in mind about the potential facebook fans here and why they may make the investment. their growth in the u.s. is flat. but the growth outside the u.s. continues to expand. they have a facebook page where it is free phone and maybe subsidies. they could have something outside the u.s. market. that's where they see the growth anyway, and they think they're going to try to do that. also the words they use. new home for android doesn't sound like a new android interface. it sounds like a place where it lives. i don't know if this is true. but this is all the sort of signs that we're seeing. facebook has to do something, though, that is key.

>> lance brings up android. is this good for android. is it frenemy-ish? >> it reminds you of what amazon did with the kindle. this is called forking sochlt they forked android on to this the kindle. and in one way it's not necessarily good for android or google. it could mean they lock out the typical services that you get on android. would it be an interface where if you wanted a p, ps you go to google play, or would you use facebook's app center to download more software and applications for the phone? this is a very important way for these operating systems to make money. >> just one epilogue. yesterday the acc says they're going to let companies use social medias as an outlet. i wonder if you think longer term that is material to a

facebook or twitter or any of the names that have democdemocrd the news flow. >> i felt it was important. every day people to ceos soft major multinational companies are on them. and this is the fastest way to disseminate information. and the old school rules just didn't acknowledge the importance of social media. i thought it was a great and obvious thing that had to happen. and i'm glad it went rather quickly. and it was really on the back of sort of reed hastings making the announcement on twitter and saying this is not a big deal. so it was very smart. >> welcome to the 21st century. absolutely. we'll see what happens tomorrow. but thank you so much for setting it up for us. good to see you. >> pleasure. >> when we come back. we'll find out which u.s. zip code sold the most homes worth

more than $2 million. the music is a hint. we'll show you pictures of the megahomes after the break.

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megahomes. those are priced at $10 million and up. we are back onset with a look at what parts of the country are selling the most numbers of these homes. >> yeah, carl. get ready to be wowed. sales of multimillion dollar megahomes have exploded over the past year. the top zid cope for megaohomes is 90210. 21 homes sold at $10 million or more. ranking second was aspen with 16. and then montecito, california, with 15. these are zip codes, not cities. if you rank by cities new york would be number one. now beverly hills also ranks at the top or near the top for the number of listings with $10 million or more. currently 58 homes priced at $10 million or more on the market. including this one being sold through hilton and highland. the owner is mark whalberg.

the hollywood golden boy and crea crea creator of entourage owns this two-acre estate. check out the pool and waterfall. if house has seven bedrooms with a two-story gym and boxing ring. of course, a killer screening room with a giant screen. the price for all that luxury is $12.9 million. by the way, dem moore lives next door. that could be a plus or minus depending on the buyer. the number one zip code for $10 million listings is not beverly hills. it's malibu. this house can be yours for $28 million. it's a smart home with 6,000 square feet. floor to ceiling windows so you get the beautiful ocean view. it has a pool overlooking the beach and access to a little secret beach called little doom. unless your name is larry ellison or david, you probably don't go there. but california really dominating the high end as the wealthy look

for places to put their money. and as there's so much foreign money coming into the market. >> i can't imagine property taxes at any of the zip codes, i mean, if you have to ask, you don't belong. >> that's right. it's california and so all they they do have property 13, huge property taxes, especially if you're buying into a new market. these people done care about the prices. i think this year they're going to see a record price for a house. there's a report in northern california of a house that sold for 1 # $0 million. that report has not been confirmed but i think we will see a $100 million house in california this year. >> that's great stuff. i still say you're a dead ringer. when we come back, a few minutes left of europe's trading day. we'll get the detail over there and the impact on us. (announcer) scottrade knows our clients trade

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the european markets are closing now. >> and they're mostly in the red today. weaker than expected numbers on economic day that in the u.s. we got more political turmoil in italy, helping to put pressure on stocks. of course, that's ahead of tomorrow's interest rate decision from both the bank of england and the ecb. take a look at the major european markets. london, paris, germany, italy and spain. rough day for telecom. verizon refuted the reports.

it's considering a bid for the entire company. and ubs downgrading three companies to sell. telacom, take a look at that sector during the course of the session. let's get a chick on energy and commodities. sharon epperson is live. >> we're looking at lower prices pretty much across the board in the commodities complex as well and kicking off with metals prices. gold may take out the february low that we saw about 1555 an ounce or so. that could happen today. we're also looking under silver at significant pressure in bear market territory at an eight-month low. copper at an eight-month low as well. e metals reflective of what is happening elsewhere. we're seeing oil prices also under pressure. we brought you live data for the big bill we saw there, definitely pressuring wti

prices, but also we're seeing pressure on the gasoline market. because the decline that we saw in gasoline supplies was nowhere near what they were expecting. the demand is down over 1 pbl% where it was a year ago. we're seeing prices at $3.64 a gallon. that's down 11 cents in the past month. it's lower than it was a year ago. and right now only alaska, california, and hawaii have statewide averages above $4 a gallon. now this is a big change from a month ago when 20% of the country saw prices above the $4 mark, carl. back to you. >> sharon, thank you for that. sharon epperson. b bob pisani is here looking at what's moving. soft adm. the opponent component on the weak side. everybody says, what the heck is

the problem? there's no worry in the market. i haven't liked it for a week and a half. this is what i don't like. this is two weeks. when the dow industrials are up and the transports are down 3%. and the mid caps. okay. you have a small number of large cap games moving to the upside. so the past two weeks the market is being held up by staples. i don't like it when consumer stocks lead the market. i want growth stocks to leave the plarmarket. they're all agging and all of the defensive names are what is holding the market up. i don't like that kind of internal action overall. i don't care if the dow jones industrial average is up 1% overall. and financials, have i mentioned

them? look at this today. morgan, citi, goldman. down 2%. no, it's not. let me show you how farther off of their highs to show you i'm not just waving my hand. and that was less than a month ago. citi is almost 10%. we're near correction territory in all of these stocks right now. this is what i'm saying. do you think the plarkt is worried? heck no. we're doing nothing. and remember, i don't blink when this thing is below 20. the market is not signaling concern. maybe i'm just getting old at this point. it's frustrating to watch things happen today. airline again down today. delta disappointed with their revenue passenger miles

yesterday. u.s.air said it today. i'm not concerned about this. they blamed the sequester. they said less government travel due to sequester. i think that's probably right. this is my opinion, purely me talking. capacities being removed from the airline. the prices are higher. fuel prices levelled off and the industry is ridiculously profit blg. more profitable than it's been in aging and ages and ages. i still don't see any cause for tremendous concern. there's great, great trends here. >> yes. profitable. that's big, big deal. >> zel that hasn't been profitable in years and they're going to do it this quarter. lits get to rick santelli in chicago. hey, rick. >> hi, carl. absolutely. i like to welcome chuck. he is really one of my favorites because he's a numbers guy. okay. it is what it is. chars, 156,000 was trimmed to

ma march job creation. i believe your last look was 100,000. there is an improvement. in the news letter you think the blas is beefed up. explain. >> well, they do is survey of several hundred thousands companies. they get 55% of the survey back. and then they guess based on the past. they adjust to seasonal adjustments every year. their number is random. >> now adp today, very close to your number. any thought to the process they made several months back? >> i guess for traders it helps to know what friday's number is going to be. for people in the real world who care about what is really going on, to me, it's a waste of time to deal with it. >> i got you. now let's switch gears a bit. we know late on the 15th, a

friday, several fridays arizona is when the cyprus story broke. you're an expert on gauging flows. tell me how and if what happened in cyprus, call it the canary in the coal mine, does it change flows that you measure, and could you give us insight? >> we started to see outflows from emerging markets. outflows for kwurp in the two weeks since. the only area internationally getting new money is japan. that is because people think they're going to do pump priming like we have been doing and that will inflate bubble up stock prices there, as it is doing here. >> now when it comes to japan, i'm glad you tension mentioned it. when i look at japan with a low closing yield of 51, i understand why it's there. i understand that buying securities just like your lower rates helps stocks. many, many smart people tell me that's the mark to watch if

everything starts to slip. do you agree with that? >> absolutely. i remember i started my business in 1990. i went to japan. the value of a block was like new york, the entire city of new york. and it was a myth. it was everybody believed that real estate prices could only go up. when people stopped believing, they crashed. but the reality is such a large portion of the economy on the budget. can't keep growing forever or even for much longer. >> well, we're out of time charles. it is always a pleasure. don't worry about the jdp market. it's only 12 million big. have a look at abecrombie

and fich. they opened a flagship location in shanghai. morning star's jamie cat says investors may be happy they didn't put out more bad news. so maybe no noise could be a positive on this one. anf up about 4% right now. carl, back to you. >> thanks so much for that. as pisani just said, airlines used to be the best performers of the year. that sector down 7% since the beginning of the week. is it the start of something bigger? and later on, why old school investors need to embrace social media for the good of their own portfolio. we're back after a break. how do traders using technical analysis streamline their process? at fidelity, we do it by merging two tools into one. combining your customized charts with leading-edge analysis tools from recognia

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manhattan. >> hey there, moments ago the 34-year-old taylor entered a guilty plea with one charge of wire fraud. that charge brought against mr. taylor, a former trader at goldman sachs. in a written statement mr. taylor said during december of 2007, he accumulated an electronic exchange. an $8 billion plus position in s&p 500 futures. this against the risk guidelines sent by goldman sachs. he entered counter trades, basically manually. however, when he was questioned about this, he also said he made false statements. what this resulted in was a loss of about $118 million for goldman sachs. taylor saying he was truly sorry. now sentencing is scheduled now for july 26th, and it will be interesting to see what the judge decides. this does carry a maximum sentence of 20 years, but during the hearing, the judge was very critical of the government, saying within the plea agreement

that was reached between the government and mr. taylor's lawyers the government wasn't aggressive enough. suggesting, of course, that the judge could sentence mr. taylor to either a sentence that is greater. and in large part, he said, the judge because this tould have risked the safety and soundness of a financial institution? a statement released to the press, mr. taylor said he was sorry for his actions. >> thank you so much, mary thompson, at the courthouse of lower manhattan. airline stocks have taken a turn lowerer, trading near a one-year low today. can it start to soar again? jim, good to have you. >> thanks for having me, carl. >> for all the -- for most of the year all we have heard about is capacity, rationalization,

attained fuel prices and now this week, boom. what is going on? >> a couple of carriersd monthly numbers. they blame the sequestration as the main reason why that has happened. we think the cops are getting a little bit tougher, and we are in a seasonably weak period. so we think investors are scared off this week based on that news. >> do you think delta is being sincere when they site the sequester? because a lot of people want to know if that will be a template for warning season as we enter a new round this month? >> we look back to what things were like at the edge of the cliff. companies were very scared. corporate travel dipped a little bit. i think it's a part of it lt. i also think the cops are getting tougher after the year. and delta cited a problem with the reservation system as well. we have to see how it plays out in the future. and we're entering into a seasonably strong period. and we think there will be good

demand as the economy continues to recover. >> your fundamental view of capacity getting stripped out as acquisitions take place, certainly the american deal will be huge. pricing power remains, and we should expect fares to go up as we get into the height of the season. >> yeah, i think fares are going one direction, up. oil prices, which is the single largest category for the airlines are moderate right now. that sets the stage for a nice summer for the airlines. zbl who is your favorite? >> we have a few buys. we don't distinguish between the buys. we have buys on delta, on southwest and alaska air group. >> and the common theme running through the names, what sets them apart? >> rational capacity, good strong revenue growth, and good cash from operations largely used to pay down debt. any -- i'm just looking for risks here. the obviously ones about rising fuel prices will always be with us. are in root structures overseas subject to weakness at china?

>> certainly. we could see further weakness on the carriers more exposed, like delta, would be hit hard there. we think the companies are on the ball. they're quick to cut capacity, and they are protecting their revenue growth. >> finally, a lot of investors have vowed never to play this sector, right? because they've seen the pain that can sometimes be involved. a lot of people said, oh, well, things are solid this time. maybe i'll give it a go. they're probably smacking themes this week. >> certainly it's smart. but it's our view that the airline sector has gotten less volatile, less risky. but high cash level, profitable for several years and has definitely taken a little bit of risk out of the sector. >> we'll see certainly what the earnings bring and then there's the summer. thanks so much. >> thanks. carl. >> when we come back, the sec

enters the 21st century, allowing companies to address news through social media. what could that have for big business investors? want to show your ipad some extra love? why not use the cnbc cover signed by the entire "squawk on the street" gang? well, it can be yours if you can guess friday's number. tweet your guess to #squawkstreet. you have to be at least 18 years of age to enter. sorry, kid. for all the the official rules and details go online to cnbc.com. blam farmers presents: fifteen seconds of smart.

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the ceo of netflix can breathe a sigh of relief. the s.e.c. announced the companies will present information on social media, like twitter and facebook. remember back in july of last year, reed hatings was in trouble for violating the s.e.c. so how will this move change the way that information is distribu distributed? dennis berman is the marketplace editor for goldman. gene is currently a partner at dermot, will, emery. good to have you both. >> good to see you. >> thanks. >> game-changer too late? what do you make of this? >> i don't see it as much of a

game changer as perhaps people believe. you have to understand who controls disclosure for the most part. i'll give you -- it's one word. it's the lawyers. the lawyers inside the company. and i think we might see dissemination of company information almost simultaneously on twitter and facebook. but i think it will be sometime. and maybe we can talk about how i do think it will change down the road. i don't see a huge number of chains because the lawyers run the show. >> gene, i mean, dennis' point is a good one, right? i mean, we all may want to move forward, but general counsels may have a different idea. >> it's a good point. but the so-called 21a report, which i think the commission provides responsibly, provides a road map for the lawyers to give advice to the company client in a way which i think will promote the use of social media to disseminate material information coming out of the company. very productive, useful tool that the commission issued yesterday. >> how material could information move in this new pipeline? what sorts of things could we be talking about?

could you, for example, warn on a quarter, the way you used to in a filing? >> i wouldn't counsel a company to use an executive social page to announce earnings. i would still go back and use a mix of information. company website, s.e.c. filings, and the social media. but when it comes to the types of announcements that are at issue here, that were the focus of the wells call, i do think that would be an appropriate use of the social media, provided -- remember, this is the s.e.c.'s warning from yesterday, you alert the shareholders to look at the executive's page in the future for material information. >> right. so this will be great business with companies basically saying, hey, we're going to be your venue for your ceo's discussion of his -- or her discussion of a business. so perhaps there'll be some entrepreneurs who have some ideas about ways the companies can disclose on a realtime basis. >> right.

gene, we obviously had a big discussion last summer about the hastings memo, as we put it up ahead during the intro, when he discussed the billion hours viewed at netflix. i wonder if you think that this posting would be fair game under the new rules? >> i think one of the purposes of this 21a report is to set forth the map,ge that there was uncertainty in light of the great usage of the social media. but if someone does something similar in the future, i think there's a warning, you may expect a threat of enforcement action as opposed to another report. >> dennis, you know, one thing's for sure. it does put the onus on the investor now to follow the companies that they're going to want information on. >> right. so what -- then that's going to be an interesting back-and-forth between companies and viewers of cnbc, readers of the "wall street journal." whom do i follow? what is the official mechanism? the official venue for learning about what a company is saying

via social media? you know, so eventually, you have to figure that will be worked out. you'll know to follow the goldman sachs official twitter account, and live will move on. the interesting point, and i would love to hear what gene thinks about this, over time, two years from now, three years from now, ceos get more comfortable. they start say things, hey, i'm sort of covered here. i have a safe harbor so to speak. do they start getting unhinged? do the lawyers lose control of their executives in a way? it certainly seems possible, just in the way the velocity in which information's disseminated and which the ceos sometimes want to talk about it. so, gene, will the lawyers lose control? >> i don't think they will. i think they can make a clear to the board, that the board should instruct the corporate executives if they use to wish this vehicle, check in with the company first. one of the criticisms in the report was that mr. hastings did not check in with the company ahead of time. so i do think there's an easy

way, a good mechanism that can be used, as part of a compliance measure for company executives to use their own page, but check in with the general counsel, check in with the company before you do so. i mean, look at the migration that's taken place since the days chairman leavitt, president clinton's first chairman, first put reg fd in place. it was then disclosing to a room of analysts, now we have 200,000 followers of a facebook page. >> right. and our hats off to the s.e.c. for doing what a lot of us felt they should have done a while ago. guys, thank you so much. >> thank you. >> thank you. >> don't forget to tweet us, 40 years ago today, first cell phone call ever on this phone, nine inches tall, 2 1/2 pounds, 10 hours to recharge. what words of advice or caution would this phone give to the smartphones of today? @squawkstreet. it's time for thl shareholders meeting. ♪ there'll be the usual presentations on research. and development.

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for access to one of the top wealth management firms in the country. for a team of financial professionals who provide customized solutions. for all of your wealth management and retirement goals, discover how pnc wealth management can help you achieve. visit pnc.com/wealthsolutions to find out more. 40 years ago today, a phone call was made on the very first cell phone. here it is. affectionately known by some as "the brick." so we asked what words of advice or caution would the original cell phone give to the smartphones of today? devon writes, enjoy