we want we want to thank our guest host, barry knapp and brian belski. that does it for "squawk on the street." ♪ ♪ ♪ good monday morning. welcome to "squawk on the street." i'm carl quintanilla and jim cramer and david faber. it's tonight at 7:15 eastern and the beginning of earnings season. alcoa after the bell tonight. europe's in action catching up to our rebound late friday, several green arrows also point out that former prime minister

margaret thatcher has passed away at the age of 87. the nikkei, the highest close t and our road map begins with the markets poised ahead higher despite investors prepping for what's setting up to be a disappointing earnings season. >> general electric, ump approximating up its oil and gas business, provider lufkin industries for $3 billion. >> deutche says the airline sector is expected to take off expecting profits up 140% from a year ago. >> our own jim cramer on "meet the press" this weekend keeping about fed chair bernanke in the driver's seat. >> we'll kick it off with the markets as first quarter earnings season kicks off with alcoa. earnings outlook is fairly week. growth expect, compared to 6.2% last quarter is also an unusual high number of negative warnings. 107 negative revisions for s&p

companies and jim, i think the ratio of downward to upward guidance is .28 to 1. it's one of the worst ever. >> i got that from twitter and i apologize where i first saw that on twitter. >> i think it's a fact set number. >> right. this is the first time that i've seen multiple articles about how badal coa will be. so often, people say could this be the breakout quarter? this is a pill-on about how horrible alcoa is doing. when alcoa does horribly, maybe the stock will trade down. >> they're almost half of what the historic multiples have been over the last decade. >> do we make too much about alcoa. we say klaas kleinfeld. >> we don't make enough about the alcoa which is proprietary, it is the skin of the apple ipad

which claus sold to steve jobs. you talk about that if you're apple and by the way, a huge construction business and autos are very good, but in the end they also make aluminum, and let's pay attention to the proprietary side and not to the aluminum commodity saturday and the s&p, and we keep hearing they'll downgrade the stock. >> it is's it will for a number of other industries that have much broader ramifications. >> what klaus kleinfeld does is there's nothing he can do about it. >> more broadly, people say fedex didn't look good when they report order a gold didn't look good when they reported and consensus still coming in from the beginning of the year until now. is it low enough? >> no. >> it's not? >> if we look at the 2010 period, one of the reason yes 2010 was a terrific time for the

s&p was that we had the lowest expectations and you beat those expectations. that's how caterpillar could go from 69 and 70 all of the way up to 110 and now we have the opposite. we do not have enough analysts bringing down estimates ahead. that said, there are a lot of companies that are doing well. they tend to be in food and beverage and companies in soft goods that have done a lot of evolutionary work to be able to improve their standing and don't forget, europe not doing that well for european companies and japan doing that well for japanese companies. it will just not be a blowout. >> it doesn't get started in earnest and friday we'll get some financials. >> i think jamie dimon, i would love for him to be able to talk only about business. that would help. >> the whale is really in the rear-view mirror. >> i think they could tell a very good story about lending. >> i would think they feel they can clear the decks. >> bank of america is rolling

out a new ad campaign during the ncaa. >> wasn't that incredible? >> which we'll talk a look at later today. >> it's humble. a spokesman says it has to do with humility than previous campaigns. >> those ads make you shed tears and they're kind of like the clydesdale ad. >> at one point it will make you shed tear. >> it will. the interest margin and we'll have that conversation again when we were reaching 2% there not that long ago that there might actually be a little bit to capture. everyone was short the ten-year. one thing i want to point out is the foreign entities and foreign wealthy individuals are setting a new wave of money and one of the problems is -- they had too much money came in and can deploy it. >> which brings us to bernanke. he is talking about maintaining financial stability and all of these weird capital flows going

on. possibility of taking arms tonight or not? >> in the end, i think this is a man who did win the signed ipad from the jobs number. didn't bernanke have that -- i forgot, we had him on with the number at the end of the show. >> he has the ability to say, listen, everybody is so worried about taking away the punch bowl. maybe he needs to up the spiking of the punch bowl. maybe he's got a new way. i would love to hear something new. this underclass, i'm not going to give up. i think a lot of chatter these days is about a lot of class developing in this country and bernanke seems to be the guy that's most focused on it. >> the divide in wealth. >> the divide in wealth and i don't see the president speaking as heart to heart as bernanke. we have a fed chief with a heart, so to speak, and we have a president who is busy trying to figure out how to change the tax rates. >> there are a lot of things on

his plate, too. >> jack making his first trip overseas. >> interesting to see how he does over there. >> it will be. we should be -- as we're spanning the globe, we should come back to japan. we are down almost a hundred. just a key point. >> what about this idea of a burgeoning currency war,/trade war, even, but certainly exporters from japan are doing better and it can be a zero-sum game. >> on sunday night before "mad men," no spoiler alert. >> it's two hours long. >> i don't care. it's not on a channel that i can get. i have to try to find it and down throwed on hulu. the atfs. the amount of money they had to buy on atfs and the side of their qe was a heck of a lot

bigger than ours. so they're buying the -- this etfs -- >> and reits, by the way are soaring. >> and they allow the pension plans to start buying reits. and they used to the charge pension plan taxes and this is a remarkable other flow of funds issue. if you're wealth ney japan can you really afford to keep your money in the yen, can you really. if you're in the japanese stock market which etf are they going to target? what etf are they taking on today? >> i think that's great. i have no idea -- >> i don't know. i'm up on japanese etfs. why are they not going from hold to buy? >> maybe it's on a conviction buy? >> boj research. >> a new target. >> every single day, we buy it. >> let's take mitsubishi. let's take tokyo and electric

power up. darn, fukushima. full speed ahead. i think the japanese are starting to raise their earnings forecast at boj and then slipping these hold to buy targets. it's very big. >> all right. it is not a merger mrngd but we do have a deal. we do have a deal. i know you want to say merge monday, but we have one. it's our old parent, general electric agreeing to buy lufkin industries. the price tag $3.4 billion and it will help expand the profitable oil and gas business and it's a big premium, about 38% over where the stock was trading on friday and from the press release itself, this is going to move ge beyond the artificial lift capabilities which includes electric submersible pumps. as carl already knows because he studied this stuff already well.

>> where plunger lifts and hydraulic lifrts and progressive pumps. >> up and down, and i use them as the background for when i was in the bockin because they're such great video. when you have shale discoveries, after you have spotted them e then you have to get the stuff up and this is a soup to nuts offering that the ge will be going for. if you read linkedin and she tweeted me all over the place on social media. jeff immelt wrote a piece for linkedin saying he wants to dominate the shale. i think he gave you a head's up to buy lufkin. >> you talked about it in august of last year as part of a no huddle. >> yes, indeed. thank you. it is just so crucial to get these old fields to be getting in and to get the new fields

pumping. lufkin was, like, robinson meyers was another one that got a takeover bid and gardner denver. these are these companies that have done nothing for year. lufkin repeatedly missed the quarter and that's how it went down, but it was up to 90 in the heyday, the 2005, 2007. >> and now they're getting $88.50. you wouldn't think someone would come and compete with ge, but you never know. >> halliburton should have bought this company and would offer the soup to nuts that ge wants to do. he is probably the most forward-looking nonoil gas and service guy being involved in oil. >> yeah. >> this is a major out of media and into oil services in a more significant way. let's not forget they took in a lot of money from comcast as nbc universal didn't own. it doesn't hurt on the balance sheet to be able to throw up 3.3

billion in cash to buy this. >> ge, to be able to have natural gas be powering these. >> research -- oil and gas research facility is earlier in the month. this is a company that has said this is a major opportunity. i am shocked that others do not see it that way including, by the way, our president if they veto keystone because this is all part of getting it out of the ground and then getting to where it's useful. >> the global artificial lift sector. $13 billion in 2013. >> i want to emphasize there are others that people should be thinking about. lufkin bought quinn pumps which made it so that they were kind of a monopolist in this business, and i think there are other companies that people should be looking at fmc technology and the main thing to understand is this is about u.s. having so much oil and gas and

let's not forget, nat gas crossing $4 and aubrey mcclendon predicted it would happen in the month of april. he didn't get there. no more than mo green got there. >> you can't talk to me like that carl i don't know. >> there's not a plaque or anything. nothing. >> he's got a new company. >> before we go to break. some sad news out of europe today, margaret thatcher, the first and only woman to become britain's prime minister has died at the age ever 87. dubbed the iron lady for her personal and political con vision. thatcher left for 11 years in 1979 and her funeral will be at st. paul's cathedral. this is a big deal. maybe the most influential leader of post-war europe. jim calls her loved and loathed in equal measure. she embraced that, if you remember. she said if you're not hated by some you have no conviction. you're not doing something right. >> i cannot wait to hear simon's

comments on her. controversial in terms of the war with argentina. i prefer to remember her as someone who reversed the post-war decline in the uk. >> took on the unions and had to be done, right? >> auckland, sarajevo. >> a friend of reagan in the different era where capital echl -- the rebirth of capitalism. and then the chinese took the torch on that. >> we'll get it back. >> when we come back, how cramer himself says the president can make wall street happy. jeff bogle will tell us where he's putting money right now. take one more look at futures and it's a pretty decent start think, after the rebound on friday, and closed just a fraction of that. a lot more "squawk on the street" from post 9 when we return. all stations come over to mission a for a final go.

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jim kraemer on "meet the press" yesterday talking about what president obama can do to please wall street. >> if the president wants to do something to please wall street, this week re-appoint ben

bernanke because he gets that we have unemployment in the country. he's got a heart, too. bernanke is an amazing man. he does not get enough credit. >> i think he's widely reviled. >> i don't think he's widely reviled, but -- >> dismissed. >> subprime is contained. subprime is contained? >> that was five years ago and six years ago. >> life is a journey, david. life is a journey. >> contained? >> one of the things you have to remember is that this man didn't get it and he's since gotten it and in 1937, the president -- president roosevelt, very liberal man, congress said it's over. we have to balance the budget and it's all good and we have a recession within the a depression and bernanke is not going let that happen and that's why it's very important to be able to say he's our guy. >> the speech today is called maintaining financial stability: holding a tiger by the tail.

we'll get a fed speak all week long and the minutes on wednesday, too, jim. which have thrown markets for a loop the last couple of months. >> and i think we can extrapolate, but i know the minutes are subsequent. we did have this tremendously horrible unemployment number so it does obviate the minutes into a degree. i do think that the market -- that people recognize, holy cow, unemployment is not good. march was a very weak month and we'll get retail sales from individual retailers and they may not be that hot. we did get retail-oriented names. >> carmax. >> so what? spring swoon or not? which is it? april's got to come back. i have to believe that the cold weather did impact retail. i know weather is often used as an excuse, but boy, it was cold. >> it will be nice today at least in new york city. we're looking at 70, 80.

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a little more than seven minutes before the opening bell. time for the mad dash by mr. cramer. airlines. ? yes. this is a group, by the way, they've been terrible since the quarter began. deutsche bank comes out and raises earnings and raises price targets and they had the ceo on "mad money." these guys are coining money. delta, they like very much. i like u.s. air, and they did not push that one. what i think is important, david is the consolidation blessed by the justice department will make it so the price wars are over. the routes are divvied up, not unlike what's happened to the rental cars and by the way, the beer wars. the justice department itself ended the beer wars that gave working people a cheap beer which you won't find anymore. it is so pro-oligopoly. >> that is news to a lot of bankers who are trying to do

deals here, by the way. >> smell the java. >> and a lot who feel that is one of the key risks whether they can get anything with any trust that has any hair on it. in the beer situation, let's not forget, they did force a significant change in terms of what consolation was trying to do -- >> have you bought beer at the supermarket lately? there's no cheap beer left. >> there are a lot of choices. >> miller 60-something. >> there's local and -- >> there's a lot of choice and brooklyn brew is my favorite. can we get back to the airways? >> they are not doing it this time. this is an investable business. it's investable because us air is buying amr. you're starting to see the amr campaign. >> airlines, not a trade. investment, are they earning their cost to capital? yes, they are. it's very difficult to get new planes so upstarts aren't going come in anymore. the upstarts destroyed things and spirit is telling you which

is an upstart and spirit will not go against the big guys. >> so ignore a march where we saw not great trends with the sequester. >> it's knocked the stocks down to levels where i think they're attractive and i really like this group and i have hated them since 1985 when i buried people in amr than american air when i was a young broker at goldman sachs. >> at the goldman sachs. >> at the goldman sachs. >> that can go well on amr? >> i hurt everybody and i learned never recommend an airline stock until 2013, but time has passed. >> a lot of people, us airways when i flew this weekend in washington, i said thank you. thank you. when continental tossed me out of the green room those days are over and i can walk into any of those ambassador class thing, but that's not the way i fly. >> nicely gheited by the airlines. it is never about that, david.

it's not about friends. it's about money! >> perfect place to end. the opening bell just a few minute away, of course, there's a lot more "squawk on the street" and jim cramer straight ahead. ♪

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top of earnings season as we get this week started. you're watching cnbc's "squawk on the street" li " live from t financial capital of the world. the alternating day, we're 13 days up, down, and the whole thing has been worth about 1%, a single point on the s&p. >> is that all? tuesdays are better days. i don't know, maybe this reverses the pattern for up today. >> they're calling it an indecisive period of indecision, but that's also looking past north korea, bird flu. >> cyprus. >> portugal rebelling against the germans.

cnbc.com, a fabulous piece this morning about that. fabulous. >> court decision saying, hey, you can't do this kind of austerity, and another $2 billion and the disbursement now delayed and that will be more fodder for the bears today. >> europe. bring your money here. japan, bring your money here. >> it's a chamber of commerce act. >> the chinese investment corporation wants to do that and a lot of people saying we don't want your money and we have 500 billion of it. >> we have the worst relationship. north korea talked about that. that's not -- that's not a relationship. that's not stable. >> here is the bell at the big board today. we do have the new york landmark's conservancy commemorating its 40th anniversary and over at the nasdaq, chicago midwest bancorp celebrating its 30th anniversary on the nasdaq. >> fulton was upgraded today by two different firms.

and i have to tell you, these regional banks had a great first quarter and they have died on the vine ahead of what we think will be bad earnings. fnfg is good whether the group regains its luster. >> you mentioned retail sales and did i mention bird flu. wells believes that same-store sales for yum are going to be tough in china. >> i know ubs cut numbers and the avian flu last time hurt the sales of yum. it's funny, i was thinking yum could do well because gina could do this story about beef saying red meat is bad. bird flu. what are you allowed to eat, david? i worry about fish, too. what's left? >> you don't want to hit the high end of the food chain because of the mercury. >> tofu. you have tofu. a lot of that and that can be made into a lot of different things that are similar to

chicken. >> i had tofurky. i have two vegetarian kids and bi, everything tastes bad. >> i'm not sure how it led us into this discussion. bird flu, this was exactly when we should be talking about the boneless chicken. it's finally open. good ad campaign. >> that always makes me think of the chickens and they can't stand. >> with the big breasts. the president said the attorney general was just -- >> how about j&j. we'll take a hard right turn. it does cut it to a neutral. they say this is no longer a consumer company with 11% of profits and it's a med pharma and it's had a great run. my charitable trust owns this and anxious to buy it now. we mentioned the stuff and i've got to tell you something. the sum of the parts' valuation in the piece of research was way too low. the notion that alex gorski can

bring more value. this is a mistake, this downgrade. they're very worried about the quarter. i get less and less worried the more gorski gets in there and starts solving the more time. >> he solves the welden-caused problems. >> when you talk about people, gorski is the bright star. i think j & j will blow it out over the next couple of years. i like them. >> you know who's having a pretty good day is lufkin injuries. i know there are no mergers. i heard that from my partner david faber and despite the more mergers, this gain of 23 is not real, right? there was no merger today. >> that's not fair. i contend that you can't call something a merger monday unless you have a number of deals and by the way, there has been a dearth of m & a without a doubt despite the fact that my good friend here called for a significant, and perhaps even an

avalanche of deal making. >> how about this? you've been completely right and i've been wrong. >> now we can move on. >> next case. next case. >> you've been right. if you missed the news, by the way, ge buying lufkin for $3.3 billion. >> what are the other things if investors want to think about future consolidation. >> some people say they had a series of accounting issues that do worry me. >> i have to tell you this is an industry. some of my friends say listen, jim, it's completely one off because there aren't other guys that can't be bought. i still think that baker hues, schlumberger, transocean, we should talk to our friend carl icahn because he wants something to happen with transocean. >> it's interesting, jim, we both kid about m & a and they may not be predicting an avalanche, but when they do talk

about an area of activity it is energy. they come back to it time and again. >> whiting petroleum was upgraded and we have these companies at natural gas at $4 that are worth more. you see another capital oil in gas and they talk about eqt. the plethora of companies in the natural gas patch and i'm not going to talk about chesapeake because that's generous, but there are a lot of companies in eog has written off natural gas. don't forget the pipelines are the biggest job creators in this country right now. i know they transport fossil fuels. >> you were talking about trying to find a hotel in one of the shales. >> it's impossible. >> you can't find a hotel. we have to stay at massalynn, it's a small town. you can't book a hotel room in this utica shale because there are so many outsiders and there

are parts of the shale that are oil and that tend to be the western part and there are a lot of natural gas and liquids in the eastern part, there were standard oil and they found a lot of oil and you can go back now because of what the technology that halliburton can have core laps. they do the mapping. these companiesor fire and no one wants to pay attention to them because they don't believe we have that much oil and gas in this country. >> how can they believe that at this point? these people are green. they don't upon want to hear fossel. >> before we turn to pisani, jim. >> gilead, bristol-myers. >> good luck selling those. those stocks, gilead has been one of the great-performing stocks of the era. cigna, i did not have -- cigna went up in the spike where they did not have all of that medicare advantage.

it's humana that has had that. humana hasn't come in that much and one of the things we're seeing is that humana is saying this. one of the things we're seeing is that stocks take off and then they lose their luster for a couple of days and then people come back to them. yeah. >> big rotations within rotations. notice caterpillar was downgraded last week and the numbers cut and that stock has had a really nice run as people rotate back into the group that's left for dead. >> china has been the big conundrum. what are they doing over in china? >> is it together there? are they together? what are they doing. the new president, what is he up to? >> so i would really have any ability to answer that question. i wish i could, and by the way, there were people who -- >> it was rhetorical. >> there are people who have no idea and have studied, and it is very, very difficult, but it is very important. >> we need them to tell the north koreans to back off.

we need the japanese to have a trade war with china, do we need that? >> gm is caught in the trade war. i don't need a car, andy know if you look for toyota,y know you make them here. in china it's probably very cheap. >> there has been only four times sense '71 where it has moved 5% in three days. >> 5%. >> this is cat strofastrophic. >> is there anything that isn't catastrophic? >> there are a number of hedge funds throughout that had this right. when you leverage that trade up. thank you very much, that's my year, i'll take the summer off. >> i used to do that. >> did you? >> yes. i used to go to martha's vineyard if we were up a lot. >> baloney. >> in 1989 and 1990 we just shut it down and went to martha's

vineyard. >> shut it down. >> that's when i was happy, david. >> as opposed to now. >> that window of opportunity of happiness. no, i'm happy now. i couldn't be happier! >> and the martha's vineyard, and the sound of computers and phones. >> and that was when we had a machine that said hi, i'm not here right now. please leave a message. micron in the '90 like japan. >> let's go to pisani's vineyard and check in with bob pisani. >> hi, guys. how are you? the important thing today, it's a fairly risk-on day and oil sers are strong on the back of the ge acquisition and energy is generally up. industrial materials are up and financials are doing fairly well and earnings in this week and defensive earnings haven't are up and they haven't seen that. everyone was talking about the up, down, up, down market. the s&ps were up one day and down essentially and where we were three weeks ago so the mark

has to resolve where it wants to goa the this point. not so nikkei. did you see four days in a row up in japan once again. now we're at 4 1/2 year highs. by the way, the dxj, the wisdom tree hedged equity fund. hedge is out all of the exposure on the currency side and that's been one of the -- and they'll be here with us to talk about that as well as other developments in exchange-traded funds and not so good news over in the rest of asia, korea and sitting at the lows for the year, china. mainland, china their stock market sitting at the lows of the year and real bifurcation going in asia. earnings are beginning this week and i would say wells fargo j.p. morgan is where i began and i agree with alcoa not being a bellwether anymore. wells fargo is almost one-third of the mortgages in the united states. bottom line, early refinancings and early signs of application, and refinancings are definitely

lower. watch out for them. other companies, fifth-third, and suntrust all have mortgage exposure and this is one of the reasons the banks have underperformed recently. they're only up 7% and the rest of the market up 5%. >> tea lor morrison on wednesday and second ep in housing for ten years. new circuit breakers are now in the marks in the middle part of the day and we'll talk about that at 11:00 eastern time. guys, back to you. >> that's something that we haven't talked about as bob is always ahead of everything on post 9. let's talk about the dollar. rick santelli at the cme group in chicago. i hope you had a good weekend. >> absolutely good weekend. the two-day chart of ten-year note yields sets the stage for lots of thought especially as we embark on some supply this week on the longer end. you could clearly see that on this two-day chart 8:30 eastern

from friday really sticks out, and i know many are going to celebrate ben bernanke, but there's a lot of unemployment out there and the plan doesn't seem to be working very well. if we look overseas and try to get a glimpse of what's going on here and over there and we have to point towards the currency markets. if we look at the euro in particular, we talked about how it was very important and 128, 129 area, a correction seems to be ensuing and not so true for the dollar yen. we are at levels that we haven't seen since the summer of '09 and that's all translating into the bank of japan giving their stock market people a big kiss. will it fix anything? i don't know, but they're not squawking as loud and best level since the summer of '08 from the nikkei. a long way from 39 thou, but getting closer every minute. jim, back to you. >> this nikkei, you have to stay

focused on it. >> let's check out the latest moves in energy metal. good morning, jim. >> we are looking at petroleum's bouncing after last year's we are looking at the fact that the sentiment has been negative when you look at many commodities. in fact, speculators reduced their bets on commodity rallies, the most since 2008. we did see a bright spot in the precious metals with gold rallying today after the sell-off we saw, but keep in mind there are many still concerned about whether or not gold will still prove that safe haven and whether or not central banks would continue the buying long term. copper, meanwhile, the speculators there largest net shore position since 2006, but a far different story when you look at natural gas. we were looking at the largest net long position in about seven years, as well. we have seen natural gas prices at a 20-month high and they say

$4.50 by july. back to you. >> thank you very much, sharon epperson and we wanted to do something begger and it doesn't seem to be coming to an end and we don't have a definitive number as of yet and we're talking about the fertilizer company that's been underseas led by barry rosenstein. we've had mr. rosenstein on cnbc and we've had the ceo on cnbc. we've heard both sides. interestingly, this issa i situation where the stock has done extraordinarily well and yet you had an activist get into the shares saying it could be better, arguing that the company is better off, jim, split as opposed to maintaining the retail wholesale operations. they have fought back valiantly, but let me get you the news or what appears to be the news. it says it believes that david rosenstein and david bullock appear to have enough votes to

be elected to the board in the annual meeting. they know the vote ahead of time as opposed to having the meeting counted there. >> what is it? a chicago-style vote? >> i don't know. only they know the results of both sides based on the number of votes by these nominees and the contested turnout for canadian elections and he's offered to pay financial advisers -- we're not even going go in there. they think they've gotten two of the nominees. >> perhaps somewhat muted, activism, never been bigger and i can't tell you how many times i've heard from bankers hired by companies. so many conversations that go on that never make it on to the television or the front page of the newspaper or even into the public realm, but companies are very aware of activists and they come in all sorts of shapes and sizes these days. it's not just the icahns.

it's shareholders you might not think of. >> they used to go after winners and losers, this is not teldar. >> right? >> that has been an interesting component of this battle in that it's not as if this has been an underperforming stock price although they would argue over time it has been. >> pcs, we'll get a shareholder vote at the end of this week and that's a takeover bid from deutschtel being flatly rejected by many shareholders. >> i talked too much about the boss with m and a. it's been a winner and a group that's been controlled by the corn price and the corn price has been terrible. >> interesting. >> i agree they are broad trends. >> beware the black swans and wall street legend jack bogle, the chairman will help us in the market. the dow down 46. ♪ you know my heart burns for you... ♪

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>> if you were watching ncaa this weekend you would notice bank of america is rolling out a campaign with commercials like this one. >> before they sat down, one more time, just for themselves. ♪ ♪ >> before the last grandchild's graced the stage, before katy and her husband hit that rough patch, before kevin finally came home and the first grandchild arrived, before the sons in law, daughters in law and before dad's brief brush with the law, before the second british

invasion. >> we have heart strings there. squawk on the tweet. who exactly is b of a trying to arc peel to with its new commercials? tweet us @squawkstreet. we'll get your responses. >> teared you up a little bit and got you moving? tugged on your heart strings? >> i'll come back after the break. >> yeah. not a lot of zero interest rate now, right? >> i like the campaign. it's got an image issue, and i think they're addressing it head-on. a lot of my friends bank there, i -- why are you looking at me? no. i'm saying obviously this is different from the pink's hot dog. >> e on, i see. yeah. >> you what? i don't even know where you think i'm going. >> i'm the only one who pulled out of bank of america because of their add campaign, but the pink's hot dog ad campaign. pink's is one of my favorite hot

dog places and obviously, a little softer approach. don draper got on that or is it peggy that had that. was that draper. >> i think he's gone. it was roger sterling in a cynical moment came up with the ad campaign. >> he looked so great. regina actually had dinner and -- john slattery. >> isn't that great? >> yes. >> oh, this is me. >> coming up, the highest-paid ceo. >> i get carried away. we'll tell you who is rolling in the dough and who didn't make the cut. up next -- ♪ ♪ coming up, it's not exactly ocd behavior, biit's certainly something requiring order and nobody does it like jim cramer. six stocks in 60 seconds when "squawk on the street" returns.

monday morning, good

morning. in the next hour of the program veteran investor jack bogle will be with us and we'll look at earnings season and whether that can pry open the cracks that exist in this market and carl quintanilla will look at the highest-paid ceos and ask if they're worth it. >> welcome back after a week's absence. >> let's get to "six in 60" this morning, six stocks in 60 seconds. >> this is a natural gas company that does incredible. >> what is the news on knock? >> j.p. morgan upgrades if they take it down. this company was the most hurt by the sequester. >> avon cutting 100. >> this is the beginning of a new era at avon. >> more love for best buy today. >> look. best buy has become to me the quint essential why you don't like wall street. here, they didn't like it and here they're all shopping at that time. >> morgan stanley starts micron, equal weight.

>> oh, please. this is the company that has the most momentum with drams. don't do this. a couple of news pieces on google today. bernstein says the buildout. i want to ask david about this. it will cost them too much. google's been in a decline ever since a thousand target. the kiss of death. the $1,000 price target. >> the "sports illustrated" cover. >> people what's app. i do this old dog, new blog with the research director of mad money and her brother, ross canon and i find these thingis and can't believe it. 1 million people are using this thing i've never heard of. >> what's tonight? >> i am dissecting big pharma. it is time to understand why big pharma went up so much and now that people are starting to downgrade it, why they shouldn't leave it. one pharma after another all week. >> see you tonight. >> thank you. >> louisville over michigan.

>> i'm predicting they're in my -- >> i know. that's the way to go. >> tip-off's at 1:23. >> the unfab five. >> jim cramer. when we come back, vanguard founder jack bogle will be here. don't go away.

>> welcome back to "squawk on the street." let's get the road map for the next hour, and into what is setting up to be a disappointing earnings season. legendary jack bogle will weigh? on how to navigate the markets here. that will bring us back to the fed. stimulus started to gather steam. is that now off the table? plus ceo compensation. think you know who tops the list? think again, but we'll begin with the markets which are lower this morning ahead of the official start of the first earnings season of the year which begins after the bell. on the cnbc newsline, jack bogle, the ceo and founder of the vanguard group. good morning. >> good morning. good to be with you all. >> how do you feel about where we are, jack? it's been a pretty good year, entering a part of the year that

is historically treacherous, at least you go back the last couple of years. do you think we're in fair value territory? >> i think we are absolutely in fair value territory, and i don't really go much further than that. i put the p-e at around -- market p-e at around 16 and some people have it lower and that makes it seem cheaper than it is, but i don't worry too much about the year. look out a decade. if you're only in for the day, the week or a month, i think you're in for a lot of unpleasantness. i think earnings could grow as much as 5% a year and that would imply because they track very closely a nominal increase of 5% a year of gdp. so that may be high. it might be more like four and a half or four, but that's what's to expect the next ten years. >> you must be strong

incorporate in that view some of what central banks are doing here and the effects that we will see in five years, in ten years. how does that make you feel? >> well, if you're not concerned about it you're not paying much attention, honestly. we have an enormous fiscal problem around the world, and the more you see say that ben bernanke and the u.s. fed seems to have done one of the best, if not one of the best jobs in the world of trying to do some stimulus because all of that austerity they've tried in european union, and great britain and greece and it's everywhere, it seems to be -- it doesn't seem to be working at all. i think lord cane may have got it right and they would. >> just help us get perspective. you've done this for a number of decades. are things different this time

around and not just for the central banks, but you've had two pretty brutal recessions in just one decade. are things different? is the world a different place? can you invest as you always used to invest? >> well, i think the answer to that finally is yes, but you really asked two questions, simon. one is is the economy different with the things that you talked about recessions and so on, and two, are the markets different and the way the markets react are eternally the same. you all know about hope, greed and fear. the eternal drivers of the market and so when i tell people i think we ought to have a 7% return on stocks, doubling your money in ten years. that's a 2% dividend yield and perhaps the 5% earnings growth i mentioned, but i also tell them that they should expect at least a few at 25% to 30% drops along the way and maybe even a 50%

drop in the coming decade. the market will do what it wants and it will be overvalued and undervalued and you have to keep a stiff upper lip and if you know how to get in, david told us at "the new york times" last week. he was telling us to get out of the market. he promises to tell you when to get back in and i would follow his advice. >> yeah. >> and jack, you know, jack, it's david faber. we've had this conversation now for a number of years, but when you talk about ten-year increments it takes me back to -- you could have measured ten years back from '09 or '10, i think, and gone nowhere in the s&p. i wonder whether generation alley we lost a generation of investors there and whether they'll ever come back whether our volumes that we have now are reflective of people that simply don't want any part of the equity markets. >> it's a good question, but when you look at the period of the first ten years of this century and even up to this new

century, up to the day. it follows two years, two decades, two decades and unprecedented in american market history of 17% returns. that doesn't go on forever. it was mostly almost entirely, about half of the return was p-e expansion. higher valuations and greater enthusiasm, greater greed and that has to revert to the mean. we know that about p-e and we know if they're under 12, at the end of the decade, about 85% they'll be higher and they'll go up during the decade and if they're up, they'll be lower at the end of the decade. so we know more than we think we know. i think the best strategy is to just do your best to avoid looking at this stuff, to avoid reacting and it's hard to do. >> i have a hard time doing it myself. >> just before we let you go. >> can we talk about the mechanics of what we do, jack?

you are widely credited with populising the index funds and on top of that we have these huge amounts of money in etfs. are you concerned when you reflect upon it that the rewards for stock picking have declined and it's less valued in the market and analysts are losing their jobs and certainly, a lot of the money sits in etfs in derivative contracts of banks. it doesn't actually flow to the stock exchange into themselves. is the stock market changing? >> no. people talk about the greater market efficiency and the rise of indexing and as you probably know there's been a $1 terrell onswing over the last five or six years from actively managed equities toen decked equities. it's 170 billion into indexing and 320 out of actives and

there's plenty of satisfaction with active management and it should be. yes. it doesn't make it good difficult for good managers to succeed and to for every manager that succeeds and beats them by 5%. there is another manager that loses you on what comes to this -- that's mathematics and that'ses been -- one would have to say that's eternal. grows return minus cost equals net return for all of us as a group. i think to the extent we can take -- for want of a better word, phonyism out of this, with people having the hot fun, the hot product in the business now and hocking it to the public. we just want to run sound, long-term, low-cost, tax-efficient mutual funds

indexed or otherwise. that's the direction we should be going and it seems to be the direction we are going. >> although you once had a hot new product, too, a long time ago. something to remember. good to talk to you. >> i did the biggest mistake i ever made. >> what's that? that was the merge of wellington management company with the old group and they had the hottest thing going and was i stupid. that was 1996. i mean, five stars for stupidity, okay? >> jack, hurry back. we'll talk to you soon. thanks again. >> good to be back. >> macy's and jc penney back in court today in the battle over martha stewart home goods. a month-along mediation effort appears to have failed. courtney reagan is in downtown manhattan and she's been following this thing from the opening gavel. courtney? >> reporter: that's true, david. here we are again at the new york state supreme court in the trial that pits martha stewart

living between jc penney and macy's. this is a month after the parties separtjudge sent the parties into mediation. he only allotted three weeks for that trial and when that time ran out there were still arguments left to be heard. the judge is growing increasingly frustrated with all of the parties urging them multiple times to come to a settlement. you guys will be happier if you decide as business leaders how to work this out. if i make the decision inevitably someone will be unhappy. the judge did note in court thanking martha stewart for reaching out to macy's ceo. the two hadn't spoken since late 2011 to tell him about the jc penney deal and lundgren said even thinking about it made him sick to his stomach. time is growing more important for jc penney as soft launches of its home collection have begun in some of the stores. martha celebration products are

able to be in some of those stores and are available online, however, the non-branded martha stewart products in the categories in dispute for now have to remain off the shelves and jc penney owns 17% of martha stewart omnimedia and they're hoping for a number of reasons that the full martha stewart collection can be on the shelves in time for mother's day as preefriously planned, but i guess right now it's up to the judge. simon? >> so when do you think we'll get a decision? >> reporter: you know what? it's hard to say. i thought the parties would have come to a settlement, but because they didn't you have to assume that jc penney and macy's both think they'll win this and it seems they'll fight it out for a while and i have a feeling that they could have a number of more witnesses to go to continue this. all parties inside are confused as to what will will happen today and we're all waiting for the judge to get started and we'll have a better idea at the end of the day. >> enjoy the weather.

75, it will be very different from last time. up next on the program, find out which corner exec has the highest salary on wall street. we'll break down the big earnings and their salaries. >> later, why ben bernanke and the fed will not be pulling the plug on qe any time soon. we'll be back after a quick break. tdd: 1-800-345-2550 schwab bank was built with tdd: 1-800-345-2550 all the value and convenience investors want. tdd: 1-800-345-2550 like no atm fees, worldwide. tdd: 1-800-345-2550 and no nuisance fees. tdd: 1-800-345-2550 plus deposit checks with mobile deposit, tdd: 1-800-345-2550 and manage your cash and investments tdd: 1-800-345-2550 with schwab's mobile app. tdd: 1-800-345-2550 no wonder schwab bank has grown to over 70 billion in assets. tdd: 1-800-345-2550 so if you're looking for a bank that's in your corner, tdd: 1-800-345-2550 not just on the corner, tdd: 1-800-345-2550 call, click or visit to start banking with schwab bank today. governor of getting it done. you know how to dance... with a deadline. and you...rent from national.

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the federal budget books

unraveled. eamon javers is here this morning. >> good morning. they're rolling off the pressespress ees as we speak. it is being printed just a couple of blocks from here in the bureau in washington. the president will not release the budget formally until wednesday, but we're getting an early look at the hard bound copies and it makious wonder why they print up the old-fashioned hard cover copies, but they're doing it today and we'll get a look at what the president says on wednesday, but we know the details of what's in there including a potential proposal by the president of what they call chain cpi which is a limit on social security payouts to beneficiaries there. that's something that has gotten at least some republicans to say they're at least encouraged by what the president is offered here and it's making liberals very nervous. lindsay graham, the republican senator who might be key to a big-bargain deal said on "meet the press" saying barack obama is showing a little leg here

with this budget proposal. carl, we're watching these coming off the press and we'll get a look at them wednesday and that will shape the debate as we go forward. >> we're looking at the deal between the president and some senators. >> some real outreach and back and forth coming out, and we'll see if it reduce guess different result than we've seen in the past, but the tone of the conversation here in washington, anyway is different than it has been in the past couple of month, carl. >> great point of why they print those books. makes no sense. >> eamon javers, thanks. >> mary thompson is back at hq and she has all of the details. >> hey there, david, there's a familiar name at the top of the list compiled by "the new york times," and new ones below it. the highest paid ceo is oracle's larry ellison. even though they rejected the firm's pay plan, even as the software firm's total return fell 22%. his pay rose 24% to $96.2

million. allen johnson saying ellison's perennial place among the top-paid ceos suggest a couple of things and first, the fact that he's the founder of the company and second of all, his board is weak. he's outpacing the second highest ceo, aca by $60 million. breaken pulled out $68 million and he -- and mark parker of nike at 35.2 and then philippe dumond who took a $20 million pay cut from last year and he earned 33.4 million this year. keep in mind, while regulators and the public tend to figure out pays including starbucks' howard schultz occupy five of the top ten slot. in fact, the only financial ceo to break the top ten is ken shut of american express.

in the last four years pay for performance has become a mantra among shareholders and last year, median compensation was up 3%, not unlike the average firms increase in net revenue and the median total return up 17%. and aaron boyd says finally this suggests that boards are getting the message. >> companies are starting to adjust to say on pay and are making a concerted effort to align the pay that they're giving to their executives with the performance that they're seeing as far as stock price and earnings and all that. >> the survey is preliminary and it includes the 100 highest paid ceos filing their proxies by the end of march and firms filing by the end of june will be released later this summer. carl, back to you. >> mary, real quickly. one interesting there about that list. no ellison, no oracle whereas all of the other guys, that is

not the case. >> wait a minute. say it again. no ellison, no oracle? exactly, he's the founder and there's another argument that i've been talking to consultants and some governance experts as well, david. he received a $90 million stock option grant this year. he already owns 23% of the company. his pay basically goes in tandem with the firm's actual performance. does he need this added stake in the company? >> a lot of people question that. of course, as you pointed out. no ellison, no oracle, he is the foushder and that's one of the reasons, of course, why he is paid as he is. >> fair point. fair point. >> sure. >> regulators may soon require banks to boost their capital levels by even more. kayla has more this morning. >> banks have been lamenting the capital levels and it appears the senate bill here at home could set that bar even higher with the multi-page draft leaked

over the weekend, the bill attempts to require all u.s. banks to hold a 10% buff every capital against its assets. banks need an extra 5% and there's a window for federal regulators to stipulate the banks hold even more capital depending how risky those assets are and they would be forred to hold in excess of 15% in capital. that's compared to current regulation under basel 3, where the absolute maximum for the biggest global banks like citigroup is 1.5%. they write these were normal, historic capital levels before the federal reserve. they also say were banks to have more capital on hand they could pay their way in a financial crisis and the capital would serve as a, quote, surcharge. a bank might get from the cost of funding simply by being big. that's a big debate in washington right now. critics say the increase

outlined would detract how banks are able to lend to companies and customers. we'll have to wait and see what the final draft of the legislation, and it looks leak a long and winding road. >> this is going to get through a congress that has taken so much money from the financial sector. >> that's true. there was a story in "the new york times" about how much these financial firmses are lobbying washington right now for some of these issues and if you look at what the draft goes rid now shlt it wouldn't -- assuming it takes a couple of years to get through the coffers of congress. another five years, it will be a long road, simon, at this point to see how it actually gets implemented if it gets immremed. >> a lot of times the rules are written after the bills are passed. it's an amazing way we work. thanks, kayla. >> attention travelers, a new report ranks the biggest airlines. phil lebeau will have those for us. look out, investors, the black

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welcome back to "squawk on the street" i'm josh lipton. the reits touch a new five-year high for the third day now trading at its highest level since november 2007. it's a yield-hung reworld out there. the average dividend yield for the group stands at 3.8%. simon property group up 14%. >> first quarter earnings season kicks off after the bell. expectations from many of the street have been rather negative for earnings season overall. so we want to take a closer look at the season and look at it as a potential black swan for the market rally as we sit at 14,506. on the floor we have yahoo finance senior economist as well

as cnbc contributor. christine schwartz is senior manager at s&p capital iq and stephen whiting joans us and u.s. economist at citigroup. ladies first, christine. you are quite upbeat about where you think we might go through. the earnings have been depressed, you argue, because all of the ceos have been saying. >> as of this morning s&p capital iq is expecting a 7% and it's low, and it's actually the highest we've seen in a month. about a month out, analyst ceos are very conservative and what we've seen over the last eight quarters is the final number ends up 4% higher than what the estimate was before alcoa report. which would be respectable. >> is that an automatic connection? >> not always. >> i think sometimes earnings are a secondary trigger for the markets and it's more news based and the rallies have more to do with economic indicators and if we do end up 4% higher, it

should give economic indicators. >> a lot of people are very worried and the leadup to it and the cracks there were with the yield on the ten-year coming down and you also have the transports down 3% and that doesn't add up to a market could consistently rally. >> in the context of the market that broadly rallied 10% on the quarter more than a full-year return. we think the economy was not just march. you've seen a lot of very strong indicators in the economy in the first two months of the year. 4.5% stronger than consensus, but just like the last four quarters which were chronically underestimated. >> what do you think, michael? >> do you think we can continue to rally 11.5% since halloween. some would say saw the man go away. >> i think the most cyclical

sectors of the market and the heavy dow industrials and they've had their stock price reflect activity and you have had expectations beaten down very low for those cyclical sectors which are the wild card and you've had the steady stocks holing everything up. so i wonder if what you have here is a below the surface correction that's knocked expectations down enough. i am alert for ceos on a forward-looking basis and maybe talking about a dollar when it's up 5% globally year to date, and in terms of their outlook, i feel like the earnings season itself might be staticy for the market and even in good reporting seasons, the average earnings season may not be great in having the market lift further. >> we'll see what earnings season brings, christine, stephen and of course, michael. guys, back to you. >> thanks very much, simon. >> if you thought an end to qe 3 was in sight, find out why not

so fast. the wall street journal's john hilsenrath and our own steve liesman is here after the break. (announcer) at scottrade, our clients trade and invest exactly how they want.

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monday morning here at the new york stock exchange. we are just over an hour into trades. it's 7:31 on the west coast. 10:31 down here in new york. ups has reportedly appealed the european union's decision to block its $6.7 euro billion lead for general express. general electric has agreed to buy lufkin industries fsending lufkin shares up 40%. and avon will plan to cut 400 jobs globally as part of a cost-saving initiative. u.s. treasury secretary jack liu is in europe on his second trip since taking office. it is buzzing between a last-minute cancellation between lew and the minister. >> great to see you. it's been extraordinary over here because about 24 hours

before jack lew on his second trip as treasury secretary was due to go to brussels tomorrow to meet with the finance minister at about 3:15 p.m. here local time, the meeting has been called off. in fact, the treasury isn't going paris anymore at all. so the four-city trip across europe is now down to three. today jack lew arrived and met with various european leaders in morning and he's heading off tonight with frankfurt where he will meet with mario draghi. tomorrow he's off to berlin where his longest meeting is with the german finance minister. 90 minutes in the mornings and then he was supposed to wrap up a trip to meet with pierre moskovici. >> they've been dealing with the scandal over the handle of what people are calling tax avoidance. we see the profit minister stepped down. france has been takinga i hard line on this very issue of tax

avoidance. several government figures have been accused of hiding their own funds offshore, that is, in order to avoid taxes. so the question now becomes what happens with president francois. what's the future for pierre who has only been in office for less than a year and it's an embarrassment for france with regard to the european debt crisis now strong cancel this trip entirely and frankly leaving the matter in the hands of germany and the rest of the european union, guy snoops kelly evans in brussels, thank you very much. closer to home, friday's employment report was a big disappointment for many in the market. steve liesman is here with more details on some very important numbers. steve? >> simon, thanks very much. funny thing happened on the way to a lousy jobs report which is that economists ended up increasing gdp or their outlook for the first quarter, but it had nothing to do with the actual jobs number. it had to do with trade that

came out at 8:30. take a look at where we are on the first quarter gdp forecasts. we are up 3.3% and that's the first quarter of 2013 and there's the 3-1 in the fourth quarter 2012 and fourth for the average of 5.5% and what's interesting to me here is they doan have much of a bounceback and they did come in in the second quarter and the first-half average is 2.6%. i want to take a couple of views about how the soft employment report for march will not lead us to alter our forecast, but it influences our interpretation of the results and it will lead us to being maintained and j.p. morgan said we would be inclined to view the payroll reports as xaj rating the labor demand. two views on what the jobs report meant for good-bye, but

ultimately gdp up in the 3 1/2% range. >> we'll get more views from the fomc members throughout the course of the week. >> 12. >> the question is does the weak data signal an end to the idea of tapering off. cleveland's fed president sandra pienatto. john hilsenrath is chief correspondent for "the wall street journal" and steve will stick around for this discussion. >> she is often called a centrist. this view that tapering could minimize risks. is that bending the view of viewpoints on the committee? >> you know, penatto has been reluctant about this from the get go back in september, but i think the jobs report really mattered on friday. the people who are making this decision at the fed, the janet elins and ben bernankes and bill dudleys want to see substantial

improvement in the job market and what we got friday is a signal that we're not getting it. >> so, steve, are you putting that whole discussion in a drawer or not? >> no room in my drawer, carl. they're all filled. >> i have an image of your desk. >> you know what my desk looks like, carl. >> and the communication strategy, i think which is that they want to tell us that they do see costs out there and they do see risks and that those are on their radar screen so when they get to a point where they do have the stop and that the market is not surprised by it, so what we have now is instead of the market forecasting when qe will end and there is a forecast on when qe will taper and there are two different idea ands that's the way the federal reserve wants it and he believes we could have's trainering beginning in june. we're not thinking time period. we're thinking economic forecast, and i think the fed is

becoming successful in making the market think about what the trajectory is for unemployment in this country and how they will react to those changes. >> john -- >> i think steve is right. the point here is that you have to distinguish between a fed strategy and a fed decision. the strategy is at some point when the economy is strong enough and employment is strong enough it will taper down their purchases gradually. that's the strategy and they made it very clear, but the decision actually got a little farther away on friday because it looks like the job market isn't strengthening as fast as it seemed to be. john williams talked about whether it was tapering in the summer and he wants to see more evidence that the jobs market is getting stronger. >> we did 88,000 in the last month and we also have what looks to be 3.5% growth. i think the jury is still out whether you will get an upward

revision there so the employment numbers look closer to the gdp numbers. >> i think another possibility is that the first quarter looks stronger than the economy really was. >> right. >> and that we ended the first quarter on a slow note and we're still on the 2% growth track. >> that's an echo. it's happened in the last three years, and i just wonder if you're's buyer of the notion that it makes it look weaker in the spring and stronger in the fall. >> in the last few years there's a risk that they have been doing that because of a lot of the distortions that happened during the financial crisis and seasonal adjustments aren't supposed to do that and they're supposed to adjust for seasonal fluctuationis and think there is a potential problem. >> carl, if that's true, carl, then the way they calculate those adjustments, the effects should be lessening over time. we did calculate late last week that they had a per percentage

points revision. >> you're right. not only has the quarter appeared strong then that strengthens up being revised up to an average of 1%. bernanke has mentioned this several teams and that's the reason why they're wearet and kind of litmus test and i'm wondering what john is, several month of 200-plus job growth and that's really what i think we're hearing. when i get to month four of 200,000 in a row or better, then, i think the economy will bring forward the tapering. the employment rate is dropping for wrong reasons, they want to see it because people are getting jobs. that will give the fed a problem in explaining itself if the unemployment rate keeps falling, but they feel it's part of a weak jobs story. >> yeah. as we discussed on the friday with you, steve. one last question, steve, on

bernanke tonight. should we expect discussions of money leaving japan or the weird capital flows of money? the russian money of cyprus, will that be any part of the discussion? >> it sounded like a speech on the stress test and it didn't sound like it would be on the topecs. perhaps in the q and a, and my knowing is he has previously supported what the bank of japan is doing and they want to see him with his foot on the success cell raert and that's a key part of what his research showed before he was fed karm an, fed governor. >> john hells and steve liesman. >> after the break, a read on the latest survey of airline passengers. are they happy than they have been. >> stocks and bonds telling very different stories in recent months and we have a top-ranked panel here to weigh in. we're back in two. mine was earned in djibouti, africa, 2004.

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we want to take a look at stocks hitting all-time highs in today's session. >> you can see right there. pardon me, i was looking over there. via com, take my word for it, up 2.5%. a couple of research notes out this morning and david bank, also, coming out with more or less positive views of via com's upcoming earnings and the multiple, buying back a lot of stock. disney, you know what the market cap on disney is? i'll give you a minute. $105 billion. that's an all-time high on disney. i think we may have seen it. that stock up over 1% and hitting on all cylinders and still a looming question when you talk about the bundle and the importance of sports programming and how long can it hang in there and paying five

bucks for espn and none of that hurting disney. wow! what a move. constellation brands hitting an all-time high and the doj and grupo modelo hitting an agreement on principle. inbev is buying what it knew as grupo modelo and fully owned by constellation. you see it there up another 2%. simon. >> one of the most influential political figures has died. margaret thatcher has died of a heart attack. thatcher was an influential figure in post-war britain and crucial to the transatlantic relationship and indeed the first woman to ever become british prime minister. cnbc's ross wesgate joins us live from london. ross, i would be fascinated to see how people react to margaret thatcher's death. she's been ill for a long time,

we knew that. on the one hand, clearly, best friend of the gop and arguably dragged the uk economy away from the labor unions into the free market in the '80s, but on the other side very controversial. a lot of people argue she destroyed the social fabric of britain. what are you hearing so far? >> reporter: certainly, a very divisive political figure as you suggested in your introduction, simon, very few politicians of the 20th century having upon the impact she had and not even winston churchill had annism. it stood for a wave of privatizations. it stood for deregulating the labor market. it stood especially in her mind for taking the state away from individuals and allowing individuals to make their own choices. promoting wider homeownership. >> it did mean in the early '80s that unemployment rose up to 3

million. it also meant the decimation of a number of industries and notably the coal industry and the steel industry which she argued was being state subsidized and had to rely on their own and it was the breaking of the minors and the unions and naturally in those areas where those were most prevalent where people will always hold her as the person who broke up society, but the impact was huge. it was not only in the uk in terms of economics and also in regenerating. when she came to power in 1979 it was after the winter of discontent. there were strikes. there were rubbish piling up on the streets and the '70s was an abysmal decade for uk economic output. she goes down in history. >> she in fact, died of a stroke and not a heart attack. that's important to say. we've known rather unkindly from her daughter that she's had alzheimer's for a number of years. will she get a state funeral in britain?

>> reporter: she's going to get what they call a special ceremonial funeral along the lines of that held for the queen mother and princess diana. it will be held in st. paul's cathedral, as well. that's interesting in itself and that tells you about the impact that she's had on this country. there will always be detractor, but even her detractors will say whatever they thought of her policies, there's no doubt how much she was admired for what she brought to the table in terms of her skill sets and her determination to see it through. and certainly the first part of her premiership was when the changes took place and she'll always be criticized for the poll tax. as far as lady thatcher was concerned she never lost a general election. she won three general elections and she was put out of power by her own party so the people of this country never voted her out and in fact, even in that election in the party she still had the most votes. >> i think we're going to hear a

lot more of this over the coming days and what they talk about here. ross, for the moment in london, thank you very much. russ wes gate there on the death of margaret thatcher. deutsche bank is getting more upbeat. the airline index is up 23% so far this year. rather than looking to excuses to boost profits, they say investors should regard recent dips as an opportunity to initiate or add to positions. he predicts the u.s. airline industry will make an operating profit of $600 million this quarter, more than double what the american carriers made this time last year. in fact, it's a gain of 140%. rolling forward his outlook in 2014, deutsche's linden berg is raising his price targets predicting 37% upside for united continent continental. 42% upside for delta. 32 for southwest. and still 27 upside from here

for us airways. the analysts say these airlines are his topics and can do better than that if they further deleverage their balance sheets and get a multiple rerating by investors. jim was talking about this in the first hour of the program. he thinks that spirit is the way to really play. and even if you look at the price target you have from deutsches he's saying that's only six times earnings on southwest. you can quite easily rerate for that. >> you could if you start to see that. but there are still question, the airline has not been an investment for so long it's going to be hard to fully convince people. great performing sector. we've heard a lot of talk from pogticians about drug test for individuals who receive government aid. but what about testing ceos whose firms benefit from billions in federal bailouts? we'll talk about that. and rick santelli with the continuing fallout from last week's very disappointing jobs report.

welcome back. let's get over to the cme group. rick santelli has the an tesant exchange. rick? >> thanks, david. friday we know 8:30 eastern we

didn't receive a report like we most of us would want to receive. we did see a drop in the unemployment rate of a tenth but that's the conversation i want to have. once again, we see that things like labor force participation rate, many articles over the weekend or, like today in the "wall street journal" about what percentage of those that we don't count as unemployed affecting things like the trend in labor force participation rate where people are going into things like disability. how do we get america to work again? well, i certainly don't believe that the fed programs are doing a good job of that, but one thing is clear. they're going to try to make crystal clear exactly how drops in the unemployment rate like fridays really don't portend that things are getting better. this meant to be the fodder but i think it's a good thing but i

certainly don't think that the fed's programs are still going to make a huge difference. we also learned on friday to tie all of this in somewhat together. portugal's high court basically is going to make it very difficult, in my opinion, for portugal to stay in the union. why? because their high court ruled that you cannot, for public pensioneers, cut their wages, cut their benefits. why? there's a bit of socialism that's going on and some of these reforms that are much needed are being fought. i'll give you an example of turn intended consequences of this. they're now thinking maybe to pay some of the wages for these workers in portuguese t-bills. that is like two standard deviations away from gold back currency. it's kind of fiat fiat. this last story. the iron lady. this story shows me why we need more ladies and iron ladies. the problem with socialism is that you eventually run out of

other people's money. and another quote that i like. being powerful is like being a lady. if you have to tell people you are, you aren't. 79 is when she came into power. think about how toothless jimmy carter was, hostages in iran and then a decade later between reagan and thatcher, we brought down the iron curtain. we need strong-willed, who cares about the polls, who cares about marketing and buzzwords. we need strong leaders. i heard somebody say today she may have torn the social fabric of europe? are you kidding? she tried to tear the socialism out of the fabric of europe. back to you, david. >> thank you very much, mr. santelli. it's tweet time. if you are watching any of the ncaa championship this week you might have noticed bank of america rolling out a new ad campaign with commercials like this one. this brings us to this morning's "squawk on the tweet." who is bank of america trying to appeal to with its new tv commercials?

welcome to hour three of "squawk on the street." here's what's happening to far. >> general electric is buying

lupkin industries. 88.50 a share. >> we're going to see earnings per share go up as companies buy their stock back. other than that, being an earnings seem to be flat. more this afternoon. >> europe not doing that well for european companies. japan not doing that well for japanese companies. i don't think it's going to be a disappointing earnings season. i would love to hear something new, which say, listen, this underclass, i'm not going to give up on -- i think a lot of chatter these days is about an underclass developing in this country. and bernanke seems to be the guy who is most focused on it. >> spring swoon or not? which is it? >> april has got to come back. i have to believe that the cold weather did impact retail. i know that weather is often used as an excuse, but, boy, it was cold. >> have your only in for the day or the week or the month, i think you're in for a lot of

unpleasantness. if you look at a decade, i think earninging could grow as much as 5% a year. >> it's sometimes earnings are a secondary trigger for the markets. i think it's more news-based right now as we've seen recent market rallies have to do more economic indicators but certainly if we do end up 4% higher we should give markets a break. good morning. we're live here at post 9 of the new york stock exchange. let's look at the markets as we kick off earning season tonight with alcoa reporting after the bell. bernanke with the first post-jobs number speech later on tonight. dow looking at modest losses. down 42. s&p is down 1 1/2. merger monday is back. ge agreeing to buy oil field services company lufkin, helping ge to expand the oil and gas businesses. valuing it at $88.50 a share. that is a 38% premium to the close on friday.

also avon products saying it plans to slash more than 400 jobs as part of a previously announced cost-cutting initiati initiative. job cuts are to occur acrossfun. it will get out of the market in ireland. let's get to the road map. start with the markets. stocks are extending losses after the first weekly job of the year last week. hours a away from the first company to report, alcoa. will those numbers send stocks deeper into the red? we have two strategists here. currency wars, the yen is falling after the bank of japan's latest stimulus measure. drug testing ceos? we will talk to a harvard professor who thinks the u.s. should consider drug testing soft of the countries's business leaders. he will explain which ones and why. first, back to news in retail. macy's versus jcpenney trial resuming today after being put on hold since march. both parties have been in settlement talks but they are apparently not going very far.

courtney reagan watching that from the steps of the courthouse. good morning. >> good morning, carl. that's right. i guess that month of mediation didn't end up doing any good because all the parties are back in court today here at new york supreme court to argue over who has the right to sell martha stewart branded products in certain categories. and i have to tell you, within the first 40 minutes, macy's lawyers immediately jumped up to the judge and said jcpenney is already in violation of the injunction. look at the website. the courtroom put up the jcpenney website and said take a look at some of these products this. they included plastic pitchers and champagne flutes. macy's says this is in violation of what we are allowed to sell and you have not yet decided where jcpenney falls on this. jcpenney says that's not the case. what we're selling here are disposable items. the judge says everyone, go back and talk to your clients. you guys determine what's going on here before i have to make a decision because he certainly hopes not to actually have to make that decision. that's sort of the tone he's taken throughout much of this

court case. he wants the parties to decide it for themselves, trying to make as little decisions as possible here. now, macy's lawyers calling their first witness after this month long recess. john ty, the general merchandising manager for jcpenney's men's currently but was in charge for home during the time that these martha stewart negotiations were ongoing. right now he's going through the modeling, the financial modeling approximately and he determined that martha stewart products could provide for jcpenney if a dealer reached, talk about how ron johnson told them to go into the meeting with martha stewart excited, full of energy. right now we'll see what the judge has to say about that. there was some question as to whether or not those financial models would be accurate and how he exactly got that information because as of right now there is nothing to to prove if he was underestimating or ever estimating at this point. jcpenney's hopes the judge will allow them to put that fuel martha stewart home collection out in the martha stewart shop in time for mother's day as

previously planned. timing really is of the essence, now, carl, as we get closer and closer to mother's day. >> it amazing how much we're learning about the intricacys of this deal from start to finish. thank you so much. courtney reagan in manhattan. take a closer look at the markets as we get ready for the official start of the earnings season. alcoa reports after the bell tonight. the chief investment strategist for wisdom tree investments and chris meyer with loop capital markets. guys, good morning to you both. >> good morning, carl. >> start with you. we always end up here t in the spring, things start to deteriora deteriorate. you can never count on alcoa. they're a volatile player at best. what's your thinking going into earning season? >> well, i think the key thing to focus on issing ing aggregat dividend growth. i think the u.s. market will be okay. we're seeing about $320 billion in aggregate dividends being paid in the usa and dividends

year over year. that's one of the things that gives us comfort. every individual company could hit or miss but if you're buying u.s. market in aggregate it's attractively priced and the dividend yields are compelling on many companies. >> as people go for yield in any form anywhere in the world. that's the lesson with that money flow. >> i think you have to squooekz squeeze dividend income wherever you can. you're in a period of a weak economic recovery. 49 months into it. but there's no guarantee going forward that, you know, you're going to get sustained economic growth, particularly in the developed world. you need to squeeze as much income as you can out of the equity markets. >> chris, a lot of discussion about the analysts having brought in their expectations for earnings and top line growth since the beginning of the year. they've gotten a little more realistic, they argue. realistic enough for alcoa to jump over the bar? >> i know people have gotten a lot more conservative as time has gone by. i don't know that alcoa will be the bellwether for the rest of the season. the last couple of years alcoa's

earnings have had very little impact on the performance of the rest of the s&p 500, for example. so i'm concerned about what happens tonight but i don't think it's the be all and end all of what's going to happen with the entire earnings season. i think people need to focus on the fact that corporations have done a terrific john in managing their balance sheets. most of them have a lot of cash. most of them have done a great job of maintaining profitability in the face of lower sales and output. and so i think the earnings are not likely to be great. we all know that. but the long-term picture is what really counts here. >> yeah. you know, everyone talks about technology needs to lead. the cyclicals need to take ownership, be it general, the market. chris, you say no. stick with your general mills and stick with your procter & gambles. why? >> my basic view is i'm not a stock picker, per se, but i think stocks that you should look at right now is a diversified portfolio of companies that are iconic

american companies that have great balance sheets, that are making money and have the capacity to pay greater dividends. i agree with him. i think it's key to squeeze out as much dividend income as you possibly can. we're at a yield-starved world. it's very tough to prior individual to make ago of it right now. and i think you're best served by looking for conservative companies, stable companies, but companies that can grow their dividends. >> we keep talking about japan. the move, the nikkeis had over the past few sessions and inverse to the yen which is falling apart. are you guys seeing dplflows th track japan? >> we're seeing a few, yes. in fact, the wisdom tree heads japan, led the oel etf industry this year in inflows. >> that's jxj, right? >> gxj. we're seeing the interest in what bank of japan is doing. the question is do they have the will to implement the policy the new prime minister, they clearly

do. they have the wallet. the central bankers can conjure up currency out of thin air when they need to. the efficacy of the policy and how quickly expectations of inflation change in gentleman japan and whether or not they can crossover and have an inflation. and the third piece is the savings rate. do you actually unleash the animal spirits in the japanese consumer to start spending quicker, get involved in their equity market. there's more aggregate savings in japan than there is in the united states. they have half our proximate cause calculation. >> one-third of ours. >> yeah. >> and they're actually using a bigger bazooka than ben bernanke. what the governor is doing, $1.4 trillion of stimulus over the next 18, 21 months on a relative basis is larger than what we're doing in the united states. so this is really unprecedented, you know, relative to where they've been. and mention that a japan is one of the unique equity markets. they correlate to the currency. if they get what they want, which is a weaker currency, higher inflation, they may still have room to run on the equity

rally in the japanese stock market. >> we talk about qe in in country. they appear to have said we'll show you qe. and they're definitely putting their money where their mouth is. thank you for coming in. >> thank you. >> chris, thanks to you, too. >> thank you. appreciate it. meantime, the ten-year treasury yield falling to the lowest level of the year. dipping briefly below 17 after friday's jobs number will investors jump back on that flight to safety bandwagon even further and take shelter once again in the bond market? we'll talk some rates later in the hour. first, though, rick santelli with some comments on thatcher. rick, well received on twitter today. what else is going on? sglil tell you what. when you talking about that, who is the king, it's ira harris. here's what he said after the bank of japan announcement. oh, my gosh, the bank of japan just declared war on the ecb. we're going to bring him back to sigh why he said that. awe stimulus is spongeable who said that? i did. we're going to reconcile the

two. and i asked him if he was to saver in japan what would he do? here's what i would do. you know what that means? sell, sell, sell. come back in about two minutes.

the bank of gentleman ban executed its first government bond buying operations after announcing the new easing policy last week. let's get to rick santelli in chicago with some more thought on that. hey, rick. >> hi, krl. watch out, he's saying he feels piffy today.

why did you say that when the announcement came through, you said, boj just declared war on the ecb. very simple terms, tell our viewers exactly -- this isn't about comedy. you believe this. tell us what you're thinking. >> look it, we're talking about the bond buying program in japan. 97%, 95% of all bonds are owned by japanese insurance companies, japanese banks, and japanese private citizens. unlike here. rates of 55 basis points and you're telling me you're trying to create 2% inflation. okay. now if i'm a japanese bondholder i go, wait a minute, this guy owned in japanese bonds because we're in a deflation their environment which made my money worth more. >> t let me stop you there. people always knock deflation. it's the boogeyman. it's what our central banks always fight against. let me see. so if you live in japan, prices really kind of come down, comes right in your wheelhouse.

certainly your wages aren't going up. i tell you what, i could think of worsen their yous than what's been going on. unfortunately their industry still stuck in a quagmire, my opinion, leftover real estate loans. there's a lot of bad issues there. not necessarily that. to get to your point. you said sell, sell, sell if you were holding any of these bonds. why? >> sure. if you're telling me you're going to turn the asset that i'm holding into a negative real yield i'm going to get rid of it. what am i going to do? remember, we're going to have the return of what we nicely call mrs. latanabe as she scours the globe looking for a more positive term, as are the insurance companies and banks. >> where is that money going to go? >> wherever it can. the g- 7 said the japanese can do whatever they like -- >> long. >> -- as long as they don't buy foreign bonds. the vast holdings of jap feesz are by japanese, the only place that boj can bye bonds to get this qe program is from japanese

bondholders which is then going to force them out. so, you know,by proxy, they're buying foreign bonds and foreign assets and nothing says it more than previous interviewer said this morning. the french bonds have dropped 30 basis points in the last three days. >> and iran's rating is now 27%. >> right. >> because of course, he represents the socialist government and they're trying to do things with taxes and his own people are found to be corrupting. once again, the iron lady passes away. you know, everything is fine until you run out of other people's money. that's the epicenter of what's going on in france. >> don't forget, the japanese are starting at 55 basis points. >> quantitative easing started. we're at 3 1/2% in a ten-year. this is looking krais crazier by the minute. so they take ben's plan years late. we're going to have to see how it turns out. >> right. they are following this plan as

i said on the blog and i like to laugh about billy joel song, we didn't start corroding and singing karaoke this weekend. we didn't start this fire but they finally caught on and now the whole thing of this is going to fall into the lap of the ecb and draghi has to play to get through the german elections. if europe politically starts to ignite this summer he's going to have a real problem. >> you also said this, let's watch the automakers in europe, germany in particular. that's your barometer, as to the fun level of what's going on in the japanese buy back programs. back to you. >> thanks to ira forget that song in my head. thanks very much and rick santelli. for a lot more on the yen and potential currency battle rings bring in the president and cia of america merck investments. he joins us on the news line this morning. good to have you back. >> good morning. >> i wonder if you have in light of what ira was just saying, a price target on the yen?

>> we think the yen is going to be worthless. the dynamics of the yen have changed. over the last couple of years the correlation between the yen and the vix, the yen is no longer the safe haven it used to be t be. the yen's current account is eroding. we talk all this theory about we will print money here and there. when you have a current account deficit 200 plus gdp to ratio matters. depression era. fiscal policies. printing money like crazy. that cannot end well. >> why is the market seemingly underestimated their resolve? why did we not think they were really serious about this? >> because for years the japanese have never gotten anything done. seven prime ministers in seven years and what is functional the japanese has been, the stronger the yen was and nobody took kuroda seriously. a week ago abe lowered

representations. no matter what bazooka they pulled out the yen would have rallied because it would have been buying on the news. whereas they were able to lower expectation, they are determined and what they have now is they have three -- the three top guy s at the bank of japan are new. this is not the bank of japan of yest yesteryear. they think that printing is use of the problems and they will use it and it is slowly sinking in. whatever comes to monetary policy people don't believe that people do -- you just heard it on draghi, they think he's going to change at the general election. he won't change. it's just this thing that there's a hope and expectation of other players that think they should do things differently. people would not jump over their own shadow. kuroda will print money. >> if, in fact, they have declared war on the ecb as ira suggested. why is gold not reflecting a more global inflationary scenar scenario? >> because many people think there this is isolated, this is

contained. it's not just the bank of japan. it's also the bank of england. we do not have an exit. for the time being, yes, some people have been selling gold because they were buying gold because of the end of the eurozone which has s. not materializing and regrouping phase. one of the things we said is we've never had a eurozone crisis. that's the good news. the bad news is we have a global crisis. >> well, it's something to obviously -- it's fascinating, the whole entire investing universe, axle. if it hits infinity, we will come back to you. thanks, axel. >> my pleasure. city ahead, california residents have more to cheer about besides the beautiful weather and now the lovely scenery. cali folks have the chance to play powerball for the first time in the history of the state. plus, could the rally of 2013 be in jeopardy with the kickoff to earnings season tonight? back in a couple of minutes.

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the results are in from the 123rd annual national air quality. phil lebeau joins us with details. >> good morning from mobile, alabama, where airbus is breaking ground at a new facility here and eventually the planes built here will probably be the best in the industry competitive with boeing but the airline flies those plains have a ways to go in terms of what they're doing when they're in the air. when you look at the latest airline quality rankings. last year complaints to the department of transportation surged by approximately 20% a lot of complaints having to do with the service that the passengers were receiving and there were more passengers bumped from oversold flights in 2012 than 2011. that's the bad news. good news is, well, airlines did a better job of handling bags. people are not checking as be many bags but the airline did a better job handling them and

improved their on time performance last year. on average airlines were on time 81.8% last year. what were the top three rankings according to the airline quality report? this is statistically. this not just people's opinions of the airlines. virgin america number one sfol lod by jetblue and airtran. sigh west and express jet are regional carriers that work for the largest airlines and then you have united and, remember, as we look at the airline index, remember, carl, last year united had three major computer outages and that's why their complaints skyrocketed. they were well above their competition. and that's the latest airline quality rankings. not a good year for airline service in the united states. a lot of people complaining that just wasn't the best experience in the air. carl, back to you. >> sometimes it is definitely not that. thanks so much, phil. interesting numbers. phil lebeau in mobile, alabama, today. we're going to introduce you to the harvard professor who says the u.s. government should consider drug testing some big name ceos.

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if you're looking for news to worry about in europe, plenty to choose from.

slovenia, portugal today. a lot of bad news doesn't matter when there's that much money sloshing around. >> that's correct. the farther bank of japan fights, is going to unleash $1.4 trillion of liquiquiliquidity. they have been sure they retire. so there you can see that -- >> the european markets are closing now. >> part of europe is trading higher. some in negative territory. what is interesting you will see portugal down on the bottom left. see portugal there down substantially over the weekend. you've got -- on friday night you've got the constitutional court knocking down some of the austerity. that existing bailout on portugal may be in come difficulty. of course, we're now looking to whether slovenia will be the sixth nation to be bailed out as their crisis continues and credit worthiness falls. if you look at where we are on

the bare bones of the data, if you like you can see that slovenia is the bigger issue for the market as things stand at the moment because portugal is already contained even though that may be under some pressure moving forward. what's interesting is that with the liquidity promise from the bank of japan, a lot of assets have risen today. some of the yields, partly perhaps because the economies are so bad, but some of the yields are dived around europe to record lows. i ought to mention where we are on the greek banks. they are recapitalizing the greek banks and the deal was for the rest of europe, provided you can find 10% of the recapit recapitalization for the private sector you can keep control of them. these two guys here have been unable to raise that and the merger has been halted. they would have been nationalized but we're all over the place with the quotes down heavily done the day but now some of what remains of those banks have risen. one more i should mention, which is really great for london which is a swedish petroleum operator

over in stockholm surging today as it says it may have a new find of oil in the north sea. those are the other owners of the license, premier and stat oil which heralds from the north of europe. >> nice to have you back and everything seems right with the world. the timing, the bell is at 11 0 11:30. simon hops. sharon epperson is at the nymex. >> precious metals after the shortcoming rally on friday and a lot of traders saying that this has profit taking due to that short covering rally. we continue to look at what the long-term picture may be for gold and there is a lot of consensus out there that perhaps in the short run we will see more pressure but many traders will believe there will be central bank buying from the chinese and will continue to support gold prices. technically, still in bearish territory here after hitting a ten-month low on thursday for gold prices.

in terms of the energy market, a mixed picture here. brent crude lower while wti is higher. that spread between the two narrows. perhaps after hitting about $105 a barrel for brent, we saw a bit of the weakness in the brent market after it looks like there's going to be the strike that was potentially going to happen in norway with oil workers has been averted. there's been a last-minute agreement there and traders say that took some of the wind out of the momentum we had seen in the brent crude market. momentum remains in natural gas. natural gas at a 20-month high. several banks out there saying we could see natural gas prices at $4.50 this summer and even though we are looking at the fact that the cold temperatures that took us here will really seem to be warming up, particularly along the east coast, still looking at tremendous strength in the natural gas market for now. back to now. >> thanks. bob pisani is here looking at what's moving. news flow is going to start tonight. >> alcoa will be the important one but i want to learn about

wells fargo. on friday, one-third of all the mortgages through wells fargo and the volumes are down a bit. that's what we're hearing. we want to get more direction on the housing market from them. as for today, kind of indetermine nate day. started off more risk on but that kind of faded by about 10:15 or so. right now we've got a sort of mixed picture with health care to the downside. hmos are getting hit. materials, tech and industrials, there's your risk-on names. this is an indetermined situation. not equal on the advance decline. a bounce on a couple of groups last week. one is oil service names which had a tough time. it helps when your have general electric buying luffkin. lufkin big in the artificial lift business. hydraulic pumps for oil and gas companies. it's up 4%. some of the other names in the equipment group also on the upside. the other group bouncing nicely are home building stocks which had a tough time last week. bounced a little on friday and up again today. not a lot of news here but i

would know we're going to have a rare event in the home building business. ipo. we don't have ipos in home building stocks often. look at what's going on happen later this week. taylor morrison is going to try a big deal here. half a billion dollars they're going to float. very wide distribution in terms of what kind of homes they're selling. we'll see how that does. the last one was tripoint, that was back in january. tripoint homes. went public at 17. started trading at 19 on the first day and eshl isly right where it was. held up all right. before that we were racking our broins out. it's been ten years since we've seen ipo of publicly traded homebuilder since tripoint. then we're going to have a live it up, live it down today. circuit breakers stops halts and stops. that's going away. we have new ones now. new circuit breaker, call it limit up, limit down.

you trade in bands. try to stop all the stocks getting halted all the time. it's a mess that creates problems and reduce these erroneous trades. this is starting today. all the exchanges are going to now do this today. suppose you have a stock that falls 5%. current limit. $10, $9.50. frozen for 15 seconds. if you get an offer, it keeps trading. stay above that 5%, you're okay. it keeps trading. trade below that $9.50 it's halted for five minutes. the idea here is hopefully we'll stop all these trading halts for five minutes that creates problems. you don't want stocks halted if you can avoid it. this is using the future business. it's been successful. only one problem i have with it. it doesn't apply at the open between 9:30 and 9:40 or at the close between 3:30 and 4:00. this is an sec mandate to all of the exchanges. and i think the problem is they want to make sure that the technology functions smoothly

and there's no problems at the open or the close. but you're now naked essentially. there are no circuit breakers at all, nothing, at the open or at the close. that makes me just a little bit nervous. now, this is supposedly come in in august and make it the whole day round. i'm going to keep an eye on this. i'll let you know immediately. we're standing here. if anything weird starts happening at 9:30, we will let you know. >> it is disruptive when there's a halt. great for tv but disruptive to the floor. state government across the country is mandating drug tests for repients of aid. in a huffington post op-ed, steve strauss says bank ceos who receive federal aid should be subject to drug testing. he joins us this morning from cambrid cambridge, massachusetts. >> thank you for having me. >> reading our op-ed, i can't tell if you're serious or in ththe

not. this is a real tactical argument or political argument. which is it? >> i think it's a real argument. i'm not starting at somewhat higher level. i'm not really in favor of drug testing people who have legitimate access to a federal government program, whether that's unemployment insurance or fdic insurance. but i actually don't see the argument as to why you would decide to drug test people who are getting unemployment insurance but you're not going to drug test people who are receiving federal aid under other programs. that was really my main point. i just don't see why you would want to separate them. >> you even begin your piece with, the suggestion from then presidential candidate mitt romney that people -- we do test for those who are receiving financial aid at a low level and you make the point, well, why wouldn't you test those who are receiving federal aid from a high level. and you cite jimmy cane from bear stearns who, of course, well documented use of marijuana. is that your poster child?

>> i wouldn't say poster child. i would just say an example. i mean, statistically, according to the national institute of drug abuse, about 10% of adult americans will make use of some illegal drug in the course of a given year. if you're looking at kind of the 55 to 65-year-old group it drops to around 3%. i actually don't think bank ceos are more criminal than anyone else. i honestly -- this wasn't to imply that they're evil people but i also don't think they're particularly more saintly than anyone else. >> i'm going to read a piece from your op-ed. the actions of the financial services industry can be explained by some combination of bad luck, innocent incompetence, criminal intent, or drug use. unless we ask ore bank ceos and other senior people to get tested how will we know if they deserve taxpayer assistance. i work for a big corporation. there are hr policies.

there is drug testing as a general practice in corporate america. there's a good chance a lot of these ceos are already tested. >> that's certainly possible. there was a "wall street journal" article in 2010 which actually said, no, the banks do not random drug testing on their senior management. that was the only reference i could find of that. >> any response from the white house or congress or is anyone taking this as a legitimate policy proposal? >> interesting question. the op-ed went out last night. you check back with me in a few days, i may have an answer for you. >> in general, it sounds like it's more of a response to the suggestion of testing those on the low end. it's not, i mean, forgive me if i'm trying to read into this. it doesn't seem like you're antagonistic in big business although you might be upset about the crisis and what led us there a few years ago. >> correct. it was really more an argument of equity that we're all

american, all citizens, all equal. i can't see the argument why you would test turn employed but not test people who are receiving corporate aid. >> it's worth a read. i'm sure it will infuriate a lot of other people and i enprobably encourage some others. huffington post, steven, thanks for coming on and fleshing it out a bit. steven strauss, harvard. 4 1/2 year high in todays's session. fifth consecutive session we have seen utilities reach a multi-year high. still ahead, a closer look at geopolitical risks. the fed, and the markets. what it can all mean for fixed income. the golden state says hello to powerball for the first time ever. our julia boorstin is live in l.a.

up next on the half, will earning season extend or crush the rally? trading ahead of this season's biggest reports. jim what godfrey on why it's not too late to buy in japan. best or worst buy? should you short the s&p stocks?

carl, we're also going to have exclues i've comments from david teper on where he sees u.s. stocks, treasuries, and also japan. certainly won't want to miss that. >> can't wait to hear. >> last but not least, right? >> thank you, scott. the fed chairman scheduled to speak tonight on financial stability but investors will look for any indication as to whether the fed will keep historically low interest rates in place for longer than forecast in the wake of friday's bad jobs number. what does continued low rates mean for the economy, investment, and your money? i want to turn to ira at credit swich and michael at rbc capital markets. guys, good to have both of you. good morning. >> thank you for having us. >> is tonight looking for glimmers of insight into the macro data or are the incredible capital flows that we've been witnessing more important? >> well, they both are because the capital flows have a lot to do with what the federal reserve

has been doing. and we think in particular in the past week really what the bank of japan has done has been a really huge impetus to what's going on in the treasury market. the fact that you have a massive qe program in japan is going to have an effect here. and we think actually means that the belly of the kur, the five-year sector is going to continue to benefit from that. you had a big rally already and there's probably a bit more to come. >> michael, you're out look, what will you be listening for tonight? we talked about what we got on friday in a moment. he's going to talk about financial stability and so one of the big issues is whether he talks about some of the criticism that's been levied at the fed for making some people -- too risky investments as a result of qe. you know, i think that if he does talk about that, we'll hear him make pretty dovish comments and suggest that qe is going to continue for quite some time. >> michael, do you think after ism and jobs on friday and

housing numbers that aren't quite as rip roar as they once were, this idea of rates falling and a renewed flight to safety, is that a rational argument being made by investors right now? >> well, i think that, you know, it does tell us that people have a little bit too optimistic about growth. but that said, i think it's -- i think you would be chasing if you ran in and bought with tens below 175. i think that would be, you know, putting today's money after yesterday's trade. you know, i think one of the things that people are looking at is they're saying with jap needs yields being pushed low by the actions the boj had taken, are we going to see a big inflow in the u.s. i think we will see some but a lot of japanese investment in the u.s. is borrowed, it's financed in the repo market and there's no reason to think that that will accelerate as a result of the boj's actions. >> interesting point. i wonder if -- i mean, ira, should we prepare for renewed push like, i hate to use a

tsunami metaphor, but a wave of japanese money coming our way? >> i don't know if it's going to be a huge wave but certainly some of it because there is going to be a search for yield in our view and some of the money that's going to come out of japan and search for yield is going to come to the u.s. and whether or not that comes in the form of treasury purchases or equity purchases is yet to be seen. but ultimately with the idea that the yen is likely to continue to fall, people are going to shun come of those investments in japan. we've been looking at ways to express that view. i think more domestically in the u.s., i agree with mike that it's going to be hard to get biyear but we can rally more. the year-end forecast is 2% on the ten-year. it's very possible that if you were to say buy today and hold for a year, i would say probably not. >> michael, you know, last couple of years we've had this discussion, oh, this is going to be the turn. large investment banks have made generational calls on the long

good-bye to bonds. i wonder if anyone's going to take a risk trying to make that call again. >> yeah, i think we had been -- had a little more bearish forecast for the u.s. economy and so, you know, not a big surprise. but that said, with yields being this low, i think what happened in japan does help mortgages, in particular, ginnie mae mortgages. you but you shouldn't get too excited. if you look at a yields in the u.s. adjusted for inflation, they're actually much lower than what we see in japan. i don't expect a massive flood of cash. >> right. and just to throw a consumer angle at it, ira, if you -- for whatever reason, if you resisted re-fiing our house or mortgage over the past couple of years, it sure seems you got a reprieve and there's a little extra time. >> rates and spreads are both lower and tighter now. so when you look at mortgage spreads, they were pricing in for an early exit of quantitative easing by the fed.

and a lot of that has been taken out of the market now. i think that's right. we were skeptical that we would see an early exit by the fed and friday's jobs number just takes that off the table, i think, at least an early exit. doesn't mean they won't be tapering. but people were thinking they might start to cut their purchases in june. i think it's totally taken off the table. >> yeah. as steve liesman pointed out in the last hour, we're -- the tapering and ending are two different discussions and our analysis continues to get more refined over time. guys, appreciate it very much. >> thank you. >> thanks. after the break, we'll head to the golden state where they're feeling a little luckier than usual, right, julia boorstin? >> that's right, carl. powerball launches in california today and the state's lottery is making a big push to get people to come out and buy the $2 lottery tickets. ville all the details on the millions of dollars at stake coming up after the break.

california is finally launching powerball -- local residents. julia boorstin is there, selling powerball ticket -- >> well, i'm having a hard time hearing you, carl, but today california does become the 43rd state to join the powerball lottery with an estimated

starting jackpot of $60 million. the lottery has done a huge p promotional push with billboards saying believe and a tv spot to the song "cal dreaming." there's even been a public art installation called red ball project touring california ending at the lottery headquarters today. now, powerball is expected to generate about $350 million intact sales. the multi-state lottery association projects that will eat into other lottery games for net increase of about $100 million in total ticket sales. and with 40% of every $2 ticket going to schools, that translates to more than $40 million in additional revenue in california schools. that's small addition to the annual spending. 21,000 plus retailers also cash in on higher sales. >> all of our shopper studies show that lottery players go in more frequently into the

convenience stores and buy more goods. i think there's a tremendous benefit for the retailers. they see more traffic and get improved sales. >> and even though people know the odds, that isn't stopping those folks coming in here to buy the tickets today. >> it's fun. and it doesn't cost that much, as long as you keep it under control and just, you know, just spend a couple of bucks and that's it. no more than you can afford to lose. >> now, powerball's o'neal says california can boost sales by more than 25% nationwide and he predicts that we'll see a billion dollar jackpot at some point over the next couple of years. carl? >> all right, julia. thank you very much. big jackpot. we'll talk to you soon. tweet time. if you were watching any of the ncaa championship this weekend you might have noticed a new bank of america ad that rolled out with mu commercials like this one.

this morning's squat on the tweet, who are they trying to appeal to? tweet us at squawk street.

our first outdoor shot of the year so far. if you were watching the ncaa this weekend, you might have noticed a new ad from bank of america coming out with commercials like this one. >> before they became a family, there was a connection that started it all, to make the future a wonderful thing it turned out to be. we know we're not the center of your life, but we'll do our best to help you connect to what is. >> brings us to this morning's squawk on the tweet. who is bank of america trying to appeal to with these new ads? james writes, trying to attract people who have a soft spot for hallmark commercials. abac isin