celebrating success and it was great to be on the show with you guys. do more of that. >> i think you're right. this is where you can do it. and you made that point. this is where the entrepreneur can still do it. you get rich, you create a lot of jobs. you don't need to hide. >> ted, thank you so much for joining us. >> thank you. it was fun. two hours goes by fast. >> it does. join us tomorrow. "squawk on the street" is next. ♪ that music will get you going a little bit. welcome to "squawk on the street." carl quintanilla is on assignment. i'm scott wapner with jim cramer live from the new york stock exchange. david faber is in washington. david, what have you got coming up? we can't wait. >> we're going to be talking with the newly installed chairman of sirius sat lie, greg maffei. reports in to john malone. yesterday a long sit-down did i

have with mr. malone tomorrow, but today mr. maffei life. tomorrow, former ceo of microsoft. that's real behind me. i always thought that it was just a picture but they've redone the studio and that's actually a window. that's the capitol. >> well, cool. i always thought that was phony, too. greg maffei, now chairman of sirius. major opportunity if stock is only at $3 because maffei is a moneymaker. >> we'll talk a lot more about it. let's look at where we stand in the futures after the best three-day winning streak on wall street of the year. mixed picture this morning. looks like the dow industrials will open up about nine points. s&p a fractional mover. nasdaq could open a little network. >> holy cow! stock goes up a dollar!

north korea, could you give the stock a break? >> an old friend from goldman sachs has a friend that says the people don't need windows 8. it remind me of dog food. can you advertise all you want but the dogs won't eat it. >> our road map starts with the markets setting up for another open to the up side coming off the strongest three-day rally of the year. all three major indices setting new records along the way. microsoft took it on the chin this morning, combination of downgrades and new data revealing a drop in pc sales. shares of yum! brands under pressure today. as the song goes, stand by your man -- or store, in this case. activist investor bill ackman says he's not giving up on jcpenney. in fact, he's doubling down. one day after an historic session on the street, both dow

component and s&p 500 hitting all-time close highs. blue chips less than 200 points away from 15,000 and the s&p within 13 points of 1,600. the nasdaq closed at a fresh 12-year high. jim, it has been an extraordinary run for the stock market. >> it's been one for the books. my take on this run is, it is very unusual to have the cyclicals, the techs, the financials and the drugs all move at once. it is reminiscent of other times when we saw a radical revaluation of the market. it is important to recognize that the s&p is still only at 15 times earnings. i say "only" because the alternative, the bond market, continues to not be a place where you can get any return. i am amazed every day at this rally. amazed. >> to your point -- david, the stocks that were the leaders yesterday, it plays right into jim's point. the cisco, intel, pfizer, merck,

microsoft, now of course that's going to be a little bit of a different story today. you've got some of these so-called old technology stocks getting hit pretty good off this microsoft downgrade. but stocks jim mentioned. those are the ones that continue to lead. >> yeah. is pfizer the key to this market again? >> pfizer broke out yesterday in a very key fda approved an being a secoaccelerator for breast ca drugs. >> the power of cheap money. bernanke is trying to get this to happen. when you talk to somebody like malone and you see how many companies he controls are borrowing and levering up to a certain extent because they have nice cash flows into the future, if you can discount that cash flow at a pretty nice rate, it does very well for you. this is a powerful, powerful driver of this. i say it almost every day, jim, but it doesn't stop it from

being true. >> i think it is important you point it out because that's the magic carpet ride. you talk about malone. this morning real g, the big real estate company, did a second guarding. initially looked like it wasn't going to hold $44. it's already up in premarket trading. this is apollo. one of the most important things in this market is the lick whichification of the private equity stakes. people want their stakes! >> listen, return of capital for private equity is a key theme also. we talk about the entrance because that's more extighting when they try to buy something which they are not trying to do as often as we might think. but exits are extraordinary important and many are many very well orchestrated. we had one the other day as well, that home builder. >> taylor was swift. >> this is probably as good a point as any to ask the question as to whether things are getting

a little bit overly euphoric or overly exuberant. listen to a sound bite from sam zell. i'd like your reaction on where we are in the market right now. >> i think that, you know, this feels like the housing market of 2006. everybody can't afford to miss it. all i know is i never got -- as an operator of a company, i never got recognized for cash in the bank. i only got recognized for increases in earnings. that's the measure of the stock market, not how much cash the company has. >> that's sam zell yesterday on cnbc on the closing bell. >> first, it is entirely possible that it is the housing bubble but it would be 2005, not 2006. that vintage was some good, some bad. that's important because 2 you have 240 is when it got way too carried away. i think there are two kinds of stocks here. kinds that fit the parameters of what zell would like, pharmaceuticals are not all

overvalued. talking about techs -- microsoft, intel, oracle, cisco are all clustered at 11 times earnings. now is that wildly exuberant? no. there are other parts of this market which i would describe as being general mills and clorox that are too expensive. but they have good balance sheets and they do have good yields. all i'm saying is that the market is not the market per se. there's areas highly overvalued for a long time and they continue to get overvalued. then areas like microsoft when it goes from 10 to 10 1/2 times earnings and suddenly every analyst takes it. i don't want to refer to it as the market. that's not holding up to an analysis. >> that's as good a segue as any to microsoft. shares falling in premarket on a pair of downgrades this morning. have them in my hand right here. one from goldman sachs. heather bellini slapping a sell rating. >> this is the first time i've ever had a bellini i don't like. >> rick sherman reducing the

software giant to neutral from buy, citing weakness in demand for dploebl pc shipments for the first quarter and the worst since the research firm began tracking the data two decades ago. we'll talk with rick sherlund in the next hour. >> i hope he has the glasses on. that picture is wrong. david, is it not true that anyone -- did anyone think pc sales were any good at all? come on. is this such a shocker? >> no, it's not. it is not. the gartner numbers were out last week. we did get a sense for this. but when you look at it in front of you and you think about 14% decline? that's not quite jcpenney same-story sales numbers but it is not good. >> i have to go to women's wear

daily to find out exactly how bad those are. it is going to be hewlett-packard. is this the opportune time to take dell private? is this the right moment? >> that's a very good and valid question. as plaquestone continues its due diligence for a bid that we expect they may -- may make, let's call it a number of weeks from now -- one has to wonder when you look at that headwind, what do you do? do you say we're all right, the strategy's a good one, even if it is 65% of revenues of the company -- we're not worried. >> my advice with michael dell is to do what my friend mark cuban did with broadcast.com -- sold to you. >> $6 billion, thank you very much. what about microsoft? take microsoft private? a note this morning from sherlund -- he's going to be on "squawk on the street" -- raises that as one alternative to try and unlock some kind of value. >> apple should go private. it's time for china to go

private. look. i think there is a level. david, help me here. there is a level where you won't be able to raise that much money to be able to bring microsoft private. >> it is impossible. yeah. unless they expect the market to decline by another 70% from here, then it becomes a lot more possible. >> wait. if apple came through -- say apple traded $100 a share. it may be right for tim cook to wake up, the siesta may be long since over and he takes the company private. >> there are a number of people who bought this stock recently because of that 10%, 1 % free cash flow yield. that's a big free cash flow yield, jim. you don't see that too often, not to mention a 3% dividend yield that goes along with it. those are pretty strong numbers for microsoft despite what's obviously a declining area for it to work in. >> yeah. david, let's look at it this way. microsoft, cisco and intel have greater growth than general

mills, kellogg and floor rocks. they both have relatively the same yields and people just can't stop buying the latter. general mills trading at $49, above where goldman downgraded it. here we are, microsoft versus general mills. which one is really cheaper, david? >> that is a question i leave to you, my friend. >> i think the answer is that microsoft's much cheaper but people look at the future and think there is always going to be big g, people will always want to obserwn cheerio's but t may not warm up to windows. if you mention to my 18 and 20-year-old, you use windows? of course, dad. you have to get the air when you open the window. they don't know what windows 8 is. dad, did you number the windows at home? >> does this -- does this down grade and now the fact that the stock is going to be down and it is pulling some other big techs down, does it throw water on the idea that tech can finally start

performing -- >> i got news for you, partner? it may not even go down in the end. microsoft may end up not down. wouldn't that be the shocker? we all his miss bellini who happens to be very nice and sherlunde, i think he had james taylor at his house -- these rock stars may not be right. downgrades haven't worked in the pharmaceuticals. why do we presume -- microsoft -- david, microsoft can do something with its cash. it doesn't have to just stand there. it can break the company up. it can go more software as a service. it can sell xbox. it can do what it wants. >> rick sherlund talks about a number of ways they could potentially add value but they have not been a company that's been willing to throw on a lot of debt, jim. they have an enormous amount of cash. but so much of it is overseas. that's the same thing with apple. they don't want to bring it back. they don't want to tax at 35%

been, 40%. this budget gets through with obama and you get some tax reform, it could be enormous but that's not happening now. >> david, you're in washington. what's this meeting with the president and lloyd blankfein from goldman sachs and dimen? maybe they talk about repatriation. >> i don't know that they get a willing audience. maybe that dynamic is changing. i'll defer to john harwood and everybody else in this bureau to tell me about that. >> is greg maffei not the perfect guy to ask about microsoft's foretuntunes? can't he spin a scenario where the stock could go to $40? >> i hope he's willing to entertain the questions. greg usually is. nod are not just talking about sirius and liberty but i'd love to hear what he has to say. he he spent quite a few years at cfo of that company.

good guy. >> timely to hear from him certainly. still to come, hedge fund manager bill ackman is sticking with his investment in jcpenney. that's next, a live interview. he's just been named chairman of the xm radio. tomorrow i have an exclusive -- he's a media titan. he lives under the radar to a certain extent. that's kind of an old picture. though john malone still looking very good. shareholder of a lot of companies you probably don't even know that that's the case. we've got that coming up tomorrow. let's take another look at futures as we see the s&p, up a little bit. just a little bit. more "squawk on the street" live from post nine, live from d.c. when we come back.

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♪ stand by your man ♪ >> well, bill ackman says he's standing by jcpenney. the investor telling women's wear daily he'll stand behind his investment. he holds almost 18% of penney's stock told wwd we're not going

anywhere. in fact, we're going in the other direction. we're digging in. jim, we read this this morning. here's the article right here. >> does digging in mean double down? is he allowed to buy more? what is that? >> i wonder the exact same thing. i guess i would be somewhat surprised if he was doing that he's got 39.1 million shares. >> is that a full position? >> it is. it is a small position, david, relative to the size of the other investments in his portfolio. but what else is he going to do at this point? right? the stock -- the stock's down 45% from where he got in or thereabouts. he's got no alternative but to stick with it, right? i don't have any indication that he's trying to get out of the way and he he certainly said that in wwd. >> yeah. listen, you're right.

obviously p&g represents larger stake. if you're ackman at this point -- in the reporting i did after your breaking of the story, scott, a couple of days back now, in speaking to people who are familiar with the board, let's call it, ackman just has to sit back and stop talking. he's lost his mojo on this board and his guy's gone. now you just -- stop talking. i don't think he's going to buy any more stock but clearly he expected to be there as a very large and significant shareholder. it will be interesting to see if he can keep himself from opening his mouth. >> remember, we have -- the wwd article talked lovingly about the fact mike ullman has the ability to deal with the

creditors. that's the key to the christmas season. >> no doubt. his credibility with creditors and jim, as you well know, with vendors is probably one of the key reasons he's back in that seat. again, it is stabilization, stabilization. that's what he's got to do for jcpenney. then they can talk about trying to create some moment mum if th can get to stabilization. >> not the pe but the mojo. >> look, mr. ullman has a big task on his hands but mr. balance sheet is going to rule at the end of the day. that's the story to focus on more than anything. >> credit suisse did a good piece about how once you're in a tailspin, you're finished. a fellow, the steven roth professor of management at dartmouth. his book is "why smart executives fail." david, how ironic is it to have

the professor talk about one of the worst investments he's ever made! >> he doesn't like to hear you say that. >> i like steven roth. i'm sorry. >> he's done a lot. >> he has. after another record setting day in the markets, how can you take your portfolio to higher ground in cramer is going to show you the way to do that. his "mad dash" is next. tomorrow on "squawk on the street," an exclusive with may is he's chairman and ceo, terry lun lundegren. >> wow! that's big. >> with what's going on with the martha stewart deal, jcpenney and macy's. what's working for macy's. its stock is at a 52-week high so something's working. mixed picture for futures. best three-day gain of the year. dow opening slightly higher, nasdaq will give some back off this microsoft downgrade. coming back after this. ♪

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♪ i like the way you move ♪ i like the way you move >> about six minutes before the bell. time for cramer's "mad dash" ahead of the market open. >> here's the problem with yum!. they started to come back from the dreaded" 60 minutes" like investigation.

anybody cancel david novak out is making a real mistake. i say yum! start buying. don't sell. >> this is worrisome though, bird flu -- >> of course it is worrisome but novak is a man who had's trumped a lot of different adversity in his life. those who bet against novak are making a serious mistake. >> at their peril. >> exactly. >> netflix. >> netflix. there is a lot of subtle ka a pitalation going on. goldman sachs is raising its price target from $125 to $184. that's what happens when you've been negative. you quietly have to come out and move the needle. >> how about the run in this sfok. >> a lot of people were short it. david faber -- when david faber announced that the disney deal was good i thought they overpaid for disney. netflix is about walking dead.

you can't crack into these great series without going back on netflix and watching them. that's why netflix does well an that's why everybody loves them, whether amc entertainment or disney. you want people to get into these long form series and you can't crack into them without netflix. the stock market looking to make more history on the way to the opening bell. that's next. ♪

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they'll get straightforward guidance and be able to focus on other things, like each other, which isn't rocket science. it's just common sense. from td ameritrade. there's a future investor getting ready for the opening bell. you're watching cnbc's "squawk on the street." the opening bell is set to ring in about 45 seconds. it is going to be interesting to see how the trade is today. it is going to be interesting to see what microsoft and tech, big old tech does today. >> i'm looking for them to shake off these very negative reports. but that may not happen. i'm focused on retail today. ross stores. i was with katie couric last

night at a fund-raiser. she once said she shopped at ross stores. she was smashing. this bed, bath and beyond is making a major comeback. it is not as bad as people feared. >> all right. the bell's ringing. you're watching the opening bell. s&p 500 at the cnbc real-time exchange here at big board, five oaks investment corp. celebrating its recent ipo. lot of ipos going on. >> they are working. i know that people are going to say a la sam zell and that great report -- it is all a great bubble. look, it was a bubble in '93 to '96. it is just the bubble turned out to be more of a bazooka bubble than a double bubble. >> i'm with you on that. pisani has more from the floor on what's happening -- well,

bob's not ready yet. >> i'm reading "the journal." fossils suggest dinosaur embryos. i stopped reading fossil. this market is so hot. you can read that story and go want to buy fossil. >> we didn't even talk about costco. >> what the heck is that? >> they were a little bit below expectations. >> oh been jujust buy, buy, buy. let's talk about ruby tuesday. it wasn't that bad a quarter. that's again weather related. family dollar cited the weather, the late tax season, is this, the that. the excused got a little too thick on family dollar. for the other guys, i kind of buy it. >> is the stronger dollar, if that gets into a consistent move here, could that be a significant headwind for the rally? >> in the old days you used to buy the retailers because they

sourced in europe. not a lot of companies now source in europe. even some of the great italian bagmakers, they take the fabric -- a la david faber when he did that terrific report on crew. they take the fabric, the leather, then they go to vietnam and make the stuff. dollar uses to be a tailwind. now i'm just going to say it is like no-wind. >> david and mickey walking through italy. >> that was nice. that was very nice. jim, think people are keeping a close eye on the yen and the impact there an those exporters, how much they're going to benefit potentially from that continued fall or what has been the fall. also keeping an eye -- on the jgbs. i know yields are extraordinarily low but there's an enormous amount of volatility as you look at the yen. look at that move! >> boj had a big meeting last

night. they're worried. there's some undercurrents that investors should keep in mind about what's going on over there. >> but the beneficiary -- italy, ten-year auction results came out today. early in the morning and they were 4.3 which by the way is now the same yield as before that ridiculous election. david, i think that's, yen, money going into where it can find any sort of return. >> that's right. that's an interesting component of what's worrying the boj. a lot of investors in japan who think the boj's buying anything, we're not stepping up for any of the auctions. we're going to be buying anything but those bonds, those jgbs. it is interesting because the idea is to keep the yields as low as possible. we all know if yields were to rise sharply on japanese debt what that would mean. their interest costs are not that far off as it is from overall revenues. just something to keep an eye

on. keeping an eye on it, guys, i haven't seen yum! but i -- we didn't really touch on it thatch, jim. what are we seeing on yum? >> it's up. it's only minus 13. i thought it would be minus 25. >> i wouldn't be surprised it's not up because of what you said. >> what do you think i'm some sort of buffett figure? i'm more jimmy buffett than warren buffett. >> you said novak is -- >> i was looking for minus 20 because of the bird flu stories. david mentioned about japan and the yen. look at kubota. you can decide not to use a caterpillar, kubota up today. this yen is going to give the japanese an unfair -- not an edge but an unfair edge versus american companies. something to think about. >> i'm keeping an eye on texas

well as we watch what this market is doing. david, hpq is down more than 7% right now. microsoft is off 4%. intel's getting hit on this microsoft downgrade but had hb down seven. >> again, down found 14 -- jim, we're at an inflection point, aren't we? >> yeah. >> we always say these things happen slowly at first, then suddenly? we're at the suddenly. >> one of the things i liked about sherlund's piece, maybe when we get a ten-hour battery life notebook, maybe that will change things. in other words the hardware is going the wrong way. it is -- the tablet, they didn't really say that much that was bad about apple in these reports. the smartphone, people are watching tv on their tablet and smartphone, they're getting facebook on tablet and smartphone. you just don't need a pc. i feel like i'm a dinosaur fossil dinosaur.

i carry a pc around. i carry a smith corona type writer around. >> you got a lot in that backpack. >> it is a big, heavy backpack. >> to your point, i got a pc sitting right here. i'm not using it. i'm just using my iphone. >> when bomber stops carrying around a pc, microsoft could go dramatically lower. he has the microsoft phone. speaking of dinosaurs. where we at on the dow right now? 14,799. microsoft and intel are in the dow. they can't pull them from the dow and suddenly add -- i don't know, give me a growth stock. they can't suddenly put in abbott labs and bristol-myers, can they? >> mcdonald's is up today. >> that article was about

service is bad. i say service is bad in buy mcdonald's. david, you remember the '90s you read a bad article and it was time to buy something before the japanese came in and bought it at 10:00. >> yes. then obviously the mid to late '90s, any news was good news. even if it was bad news. >> remember when it switched from pfizer to yahoo!? >> yahoo! to ktel. >> and 360. remember 360? the ceo of 360! that's like steve roth and jcpenney. >> now he's going to back out. say i hear this, forget that. >> let me ask you quickly. 15,000 on the dow. how do you read it? does it make you more nervous as we continue to climb? >> you nevi run a travel trust

stephanie link who comes on your show all the time. when she's on halftime she and i are both struggling because we see stocks we've sold and we feel like totalle idiots. what do you mean you sold coca-cola at $37? but it was really expensive. the problem with this market is they're holding on -- there is such seller's remorse. it is incredible! how the heck did i sell general mills at $44? what was i thinking? well, it was the most expensive it's ever been. eli lilly, we had the ceo on. that's an incredibly expensive stock but you sell it at your own peril. >> that's part of the issue here. people look at the rip van winkle trade. right? investors who have been sleeping for the last four years will wake up and see the dow is suddenly close to 15,000 and think what should i buy as i look at this market, is now the time to get in, should i be nervous, what should i do?

>> you can always fall back on companies that are not that expensive. they tend to be companies tied with pcs or companies that have been left behind. is david still with us? because the thing that i'm looking at is, at what point do people say pepsico is too expensive. in other words, the classic growth names. at that point if that money doesn't rotate to the banks when they start reporting tomorrow, then we are in trouble. it has to rotate to the banks because that's the most undervalued sector. >> wells and jpm tomorrow. the first of the big bank reports. bob pisani is on the floor with a look at what's moving this morning. bob, still trying to figure out where we're going to go in the early going. >> the big topic is the idc report down here. jim, you said is anybody surprised pc sales are declining, no, nobody is surprised. a couple things were eye popping in this report. one, the magnitude of the decline and two, the fact the asians have stopped buying. worldwide pc shipments down

13.9% but that was the steepest decline ever in a single kwaerth. if you break it down by region, u.s. down 12.7%? that was a little more than most people anticipated but the asian shipments were down 12.7%. there has never been a double-digit decline in asian shipments before. this is a lot of implications overall for the global market and for electronicsmakers. a lot of them sell components through mobile phones as well as pcmakers. intel down 2.5%. aap down 4.5%. cannibalization trend is accelerating between pcs and mobile devices. that has a lot of implications. broad com? barclays downgrade broad com for heaven's sake. barclays downgraded the entire semiconductor sector. not pc, semiconductor sector. i'll talk about that more later but they cite much slower growth profile overall. this is an indication of the broad trends that are going on

overall. the japanese stocks are up again today. the usual ones, toyota, they're all flying. but there is a widespread belief here and on trading desk that japanese buying in the u.s. is helping our rally recently. this is believed everywhere. the problem is there was a report out mentioned today in the ft, the japanese weekly, in the bank business that japanese have been next sellers of foreign bonds. it is widely believed the japanese are using some movement outside the country, some capital flight to deal with the weakening of the yen. who knows what's going on? all i can tell su something seems a little bit funny about that. nobody particularly believes it down here. retail same-store sales, i'm sorry nobody cares about it anymore. you know jim, only 14 of 120 publicly traded retail companies now report monthly numbers. target's gone, walmart's gone. all the ones that matter are gone. it is much more important. with that said, limited had a great report overall.

bed, bath and body works were particularly strong. i found a company that says it is hiring. pier i had decent earnings report this morning. buried right in the middle of it, they said they are considering increasing their head count reduction to support expanded stores around the united states. one of the only ones i've heard that's actually said they're going to be hiring this year. back to you. >> alex smith. he's had a remarkable turn. that stock was one of the best performers since the bottom. a great report. the japanese i believe come in every day at 10:00. what they did from '87 to '89, they come in at 10:00. i don't know why. they've been flooding the italian bond market, french bond market, all of these flows of funds are being recognized by traders. watch 10:00 for japanese money. let's shift to bonds and the dollar. rick santelli at the cme group. >> let's point to some important things out of europe.

greece new record high unemployment rate. 27.2%. in spain, year over year housing prices dropped close to 10% for the fourth quarter of last year placing those prices at par with 2004 levels. now to the charts. if you look at a two-day chart of 10-years, we closed at 1.80 yesterday. down several basis points today. we have a 30-year bond auction. watch which side of 3% it goes off at. open the chart up to two weeks, yesterday it was a one-week high on yields. yes, one-week high. just at 1.80. we switch gears a bit and consider volatility par excellene excellence in a fixed market, i don't look looking at percentages especially on fixed income markets especially on rates but it is hard not to when you're in the 50 basis point camp and you have swings that are over 10% like we have

yesterday in their futures markets and cash market yields. if we now switch gears to foreign exchanges, euro seems to be moving better against the dollar. is this an offshoot of buying euro currency on a yen carry trade? i don't know. many suspect maybe. if we look at dollar-yen it hasn't crossed 00 yet but it is getting awfully close. back to the spanish housing, even though that is going on, lots of liquidity out there. look at their yield! 10-year in the 4.60s. basically the lowest level since 2010. back to you. >> rick santelli for us. shares of eli lilly at multi-year highs. the chairman and ceo on everything from what's in the company's pipeline to his prescription for growing the drugmaker. that's coming up. also ahead, david faber, greg maffei, tapped as the new chairman of sirius xm. john malone tomorrow.

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welcome aboard.

welcome back to "squawk on the street." i'm david faber in washington, d.c. you see the capitol behind me. another story we've been following -- deutsche telecom and its continued quest to acquire metro pcs. that's taken a significant turn for better perhaps if you're deutsche telekom at this point with a new offer yet to be approved by pcs' board. though one would expect they will shortly do that. the new offer they're calling their best and final. that's nothing in the law books that says that means anything over here in the states but it

is deutsche telekom. we'll take them at their word. they have answered many critics of the previous deal by decreasing the size of the debt on the combined company. remember, they're combining t-mobile with metro pcs. deutsche telekom would own 70% of the combination. the debt on the combination comes down by a significant amount, reduced as well by $3.8 billion to $11.2 billion in total. they also reduce the interest rate being paid. deutsche telekom has been saying it is 7.2% though it is a complicated formula others say gets them to a higher rate. nonetheless they are reducing it by about 50 basis points. so about 6.7% if you again take them at their word on where it was. will it be enough to get shareholders who have been against the deal to come on-board? one of the key voices has been peter shoenfeld. they have avenue held a 2%

position but it is their voice to led the charge dwens the deal saying it combined company would be too highly levered to compete in an area where you need to spend a lot of money. they were then followed by paulson funds at a 9.9% position. there was no way they were going to get the vote. it had been scheduled for tomorrow, now pushed off to april 24th. i did speak with peter shoenfeld. did he not say anything definitive but he did term the latest offer from deutsche tele as very constructive. he and his firm are trying to determine if it is sufficient. they have answered at least what was looked for in terms of the reduction in debt, reduction in interest rate an importantly the extension of the lock-up by deutsche telekom allowing it not to sell shares for 18 months, pushing that off by a year. it had been six months.

we got to go from a likelihood this deal was not going to happen to a likelihood don't quote me completely but a likelihood that this deal is going to happen. again the shareholder vote scheduled for april 24th. we'll see what happens with the board. that's expected. that of course changes the landscape here because if pcs deal had had gone down, you don't know what would have happened. lot of moving parts when we talk about this. back to scott. jim and i were just talking here, the markets have gone positive across the board. what was a negative beginning the trading day, dow up 25 -- 14,826. retailers doing quite well, limited, ross, bed, bath, beyond. >> tjx which stephanie owns, this stock looked really bad. one point it was down $1 in premarket because numbers looked weak for the month of march.

it was not new news. you look at the stock, it's down $1. next thing you know it is up 16 cents. there is a revaluation quickly when people realize, wait a second, it was the weather. weather did play havoc with numbers and now people are looking through the weather an hearing that april at end of march was very good. this is really important. again shows that the bull is in charge. coming up, rick sherlund. but first -- coming up -- it's april 11th. so, what's the 411? cramer's got it. and it is six stocks in 60 seconds. we'll be right back.

time now for six in 60, six stocks in 60 seconds, give or take a few. >> i think the outlook for the summer will be terrific. >> howbeadobe?

>> gold man says from sell to hold. >> acadia. >> parkinson's disease unmet. i focus on this because the fda has opened the floodgates. if you have a disease that's unmet they are approving. one of the finest doctors i've ever met. >> speaking of diseases -- >> this is just one of the most radical revaluations i've ever seen. the crow is dead-right. jeffries is right to raise the price target. >> this is incredible! re realogy is giving money away! they be giving money away! acres of diamonds. >> what's coming up tonight on "mad". >> you know shark tank. one of my absolute best brand managers. i'll ask him can apple get their mojo back? i don't know.

>> 6:00 to 11:00 tonight. >> i'm looking forward to halftime. >> we got a great show today. we got a great stock picker on. andrew wellington. don't miss that. simon hobbs with a look aswhat's coa at what's coming up in the next hour? >> an interview with the ceo of eli lilly. david faber will be talking to liberty media's ceo on the new sirius xm chairman, greg maffei. and rick sherlund. this is cnbc "squawk on the street" on a thursday morning. stay with us. ♪ [ laughter ] ♪ [ female announcer ] each one of us is our own boss. ♪ and no matter where you are in life, ask your financial professional how lincoln financial

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good morning. let's get the road map for the next hour here on cnbc. both the dow and s&p closing at all-time highs last night hovering now just above those levels. questions over the fed and qe and tomorrow's big bank earnings on tap could we be on the verge of a major pullback. don't look now -- but old

tech has been that ento the woodshed on a slew of downgrades for microsoft and some very weak data on pc sales forecast from idc. rick sherlund will be here to speak with his microsoft downgrade and tell us whether tech will ever join the rally in 2013. shares of eli lilly at multi-year highs. the chairman and ceo is here for a cnbc exclusive. our very own david faber is live in washington with some big name guests ahead in this hour. >> good morning. that's right. few minutes from now we'll be joined gi the ceo of liberty media, greg maffei. he's also the chairman of sirius. this guy's got a lot of busy board meetings, i will bet. but a lot to talk to him about, including sirius and starz and liberty. he once was the cfo of microsoft which has been in the news today. then tomorrow our exclusive interview with the chairman of liberty media, john malone.

controlled shareholder of many, many companies you know well. long ranging interview on which we touch on many different subjects. back to you. >> david, we look forward to that. back to the markets, stocks trying to hang on to all-time highs this morning. what's next for this market? is a major pullback likely? let's bring in ed yardeny. it is hard to believe we're sitting on the cusp of dow 15,000. >> i'm not smart enough to figure out when the next correction is. lot of technicians i think got very bearish last week. here the market's making a new high. my target by year end is 1,665. that's only 5% from here. >> you're pretty bullish. >> yeah. i think the market continues to go up. if you want to be bearish with be if you want to short this market you are betting against the three richest men on the planet earth -- bernanke, draghi

and -- >> but they said they would consider easing the aggressive policy if any unwanted asset bubbles present themselves. he says he doesn't see them right now. >> i think that's a very good point. i just think central bankers are always trying to demonstrate that they're reasonable and that they're worrying about inflation but proof is in the actions. the fact of the matter is they have absolutely flooded the system with liquidity and the other proof is in the performance of the markets. look at the japanese nikkei, look at our market. they're all going up. this is really what they want. we may call it asset bubbles. they call it the wealth effect. they welcome it. >> if you're -- >> i don't have a problem for it either, by the way. for now. just want it to go totally crazy. >> if you're waking up from this long slumber and see the market keeps going higher and you are deciding whether you should get involved or not, what's the one area of the market you'd be a buyer? >> anybody who's missed the whole thing has been very

conservative, scared of the market in bond. it is hard to put them into something that's already had a big move. maybe all they could do at this spoint par point to participate in the market is buy an index fund. there's nothing i'm that crazy about. energy, materials, technology. energy, materials i think will be underperformers. while i think the u.s. economy will outperform the global economy, the think the global's growth rate is pretty slow. >> you are saying this will continue to be a defensive led rally? staples, utilities -- >> the problem with looking at it that way is it hasn't been defensive. all those stocks earned a very good dividend. the fact of the matter is the central bankers have created a bubble in the bond market with interest rates near zero and people are scrambling into dividend yielding stocks. >> you write a little bit about that in your note this morning. where are you scrambling to to find that dividend yield? >> i really have no problems with health care. health care's got the aging baby

boomers right ahead of it. they're already starting to age. i think that's a good place to look for value. i don't do individual stocks but pharmaceuticals have been extremely strong which is phenomenal because these stocks were being held back by the fact that their pipelines were full. teches have gone straight up. >> we'll talk to the ceo of eli lilly in just a moment. let me just attempt to play devil's advocate here. even "usa today" has a headline in the business section which reads, investors fear the downside too much. just in line with what you are saying. utter the word, "this is a new paradigm." >> no, i refuse to do that. >> really? >> look. i could make the case for a secular bull market. i think we all know the energy story in america is probably going to be very bullish. there's a huge robotic story coming with the automation that's going to bring a lot of production back, not necessarily jobs. look. i think the one real big

downside here that i can't make go away is income inequality. >> hang on, hang on, hang on. there's a much bigger problem here. you're saying buy the market because the central banks are flooding the system with liquidity. but the reason that the central banks are flooding the system with liquidity is because the underlying state of these economies is so poor and in some cases deteriorating, or in the ooh case of the united states, possibly slowing down. just ignore that, that's not relevant? >> i'm not saying ignore it. the stock market's saying ignore it. >> you're telling people to buy the stock market. is it safe for me to do that if the central bankers are doing it for this reason? >> you're making a great case from the other side. but the reality is the liquidity -- the fundamentals for the market itself have actually been pretty good. earnings are at an all-time record high. >> and decelerating. >> well, look. that's a good question here. i think that revenues globally are going to go 5% this year and 5% next year. that's not a wildly optimistic

forecast. that's what i think earnings are going to do. i think there's room for more valuation. look, we have to deal with the facts on the ground. facts on the ground is bond yields have dropped to record lows in a lot of places around the world. people want dividend yield. central banks want the wealth effect. some of us may call it an asset bubble. he don't think markets are crazy overvalued yet. i'm actually worried about a melt-up. even though last week when everybody was concerned about a correction, i am much more concerned about a melt-up. >> you say s&p will hit 1,665 by the end of this year. do you see anything interrupting that in the meantime? >> well, i'm not smart enough to figure what's going to be next. but look at all the issues we've had. all the reasons to panic. italy still doesn't have a government. cyprus meltdown. we have little kim over in north korea. he doesn't seem to be get iting any attention from the market.

the market is passing these stress tests remarkably well. >> isn't the history of markets that it doesn't matter until it matters? one day we'll wake up and go, wow, it's down 100 points because they fired a missile. >> i'm not committed to being a bull for the rest of the my career and i still look forward to working for many years to come. i'm reading what the bears are saying. i'm worried about all those issues. this may end very, very badly but as you know, that's been a terrible investment strategy for the past four years. >> yeah. the markets now positive. nasdaq's threatening to go positive here. it gives you the idea that even in the face of what's negative news, when there is any, such as this morning when you have tech hurting a little bit on a microsoft downgrade, the market has this ability to fight its way back. >> i've seen a lot of my professional friends turn bearish and some of them taking bearish postures on the market. just keeps glblowing up at the d of the day. i think a lot of that is liquidity. fundamentals aren't that bad for

the market. >> ed, good to talk to you as always. a day after president obama unveiled his budget for next year, some of the big wigs of the pharma industry are coming together in zig discuss the future of their sector. amongst them, the head of the drugmaker eli lilly. shares of lilly just hitting a 52-week high yesterday. here in the cnbc exclusive is john electr the company's chaim and ceo. there's so much that people want to know. what's in the pipeline, the new molecules, where we are on the patents around the world. at the same time where you are in your earnings and your profitabili profitability. in a close period, what do you say to people at a conference as you are attending today? >> well, for the first time earlier this year our industry did a broad survey of the number of medicines in development.

5,000 different medicines in some stage, clinical development, 800 of those in late stage development. last year the fda approved 39 new medicines. that's a multi--year high coming on top of 35 the year before. so i've been saying for some time that i believe we're entering a new era for this industry where we're going to see increased levels of productivity and output based on our ability, our increasing ability, to tranlate all of this great science into medicines that make a difference for pash. that's how we'll overcome our patent challenges and resume growth. >> in the meantime, how are you managing your own business? i see in a proxy filing that you recently froze salaries, cluesing yoclues ing including your own, as a result of the expirations in 2014. talk me through what's going on internally, if you would. >> simon, several years ago we foresaw a period which we call our y-z period where we would be losing several patents on our

largest products. that happened in late 2011 with zyprexa. simbalta this year. we took measures to ensure we could not only make it through this very challenging period from a financial perspective but that we were investing appropriately in our pipeline. today we have 13 molecules in late stage development. we've got the strongest late stage pipeline in our history. our ability to launch these products in the next several years will take us out of this trough and get us back to growth. >> i have a question though as you see that growth. investors say that it is the pipeline that makes them feel confident about the future of lilly stock. are you cutting sitting at 52-week highs and yet you're tripping the stock buyback program. do you not feel like the stock is getting expensive to buy back at these levels? >> well, we announced the buyback in late december when the stock wasn't quite where it is today. we've said all along we will

maintain our dividend through this very challenging period, at least at its current level, and then consider buybacks as we look at all the other factors and all the other potential uses of our cash. we think the strategy that we've laid out is a good strategy for our investors. we've been very transparent an they've stayed with us. >> is there a division between what is good for investors now who need yield who are behaving in a very short-term way in the desire for that, or stock buybacks, and what you would like to do in the longer term which is a long-term investment in r & d and a drug pipeline. has there been, for example, one project that you've canceled that arguably might be good for the company in the future because of the pressure to buy back stock or raise the dividend and we should note you've been very successful in pushing the stock up 17% so far this year. >> well, even at our current stock price and our dividend payout, our yield is pretty good. it has not hampered us from

making the investments in r & d that we need to make. several years ago as we entered these patent expirations there were lots of voices out there saying you need to slash r & d. i was saying, no, we need to increase r & d. we've never had so many great opportunities to get new medicines to market. i think we've been able to do both and maintain that balance. obviously it is something we look at very carefully. >> john, what do you make of the move, speaking of your stock, what do you make of the move in your stock and some of the other drug stocks? your stock hit a 52-week high yesterday. do you grow more nervous by the day as you watch this stock market and look at your own stock price? >> i think you have to look back over the last half decade or so when pharma stocks were pretty beat up. many of us carried high single-digit multiples. i think the industry to some extent is coming back into favor now. i think that's because we're reliable cash generators, those dividend payments. but people are starting to see

what's out there, what's ahead. they're starting to see pipelines that they're more excited about and opportunities for new medicines. whether that's alzheimer's, cancer, diabetes that can make a real difference for patients. >> do you think we'll get a alzheimer's or does it mutate too fast and when do you think we might get it, if we can? >> i've been quoted as saying we're hot on the trail of alzheimer's. the last year or two have generated a number of clues on the cover of our annual report this year our puzzle piece is coming together. i have to say for the industry, i'm confident that we're going to have some new advances in the next 5 to 10 years. that's the sort of time frame that -- where i would expect to see multiple opportunities to begin to make a dins. >> for that and so many other things that you treat, sir, thank you for joining us. the man at the helm of eli lilly. have a good conference. from pharma to old tech,

though it may still be early, it seems more people are rushing to sound the death nail for the desktop computer. that brings us to this morning's squawk on the tweet. how would you write the ebit ware? here lies the desktop computer. we also have big news in the media industry. sirius appointing liberty media ceo greg maffei at its new chairman. david faber has an interclue with the man himself. in case that wasn't enough for you, tomorrow on squawk on stroot, another heavy hitter in media, john malone from liberty media for a cnbc exclusive. the contribution new york stock exchange real-time exchange market snapshot is sponsored by interactive brokers. revolutionizing an industry can be a tough act to follow,

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welcome back to "squawk on the street." sirius xm appointing a new chairman. he's got somewhat extensive board experience, greg maffei, president and ceo of liberty media. liberty now owns 50% of the satellite aid yo company's outstanding shares and control. nice to have you here. this is real.

>> it's unbelievable. >> you're chairman of sirius. anything going to change? why take the chairmanship? >> i think it just recognizes that we are in hard control. over 50%. i don't think it is going to be much change in the business day to day. >> you don't. why not? >> i think sirius is doing very well. jim myer and the team are absolutely executing. i think the strategic initiatives they're pursuing are great and frankly, the fact that the consumer likes the product and is buying it, car sales are good, all those are positives. >> what about ceo position? is myer going to be the guy or are you still looking given the number of months since mel left? >> there is a search committee of which i'm a member. i think we are gating close. >> how long until we know the permanent ceo? >> i think we're getting close. >> week? two weeks? that's it? we talk about the consumer. you have a lot of perspective on the consumer given all the

various businesses within liberty or that you are a part of or on the board of. what are you see, whether qvc, trip advisor, expedia or sirius? >> a lot of the businesses that we are in are subscription businesses which are probably not necessarily as attuned to day to day fluctuations in the economy. qvc is probably the one that's most economically sensitive. the business there shows the u.s. consumer is surprisingly strong. we've saw probably some bumppyness around the payroll tax issues but seem to be carrying through okay. >> really? so maybe early january a little bit or late december but things are actually a bit better? >> i think it is more like february is when we felt people probably looked at their paychecks and recognized what was going on. it seems to have been absorbed. >> back to sirius. there's a lot of talk you might reverse a reverse trust. mel famously back then said he would never work for anybody.

>> he said not even warren buffett. >> not even the pope! i don't know where he's going to get a job with that kind of attitude. in terms of buying back stock or what you may do with sirius, you in a holding position now? >> sirius has announced a share repurchase. we said we won't participate in that now for a bunch of technical reasons. that's not something we are going to do. over the longer term we said we might. just as a matter of returning some high basis stock but we have made no final determination. >> an idea of a spin at some point in the future, is that still a possibility? >> absolutely. i think we have no timetable or plan but liberty is always evolving as you've noted in the past. at some point it might make sense for sirius to be a totally independent separate company. >> starz was a spin and is a separate company, though you are the chairman of starz. of course still controlled by

malone. what about the future there? there are so many offerings now, whether netflix or hbo or epic. a lot of talk about starz being a potential consolidation play. maybe you get it together with an amc. is that something you would see in the future? >> well, first, starz is doing very well. not only is the stock doing well, but the business is doing well. consumer demand for the starz product is high. what they're doing around originals, where they're going on relations not only with the consumer but with distributors is excellent. >> looks at that stock! >> yeah. pretty good. >> not bad at all. >> well received in the marketplace but more importantly well received with consumers. so i'm very optimistic on the business as a stand-alone proposition. what we've said though, to your first point, is that -- look. there are benefits potentially to a consolidation or partnership.

scale, cross promotion, some people might have retrans or other kinds of market power that would be beneficial. >> do you worry about it at all being dislocated a bit given the choice? i know you did the sony deal but starz was on the other end of what -- >> didn't do the disney deal. >> does that worry you? >> i think it is the right direction for the company. starz's future is going to have movies but ultimately it is going to be about strength and building original programming and i think giving -- freeing up the cash flows, freeing up the air time to invest in originals behind the team -- chris ael brekt and his team is the right thing. i think we are on the right path. >> area has gotten a lot of play this week. i discussed it with john malone in our interview yesterday. but i want your take now. chase. kerry coming out a few days ago. is this a bunch of nonsense or is there something here to the idea that one of these big networks is going to pull itself

off the airwaves. >> i think it is recognizing, as i think chase is very astute. we know him well from the directv days, had nothing but respect for his acute in the space. recognizing cable networks have generally received higher affiliate fees than he's getting in retransmission fees. if he's particularly being tam. ed and reduced in his retransmission fees, what's his incentive to remain a broadcast network? in fact, one of the questions for the long term is what is the role of a broadcast network? are there other ways to distribute that that are more efficient? reuse the spectrum, talking about a public use perspective. i think there's a lot of questions around how the space evolves. >> right now it is separating in a very small region in the country but it has won its court challenges. we've heard this conversation about becoming a cable network, whether cbs or fox, for some time. it's never happened. >> i think there is a lot of public interest, questions around availability of

programming and these networks are in the public space having -- sitting on public spectrum and regulations. to the degree that is that more than you need cable, that frees up the question which i think chase raised. >> you were the crow of microsoft. i know, 13 1/2 years ago. you left i think when the stock was at an all-time high or very close to it. nonetheless, i'm curious. if you're sitting on $61 billion in cash and watching your kroer business decline what would you do? >> i think they have the legacy of almost too much success. you've got two unbelievably wonderful businesses in windows and office and they are trying hard to find new legs. i think you see them doing investing in the mobile space. you see them partnerships around bing. a company we're involved with with, barnes & noble.

building a partnership around books. i think they're pursuing the right things. it is not easy to turn around a large company with such a great success and move them into new markets. >> barnes & noble you mentioned. you can just mention a company, then i come to it. i had forgotten about that. what's liberty's strategy when it comes to that 17% position right now? do you see a possibility of increasing that? there have been a number of partnerships with the nook. give me an update. >> our investment thesis was that the retail business was going to be stronger than some had forecast. i think we've mostly been right there. they went through the borders liquidation quickly and actually absorbed that and have profited from it to the sense they're really going to be likely the last standing book store of scale in the united states. the other bet was that the tablet space, what they'd done around ebooks was powerful. that's proved to be a very competitive market. >> it's not going very well. >> i think the partnerships they

have with microsoft and pearson are setting them on the right course for success. >> you see yourself as a long-term investor at liberty? >> we are always a long-term investor. >> that didn't answer the question. >> all right, greg. finally, chairman of a number of boards. you see on i think more boards than any single person perhaps. you going to cut back on your work load at all? >> i'm trying. i'm trying. >> you must be on board calls all the time. >> you know, we are -- the nature of liberty is -- because we have investments in a lot of public companies. it sets up a condition where we have a lot of board seats. it's different than a lot of companies where starz used to report to me when it was inside liberty. >> look at all those. that's just some of the ones you own. you bought back an awful lot of stock and at a great price. you've shrunk the cap by almost half over the last seven years. that will continue, correct? >> we have been doing share shrink consistently at all our companies. some where there's maybe

different availability of cash or timing. but that's certainly been our plan and path. >> greg, as always, appreciate your stopping by. >> thank you. greg maffei, ceo of lifbt. tomorrow, his boss. chairman liberty media, john malone. my exclusive interview with him. wide ranging. we did not talk about charter here, for example. we talk a great deal about it tomorrow. don't miss that. >> david, that was great. thank you very much. john malone tomorrow. david faber in d.c. we'll pick up that theme of old tech being taken out to the woodshed today on the latest round of ibc data that shows dploe global pc shipments falling. we'll hear from rick sherlund who just cut the stock to neutral from buy after a pretty good run. breaking news on natural gas

inventorie inventories. will the data push it even higher? wow! back in two.

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welcome back to "squawk on the street." i'm sharon epperson from the my next with breaking news from the energy department about natural gas storage levels. they declined by 14 billion cubic feet in the last week, down 14 billion cubic feet. that's less than one analyst had anticipated. they were looking for a draw of somewhere between 20 and 24 billion cubic feet. normally this time of year we see natural gas inventories rise. we are looking at natural gas futures rallying as a result. we are looking for the first time that we've seen in about a year-and-a-half the five-yearage for natural gas supplies is at a deficit. that's something that trader say is a big reason why we've seen natural gas earlier this week hit a 20-month high, $4.18. that is the technical target that many traders are looking at for natural gas to rally to today. back to you. >> sthaharon, thanks. turning to washington, d.c., president obama meeting with the heads of the world's biggest

banks today, including lloyd blankfein and jamie dimon. >> i wouldn't oversell this meeting. appears the bank executives will meet with the white house staff. president will do a drop-by but of course they have a lot to talk about -- immigration reform, especially on the h1b issue. the budget is coming out. the white house would like some more cover from business as they got on the fiscal cliff deal. debt limit coming up and dodd-frank is still in the process of being rolled out. a lot to talk about for them. >> a bit different from the dynamic a couple of years ago where we'd run after these guys on the lawn and try and get comment from them. the environment is different now. >> the environment is different. just like it is a little more peaceful between republicans and democrats at least for a short while, i think the same is true of business.

president obama's been re-elected. they know he is not going anywhere for four years and the temperature's down a little bit. i think the white house would hope to take advantage of that, try to work out any problems that they've got on financial regulation. get a little help on the budget. and everybody's watching hiring and confidence in the economy and trying to create circumstances where we could have a little better growth than we've had because the growth is not sufficient. job increases are not sufficient. >> something will come up in that meeting, namely, hey, is there any chance we can start to bring back some of our cash we have overseas and do so at an advantaged rate as opposed to paying 35%, 40%. if that were to come up, what is the response by the administration to that idea? >> they're not for any stand-alone amnesty for bringing back that money but remember, we do have a tax reform discussion that's proceeding alongside the budget. dave camp, the chairman of the

house ways and means committee and max baucus in the senate. they would address that issue in a tax reform and the administration's position is tax reform is very difficult to achieve but if that train gets rolling down the tracks, that could be part of our budget discussion, grand bargain discussion. of course the condition from the administration would be we need some more revenue to come with that and whether you go to a territorial system or how can you get some of that money back is unclear but usually when you get a negotiation like this, some of that money parked overseas we've seen it over and over in the past does get brought back, does get some sort after break and everybody ends up with a little bit of what they want, if not everything. >> it could be part of the loophole discussion, closing loopholes, raising revenue -- >> that's right. >> we'll see. >> on corporate tax reform, they put place holders in, revenue raising place holders. loopholes that they would close in order to bring the rate down.

it is not a full-blown plan. it is kind of an appendix to the budget reflecting their believe that it is very iffy as to whether a tax reform discussion gets under way but they're trying to be prepared if dave camp and max baucus achieve take-off gvelocity and get that going on the hill. >> nice to be in person with you. >> cherry blossoms are beautiful. down here at the new york stock exchange, we keep hitting record highs on the dow. we're up 27 points. why does the market continue to rally in this very solid way? beneath that of course we have a problem with technology. we'll talk to the analyst behind the downgrade of microsoft, rick sherl sherl sherlund. tomorrow, what's working for macy's and what is the interplay

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microsoft. nomura downgrades from neutral to buy. goldman sachs downgrading microsoft this morning. here now is rick sherlund, the head of u.s. technology research at nomura.

why today? the data comes out today that suggests that pc sales are down double digits. maybe 14% in the quarter. another firm says maybe 11%. no big shock. why today? >> it's got two things. number one, microsoft and some of the other tech names that had a big move over the last couple days because some data points coming out of asia, the manufacturers, that march was a pretty good month for building machines. i think people were expecting pcs to be down 7% in the quarter. down 11% to 14% as you try an calibrate how stable is this market just sort of feels like a very, very slippery slope. so you've kind of got the combination of the stock's up over 30% again. fundamentals seem like they're slipping for the core business. i think there will be an up cycle coming in the later, these new ultra book touch devices and get ten hours of battery life?

while a lot of consumers buy tab ple tablets, half of us still produce content on a notebook. these notebooks are so out of date. if you could get something for $600 with a ten-hour battery life, you'll begin to get some benefit from that. how much after secular decline are you experiencing and what kind of growth benefit can you get from an upgrade cycle. i think we're getting nervous that this secular case is maybe a little stronger on the downside than you'd hope for. >> the conversation today seems to be about how to unlock more value in this stock, whether it's your downgrade today, whether it is goldman sachs' downgrade today. you lay out a whole bunch of scenarios. maybe one is taepg the company private like dell. goldman sachs today talks about possibly breaking up the company. what's the real answer going forward? what's this company going to look like a few years from now?

>> i think current management is reluctant to do things that you would do if it were a private company or if you were a financial engineer, an outside party to come in, you might be less attached to -- bing, for example. maybe you would say windows team, it is time to stand on your own, we're not going to subsidize you anymore, we're going after the market opportunity on tablets with office. >> you're saying ballmer is unwilling to do what need to be done. >> i think to realize asset values which investors would be motivated to do, yes, the current management is reluctant to do those things. >> can i have a surrender from you on your optimism that surrounded the launch windows 8 a few weeks ago. you're now saying half of customers in the consumer market do not need office at all and you note that you're disappointing with windows 8. for all the reasons that we discussed at the time. >> we've been saying that all along. i think what we're hopeful for

is that the overall pc market wouldn't fall off so fast as you're waiting for an upgrade cycle to begin. i do think that a year ago, you were more hopeful that windows 8 would be a catalyst to create a bigger upgrade cycle. >> which it didn't. >> that's right. it's been kind of 1,000 cuts. every month pc demand is falling a little worse so i think ultimately you say, wow, this upgrade cycle is still coming. the story is similar. >> i'm sorry, which is more important then? the launch of windows 8, the new software and all that flashiness that we discussed at the time or the fact that you might get longer battery life by the end of the year in a notebook? >> i think windows 8 is not enough on its own. because it's got tablet capabilities and notebook capabilities. the tablet capabilities kind of get in the way if you just want it for a notebook. i think if you want a tablet you buy an ipad. but i think -- >> does battery life matter?

really, do you need eight to ten hours of battery life for most people? on a non-mobile product? >> oh, i think that's huge. huge. >> really? >> on the i 5 processor right now you get four to five hours of battery life. i go to an analyst meeting, if there is no plug, have to put the device back in my bag and pull out a sheet of paper. if i got ten hours and my price point comes down $500 or $600, i think those who still need notebooks -- half the consumer market -- that starts to resonate. you think i've kind of semi-retired my notebook, i don't use it as much. but if i can get a device i can carry around in my bag, ten hours of battery life for the right price -- >> why not just go to sell on this call? if the numbers are bearing out to be worse than even experts like you and the research that you do look the way that they do? who's to suggest that the numbers respect going to continue to decline by double digits every single quarter. >> i don't think a lot of growth

investors have been buying microsoft for a while now. it's a value stock so it is at eight times pe on calendar '13, x-cash. if you look to enterprise value to free cash flow, it is about eight times. if you fully tax the income, it is 11% free cash flow yield. so it is very much a value stock right now. i think there is an opportunity for the stock to do better. once you get to the second half of the year. and maybe some time you'll be able to unlock more of these values. they'll release office for the ipads which i think could be a big opportunity. there's things that can be done. i just don't think the stock goes down a lot more from here. and so it's more what are the catalysts. there probably aren't much in the way of catalysts near term to help that stock. >> rick, it is good to see you. >> when you buy your notebook, can you bring it in and show us which one you brought? >> i have the surface pro now. i had to test it. right? i'll buy another one in six

months when i get ten hours of battery life so i can make it through a whole analyst meeting without -- >> you may not be typical. after the break, we'll take you live outside the courthouse here in new york for the latest on the battle royale between macy's and jcpenney. tomorrow on "squawk on the street," we have the exclusive interview with macy's chairman and ceo terry lundegren.

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welcome back. quick touch of the markets here. positive now across the board. even the nasdaq has now gone into positive territory. it is a fractional move but nonetheless shows the kind of strength you've seen in the market today, despite a downgrade to microsoft and some other tech names moving lower. markets all positive across the board. macy's and jcpenney back in court today. courtney reagan's been covering this story since day one. there are was an hour delay

today. not sure now. court is unway just moments ago in this trial that pits macy's against jcpenney and martha stewart. i called jcpenney this morning and as of right now the company cannot confirm reports about executives that have company ca confirm reports about executives that exit the company. nor are they commenting on speculation that the nceo is interested in settling the case. the judge dismissed macy's claim that mslo violated the contract with macy's by showing that contract to jcpenney. the judge says he thinks he had to show it to them because j.c.penney was interested in them. so the macy's lawyer is upset about the ruling. he looks forward to today's argument. whether they violated the contract with macy's when he entered into that contract by designing certain product

categories. they are going to appeal the dismissal yesterday. right now martha stewart's lawyers are saying macy's did not show they reached a burden of proof by designing products for j.c. penney and are not labelled in martha's name. if the judge dismissed this claim, it will necessarily take the umph out of macy's injunction we expect them to file some time today or tomorrow to broaden the scope of what they're asking the judge to keep jcpenney from selling on the shelf. we'll keep you updated when we know more. simon, back to you. >> thank you very much, courtney. ahead in the program. it's been all the rage lately. stay with us on cnbc.

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welcome back to "squawk on the street." today is friday eve's rendition of the santelli exchange. a couple of weeks ago we had on jeff burwick, the head and cofounder of bit coin atm. i thought it was a fascinating

story. he wanted to open up the first atm in cyprus. however, i'm a bit skeptical about bit coin. everybody talks about regulations and big banks. i'm not against regulation. i'm just against an overload of bad regulations. every economy, even free market economies need speed limits. the bit coin story just seems a little bit crazy to me, but i would frame it this way. no matter what you think about bit coin, the story is really about a lack of confidence in central banks and how far investors will go to try to avoid central bank activity and impact. but as you look at this chart, and this is a candle stick, so it doesn't reflect time. if you look at this chart, yesterday basically the high was 266. you see what the low is there? 110. 110! now that's a bit of a correction. it underscores this may be

interesting. and everybody talks about it. be careful where you put your dough. this is a quote contributed to charles evans in early february. the natural question at this point is to ask what constitutes substantial improvements in labor markets? the first would be increases payrolls of at least 200k per month for a period of around six months. well, being the research guy i i am, i decided it was time to go back and look at the last time that we had six nonforeign payrolls, 200,000 or higher, and here's what i found. i found seven. 232. here's our six to satisfy charles evans' tcriteria.

here's the seventh one. here's the fascinating part. this was january of 1997. yes, 1997. 16 years. when i first heard they were looking at employment my comment is you may as well tie it to venus. why does it become your trigger not to do something else? 16 years. #. >> '97 was a good year, rick. as always. much more on the market rally despite all odds. tech joining in. we're back in two. [ male announcer ] when gloria and her financial advisor

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we're here on the floor of the stock exchange. we've added 62 points to these. time now to squeak on the street. it may be early but more people are rushing to sound for the desk top computer. that brings us to this morning's squawk on the tweet. here lies the desk top computer, dot, dot, dot.

after you finish reading about the death of the pc can you pass me back my tablet. here lies the desk top computer. i think they once used these on the trading floor. and scott says, not me. loving user of tablet and smart phone. as you say, markets here. we'll also hear from a great stock picker. a hedge fund is going to give you three picks to buy right now. >> nice to see you again. have a great day. we're going to continue to mix it up again. carl is on assignment again today. in his absence the mice will play. we'll have a very infrvl conversation about key topics that we have at the moment. one is zuckerberg's big mistake.

the inside track on why facebook was led to moe bible the ipo. a fascinating reengineering of facebook. we'll look at the markets and what on earth is going on with tech and the differences and the similarities between technology and pharmaceuticals as we now have them. also ahead in the next hour of the program, we're going to talk about monetizing smiles. the revelation that mcdonald's has held. a very interesting web cast about how to increase the profits from here. let me introduce the all star cast for the next hour. this is ""squawk on the street" overdrive.

another all star panel lined up again today. the dow and s&p 500 hitting more record highs. . the dow is up 13% year to date. some already calling for the printing of dow 15,000 t-shirts. the blue chips less than 200 points away. many are just coming out of bad territory hibernation and are still sticking to the sidelines. what advice would you give to investors who are bearish on this market? >> that's fuelling what we have seen. that's part of the rally that we have seen. there's so much on the sidelines. >> why should they come in? i think i made you a member.

>> that's okay. people have been doubting this rally for a long time. and it was reassurance that the fed is only going to keep supporting things which means, hey, a lot of people took that to mean the water is fine. >> let me be really naughty then. i know this is not really the same. i'm not sure that argument stacks up. because when we were coming up the tech bubble was the new paradigm. it was the same. you can't fuel the market. it will continue to rise. that is sort of the thing about any bubble. we hate to use that word. if productivity story with business continues.

even though earnings are not -- sort of like pressure make indictments. that as a result, the efficients you see on factory floors, there's no parts anymore. i mean, that is sort of continuing to go to the bottom line of companies. that's one reason why it might keep going. >> i think the economic picture is still spotty. in a lot of cities that are new york, not san francisco, maybe not even chicago, are still feeling like the recovery where they live hasn't taken on full steam. the houses are priced 20% below where they were at the peak. in a lot of middle america they're not feeling like the recovery has taken on steam. >> but in the economy and the stock market have been decoupled

though. wouldn't you say there's not? >> but your emotions are really constrained by the situation in which you find yourself. >> it's also the fear that the retail investor will throw up until the peak. and they would have sold at the peak and the retailer rides it back down. >> you're very quiet, mike. >> it's very understandable. it can be described easily whoo we're here at these levels. expensive bonds. i think it's a a matter of where are your expectations if market

can go up without you and it doesn't cost you anything. you don't have to beat the market. you just have to be involved. your job is not to be ahead of it. every quarter that stocks do better than bonds, if you own both stocks and bonds, your exposure to stocks went up because the market went up. that portfolio outperformed the other one. >> so let me ask you an evil question then. a lot of people have target dated funds. they'll have a set split on the bonds and equities. should they come out of the bonds and start investing solely in equities and the instruments within their 401k for fear of bonds or are we okay? >> i doubt it.

i don't think that's this thing to be concerned about. >> why should you not be concerned? on a quarterly or annual basis those will reapportion. it's a mechanism for buying low and selling high. so that mechanism over time should be time. i don't think bear market is what we have to worry about tomorrow. >> i think it will be a good problem to have. two things out showing drastic drops in first quarter pc shipments. one saying it was the first that we have seen since we began tracking the data 20 years ago. the downgrades for microsoft

this morning. a sell from goldman sachs. rick was with us in the last hour of the program saying pc weakness and evaluation played a role in the decision but there could be positives later in the year with the upgrade cycle more broadly in the pc sector. microsoft is now reportedly working on a seven-inch tablet it could bo into production later this year. where are you on tech? >> i think there's something to be said for, you know, the microsoft story is -- obviously, the decline in pc sales has been happening for a long time. and that is a huge shift that microsoft and all have been dealing with for a long time. they're in the middle of it

stil still. >> i think thought microsoft introducing windows 8 was supposed to be great, wasn't it? >> and introducing a surface tablet at all. it came with fanfare that came on quickly. he sees the upgrade in the second half of the year when you see the launch of the lighter notebooks. i'm not sure that's going to make much difference. it's a big old tech company. it's lumbering along. pc sales are on a slippery slope. >> let me see if there's a likeness between technology old tech, cash rich tech. eli lily was on talking about the comeback that we have seen in farmer stocks. this is what he had to say. >> i think you have to look back

to when the stocks were beat up. the industry is coming back into favor. but people are starting to see what's out there. what's ahead. they're starting to see opportunities for new medicine. >> in those respects right there. financial stability. very high quality financials. they are not going to be pacing growth in their sector. but they are equipped to be these bond equivalent type stocks that can for a long time participate in global growth and intellectual property value. >> but it's not fun to hold a bond when it loses value in the

price. just the yield isn't enough. do you think it holds the same clout as some of those companies do? and you get the dividend yield. it hurts a lot. >> it does. however. if you told me a week ago that rich of goldman sachs and the ipo comes out and it's down 4%, none were really baked into that stock already. that's why you need a different mindset. >> do they have the same defensive qualities? nokia can be destroyed. blackberry can be destroyed. >> that's the question. i'm not going to say that they're equivalent. >> i think it's a case-by-case

situation. mike makes great point. >> we'll leave it there for a moment. we need to take it there for a moment. the reason that we are in today. we now know what mark zuckerberg's biggest mistake was in his own words at facebook. it wasn't the ipo. and later bitcoin is one of the hottest topics on wall street right now. but is it an investment or a side show? "squawk on the street" overdrive. [ female announcer ] it's time for the annual shareholders meeting.

♪ there'll be the usual presentations on research. and development. some new members of the team will be introduced. the chairman emeritus will distribute his usual wisdom. and you? well, you're the chief life officer. you just need the right professional to help you take charge. ♪

. welcome back. we're with michael santori and lee, assistant editor with "fortune" magazine which comes into focus this weekend. you have an interesting story about mark zuckerberg in his own words, the big mistake he made over the last three years. in other words, they wouldn't surf the web with apple or

android. explain better than i have. >> mobile has been facebook's achilles heel. he said this is one of the biggest mistakes he's ever made. he thought that apps were going to go away. in 2010 he thought facebook was going to double down on this web centric world view of mobile. and that didn't happen. that's what he means by this is the biggest mistake he ever made. he had a naefl weapons engineer saying we have to rebuild our apps from scratch, which takes a long time. this is right as the company is going public. the company had to slow down. they had to retool everything. >> tear st strategy apart.

a year or so in advance. not as they wanted. >> it meant letting the apps exist as they were and having people complain and say that's okay. we're going to take our time and make sure we do this right. >> so is this an excuse for him? because they had a much bigger job that they started way in advance? >> i don't think is at all. the transition from web to mobile is ten times as significant to the company as the transition from being a private to public committee. in his words. he thinks going to mobile is so vastly more important for this company than anything going public could be. >> the entire user. he said in the fall that 60% of

all facebook users were accessing the site on mobile. it's like packaging a miniature website. and he was advised by lawyers during the ipo that he had to admit that this is an achilles heel. we don't know where mobile is going. this is one of our challenges without giving too much detail. >> you're saying if i hear you right. we thought it was about their able to sell apps. you're saying it's about the technology. >> once they went public it was almost as if the burden was lifted off their shoulders. they finally got their stock into the open. in august they put out the new

i.o.s.app. they said mobile is no longer a mystery to us. it launches tomorrow. but this is basically a way to coopt. it's the closest thing without it being a face book phone. >> that's a question. a lot of critics say they're distancing themselveses for the iphone. what i see is really android as a device agnostic operating system does that allow them to then build a facebook phone that uses android and already have that figured out? >> that may not need to. this comes preloaded with facebook home. so this is basically, i mean, we call it in the story, the analogy we use is it's a strangler if anything.

it grow on of the of it and competes with resources. it's not a competition thing but it's a setup. facebook is using google's skoft ware and by the way, it is open source. that's the whole point. and it does risk al yen nating apple. >> i'm looking at a series of quotes from zuckerberg here in the article. i think google has the opportunity in the next year or two. what do you make of it? >> i don't know that i've seen a company this young at this size have to blow up their way of doing business at this point. technology in the sense that

we're behind and catching up is good enough. have they leapfrogged? is this something that will be enough to carry us through the next cycle? the next phase of what users wan want. >> we'll have to see. the motto is move fast and break things. and then secondly you have to wait for the users to update them. so there's all sorts of mechanical and cultural things happening here. but it's did he feel very, very different. have you useded it? >> we saw it. we don't have it on the phones. >> we will be reviewing it tomorrow in many forms. for the moment let's take a

quick break. after that big bank ceos are descending on the white house as we speak. find out what president obama wants to talk to them about and what it could mean for the economy and for shareholders. when we come back. [ male announcer ] you are a business pro. governor of getting it done. you know how to dance... with a deadline.

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welcome back to "squawk on the street." i'm josh lipton. they say the growth profile is much smaller than expected. that means some still look relatively expensive. they did like one name, though. up grading silicon laboratories. the ticker is up more than 5% right now. >> bad day for tech all around. josh, thank you.

welcome back here. mike sonteli, lead editor with fortune magazine. the ceos of the biggest banks are speaking with the president right now. caleb, what do you think that they're going to discuss. i find it extraordinary that they are not plugged in to the president through their teams and lobbyists 24 hours a day, seven days a week. >> they are. it's a pretty clean vanilla meeting. it's the quarterly meeting, to my understanding, and it's being conducted by white house staffers as well as the sff and president obama will swing by a whole host of financial executives including companies for brokerages and credit card companies as well. it's a long list.

but it is interesting the back draft during which it is taking place because the financial services forum last week was extremely vocal about too big to fail. and if banks had to sit on their capital instead of lend it to companies and customers would we taper growth off. would you be hurting the consumer? would would that look on the back end. so it's very interesting the time at which this meeting is happening. we know. it's not a revelation, is it? >> not. it's not. i think there's a lot more that has taken priority. we're still seeing so much of dodd frank has yet to be

implemented. plain vanilla is the way to say it. it's a lot to talk about. >> same as job creation. >> how could they get that into the meeting? >> i'm not sure they're going to get a lot of line item work done. otherwise it's all happening at the staff level. but it is somewhat interesting that it's ceos. it's a sanctioned forum. >> yol they'll use this forum to do it. the ceos are busy. they'll definitely use the time down in washington to take other meetings with staffers, with people involved in this regulation. i want to point out j.p. morgan

specifically. the wall street journal calls them the new goldman sachs as far as regulation goes right now. we saw a share letter come out yesterday from jamie dimon. he says we received regulatory orders including mortgage foreclosures, anti-money laundering procedures and others. we expect we will have more of these in the coming months. i feel terrible for letting regulators down. to the driveway in which they were in contact with the regulators. let me ask you a question. should the ceo be split? should jamie dimon not be able

to occupy the positions? >> that's often the answer. do you think it should be split? >> i don't really. >> the one way it would change anything as you said with citigroup is if the board decided the ceo has to go. it makes it easier if you have a different chairman and ceo. >> it's more than that. if he is saying this is a teacup and they say regulators know everything we're doing and neither are true at least we can get on and say we're rather worried about what's going on. you need to do something. >> the director and the board will be the place where this decision actually falls. it's interesting to see what happened with goldman sachs. they were able to come to an agreement. they sat down with them. they came to an agreement in which that proposal was take an

off. next month we'll see how shareholders feel. >> huge for jp morgan to prevent that from coming through. >> straight ahead on the program, sam zell comparing the markets today on "squawk box" to the housing market of 2006. in other words, he thinks you can't possibly stay out. and there's the bell sounds across europe, we'll update you on what is happening there. a lot of greens on a lot of screens. clients are always learning more to make their money do more. (ann) to help me plan my next move, i take scottrade's free, in-branch seminars...

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we look at the european markets. we're coming off the biggest one day gain in three months. 24 hours ago we were looking at a 4% jump in bank stocks in europe. today the dominant macro theme is the underpinning by ue from the feds and the bank of japan. further gains today were capped on the session by renewed selling on mining stocks. specify fiszemissed expectation. today bearish expectations after

some forced to cover after a short squeeze. possibly including an ecb interest rate cut next month. in italy investors continue to shrug off weeks of political deadlock there. even increasing signs of division of the top of italy's party. rome was able to successfully auction over 7 billion euros of bonds today. at home comparing the equity markets here in the united states to the housing market of 2006. take a listen. >> this feels like the housing market of 2006. as the operator of a company, i

never got recognized for cash in the bank. that's the measure of the stock market. not how much cash the company has. >> i don't think it is. i think investors are showing you that they're able to. it hasn't come along with a compelling narrative. they're saying it's not the tech boom. it's not the china boom. it's just on paper. stocks are relatively okay versus the opportunity. i don't think it's a bubble like atmosphere of housing in 2006. >> i would agree with that. speaking of housing we are seeing a recovery that is pretty strong. is he saying -- i wasn't here in 2006. in 2006 did you have a bubble? >> it have the top. >> right. >> the housing market top.

is he warning? >> i think he's feeling it's less of a choice to participate. all the incentives point to buying high. >> it's the little engine that could and no matter what happens it's still going to be chugging forward. when i say sam zell made this sweeping statement about the market. do you agree? they say i listen to him for news about development that he has under construction and what he's doing abroad. that's what they want to hear from him. he made a lot of the statements in the past and his track record hasn't been so good. i believe that we have some of his statements for the past. i would like to take a listen to some of those now. >> i think the housing market this spring will begin its recovery phase. i'm more optimistic about the housing market.

we're heading for recession. that's exactly what you're looking at right now. everybody has ig fored the fact that there's still 3 million to 4 million hours in perg toir. not for sale. not foreclosed. meab occupied. maybe not occupied. and you have to address that. >> and in 2005, february of 2005, the one that he didn't have, he said he believed the housing bubble was created by the business and was not a real thing. >> you're a senior member of the press. what do you make of it? >>. >> he doesn't have good track record predictions which is why -- i don't know if he moved the markets yet. >> the difference between sam zell and us is sam zell is worth $4 billion. and none of us are worth $4

billion. >> you want to look at him for where he's putting his money and where he's investing. >> social security there something more interesting? do you have to shift around and be kind of fleeting foot? if you were a man or woman of great conviction and you held convictions for a long time, chances are you would be hugely a wrong. by flipping around, perhaps the way you make money. >> he's in the rental market right now. he's working with 12 brothers on a project in midtown manhattan. >> and his fortune was built at buying things at distressed levels. >> yeah, he's the grave dancer. >> the grave dancer. >> is that true? >> it wasn't navigating twists and turns of the market. it was buying very goose assets very cheap when nobody else wanted it. >> we're going to take a break

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our traders will reveal names still on the cheap. can you buy and hold and beat the market? great ideas from one money manager whose portfolio was up 15% last quarter. you want to hear what he has to say. which one should you own ahead of tomorrow's earnings? we'll debate that as well. simon, we'll see you in about 15 minutes. >> welcome back to "squawk on the street" overdrive here. a special edition on post 9 as carl is away on assignment. and lee gallagher with fortune magazine. it's the talk of many people in

the blogosphere. trading in the virtual currency, bitcoin has been halted for the next ten hours or so. that follows a period of volatility that saw it drop substantially yesterday. the world's bitcoin exchange said the selloff came because of a rush of new users took it up in recent days. just explain to everybody if you would what exactly bitcoin is. this is what they would like us to believe is a digital currency. it will only grow very slowly. >> right. so it was created in 2009 as a currency not tied to any political system. the developers envisioned it being something to use on sort of a global amazon. it was criticized early on because it was used by a lot of

hackers. and there was speculation it may be funded terrorist attacks. you can't trace where it gets bought and spent. and when it really picked up steam was in late march after the bailout of cyprus when consumers started saying, wait a second. is my money not safe in a bank? do i need a ref yun not tied to a bank or national economy? we saw people selling their houses and cars in bitcoin. it became a little bit crazy. and despite yesterday the $250 before falling as low as $106 per one bitcoin. but this is not the first time it's fallen. it fell in late march after being the victim of a cyber attack itself. and what happens with the currencies is you buy them, you buy them, you buy them.

when something like a cyber attack happens or like yesterday they couldn't process orders because 20,000 people were trying to open new accounts with them, they're a victim of the crisis of confidence. >> this isn't a currency. the currency is about enabling people to buy and sell in the economy. and the currency grows with that demand, with that economy. this is a pyramid scheme. the growth in bitcoin grows slower than the growth of users. ha is a classic, mike, pyramid scheme. >> on paper academically speaking it's supposed to be virtual gold. right? gold is finite. you have to mine it to get more of it. you have to min bit coin electronically. if it can be captured in these moves, then it's not a good currency or storage value.

it makes cash portable in an electronic way. it's a matter of convenience. it's a gimmick. >> but it's confidence. >> well, it's not backed by any government. but i will say, it's interesting. barry silver, the founder of second mark is backing -- there's a new platform to trade bit coin. it's very risky. it's very volatile. and i'm with mike. i think it is a fad. >> i think it's probably a fad an a gimmick but in some form. >> it's not dangerous to be invested in a fad or gimmick. >> absolutely. it's to hold money in it. >> and to be safer to use it. >> it's a convenience. >> i want to spend it. if it's going up in value, you don't want to buy anything with

it. >> and you can't buy much with it. there are only a few products on there that you can buy items with bitcoin. i would direct people who want to be more educated, a popular blogger who wrote about a new rival to bitcoin called ripple. it's actually founded by one of the developers of the exchange where bitcoins are traded, too. it's a more secure system. it's not as open source as bitcoin is. it claims because of the security and technology and expertise that the system is more safe and won't be the victim to these things. >> that is that technology advancement. if people are going to go from one form of digital currency to the next, stampede out one into the next into the next, they're going to collapse as they go around. you know, this is like hand

sanitizing. >> the difference is it's tied to currency values. >> where is your money safer? in bitcoin or cyprus banks? >> it's a force to be reckon with. >> if we agreed to get and online value for frequent flyer miles it has a value stored up somewhere, you can't create them out of thin air, they're there, but if we all agree that we can turn those into real currencies at a given level, that's kind of what it is except it's in a more -- >> at least you can hold the ceo to council. here do you know who is generating the bit coins? >> the end users. >> we'll leave it there. mcdonald's has a solution for recent problems, service with a broader smile. but can you monetize smiles? famers presents: fifteen seconds of smart.

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mcdonald's trying to put the help back in happy meals and pump up the service with a smile and to generate extra cash. the u.s. restaurant sales -- with u.s. restaurant sales beginning to slip last year, the fast food chain is pushing

franchisees as we learned from the journal to improve staffing and service amid mounting complaints about rudeness and other problems. it's the front page of one of the sections in the journal today. what they're effectively saying is that their survey suggests or some analysis suggests that for many people, many franchisees, the rate of good service is almost as important as the value of the food. what do you think? >> it is important. i think a challenge for mcdonald's is that 90% of its restaurants are owned by individual franchisees so it's hard to instill any kind of consistent -- let's say she want to make a change. getting the message out is difficult. they did do well during the recession by introducing a lot of different products. >> to me it's focus on the menu for a long time, innovating and getting value on the menu side. now it's service. i also see an echo in the complaints about unstocked shelves at walmart. i think we went through this period where everyone was trying

to limit staffing and staffing is one of the issues at mcdonald's. >> within hospitality, they have what he -- they have data points of human intersections, touch points, smiles. they believe they can get an empirical correlation between the number of smiles you encounter as a hotel guest and what you're willing to pay for a room. >> the article cited a survey done by qsr saying mcdonald's was second to last on friendliness, second only to burpger king, which is at the very bottom of the barrel. but when you think about your positive fast food experiences k34 is an oxymoron, you think about chick-fil-a and what actually makes the experiences positive, it's about having bright clean well wlit facilities. once you go into a clean building, the smile is like a cherry on top and i think mcdonald's has let that side go. >> i think speed is also really important. the one place will that i think mcdonald's definitely leads is french fries. >> the taste. >> not that that's a good thing

anymore. the changing in our health needs and huge obsession other than -- >> you can enjoy french fries. don't worry. keep the tweets coming at home, though it may still be early it seem, more people are rushing to sound the death knell for the desktop computer. we're asking to you write an obituary for the pc. here lies the desktop computer. you fill in the rest. your answers nest. with the spark miles card from capital one,

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. so let's get to it. time to squawk on the tweet. this morning's squawk on the tweet, how would you write the pc's obituary? tom tweets here lies the desktop computer control alt delete. james tweets here lies the deskd top computer, blackberry you're next. and john tweets reports of its death greatly exaggerated. very nice. and did you have your own obituaries?