we have still the greatest system, the greatest capital markets in the -- >> do we ratchet down our expectationses? >> no. in the immediate term we'll do better than other places, but we're eating through the overhang of a dead binge, a ten-year debt binge and it will take us some time. >> thank you. come on again and bring some of your friends. make sure you join us on monday. "squawk on the street" is next. ♪ ♪ ♪ good morning and welcome to "squawk on the street." i'm david faber with jim cramer at the new york stock exchange. carl quintanilla is in the chicago suburbs getting ready for his global exclusive with mcdonald's ceo. >> the intergalactic exclusive as we agreed earlier in the week. we are live at mcdonald's innovation center in suburban

chicago, guys. with gdp this morning hard to think of a better morning to talk to the single biggest restaurant company. 34,000 restaurants around the globe. a company as global as it comes, serving 69 million people every single day. what does ceo don thompson see about global economy? the u.s., europe, china, commodity costs, new menu items. the stock which you well know has managed to ignore at least to now same-store sales comps that are getting lower and lower over time. we'll talk about all of that over the next hour. a big show coming up from suburban chicago here at mcdonald's. >> can't wait you to watch you making an egg mcmuffin. >> egg whites. >> when you go into a diner. i'd like an egg white omelet. i don't know if we can make that. how many will he be making? >> you have to make it many,

many times and very quickly, all part of the mcdonald's story. >> all right, carl. we'll be checking in with you very shortly. let's get to the futures and they are moving to the downside. gdp came in lower than expectations which all had been ratcheting up in recent weeks above the 3% mark. some of the europe stock markets are on track to break a five-day winning streak. you can see a lot of red there as we look throughout the eurozone. u.s. economic growth regaining speed in the first quarter, but not as much as most economist his expected, raising fears that the economy might not handle deep spending cuts and higher taxes. is this the ammunition the fed needs to keep qe going. plus amazon's falling in pre-market after the world's largest internet retailer posted slower revenue growth as it struggles overseas. can the retailer continue to deliver. as we mentioned we will bring

you that global intergalactic and don thompson will join carl quintanilla live and that will be a few moments and the gdp rose 2.5% in the first quarter. that was up from a .4% reading in the fourth quarter and it was the strongest consumer spending in two years and did offset further declines in government spending and forecasts called for gdp to -- and it's been full of earnings reports whether it was amazon, starbucks, chevron which are in the spotlight this morning, jim. yesterday you were down in philly and this week ended what was the biggest week for earnings and capped by this disappointing gdp number. >> sometimes i wonder, david, where did they get that estimate? we sit here every day, you and i and we know the economy is not strong. we know we're not putting a lot of of people to work. we know that federal spending is down. we know that the possibility of exports to europe and china not

so good. to me, the problem is with the estimates. i was surprised that we could even do two and a half. >> let's not forget there and really what we're talking about day to day is where we are right now. what we're hearing anecdotally from the ceos we speak to or the people who call on the ceos to get a sense of businesses and that has not painted a great picture for the current quarter. i would assume, though, people will ratchet down their gdp estimates given what was less than they expected in the first quarter. >> i look at 3m which is a great company and the u.s. can't offset farm weakness and i look at horton this morning and i say okay. housing industry is so strong. i think it punches above its weight which is something that the people at wells fargo will tell you because they're the largest mortgage lender and it ripples through the whole system. john stump would say it will be

a gdp multiplier. it hasn't happened yet. >> we talk housing and autos on one side and we have a lot of other things potentially weighing down economic growth. whether it be the payroll tax and whether it be sequester. so many different things in addition to all of the things that are constantly cited by the ceos and the like in terms of uncertainty. i know, i hate to use the word. >> the ceo of paychecks and they do more business than any other company. we're just not seeing a lot of formation. the reason why you might not see a lot of formation is you are so unsure that you're afraid to strike out on your own. i know there are people in our audience that say, of course, jim that's because we have a liberal presence. i think that's too simple. i think there is a big -- say hatred of washington. republican and democrat by most business people who say, you know what? on monday planes didn't take

off. so now they passed that congress likes to fly, so -- boom. these kinds of things annoy people, but more importantly they make it so you are cash rich, but confidence poor. don't have the road map you'd like in terms of future growth and we saw at&t and by the way, business formation. let's talk amazon real quickly here if we can. yesterday i was watching it right after they reported, of course, the company reported it was 18 cents a share that was ahead of estimates, but they're spending an enormous amount of money and was the revenue light and the eps was better. what's your take? >> i liked it. i liked it for a couple of reasons. one is, it's the opposite of apple. they're not defensive. hey, what are you guys doing with refrigeration out? none of your business. give me a break. we're not talking about that. the gross margins weren't bad. they are still trying to take over the world and, david, when you take over the world it costs

a lot of money. >> you've got to believe that when they stopped spending it is going to be an enormous cash machine. amazon web service is a terrific business and it's a third party fulfillment. they are adding people and they are visionary, david, visionary. they let him get away without worrying about the price to earnings multiple. >> this is not bristol miers? you can't worry about the p-e multiple given how high it is. >> carl, take it away. >> thanks, david, the moment you've all been waiting for. the man is in the chair. our exclusive interview with mcdonald's ceo don thompson. got a lot to talk about from top to bottom, micro and macro today. a lot more "squawk on the street" when we come right back.

>> all right. time now for an in-depth look at the world of the golden arches. weir pleased to be joined by ceo don thompson joining us in tfroe mcdonald'sic innovation center in suburban chicago. why where are we and why is it important to the company? >> right now we're in the innovation center and this is where many of the countries from around the world come to test out new menus and to look at menus and the operating platform and it's also where we do a lot

of our futuristic thinking, if you would, about how we engage with customers and also how we ensure that whatever it is we do at mcdonald's that our restaurant teams are able to deliver that for customers at the speed that they expect from mcdonald's. >> first time live cameras have been in this room? >> this is the first time we've done something like this in the innovation center. >> we'll see if you live to regret it later on. >> we have good-bye this morning. 2.5. i always think there's no better set of macro eyes than mcdonald's and the sheer volume of people you interact with every day. people are worried u.s. is slowing down, and i haven't heard comments from you lately to suggest otherwise. >>. >> i think what we're seeing, carl, relative to the u.s., is we've seen these starts and stops of a recovery, and i think earlier retail sales earlier this year showed that things were slowing just a bit. you have to look at it and take it with a bit of a grain of salt. we do see the impact possibly of

a payroll tax and it's too early to tell, but you still have a little bit of hesitance relative to certain investments back to the broader economy and relative to jobs. unemployment is still at a fairly high rate and so as long as unemployment is at a fairly high rate and as long as there's a bit of consumer confidence and it's skittish, if you would, then we'll see a fairly soft retail environment and nothing to suggest that that changes mid-year. that there's some sort of second-half story that sounds and feels different? >> there are are a number of things in place that could possibly help us in terms of moving forward, but it will remain to be seen whether or not there will be more jobs created. at mcdonald's, we are seeing some faint signs, at times like late-night hours, breakfast and at times we'll see some resurgence there, but it's been a little bit of a mixed bag

based upon the cycles that we've seen. >> your plan stateside is still for a tough environment, for a tough retail and informal leading out environment? >> we always planned for the environment that we're in and we don't expect to get the benefit of a resurgent economy. we love that, a little bit higher inflation to price effectively, if we don't see those things we are well equipped to supply customers with affordability and food news. >> i want to bring in jim kraemer in a minute. before we do that, europe continues to be a big story. some say we think we've seen the worst of the worst at least in the periphery. your report card? >> well, we hope we've seen the worst of the worst, but europe is a lot of different countries and everybody kind of speaks about it in a very hom on ho, h

omogenous way. and spain came through yesterday, 27% unemployment. portugal's tough. italy's tough. that division is very, very tough. the uk for us, russia, have been fairly strong market, but across europe you have a bit of a mixed bag. we don't see that changing economically any time soon. austerity measures are still in place. there are still deficit issues. we think europe will be a much longer recovery. >> jim, i want you to play a bit. you have a question for don? >> great to see you. i just love what you're doing at the company and one of the things i love is you are creating new product all of the time and carl is showing us around some place we've never been to. egg white mcmuffin. what i've been demanding and what others have been demanding. how can you make it? it's a technological marvel? >> i tell you what, jim, first

of all, it's good to be able to talk to you again. you know, the egg white delight is a tremendous product and it's egg whites across the entire breakfast lineup that is satisfying the needs that some customers have and what we want to make sure at mcdonald's is always to satisfy the varying needs. some with egg whites and some with traditional cracked eggs and we're excited about the lineup, but we also have some other breakfast news coming in smoothies and other things that appeal to our consumer base. >> how about bone-in links. i have to know because sallie smith says i'm not worried about mcdonald's. >> well, you know, ours is about consumers and not about the competition. we've had tests with our mighty wings and they performed quite well. chicken is a great opportunity for growth in the country and

we'll press forward relative toic whichen and i hope no one is too worried about us and we want to satisfy the needs of customers across the news it's outperformed the s&p for the past three months and investors looking past sort of what same-store sales have done lately. last year the complaint is pipeline's dry. they have nothing new. there's no energy, that's changing at least from what we can see, but how much more is to come and when does that start to have an impact on comps. >> carl, for us to be successful at mcdonald's is we have to be exciting. we have to be innovativinnovatie have to bring new food. in our pipeline there's over 160 products so we don't have a lack of products globally around the world. what we had was a lack of adapting some of those in the u.s. and also in the u.s. we were refueling the local pipeline. so when you see things like fish mcbites this year or egg white delights.

when you see blueberry pomegranate smoothie that came from canada after canada adopted the smoothie flavors from the u.s. when you see the wraps that came from austria through poland across to the u.s. and when you see mcbites coming from australia to the u.s., those are just some of the things that will be in this menu. this year's menu is innovative and new and there's more to come with beef and chicken products and things that will come later in the year. >> i will parse those words carefully. fair to say, last year you were not satisfied with the pipeline and you now feel different? >> very different. last year i was not satisfied and many people heard about that. i thought that we were not addressing the needs of consumers and we weren't bringing energy to the marketplace. that's our report card. that's my report card, but this year we won't get the same grades twice in a row. we are bringing new food news and exciting things to our customers. >> we've heard about beverages and a while ago on comps.

howard schultz on our air last night talking about the war as it relates to coffee. here's what schultz said. >> i think the competition is quite bifurcated in terms of what other people are doing. you can mention mcdonald's and mention dunk indoughnuts and panera, these are all good companies, but they do not in any way resonate with the consumer the way we do with regard with what it is we do and that is the sourcing and roasting of quality coffee and the experience we create in our stores and the equity of the starbucks brand. >> i love getting two giants of the restaurant business to react. what do you think of what he's saying. it's a street fight out there, is it not? >> any time you're in the retail business there's always a fight for market share and a fight for consumers' mines and their loyalty and their pockets. what's interesting about it is as howard mentioned, those are very well-respected companies that he mentioned and i have tremendous respect for all of them. i will say when it comes to

resonating with customers. we sell more drip coffee than anyone else in the united states. so we think we resonate quite well there. we entered into a new space in espresso-based coffees as well as ice blended drinks and that is a platform that will continue to build year over year and it will continue to bell and you will hear about the platform. we took a bit of a hiatus after the mid part of last year. we're talking about our platform more this year. >> speak of beverages. how many ounces is this? >> that looks like that's a 21-ounce. >> we live in new york back home. we all know about the bloomberg soda ban which is probably not now going to happen. you take that as a victory? >> you know what? we'll be okay in any environment. clearly, what we want is that customers can choose what it is that they want to have when they come to a mcdonald's. we have to satisfy their needs, not our needs. that's the way this business was built and that's the way we'll

move into the future. when it comes to the 16-ounce, we think that it is very, very positive that customers get a chance to choose what size beverage they want. i have had conversations with the mayor, and i respect him, and i respect the fact that he believes that government should play a stronger role in that. we just happen to differ in terms of believing that customers can make their own choices and decisions. >> we're in a room where you basically test how quickly you can push out a product, old or new given traffic rates and congestion. there have been complaints about speed of service, various surveys points you not at the top of the list. there have been reports of your own webcast franchisee saying guy, we have to get better about being polite and we have to get better about having order. how much of those concerns are real and how much impact has it had on the company? >> what's different is there was a document every year and i've

been around for 23 years. every year we talk about improofing service. every year we focus those customers also that haven't had the kind of service we want them to have at mcdonald's. our customer satisfaction scores have improved year over year over year and so we know we're doing better, but nonetheless, we have to step our game up. as long as there's not one customer that's not satisfied with their service experience then we have to focus why they weren't. we focus fast. we focus on accurate, friendly, we focus fries, food products and the quality of it and cleanliness and those things will never change. so for us, that's a day to day focal point that we have to continue to try to get better. doesn't every new product increase occupational delivery. >> they have to operate the same way everywhere in the world. some crew worker has something else to do with a new machine they haven't seen before. >> that's the reason we have the

innovation center. we are able to configure these kitchens to replicate any operating platform that we have anywhere in the world. we are able to take those product mixes, bring them in here and actually run them at lower transaction levels and we can run a platform until we want it to break and what that helps us to see is whether our break points and then it helps us to redesign things in the operating platform to accommodate new products. beverages is a good example. smoothies, we constructed an entire work sale to be able to efficiently, effectively and at the speed of mcdonald's deliver up an ice-blended smoothie. so for us, this is not just the point of implementing a product. what we do is we make a change to the consumer opposition. all of those products and the point now is to drive traffic, to get those comps up. it's been big news when the comps went negative.

when do they go positive? i know you've said april is trending negative, but when is the turn? >> we think the comps clearly will ease as the year progresses in terms of what we're going up against last year, but at the same time, driving comps is about being and having compelling offers. again. stronger food news and operational improvement and we do have much, much better food news and it's also about the marketing activation and engagement. that's much stronger this year. i was on our creative quite a bit last year. i thought we went away from some of the base consumer propositions. i thought we went away a little bit from talking with our core favorites like big mac, quarter pounder and our salads and price. that will help us to continue to gain customers and gain share. this year we've already gained market share and we've outcomped the competition 11 out of 13 this year. so we know we're getting back on

track and we'll get better as the year progresses. >> burger king was out with comps this morning down 3% in the u.s. we're going do some cooking later on, don, and we'll take some questions from twitter as well kwat squawkstreet if you have one for don. back to you. >> looking forward to a lot more of it. >> we have cramer's mad dash ahead of the opening about will and the crowd is starting to gather here as we get close to the open on trading for the last day of the week, and the last day of the workweek. tack a look at futures there and looking for a potentially negative open and a lot more "squawk on the street" straight from the new york stock exchange. ♪

[ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves...

futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim. from td ameritrade. all right. look at that. you're watching "squawk on the street." we'll get to the mad dash in a minute. man, how was it last night at villa nova? >> it was so much fun. i love being around young people. i love being around people who love the stock market.

some of these investment guys came to me and david, they said buy horton. gutsy call, horton reported and they were dead right. that was a great call. >> that looks like it was a lot of fun. >> and a lot of people. >> look at that! that guy was john and his first day as a wild cat. >> i said, their it's my first day and how about ncaa and i've never worn this in the real day. >> he's warming up for next year. carl my stage manager was saying, don't worry. i hate that kind of thing, but he pulled it off. >> let's get to the mad dash, of course, and we've only got a couple of minutes before the open of trading and the last day of the week. jc penney and we didn't talk about it. soros fund management -- >> why, david? what does he see? >> the key here is not george soros. i can tell you without a doubt he had absolutely nothing to do with this. they managed $26 billion.

16 billion of it's outsourced and 10 billion is inhouse and this is a tiny, tiny position and all of that being said someone thought let's take a shot. >> do you think people just said on the valuation basis it's not going under and let's just buy this on the deutsche bank? >> and maybe you also -- good point, potentially and maybe you just get a decent short squeeze. maybe if you're soros you participate in some sort of financing if it comes down the pike and maybe there's some sort of convertible, i don't know, but don't go thinking george soros is taking a -- it's .1% of money managed in the management. this is not breaking the british pound is what you're saying and this is not something that soros himself would be involved with. >> i think people at home buying something based on someone else buying it you have to be careful. you have to do your homework and

you have to believe that they can get better and i don't think they can. >> we'll be watching jc penney and we'll talk about it and there it is. [ bell ringing ] >> more green than red. here at the big board we have hannon armstrong, celebrating its initial public offering. over at the nasdaq, churchill downs celebrating the 139th kentucky derby. that will be coming up. >> you ever been? >> never been. >> do it in your life time, my friend. it's one of the most exciting things in the world. >> the run for the roses will take place may 4th on nbc. a little plug for the parent company right there. let's take a look at how we're doing this morning, jim. any number of difrn earnings we didn't get to including in the oil patch and exxon mobil yesterday, we have chevron, right? >> i am concerned about exxon.

they seem to be drilling on wall street more than they're drilling overseas, and i know that people feel that they're starting to step up their production in the united states. southwestern energy, major overpay. david, it is growth that we want out of the oil companies and chevron's got it and chef von doing great things. someone on the board of chevron was saying to me the other day, listen, this is a technological marvel, engineering dump where th they are producing growth. we don't want companies that are steady with no production growth. it's chevron, yes. exxon, no. >> let's take a look at shares of chevron. as you've been doing recently within sectors saying hey, management matter, but you can'ty bah a sector across the board and say okay, i'm a believer in oil. >> people must look, for instance, at colgate. the colgate call was a marvel.

i know we think of the toothpaste, like, big deal. no. taking share with innovation. not advertising. actually taking share because they've got something that the people want more. colgate just literally, literally in every country, they are doing much, much better. it is execution. i don't want to slight procter because it's a great american company, but colgate is better because management has just done a fabulous job. >> looking at some of the other movers this morning. amazon shares are down about 2% again. figure out the multiple if you can figure out anything in terms of the earnings and do they get a pass? is there some point at which people say this is not working for me. >> i don't want gross margins to expand. i would love to see gross margins expan as they spend and they've got that. that wall street is wrong on.

i thought howard schultz and starbuc starbucks, was an amazing conference call. people said not that long ago like mr. townsend, mcdonald's, wait a second. we're oversaturated and mr. schultz said that is just plain wrong and he's right. the u.s. has more from many more stores and i know people are worried about china. give me a break. china, they are still in the infancy and hey, you know what else? europe, they made money in europe. i think this is a marvel. >> you do? >> i love this company. the stock is about 14%. about 11.5% this year and it is down about 1% and mcdonald's up 14% this year and none of them beat chipotle which has had a nice rebound. chipotle and this is a company that is introducing a couple of new concepts and they have a vegetarian concept and you see them putting some others and international getting better and

avocados are are not so bad and raw costs food could go their way and this is a company that's been humbled by the downturn in the stock and i like chipotle and i wish it was at 350 and not 340. when you're saying to yourself, shoot, how did they get so darn smart? and the answer is this is the best and brightest. the best and the brightest go to chipotle. the best and the brightest go to starbucks, 200,000. why do you look at me? >> the best and the brightest? is that the good thing for the u.s. economy. the best and the brightest -- >> do you want them to go to credit suisse? that happened for 20 years? where did that get us? where did it get us that they went to washington mutual and wachovia? ultimately, wells fargo prevails. >> it got us synthetic and ceos and things that chuck prince had no idea what, in fact, they even were. it's about technology and you

listen to mr. thompson and it's about technology and it's about plans that are working. it's about mobile payments that are working. i am in throng with these companies when i am on their calls. it might not be the worst thing if they went into the telecom equipment world and we had a u.s. provider of some of those services instead of having to say we can't have the chinese because they're spying on us and they don't have it together and ericsson. i could think of some areas where it might be good to have guys to starbucks. >> mark cuban talked yesterday on wapner's show. innovation and tech, and apple is now old. i know mark benny from sales force.com, but the innovation tends to be customer relations management. >> before we go to bob. microsoft talking about

innovation. >> it came up a large position, but look at the move! it's flat today, let's call it, but whoa, this is one of the best weeks microsoft has had in many, many years. >> terrific analyst downgraded ahead of the quarter and obviously, the dean of microsoft, downgraded ahead of the quarter and mark muller from bernstein said, listen, this is the darkest before dawn moment and it will be led by x-box, and it will be led by cloud. steve ballmer has reinvented the company and people are thinking about the old ballmer and they're thinking about pcs. >> they're also thinking about the fact this he's like a pine tree. nothing can grow under him meaning succession. no succession plan. everybody leaves. >> um, okay. that's a valid point. i hadn't thought of it like that. >> they need to have it. one of the reasons why i like mcdonald's so much is they have a tremendous bench. that's a valid point. i don't know what to say about it. people at home are right and

listen to that because there is no answer and he needs to present that. >> let's go to bob and he's on the floor and he has more on what's moving today. >> disappointing gdp, the dow is up 12 points and we're six points from a historic high, and i bitterly complained about the top line numbers and i'm a glass half full guy and we saw the usual complaints about weakness in japan and you saw perkin elmer's report all over the board. they're down big and missed top bottom line and complained about weakness in japan and weakness in europe, but we know all about that. weakness in the top line and the economic numbers and the market keeps going up every week. we're up 2% again this week just shy of the historic highs. we just keep advancing. pullbacks? you know the pullbacks. one in february, and one a week and a half ago and both of them were the same. 2%, barely, barely a pullback. the bottom line is things keep

marching ahead and one of the reasons the market keeps advancing is we get this rotation and this is great if you're a market guy and you're long because this week it's been about cyclical names and you've seen materials and industrials advancing well a immediate of defensive names. those were the ones that were advancing a few weeks ago and that's what's moving the market here and the cyclical index, that's up almost 3% this week and the consumer index is flat. completely reverse of what it was a few weeks ago. that's a good seen for the market, but then it makes people crazy when you try to learn for long-term trends. two great bright spots of the u.s. economy. number one is aerospace and we've seen great numbers from the aerospace companies these weeks despite sequestration on the defense side and the second, of course, is homebuilders. we saw it this morning and d.r. horton beating and orders up 34% and m.i. homes and pulte all had great numbers and the home

construction index and the itb, the etf is up 8% this week and best week we've had. etfs are continuing to report assets. >> wisdom tree is publicly traded and that's the fifth largest etf and more importantly, the overall numbers, the overall revenues much higher and they're bringing in a lot more money and the hedge fund has been doing traffic for them. it's been a strange week, jim, for those of us covering the markets. we'll be talking to bill broadski, the ceo of the chicago board options exchange in one hour and we'll find out exactly from the horse's mouth what happened that day. guys, back to you. >> everybody in our business, what are they doing? how do they not know how to do this stuff? great stuff. great interview, great guest. let's go to the cme group in chicago. go ahead, rick. >> thanks, jim. we had our first quarter of gdp

and even though i scratch my head when analyst it is look at 3% or higher, i understand why and it was still not a bad number at two 2.5 and it wasn't 3 and you are averaging the first quarter together. of course, they're moving down and the current level at 167, well, consider, open this chart up. we've used the chart every day to april 10th and we are now nipping below that compressed range and open the chart up and you can see why it's significant and should we close at these yield levels? it should be a fresh, low yield going back to december 11th. s&p futures trade before the big guy opens at 9:30 eastern and on the number. you see the way it was lower and we are higher before the move on the weaker good-bye. y think that's what i'm calling the ben bernanke bounce. pay attention to that. let's switch gears and we know the uk avoided a triple dip

recession and it is still flying against the dollar and some of the best levels since mid-february and now we're going carl in romeoville and i had a lot of jobs working through college. one of my favorites was driving a limo for a company who only had three accounts and one of them was mcdonald's and they were great people to drive around. >> it's nice not being too far away from you, rick. we'll talk to you soon. >> when we come back, our interview with don thompson donees. we'll talk about china and your twitter questions. you guys came up with some doozies. we're back in a minute. it's as simple as this. at bny mellon, our business is investments. managing them, moving them, making them work.

we oversee 20% of the world's financial assets. and that gives us scale and insight no one else has. investment management combined with investment servicing. bringing the power of investments to people's lives. invested in the world. bny mellon. transit fares! as in the 37 billion transit fares we help collect each year. no? oh, right. you're thinking of the 1.6 million daily customer care interactions xerox handles. or the 900 million health insurance claims we process. so, it's no surprise to you that companies depend on today's xerox for services that simplify how work gets done. which is...pretty much what we've always stood for. with xerox, you're ready for real business. ...amelia... neil and buzz: for teaching us that you can't create the future... by clinging to the past. and with that:

you're history. instead of looking behind... delta is looking beyond. 80 thousand of us investing billions... in everything from the best experiences below... to the finest comforts above. we're not simply saluting history... we're making it.

back now to mcdonald's ceo don thompson. we covered a lot of ground at

the top about the big macro stuff. didn't get to china where people are worried about whether we'll ever see growth like we did a couple of years ago. obviously, bird flu has had an impact on your competitors and i'm sure being in mc, too. what would you say about that region? >> china is still a tremendous growth opportunity. last year we opened about 250-odd restaurants. our goal is to be somewhere in the 1700 range or 2,000 range, actually, by the end of the year. so still tremendous growth. we're growing in clearly at the core cities and we're also starting to extend those out further. we are building traditional drive-throughs and automobile ownership is growing in china. so we're still very bullish in china. china is a part of our portfolio. it represents about 3% of our overall operating income. so we know that there's tremendous upside, but we have balanced growth across asia and the rest of the world.

>> you were talking about growing into the secondary cities and the tertiary cities which are huge cities by any standard. drive-throughs are almost more important than other markets. you are watching how quickly people buy cars. >> absolutely. china is growing so rapidly so you have to look at some of the economic indicators and one of them is automobile purchases because for mcdonald's, if we can build a traditional restaurant with a drive-through which we know how to run very, very well and they seem to have a tremendous affinity from a consumer perspective in china and we'll be able to continue to grow that business from years to come. as we go further out. we go from company operated to conventional licensees and to developmental licensees where we are not deploying our capital and we've found some phenomenal developmental licensees across china. >> one concern people have long term about mcdonald's is the whole millennial issue.

kids in the age from their younger 20s from their early 30s in this country where they argue, look, consumer tastes are changing. they'd rather go somewhere where something is organic and there's some farm to table type quick-eating option. how vulnerable are you to those tastes changing over time. >> we're as vulnerable today as we always have been. we as mcdonald's have continued to evolve and we're doing that now. the mcwraps that are out right now are really millennials are really the target because their tastes are very different. they love the fusion of taste. they love the freshness of the cucumber slices and 16 assortment and variety of lettuces that weus the spring mix. they love those things coming together in the non-traditional carrier which is the wrap itself and so we will continue to change our menu and we focus millennials also in very different ways. so it's not just prime time television. it is the social media.

it is the fact that from a digital perspective, we've increased our spin and we'll continue to do so. we're getting more activations and we are at music concerts and things and all of these things make it very exciting for me and hopefully it will be exciting to millenni millennials. they've responded well to the wraps thus far. >> think jim has a question on that topec. i know when i go to mcdonald's, and i have a couple that i like to go to. i would love to have a rewards program and i would love to be able to pay mobile. while there are very few lines and it's kind of something that starbucks has got enemy into. what's the next level so that you guys are rewarding people leak me and making it so i want to come back and i'm in and out because of mobile? >> jim, thanks so much for the question. huge opportunity for us at mcdonald's, and i will recognize the fact that as a global system, we've been a little bit

late to the mobile entry party, i guess i'll call it, but i will tell you this, one thing we are learning from those that have been in it and we have tests around the world relative to mobile pay. we want to engage with customers not just from a mobile pay perspective, but we want to engage them in the supply chain through mobile applications so they understand the quality and freshness all of the way from the farms themselves and all of the way to when they get the products. so mobile for us is much more than just the pay. it is the consumer engagement to understand what they're getting out of a mcdonald's experience, but you're absolutely right and we are making many steps and strides. many of them originating from where we sit today at the innovation center. >> let me ask you about that because the innovation center has 20 concepts we've never seen. chipotle was a mcdonald's

invention. is there a new concept? because i'm sure you're leaving stuff on the table that i would love to eat. >> i think, jim, if i heard you correct are some of the ideas that might be able to transfer around the world and are we leaving some things on the table? the wonderful thing about being in 119 countries is we get to deploy many of the things that arise here out of the innovation center, but i will say something else. many of the ideas that come into the innovation center come from these different countries around the world. so we socialize those ideas that may start in market a and go to market b. whether it is mobile applications and engagement in japan or it's a supply chain tracking system that we may have in other areas of the world. whether it's menu products and so we're able to socialize a lot of the great ideas. our challenge, as we move forward and one we accept and move forward aggressively on is how do we leverage and scale ideas more quickly in this

global environment and that is a priority. it is an expectation and all of our leaders around the world understand it as such. >> don, let's get to some twitter questions and here they come in rapid fire fashion. >> what about burger king's home or office delivery? is this something you considered? >> doing it in a big way, beginning in latin america, we have a couple of things we may be doing in the u.s. here in some of the markets that are a little bit more dense. so delivery is a big, big opportunity particularly in areas where you don't have drive-throughs. >> being in mcseems to be disappearing from airport terminals, planned? getting outbid? just my imagination. >> there are some that we have come out of. there are other airports we're looking going into and it's less about airports and more about distribution and what's the format of mcdonald's relative to venues and site like that.

we're still thinking about airports. why not create a reward loyalty with points with future perks. >> love the idea. who knows? we may see something like that in the future? >> would you ever consider, this is a big one, having mcdonald's serve breakfast all day long? >> yes, we would consider it. we have to focus the existing menu and focus on the great customer experiences there, but we have looked at breakfast across the day part and we have it in some markets around the world and this innovation center has come up with innovative ways of us expanding the breakfast hours and some of those things we'll also be seeing here in the near future. >> we'll be doing some cooking soon back after the break and we'll get consumer sentiment. don't go away.

welcome back to "squawk on the street." the survey is out, 76.4. that sounds pretty good benchmarked against 21.3. woe are new comping against the march final which was 78.6, a high watermark. how does this fit in? 76.4 is the strongest level going back to january when it was 73.8. now we're going to go to david

faber. >> all right. thank you very much. it is time for "six in 60." six stocks, 60 seconds, give or take a couple. >> equipment stocks have been red hot. lam research deliver adi fabulous number, and i understand a little overreaction. >> anheuser-busch, otherwise known as bud. they put it on the convection sell list. ahead of that, modelo, no. conviction selling. we don't just hate it. we really hate it. i bet you they don't drink it anymore. >> vf-corp earnings. the guidance is conservative. come on. >> coinstar. they changed their name and i saw nothing good on the call whatsoever, but they changed their name. >> sometimes that's all it takes. >> pfizer, pfizer, yes! more than lumber liquid aurts. disappointing room and arthritis

failure in europe and i'll be back. >> finally -- >> they got the apple take. they have something to do with apple and they disappointed anything apple and the apple doesn't fall far from the tree and it hurts cirrus, too. >> that is not a nice-looking chart. >> what do we have coming up on "mad money." it's green week. we bring on a company that's produced more green energy than all of the solar companies together and that's david steiner fr with the land phills. you would be shock howed much money they're spending so the skies are cleaner. >> i'm very much looking forward to waste. methane capture. >> they power their trucks with it and they've been able to develop so much energy from the landfills. 52-week high, really great manager. both great managers and both great yield. >> have a great weekend. >> the knicks are going to beat the heat. >> no! >> and they'll play oklahoma city in the finals. >> oh, my lord!

>> that's m prediction. >> that is one of the greatest and craziest predictions. >> if it comes true, though, i'll be happy. coming up we have carl's exclusive with don thompson. they're about to get something cooking. we'll be right back. eople and property, while keeping out threats to your operations? it's not working! yes it is. welcome to tyco integrated security. with world-class monitoring centers and thousands of qualified technicians. we've got a personal passion to help your business run safer, smarr, andharper. we areyco ingrated security. and we are sharper.

everybody has different ideas, goals, appetite for risk. you can't say 'one size fits all'. it doesn't. that's crazy. we're all totally different. ishares core. etf building blocks for your personalized portfolio. find out why 9 out of 10 large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus, which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal.

lets you jump backwards and forwards in time to capture the perfect shot. blackberry z10 with time shift. built to keep you moving. see it in action at blackberry.com/z10

>> so, let's get the road map for the next hour of "squawk on the street." we have mandy drury and it dominated my quite funny accent. the house is expected to vote on a bill this morning that would end air traffic controller furloughs. we have a top analyst to analyze the impact moving forward for the industry. >> plus this has been an active year for shareholder activists and we'll brake down which companies could be facing big proxy fights pretty soon. >> and an interview with the chicago board options exchange the day after a software glitch with trading difficulties. >> and we'll bring you exclusive access to mcdonald's innovation center. >> carl kiquintanilla is there right now and joins us now.

carl? >> as you know, mcdonald's stock has had a pretty good year. it's outpaced the s&p by 100 basis points and one of the big complaints about the company has been the pipeline, so to speak. what new products do they have coming and where we are with the innovation center and the first time live cameras have been here ask is where all of those new products are put into a kitchen and tested. can they make them fast enough? can they make as many of them as they need to make? the big story is gdp, as you know, at 8:30 a.m. this morning. it's hard not to think of mcdonald's when you think of gdp. they serve some 29 million americans every single day. 14,000 restaurants in this country. a set of eyes and ears that are practically unduplicated among other big american companies and we asked don thompson about an hour ago whether or not this 2-5 number on gdp is indicative of how the rest of the year is going to go? >> we've seen these starts and stops of a recovery, and i think earlier, retail sales earlier

this year showed that things were slowing just a bit. you have to look at it and take it with a bit of a grain of salt. we do see the impact possibly of a payroll tax. i think it's still a little bit early to tell, but also you still have a little bit of hesitance relative to certain investments back into the broader economy and relative to jobs. >> now, as for those new products you probably already know, mcdonald's making a big push on egg whites and a blueberry pom grn at smoothie. that's a good start and it's two-thirds of their profits and the standard entree items. we did ask don thompson if he was satisfied about the pipeline as he was getting so much criticism? >> last year i was not satisfied and many people heard about that. i thought that we were not addressing the needs of consumers and we weren't

bringing energy to the marketplace. that's our report card. that's my report card, but this year, we won't get the same grades twice in a row. we are bringing new food, news and exciting things to our customers. >> david, simon, mandy, i don't need to tell you, it's a competitive space. you have starbucks, you have the paneras and the chipotles and mcdonald's trying to make their push and being a giant, when they make a statement it tends to get people's attention. >> whenever you talk to people about mcdonald's everybody wants to be an authority on this company. we've all grown up eating mcdonald's, perhaps some more than others and what do you think, is the most surprising thing that you have learned about this business that has made you think differently about mcdonald's? >>. >> i think it's the degree to which they felt they were late on certain things. don this morning talked about being a latent rant into some social things, some digital payment methods. i think they feel that they were

maybe not as on-message as they could have been last year regarding new products. so it's rare to see a giant like mcdonald's say we need to do better, but that's clearly the message they're trying to get out this morning, but you're right, mandy. it's one of those companies where we all have an experience with them in our daily lives and that's why people like talking about them. >> carl, rare to hear a ceo say hey, you know what? we didn't do as well as we should have. to be fair, mr. thompson took over not that long ago, but i would guess in some ways i don't think they would point the finger at the predecessor, and there was a lack of momentum that he would have to restart, i guess. >> that's true. >> he came in july 1st of last year. he's been with the company for 23 years, don thompson and electrical engineer by background and he's had a better set of cards to play this year than last. the stock which might still be

above 100. investors are looking past weakness in the comps, the same-store sales comps and it's done better for the s&p and for that reason a lot of people are a little bit leary. can the stock continue to keep track with performance? but that's one thing the company will try to work on as we get into the second half. >> just before we lose you. i love the way in which you juxtaposed him with howard schultz from starbucks and the conversation about coffee. where do you think we left that in the end? >> we asked don to react to that. he made the point there was a point about a year or two ago where the two of them were really butting heads on things like this. i mean, this is a huge driver of track, maybe not margin, per se, but this gets people in the store in the morning where generally margins are a little bit fatter, so i'm not sure whether he would argue the war is still between them and starbucks. it might be more between them and the panera or them and a smash burger. they have a lot of competitive things to worry about.

no question. >> we'll be talking more about starbucks in this hour aren't we, guys? >> and we will watch carl make food. i am very much looking forward to that. putting that egg member muffin. >> he doesn't look like an egg white mcmuffin guy. let's be honest. >> we'll check in with you very shortly. >> the shares under some pressure following weak guidance last night after the bell. the revenue was also slightly below forecast. you see the stock was up substantially after whatta, peered to be a modest sell-off in the earliest going, and $300 buy target and dan morgan is the portfolio manager for sinovis trust. dan, let's start with you. it's funny, fourth quarter numbers also not the greatest and somewhat disappointing stock went up and this time of a different reaction. are you surprised? >> a little bit. gross margin numbers that came in at 26.5% and consensus was at

25% and it's the highest gross margin they've had over the last five or six quarters, so i was kind of interested to see how the street would react to that and initially looking at those number from the gross margin perspective which the street focuses on so strongly it looked pretty impressive. >> where do you come down on that given the similar set of circumstances than q-4, but a different reaction from the stock market. >> what i look at are two things and one we look at the growth rate in the unit ships and last quarter it was 30%. remember, that's twice as fast as e-commerce and the other is just the e fir enzi in the model or the gross margin improvement and actually, the 26.5% is the highest they've ever been and they're hitting on all cylinders in terms of efficiency in that line. granted, this is a still a company that invests very, very aggressively and management didn't tell you much. they don't tell you how much

they're going to spend. they don't tell you what their capex is or how many distribution centers they'll open. to a certain degree, you know, it kind of leaves uncertainty in the minds of investors. >> dan, the gross margin is extraordinary with the decade high of 26%. i guess the reason we sold off today is the concern of not growing as rapidly overseas as they have done in the past. 44% of the business, of everything going on over there.

china lowered expectations for gdp going forward. so that's enough to put a little bit of headwind on amazon even though, you know, it was a pretty good quarter from the gross margin perpective and always looking ahead in terms of guidance and that's something that is kind of out of control of amazon in terms of the business model in terms of generating future revenue growth. >> you know, yousef, i have to admit my eyebrows raised whenç the report first came out that they were working on a set-top box. apple is reportedly in that space and you have netflix and a big player. do you think this is a push that would pay off for amazon? >> look, i think they have to. they're already the seven largest player after netflix accused it in terms of streaming services, and i think what differentiated amazon from netflix is they have aws, which is one of the largest online

platforms for data storage and what not, and i think that is something that they can eventually use to serve anything from movies to online gaping, et cetera and having that set-top box that will look more like the box is a very smart strategy. >> dan, yousef said this earlier, but as a shareholder i want to get your take. you do, in a way have to believe. they don't tell you a lot. the trade's at an enormous multiple. what keeps you believing and what would change your belief? it's the highest multiinout there compared to other internet stocks and it boils down to the marge sxins their ability to continue to execute and you talk about the home entertainment strategy. so as long as they can keepç executing and creating new markets for their products and

keep those margins up, you know, we have to stick with it. we start to see those margins evaporating any if the video downstream doesn't work because netflix, apple and google are in the same space then we have to think about amazon. we have to leave it there. yousef sqale and dan morgan. within the hour the house is expected to vote on the bill to end the delays at our nation's airports. we'll take a look at what it means for the airline stocks and the faa as people play games. plus companies across the board gearing up for their annual shareholder meetings. what are the key issues facing the big of the names on the street? we're talking proxy battles ahead this friday. [ 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. ♪

>> the house is expected to vote this morning on legislation aimed at easing the faa furloughs that have resulted in flight delays for millions of airline passengers. hampton pearson is currently at the reagan national airport and what are we hearing on this? >> well, mandy, first of all, here's the headline that air travelers across the country are happy to see as they make their way into airports nationwide. the senate late last night unanimously given the faa the authority to set offside $250 million in funds to bring back the controllers and keep them in those small airports around the country, as well.

we are looking in live on the house which is in session and is expected to take up the vote on what the senate did, hopefully within the hour. meanwhile, we caught up with a couple of those senators who made it all happen last night. >> the administrqt9 was purposely making air travel difficult. everyone understands that the faa has more money in its budget after sequestration than the president asked for in its budget. i think it was an embarrassment to them. >> i don't have to wear a mask or disguise as i go through the airport, i'm happy to say. >> and, simon, to underscore senator mccain's point, you can't imagine how many people were telling him today they were very happy for his service over these many years in the u.s. senate. we are waiting from the faa to get some kind of a word of how quickly they can ramp up as far as getting up to full staffing of controllers and key certains

around the country. simon, back to you. >> i'm assuming if the vote goes through within the hour, there's nothing to stop them almost immediately putting those people back to work, and they don't have to pay them now and the money will be there by the time they have to. >> reporter: well, you may be right, but when it comes to government in particular, your assumptions can really get you in trouble in terms of common sense versus how sometimes the bureaucracy can still slow things down. >> which might be right, at hampton pearson at reagan national airport. we will get more insight now on the impacts of those furloughs and the airlineç sector in general. ray neidl is a consultant working for the capital and a former airline analyst at callian securities. welcome to the program, sir. thank you for joining us. >> thank you. >> do you agree with him that it

was the administration. >> it is ridiculous going through this procedure. the faa and controllers are a vital service. the breakdowns have not happened, regardless. >> it's probably an unpopular thing to say, presumably, somebody acted with great courage because in the face of there not being enough staff they took a bold decision that they would be able to delay flights and there is someone in there that is aking in the public interest albeit one that has hugely inconvenienced people. >> i can't comment on the inner workings of what happened with this and basically as an old budget analyst i started out with american airlines and there are always ways you can eliminate non-essential items when you cut your budget. this did not is have to happen. >> the faa should be separate and independent from the budget process otherwise this can easily happen again, right, ray?

>> yes. the faa is vital not only to airlines, but to the nation's economy. there are new technologiesç coming down the road which are being held hostage, and to the politics in washington. this is something that would save the airlines billions of dollars over the years, and add to the economy, plus the inconvenience of the traveling public if the system can be starting to implement it. >> how dangerous has the situation been that we witnessed over the last few days, do you think? >> i don't think it was a matter of danger. i think the faa is professional enough where they took care that safety was still first. >> can we say at this juncture, ray, which of the airlines this has hurt the most? >> well, it hurt the airlines that were bigger with more flights, think, and it has hurt airlines that have high concentrations into big cities which is washington, new york,

and the eastern corridor, chicago, and dallas with there are big hub cities. >> and in terms of the stock impact there? >> there was an impact as we saw, but the thing is this is too important. i didn't think it would drag on for too long and even the politicians realize this and it seems they're taking action. so any problem with the costs will be only temporary. >> and more broadly, ray, do you agree we're in a new dawn for the airline industry where capacity can be restrained and prices can rise andç therefore for shareholders there are additional gains to be made on these stocks or do you think we've probably had it now? >> no, this is not your grandfather's airline industry going forward, with consolidation and costs with the management and airlines figuring out extra charges and with all of the mergers, we have a new industry that's going to be profitable through the business cycle and with the completion of the u.s. airways-american merger, the merger process from deregulation is completed.

going forward, it is big gains through the airlines will be new technology, new air traffic control which is exgen. >> thank you very much for joining us today, sir. >> coming up on the show, starbucks turning up the heat on the coffee game after beating the both the top and bottom line, but that news is not helping the stock this morning. so we'll get behind those numbers and find out whether now might be the time to buy. also ahead -- ♪ ♪ still to come, there's much more mcdonald's magic to share with you. we'll see how certain meals are made as well as a tour of the innovation center. all that and much more today on "squawk on the street." bny mellon combines investment management & investment servicing, giving us unique insights which help us attract the industry's brightest minds who create powerful strategies for a country's investments which are used to build new schools

to build more bright minds. invested in the world. bny mellon.

how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed: the official retirement age. ♪

the question is how do you make sure you have the money you need to enjoy all of these years. ♪ it is annual meeting season. we have companies getting ready to host that annual gathering oç shareholders and what about some of those key issues surrounding some of those bigger company names. mary thompson is here to give us a breakdown. mary? >> david, shareholders are focusing on boards and pay this proxy season while the focus of activist investors on certain firms will make for interesting

annual meetings in the weeks ahead. here's chris sirnage on how the season is shaping up. >> it's pretty lively. i personally cover contentious meetings and contested mergers and proxy contests and we're seeing that on a pretty steep upswing. >> among the meetings of activists pressing for change, hess is may 16th. they want to end the firm's 17 years of underperformance. timkins on may 7th for the pension fund aimed at improving value by bearing the steel and bearing businesses. while the steelwater mining, clinton wanting change given the firm's loss of market share over the last five years. >> other meeting to watch include occidental petroleum, shareholders now focus directors, with the board launching a search to replace the ceo, supporters of mr. chasen may seek to unseat

directors who don't back him and in the wake of the london trading loss, jamie dimon faces a challenge to his chairmanship at the annualç meeting on may 21st. the bank board is lobbying shareholders to defeat that proposal. they maintain the say on pay vote is to gain dissatisfaction with either performance or compensation. so far this season, five firms voting down the firm's pay plan including the one at navistar. >> mary, so interesting, of course, you had chris on from iss, and i notice their advice -- advice can play an important role in a lot of these kinds of services -- a lot of these fights and of course, there is some debate about whether that should be the case and whether iss' analysis is one that should be listened to, but very interesting and certainly an important time of the year that they were headed into. >> it is. as he was mentioning again, and it's the rise of the activist shareholder. the concern about proxy

advisers, too, like iss is the way they are con flicked in some way. nevertheless, their thoughts on how you should vote a proxy does carry great sway so people, shareholders, particularly institutional shareholders tend to listen to them. something i want to talk about with simon, he mentioned earlier after i mentioned my piece on say on pay. that's right, the shareholders may vote against a compensation plan and it's handed back to the board to decide whether or not they want to do anything on it and typically to avoid any public relations black eye they do attempt to make changes because if not it will rear its ugly headç again the next prox season. >> i talked to management involved in the proxy fights and they'll spend as much as 40% or 50% of their time just with iss and that's how important they view it. thank you for that. >> still ahead on the program. quintanilla eggs and carl is cooking with mcdonald's ceo don thompson. that's live. those are live pictures from

inside the fast food giant's secret innovation center and we will be live with carl. mr. thompson later on the show for more of that exclusive global interview. plus, it's the battle of the coffee brewers. so who comes out on top? we'll be talking starbucks, mcdonald's, dunkin and more ahead as we head toward the weekend on cnbc.

we are one hour into trading and here are the stories we're

squawking about. 7:30 on the west coast, 10:30 on wall street. that is the lowest level since january. as consumers face negative news on job, federal spending and that number, by the way, still higher than most analysts were expecting. d.r. horton trading at a new 52-week high after it nearly tripled. the spring selling season off to a strong start and it's selling more homes at higher prices and korea's samsung reported its sixth straight quarter profit growth ahead of the debut of the latest galaxy smartphone and that's the s4. it launches in the u.s. tomorrow, of course, taking aim at its rival apple here in apple's own market. >> our own carl quintanilla sitting down with don thompson for a global interview inside the fast food giant's innovation center. it's the first time live dam ras have been allowed in. carl is a very lucky boy. thompson did talk about taking the fits and starts of the u.s. economy with a grain of salt. he also related how europe has a

long road ahead of it. >> the uk, for us, russia have been fairly strong markets,ç b across europe you have a mixed bag and we don't see that changing economically any time soon. austerity measures are still in place. there's still deficit issues, so we think europe will be a much longer recovery. >> and at home, of course, the talk is mcdonald's sales trending negative already for april and the ceo saying the need to satisfy the consumer to satisfy the offering was the only way that they could drive the business forward. that fits into a much bigger story this morning and that's where we are on growth for the first quarter. gdp came through this morning and q1 gdp that is well short of the consensus of 4.2%. let's bring in brian wesbury, chief economist with first trust advisers. good morning. >> great to be with you, simon. >> i have learned to be nervous about gdp data, not only does it

get revised three times before we get to the final figure, but we contracted in the fourth quarter of last year and that figure was way off. >> do you think we can believe this? >> well, i do. we're not going go from a positive two and a half, simon, back to a negative number. so that, i'm not worried about. in fact, it looks to me like the more likely scenario with this quarter is that it gets revised up just like last quarter did. i still think when those revisions are all said and done we'll end up at about 3% growth. you know, underneath all of this, the consumer and the consumer investing, business investment and housing when you put all of those together it was a 3.3% number and what really dragged us down was trade and government spending and those were the two negatives. so the core part of our private economy seems to be doing better than it was late last year, and i think that's going to continue in the months ahead.

>> and that's exactly what i was going ask you, specifically on consumer spinning which is the big question at the moment when we see so many soft earnings statements coming through, forward-looking statements that perhaps have disappointed even within the last 24 hours. do you still believe that the consumer will hang on in there and consumer spending will grow from here? >> i do, simon. it's always hard to tell, right? we had a weak retail sales report in march. we attribute, this is going sign like econ explanation and excuses, but we attribute that weakness in march to an early april -- or an early easter, believe it or not. usually easter comes later and for some reason we have a problem seasonally adjusting that. i am looking at these top-line revenue numbers and saying, well, maybe the economy was weaker than we thought it was in the second half of last year and that's affecting these numbers as we roll into the çfirst.

obviously, it's a little bit worrisome, but every quarter for 15 quarters, we have grown, sometimes a little slower and sometimes faster. we call it the plow horse, the economy. it's nothing to write home about. it's not a race horse and it ain't going to win the kentucky derby and it sort of keeps plotting along and finding a way to move forward, and there's no reason for me right now to -- to expect anything different than that. >> the plow horse economy. well put, brian. i'm going jump in here because i would like to know whether or not today's gdp report advances or hinders the conversation later on this year? >> i think it's sort of neutral right now. the fed is -- they're stuck in the middle, right? they're scared to say they're going to start winding down because they're afraid of what that might do to long-term rates

and to the economy and it's not really gdp that they're looking at. it's unemployment that they're looking at and with us still in that 7-point -- well, over 7.5% unemployment they need to see it at 6.5 before they feel comfortable in unwinding. so this report today is a little bit better than we've seen in the last six to nine months, but it's not enough to push the fed over the edge to start accelerating anything they might have plannedç already. >> all right, brian. thank you very much, and thank you for the plow horse economy. >> you're welcome. thank you, sir. >> great to be with you. >> plotting along. >> okay, starbucks shares are down 2% right now. starbucks is the world's largest coffee chain. many of us know it and love it and it is reporting its earnings yesterday and they came out in line. is the bar just being set too high? that is the question we will pose and matthew has a buy on

the stock and $396 price tag. can you answer the question if we just maybe set the bar too high for this stock? >> that was a misquote on the price target. that seemed high. yeah, i think the expectations were high. they had a strong quarter and very good traffic trend on the previous speaker talking about gdp growth. traffic grew 4% and that's phenomenal considering the weather issues and the economic issue, and tax refunds and incremental tax on the payroll. all things considered they put up a 6% overall comp. so the momentum is very strong at this business, but looking at the overall, what it needed to do to get higher from here on a multiple basis, i think you need china to be a clearer picture for them, and i think you need to see the consumer products division or their chashel developing business performing better than what it did the quarter. >> i am glad you raised the

issue of china and some of it has been disappointed and some continue to keep it on the front burner, but to what degree did you start making accelerated market issue on that market. they are see something pressure on the margins. two reasons, china is a company-owned market and they cellinged in a home that's a negative mix effect and they are stating to get hit a little bit on a year over year basis and the last three quarters they can fix it. they've done it in europe and there does seem tobacco a lower margin contribution in the region that they classify as china, and asia pacific. you didn't even see starbucks reducing its prices. is there a golden period that we could run into when due to the

fall of the coffee price and their own hedging you will rolling off they start making extraordinary profits from what they're already selling? >> yes, that's a great question. i think that you will see the commodity tailwind and one of the reasons why we like the earnings momentum story is the commodity tailwind should support earnings growth through fy-15. that's ending september 2015. they did indicate on the call ate year over year through coffee '15 and that is in the grocery channel as well as the retail stores. so they will give that back to the consumer and you've seen the bagged bean coffee roll back prices to win share they should have been contending for in this previous quarter. >> i do want to make an apology, i might have been a typo. i suspect it was for cmg, instead, and i see that starbucks is up there with cmg and also cmgr as your top picks in this sector. why have you chosen those three

and if you put up gmcr against starbucks is there one that comes out in favor of the other? >> good question again. i think gmcr is a little bit -- is could win over some more fans. it's more of a contentious situation there. both sides of the argument and the bear and the bull case and starbucks is a little bit of a crowded lawn and it needed to do more in this quarter to get this stock going. green martin, i think we see a lot of margin opportunity. i think they co-exist together and i think both top lines can grow and green mountain and starbucks. one thing they pulled out of their call is their k-cup business grew 75% and that is a great relationship they have there. i think that's a good long-term relationship that they will both benefit from. >> got it. thank you so much for joining us today. matthew çdifrisco. >> thank you, mandy. the ceo will talk us to about

what happened yesterday at the exchange, the largest options exchange in the world shut down temporarily in part due to an outage. we'll look at what caused the problem and what's being done to prevent it in the future. it's a first on cnbc interview when "squawk on the street" returns. you know how to mix business... with business. and you...rent from national. because only national lets you choose any car in the aisle. and go. you can even take a full-size or above. and still pay the mid-size price. i could get used to this. [ male announcer ] yes, you could business pro. yes, you could. go national. go like a pro. the ocean gets warmer. the peruvian anchovy harvest suffers. it raises the price of fishmeal, cattle feed and beef. bny mellon turns insights like these into powerful investment strategies. for a university endowment.

it funds a marine biologist... who studies the peruvian anchovy. invested in the world. bny mellon. it's delicious. so now we've turned her toffee into a business. my goal was to take an idea and make it happen. i'm janet long and i formed my toffee company through legalzoom. i never really thought i would make money doing what i love.

[ robert ] we created legalzoom to help people start their business and launch their dreams. go to legalzoom.com today and make your business dream a reality. at legalzoom.com we put the law on your side. with fidelity's new options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens and i helped create fidelity's options platform. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.

>> a software glitch knocked out trading for more than three hours on the options exchange and the chicago board of option exchange. bob pisani joins us on a very noisy trading floor. >> there were a lot of kids here today and they're excited about things, yeah. a lot of speculation on what's going on. let's go right to the source now. joining us now, bill brodski.

bill, thanks very much for joining us, and very much appreciate it. what happened? >> bob, we had the first significant system outage we've had in over 12 years. we had yesterday and it was unfortunate. we regret it, but quite frankly, we're up five today and we've had an incredibly good record over the years and yesterday woe had a software bug. it wasn't any sort of hacking incident. these things do"haa with any technolo technology company and yesterday we had one. it wasn't a software, and we've seen software upgrades with a lot of the exchanges and was that what happened? or was that something different? >> this was not a software upgrade and this was something that cropped up unexpectedly and our folks found it and they isolated it and they dealt with it, and it just took us longer than we thought and one of the reasons it took us longer was that we thought we were okay, and again, we have things working fine today and i expect that we'll be fine. >> when you say not okay.

i know there were multiple attempts to reopen the market earlier than the three and a half hours it took that failed. can you tell us a little bit why, why we couldn't open it? >> i guess the question is aren't there redundancies built into the systems that could make it easier to open? why did it take three hours? >> there were various aspects. the option market has different issues than the stock market in terms of things like spread orders and other things and you have to make sure that when you reopen it you purge the orders out of the book and re-enter orders and there were different aspects that occurred yesterday that caused the delay, but we're going to do a thorough review and my guess is that we will, if this were to happen again, probably approach it differently. >> there are sec procedures already in place that require all of the exchanges to have safeguards against technology breakdowns. is there anyç indication that there are any violations of the rules here. >> we had a very good briefing with the sec yesterday and

again, we will do a very thorough review of what happened and be in a much better position down the road and the next couple of weeks of analyzing the outage. >> have you been in discussions with the sec about this. let me ask you about these customers and it's gotten out and we're doing this interview this morning. you do have a lock on s&p options as well as the vix. a lot of people were unhappy they couldn't trade those contracts and are you happy as a result of this software glitch? >> we've had an excellent record in terms of running this and i don't know of any company that doesn't have the technology problem here and there. i don't expect any problems that way and in fact, people who provide indexes such as s&p, dow, russel, come to us come toous because of the product innovation and the fact that we've run the markets very well. remember, we haven't had a serious technical issue for over 12 years. >> i would like to jump in sir,

and you don't know a single company that hasn't had a software glitch and technology problem. that's just the point. it happens over and over again. at what point do we need human involvement? >> there is human involvement, but what we've done in theseç markets over the ten or 12 years is make them extremely sophisticated in terms of technology and as any company learns from the issues that they've had and not only the ones we've had, but others have had, so we will use this as a learning experience, but i really think that our record speaks for itself. >> mr. broadski, is there not a more general point here that is very important. we had problems with nasdaq when facebook came to the market. we had problems earlier in the week when there was a hack on the a.p. twitter system and the market plunged because of what was said there and now there's a problem with your technology. as you look at the broader

picture and are we changing our vulnerability to the technology and the approach that we should have to it? >> look, technology has a double edge to it. on one hand, it gives people much more transparency, speed and accuracy than it ever did before. on the other hand, the sophistication and the complexity of the technology means that there are vulnerabilities this is true in life. whether it's american airlines going down for hours, you know, recently or other things, every system is going have vulnerabilities our job is to make sure that we learn from our experiences and make these -- these incidents very far and few between. >> bill, it's good news. how robust is your security? do you feel that the çcboe cou withstand a cyber apac on thett you talk to other exchanges to increase security. some kind of cyber attack is

what all of us are concerned about here. >> the cyber attack issue is a concern of every company around the world and there is a tremendous amount of coordination with our government who does a great job in this area and the government very often is the one that tells us of what's going on. so there are tells us what's go on. there are organizations and subgroups particularly in the financial sector that work very closely together. this is a vigil that will never stop. >> have you actually learned what went on? in other words, you weren't particularly clear in describing the malfunction. do you know what it is? when do you expect to know what it is and have the confidence it won't happen again? >> we know what it is. it's an internal issue. and we hope that it will never happen again. >> bill, thank you very much for joining us. as soon as we get anymore information, please let us know. today is the 40th anniversary of the creation of the options

industry. they'll have dinner in a month to be celebrating that. i know it's a tough celebration for them. didn't hurt the stock at the the company. it's held up very well.ç up next, rick santelli will be live in chicago in the furloughs in only the way that the rikster can. he will weigh in on what's been happening in the air krafl system. find out what it means for the airlines moving the forward. i know what you're thinking...

transit fares! as in the 37 billion transit fares we help collect each year. no? oh, right. you're thinking of the 1.6 million daily customer care interactions xerox handles. or the 900 million health insurance claims we process. so, it's no surprise to you that companies depend on today's xerox for services that simplify how work gets done. which is...pretty much what we've always stood for. with xerox, you're ready for real business.

whichbut my shoes didn't what we'always love me.oesr. they spend most of the time under my desk, instead of on my feet. until i found dr. scholl's for her. they slip into my heels to support and cushion my feet all day. now, i'm a believer. and these are for flats- so comfortable! so i've got energy and style all day. this is happiness - happy feet. i think i can wear these forever. dr. scholl's for her insoles loving your shoes starts with your feet. i'm a believer!

welcome back to "squawk on the street" and the friday rendition of the santelli exchange. i never met a friday i didn't like. always a little optimism on the trading floors on friday. there's a lot of optimism by the traveling citizens of the united states. hopely the this will be the last time i talk about sequestration and the effects. yesterday we had a very busy senator on in the afternoon. senator tom coburn, republican from oklahoma. he brought up very enlightening

facts. i would like to bring up the first one. this is in regard to a letter he wrote. sequestration has been in effect for 54 days. and it's been 49 days since i first wrote. to date no substantive response to those concerns has been provided. there's tom and there's 99 other senators. i think senators' letters ought to beç recognized. but maybe more importantly here's what the senator himself said as to the reason he believes the letters weren't answered. run the tape. >> they're not answering the letters because they can't justify what they're doing. >> well, that's obviously one senator's opinion, but it certainly seems to fit. and after that interview on the telephone he told me we're going to run this thing through the

senate tonight. we're going to run it in the house. and probably could be on the president's desk by today. so far he seems to be correct on all of that. we had gdp annual rate disappointed a bit. let's take a walk back through time. three gdps with 3% or higher growth rate. q 409. and we've been there. we've done that. i think about a new normal or as i used to call it a new equilibri equilibrium. new normal fits better. this is par for the course. what happened there? what were the issues? whether you have fiscal cliff or changes in tax policy. they all affect investors inventory, behavior and try to get out ç0.4.

when you make a cupcake the three main ingredients are baking powder, flour and eggs. austerity is a lot like a cup cake. if you don't have pro-growth economic reforms and a curtailing of spending, you don't get a good cupcake. you don't get a good economy. simon, back to you. gross, indeed. ig day here on cnbc. carl has his exclusive interview with mcdonald's ceo. david is sitting where carl usually sits. mandy is sitting where dave usually sits. only david doesn't usually wear shoes like these. >> shoes like these? >> oh, oh. >> i was quickly going to take these off.

>> it's friday. friday morning. >> yeah, yeah. these are shoes i'm not normally a i lowed to wear. thanks a lot, simon. straight ahead, as simon was saying a lot more with the exclusive mcdonald's interview. what do you have coming up for us? >> we have to have mandy on the show mr often. that's pretty much decided. when we come back a lot more with the ceo of mcdonald's. we got him to comment on a hamburger from mcdonald's that somebody saved for 14 years. hear what he says about the freshness when "squawk on the street" continues.

we're looking at a live shot now of the house as it prepares to vote to end the furloughs that have so disrupted airline travel in the country. you'll be aware that last night

in the senate legislation passed to transport $350 million after dark without even a roll call when many members of the senate were actually away for pa week's holiday. that's not the case in the house. they are working and should imminently push that through. now the question is how rapidly can the air traffic controllers be put back to work? we'll come back to that within the next 60 minutes of "squawk on the street." time for the road map. amazon holding after first quarter last night. they are spending huge amounts of money attempting to boost its business. cf1 oss. coming to an end. and we are live this morning at

mcdonald's innovation center with a global exclusive look at how the company operates and innovat innovates. find out what the company is working on. . carl, it's been fascinating to watch you and the ceo don thompson this morning. >> we got a lot of ground covered this morning. we talked about the future for europe. the future for the new product pipeline which was the source of so much criticism last year. one thing we talked about in the past hour is china, km is an incredible he important market for them. they're going to have 2,000 restaurants in china by the end of the year. they're trying to move into secondary cities. same store sales in china were 10% plus back in twaigtd. they're now down four. so the question for thompson is

when does china come back and how? >> i think china is still a tremendous growth opportunity for us at mcdonald's. our goal is to be in the 2,000 range by the end ofç the year. so still tremendous growth. >> and when we come back we're going back into the kitchen. thompson and i make an egg white mcmuffin. he makes one and then i make one. we'll talk more about what they're doing back here. think about the amount of food that mcdonald's has to buy. the amount of paper. the amount of fuel they use to fire up their kitchen. >> i'm impressed in advance that don thompson knows his way around the products and the kitchen that he can come up with. which i assume is what he does.

>> i think that's a safe bet. you have to watch the videotape first. >> thank you, carl. we'll come back to you later in the program. let's hit on the earnings if we may. amazon reporting a first quarter that actually left the stock in negative territory. collin is joining us now. good morning. nice to have you on the program. the margin is extraordinary at amazon. despite all the investment now. where do you think the stock will go from here? >> well, clearly it's trading off today. # some of the headline numbers from the report are spookingç investors, but margins exceeded expectations. the gross margin hit an all time high for amazon, which was not expected. so as we think about seasonality

currently in the market we know retail trends are sluggish. we think the stock is shaping up well. >> would you regard this as a buying opportunity? >> we do think it's a buying opportunity. ebay and google have massively outperformed year to date. we could see a shift on amazon. >> i know amazon is a phenomenal story. but do you get nervous about the the rich nature of the trade? at a tile when it is trying to be so many things. it's trying to be like a netflix. it's trying to have the eco system that apple has. it's trying to do a lot at once. #. >> it's possible. when you think about where amazon is positioned, it's still a clear precedent for growth. in technology amazon web services is on the cusp on a

deflection point. f it could be just as large as retail. in media amazon is making traction in music and videos. the commonç denominator, we stl think they're well positioned. >> this week has been dominated by apple. why is he able to convince the market he doesn't need to return cash to shareholders? you have tim cook at apple having to bum extra $50 billion? why is there a difference between the two? >> amazon is more of a software oriented internet company. they're still very early in the growth opportunities. investors may see it as short sided when they have these significant opportunities to grow in multiple areas. >> what do you think the stock

or business will look like in ten year's time? >> certainly massively larger. we think the margins will normalize between 5% and 7%. we don't think amazon is managing the business to grow margins. >> and it will have cut the feet out of a large proportion of the retail sector? as it drives down the cost of the operation. >> amazon is certainly changing market share. commerce is merging onto smart device. amazon is a clear beneficiary of aç lot of the trends that are impacting retail. certainly commerce overall. >> thence the 3.25 price target. thank you for joining us. have a great weekend. >> you too. is the faa furloughs are coming

to an end very soon. the house voting on that after the senate last night. thousands of flights have been delayed and passengered stranded due to furloughs. how will it affect the airlines and the industry moving forward? gordon bethune will join us live to weigh in. first, rick santelli talking europe rate. >> we are. there's a lot of issues going on with europe. we've had comments in the last 36 hours where angelo merko underscores the economies with regard to potentially raising or lowering rating. we had a gdp number. all of this is in the wheel house of our guest in 25 minutes. be there i love these shoes

but my shoes didn't always love me. they spend most of the time under my desk, instead of on my feet. until i found dr. scholl's for her. they slip into my heels to support and cushion my feet all day. now, i'm a believer. and these are for flats- so comfortable! so i've got energy and style all day. this is happiness - happy feet. i think i can wear these forever.

dr. scholl's for her insoles loving your shoes starts with your feet. i'm a believer! . good news for airline travelers, the house is voting right now on legislation to end the furloughs of air traffic controllers and therefore presumably those delays that we witnessed this week for millions of travelers. this after the senate voted late last night to transfer the cash over effectively about a quarter billion dollars from one account to another. let's get more insight from gordon bethune. formal continental airlines chairman and ceo and cnbc contributor. >> good morning, simon.

>> how did this week make you feel as a veteran of the industry? >> i was appalled as everyone else isç that we would have th reaction. no one would predict doing anything that stupid. they lived up to expectations, i guess. >> but they did do it. why do you think they did do it? >> i think it was political. if you were an automobile fleet manager and had to save 25% would you take a wheel off every car? it's so moronic. they want to make the point that people having to save money. what is the implication for making your point and the politicians pushing the money forward? do you think the faa or the d.o.t. made the point and can standby it or they've been

embarrassed by it and effectively pushed back to a corner? >> i think they leveraged it to something bigger and it blew up in their face. so i i think they ended up making a fool of himself and the country quite frankly. >> and what is the goal of the airline ceo? others wanted to bite it out. there is at some point weakness on their part for not being able to lobby what is going çon. >> simon, as you know you get your head cut off as you speak badly. you can't publicly criticize the government and be in business. guys like me can. they were appalled.

it set the country back millions of dollars. it was a poor management strategy they should have never deployed. >> so in what ways do they retaliate? >> oh, there's a millions things they can do to you. there's a lot of action between the glovt and airlines every day. so when they want to make a point, they can make one in a very subtle way. >> that is an interesting insight. what do you think the implications are longer term? we had a call to make the faa independent. is that where we go? >> the man that is running it now doesn't know the front from the back of an airplane. that would be a good start. i'm not sure being part of the d.o.t. is helpful either. there's not a lot of management over there. they really need some good

administrators in there thatç know something about this business. thank you for joining us. let's get a market flash with josh at h.q. >> take a look at home builders up sharply today. 13 cents above estimates. back locks up 54%. simon, back to you. >> that is a big move. do you think carl can hold his own in the kitchen? i think he can. we'll bring you more as carl learns how to make fast food the

big giant's way. the egg white delight. ♪

[ agent smith ] i've found software that intrigues me. it appears it's an agent of good. ge has wired their medical hardware with innovative software to be in many places at the same time.

using data to connect patients to software, to nurses to the right people and machines. ♪ helping hospitals treat people even better, while dramatically reducing waiting time. now a waiting room is just a room. [ telephone ringing ] [ static warbles ] [ beeping ] red or blue? ♪ s

. we have some breaking news on sac capital. kate kelly joins us on the news line. kate? >> simon. thanks so much. the embattled hedge fund facing continue headwinds have offering investors for the second time a chance to face moreç relaxed conditions for redeeming capital from the firm. in the past investors could only get their capital back over the course of a year with 25% of their capital per quarter. that went to 33% over three quarters. it will now be 50% in two quarters. fac is offering investors an easier way to stay in the firm and get their money back relatively quickly. this is after the $15 billion hedge fund loss. $1.7 billion of capital after

legal issues continued to surface around questions of possible insider trading at the firm and whether or not founder steve cohen was personally involved or not. >> do you think it's likely to be effective in keeping money at the margin in the business, katesome. >> i do think it could be an effective tactic. in the first quarter they successfully kept blackstone on poord or at least most of the capital by allowing them to get their capital back should they choose to redeem. now they're hoping for additional legal clarity as the next few months transpire. >> kate, thank you very much for that breaking fuse. the secret to running mcdonald's is to learn to satisfy the customer's needs, not our own. that's just one of the gems we learned this morning from carl's exclusive interviewç inside th

fast food giant's room. now the question is, carl, can you satisfy the mcdonald's consumer? >> i think there's a reason i work for us and not for mcdonald's, simon, that's for sure. we have made our way into sort of the engine of mcdonald's. this is the innovation center. 38,000 square feet. they can basically replicate any single mcdonald's in the world. you mentioned don thompson and i went back here. we made an egg white mcmuffin. he made one first. i made one second. they're making a big push here, simon, to make clear to consumers how fresh the food is. trying to push back on the criticism they have gotten that it's not as fresh as it can be. and as you can see all the the ingredients, you see all the packaging. you see all the paper. we had to ask don about commodity costs and what he sees for the rest of the year. >> we expect commodities in the

u.s. to be up between 1.5% to 2.5%. across europe 2.5% to 3.5%. so we don't see them coming down. and our commodity costs are better than the entire industry because of our scale. we have phenomenal suppliers. >> so here we are. you can see everything here. it's open. all the wires. this is so they can move things around if theyç want to recrea a restaurant in malaysia, they can do that. one of the stories that's gone viral is this burger someone kept around for 14 years that looks like this. it's made its way around the internet. we posed that question to donte. >> i have never seen a hambur r hamburger. we don't have fillers in the

beef. we don't do any of those kinds of things. when somebody makes a hamburger, you can be sure, it's pure beef. it's not anything else wow? . were you checking every day? our beef is 100% beef. guys we'll come back one last time before the end of the hour and show you what it's like when they ramp these kitchens up to the breaking point. there's so much traffic they can barely keep up. it's part of the process of learning what they're able to do as they're awe lowed the new products around the country. back to you guys. >> it's an interesting point, carl, whether you keep a burger around for 14 years. you come back late one night and are tempted to eat it. certainly in myç household. >> believe me, their emphasis is trying to, through technology,

through social media, trying to actually prove to the consumer where your food came from. there will be ways to do that in the fump. to tell you where the food you're eating was grown. all that is way off in the future. that's going to be part of the message of educating consumers about the product they say they're serving. >> it's been a fascinating morning. we'll come back to you, carl. meanwhile, bells are about to sound across europe. we'll have the close and details of how it's impacting u.s. trade next. karen and jeremiah. they don't know it yet, but they're gonna fall in love, get married, have a couple of kids, [ children laughing ] move to the country, and live a long, happy life together where they almost never fight about money. [ dog barks ] because right after they get married, they'll find some retirement people who are paid on salary, not commission. they'll get straightforward guidance and be able to focus on other things, like each other, which isn't rocket science. it's just common sense. from td ameritrade.

we're coming up very close to the end of the trading for the week in europe. it's negative territory, as you can see, but europe has had a great run. here in the united states we're talking about turning towards trend growth. europe, of course, remains in recession in many parts of it. that has been the story of the week, or rather the fact that the ecb is expected to react to that mix thursday with some sort of move on interest rates. so i know it's good news in many senses here. the you look at how we traded through the week as a result of the poor data in particular that we got on tuesday, those stocks have rocketed higher. it's been a great week for the stock market in europe.

up 4%. because of what we're now expecting from the ecb. it's really that that is driving the market. actually the earnings picture in europe has been much worse than here in the united states. far fewer companies are beating on the top and bottom lines. today for example, our latest concern is over that huge luxurç operator, down almost 7%. it's gucci brand isn't growing as fast as it has in the past. let me check in on where we are. we are still looking there. the deputy secretary of italy's biggest political party to try to forl a coalition government over the weekend. obviously if he does, that is light relief for the markets. others have had it's quite problematic. that will probably be a story on monday morning.

in the meantime, let's check where we are with the markets here, bob. i want to talk about the cboe. the chicago board options exchange. up and running as usual this morning. a day after a software glitch. i spoke with the cbo about an hour ago. i asked him if he was comfortable enough. >> the cyber issue applies to every single company in the world right now. there's a tremendous amount of coordination with our government who does a great job in this area. and the government very often tells us of what's going on. so there areç organizations an subgroups particularly in the financial sector that work very closely together. and this is a vigil that will

never stop. >> he says he will use the outage as a learning experience. we'll bring you any further news on that as soon as it comes out. the markets are me anderring around today. considering the lousy gdp numbers are a disappointment. disappointment on many, many big companies. the markets have held up extraordinary well. this week it's one point. yesterday we were up the most since november. if that doesn't make you a little crazy, you're not paying a lot of attention here. we're up 1.75% on the s&p 500. the important thing here, we would have been four or five points at the s&p 500. strong week for the stock

market. then the s&p 500. take a look at the sectors today. one of the reasons we held up so well is we have seenç healthy rotation. this week for the most part it's been about materials, energies and industrial stocks have done very well. today it's tougher because materials consumer discretionary, these tr the names that have done so well, they are lagging the overall market. so that rotation is the key to why the markets have held up. traders are moving out of one sector and into another and the markets still hole up. >> he didn't answer you

questions on if they expect the legal challenges. i would expect some people could not trade particularly on the s&p 500 are probably unhappy and considering some kind of legal action. we'll see what happens. the most important thing is let's hope there's increased coordinations with all of the exchanges to reduce the possibility of a cyber attack. that's what everybody is really concerned about. >> bob, thank you very much. >> thanks, simon. let's start out with reading something that was said byç angelo merco yesterday. the ecb is in a difficult situation. it would probably have to increase interest rates for germany a bit. but for other members it will need to do more to make sure the liquidity is available to firms. why is this so important? >> rick, you know, we have

talked about it. bernard commonly asked this question over and over. whose currency is it? europe is trying to answer that question. now in all fairness to the peripheral nations of europe, when germany was going through major structural changes the euro went down to 82 cents. they kept interest rates artificially low to help the german situation. so they're rightfully pointing their fingers back at germany. you get the third player in here. they have flocked to see who would be in control of the currency. that is the battle that is going on. in this election and the closer we get, the more this issue is going to play out. >> especially when you have the anti-euro party. let's switch gears a bit. you see who i'm pointing to?

this man told us around thanksgiving if you want to see what's going on in europe, watch what japan does to currency. wednesday, what didç they haveo say about their quarter? >> terrible. they're all talking about now the slow down is affecting them. it's falling down in china. this is a movement of the euro yen which has been so dramatic. and here's what the world is going to confront. the japanese auto companies know what to do. they know how to regain market share that they lost when the yen was so strong for these last few years as it was a haven currency. >> i didn't see any surprises with bank of japan. they surprised us enough.

>> this is going to take time. i still say is if the japanese government turns on nuclear reactors. people say that's a positive for the yen. i say not so quick. that will mean there's a bite from the weaker yen. they're importing the energy where they use weaker power. >> weaker currency doesn't buy as much oil. that will be the next leg down in the end. >> as long as they don't subsidize companies that make cars that don't buy well. ira and i will monitor a big issue. that's autos in europe. >> thank you very much. coming up, more of our exclusive inside look at mcdonald's innovation center. see where all those million dollar ideas are made.

but first, from housing to oil to autos, it's a big day for earnings. we're standing by ready to break it all down for you after the break. with the fidelity guided portfolio summary, you choose which accounts to track and use fidelity's analytics to spot trends, gain insights, and figure out what you want to do next. all in one place. i'm meredith stoddard and i helped create the fidelity guided portfolio summary. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. both tylenol and bayer advanced aspirin

are proven to be effective pain relievers. tylenol works by blocking pain signals to your brain. bayer advanced aspirin blocks pain at the site. try the power of bayer advanced aspirin. it's lots of things. all waking up. ♪ becoming part of the global phenomenon we call the internet of everything. ♪ trees will talk to networks will talk to scientists about climate change. cars will talk to road sensors will talk to stoplights about traffic efficiency. the ambulance will talk to patient records will talk to doctors about saving lives. it's going to be amazing.

and exciting. and maybe, most remarkably, not that far away. the next big thing? we're going to wake the world up. ♪ and watch, with eyes wide, as it gets to work. ♪ cisco. tomorrow starts here. it's easy to follow the progress you're making toward all your financial goals. a quick glance, and you can see if you're on track. when the conversation turns to knowing where you stand, turn to us. wells fargo advisors. up next, facebook's biggest and bestest friend.

we're going to talk to the analyst wlind today's upgrades. and three consumer stocks that he thinks is right. is it time to sell? two traders. one big debate. back to you guys. >> welcome to the earnings. we help you trade the stories you may have missed today cnbc's josh lipton can join us. kpakly half of the s&p 500 companies have reported earnings this morning. you have been watching a growing trend. that is a weakening yen.ç >> it's something that you were talking about before the quarter on fast money. you're starting to see

companies. there's one you get a company like boston scientific. they come out. this makes it crystal clear. now they are modeling for $140 million. so you can see the big impact on their business. then a company comes out and says this yen thing has hurt us. for them, 20% impact. this is a trend that we're seeing. we will continue to see. josh, you were calling on currency desks to think of this. so i talked to sebastian gally. he told me he does see near-term consolidation near the market. he sees 110. that says u.s. reforms.

>> we were talking about the weakening yen specifically when it relates the to the auto makers. so when you take a look at toyota which exports cars from japan because that is key. are theyç actually exports the product from japan. that is where the advantage lies. you could see that show up in the earnings of a toyota, of a honda, for instance. honda is opening first auto plant in japan for 50 years. so we see that also. talk about currency impacts, it's all there. >> it just seems so swift. >> let's talk burger king. first quarter revenues doubled. they are hoping to catch up to rival mcdonald's.

a lot of investors are baking this into the premium. >> burger king was negative sales going from 1.4% globally. negative in the u.s. kpeskly, china, russia. they say burger king will keep returning cash to shareholders. >> they didn't just hike their dividend. this was a whopper of an increase at 20%. >> you've been sitting on that all morning. >> all morning. >> but they also did bundle early in the quarter how they mixed their products. they had premiumç products whe they should have had value products. i think the biggest reason for optimism would be the unanny degree to which burger king resembles him. >> i would take that as an insult.

dr. j., i know you're listening out there. who wants to look like that creepy king? >> it's always a good thing. we don't know if the king has hair. >> oh, underneath the crown, you're saying. you compare that to other fast food chains. mcdonald's is 19. how much are you willing to pay up for this? of course. they teamed up with warren >> >> and in that fabulous interview how they intend to reignite the competitive space. >> points are also trading higher this morning. the company betting on strong growth from the revenue

business. we also saw blu-ray up ç4%. when you look at any important metric. sales growth. they're all going the wrong direction. >> and think of the rebranding, too. does that really bring back the limitless possibilities? they sit on the outer wall of the cds. that's all i can think of. >> one was specific they were telling their clients they see this out of declines of volumes of the kiosk. it poses a significant risk to the countries. >> and the polls were say they are gain iing you have to wonde

these days. who wants to drive to the outer wall of a supermarket? i don't know. that's the earning squad for this morning. tweet us. we'll be back with much more during "power lunch." meantime, much more "squawk on the street" is straight ahead. coming up, join us for a tour of the mcdonald's innovation center. we'll show you where all that mcdonald's magic takes place. it will make your mouth water:

live cameras have never been allowed inside before, but we're bringing you an exclusive tour of the mcdonald's innovation center. >> hey, simon. all morning long we're talking about new products mcdonald's is pushing out. you can pan off of me for a second. it's prettyç standard until yo start launching these new items. what happens to service fees if you introduce a new smooth ie? does the whole line slow down and does customer satisfaction, as a result, begin to decline? that's what the whole innovation center is about. take a look at this video where

we sped up the speed of which things happen here. they try to make things break to the point where service breaks down. they know where the problems are in the supply chain. the largest guest count is cust. and that was in advance of the 2012 summer olympics in london where they knew things were going to be busy. a lot of it is about innovation. there's a drive-through over there. i can't show you some of the top secret stuff they are doing in drive-through, but let's just say the drive through is going to look a lot different in the next two or three years than it does today. a lot of it is about pioneers of invention. there's a room here that is actually the steve jobs room. there's a ben franklin room. all of this, of course is meant to honor and remember those who have pushed american business forward. and, guys, they even use fake money. actual transactions happen here. we've got some barbecue sauce, hot sauce, mayonnaise. and all along here on the counter, real people come up. they flash a receipt which

simulates the order. they count the change. they serve the food which, by the way is real food. all in an attempt to figure out how you'll makeç a smoothie happen the same way in 14,000 restaurants around the country. it's pretty amazing. we'll bring you a little more -- a lot more on the web, too, at cnbc.com. simon? >> i'm not sure what steve jobs would have made of the idea that mcdonald's have named a room after him. he was a vegan, wasn't he? >> he was -- he was a technological pioneer, but i think trying to capture that spirit probably says a lot about what they are trying to do here. and the first time live cameras are ever in this room took us by surprise, too. >> yeah, i'm surprised they didn't make you wear a hat, carl. >> there was some discussion about that. i managed to get out of the hat business. >> it's been really interesting, carl. we've loved the interview. loved the tour. i particularly like the woman

who is sitting on the seat for the drive-through, pretending that she's in a car. they've not actually clearly introduced cars there yet. >> yeah. okay. have a safe journey back. carl quintanilla live from the mcdonald's innovation center. up next on the program -- remember this nickel? it was estimated to be worth more than $2 million. we'll tell you how much it actually sold for after the break. revolutionizing an industry can be a tough act to follow,

but at xerox we've embraced a new role. working behind the scenes to provide companies with services... like helping hr departments manage benefits and pensions for over 11 million employees. reducing document costs by up to 30%... and processing $421 billion dollars in accounts payables each year. helping thousands of companies simplify how work gets done. how's that for an encore? with xerox, you're ready for real business. all your important legal matters in just minutes. protect your family... and launch your dreams. at legalzoom.com we put the law on your side.

welcome back. i'm josh lipton. we're watching shares of expedia. they earned 25 cents per share for the first quarter, 2 cents above estimates with revenues also beating forecasts. the travel services providers growth has been helped by technology upgrades with bookings up 16% in the latest quarter. simon, back to you. >> josh, thank you. after a bill was passed last night in the senate, the house is voting now to get furloughed air traffic controllers back to work. john harwood has more for us live from washington. john, do we know how rapidly they could be put back to work? >> very rapidly, if the house approves this. they are in the middle of voting now. this is taken up under an

expedited procedure called suspension of the rules in the house which requires a two-thirds vote. nevertheless it's expected, even though some leading democrats are opposing it that they will get the votes to pass this. and if so, i think this crisis pretty rapidly will be -- will be put to rest on the issue of flight delays, simon, but, of course, there are many other issues generated by the sequester cuts. the question will be, is -- are any of those others any time soon going to be conspicuous and painful enough to cause the congress to enter into negotiations to get rid of all the sequester cuts or are they going to take up these piecemeal and try to solve these individually which is not what the democrats want, but the republicans would be happy with. >> in the meantime, a lot of people have said that politics was played here. that it was a foolish decision. that somebody is going to have egg on their face. who ultimately will take the blame for this and at what cost, john? or will nobody ultimately take the blame? >> they are all taking the blame. this is an exasle of washington

not working because this -- remember, this sequester was passed in 2011 as an alternative that was never supposed to be invoked, but as a way out, an exit strategy from a horrendous moment of gridlock over the raising of the debt ceiling. it was passed when the tea party was at the height of its power. it's receded now but this is still on the books. we'll be dealing with this from some time unless there is some sort of negotiated settlement. >> i think the point the people make is, look. the faa could have come to capitol hill and said, these are the consequences of what you've done. we need you to vote now, this $250 million from this pot to that pot and then none of this would have happened. but they failed to do that. and the argument is that was for a political reason. >> you mean the fact this wasn't solved earlier? >> correct. that they didn't see it coming and asked for permission. >> the administration's been warning for this for some time.

they called this precise. this is unfolding precisely as they said it would. it's just that the administration has been hoping that problems of this sort would cause the republicans to come negotiate with them on alternative. because they don't want the sequester. they want to get rid of it. and it hadn't worked so far. we'll see if it works over the next couple of months heading into the next debt ceiling showdown. >> you mentioned other -- other events that might be looming that might have a similar impact on the public and, therefore, require a vote like this. do you have any in mind? anything immediately looming that you think could be as significant? >> there's a reason that the administration pointed to these flight delays when they came up to the deadline for avoiding the sequester. because this is one that is very home based to congress because members of congress fly, because their more affluent constituents fly, business travelers fly. the most significant thing the white house thought was in their

favor was the defense cuts because republicans tend to oppose defense cuts. the next thing to watch, i think, on a large scale is whether defense contractors, small businesses who are not getting paid because of the sequester, complain enough, generate enough heat to produce some sort of solution beyond what we're seeing today. >> the power of public pressure. john, thank you very much. john harwood there live from d.c. as now the house votes to end that particular element of the sequester. do you remember this nickel? this is the 1930 liberty head nickel. we told you about it earlier in the week and how it was being auctioned off relatively soon. it was expected to sell for as much as $2.5 million. well, if you can believe it, it sold for even more than that. this nickel sold for $3.2 million at an auction in illinois on thursday. a buyer calling it, quote, one of the greatest coins at that price range. vh winning bidders are a partnership team out of kentucky and, indeed, florida.

let's have a quick look at where we are on the markets. we're slightly negative. negative to flat as you can see. but it has been a good week for the market. amazon is one of the standouts. market up, probably 2%. that's it for "squawk on the street." have a great weekend. it is noon on the east coast. time for the "halftime report." welcome to the halftime report. four hours to go until the close. here's where we stand. dow jones lower by, not much, 2 points, call it flat. s&p down 6 points. a decline of 0.4%. nasdaq down by 20 points. 3269. we'll talk about amazon. it's one of the reason yes. here's what we're following on "halftime." saving face. facebook may be down