pooped on our head ten seconds before we came back to air. look. it's there. >> only in omaha. >> indoors. holy smokes. that was great. thank you. thank you. thank you both very much. >> it was good to see you both in person over the weekend and we thank you for a great show and make sure you join us tomorrow. "squawk on the street" begins right now. okay. only becky quick can get away with that on live television and still be adorable. it's monday, may 6th, 2013 and welcome to "squawk on the street." i'm carl quintanilla with jim kramer and david faber. that's a surprisingly good jobs number. we do have one last push of earnings this week. one dow component, 46 s&p companies and europe is the topic of much discussion if you heard warren buff oat squawk

earlier this morning. speaking of which, with the oracle of omaha, sticking with stocks over bonds as the markets revolve around these new highs, but buffett says the records we pass on the way down may be more important than those on the way up. more of his insightses in a moment. microsoft stock in particular doing twice as well as the s&p so far this year. bill gates explains why now may be the embattled tech giant's time to shine. buffett weighing in on j.p. morgan and the battle of its board. in the wake of the firm's trading debacles. >> from an oracle to "the iron man" disney's installment of the franchise blows box office ridiculouses with the biggest debut of all time. >> thor ak elg of omaha believes it will go higher. people should pay more attention when indexes cross milestones on the way down because that's when stocks are cheaper and more

attractive to buy. here's what he said about why he likes stocks versus bonds. >> in terms of stocks. stocks are reasonably priced and they were very cheap years ago, but stocks grow in value over time because they retain earnings and they expand the companies underneath you. i like owning stocks, and i do not like owning bonds now. there could be conditions under which we would own bond, but their condition's far different than what exists now. >> in essence, guy, he says bonds are a terrible investment, that the price is artificial because of the fed and when that changes, in his words people are going to lose a lot of money. >> this whole weekend becky quick, obviously, dominant player and fantastic work, congratulations. the whole weekend was a weekend filled with common stocks and valuation of companies and people said overvalued, overvalued. you have to wait for a pullback. no, stocks are cheap versus

bonds. bonds are terrible and there are individual stocks that are great value, the ones that can be understood, hence the heinz deal. people are trying to figure outdo i ever want to own a stock? the answer is yes, i want to own a stock. maybe i want to own a berkshire, but maybe i want to own a rail or a food company. he makes it pretty crystal clear. it was a great tutorial. >> it was interesting when we talk about bonds and bonds had an enormous rally and we were very much worried and wondering whether the breakout to 2% on the ten-year had movement much higher and real pain and as it did in 2010, 11 and 12, here we are on 13 with this big rally and if you bought the bonds then at 2% you're very, very happy. >> yes, it's been a huge win. can i just say this man is uniquely non-political. i think a lot of people feel

he's a democrat. there are a lot of people that come on our air and they're angry about bernanke. i mean, somehow bernanke's manipulating the stock market. warren buffett is saying can we just look at stocks and make some decisions? >> ibm is still cheap, i like that. wells is cheap. he's not talking about net interest -- john stump, when you meet with john stump. we're building a great business. you know who listens to him and buys into that in the largest shareholder -- berkshire did say they've been buying wells fargo pretty much every month this ye year. i like it very much. they have 30% of the market and they were able to take a look at the great depression. the idea being ready to buy when thing goes down. he's got a remarkable feel for what is desperate and then he's able to use his premature, hey,

listen i'm going to bank of america and bank of america is done. >> nobody else has that and he takes full advantage of that and gets a better deal. i'm not saying he's incapable of perceiving value and being able to sit there to see that value realize, but none of us are getting the the down tens so to speak. >> he had to come out and have a good thought. nobody else was able to get this and buffett dodged that question and they were talking about the immortality of buffett. >> and howard. >> be custodian of the company. >> it isn't so much that he not edge only has the process of buying a piece of goldman or

bank of america. >> what speed can they do that? i'm taking my grandkids to dairy queen and let me know what you want to do in that famous note. >> it is a more difficult decision and you do have the ceos the company that can act fairly quickly. >> not that quickly. >> he wonders if he can have a blizzard with m&ms orr yos. i can't even eat that. everybody would say what happened to jimmy? he's so fat. >> here's the monthly performance by month since 1960. we started the month sell in may, go away. there's the summer since 1960, and i wonder is this one shaping up any different because of how friday went? >> do you know for 20 years that july dump i played was the summer rally? remember those days?

>> we've had an unbelievable quarter and this quarter does inspire people to say i am going cut back dramatically because i want to take the summer off. i remember when i worked at goldman sachs, okay? there was the summer and the summer was when you spend time with your family and you moved out to montauk and you made your calls and it was difficult also, when i was a hedge fund manager and there weren't a lot of deal or meetings. you just cut back your exposure throughout. >> one of the ads from the brokerage firm we see on our air who over weekend took a look at your 401(k) or took a look at your ira or your accounts and i'm up 8%, 9% so far this year. i would be happy with that in a year. >> would you double in five years with that? >> should i be then, perhaps moving more conservatively

either into cash or into some sort of fixed income that will not hurt me? >> i think that's why i've been saying move into mlps because you want the great yield because people worry about the tax changes. yes, you change the coloration of your portfolio. but what is so interesting is the biggest stocks are tech and they're conceivably the worst place to be except they are cheap and people want to have cheap. >> which is a perfect lead into microsoft because talk about cheap. it's been getting more expensive and microsoft struggling to compete with the likes of apple and they continue to fall rather dramatically. bill gates on "squawk box" this morning saying pcs are still a big market. >> windows 8 really is revolutionarisome that it takes the benefit of a tablet and benefits of a pc and is able to support both of those. so if you have surface, surface pro, you've got that portablity

of the tablet, but the richness in terms of the keyboard and microsoft office and pc. so as you see, pcs are a big market and it will be harder and harder to distinguish products whether they're tablets with pcs. with windows 8, microsoft is trying to gain share in what has been dominated by the ipad-type device. >> the microsoft's stock has been parabolic. i'm looking at a $28 stock that is now approaching $33.50. three major firms saying how week they are. they were strong and the entertainment and device business is terrific. new xbox coming out and steve ballmer has changed the way people look at that company. it's maybe late in the game for him, but i'd like the fact that the company has, to me, been proving the doubters wrong. it's not just windows 8 which i don't care about. i like the idea that there

aresome the sum of the parts. do you think it's an execution story rather than some sort of stealth rally in tech and some sort of stealth rally into more aggressive, leadership-type names. we're seeing it in xilinx and the benefits of the national semi merger. we're seeing it in an adobe where acrobat has come back to the fore. >> bmc today. >> this is an undervalued sector. it is not the sector that warren buffett likes because he likes understandable things. he moved the whole consumer products group. i think general mills is at 51 in part, but i see value in tech even if warren buffett has not and the difficult thing is if you want to sell in may, there are other people who are hoping you'll sell in may if you want to get that performance. >> i've been hearing from a number of cash flow yield, and

by the way, that wasn't changing. nothing was changing and the stock wasn't going anywhere and suddenly they don't seem to ring a bell, but certainly everybody got to come by it for one reason. >> i guess it was the quarter and i thought the quarter was excellent and bernstein saying this is the beginning and you have the multibillion cloud business surfacing and the multibillion-dollar surfacing and you have to look at this company as a different animal. a bear would say would you give me a break? this in the end is a pc company and craig barrett no longer connected with intel on another network saying the pc is finished, but the cash position, the ability to monetize. i would love, love, love, a piece -- not a tracking stock, if they were to spin off xbox, if they bought out netflix, netflix is a powerful, younger person function and then you would see this company has a lot of weapons. it's certainly better than hewlett-packard. >> that doesn't mean to say that

we're not going to see continued potential declines in those companies that are very attached to the pc. whether it's hewlett-packard which we'll see in a few weeks or dell, in fact, which is coming, of course. the deal is still there and a 1333 stock price. it's pretty rational now, but let's remember. this group has done nothing. you are speaking of microsoft after this parabolic move that david references at 12 times earnings. i am paying 19 times earnings for kellogg and general mills and, yes, the cereal business is stable and no doubt about it, but i don't know if i can sleep well with general mills at 51 as much as i like the company and the management. it's easier to sleep with it at 32. i mean proverbial sleep with it. >> if you -- it's not rem sleep we're talking about. >> it's not rem sleep unless you take aer is quill, the preferred

drug of prisoners everywhere. >> you can sleep through whole days so it makes the sentence kind of shorter. >> you may want to try a microsoft and kind of lug it. >> it's a little uncomfortable. >> i just think that microsoft, people the got negative. they waited and waited and waited. they stuck with it and when they gave up on it was precisely the moment when people got excited. the kind that they were starting to happen. it feels like the yankees to me. weren't they supposed to be horrible? >> it was pretty amazing. >> the pitchers yesterday were a little horrible. >> what do i know? >> geez. when we come back this morning, getting up front about the media business. cbs' les moonves in the 10:00 a.m. hour and terry duffy on today, the third anniversary of

the flash crash. what's he saying about high-frequency trading and investor confidence in the markets. take one more look at futures and not a lot of direction right now. awfully close to the flat line. a lot more "squawk on the street" from post 9 at the nyse when we return. [ male announcer ] you are a business pro. omnipotent of opportunity. 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.

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welcome back to "squawk on the street." we have one of the largest private equity deals of the year. the $6.9 billion acquisition of

bmc software. bane and golden gate capital with gic special investments and insight venture partners. so, pardon me, it's closer to four private equity firms rather than two. of course, this company has been for sale for quite some time pressured originally by 1.6% of the company's shares. they had gotten to consider many alternatives including a sale and that is a process that now ends with this definitive agreement to be acquired by $46.25 a share in cash by this buyout group, jim. there were some share holders who believed over time you could also have a significant return to capital and this is one most shareholders say thank you. it is 9.6% and it was an activist campaign for them in which they did get a couple of board seats and the prospect of

another proxy fight loomed large for bmc. this process ends before that could begin. >> what wi think is most interesting, david, if i'm working at bmc is they've done tremendous work in information technology. it's been absolutely terrific. the stock did nothing for years. they weren't getting credit for their fantastic business and it is. it is a consistent business that if were in any other industry other than software, people would say that should be private. i applaud bmc for saying we're not going to get any credit. >> halo effect around the infosys, and the adobes. >> i think that maybe -- sales forces is so expensive. bmc was very cheap. i noticed sales force was starting to creep up now that it has been absorbed, but this is a company and i remember when i worked at goldman sachs and he was doing an analysis and bmc was the great software company

at the time. they were very linked to ibm and you know what? we see a lot of companies that are basically saying, you're not going to value us. >> right. >> we'll see you later. >> we'll see you later and there's an ability and what's surprising is how few private equity deals we've seen of any significant size and this will rank among the largest that we've seen this year. i should point out there is a 30-day go shop provision as part of the agreement, but one would expect they will come up with nothing because they've been out there shopping this company and no strategics were involved in the final negotiations from having spoken to people around the situation. you have hewlett-packard which is concerned about other things and dell given its own transaction and ibm. no strategics that you'll get a higher bid. it was well shopped. they do end up with this $46.25 a share deal. im, this has been a year

characterized by private equity rather than exits. this is a new entrant of size. not one we have seen this year despite incredibly low rates for financing and an abundance of cheap financing for private equity and not to mention they've got new deals and they don't want to give the money back. >> the whole time i sat next to you, david and felt there were companies with cheap money that would just say i'm not playing anymore. the market doesn't like me and now i come back and look at how many stocks in the last month and a half have had major breakouts and in every one of those cases they say, you what? i don't need to go private. one final thought here, compuware. >> i keep wait for example that one. i keep waiting for that one has a hold in a way while this got finished. >> so with the extent that you considered this successful, keep an eye on those shares. they missed the quarter badly and the stock did not go down

and that to me, was the tell of a lifetime. that was another activist situation. a key to m & a. >> i think they're so good. >> well, we'll see. jesse cohen. i'm trying. he's their portfolio manager. >> hess, they are really driving this one. >> hess is -- >> they had the hess gasoline truck. they've got that hostage. >> when we come back what's it going to take to get your portfolio to a new all-time high. cramer is on the case. his mad dash is next. take one more look at futures as we wait for the opening bell. don't go away. in today's markets, a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price --

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six minutes before the open of trading. let's go to cramer's mad dash ahead of the market open. the export of natural gas. >> incredibly important story in the financial times this morning. this is about the president giving a speech in costa rica saying we are going to be a net exporter, pretty much green lighting something that people were worried about. right now ellen, and they have the permits and they're building like mad. they're going to be shipping. >> billions and billions will needs to be spent which were designed to import gas and now you need to export it. >> this is one of the greatest employment jobs ever so i think

the president senses that. this paper suggests freeport. i think it's wrong. letter d, dominion, they've got it going. letter d is one of the best companies and they've in maryland in steny hoyer's district. you want to put people to work, david, you build these plants and don't forget, coke, k-o-c-a is fighting this tooth and nail. >> what about the larger issue here? we have the low. why aren't we using that as an advantage against everybody else? why would we want to export? by the way, i don't necessarily believe it is done. >> don't worry about it. we're the only guy that will build it. the other guys are talking about 2020. 2020 is not hindsight. it's foresight. >> do they want to give up their own natural gas and prices? that's what the department of energy will find when they study this and the answer is no.

>> incredibly important issue and one you have been following closely. up huge because of the low prices and the huge beneficiary of this. you're right. we've got four minutes before the opening bell. stepping up to the up fronts and hear what leslie moonves has to say in a live interview. >> you will find out. it's monday, opening bell after this.

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with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim. from td ameritrade. you're watching cnbc "squawk on the street" live from the financial capital of the world. the dow is up 15% so far this year. that's the best start at this stage since 1999. in two weeks, guys, the s&p is up 5%. the russell is up 6%. the nas is up 6.7%. >> in how long? >> two weeks. >> and the major averages are up 9 of 11. we keep asking how hot is too hot question, jim. >> it's not interstate 95 and no jersey turnpike guy and the state trooper trying to pull you over.

one of the things you have to remember is the market is literally now getting back to where it was and people are being drawn in. we know they should have come in earlier, but now they're saying, well, you're watching warren buffett this weekend and you're saying it's not too late. count me in. >> and with that, there is the opening bell and the s&p at the top of your screen. dow here at the big board, the office of the comptroller of the currency celebrating its 150th anniversary. over at the nasdaq, mela sciences, a medical device company doing some of the honors. walk you through bmc which we'll watch closely today. not just for a single stock story and what it it is about the broader market and private equity. we have not mentioned disney which reports this week. "iron man," the second biggest opening every and my favorite metric. they did four times the receipts of every other film that was out there this weekend. >> i paid $14 to see it because i wore the 3d glasses, one of

the most exciting experiences. it was like "the avengers" which was another great box office success. people want to buy disney now. please, do not do disney like that. think of disney as espn and disney as theme parks. that's always been wrong and disney, has, by it is way, when it's reported traded down very swiftly and that's been your best opportunity. >> these phone entertainment divisions of disney, viacom, time warner or news corp. one quarter is great any the next quarter may not be. >> john carter, it was a year ago, right? >> the only time it ever really worked for me was close encounters of the third kind, and it was sclum bia pictures because they were stand alone operations. >> lions gate, stand alone operations. >> when they were smaller studios, if you were a movie theater operator you were tabab

to get an advanced screening and go see a movie and know that it was going to be popular and then you could play the pure play producer. >> i was the boss of your guest at 10:00. sumner redstone used to do that. >> yes, he did. yes, he did. thanks, jim, for letting everybody know. >> oh, i'm sorry? was that the lead? >> oh, i'm sorry. i was just keeping it broad, but you brought it right home. if you're out there, we love you. you know that. >> he's been a great wealth creator, by the way, when i look at these entertainment companies and they're just a 52-week high every single week. it doesn't seem to matter what they do, like dish. here they are willing to spend a fortune and the stock goes higher. >> another company with earnings this week. david carr today, his column in "the new york times" about compensation. you have a busy week ahead, too, david, as you watch the numbers coming in. >> yes, i do.

all of the stocks are performing incredibly on any bad news it was an opportunity to divide when you look at some of these names. we talked so often about it and in the case of cbs we'll be speaking about moonves shortly and so much of it is the buying back of stock and the shrinking of the cap and the ep is that has resulted because these are free cash flow-generating machines. >> that is more of an ironman story and 27 releases slated for the story. i want to know whether that market is saturated or whether they're still to come. he's a very interesting guy because he's got an approach that's uniquely levered as opposed to disney. you play it without looking at the schedule. >> one thing we haven't mentioned this morning is j.p. morgan. iss comes out on friday for what it's worth. it is an influential proxy.

it doesn't vote. we think three directors should be voted down. you have ellen who runs the museum of natural history here. >> do some homework, guys, i came out this morning on @jimcramer. >> you called it a waste of ink. >> it is a waste of ink. jamie dimon, you may be jealous of him, but he's still the best, and i may be tough on him sometimes. go move on to some company that is bad. why do they waste their time with good companies? dave cody. dave cody is one of the most -- next door to dave cody. there's not a minute that he's not working. >> it happens to come on a day when citi adds honeywell and says the story is not just good, it is wicked good. >> it is wicked good. he's got refining and autoparts which we know is on fire and they make the cockpits for

planes and this is a guy that even when he's funding for birds upstate he's a good man. i like to hunt for birds. my mom always wanted to hunt for birds. >> what are you? some sort of -- never mind, i don't want to go there. >> no -- my mom was a hunter. who was the for rajjer in the family? >> my grandfather. >> tyson speaking of -- does miss this morning by the cents. it's the worst performer on the s&p. >> they say second quarter, jim is their toughest and they see brighter things for the second half. >> this is a company that's very commodity oriented and levered to corn. at the sammy time, jimmy did a piece on how people got away with tyson. there are other ways to play this. i prefer to buy conagra. it is a big beneficiary of lower costs and the stock has done

nothing. they're a huge spurt. it's done nothing. play it with conagra. >> blackberry gets a call today. price target of 9 and the z-10 will weaken in the face of samsung competition and the q10 would be more popular if they could make enough of them. >> this is one where it's difficult to keep track of. the 10 is doing well. it is still an inexpensive stock and there's always a takeover premium in it, but sometimes they get exhausted by trying to gauge the sales when no one seems to know. >> what's up with $general? one of the things that this was -- a lot of talk about price wars. my charitable trust sold this thing way too low and got beat up by the whole concept that dollar tree, and they were all in a price war. it looks like the price war is over. a lot of it was tobacco oriented

and dollar general in california and because my charitable trust did sell it lower. it's going higher. of of all of the resultses we'll get this week, we mentioned the media companies, whole foods, zillo, sodastream, green mountain, groupon. anadarko tonight. >> i know green mountain, herb has had that, that's the keurig. aol has been a best in show name. i think armstrong has done a remarkable job, and he brought back a lot of stock lower and that's what you want to see and has turned that company around dramatically. >> you really feel like -- you do wonder whether that is a true turnaround. they did extraordinarily well in terms of the company sale and other important initiatives. >> right. >> there's still a lot of friction out there with regard, where they are moving

aggressively now to put programming out there. >> as is google. aol is trying to develop a orr three minute ved and and there's not as much, like ceo. broadcast television makes me hold my breath. >> on this day may 6th was the flash crash. >> right. >> the point swing on the dow of 1,010 points. you can't listen to sound of you enough that day on "street signs" with erin as the market appeared to be melting down. >> we've now broken dow 10,000. >> p & g is now down 25%. >> that's true -- if that stock is there you just go and buy it. that is not a real price.

>> is there a distress? >> 49 1/4 bid for 50,000 proctor. proctor just jumped seven points when i said i liked it at 49. i would buy 50,049 and i just flipped it. i just paid 500 gs. the machines broke down. it's the greatest story never told. you'll never know what happened there. >> by the way, you never know what happened there. i couldn't tell you. >> the government doesn't care. i'm doing a 1 croc power lunch and that was one of those moments when the bids were pulled away. the buybacks don't exist on those days. if someone had a brain on a buyback they could have bought every share. >> how did you say that is not a real bid? how could you know? >> because i've seen the phoneiest of the market over multiple years. on the terrible tuesday, the day after the crash. >> this is one of those and this is the terminator 2 situation where you literally, the machines are smarter and faster and they're not run by anybody

and the government is trying to figure out what is going and that's the way the cookie crumbles. it's just a shame. it's what happens. i knew it was all phony. a lot of people did the procter & gamble trade. the stock was at 45 and i knew you had to go right through the market and you had to go a couple of minutes and i got emails for -- i bought 500 and 700. watch c snbs make money. >> watch cnbc make the most money that day. >> that's great stuff and i'm sure you'll be talking about it that day. >> bob is on the floor. >> happy monday. flat market, but techs, financial, energy, materials all leading so slightly more risk once again and that's been a characteristic of the market in the last couple of weeks. what i see today in terms of stories, a continuation of one we've seen for a while and that is consumers and companies are in a mad dash to find ways to cut costs in a no-growth environment. look what happened to tyson.

tyson missed and lowered their full-year guidance and tyson tried to raise beef prices and chicken prices and what they're seeing now is consumers are switching to cheaper chicken over pork as well as beef. that's an issue here and companies are doing the same thing. they're looking to save costs because we don't have top line growth. so look in the last few weeks. american express said companies are looking to spend tough overseas instead of one day. regal makes electric motors last week and they said their clients were looking for cheaper ways to have heating, ventilation and air-conditioning parts. more value orient saturday phrase they use. alcoa last week and the stock went up, selling more aluminum? no, they're thinking of closing melters in europe because europeans have higher costs including in the united states. everybody is in a mad dash to cut costs in a top line growth environment. cisco, i'm talking about the

food company. they missed on the top line and they cited consumers less willing to go out and spend money on restaurant purchases and one thing they think is so important about these stocks like tyson and like sysco is the price. they're at new highs essentially because of the dash to go into value-oriented stocks earlier in the year that hasn't been the outperformance, but these stocks are very, very expensive and one or two companies did cut sisk coe on valuation. so i think you have to pay attention to the environment. that's not hurting the stock market. how about s&p 2000, everybody? did you see las low berini on friday night raised the price target to 1900 and he's been the big boy and he's been right in the street. the reason he changed it is he used to have 1600. the interesting thing is berini implied that the biggest thing the market had is that nobody

believes in the rally and we were talking about this last week. everybody down here does not believe this rally. in fact, they were handing out dow 15,000 hats to a few people the other day and some of the guys hated this rally so much, and they were walking around 5,000 hats. that may be one of the biggest friends the market has right now. >> guys, back to you. >> wouldn't they love it on the sell-off? rick santelli at the cme group in chicago. rick? >> good morning, jim. well, this morning we're not seeing a huge amount of selling pressure in the treasury complex, but a chart will show you when you included the revision the market was impressed with friday's labor report and hence we did see some selling and today the journal was talking about customers and institutions that trade fixed income just missed this rally. funny time to talk about it because many think it's time to actually start selling.

look at the chart going back to december 1st. it looks like yields have bottomed in the lower 160s. if you open it for one year of the boon you can clearly see patterns have changed a bit although the spread continues to widen against treasurys. now let's look at the different maturity and let's look at the jgb market, ten-year to be specific and if as you look at the jgb chart, its had a lot of volatility, and i will tell you this, it's still contained by 60 basis points and still one of the most looked-at charts to on the trading floor and if you look at the italian bond, 276 yield is the last month, but it is up 20 basis points and it's been knocking it at the door for 100. it still hasn't broken through. >> thank you so much, rick.

let's take a look at the changes. >> a lot of folks are focused on the technical moves in gold after the strong showing we saw last week. a big move there up on the upside in the gold market. 1480 announces the key level that traders are watching technically and they're also keeping their eye on geopolitical concerns and they're watching what happened over the weekend in syrian territory and looking to see whether there will be any escalation there and that could perhaps, some traders provide somewhat of a safe haven bid for gold. meanwhile, in terms of the oil market, we did see oil prices up $1.50 overnight and many traders were pointing to what was happening there in terms of the israel and syria conflict and they're saying that is short lived and we are seeing oil prices under pressure right now. natural gas prices have given up some of the losses that they've seen and they've recovered. as jim mentioned, a lot of folks talking about the fact that obama is stressing the fact that we could see the u.s. become a

net export by 2020, talking about the fact that they could be the beneficiaries of that. >> thank you very much. >> still ahead, les moonves will be here to givesu us his take. er terry duffy and it's been three years since the flash crash. what is he saying about the trading landscape now? we'll be right back. i turned 65 last week. the math of retirement is different today. money has to last longer. i don't want to pour over pie charts all day. i want to travel, and i want the income to do it. ishares incomes etfs. low cost and diversified. find out why nine out of ten large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus, which includes

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you might want to keep your eye on apple this week. the stock's up 15% at that time. it is once again the holder of the biggest market cap. today barclays raises their target from 465 to 525. their dominance in the accessory business and how that hold is

beginning to loosen some of the logiteches and makers of docks and cases. i'll mack a samsung case. >> i thought that was an important piece, but i also want to remind people that the way that apple traded down was every time it went down people then cut their price target. they cut the price target to the 400, suddenly they've got to start bumping the price target up. may i suggest that wall street research is just valueless. but this price target move. i'm really tired of the price target issue because all people are doing is playing a bull market thing. the market goes up i raise my price target. regeneron, that has had their price target raised because it was at 260. there's no help the price target raise said i read the paper. the stock's higher. >> we've been talking at how it was conceivably cheap, and it

was below 400 and yet let's call it mid-april and sudden looky you saw that thesis start to gain traction and not just in apple and we talked about microsoft and google. you add up all of the market cap gains in those three stocks alone over the last two and a half weeks. >> we got this new benchmark that came out that basically says, okay, look, if pfizer trades at x, google is cheaper than pfizer way lot more growth and google was very cheap. it was. apple got very cheap. then it became absurd. that 3% is -- i detect treasurys are 2% and i get apple at 3%. it was hard to hate except for the analysts who collectively hated it. >> yeah. >> there are a couple of events coming up and them cook will speak at all things d. there's the developer's conference in june which will begin to answer the question if developers are beginning to migrate to other platforms or

not. >> i think there was a good piece in the times. i'm sorry. i don't want to misquote. it may have been the journal, but there are people who now think samsung is no longer bold. that apple became less bowl and suddenly samsung is less bold. this is a very psychological stock. wall street research sold to you on this. >> very nice. >> when we come ban, looking through google glass and the wearable technology that we've taken a look at over the past few day, but up next -- ♪ ♪ still to come, jim cramer is on a mission, the goal, six stocks in 60 seconds, we're going along for the ride when "squawk on the street" returns.

time for 6 in 60, six stocks in 60 seconds. >> i boo owe jen says not too late to buy. >> understand that, that makes sense. >> cliffs will outperform. >> people want so much and they want a cyclical stock so, so badly. valet and not just the person who puts my clothes out in the morning. >> etna has moved ahead and the

dow stock, i think it's a good call. >> bank of america. >> when you start getting some settlements in these private suits against bank of america. it has been lawsuits and you want to buy bank of america. >> groupon will report this week. groupon says it was a groupon and -- never mind. adt. morgan stanley, sell the hold. >> morgan stanley has targeted the stock. they have been the main reason why they went down. they reiterated that they hated. i had the ceo on tonight and it has been a complete bow wow, and i think he will set us straight tonight. morgan stanley, thank you for this charitable trust and he had been relentlessly hating it. there you go. >> and speaking of relentlessly hated and suddenly people don't like his company and you know what? we'll flush it out. what am i going to say? thank you, buddy. >> when we come back, simon will tell us what's coming up on the 10:00. >> looking to pick up that relentless theme again. we'll talk about all of the

things we learned about the fifth largest company in the world, it is berkshire hathaway and warren buffett and we will also talk television with the ceo at cbs corporation and he'll be live at post 9 and as "iron man 3" grosses 130 million in just one weekend, we'll talk to the ceo of of imax, and that's next on "squawk on the street" this morning. all stations come over to mission a for a final go. this is for real this time. step seven point two one two. verify and lock. command is locked.

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welcome back to "squawk on the street." let's get the road map for the next hour. the oracle of omaha warren buffett says he likes stocks right now, but there is one investment he calls plain terrible. becky quick with the details live. >> plus j.p. morgan. one firm calling for changes on the board and changes to the role that jamie dimon plays at the bank. >> as media companies prepare for the up front. les moonves will join us on a first on cnbc interview on post 9. >> "iron man" issue smaing the box office and we'll talk to the ceo coming up. i want to talk about big banks and mortgage settlements and diana olick has that.

>> new york attorney general eric schneiderman announcing he intends to sue bank of america and wells fargo over the $26 billion mortgage servicing settlement that was signed in the beginning of last year. he said in a release today, since october 2012 the attorney general's office has documented 339 violations of standards agreed to by wells fargo and bank of america in last year's settlement. victims of the institution's violationsel speak first hand about their experiences at a press conference today. you'll remember the national mortgaging settlement involved 50 attorneys general as well as the justice department involving so-called robo signing and that was problems having to do with foreclosure documentations. part of the settlement was to improve servicing standards and apparently the new york attorney general said that is not happening. we do know that the banks have done with billions of dollars, $6 billion so far of principal forgiveness and those servicing

standards were the crux of this settlement and the aig saying they have not been following the rules. we're, of course, contacting b of a and wells fargo ask we'll get their reactions if we should get them as soon as possible. >> thank you for that. we'll watch the two name, of course. speak of wells, we want to talk with warren buffett. becky quick was sitting down with the oracle of omaha for three full hours and they talked about the fed to his deal for heinz and becky joins us this morning live from omaha. >> a lot of ground cover today. >> yeah, carl. he did talk about a lot of things and it's funny, we've spoken with him over the years and we tend to get questions from viewers when they want to ask questions of oracle of omaha, too. it has something to do with what should i do with my money? >> you know he very rarely tells people directly what he should be doing on those things and every once in a wheel he does give you specifics. he said he thought one of the best investments you could make

was toy about a home and that's where 30-year mortgage rates. . he said there was one place that he thought was not a great place to be. listen in. >> i would have productive assets. i would favor those enormously over fixed dollar investments and i think it's silly to have some ratio like 30%, 40%, or 50% and bonds are terrible investments and if you have a guy buying 85 billion a month and if it changes people can lose a lot of money if they're in long-term bonds. >> you look around the investing world and another place that people look at and then maybe shy away from pretty frequently is europe, but when it comes to europe, well, buffett says he is much more optimistic. in the last 12 months we've bought a couple of smaller businesses in europe and we've got european stocks and the fact that there are troubles in

europe and they're not going to go away fast does not mean you're not going to buy stocks. we bought stocks when the united states was in trouble in 2008 and it was in huge trouble and we spent $15.5 million between september 16th and october 10th and it was because the prices were good, and if you believe that europe is going to be around which it certainly is and it will have huge amounts of purchasing power with citizens and all of that, then you look at -- you actually look at troubles as possibly being -- offering you an opportunity to buy. >> now we tried to get a little more specific with him and asked if he would be buying in southern european countries, as well. he said if the situation was right, if he thought it was a good price and if he understood the story he would even buy in a country like greece. over the weekend at the annual meeting that was a question that were asked about the charlie mungser. charlie joked around a little

bit and said if you're going to do that first, please make sure you call me before you do that. not an agreement between berkshire's chairman and vice chairman on every type of investing situation. carl, i send it back to you. >> so many sub headlines and i have doug cass as his role as the designated bear dominated those. do you think the takeaway would be that warren would be willing to do that again? >> think he enjoyed it. when we asked him about that this morning he said it always spices things up a little and doug did that. i think he likes to take his creddics head-on. it gives him an opportunity to have the other side of the story and i wouldn't be surprised if he did it again next year. >> you've had such a long weaken, birds pooping on you -- >> i got it out, see? look. all clean. >> that was classic.

>> becky, you are the best. incredible and we'll be talking to you later today. >> i'll see you a little later. >> let's get some more insight then on berkshire hathaway from two long-term shareholders. joining us now, jeff matthews, author of warren buffett's successor, who is and why it matters and also with us, bob miles. he's the author of the warren buffett effect. let me kick off with you. the stock is higher today and it is now, as he told us to some approvals during the meeting the fifth largest business in the world and we shouldn't forget, bob, that we had results that beat expectations on friday night due largely to the insurance business. what is your takeaway from the weekend. >> i think it was all good news from the weekend and the price is up 22%. there were a lot of shareholders in attendance and they were buying and there was basically a very positive, like the economy is back. the recession is over and the

only bad news is that buffett is sitting on $49 billion worth of cash, earning next to nothing and he has $50 million to $60 million a day flowing to omaha to reallocate. >> any idea what his next $20 billion buy might be, bob? >> i think it might be something similar to heinz where it's a dominant, well-known brand that has a 70% worldwide penetration like heinz ketchup. but he's open and even said he would be interested in investing 15 to 20 billion in the european country which is the first time he's made mention of going overseas. >> you're not going to suggest any names, bob at this stage as to what he might buy? >> no. >> i guess not. >> no. >> let me ask you, there are two big questions. the first is doug cass

reiterated that whether you had a problem that berkshire was so big that it had to buy bigger and bigger pieces to move forward. the next one was worries about succession. which one worries you more, jeff? >> i think he takes care of the succession issue and i don't worry about that at all. he explained why his son howard would be chairman, and that was one of the best questions and most important questions that's been asked of cass for asking it and i give credit for warren buffett and charlie munger for answering it head-on. buffett's been talking about this for 15 years and he even talked about the it back in the days when he was running a partnership and how hard it is to grow when it gets bigger. that's the slowdown that i pay more attention to. >> jeff, i know you also noted that he did not give a

particularly good answer. i thought that was the most disa point answer the whole day and he was caught flat footed on it and he oifred himself as working for microsoft and in the interest of full disclosure. i think ibm will do well and he didn't answer the question is what is ibm's compet of float. rising margins which hursts customers, right? and a lot of alternatives to what ibm does out there. that's a big question mark and clearly buffett wasn't on his game with that one. >> we had the discussion this morning about succession and not in that his fund managers can't or aren't as smart as warren is or are as capable of running a fund or some pile of money, but there is some hard to dwaunt phi element of being able to pick up

the phone being war withen buffett or demanding something that no one else can. is that something that someone should be expected to do. berkshire hathaway has capital and they can increase float during market declines and my favorite quote was when warren said berkshire hathaway, both alive and retired is that they're the 1-800 number for stock market panic. you can call berkshire and when the tide goes out, those who are swimming naked can call him or his successor and they'll have the cash ready and they'll sell you a swimsuit. >> you don't think they'll be pressured to pay a dividend then. and that's what makes them the pile of cash? >> i think he has a test for a dividend in a rolling five-year average.

if he retains a dollar of retained earnings and he doesn't grow a dollar in market value then i think he will consider a dividend. it's a rolling five year test. >> thank you. bob miles there and jeff matthews in the wake of berkshire hathaway's weekend. >> it is the three-year anniversary of the flash crash. who better to talk to of the safety concerns than the president of the cme, terry duffy. plus as big-name media companies get red for the fall tv lineups, les moonves of cbs will join us live at post 9 in a first on cnbc interview.

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for material failures on the

risk policy committee during the london whale trading losses. david cody, ceo of honeywell and ellen futter. shareholders approved all three last year and crown and cote and futter with 86% saw the lowest approval rating of all. when it discussed the matter with lee raymond, raymond cited the challenges of recruiting board management with strong risk management skills and no conflicts. citigroup and bank of america for their part according to iss, have both been able to add a handful. j.p. morgan says it strongly endorses the reelection of the current directors and disagrees with iss' position. they have served the company well and that recent oversight and mistakes were not attributable to that committee. further, iss backs a non-binding proposal that would split the chairman and ceo rules in favor of appointing an independent chairman. 40% were in favor of a similar

proposal last year and the ceo jamie dimon in both roles. dimon has held the dual roles since december 2006 and bill harrison stepped down after the successful merger of j.p. morgan and chase. since then you can see shares of j.p. morgan are roughly flat. of course, both of these pressing issues that are going to come to the fore in the meeting with tampa which is two weeks from tomorrow. carl? kayla, thank you for that. >> as you know, the markets are hovering right around record levels. the dow is down 2 points. cnbc contributor joins us this morning along with neil hennessy, the portfolio manager of hennessy funds. happy monday morning to you. dan, you sent a chart out this morning looking at monthly performance on the s&p since 1960 in which it's fairly obvious chance in the summer months and particularly the back half of the summer. look at september there. what does this mean for trading in the next quarter or so and

does friday's jobs number do anything to change that? >> well, listen, the sell in may and go away axiom is definitely true. you are definitely entering the seasonally weak period of the year for stocks and there's not a lot of stuff that goes into this. i think our view has been that it's been an extraordinary start to the year over the last 30 plus years you've only had three or four-year start at a faster and stronger pace than we've seen this year and we've been of the belief that investors are likely to be to find turns unrewarding. the stock market keeps going higher. >> neil, you have names here that you believe are likely candidateses to boost a dividend. i know whirlpool, mohawk and beacon roofing are just a few examples. talk about those, and i wonder if you think investors are still hungry for div hikes and or if they are, if this stealth rotation into tech, for instance, is really where we'll wind up for the next few months.

>> the first thing you have to understand is what companies are doing with their money. they're initiating dividends and raising their dividends and making their stock buybacks and internal infrastructure and making acquisitions. whirlpool just a couple of weeks ago raised their 25% and they're making $5 a share and it was a no-brainer. if you look at beacon roofing or you look at, say, mohawk. if you believe what warren buffett is saying that housing is a good deal here, why buy the house? why don't you buy what's going to go into the house, there's been four to five years of deferred maintenance on existing homes and so you think you're going to need carpet or cabinets or new washers and dryers and that's why that segment of the market is good to be in. >> dan, correct me if i'm wrong, weren't you quite bearish going into the majority of the first quarter? >> no. we were certainly nervous in front of the fiscal cliff which

proved to be unfounded and we were wrong in that regard. we make tactical and secular calls and we were certainly wrong about the technical call. i wonder how relevant it is to bring in a chart that in material material you get a gain just over 1% in the stock market and as you note yourself in your note, we grew 6%, 7% in the major indices. the chart that we're looking at is an average, and that's how we have to look at things and some years will be better and some are worse. a lot of my contemporaries think that this is not the year it will work and the economy appears stronger than we thought and there's something to that. the question is with the s&p 500 with large cap stocks up 13% for

the year, is this going to be a 20% return year? if not, the bulk of the gains are at an end. >> what is the answer to your own question? >> listen, we've been wrong for several weeks now in thinking that lower prices are more likely than higher prices and for now, as painful as it's been, as i acknowledge we're sticking to that right now. we don't think anybody should sell, but the question is if you have new money to put to work we've been saying no and we stick with it. >> all right, guys. we'll see what happens. a lot of interesting calls being made about year end. neil, dan, thanks a lot. >> thank you. it is the three-year anniversary of the flash crash. could it happen again? terry duffy, executive chairman and president of the cme gives us his take and we'll get up front and we have an exclusive interview coming up. the american dream is of a better future,

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welcome back to "squawk on the street." i'm josh lipton. san francisco suing the company for what it says is violating california law with its

marketing of caffeinated energy drinks to children, despite scientific findings. the city's attorney is saying of the product's health risk and that lawsuit filed in san francisco superior court and the stock is down 2.5% and down 16% in the last 12 months. carl, back to you. >> thank you so much. "the iron man" prequel rounding out the week wenned -- get this, $175 million in ticket sales this weekend. places the movie second only to "the avengers" last year and it's made so much money overseas and richard is from imax. >> if the summer goes like this, we're all in for a wild ride. >> i think this weekend was very important not just because of the grosses of "iron man," but i think it's the lead-in and the kickoff. typically when you have one move they starts to sell strong, people see trailers for other movies coming up. so big opening for this, and by the way, star trek.

they'll see the trailer for star trek and they'll like it and go see it. on the other hand, if it starts off weak it's tough to build the momentum. >> how much is slated? >> about 25. >> 25. relative to past years, how is that? >> it's about the same as last year, but we converted a few years ago from film to digital and because imax prints were so expensive and they used to cost $30,000 a piece and in digital they're $150. hard not to have a conversation with you and mention china. we have ism services not so hot. i wonder, are you beginning to see activity bottoming out? this was a record release for us. we did about it 10% of the chinese box office, about $6 million out of 60 which is very good. especially people had written off lefter in films and it is more movie dependent than

western or chinese or whatever is the average ticket price there is $16. someone just emailed this morning an article from the xinhua news agency which is state owned saying people are flying in to beijing and shanghai to see the imax version of "iron man." i haven't seen it, certainly. >> the figure is the international figure is astounding and $618 million and do you know why they released it abroad before here in the united states? >> i think it was just part of their campaign. that's increasingly the case because now about 70% of the box office comes internationally. >> right. >> and it used to be reversed and that's where the big dollars are, and i think with some films like star trek, they want to build ement mo up overseas because they know it will do great here so they want to open that also. >> before we let you go, what can you tell us about the imax private theater and there's a lot of stuff on the internet about curved floor to ceiling,

and wall to wall screens and they monitor the sound quality, service center on standby to check that everything's working. >> i can't tell you much because i haven't done an official product launch yet, but we've started to sell some of the theaters. basically, the only version we're selling now is the same kind of imax theater you would see in a regular imax. so the price point is $2 million. so if twrou have a couple of million sitting around. >> i don't, but my good colleague david faber inevitably does that. >> let's talk about that and i'll put one in my two-bedroom apartment. >> i don't have a house big enough in new york city. for 2 million more you get a house also. >> the manhattan market will be tough given space constraints. congratulations on the weekend, rich. we'll keep an eye on imax. >> thank you. >> still ahead, we'll get up front about media. leslie moonves will join us live at post 9. we're right back.

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the bull market most resembles the patterns etched in '82 and 1990 suggests, at least, another 20% upside. in the tech world, apple edging slightly higher after apple raised its price target from 465 to 525. >> we should remember, it marks the third anniversary and the flash crash and the unprecedented drop that sent the dow down 700 points in mere minutes before you had a sharp rebound. exposing some of the key floors in the electronic u.s. marketplace. here to sort through the mechanics of what happened and whether or not the same could happen now, bob pisani and ubs director of floor trading art cashin. you don't think we could have the same difficulty again. >> make sure your orders are rational going in, that you're getting correct quotes, number one. >> make sure there's some kind of support for the market in the event there is a panic of some

kind going on. we have new circuit breakers here and limit up and limit down that i think will be more effective than some people think. i'm not saying you couldn't have a big drop in the market, but if we had the limit up and limit down rules that we have now at the same time the flash crash occurred. >> is it enough, art? it's tough to say, that particular day had a lot to do with misdirection. a lot of the computers we're told to have this local or venue for favorable treatment and they just kept sending them whether there were bids or not. nothing traded for a money on the new york stock exchange. humans intervened and said, wait a minute. that doesn't look quite right. can we check that out, but in other places where it was all automation things traded down to a pen. >> that goes to orders being rational and we, lieliminated stock quotes. you can't do that now, you can't

have a penny quote that goes in there on proctor & gamble, that willy get executed and that was one of the steps that was taken and i don't know how you feel, art, but i feel, most people i talk to feel maybe not that we wouldn't have gone down, but the severity of the decline would have been greatly mitigated now that we have elimination of the stub quotes and limit up and limit down. >> know they've made some corrections. >> i don't think they've fully explored exactly what happened that day. i've seen a lot of reports and they seem to skate around them and i don't know whether that's people saying, i don't think we should look down that street. it won't be good for us, but, yes, i think it's better, but you always worry that whether the lifeboats are real or they're just painted on the side of the ship to make you feel better. >> there's an implication in what you said that we haven't gotten to the bottom of it because there is a vested interest. >> i don't know why we haven't

drilled all of the way down. you're all journalists. do any of you feel satisfied that we've got tonight bottom of this? >> there hasn't been what some might call closure on this issue, right? to put a very bad example on it, the 9/11 report with that kind of stamp. >> yeah, no. i think that's exactly it. they've come up with certain circumstances, this seemed to occur, that seemed to occur, but there is no full postmortem that took them from step a all of the way to the end and i think the public would have been more satisfied and better served. >> clearly, the confusion around the orders. when we had several exchanges and not sure whether the quality of the information was correct, was a mitigating factor. that caused a lot of people to simply shut down their trading systems and that loss of liquidity was a major exacerbating factor in the whole flash card. i'm not saying it caused them, remember that day there was rioting in athens and that was new to us and there was good

reason for people to be concerned. >> there were exacerbated factors that they were trying to address. >> your point, bob, is not that humans are the last line of defense. your point is that they've been mechanical, structure safeguards put in place. if it's abouting a humans on the last line, they're more in trouble. >> look at limit up, limit down, if it trades doin 5% roughly in the first in five minutes goes to $9.50. that stock would halt trading and then it can stay in that state, and if it drops below that band then it halts for five minutes and that's how limit up, limit down works. there was no single circuit

breaker in place as you know on all of the exchanges and that's what created some of the craziest thing. all of the exchanges have the same circuit breaker. >> in a word, could it happen again? >> hopefully not to that degree, but let me put in another word for humans having been one for a little while and tell you that when we had the problem with night trading the humans knew immediately that they couldn't get it settled down and humans actually began to worry about that little twitter feed we had the other day. so it's nice to have some experience and say just a minute. that doesn't look real. as a matter of fact, you had cramer on this morning and he made a great call that day saying that doesn't look real. >> yeah. on night you'll find they're moving towards a clear kill switch, a clear way that the systems can be shut down quicker and more effectually and that's the technology. >> did not, no, not ultimately.

nor may they stay here on the floor. >> on a quick programming night, three years after the flash crash, a special report on the rise of super computer power trading and whether it helpers on hurts ay from market system. she was the first that the flash crash was caused by system error and that's today at "power lunch" at 9:00 eastern. >> we'll get more on how exchanges have changed with the flash crash with terry duffy, the executive chairman of the cme coming up. >> as we head to break, take a look. not much going on today after that big rally on friday. mine was earned in djibouti, africa. 2004. vietnam in 1972.

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time for the santelli exchange. let's get to the cme group and rick santelli in chicago. >> am ggood morning, rick. >> good morning, carl. it's getting more key every month. doing a postmortem on friday's jobs report, there are a number of places to start and human behavior is what i want to discuss and whether it's fiscal cliff and tax and dividend issues we see human behavior makes rapid adjustments when it it comes to their money, whether it's about tax policy so we like to see various branches of the government do proactive-type models verses passive models when you raise and lower taxes. removing them and reforming them versus tax credits, maybe more importantly as we get red for nationalized health care, there's a lot of changes and even the fed missed many of their programs creating money,

but instead of seeing it move into the loanable areas, it was put on balance sheets and human behavior. "investor's business daily" laid important aspects to this employment report. i'd like to show something on the screen here from their article on friday. starting in 2014, large employers will face non-deductible fines of up to three grand for full-time work and they'll get subsidized coverage with the obama care exchanges because qualifying coverage isn't available via the workplace. the fines and it's important will be influenced by staffing levels in the back half of 2013. there's your human behavior catalyst. we're already starting to see what happens. if we summarize, and we saw that the average workweek in friday's report was down .2 or down 2% year over year and keep in mind, that is the steepest, sustained decline since 1980, another area. total service sector benefits

dropped .3% in q1. that's the first decline in more than a decade. so we are seeing these adjustments happen now. we know that there's political gridlock and it might be too much to expect that? adjustments will be made, but we've seen many stories about how bumpy the rollout is going to be, we'll get a better idea. another area, similar, but not exactly the same, one of my favorites and we've had him on several times and he likes to keep score on something i like to keep score on. >> population growth versus non-farm headline growth. it was 180,000 for the population, 165k for non-farm. so population growth was larger and according to richard, if you look at the last seven after the big adjust ams that adjustmente

ask revisions and it was one of the last seven population wins and nothing says jobs like better than that. carl, back to you. >> thank you so much, rick. when we come back, just as big media gears up for the fall tv lineup, cbs' les moonves is live at post 9 for a first on cnbc interview. we'll be right back. [ male announcer ] at optionsxpress, our clients really appreciate our powerful, easy-to-use platform. no, thank you. we know you're always looking for the best fill price. and walk limit automatically tries to find it for you. just set your start and end price. and let it do its thing. wow, more fan mail. my uncle wanted to say thanks for idea hub. he loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. [ male announcer ] open an account and get a $150 amazon.com gift card. call 1-888-280-0149 now. optionsxpress by charles schwab.

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television executives flocking to new york this month for the all-important up front season. it's the time when the networks show off their lineups and sell pilots and sell a lot of advertising and so we are joined here, of course, by the man that many in the media count on to predict when it comes to sales. leslie moonves is cbs president and ceo. you do sometimes put it out there and everybody else follows and what you'll be up. i'll ask you right now in terms of advertising given where we are, what are your expectations for the up-fronts and what's coming soon? we'll finish this season and i can mostly talk about cbs and the industry in general. we'll finish the season having been the most-watched network and we are going to win the 18 to 49 for the first time since

1991 so oui pretty cocky going into this up-front season. i said last week on the earnings call we expect to be up high single, low double digits and we should lead the marketplace, but i think it's a fairly healthy marketplace. once again, scattered market pricing is up right now in low doubles to teens and that's usually a good foreboding sign for the upfront. >> how do you get 9% or 10% up this year? the economy is not great, it's okay, but we have people appearing all day long saying it's not great. >> look, network advertising and i'm a big booster of networks. >> yes, you are. >> and i always have been. it's the best game in town and it's still the only place you can get 110 million people watching the super bowl together, collectively. it's the only place where you can get 18 to 20 million people watching "ncis" every single

week. as the marketplace gets more fragmented, network television is still the big player. it's still the big tent where you can get the most amount of people. >> it has been and you have been saying that for a long time. nonetheless, those of us that see the 66 plus, versus four on digital start to wonder when the netfl netflixes of the world become more popular and when broadband tv starts to catch. >> look, some of the money will be shifting in the future. some of the money already has been shifting. the idea for someone like us, a, to have strong interactive presence which we do with our own interactive sites. in addition, we sell a lot of content to netflix. we believe in netflix. so while network advertising may eventually shift. it's going to shift into other areas where we are also getting paid. >> so you think you'll get paid regardless, even if the audiences continue to shrink,

let's say and people start pulling out their cable? >> no question about it. the key for cbs and all of the major media companies continue to produce a-quality, premiere content, and you will get paid. you will get paid differently than you do than you do today but you will always get paid and win out. content wins. >> netflix has been an important generator of profits for you and many other media companies. but they've been talking a tougher game lately. the ceo recently saying we know exactly what our customers like. >> correct. >> we're not going to buy in bulk the way we have in the past. you've got great deals but that's going to come up. >> you know what, we did a blanket deal with netflix a few years ago. that deal is adjusting because now we know what's working and what's not working. it's important to be close to netflix, which we are. substitute certain forms of content for other forms of content. in addition to sell them what they want. obviously they want more content on an exclusive basis.

so we're in constant congresses with them about new content and continuing content. so we view netflix as a friend, as somebody who is pating for our content. and, yes, the game is changing but we're changing with it. >> are you telling me you think you will get the same dollar amount even though it's composed differently? >> that's correct. maybe more. >> it's funny, ten years ago, even five, retrans and netflix didn't exist. >> that's what's exciting about the cbs story. there are new forms of revenue that didn't exist three, four years ago even. in terms of retrans, we're going to be getting over a billion dollars by 2017. in terms of the fet netflix and the amazons and other entries into that game, into that streaming game, we're talking about hundreds and hundreds and hundreds of millions of dollars extra with revenue that didn't exist just a few short years ago. i think that's one of the reasons our stock is performing well. >> there is this conversation now going on about areo.

you've been a part of it. it's in a small number of homes. we can put a small antenna here and couple it with broadband tv. why are you guys opposed to that when it seem t it would open it up to more viewers? >> first i have to say much has been spoken about it and written about it. it is not a serious threat to us. we think it's an illegal service. we think they're taking our signal. and they're not just passing it on to people, they're charging people for passing on our signal without giving us any money. we think that's illegal. and as they open up into a couple of marketplace we will challenge that as well. the amount of subscribers they have is very, very small so it is not -- >> you talk a big game there about we'll just become cable networks. you're not really going to do that, are you? >> if the business model, you know, is not working for us, if the courts do not vote for us, we can move it over to cable. but as i said, it's nothing we

are losing sleep over. rather minor issue that's gotten a lot of attention. >> not a minor issue is something you're currently taking place. your outdoor business is becoming a reit. it will result in money coming to cbs. debt spun off. what will you do with that money? >> obviously a great chunk of it will go back to our shareholders. we will a share repurchase, i'm sure, with a lot of proceeds for that. and you know, we will see what to do. we will see what's available. >> are you going to buy something? >> there's no intent to buy anything. we consider ourselves a major content company. like we did recently with "tv guide" network where we bought 50% of it. if there is a great asset that has content, which is our strong suit, we will look to do that. but i don't foresee any major acquisition in the near future. >> shareholders has been a key component to your strategy.

leslie, this morning david karr writes in the "new york times" about how much money all you media execs get paid. you're right at the top of the list. why do media executives make so much more money conceivably than your peers at other companies. >> well, you know what, most of the media stocks have done extraordinarily well. in my case, yes, i get paid well, but the majority of that is is due to the fact that our stock has gone up from $3 four years ago to $47 today. around and a lot of my pay comes from that. i think the media sector has done extraordinarily well. i understand we're high paid, highly paid, but the stocks reflect that. >> finally, 18 to 49, your guys are going to win it for the first time in 23 years. so you're not hold anymore. what happened? how did cbs go from being the old network -- >> all the jokes about cbs being the old foegy network is over. we beat everybody in 18-49.

we've gone across the board. i think that's because of our programming. we have great programming this year. obviously our comedies are doing well. "big bang theory" is a huge success. "cis" is the number one show on television. we had significant football as well. we had football championship and the super bowl. >> that helps. you are looking at the new programs now. not replacing too much. anything you want to share with us? >> we renewed 18 shows already on our schedule. we have our upfront a week from wednesday at carnegie hall. we have a lot of great pilots. today we begin the dance where everybody is fighting for those few spaces on the cbs network. >> find another "csi," never know. >> we're looking for another one. i think we will find it. >> appreciate it. >> david, thank you. >> carl, back to you. >> david, thanks so much. all the places video will go. in-depth testing of google glass continues today and this time they will venture into surprising places to see how

well they can be integrated into your everyday and not so everyday lives. back in a minute.

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maker will be selling viagra directly to patients on its website. for those that are too shy to buy viagra at a drugstore. men will still need a prescription, it says here, though i presume women will also need a prescription as well. apparently attempting to counter count eer fitting drugs. >> according to reports i read, three feel pills with your first order and they're $25 a pop. i mean, these things are not cheap. >> i also agree you can use your insurance to lower the cost of that. >> i didn't know that. >> you can. >> good tip. thank you, simon. >> i read it here. let's look at euro/dollar. mario draghi is intervening now after he so successfully lowered the euro last week by saying the university in rome that they would indeed do a potentially more to try and help the eu eurozone economy. he's hinting at negative deposit rates for the central bank. he's raised it again. this is verbal intervention, i would have thought after of course attempted to walk us back

from what he said last thursday at the news conference. 1.30-'56 is where we're trading. >> deliberate. >> responded as if it was new. thank you. talk more about europe and, david, see you later. >> carl, thanks. if you're just joining us this morning, hoarse what you missed earlier on. welcome to hour three of "squawk on the street." here's what's happening so far. >> in terms of our businesses that we have 70 plus direct businesses and a lot more indirect. we're seeing the same thing we've been seeing for four years. and that's gradual improvement in the economy. >> things that are unique for businesses which is a particular strength for microsoft. the software business is an amazing business to be in. both in terms of growth and the profitability dynamics. >> there are a lot of people come on our air angry about bernanke. i mean, somehow bernanke is manipulating the stock market. can we just look at stocks and

make some decisions? >> i would love, love, love a piece of not attractive stock but if they were to spin out, xbox. xbox plus netflix, if they bought netflix is very powerful, younger person function. then you would see this company has a lot of weapons. >> we've got one of the largest private equity deals of the year. $6.9 billion acquisition of bmc software. >> there is the opening bell. >> as the marketplace gets more fragmented, network television is still the big player, still the big tent where you can get the most amount of people. >> good morning. we're live here at post 9 at the new york stock exchange. let's get a check of the markets on this monday following a big week last week. jobs number for friday looking for follow through today. not getting it. the dow is down to 25 points. s&p is off about half a point.

at the nasdaq, climbing about six points. bmc software agreeing to sell to bain capital for $46.25 a hair share in cash after several months of talks with various pe firms the price does represent a 2% premium to friday's close. in the tech world, rbc upgrading intel to perform in the mobile sector. let's get to the road map for the next hour. warren buffett and bill gates, two of the richest men in the world sounding off on china and some of the big u.s. banks. we are going to becky live in open omaha in a minute. speaking of gates, we'll hear what the cofounder has to say about the company's push into a tablet business. google is hitting an all-time high today. glo google glass has had some mixed reviews. and on this third anniversary of the flash crash, rick santelli talk to terry duffy, executive chairman of the cme. we'll start with buffett,

the oracle of omaha sitting down with becky quick for three hourses this morning talking about everything from the market record run to the fed to the highs. becky is wrapping up some of that sound for us. good morning, once again. >> we sat down with buffett and gates. it's not often you get to sit and talk to these two. there are no shortage of topics you want to get to with them. one of the things we brought up with bill gates was microsoft. that's the company that he founded and where he still serves as chairman. a huge issue for microsoft has been piracy, particularly in china. it's not just microsoft. there are a lot of big western companies that have dealt with this issue there. but gates was actually able to finally put some numbers on this. >> china has been a disaster if you say per unit of your product that gets used, how much do you get paid. it's been over 10-1 versus the united states. and even like 4-1 versus india.

and so it is a uniquely high piracy market. now, the trend line that number's been coming down somewhat. >> he talked about that trend line improving and that's very important but he also talked a little bit about why the numbers have been so much higher in china than they have in other places, even like india. he said that's because in china you have government offices that actually don't pay for software. same situation if you look at big companies, which that would be unheard of in a western country to not be paying for, let's say, microsoft office or something if you're using it by the hundreds or offices in your office place. the western countries, the bigger problem they've had is trying to get people at the lower levels to pay for those things. but in china, it's been a problem with big corporations and big government, too. now, one of the issues we talked to warren buffett about today had to do with jpmorgan. you guys have been talking about the news today about how iss has been recommend that shareholders vote against three of their directors. iss' perspective, they say that

those three directors, along with the rest of the board, has been too slow to react to some of the problems that they think have developed at the bank. especially the lon dan whale and other issues. we've got the chance to talk to buffett about this and he is not just a neutral observer on this. he also happens to be a shareholder because he owns shares of jpmorgan in his private account. >> i don't know the details but if you're the director of a company like jpmorgan, you cannot know the details of what's going on with trading or anything of the sort. your key decision is whether you believe that you have the right ceo. if you have the right ceo, the board has done its job and if you prevent the ceo from over-reaching in terms of comp. i've written about that. i think they've got the right ceo. i think they've done their job. >> he went on to add, and has talked about with us over the last several days about how he is 100% with jamie. he thinks in this case, at least, the chairman and ceo should still be titles that are

kept together with jamie dimon and not split up as two separate roles. one of the things we talked to him about, carl, is jcpenney. this is a company he's rooting for. he started out working there as a young man for a time as a salesman on the floor. by the way, he's also a supplier to jcpenney because of fruit of the loom, which is one of the many berkshire brands. he talked about how he's really rooting for this company, would love to see them turn things around. he pointed out that could be very difficult to do because the company has lost so many, the retailer has lost so many of its shoppers. once you lose those shoppers it's tough to get them back. he said ullman is somebody he's t rooting for in that job. guys? >> they do seem cut of the same cloth. no doubt about that. i can't think of a single topic you guys didn't cover, at least in part. i certainly hope that plane behind you is your ride back home because you deserve it after the past couple of days. >> no, no, i will be flying commercial. i will be flying commercial.

yeah. flew commercial here and back. not quite as roomy or as comfortable as the plane we go inside today. >> thank you. see you soon. as you heard, she did talk to gates, as well. microsoft is trading near a 52-week high. gates was on earlier today. he talked about the future of pcs and tablets. take a listen. >> windows 8 really is revolutionary in that it takes the benefits of the tablet and benefits of a pc and it's able to support both of those. so, you know, surface pro you've got that portability of the tablet but the richness in terms of the keyboard, microsoft office of the pc. so as you say, pc s are a big market. it's going to be harder and harder to distinguish products, whether they're tablets or pcs, with windows 8, microsoft is trying to gain share in what has been dominated by the ipad type

device. >> and joining us on the news line this morning brent thrill from ubs has a buy rating on microsoft with $33 price target. good morning. >> good morning, carl. >> a lot has been talked about not just regarding the share price but what you call this course correction away from pcs and into mobile. i'm wondering is the way gates framed it today a reasonable path? can you sort of be somewhere in the middle? >> we think microsoft can. remember our thesis on microsft is predicated on the enterprise strength. enterprises don't just switch over over night. clearly we think there's a way to extend out. so they're not the pure play such as apple or even google, what they're doing. we think microsoft is on that trac track. and it's still -- there's a lot of evidence we see to see. certainly as we move through the cloud and introduce new devices like surface, we think they can

start to address this. i could call this the national anthem in motor right now. we haven't even gone through the first inning. >> you've written, in our view, microsoft does recognize the shortcomings in its window business and has this considerable course correction plan to adjust challenges at least around windows 8. is is that what explains this stock over the last couple of weeks? >> i think what explains the stock is you've seen a software train wreck in q1 with earnings. over 60% of the software industry missed. we think two things are going on. one, microsoft multiple is just over ten times. it's been a safer parking lot. number two, everyone else in the software business has been blowing up so software has attracted that money. you look at other tech names like apple underperforming, microsoft is up 25% year to date with a 3% give dividend yield. apple is down 14%. we think there's been money rotated from other names into microsoft.

clearly, from this level at $33, you've got to get mobile right. you've got to get some of these new areas right for microsoft for this stock to continue its run. i think there's a third callous which we can talk about if you want. >> what is that? is that your price target, at least 40 cents above. when do you move? >> this company has not given shareholders a target on outyear numbers. they've been very cryptic in their guidance. we've been saying all along to investors that if they can pull an ibm and ibm gives guidance of 2015 of $20 in earnings, if microof could simply put a number out there it would get the bears off the stock in the sense that they actually have recurring revenue visibility. but microsoft has not done that. they think they can potential by do it with the new cfo coming on, head of ir very hirely regarded and we think they're thinking through this. i think that's the next big move. what makes us move, the stocks

ten times just over ten times the multiple is not outrageous. >> you mentioned the new cfo. that's a very good point you just made. along with that new cfo coming in, do you think there is a more out of the box discussion happening in redman regarding a spin off of xbox, regarding transformational m and a? >> i don't believe so yet, carl. we think that they have not announced this person yet, but we do believe the cfos in the running who we think are most likely to get the job are more shareholder friendly in the sense of one to get more metrics. just as microsoft has given more the stock continues to move up. as investors see proof that they're moving to mobile and doing things and not just sitting idle. so i think anyone that's come into this role understands why the stock has been moving and they want to give you more of that. so we think there is a

discussion going on behind the scenes, certainly we'll have to wait and see. >> yeah, that's going to be interesting to watch, brent, the next few weeks and couple of quarters are going to be fascinating, especially, you know, this $30 territory is always treacherous and we'll keep a close high on it. things so much. >> thank you. >> brent thill at ubs. microsoft's biggest competitor catching, apple is rallying 14% in the last couple of weeks. reclaiming the spot of the s&p's most valuable company. sema has more on that. >> apple is staging a major comeback. since apple hit an intraday low of $3.85 shares have risen 17%. while the s&p 500 has only climbed 4%. of course that sharp move to the upside has helped apple reclaim its reg as the most valuable s&p company, which it briefly lost to exxonmobil. a couple different reasons for the comeback in shares of apple, carl. first, of course, is a broader rotation of capital into

cyclical sectors. that's helping tech stocks like apple get a bid. second is the valuation. the street seems to finally feel like apple is trading at a aren't price to earnings ratio. third is that higher give did yield in this low rate environment investors want yield. now, apple has been powering the nasdaq to new highs. keep in mind, apple has an 11% waiting on the nasdaq 100. >> yes. as it goes, so does the nas, at least a lot of the time. thank you. when we come back on this anniversary of the flash crash three years ago today, we'll talk to the president and executive chairman of the cme group. he will join our own rick santelli live. terry duffy is after the break. (announcer) at scottrade, our clients trade and invest exactly how they want. with scottrade's online banking, i get one view of my bank and brokerage accounts with one login... to easily move my money when i need to. plus, when i call my local scottrade office, i can talk to someone who knows how i trade. because i don't trade like everybody. i trade like me.

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let's get to our rick santelli in chicago. a very special guest on this third anniversary of the flash crash. hi, rick. >> hi, carl, yes. we have the boss, the man, terry duffy. thanks. i don't know if i've ever sat next to you. i don't know if i've ever sat down for an interview period. third anniversary of what is known as flash crash. >> right. >> how do you remember that day three years ago and anything you've learned along the way that could clarify the issues of that day? >> i remember it quit well. the markets went down. very fast. now have coined that the flash crash. and subsequently looking into what we thought caused it and what others thought they thought caused it. i testified in congress several

times on this particular issue. you know, we were demonized to begin with say the future of the market was what caused the flash crash over a big asset manager putting in a large order. >> client of barclays. >> correct. putting in an order to sell the market to take it down. after doing the forensic on this, that was truly not the case. what we were able to show is showing congress quite clearly was that the market went down, the supposed client did not sell on the bottom so very small amount and sold on the way back up. so what we saw was our functionality kicked in, our market stopped and the markets replenished liquidity and went on trading and the markets kicked back up. what happened was in the securities world, some went into the new york stock exchange and they were down into their protocols and procedures of shut downs so the orders went to there, couldn't get filled, went to different locations and went to a penny. so it's kind of hard to say that the cme futures business caused

accenture to a penny. we don't trade at accenture. it's going to different pulls of liquidity looking for a fill. >> that is a bit depressing. if fragment taasation, i don't e the system changing any time soon. the dark pulls, the various flts forms have sprouted up. >> i think there's been some procedures and protocols changed, rick, since then. so we have not seen an event like that since then. we saw an event a week ago when ap was hacked under twitter account and it had some very disconcerning news that the white house and obama was hurt. that is serious news to come over twitter, especially at ap. what we saw on the way down in s&p 500, we never went down more than an index point and a half at one any particular downtick. so even though the market went down 18 index points, only went

down 1 1/2 ticks at any given time. so i think that people are starting to understand that the technology is better than it was just as little as three years ago. >> i had eric scott on friday and he's the founder and the president of nanex. he definitely thought, as you do, that it's more the hft dealing with the market than it is the market they create causing the flash crash. pretty much the volume didn't occur. it wasn't because they flipped it in that period. dropped down on the flash crash. did 10,000 contracts. one port purportedly with no liquidity at the bottom. we do disagree on something. what we disagree is on is hft a good thing. the way i look at it, i think they are in essence by using lots of orders they cancel, radar to see where the orders are. in my opinion, and i saw that barch hilton had a similar

opinion, why don't the exchanges charge them a little bit for cancels at least in an entrepreneurial way to regulate it. >> let's talk about htf is doing. they buy and sell on the bid offer constantly. what people do on our world is look for risk transfer. what people are doing in risk transf transfer, enter into the market in two ways. take the liquidity or price ord orders. no one has talked about limit price orders. when you supposed that high frequency orders are going. they are not chasing the hft traders. >> no, see, we have a philosophical disagreement. i believe the hft are in essence trying to swipe a license plate off every car they're passing on the high speed lane. his analogy was was that they really respond more to what's there than create something. we're going to constantly disagree on this. but i want to have one final issue. friday, last week, the cme was in an article in the "wall

street journal." he said the issue in that article was not fair to the cme, that you guys aren't the bad guys. quickly to finish up, maybe you can explain. >> first of all, you know, what that article said was we are a couple millie milliseconds in latent si. >> yes. >> first of all, let's talk about the example he put in the wall street. he put in that a customer is trying to buy a wti at $89.97 and sell a wti at $90.03. total of $60. it's $10 a tick. they are saying that hfts are trying to get filled on one side of the marked and determine which way the u.s. oil market are going to go over a $60 trade. to me that makes no sense. the example was poor. what we are doing is market -- the playing fields have been leveled. everybody complained about not getting a fill for an hour, a week, or a month.

>> and they did, you're right. >> now we're down to milliseconds. >> the issue that you are probably totally not guilty of is a delay caused by you trying to do a good job of a client getting the information. >> the new york stock exchange had two tapes. one for proprietary traders and one for everybody else. fined them $5 million. we're within a couple of milliseconds getting our order confirmations for your own order and people are making a "wall street journal" front page story out of it. makes no sense to me. >> i agree. terry duffy, thank you. complicated times. complicated topics. carl, back to you. >> you sliced right through it, rick. great stuff. thank you for that. thanks to terry. a programming note. today at 1:00 p.m. eastern time, three years after the flash crash, a special report on the rise of super power trading. our own jim cramer will play a big part. he was the first to say that the flash crash was caused by a system error three years ago. that is today on "power lunch" at 1:00 p.m. eastern time.

think the rally is run out of steam? not so for every stock. they are busy distilling the top five names that still have play in this game. [ male announcer ] there are people who find their own path. and never back down. who believe the american dream doesn't just happen, it's something you have to work for. ♪ we're for those kinds of people. because we're that kind of airline. and we never stop looking for a better way. it's how we've grown into america's largest domestic airline. we are southwest. welcome aboard.

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welcome back to "squawk on the street." i'm jackie deangeles. it's been a record run for stocks. one of the big themes as the markets are sitting at all-time highs is how to find value. i worked with one of our data team geniuses on this. we uncovered some of the undervalued gems, these are the names that still have room to run even in this market. we started by looking at the the ten s&p large cap sectors. five of them, of course, already in bull market territory since november's lows. those were the financials, health care, consumer discretionary, utilities, and consumer staple stocks. we crossed the sectors off our lists. we saw that technology, energy, materials, teleco, industrials,

they were the underperformers. we drilled down deeper and looked at the price to earnings ratios and found the companies that we're looking at were sitting below their five-year averages. then we looked for those that had forward pes that also show growth potential. so what are they? the top five on our list come from the technology and energy sectors. it is coincidentally the bottom two performers. in tech, apple, intel, and yahoo!. in energy, watching exxonmobil and hess. interestingly enough, carl, barron's had that article this weekend, apple ranked one in terms of its 500 top american companies, making the case that even though apple stock price has been beaten slightly down, the company's operating performance, their sales growth, and widely deployed cash flow give the company an edge over the competition. but still some other really interesting names to watch in tech as well. back over to you. >> we should save this tape and play it in the year's time, see what happens. thank you. a few moments left here in europe's trading day as they kick off the week.

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the european markets are closing now. >> and not nearly as active as last week but a lot of red today. first time in a while. >> yes. we extended our losses during the session. don't be misled by the uk. it's a public holiday today. that move is from friday. profit taking today after the big surge that we had at the end of last week. there is some data around some composite pmi data that shows

that the second quarter is going to be bad. don't be misled by that. as i understand it, there are revisions and the revisions we're getting today are marked positive from what we thought we were. the big news that's developing is what really to most observers amounts to verbal intervention from the ecb president mario draghi, reminding an audience in rome that the european central bank could do more action in order to help the economy. this is a clear indication that they are considering or he wants the market to believe they are considering negative deposit rates. you can see the move we've had -- whoa. you can see the move we've had on the euro as a result of those comments that are coming out of rome. remember after last thursday, there was some walk back by other members of the ecb saying that's not relevant now. he's really nailing his colors to the mask that it is potentially something they would consider. the reaction on yields around europe to those comments of draghi is interesting. some yields are lower, some of

the core countries are lower. slovakia is lower. as far as italy and spain are concerned they've seen yields rise during the course of the session. the bond market is el selling off. that could be profit taking after the strong rally we've had on the peripheral bond markets. other thing i want to mention to you is do watch this debate about austerity. yesterday the french finance minister gave an interview in paris where he said we are witnessing the end of a dogma of austerity. now, he is now going to berlin tomorrow to meet his german counterpart. and there is big pushback in berlin against the idea that france should be given, say, two more years to reach its deficit targets. it cuts to the argument about whether eurozone is going and it is by no means angle and merkel facing the election in september. the head of the french central bank may disagree on future

lower interest rates. carl, back to you. >> i like the notion that somehow the debate is over and now we can focus on serious issues. >> very french. i know the french very bell. >> simon, thanks a lot. let's bring in bob pisani and see what else is moving here on this monday morning. >> flat markets, but some end disease, new highs. the transports again out performing. this is i think the third day in a row. intraday historic high for the dow transports. it's nice to see the rouse sell 2000 out performing the underperform for about a week, about a week and a half ago. the important thing is we're finally getting confirmation. big banks among the market leaders today. citigroup, morgan stanley to the upside. the new york attorney general is planning to sue bank of america and wells fargo for violating some parts of the national mortgage settlement. that is not affecting those stocks. consumer and drug stocks, take a

look, are lagging today. a little more of a risk off. health care slightly to the downside. food company slump. i mentioned earlier this morning. cisco, the food company, both disappointing. a lot of people switching to cheaper chicken over beef here. finally, anniversary of the flash crash we talked about that in the last hour. and here's my thoughts about it. what's different this time? there are new circuit breakers. limit up, limit down. that limit the kind of movement the stocks can have. i don't think it would eliminate big drops but it will go towards mitigating dramatic drops. stub quotes were eliminated. that was that practice of putting a penny in no to bid on procter & gamble. some stocks t got hit on that. that's been eliminated. also, what do we learn? without getting into discussions about exactly what caused the whole thing, two things obvious to me. number one, it's garbage in, garbage out. you have to make sure your orders are rational. if you get quotes for stocks to bid bids and offers that the exchanges or traders can't make

sense of they shut down. one exchange will shut down. that was a major problem during the flash crash. secondly, you've got to have some kind of uniform method to slow down the market. that's what this limit up, limit down circuit breakers are supposed to do. it's a good idea, rational idea. it's not a perfect system. but it's a better one than we had three years ago. hopefully it's going to be better three years from now. guys, back to you. >> that's a good point to make, bob. constantly making changes and making things better as we go along. bob pisani at the trading floor. buffett sounding off on the markets. in his interview this morning with becky quick on "the squawk." >> in terms of stocks, stocks are reasonably priced. they were very cheap a few years ago. reasonably priced now. but stocks grow in value over time because they retain earnings and expand basically the company's underneath it. so i like owning stocks. i do not like owning bonds. there could be conditions under which we would own bonds. but there are conditions far different than what exists now.

>> everybody knows what he means by that. let's bring in two money managers to get their take. steven wood, russell investments, is here at post 9. and michael jones, office we're riverfront investment group joins us from new orleans. guys, good morning. >> good morning. >> here we are. i wonder if punching through 1600 would change your view? >> not really. it's century market psychological. i think markets are fairly valued here. fully value is a loaded statement. but fair valuations, we're at the top end of our range. what we're looking a lot at is fundamentals in the economy and earnings haven't changed a lot. the dynamics of a multiple expansion environment. we have seen that sentiment and momentum have changed significantly. so our investors in this world either, a,figgering out they're not going to get much out of fixed income and cash or are they going up the risk curve and understanding that the way to beat modest inflation and hit their vote over a long time is risk asset. >> you do have clients that who have not been exposed to

equities, saying i want in? or you've had those who are hedged, i don't want to be hedged, i want all in? >> we've got institutionals, retailers. depending on what their trying to accomplish. a common question is, is it too late, have we waited too long. and the advice we've been giving is you want to have that strategic asset allocation. you want to be exposed over the bear market, up over 140% over the last four years. that gis you the opportunity to trim some winners from our perspective and may be more of a question of security selection and stock picking. where are valuations attractive, we're a fundamental stable and multi-asset strategy is going to be where most people need to look and extend out their time horizon. >> michael, let me ask you about that question, whether or not it is too late. we're getting some, i'm looking at a note here from laszlo today. i it's not his target for year end but if you lay over 1990

trends, you're talking 1900 by year end. is that ridiculous? >> i think that's a little bit of a stretch. but we do think we're still about 10% undervalued on our model. and i think more importantly, there hasn't been enough coverage of the fundamental improvement that is driving this market higher. if you do back six months ago we were looking at trillion dollar budget deficits as far as the high can see. now, thanks to the sequester and to also the fiscal cliff tax hike, we're looking at getting the budget deficit below 3% gdp within a couple of years and what friday's nonfarm payroll suggests is we're going to do it unlike europe without having a crippling recession. i think the market is extremely excited about having a forward look on the budget deficit that we get it under control without the kind of recession that we've seen elsewhere. >> you do want eventually the baton to get passed. revenues flat for the quarter, guidance is more negative than it is positive.

when does corporate america take that baton and say, okay, we're going to stop buying back stock and start applying it to cap x. >> i think what the market is correctly assessing is this is -- $104 of earnings is really great in an environment where you are fiscally contracting out of washington. what we're seeing is just enough tail wind coming out of the recovering housing and auto seccsec sectors to keep the economy moving forward 1 1/2, 2% while we're absorbing big tax increases and big spending cuts. that balancing act is going to keep earnings from growing and certainly revenue from growing as fast as it would in a normal recovery. remember, we're weaning ours off of a debt depend si. if we can do that without a recession, the market goes higher. >> long-term positive. to wrap it up, steven. where is value? i mean, is it in heavy metals? is it in the caterpillars of the world? where do you think the catch-up is going to be done next? >> i think it's going to be more dynamic. if you look at the market year

to date, 14% year to date. if you look at the russell dynamic versus defensive, this is defensive market and you've been talking about that. so there's been these fixed income analogs that investors as they've gone out of fixed income they want fixed income. >> thank you, general mills. >> for example. so the staples, more defense uf plays. within the small cap space right now, the russell two-year, more growth oriented dynamic companies pick up. look global and we need to be dynamically sensitive but understand this is going to be a revenue environment. that's a stock-by-stock analysis. not all guidance is going to be the same. you've got it stock by stock. right now you think the xha is holding up okay. the private economy is withstanding the body blows from washington. housing and i think energy could offset the shenanigans coming out. >> as michael points out, too, it would be nice to have some of the shenanigans put to the side. guys, thanks a lot. michael and steven. when we come back, another

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literal literally. tim stevens is the editor in chief of gadget. he's taken it on the road, on the airport. he talked about how it works if you already wear glasses. tim, it's great to have you. you've written it up. you said in some respects it's both beautiful and elegant. what do you mean? >> it is. i mean, the design overall is nice and simple with this band that runs around the front. in some regards it's simple and elegant, but on other hands it's complicated and clunky. there's a module mahanging off the right side. i'm wearing it now and you can see my coming with this giant thing. >> you say over time, they don't actually sit evenly on your face. >> right. so there's a lot of weight on the right side of the frame versus the left. ultimately they wind up tilting offer to the right side. they try to counter balance that with a battery that sits behind your ear which does a pretty good job. they sort of still sink down to the right so your pictures are going to be off. >> we have pictures of you using this on your bicycle.

>> motorcycle, actually. >> motorcycle. >> yes. >> walk me through what that was like. you were wearing a helmet? >> i was wearing a helmet. i was able to get it under there. i took it for a ride in canyons in california. i should live hankout with my fan on google plus so i was streaming video live from this headset while on the back of a meyer so motorcycle. >> you wouldn't recommend it? >> i would not recommend it. it was a little bit distracting because you see the faceses of the people you're hanging out with displayed on the glass which is distracting on the back of the motorcycle. >> how about the airport? what practical use does this have? >> it's got google now built in which is the ability to give you updates on flight information. pop up warning for flights delayed or tell you what gate to go to. read your e-mails as you're walking. dragging two bags with you, you can tilt your head up and read your e-mails which is nice if you're a frequent traveler like i am. >> one big concern has been among people, would be buyers say i already wear glasses. am i out?

can i use this product? >> it depends on the frames. if you can wear contact, that's preferred. glasses, small discrete frame, you might be able to fit these over. we had a 50/50 shot. if your eyesight isn't good, definitely these are ail lit risky. ultimately this is a prototype version. google will have the final release for us next year and presumably have better support forepeople with eye glasses. >> you seem to think this has a future. >> i do. this is an early version. $1500 developer edition. early prototype. next year the cost will be way, way cheaper and the developer will do cool stuff with it. >> way, way cheaper. 1600 people laugh. they know this is a first crack at a new sort of secular technology. >> right. >> what would be a reasonable price, do you think? >> i think somewhere between $200 and $500. 2 hardware is not that expen expensive. year and a half processor from older smartphones. the only expensive part is this display. if google can make them with enough numbers, millions instead

of thousands, they could easily get the price down. >> first obvious birs would be, what kinds -- people in what kinds of jobs? >> people who travel a lot, i think it's helpful because you can walk down the street and say find me a pizza place nearby and get me directions. people willing to make the commitment to wear something like this on their face just to read their e-mails. >> we talked about the cultural thing you've got to get over. >> thank you. >> tim, really interesting assessment. thank you for coming in. tim steven, of course, with in gadget. when we come back, the biggest banks in hot water once again. we're bog going to find out why york's attorney general is going after b of a. ♪

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struck early last year by state attorneys general, the department of justice and five largest lenders. the banks were required to lower mort galk principle, pro vitd other types of modifications and foreclosure alternatives and improve servicing standards. there are 304 servicing standards in the settlement and

that it's servicing issue that has the new york ag suing. his office says it has documented 339 servicing violations by the two banks, quote, putting hundreds of homeowners across new york at greater risk of foreclosures. most of this has to do with time line standards that is answering a borrowers application for a loan modification within three day or notifying borrowers of missing documents or five days decide oong modifications and 30 days not pursuing foreclosure at the same time a modification is in process. that's called dual tracking. former north carolina banking commissioner joseph smith in his latest report out in february, he noted 5700 consumer complaints submitted to his office since may about half of which related to problems with loan modifications or customer servic services. this is a, quote, significant increase since his previous report. we've got plenty more details, of course, online.

realtycheck.cnbc.com. >> it sounds like we're going to have some personal stories from victims? >> absolutely. >> is there any significance to it being new york's attorney general versus the other 49 attorney generals around the country? >> well, he was actually the holdout. you remember that these negotiations over the settlement went on for many, many months. new york was the long holdout for quite a while. also, you have to remember new york has an enormous backlog of delynch quent loans. it's called a judicial state. that is it requires a judge in the foreclosure process. and there are thousands of loans that are still being held up by that. so obviously a lot of frustration in new york especially. >> we'll be watching for that this afternoon, diana. thank you very much. when we come back after the break, the inside scoop on a culinary paint that could fetch a whopping $22 million. robert frank is up with that next. [ male announcer ] with free package pickup from the united states postal service

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in today's million dollar minute, a chef who is expected to bring home the bacon. robert frank explains why a trophy painting for serious art collectors could set a new world record. >> this little pastry chef is worth big money. >> for this painting is 16 to $22 million. >> it's a painting from 1927. what makes it unique is that it's a portrait of a blue collar working class chef. >> it's a young boy, clearly in pastry whites, from a series of six portraits. >> he went from rags to riches after discovered in the 19 20z by wealthy and eccentric dr. albert c. barnes. >> he was a star emeritis, it changed his fate. >> the pastry chef became the image of the working class for

pastry. >> some sense is he was exposing the workers for the working class not only in pastry chefs but people in all different trades. >> it's a pretty safe bet there won't be anything working class about the highest bidder. >> wow. robert frank joins us back at headquarters with more on this. robert, are we in some new chapter where these multi-million dollar paintings are not just by picasso? >> i think so. you know, the auction house is next week and two weeks after that are expected to sell more than $1 billion worth of art. these are in the spring auctions. a lot of the headlines are about the post-modern and contemporary stuff. the jackson pollucks that are expected to sell for millions of dollars. these impression paintings we don't see them much. like every part of the art world now there is nowhere for the money to go.

when you get a good painting like this that has a great history, you will have a huge number. the record is $17 million for him setback in 2007. this could go well beyond that. so i think you're right. we are in a new chapter. >> just for those of us who are not art history majors. is soutine, he's been in these circles for a while and i didn't know it? >> yeah. he's one of the contemporaries in paris in the early 1800s and considered a bridge into impressionism. monet. really sort of looked in the underbelly of paris society. rather than painting the aristocrats he was painting pastry chefs. and his most famous piece is called "beef carcass" where he took a giant cow, rotting cow, left it in his apartments for weeks and started painting it. back then it was not popular. he became instantly wealthy overnight when this one collector, american collector

went into the gallery where he was showing more than 50 paintings and the artist soutine went outside afterward, hailed a cab and went to nice to celebrate his new found wealth. it was overnight wealth for this artist. that's what's unusual about his career. >> sounds like he might have been a buyer of one of those paintings back then given his wealth. final question, robert. i wonder, if you're at a dinner party and someone asks you if we are in the later stages of an art boub bubble now, what's your response? >> i think there are certainly parts that are a bub. we had ronald perlman on last week, major art correctllector, said there are bulbs where prices just don't make since. i think in certain parts, especially in the contemporary space, there's a big bubble. but it could go on for a long time because there's so much wealth out there looking for a place to go. >> yeah. fascinating piece, robert. thank you so much for that. >> thank you. >> robert frank at hq.

before we go, check on google hitting, yes, another hit all-time high in the session. 858.62 after a new one on friday. a previous one earlier in the week. year to date, google is up 21%. that's almost two times the s&p. nd that does it for us. back to headquarters with scott wapner and "the halftime." thanks very much. b we've got four hours to go until the close. we're mixed. the dow just dropping barely into negative territory. 15,000 there. but there's the s&p 500, fractional winner, as is the nasdaq today. here's what wore following on the half. the a of your eye. why individual investors are flocking to the stock and what it means to where shares could go from here. under the radar, jack black on what names will work as the market keeps climbing. first, our top story. that is the rally and where the next leg could take the