>> i rather have 85 than 32. jimmy brown, o.j. simpson. my wife's going to love that i said o.j. >> thank you for coming in. >> thank you. >> you agreed with a lot of the stuff. we have four seconds. thanks for coming in. thank you to kayla, robert and julia. make sure you join us tomorrow. i don't know who will be here. "squawk on the street" is next. good wednesday morning. welcome to "squawk on the street." we are live at the new york stock exchange. the agenda is jam-packed today. economic data, tech conferences, earnings, some high-level downgrades. take a look at futures off 14 points and europe, meantime, a bit higher despite gdp numbers. officially the longest recession

now in the history of the eurozone. even germany contracting year over year. stocks closing at record highs for eight of the last ten session, but as we said that gdp number did fall in the first quarter. the agricultural equipmentmaker posting record results on the top and bottom line and it will have some investors worried. >> macy's shares are on the rise after the retailer reported strong earnings and upped its dividend. >> the music space could be getting more crowded. google is expected to launch its own service that could hurt pandora, plus changes are in the works for google maps and we'll have the details. >> first up, we'll begin with the markets with an all-time closing high. s&p 500 posted an eighth record close in nine days, but across the atlantic, eurozone gdp fell 2% in the first quarter marking six straight quarterly declines and the longest recession on records and the nikkei hath new

five-year high as the weakening of the yen helped lift exporter shares. now 15,000, jim, and the market seems to want to look past some of these miserable gdp numbers. >> i have to tell you. i know this is going to sound parochial and also boosterism. >> okay. >> yesterday it was david tepper. okay? this is a man who is not afraid, who comes on squawk and basically lays out a case, and thinking those of you who are thinking the market will get hammered and when the fed is done you will be sorely misled, he puts a note of how recipe will keep going up and there is an eye on the market and tepper changed the equation. i can say this if you didn't watch this, but this market yesterday at 4:10 yesterday our market looked terrible and then the guy comes on squawk and you

say, oh, man. i'm going to get killed. >> we have to bring shovels. >> i think you need a deere construction. >> what do i know. >> hey, great restaurant. tepper could change the mindset of people. >> i made 2 billion, i have to cover my short because he came on and it was a dominant, dominant strategist talking. >> vix was higher yesterday and people were writing that it wasn't to protect yourself from the downside. i thought it was interesting. if the fed doesn't stop tapering. that's always code, but you have a recipe for a meltup and the fed has to pretty soon make it so it's just a very good rally

and not a pair bell onec rally. and we did see some meltup, but it wasn't just those names. there were large positions and it it was a domino effect. we talked about the short position and as people are covering and that is why you see the stock in a parabolic move, but talk about that dynamic to the extent that you can as a hedge fund manager. do you cover others? >> yes. you cover netflix and then you're worried about arrested development best buy and gamestop. these are valuation shorts and tesla, don't forget, morgan stanley came out with an incredible number. do you remember deutsche bank? it reiterates their hold and the target at 50.

he clearly is anticipating a two-for-one tesla split. why else would you use a $50 price target? >> don't say the word sell. you'll want to hold it as carl said from 92 to 50. ? yes. tesla was -- look, when it starts going down like it did yesterday it means there's finally supply. the supply was broken. remember the google price 1,000? oh, geez. did you see the google price target? >> there are $4,000 price targets on google. jeffrey bernstein in atlantic. morgan stanley, carl, they're wise to us and did you see their price target today? 996. they know we were about to put the hammer to them. >> thai did a 10 for 1 split we would be talking about a 100 price target and when you see this kind of activity where the guy goes 996, what you say is

apple better stop right here because everybody who took the price target from 600 down to 60 is in jeopardy because then they have to raise the price target because they've got to provide the value. >> you were the first person to point out that the value of that might not be as great as we think. >> it's true. you have to pick and choose very, very carefully. that's because they were making an enormous amount money from investment banking. when that has largely been staunched as a result, yes, you don't get the compensation levels and so you could argue, back then you had a lot of smart guys who were heavily conflicted and now the question is -- speaking of the street, of the 17 strategists that are tracked only five have yore-end targets above where we are right now at 1650. they'll get tepperized. >> you think so? >> they'll be tepperized.

absolutely. i hope they go to the supply with me on sunday because i'll start doing my planning where you get the best shovels. >> so the street is way behind the market. this is a bad game so what happens is they have to capitulate, capitulate, capitulate and then you're in a situation where the market's moved up too high, but that's a staggering statistic. i gave a talk at tulane and my daughter goes to tulane wall street series. i gave this incredibly bullish outlook and at the end people were, like, you're worried about the airlines? there are objectists everywhere. are you kidding me? europe bombed a while ago. look at those banks. look at japan another 2.5% or so overnight. now up 45% for the year and the

nikkei. one wonders whether the jgbs are getting away from them including the yield with .92 last night. we'll see. 92 basis points last night. yeah. >> relying on the eye on the market piece. surveys indicate that reserve managers have exposure to equities. >> wow! central banks are beating and raising these central banks and i'm raising my price target for the central bank right here. >> i understand you can't fight them. there's some saying, i don't care what it is. >> don't fight the -- whatever, nikkei. it is a moment. >> yes, it is. >> because we come in and you kind of expect deere. >> speaking of deere shares will be down in the pre-market despite second-quarter results and they have a cautious effect

in the fiscal year. it cited lingering economic concerns in many parts of the world. equipment sales are expected to rise 3% in the current quarter. that is below what are the current forecasts for d.e. >> that was not a great -- look, if d.e. has a history four out of the last five times that it got hit in the earnings call and the last time they did not go higher, but they typically do go higher. they said a couple of places that were weak. they didn't like asia. they took asia down. deere is a caution company. they make the tires for deere and they're not nearly as negative. they go from slightly high tore little change. i thought this was interesting. flat to flat to down slightly. >> the dollar is obviously stronger and having an effect.

>> although mosaic is out with corn plantings. >> this is the third lowest at this point since 1980. so there will be some activity in the last later half of the year. >> total cash receipts. i like deer's presentation, but the total cash receipts are good for the farmers. titan gave me a ratio of tractors to farms. russia and brazil very, very low. >> really. >> yeah. it was really kind of interesting. canada is more tractors than farms and it's incredible. >> it's an agrarian economy. >> although the largest cat dealership in the world is in brazil and it's in the heartland there. >> it is a very positive picture from brazil about banco ital. >> i'm warming up to brazil.

>> world cup and olympics. >> not past blue ribbon for those who are cynical. >> $11 billion bond deal. >> one of the larger once of all time. we may see larger one, but why not? by the way, they had 40 billion in demand. i think that's interesting. and you paid that dividend. who knows? >> that was amazing. >> we come right back full circle to what we end up talking about. cheap money. >> and petro. remember, mexico, venezuela and brazil have the biggest undiscovered oil -- let's call them prospects in the world. 11 billion to petrobras means schlumberger. you start getting mexico and pemex and they're denationalizing pemex, and i know venezuela is just horrible. they raised enough money to be able to drill, baby, drill or whatever it is in portuguese.

our viewers will tell us in a couple of minutes. >> we mentioned tesla wanting to ban sales from the electric carmaker and we'll bring you results from that showdown and boone pickens and what effect will it have? we'll talk keystone and exports. we'll talk exports. a little bit of softness on a wednesday morning. more "squawk on the street" live from post 9 in just a moment.

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welcome back to "squawk on the street." rick santelli live on the cme floor. we are waiting for industrial production pass utilization. we had tick data and it was on the light side for investors not sponsoring our financial assets as aggressively. industrial production for april, that is double what we were looking for and double down what we were looking for and last month's positive .3. utilization, this is shocking, 78.3 expected and 77.8 and last month downgraded from 78.5 to 78.3. why is this important? because last month at 78.5 that was the best rate since july of '08. so not only did we lower that

bar, 77.8 bridges us back we had 77.6 and it does change the dynamics of those rates. carl, back to you. >> couple that with what empire said today. interesting day shaping up today. shares of macy's up in the pre-market. it earned 55 cents a share in the first quarter. it did beat estimates. comp sales up 3.8 despite unseasonably cool weather in the spring in much of the country. retailer raising its dividend to a quarter a share announcing a $1.5 billion increase in the buyback and jim, comps up 3.8, margin's stable and this is every retailer high or low end. terry lundgren has done a remarkable job. but this is fantastic news, lundgren is not getting his due.

when you lose sales at jc penney you tend to be going to macy's. let's not -- we can't slight lundgren. he's done a fabulous, omni channel 360 fantastic job and he's revitalized this chain and it's a remarkable performance by this man and spent 2.2, so not quite through more or less yesterday. shrinking a cap and certainly does have a positive impact on that earnings per share number when you have fewer shares. >> right. macy's is again that kind of defines this moment. a higher dividend and the buyback. that makes it so that you're getting tight flow. the amount of shares being retired here at this moment is remarkable. this is the common equity

shortage. brings us to citi upping gap, as well. >> i was surprised that gap came back, and the stock traded 41, 42 and came back. urban outfitters will have a very good quarter. i continue to believe that williams-sonoma is doing fabulously. you go to the mall and see a lot of opportunity to buy stocks. it's a lot of stocks that are doing well. look, j.c. penney is a stock that's doing well even though i think we're going to hear. i don't like j.c. penney, but i recognize there are a lot of stocks. when kohl's goes up then you know this retail rally is for real. i know we don't have that camera work that we have. a man of your age having that flexibility? >> thank you. >> i get my leg above this level here so well done, my friend. >> you come and get my train

tore come to your house. he'll get you doing handstands. you'll be like cirque du soleil! >> i would like to see that. >> so would i, actually. yeah. >> google is holding their annual software developer's conference in san francisco expected to unveil a variety of new products and services including new maps features. also published reports said google is set to launch a music streaming service similar to spotify. the stock hit for the eight con skut of sessions. >> some tech reporters were able to briefly take a look at it. we'll see what they come up with today. >> google continues to do everything right. >> i love google maps. >> isn't it terrific? >> i love it. we'll look at the blue dot, and i can always know where i am. >> word by word directions so you don't even need your own gps in your car.

>> i got that ahead of you, but you can be a total moron and it's not like that great office episode where they turn into the lake. it is just a fantastic product. >> google is worth $1,000 a share? >> i think it can happen. i mean, geez. why not? >> it's not nose bleed terror for a multiple of any kind. they are connected in so many businesses, if you want to do anything on the web where you're selling something. you have to be on google's good side, so to speak. throat problems. right? >> yeah. the sad news that affected want just his voice, but his breathing. >> at one point i had terrible nodes in my throat, listen, you are speaker 15,000 words a day and you can only speak 10,000, and i had to give up my radio show. he has a very tough condition. he's a great guy.

it's very hard. when your throat is doing that it is very hard to be a leader and the guy obviously is an amazing guy. >> john ford is at the conference and we'll see if there is a new nexus 7 tablet. a lot going on with google. >> people think our country is a great joke. can you imagine? people say, china's so great. i don't think our country's a big joke. they think our government is a big joke. >> that's true. >> fbi launches probe of the irs. i mean, that is -- what a nutty headline. >> that's very nixonlike, but i do think google is a gem. i think people do not appreciate that this is the kind of company that you want to be an american company. >> we'll get jim's mad dash after a short break. do not go away. hey, so uh... what's going on here?

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♪ ♪ less than six minutes before that opening bell. time for "the mad dash." >> we're talking best buy. >> let's do that. the stock has been hot and people are saying it's a short squeeze. i point out that during the housing boom, the home entertainment theater business was best buy's strongest business. >> this is not fundamentals. are you kidding me? no. it's a short squeeze, but that's all right. we've given you -- if i'm

sitting there going -- we have the homebuilders coming public tomorrow. one of the things that the builders are starting to build back in are home theaters and these guy, now, all i'm saying is that this is a kind of de facto housing play and in the meantime people are shorter because they think of amazon. if i'm smart enough not to sell here because i knew the end of the world is coming, don't i want to sell here? >> what does that mean? look, here's what's going on with best buy. i mean, you know, this is one of those moments -- >> let's move on to clorox. >> all right. sorry. clorox. we've seen this over and over again. downgrade on valuation because clorox just boosted their dividend far more than people thought. the stock went up big and credit suisse says too high. there is a contest between the companies that have a better yield, 3.5% yield and they

obviously want to sell clorox. if you ever get revenue growth in clorox it goes to 100. you're betting -- by selling it you're betting against revenue growth and i think it's coming for some of these companies. i think the companies growing 1% to 3%. clorox, the big decliner was kingsford. if we get a warm summer you will see the stock up there because kingsford will come back. >> all right. we'll come back after the break for the market open. stay with us. [ female announcer ] what if the next big thing, isn't a thing at all?

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learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim. from td ameritrade. after that, another stellar performance on a tuesday yesterday with the dow up triple digits we begin with another opening bell in less than a minute's time. a lot going on as we talked about down graded domino's pizza on valuation. >> i thought that was criminal. the stock has run up so much. i totally get that. if someone wants to take profits in domino's at this point it wasn't so bad. it was ten bucks when patty doyle took over. what can i say? nobody ever got her taking a profit. >> we continue too watch google. we'll talk about more about the downgrade of blackberry today.

james murdoch selling shares of news corp. >> that stock's been a total horse and we talk about the debt costs, right? >> little did i know it was technical. >> i don't even know what that means. i don't know what that is. >> freddy krueger meets jason or something? i know it has nothing to do with making money. >> i do know we should watch the ten-year. >> remember "the omen?" what the heck was that? >> yes. >> it was led zeppelin or something. come o the led zeppelin, there, how much is that going to make us? >> there's a look at the opening bell and the look at the s&p 500. participants of the aids walk new york taking place sunday and resource, an independent energy company. it's time to fade the blackberry 10 rally, but not a short,

necessari necessarily. the price remains 15. it's a ping-pong stock. this has been held to this level. >> google's an droid. >> google owns its own handset maker which you sometimes forget. >> would you sometimes chide at them for doing? >> they spent $12 billion on it. >> how much did gilead spend? >> i wouldn't compare those two. >> why? contest it for hep c, there are 200 million people on he%-c. you can test for it. today we discovered they have a great oncology franchise. biogen, celgene, the four horsemen of the apocalypse for horse sellers. >> speaking of horsemen.

the journal writes about what they call geriatric growth. >> i thought that was interesting. my charitable trust owns cisco. that was very damning. >> cisco has to check into ventas. >> i thought that this was -- you know what? ooh a tough stock to own. i go back and forth with stephanie links. it is very cheap on every metric, but some people are calling it a value check. >> agilent. the biggest gainer on the s&p did beat by ten cent, but current quarter outlook is weak. >> this has got a lot. people suspected danaher will buy it. >> this also comes up in activist circle if there are such a thing. i guess there are because i hang around an activist circle. >> i said activist. >> the activis is also in the

news. >> there's nothing going there that i'm aware of, but it does get mentioned a lot because it does have separate businesses. i want to talk about what you did in terms of activis and hess did very well. >> now we're there. tomorrow is the meeting. so if there's going to be any movement in that, we will look at it. you mentioned activis, that being a.c.t. and it was the stock that precluded any ability for them to get something done there. >> and they canceled that may 13th meeting at bank of america and merrill. now activis going after the idea that they had been planted and got that stock up because people thought that might be a good deal and took them out of the realm. something's going on and then valiant. look at these stocks. >> these are very commodity plays and these are generic

drugs and they don't really have a lot of margin to them and yet mylan, you consolidate and the deal worked. i don't know, things happen. it's a $15 billion potential bid and it's like, you know. so what? that's what happens to a lot of bids these days. you have a lot of sellers that aren't really interested. and in a market like this you can understand why. best buy would have been taken private at 15. why would you do that? >> it's like louis c.k. and he treated like elton john was play at the hilton. no one is paying attention at these amazing things. >> a couple of stories at jpm. one, the journal says the proposal to split the bulls is run ahead of last year's 40% approval and then the deal that dimon is leaning on lord blankfein for advice and one source calls them friends.

>> maybe they're frenemies. i continue to think that jamie prevails. >> i think you're right. i think that the idea of lee raymond is not that good and cody not understanding risk. >> dave cody should come out and say can i understand why you guys understand risk? >> it's kind of embarrassing. >> if you are a j.p. morgan shareholders, if it does go against and he decides to leave. my charitable trust -- which is a possibility. he can make more money. he can go somewhere. >> i don't think it is about money with that guy. >> he may be doing something else. not that he hasn't made enormous amounts of money. >> david, sometimes there's more to life than money. it doesn't buy you happiness. >> how many boats can you water ski behind? >> how many houses can you own? >> i only have one.

>> how many houses can you own? >> by the way, you mentioned speaking of wealth, james murdoch does sell some news corp., the non-voting stock and it's not a routine sale. it's 20% of his stake and holds on to the class b shares, but what a run it has had. up 60%. this was an dollar 18 stock last june, i believe. these companies split themselves up and they were going to give the publishing division some money. also, let's not forget, this industry and cbs, cbs yesterday -- cbs was five bucks in '09. >> how i made your profit. >> the big bang upside surprise. >> people there waiting. we asked leslie moonves about it a couple of weeks ago, but the reit that will take place for the domestic outdoor business will happen by the end of the year and that will result in a lot of money coming cbs' way and

we'll have that coming back to shareholders and there is a belief among other shareholders that maybe they'll try to buy something. >> news corp., look, i think taking a profit. the stock has been amazing. i don't know what his role's going to be, but news corp.'s been an incredible stock and rupert murdoch has figured out how to return to shareholders in a brilliant way. >> someone broke that story. you did, until tomorrow and they're not going to be good and then a lot of other reporters followed with more about that story, but the stock is down a bit. >> hewlett-packard did reverse yesterday and ended down, i believe. concern, overall about pcs. listen, margins will be the issue here as i rarted, but carl icahn, they're out there. icahn's out there still trying to raise over $4.2 billion in debt financing and we'll see if they're successful for that recap plan, and i will say this on dell and i've run into a lot

of shareholders who say 13.65 or if you can give me what carl says in cash and even that going to zero, that being the stub. i'll take it. i'll take it and so -- it is going to be fascinating as we head into -- it's a while away, head into the shareholder vote. >> that's like the corning stub. forget them. that's a bad dude. >> but 12 bucks a share and $1.65 and maybe if he's right that thing goes up a lot so i go to zero and i go to their 12. am i willing to take that trade? silver lake's only putting $1 billion in additional equity and michael is rolling in so you're leffening it in a public fashion. i don't know if he can raise the debt financing. >> really? cheap money is available, but 4.2 for this for a company in significant decline. >> here goes microsoft once

again and microsoft obviously, in windows 8.1 could be good. $600 new pcs coming and maybe dell does have the ancillary businesses and dell should be sold. and walk away. >> walk away, walk away. sorry. that's from ronan. >> that's some -- some weird stuff is stuck in my head and i couldn't help myself. i apologize. deniro said that. >> i like that movie. >> before we go to pisani, google is trading above $900 for the first time ever. >> i have to raise my price target during the show. >> to what? $1,111? >> i'm taking it to $950. >> don't joke. >> no! >> let's get to bob pisani. good to have you back in the house. >> good morning. quiet open and cyclical rally

occurring and very interesting about the strange dislocations in the market and once again with choppy economic data on top of the roaring stock market that may empower manufacturing. ipo not particularly great and there was a lot of hope once the retail sales numbers came in last week. some people raised their q2 gdp estimates hoping the numbers would come in better and once again, there are choppy numbers here and the fed will need three, four months at least of solid economic data before they start considering their bond-buying program and a lot of people have that slated for september and we'll need good economic data for the next three to four months. i'd say right now the market is still very much out on how this will occur. look at this going on in greece. do you remember six months ago? the common wisdom was greece was going to leave the eurozone and now greek officials are talking about returning to the capital markets with more bond offerings

some time in the first half of 2014. greek yields on the ten-year are collapsing this morning. fitch is upgrading that with that and they're reacting this morning. dislooks in the market, the greek stock market is up 20% so far this year. it's one of the best performers. the german market is still at a new high and in japan, again, up 2.3% today, 45% this year. the nikkei, i asked christian schuller who is my adept producer about this. the nikkei closed up 8%. 30 out of 88 sessions this year. one-third of the time, the nikkei has been up 1% every year. you know how rare that is? it is up 1% this year. 30% of the time up 1% or more. let me move on to a couple of stock market reports and deere had terrific numbers and they cited positive conditions in the global economy. here's why, they lowered their equipment sales guidance to 5% from 6%. there is slight weakness in the

division that deals with construction and that's not surprising. cold spring and a little bit late and the key for deere is agricultural equipment in the united states and here the numbers are very good and they have very good guidance overall and it's had a good run here and i wouldn't worry about it that much. right across the board. not only did they beat, they raised the dividend and increased the buyback and reiterated the guidance. macy's has a 2.2% dividend yield and 2.2% well above the s&p 500. jim, back to you. netflix up another 9. don't forget "arrested development," there is 11 more days and i believe that will be a game changer for netflix. >> i always think icahn, how much money he's made on that name. good for him. >> let's go to rick santelli at the cme group in chicago.

>> thanks, jim. if you look at a chart of ten-year note yields you're wondering what was it that came out that caused the yield to drop? the next chart explains it. look at the boon. the boon set the stage for the drop in rates and what set that stage was the data, whether the eurozone in aggregate and soft gdp numbers and germany specifically and quarter over quarter it was positive by .1 and they were looking for .3, but year over year it slipped into the same dicey swamp that the rest of europe is. we can talk about funding, talk about auctions. you need to talk about jobs and gdp at least an equal amount if you look at foreign exchange for a minute and look at how the euro verus the dollar responded. since february 1st it is rolling over a bit and where is the bottom end of this, over 126 1/2 or so. if we look at the dollar yen. it is interesting and it gave up ground, but after, after the

dollar reached the level of 102.80, a new fresh high on an intraday basis going back to october of '08 and the jgbs, let's concentrate on these. they reached a yield of 192! if you open the chart up, there's a nine-month fresh high yield and it is double where those rates were on april 1st. david faber, is it time to get out the sony carving knife or what? >> let's stay in japan. 92 basis points on that jgb was interesting. do they lose control? keep watching that space with rick santelli. the smoke has cleared on the big news yesterday on sony involving dan loeb with a 6.3% position in the company. it's the largest shareholder now and a big move up in the stock price. it's interesting. the early headlines, of course, weren't completely rid. he's not calling for a break-up of this company, what he is calling, of course, is creating value through a spin-off of a

portion of sony entertainment. its large entertainment asset focused in the u.s. i thought it might be worthwhile to take a look at a few different things and consider it in the overall context of an activist effort because loeb known for all of those nasty letters from years ago has not done that many activist campaigns in the last five years or gone to proxy fightsal all. yahoo! , i think there was one other in the last five years and this one may never get to that point, either. in fact, if you were thinking that he might get action at the annual meeting that's not going happen because loeb approached sony too late to make proposals. he had to know that. of course, he knew that. this was not an in-your-face approach. by the way, also, he called and said hey, i would like to call and meet with you. so it wasn't him delivering a letter una nouned. in fact, they had scheduled the the meeting between loeb and management at sony, but all of

that being said it doesn't appear that sony will take loeb for his proposal to sell off through subscription rights with sony entertainment and when it comes to activism being able to get something done, not that he just missed the annual meeting. it's got a staggered board so it will take quite a while to get anything done. sony executives that subsidiary ipos rarely work and they will cite fox entertainment, for example, as an example of that. they've done their own subsidiary ipo, and we needed to raise capital when it came to sony finance. we don't need to raise capital at all although loeb is saying something different. 6.5% ntsb is what sony says. if you net out our cash, we are only one times levered. the idea that we need financial

flexibility and we can get that by selling part of sony entertainment to the existing shareholder base or the public at large is a fallacy. we'll see. is there value with sony entertainment? yesterday i interviewed berkoff, a long time media banker who has done deals of exact three this time. here's what he has to say. >> you look at companies that have music profiles like warner music and the film studio that looks like a paramount or universal studios and you also have the tv production. so those are very attractive businesses and can have a much bigger private valuation and getting reflected in the stock today and the stock is trading somewhere around $20, or $21 a share. >> 12, 13 or even 14 dollars a share. >> he is a conservative man. this is not pie in the sky. >> so this is the beginning of what may be -- may get

contentious at some point, but a long battle in which sony at least is saying we're not interested in that. we are going to try to execute in our current business plan. we believe the entertainment assets fit well with our business plan at this point. for his part, my expectation is dan loeb will hire advisers down the road and sony will do so and we'll see where we end up. he is the remembering laest shareholder and you're talking about a management team that does not own a lot of stock and he'll have a say. >> is he hedged in the end? >> no. listen, a lot of this is based on his belief that the yen will continue to fall and japanese businesses overall will benefit. >> totally agree with that. >> finally, guys, you can see the bottom of your screen, that julia robert sovrn's tiger management is out of apple as of the end of the quarter on march 31st. they had 42,000 shares at the end of last year and that's gone to zero. hard to say how much of that bleeding he missed. the stock was in freefall the first part of the year.

>> one of the biggest losers in the s&p. julia doesn't tolerate it, the concept declines. >> something to watch yesterday in the middle of the day. some discussion of what it's worth which we'll talk about later on, as well. >> a bear taking a swipe at apple. find out why he sees the stock falling to $240. >> come on! [ female announcer ] it's time for the annual shareholders meeting. ♪ there'll be the usual presentations on research. and development. some new members of e team lle uced the chairman emeritus will distribute his usual wisdom. and you? well, you're the chief life officer.

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plenty of stocks making your head spin today. google trading above $900. for the first time ever. the stock is up 28% so far this year. it will be the topic of a lot of discussion. we'll get jim's "six in 60" in just a moment. we oversee 20% of the world's financial assets.

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time for "six in 60" on a wednesday. >> this is what the company is about. they do 9.6 million shares and upscale the offering and people are immediately wealth. >> there are still sells on the street. >> safeway. oh, safeway's bad. goldman, it's not a good situation. they just did the black hawk.

there's not enough room for kroger and hopefully someone likes this group. >> very gutsy call ahead of the quarter, but i do believe the company is doing well. >> i didn't like these calls. if you get retail back you'll look back say why did i do this? >> i think noble is perhaps the most undervalued for eog and great properties in the mediterranean. >> abbd. >> this has been over the breakup of abbott. what a win. look at this. oh, look at this. look at how the telestrator doesn't work and it makes me look really stupid. >> that's impossible, jim. what's coming up tonight? >> i have nordic american tanker. this has been a disaster so let's figure out if it can turn. >> we'll see you tonight. >> simon's here to tell you what's coming up on the 10:00. >> we'll build on the analysis you gave us on macy's later on the program. also, should the united states embark on massive exports of liquefied natural gas.

boone pickens will join us and apple is turning negative recently and we'll have the analyst that may be responsible for that. he thinks apple will half in value. that's in the second hour of "squawk on the street." flying is old hat for business travelers. the act of soaring across an ocean in a three-hundred-ton rocket doesn't raise as much as an eyebrow for these veterans of the sky. however, seeing this little beauty over international waters is enough to bring a traveler to tears. we're putting the wonder back into air travel, one innovation at a time. the new american is arriving. how old is the oldest person you've known? we gave people a sticker and had them show us.

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welcome back to "squawk on the street." we're about 18 seconds away from the may read of the national association of homebuilders housing index, but just to put a face on it, we're expecting 43. the high watermark after the crisis has been a twin 47 read at the end of last year in january of this year. and the survey says 44. we topped our slightly revised last look at 41, and as i said weave had reads at 44, 46, and the high read is 47 and this inches a bit closer to that read. carl, back to you. ? all right. finally a number that beats instead of misses after empire and industrial production. the dow down about 15 points as we try to ease up after yesterday, up triple digits. nasdaq up almost two and the road map for the next hour and

google opening up the software conference today. the company expected to launch a paid music streaming service, but is this enough to propel shares above the $1,000 mark? >> the man who dared to suggest apple could half in value. he will join us later on to defend his thesis. >> liquefied natural gas overseas as domestic production hits all-time highs and we'll talk to none other than boone pickens to talk about giants like exxon. but first up, google set to hold the software developer's conference in san francisco today, and expected unveil a variety of new products and services including a relaunch of maps. published reports say google is set to launch a paid music business like spotify. joining us is the lead analyst for pc mag mobile. good morning. >> what do we know about this

maps issue and talk about how it was divulged inadvertently this morning. >> google has been, for a while, assembling all of this location-based content. they bought zagat, and then they bought frohmer's, the travel book publisher and they've been thinking about how to make maps more of a gateway to information than just the basic mapping service it's been up until now. they also want to make maps a lot more social. they want to get more people using google plus. so we'll look at maps as more of a window to this google proprietary information and then the social information as opposed to just maps. >> yeah. >> how much of this is another shot across the bow after their well known tete-a-tete regarding maps with apple? >> google definitely wants to prove and show that they have the leading mapping service, and they want to show that -- they want to show that they're advancing, but i don't think this is about apple.

i think this is about google being the premiere provider of web information and of cloud-based services. that is going to be the theme of this week's i.o. goingel is the cloud services provider and not about fighting over the end point. >> do you believe this spotify over the service story? >> i think it's logical. if you look at google music, it's done okay, and it's more of an offensive play and they see the next generation streaming providers coming in. spotify, deezer in europe and there's this beat service daisy that's going to be coming up and google wants to say, hey, when it comes to web services we should come first. we should be the best provider, so google will step up there. >> how much do you think in the aggregate, sasha is about divorcing themselves from the advertising model, away from display and more into areas like you mentioned like google plus.

>> i wouldn't say it's divorcing themselves from the advertising model. it's divorcing themselves from display advertising. there's a whole different kind of advertising and leveraging user data and that's what google does best. checking this user data and the user behavioral data and leveraging, two people who wanted to sell ads or sell products or collect information. so as long as google can get the eye walls. they're an eyeballs company and now they're an ears company. >> we spent the better part of the last few weeks, sasha, looking at glass in person with guests on our show, talking about the cost, the e fesh enzi and who's going to use it? who with will wear these things around, open society. i wonder if the conference will give us ideas as to how they're going to integrate products with that platform. >> they'll definitely give us a glass update. there have been developers working on it and a lot of buzz.

one of the things i'm excited about today is to hear more focus from google. over the past year there's been a lot of these scattershot products. we've had the glass idea. we had the nexus q. we've had various google hardware this, and google hardware that and people are talking about motorola. i want to hear about their core dreams of what the web will be made of and what they're delivering through the internet. >> how bad will people be about larry paige's health problems? >> i don't know. i'm not a doctor, jim. i'm just a tech analyst. >> is larry paige to google in, change what steve jobses was to apple. >> i don't think it is a company with one single visionary. i don't think google is a company with one apex of the pyramid. they have larry and they have sergei and eric schmidt. they have a lot of good people

lower down. i think if any one of those people dropped out, sure, it would hurt google, but it would not be crippling. >> obviously, sasha, the knock on this company and this was a few hundred dollars ago in the stock price. was there inability to discipline themselves in regard to the pie in the cost that people thought would come to nice fruition. it's closing in and well below $900 a share now. have they found that religion where they can invest in long-term projects without spending like drunken sailors? >> they request is if they found these projects like google glass and the self-driving cars and the core products like improving maps through the zagat and frohmer's content or approaching these ott players and killing them off with their own music service, and i think that's what google i.o. today starts to answer.

whether ooh a focused presentation about here's what we're doing with the core businesses as well as a little bit of this future. >> yeah. just to put a period on it. when we're done with this conference is the story going to have been map, music or something else? >> i don't know. goggle is always full of surprises and the way google glass was interviewsed and the impact it's had on discussion throughout the tech world has been a big surprise. i always like to hope for a surprise. >> we'll see what happens, of course. we'll be covering it all day from san francisco. sasha, thanks for your time. >> thanks for having me on. >> now to shares of macy's which are trading higher after first quarter earnings. the store chain raised its dividend by 24%. >> liz is a senior analyst at mcquarry and she has, and it is five bucks below where we are

right now. that is where i'll start off, liz. they seem to be executing extremely well. we got less constructive in the beginning of the year just as the thought on the entire work space thought it would be space under pressure and that sales growth was slowing and we did see that from macy's in the first quarter and we refused the price target after the conference call and sales growth for macy's was slower than expected and they delivered a result with cost-cutting and share repurchase and it wasn't a strong sales picture. >> operating was up 40 bases points and that doesn't seem to me to be under a great deal of pressure. >> i don't want to say a great deal of pressure, but we've been recommending macy's for a very long time and single digits at a prior firm. i moved to the sidelines with the thought that sales growth was slowing and i'm not saying there's anything bad happening there at all.

my rating is reflective of the fact that sales growth going forward is not quite as robust as it was previously. >> price target's probably under review and after the conference call we'll see where we shake out. >> can i ask you about j.c. penney. my sources in the industry tell me they've had a fantastic couple of weeks because they've obviously re-introduced the coupons and they were in the national press at a time when they still have mr. johnson's super low prices and people are getting stock really cheaply. the revenue is apparently soaring, but the flipside of that may be that they may be selling more or less at cost. what are you hearing and what is your view of j.c. penney in general? >> yeah, was there some buzz out that traffic trends improved. they came out with their advertisement think thatting customers for coming back so that was a sign, but there were also some hiccups in that whole strategy to bring back couponing. there were some reports out that

they'd been given $10 off $10 and many people were giving away free tou else. i think there is a period of transing, but the traffic coming back is very important and it's a good first step in terms of restoring lost sales. >> there's been a belief that macy's has benefited from the travails of j.c. penney. a, is that true? and b., is that going to stop now? >> it's true to some extent. i don't think macy's benefited as much as they were expecting or others were expecting. >> what they found was the traffic decline urt hur more with penney's. so they benefit a little bit. if penney's get their act together there will be some impact to macy's in the rest of the sector, but not anything too terribly onerous. i think, really, penney's drawing customers back into those malls will be important, as well. >> 10:30 call from macy's, anything of great importance we

should be listening for? >> i think the comments with the lower end consumer and the higher end consumer were interesting in their release. so the middle consumer for macy's which probably has an income of 80 to 120,000, that customer is good, but the customers at the upper end and lower end are both, you know, softer. so i'll be looking for more information on that. >> as will we. liz, appreciate your time. luz dunn from mcquarry. >> thanks for having me. >> next, should the united states embark aboard exports of natural gas or keep it here. the founder of bp capital boone pickens will be here and one firm soungdzding a big alarm on apple saying the shares are headed to 240. the analyst behind that call will give us his analysis next on cnbc. with fidelity's guaranteed one-second trade execution,

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>> with natural gas product at an all-time high the white house is about to make a critical decision. green light, the exporter of cheap natural gas in liquid form around the world or keep it here at home to drive down costses and give u.s. businesses a competitive advantage? boone pickens is the founder of bp capital and has done much, of course, for this industry. he joins us now live. good morning, boone. nice to see you again. >> good morning.

good morning. ? do you think that the white house should okay massive exports of liquefied natural gas? >> well, sure. i mean, the producers have gone out and drill. they should be entitled to the best market in the world. why should you keep natural gas down to favor other industries. it doesn't make sense. when you export gas you will create a lot of jobs and if you look at the industry, the industry has created a lot of jobs. so go ahead and move it out, sell it. >> i guess the tradeoff as people see it is the huge influence that the united states could have around the world. i mean, the cost of u.s. gas is one-third of what europe is importing at the moment. it's much cheaper than asia imports. it's a huge ability to have strategic power, but at the same time if alcoa was here, and coke

brothers were here, they would be saying this is an american resource. let's use it for american industry. let's be able to have that competitive advantage in so many other thins that they havas quell. the coke brothers in fertilizer and plastics were enjoying the best margins the company has ever had. >> they're not trance parent and sure, they want cheap, natural gas so they'll maker a lot of money. that's fine. that's america and that's the way it should be, but we should allow producers to export if you want to export. ? it's a two-stage process, of course. you have to build out the lng terminals and massive investment and you have to decide whether you will allow everyone around the world to get a hold of it. if you don't have a free trade agreement with the united states then you have to have a specific greenlight there as well. do you see both those processes

pushing it in an open door and they should just go ahead and how rapidly? ? i would go ahead and let the gas go into the global market. wh whether they have a free trade agreement with with us or not, that's not my field, but here you've got -- you know, the united states has the cheapest energy in the world. our natural gas is one-third of the cost around the world. asia, europe, others. our oil is 20% cheaper than the global price for oil, and our gasoline is half the price of gasoline around the world. so here you are enjoying the cheapest energy in the world. take advantage of it, use it, rebuild the economy on it and go forward. >> where are we on the environmental concern? there are many people watching who are really concerned about hydraulic fracing in particular and the costs that that could have to the -- to the well-being

of the united states. what would you say to them? they would be alarmed to think that hughed raulic fracing will be accelerated to provide cheap gas to south korea. >> well, you have been fracing wells since 1952. so that's 60 years ago. nobody ever said anything until recently. and we have fracked over 800,000 oils in texas and nobody has complained about it and now it wants environmentalists and screaming. get lost. this is something that's been proven over and over again that it is safe. so proceed and get the natural gas out of the ground and use it. >> hey, boone, it's carl. a lot of discussion this week whether we'll get a keystone announcement. it felt like the white house was

going put it out there in conjunction with some sort of broad climate change initiative and that appears to have been rolled back a little bit. do you think we'll hear more in the back half of this year? >> i don't know, carl. i've been very surprised that this decision -- you know, they're choking on a gnat. the decision should have been an easy one. there's 250 billion barrels of oil up in fort mcmurray. that oil is available to the united states. how does 250 billion compare arne the world? that's what the saudis claim they have. 250 billion barrels. here you are with oil at the level of saudi arabia, con tijous to america wanting to sell it to us. we are absolute fools if we let that get away from us. >> it's amazing to me, boone, even with all that policy and decision and some of the concerns that simon brings up, i mean, this is still, regardless of all of that, turning into a

huge economic tailwind for this country. david tepper this week said it would drive a manufacturing renaissance here. what we'll be responsible for in terms of output over the next few years is unbelievable. >> it is unbelievable you're right and we have built on the back of cheap energy in the united states. the economy does well. any country in the world that is using their own resources is doing well and that's exactly what can happen to the united states if we had a little leadership in washington to take us down that path. >> mr. pickens, are we sure? are we 100% sure that the reserves are as big as we think? because there are many oil majors who have that sort of calculation horribly wrong in the past? >> well, you say 100% sure? nobody's going to tell you they're 100% sure, but you know

what the source rock is which is a shale. now we've been able to penetrate the source rock with horizontal drilling and that is where actually i'm surprised at some of the recoveries we're getting out of these wells. i believe there's 400 trillion recoverable and that's a 135, and i believe that to be the case. >> i have to ask you about the piece you did with linkedin about your gym workout routine. you are 84 and you say that's just a number. you walked people through your treadmill, your weights, your crunches, although i'm hoping you don't do this every day in a suit and tie. >> no, i don't do it in a suit and tie. i just got through doing it at 6:30 this morning. i have a trainer eric olberg.

i can't shake the guy. i made a deal with him 21 years ago to keep me alive, and i mean, the son of a gun is there every morning at 6:30. so, yeah, i'm 10 degrees start and stop on the treadmill, and i go a mile on it. get my heart rate up to 135. i curl 30s and push and pull down 140, and that's all a true story, and today i'm kind of -- maybe i act a little bit slow this morning, but by 11:00 i'll make a good recovery by 11:00. >> and you put the refst of us o shame. boone pickens, good to see you. thank you for coming on cnbc. >> good. thanks for having me. >> coming up, the google developer's conference is heating up. there's the conference and we'll get more on what the tech giant can unveil later on. >> later on, banning tesla. a top executive will go head to head with someone who wants to ban the sales of tesla cars

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shrinking deficit projections are causing the street to rethink the program. steve liesman joins us on why it is more leakly. interesting after tepper's comments. >> right in line, the budget deficit increasingly seen as a catalyst for the fed to reduce its purchases of bonds to drive down interest rates. david tepper on squawk box yesterday flagging the problem faced by the fed. declining deficit means the governor will be selling less paper. the less paper the governor sel sells. right on cue, revising downward the fiscal yore 2013 by more than $200 billion from the earlier forecast to $642 billion. that compares with the deficit in fy 2012 with 1.2 million. the fed plans to buy more than $1 million a month in mortgages

and that plan remains unchanged at least for now. credit suisse, the new deficit projections raise the sustainability of the purchase. we still look for a tapering with the risk and the small cut say $10 billion come sooner. ubs says the fed could find itself paying more than 100%. in order to maintain a stable accommodation of the qe, the fed would need to reduce their rate of purchase. the fed, as you know has tied its purchases to the economic outlook, specifically improvement in unemployment, but making a change because of improvement in the deficit wouldn't necessarily contradict it. the fed has always said it could alter its qe amounts if they see that they're hurting the functioning of the market. that could happen if the fed takes down such a big portion of the treasury. >> here's my take. if its purchases are shown to

hurt market functioning, but if it's the government is lowering spending with no offset in private sector growth, the fed could keep its purchase or policies unchanged. this is about the fed sponge at the moment being too large for the projected puddle. >> yeah. interesting. someone pointed out, steve, we had so many front-page headlines when it looked like the deficit was going to be very bad and now that it's looking less bad a lot of the coverage is on a-14 of "the washington post." "the financial times," for the record put it on the front page. it's an interesting question. i will tell you, carl, there is skepticism about the sustainability of this deficit decline. there were a lot of prepayments by wealthy people in 2012 of their taxes because they wanted to get out in front of the tax increase and plus, as you know, there's the big payment from fannie mae and expected, but uncertain payment from freddie, so there is some talk this morning that also that maybe the

congressional budget office is getting ahead of itself in proekt jing these lower deficits to remain. >> interesting. steve liesman at hq. >> speaking of washington, breaking news out of there. eamon javers, good morning. >> the house oversight committee will announce that it will hold a hearing next wednesday looking into this whole question of irs, political targeting of non-profit conservative groups expected to testify and be invited to this hearing will be russell george, the inspector general and lois lerner and also neil roland the deputy treasury of the treasury. and the former irs commissioner will also be invited to testify at that hearing on wednesday of next week. they're going to announce that later this morning. that will join a long list of other congressional hearings, house, ways and means is expected to look into this, as well as over on the senate side,

the permanent select committee on investigation. so now we have at least three committees here that will be digging into this irs hearing and what i am told about this oversight committee hearing is that aides will be looking into the question of where did this all begin? it was one of the questions that wasn't necessarily answered in the report from the inspector general last night. why was this effort politicized very early on and focused director on tea party groups and groups with a bend to them. where was that decision made? who made that decision? that will be one of the things that they'll try to get to the bottom of in this hearing next wednesday, carl? >> okay. thank you very much, eamon. >> we have breaking news on crude inventories. oil is heading further into negative territory. bertha coombs has the details. >> it is a mixed report, simon. the government reporting that crude stocks declined by $624,000. that was a surprise. the expectation was for a build of about 1 million barrels which

is what we saw from the industry, but the big surprise is on the gasoline and in terms of the gasoline, they are reporting here a 2.6 million barrel build and the expectation was for a draw down there in the neighborhood of about 1 million barrels or so, and that right now is certainly sending gasoline much lower and that is leading the complex lower and we are seeing crude oil holding at around the lows of the session. as far as cushing, oklahoma, we continue to see a build there as we continue to see production increase there in terms of shale production on land. we saw 757,000 barrel builds in curbing, oklahoma. the delivery point for nymex crude. >> a lot of red on the screen. bertha, thank you. >> up next on the program, the man who says apple shares could half in value. he'll explain why after the break. [ laughter ]

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>> and we are an hour into trade. the stories we are squawking about, 7:34 on the west coast and 10:34 on the east coast. deere, down 4%. the farm development giant issuing a cautious outlook, due

to what it calls lingering economic concerns in many parts of the world. bank of america and citigroup hitting now 52-week highs and each up more than 40% in the last six months and the nahb home builder sentiment index coming in above expectations today rising three points to 44 in may. >> the debate over apple's share price continues. the shares of the company continue to drop this morning after a midday sell-off yesterday which you might have heard about. we heard well known investor david tepper saying apple needs to step up and do a better job at innovating. take a listen. >> we still have a position in apple. >> we bought a little bit below 400. i along with everybody else is waiting to hear what they have to say as far as do they have something revolutionary in the horizon? revolutionary? yeah. or do they have something evolutionary? >> if you don't have a steve jobs around to do the revolutionary sort of thing, do the evolutionary thing and you could still have something that

gets better. now, if they don't do either, we've got a problem. >> we've got a problem. >> our next guest thinks shares of apple are worth $240. david trainer, the ceo of new constructs and joins us this morning from nashville. good morning. >> good morning, carl. >> walk me through the metrics that lead you to 240. specifically, you're looking at comparable return on invested capital versus some of their peer, right? that's exactly right. it's a curse and a blessing to have a invested capital. they dropped to 270 last year. the current stock price applies 24% and i think that's an unsustainably high level of return for any business and much less one competing like consumer electronics. >> unless they what? unless they roll out another

revolutionary product like tepper suggested? >> i'm the kind of person that i would rather not bet on someone planning to revolutionize again. it's something that they've done it once. there will always be an american icon for what they brought to us, but the competition is stiff and unless it's something competely out on of 100 years in the future like the iphone was, i don't really think they can justify the valuation they have that implies these super high returns on invested capital. >> what specifically leads you to believe that those returns are not sustainable when it comes to the competition? is this a google story? an android story? or lack of momentum internationally? can you be more specific about that? it's all those things. when they started the iphone there was nothing else like that. some people will argue with you that the samsung galaxy is a better phone and that's a lot of competition and it's coming at it from all angles. they're all chasing the opportunity that you have 100%

on invested capital. that's getting a dollar back every year for every dollar of capital that you put back into the business. that's phenomenal and that will invite competition from all corners of the world and in an attempt to get a piece of the market share. so it's all those things. >> david, you don't typically hear about people talk about a return on invested capital leading them it a target price. can you walk me through, if they do fall, to microsoft's orc was 75%. if they were to fall to that, how do you get to a price for the stock from that roic? >> great question. so the set return on invested capital is 75% for microsoft. if that were apple's long-term return on invested cap it will. you are looking at 295 a share. mine is 50% on invested capital. that implies a certain level of after-tax cash flow, net operating after tax. you look at the cash flow, you

add the cash per share that the company has and you take out the debt and you take out option liabilities and you take out deferred tax liabilities and you get to sort of a net equity value per share that equals the $295 for 75% return on invested capital or 250% on invested capital. >> you are doing a discounted cash flow valuation? >> it's essentially discounted cash flow valuation. it's a perpetuity value on the implied note pad. it's detailed on the article on my blog. i show my model and it's totally transparent and my goal is to further the knowledge of investor so they can make a more informed decision and everything about this analysis is transparent and you can see it on the blog. >> i just wanted to understand the basics of it. thank you. >> neither you or the firm are long or short the shares? >> that's correct. i know you say you don't want to have to bet on whether or not they roll out revolutionary products, but you will admit there's risk to your model

because you do know what september or fall will bring. >> that's right. i would like to be on my side of the risk and i would not like to revolutionize some new market again. that to me is a home run bet. it's a lottery bet. i think it's important not to underestimate the impact of steve jobs. steve jobs is like the bo jackson of ceos. >> right. >> he did amazing things we may never see again and we wish he could have been around longer, but they're still fantastic people, but steve jobs of a singular personality who took apple to new heights. >> yes, he did. and with that, the stock's down about 2% today. david, interesting insight. we thank you for your time. >> great to be with you guys. thank you. >> david trainer with new constructs. the vote to split jamie dimon's role at j.p. morgan will be held now in less than one week at the annual shareholders' meeting. "the new york times" is out with a piece saying it's seeking

advice from lord blankfein about how to handle challenges over his role as chairman and ceo and the regulatory investigations of the bank. blankfein has told dimon that the storm will eventually pass. >> all things pass, of course, apart from death and taxes. >> one thing that will come to pass and that's a vote in tampa on tuesday and we'll see where that goes given what the journals say and how it's running versus last year's proposal. >> yeah. it will be very interesting to see if it actually goes against dimon. then we really have a story. >> it brings us to this morning's squawk on the treat. >> blankfein says to dimon, blank. tweet us@squawkstreet and we'll get your responses later on this morning. >> still ahead on the program, google jumping into the radio business. the company looking to offer a music service in man dora. a okay at what that means for

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the dow's down about 20. let's get to josh lipton. >> computer sciences taking a drop and the i.t. company lowers operating expenses and a tax benefit and there was a top-line miss. it dropped to 3.7 billion. the street wanted to see 3.9 billion. analysts say at some point you have to make the transition to revenue stabilization here. big-name investors, by the way. david einhorn's fourth biggest shareholder. remember the 13 fs start coming in fast and furious so we'll see if einhorn has made changes to that position, but csc at session lows down about 6.5%. simon, back to you. >> we'll see you tonight.

thank you, josh. >> airlines may now be colle collecting $3.5 million in baggage fees, but overall passenger satisfaction with carriers is now back to a serve-year high. customers are happier about checking, boarding and their in-flight experience and let's put off by charges, and according to the powers, stewart gripe puts a lot of that down to the fact that newly merged airlines can now afford to treat passengers better. >> the profitability in the industry is critical to making it a better experience. when we were during the downturn we had chronic unprofitability and periodic bankruptcies punctuating it. there's little money to make employees happy and to invest in things like wi-fi or in-flight services. so even though that consolidated industry may mean that it's tough as a frequent fly tore get as many upgrades as you used to

and perhaps there were fewer routes in the secondary or tertiary markets. overall a profitable industry may make us make the time more efficient and enjoyable when we're onboard and using an app to check in and a reservation. >> the airlines are up again today. what's interesting, guys is cramer absolutely called this one. >> remember the big call? a very, very upbeat on the airline, since may 5th, march 5th. >> delta air lines up 20% and united continental up 24% and the fact that oil is falling today is another boom to them. >> delta going vertical. >> now maying paying a dividend. >> that was a huge moment for the airline industry. >> cnbc is pleased to announce that it has now started on sots.cnbc.com which is my digital offering with a great

logo. look at that. >> kind of happy. >> like that. >> all right. when we come back, rick santelli is digging into the deficit numbers and he'll sound off on the discussion we had with boone pickens early on. john ford is there and we'll see when the company has to unveil later on today. everyone's retirement dream is different; how we get there is not. we're americans. we work. we plan. ameriprise advisors can help you like they've helped millions of others. to help you retire your way, with confidence. ♪ that's what ameriprise financial does. that's what they can do with you. let's get to work. ameriprise financial. more within reach. do you want the long or the short answer? long i guess. chevy is having a great-deal- on-the-2013-silverado- but-you-better-hurry- because-we-don't-want-to-see-

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time for the santelli exchange. rick, we now it's your turn. >> wow, i'm going to dig a little deeper into both of those. let's start with deficits. first of all, you know, i believe in balance. remember when you got the ball bearings in physics and you dropped them and three kick out on the left. three on the right. there needs to be a ambulance. many have overlooked my opinion. the true issue with deficits. when you pad the course with too much weight it doesn't make the trip as efficiently. and i do understand everybody wants to ring the bell on smaller deficits. i'm in the club as well. we need to be be honest about

it. obviously that's the main motivation. but there's another. we cosigned for all the losses. just hope it doesn't mean no reform. we need a free market in housing that isn't the government. nothing talks about free markets better than a really old book. wealth of nations 1776. hey, that was a really good year by the way. adam smith. what is the underlying premise of adam smith we can apply in ample helpings to a variety of issues in the day? that is who should best deal with the procurement? whether it's a natural resource like natural gas or whether the government should decide who gets loans or what what type of loans. no, no, no. it should be free market for free men. and as the wealth of nations

pointed out. don't worry about natural gas. the government can't decide what is the optimal level. supply and demand forces. you never want to scream a good idea down a well. you want to jump up and scream it off the side of the mountain. i was right when we did the conversion on a nat gat vehicle. jim cramer is right. natural gas affords us great things. please take advantage of it. the last issue is also about freedom. the irs story. and the reason it's in my wheel house a bit is because i believe that conservative principles of finance are the best route to the country. so in the irs story, who benefits and who is motivated, and how will the markets be affected?

what is the motivation to squelch the merge? these conservative groups are -- the motivation is a de facto defunding. the voice to be squelched. keep the issue nonpartisan and keep it simple. motivation, benefits. what was what was the motivation? de facto, defunding of voices that have started to get very loud. who benefits? listen in the end it doesn't seen to me people have any benefit or motivation to do the thing we are learning about. keep it simple. keep it honest. keep it nonpartisan. >> hopefully we get some anxious to the questions, rick, when the hearings take place on the 22nd. a little bit later on. one state looking to ban test la from selling to consumers.

we'll have both sides of the argument. a debate you can't miss here on "squawk on the street." bny mellon combines investment management & investment servicing,

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siemens. answers. we talk often here on "squawk on the street" about the girth of merger and acquisition

activity. one deal reported on by bloomberg and reuters. but actavis in in talks to acquire a small company with tax advantages. there are people who wonder about the strategic benefit of the deal itself. but what we have also learned is mylan, which is smaller in capital did not long ago make an offer for the company in a so-called love letter, if you want. they didn't say they would go hostile. we do know about the offer. two-thirds of it was in the stock. respected market caps to the companies at the times were very similar. activists, as i said, is a bit larger now. it would have given shareholders a 48% stake of the combined company. and when you talk to people in the industry, they note, hey, the synergy is there for these two companies. at least $500 million, for example, chime in the analysts

at jpmorgan. actavis shares up again this morning. we'll see if a deal goes on there. that prompted mylan to send a letter to which it quickly got a no thank you. and thus we are left with no deals, at least as of now. >> of all the sectors to watch this year, i see randall stevenson at a conference today asked about mmy and europe i am trying to get the quote right here. not the place for that sort of thing as of now. not to say he's not open to more deals down the road. it's tempered by the difficulties around the globe. >> others are going in, notely from asia ya. this is the time to pick up cheap assets, some would argue.

>> guys have a good one. we'll talk some of the gdp numbers. if you're just joining us this morning, here's what you missed earlier on. welcome to hour three of "squawk on the street." # here's what's happening so far. >> if they're taking the -- they're tapering because we have strong growth and inflation is coming back, yields are going to be higher. are they 2 # 0 basis points higher? no. i just don't see us shockingly coming from an era of deflation to one of inflation. >> there are 4 thourk price targets on google maps. >> but morgan stanley, they're wise to us. did you see the price target today? >> 996. they know that we are about to put the hammer to them. >> you start getting mexico, denationalizing pam-ex. i know that as well it's just horrible. but i'm saying they just raised enough money to be able to

drill, baby, drill. or whatever it is in portugese. >> here you are with oil at the level of saudi arabia, contingent to america, wanting to sell to us. we are absolute fools if we let that get we from us. >> you know, it's something that they don't want. it will always be an american icon for what they brought to us. but the competition is stiff. >> good wednesday morning. we are live here at post # at the new york stock exchange. yet another session with a slow build throughout the morning. started in the red mildly. now crossing into positive territory at the same time. s&p 500 is one point higher at

1651. zynga seeing a big spike following news that jana has taken a large stake in the company. oil and gold both slipping today. falling for the fifth session in a row. oil trading at a weak low. weighing on prospects for energy demand and gold declining thanks to a continuous dollar. let's get to the road map. google above $900 for the first time ever. news of a possible streaming service. now leaked pictures of google maps pushing the stocks higher. plus, a top test la executive takes on the organization that wants to ban the vehicles without a dealer network. the two go head-to-head in a few moments. and the company's forecast is coming in cautiously. should you be selling it? we'll tell you how to plan. but first up, a keynote address

is about to begin in san francisco. want to check in with john fort at the mosconi center. obviously a big splash. what is the headline going to be? >> i think the headline may be if there is new hardware and i am expecting something at the very least, i heard from a source that the new seven-inch tablet has been passed around headquarters lately. it sounds like that's ready. maps are a are really big deal. an area where google is in the lead a year ago. maps is like the search of mobile. it's a central feature. so that's going to be really important. and this is a battle for the hearts and minds of developers. in less than four weeks apple will be in this very spot trying

to rally the the same community to their cause. this is really what it's about, carl. >> when you talk about hardware, jon, obviously glass has gotten so much attention. what would signify a big move forward in hardware? >> glass, it's funny that you mention that. i think 1 in 20 people here this morning has it on. literally. it's all over the place. tablets, extraordinarily important because of the way those are leading the charge against the pc. we talk about the decline of that. apple is still able to keep the lead in the google market. google will want to convince developers with their hardware and with the keylime pie of android, they have something these developers want to get behind. they need the apps. google has made advancement in higher resolution screens. expect to see them keep pressing that at lower price points than

apple. >> people in silicon valley like to present sometimes that they don't pay attention to the stock price, per se, but clearly google above 900. we have four targets now on the street of $1,000. how much of that do you think is permeating the room? >> a lot of it. a lot of it. friends i talk to at google always know exactly where the stock is, even if i have to check to see what it's done. people are very much aware of that. it gives company the sense of asengs. and google is doing well on the services realm as well. those are things that real people are using. and there is sense that investors are voting with their dollars and that's impacting the stock price. >> yes, indeed. and we await the headlines tla you're going to bring us later on. our jon fortt out. and macy's did top estimates. they raised their dividend.

they upped the share buyback program. courtney reagan is back at hq. >> while my caters have had their ups and downs, macy's is steadily gaining ground. for the first quarter they had a profit of 65 cents per share. that was in line with consensus. the department store is increasing the did i have dend by 25%. and increasing the repurchasing authorization by $1.5 billion. bringing the outstanding buyback to $2.5 billion. the retail reaffirms the full-year guidance. while many are worried about cooler weather impacting results, macy's has impacted the headwinds. they did mention, quote, sustained unseasonably cool weather, in northern climate zones. interestingly he also mentioned weakness among the most budget conscious consumers and the

higher housing bloomingdale's customer. but the strategy is targeting the core middle consumers, including my macy's. the omni channel. and those seem to be resonating. so far in 2013 macy's shares have outperformed the s&p retail index. macy's first quarter same-store sales up 3%. they haven't had a same-store sales quarter since '09. the average since then has been 4.2%. many believe that defecting jcpenney consumers are going to macies. the company hasn't confirmed that since this quarter when it said macy's was seeing an influx from yc penny. >> definitely worth a look if you haven't checked that out. courtney reagan back at hq.

dow, s&p 500, russell and mid cap all at all time highs. josh lip on the has a swell on netflix, too. >> yeah, netflix is in the green today. we did hear from jan na partner who is told us they disinvolved the share. now hitting a new 52-week high this morning. now up some 160% just this year. remember icahn, big shareholder here. told our own scott walker last week he has not sold a single share of netflix up more than 4% right now. carl, back to you. >> josh, thanks so much. news from the airline sector today. the department of transportation releasing data on flight delays, lost luggage and consumer complaints. phil lebeau joins us today from chicago. hey, phil. >> and we're talking about the results for march. some people look and say relatively good month because they didn't have a lot of bad storms out there. overall the on time percentage rates for flights was 79%.

the highest three, hawaiian, virgin america, alaska. the bottom three on on-time arrivals, press jet, which is a regional carrier followed by jetblue and frontier at 74%. 3.05 bags per 1,000 passengers mishandled. that's a little better than march of the year before. and one more stat as we take a look at the airline index with all the stocks off to the races today. in the first quarter an average of one passenger per 10,000 was bumped. you always hear people saying i got bumped or i know somebody who got bumped. on average it's one person for every 10,000. >> i have a feeling a lot of viewers are saying that was me. really quickly, you have a number of things working for the sec tar. you have crude down almost $2. we're seeing capital return to shareholders. and then i imagine we're talking

about fare hikes later in the year. >> and the summer bookings are trending positive at this point. you have a lot of factors moving in favor of the airlines this year. we also have the transports at an all-time high. you see a lot of investors moving into the sector right now. >> phil lebeau, we'll talk to you soon. when we come back, tesla, as you know, some of the hottest cars on the road. one state wants to ban the company from selling to you. we'll find out what tesla has to say in a few moments. first rick santelli looking at consumer debt. not here but in europe. right, rick? >> absolutely. the question is. we all we know who has the consumers with the most debt in europe. you may be surprised at the answer. and i'm going to give you a two-fer today. 24 hours and 10 minutes from now, we're going to have a really special guest. bernard connelly. why is he special?

he was instrumental in development of what became the euro in a book he wrote decades ago. how do you think he feels about the euro now?

150 years. from the civil war era, right up to today. and through it all, the california teachers association has stood strong. for the legislation that established california's free public schools... ensuring funding for all students... the first law to reduce class sizes... and establishing community colleges. our schools may have changed,

but our commitment to california's children never will... because we know quality public schools make a better california for all of us. phil lebeau just mentioned transports trading higher today, hitting a new one-year high as we continue to look at all kinds of things. with that we go to josh lip on

the back in headquarters. >> the airlines are flying higher this morning. the airline index enjoying a nice warming in the green. some airlines have ripped higher this year. united, u.s. airways, delta. jim cramer has been a fan of the airlines. h points to the massive consolidation of the industry. the fuel situation has stabilized. his favorite name in the space, usair. >> very nice by jim back in march. tesla may be firing on all sicylinder cylinders, but if north carolina lawmakers have their way tesla sales will be banned in their states. they would prevent what they're calling unfair competition with car dealerships. and on the cnbc news line,

robert glaser. president of the north carolina automobile dealers association. good morning to you both. >> good morning. >> walk me through exactly what you proposed and the likelihood of success in the legislature in north carolina. >> well, carl, first and foremost, thank you for having me on. i appreciate the opportunity to talk about this issue. we believe if you're selling cars in north carolina that you should be licensed to sell cars in north carolina. and we believe in the franchise retail system. it's been in place for 100 years. it works to protect the consumers. it works to protect the customers. and that was the emphasis on the franchise bill that was filed. >> is it a matter of not wanting to see tesla dealers at all? >> no, we would love to have a tesla dealership in north carolina. it's a beautiful car. we would like to see tesla make

a dealer, pick any dealer that they choose from anybody they wish. and create a dealership in north carolina. >> obviously you built a model much different than that. why not go the dealer route and how worried are you that something like what happened in north carolina picks up steam around the country? >> first off, let me make a point in response to mr. glaser's points. we, too, believe we should be licensed in north carolina. we will pursue that over the course of time. i also think it's interesting that mr. glaser asserts his mission is to protect consumers. i think in this national forum it would be interesting for consumers to understand that's what the dealer model products. this requires a great deal of education. we believe that education, the ideal setting for the location is in our stores.

we also believe -- there's a fundamental conflict of interest in the dealer model as the education process is inconsistent with the dealer model, which is to move product. and fundamentally that's what we believe. that's where we believe it all falls down. what's happening in north carolina, if i mig, what's happening in north carolina is the dealer's association is changing the rules f the game. they're moving the goal post. they're fundamentally disenfranchising north carolina consumers from having the ability to order a car in the privacy of their own homes. they are changing the rules of the game. >> there's that. there's the notion that the state will miss out on sales tax from residents who go out of state to buy. when he mentions this idea of protecting the consumer. protecting them from what? are there safety concerns that you think dealerscan help us with? >> no, not at all, carl.

there are 7,000 licensed car dealers in north carolina. . #,000. all play by the same set of rules. and these rules have been in place for 50 years. we just believe that test la or any manufacturer should play by the same set of rules that everybody else plays by. those are good for the consumer. sthair good for the dealership. they're good for the employees. they're good for the families. and it's a model that's been in place for 100 years and it work works. >> if i might, we fully intend to play by the rules. what's happening here is the rules are being changed to protect the deal model and exclude us. and to be clear, we will pursue a license in north carolina to set up our stores. in fact, we already have service set up in california to service the 80 vehicles we already have

in the market and the 60 more or so that are to come. north carolina consumers are buying the vehicles. they're interested in the vehicles. it's a great market. it's innovative harkt. we have a lot of uptake there. we want to service the consumers. ultimately we want to set up a sales presence. and we want to do so as a fully licensed entity in the state. we don't want to see the rules change midstream. >> robert, be honest with me. the chances of this bill's success, is this going to happen or not? >> well, the bill was passed by the senate this last week. one of the commitments that we made that we intend to sit down with in north carolina before the bill is debated in the house and sit down and talk about what issues and what concerns we can share morning -- between each other. >> do you have a feeling other states are watching?

and other legislatures, perhaps, going to copy zm. >> oh, i believe this is a big issue around the nation. i think it's a big issue going on in texas where it's about ten days left in their legislature, in which legislation has to be passed. i believe it's a big issue in virginia, in maryland, where the dmv has said that the tesla model is not the best model for the consumer. so this is a big issue across the nation. >> before we go, a little bit separate from this topic, but i would love to get some color from you on the sentiment in the tesla offices. with regard to what the stock has done in the past few days, the calls out of morgan stanley, skeptics on the street seems to throw in the towel. how do you guys respond to all of that? >> i would say two things. your colleague in the previous segment mentioned here in silicon valley we don't pay very much attention to the price. i'm going to hue to that

philosophy. i've also learned over the course of many years working that i don't like to get ahead of him on these sorts of issues. i'll leave comments on these sorts of things to him. >> he tends to move the ball when he wants. there's no doubt about that. i still appreciate you guys both coming to the screen or the phone. it's an interesting debate that we'll watch closely. thanks so much. >> thank you. >> robert glaser. still to come, the investigation into the irs is heating up in washington. we're going to take you there live. >> and mary thompson is live with benmosche coming up. you make a great team.

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page today and it's almost hard to believe. >> it's hard to believe and hard for eric holder to look forward to what's going to happen to him at the house judiciary committee today. that's not any indication of how rough the it's going to be for him. listen to him first of all saying what he expects to happen on the irs controversy. >> my question isn't about who is going to resign. my question is who is going to jail over this scandal? >> of course, that's only one of the two things that eric holder can face tough questions on. the other is the ap phone records in a leak investigation. john boehner, since we don't know the details of that issue was subpoenaed, found that

confusing. republicans are going to ask him about that, too. >> i'm hopeful that we're going to get a clear explanation for why such unprecedented action was taken. it befuddles me that there could be some justification that would allow them to infringe on the first amendment to the constitution. >> so we have a bundle of scandals. of course, we have the lingering questions over ben gauz. this is a very difficult time for the administration. eric holder will be in the line of fire this afternoon, carl. >> yeah, a lot being made of the criticism he has gotten even from staunch defenders like john stew ward. thanks so much. our john harwood. the new york times is out with a piece today that says jamie dimon is seeking help on his

role as chairman of the bank. he told dimon the storm will eventually pass. fill in the braining. dimon and blankfein walk into a bar. blankfein says to dimon, what? we'll get your responses when we come right back. >> and mary thompson speaks to aig ceo with a cnbc exclusive. also, we'll get the close and the impact on us here this afternoon after the pretty miserable gdp numbers. back in a minute. fá7á#c#,

markets are closed in europe. and apparently the economy also having trouble getting out from under, too. the longest recession in the history of the monetary union. simon hobbs with more on that. >> it really points to the assets particularly here. so you're looking at a stock market in europe that is climbing ever further into a territory we have not seen since the summer of 2008. so basically five-year highs because of what the central bank is doing. because the stocks are cheap. but the economic situation is very poor. today the governor of the bank of england, the outgoing governor of the bank of england was able to say that he saw recovery in sight as unemployment rose again in britain. but the figures are written

large for what happened in the first quarter of the year. just see the difference between what we had here in the united states and the rest of europe. these are annualized rates. europe reports its data in a different way than the united states. and you can see as jpmorgan puts it the euro zone is still in a prolonged recession and the weakness spread to the courts. so france contracted as an annualized rate of 0.7% in the first quarter. now you can say the very cold winter had a lot to do with that. but most people would point to what is still very large and controversial. back to you. >> you think back to what temperatureer said. one of the few risks is the risks of riots thank you so much. simon hobbs.

rick santelli in chicago with a look at rising consumer debt in europe. rick? >> absolutely. austerity is the problem. i'm going to buy that one soon. what country has the highest consumer debt? i'll tell you, dan, i'm glad that you brought this up. the guest today is dan, i would have picked greece or spain and i have been so wrong. >> i was shocked myself. it's 250% of consumer income right now. and france is only 125%. and it's bigger than greece is big a significant amount. so you look at the whole thing and come up with something like holland. and the point behind all of this is the what ifs are still out there with the european economy. we haven't had any bad news. if we see something bad come out of there, is it going to have an effect on us? >> i have to jump into the

austerity argument. it's so easy to take what you know you need to do, which is tough, and find a way to bad mouth it so you don't have to take the tough action. certainly you can't stop spending all together. we are supposed to prime the well. if you don't fix structural issues and you raise taxes and cut spending, of course that will end up in disaster. this discussion is about ideology, not solutions. >> no. it isn't. we have all gone through periods where the income isn't as great as it once was. what do you do? you cut back. then you build up your base over time. then you feel comfortable. if you have a downturn, then maybe. >> it's okay to borrow money from a bank or relative, but more important, it's probably good in good years to save some money. >> absolutely. >> so when you have the bad years you can protect yourself.

it's a very different argument for me to see the countries have stopped spending money all together. raising taxes seems like the biggest culprit. >> i would absolutely agree. this can't go on forever. some point you have to be able to replenish the wealth. >> the consumers are 250% in debt. okay. and the notion of europe with export issues with the yen, how are they going to resupply the consumer? it's got to be through job growth and prosperity, right? >> just think of the number, 250%. let's say you owe 250% on the value of your house, your mortgage. >> oh, we have been there, done that, dan. and by the looks they're trying to up the same game again. it's always have fun to have dan. you get a glimpse of the conversation that traders have on the floors. >> that's why we're here, rick.

thank you so much. bob pisani is here at the big board watching what is moving. >> amazing market. i know you were talking to phil about it. a couple of news events are going on the bank f ceo is talking about margin expansion. fool prices are starting to drop. then southwest just came out a few minutes alaska. from 1 cent to four cent. that's a major issue for them, too. delta restarted them back in 2008. how about zynga and groupon? they vn had a lot of great news recently. look at these stocks moving up here. looking for the numbers here.

21 million shares. 3% stake there. and for zynga, 25.4 million shares. and look at the stocks moving to the upside here. elsewhere, there are have strange things going on in markets. i get asked every day what is going on in bond market. that is drifting to the downside. yields moving to the upside. it's hard to tell right now. put u up the dollar index. this has been a huge move in the last few weeks? i think gold is down again here today. gold is below $1400. so you're getting commodities under pressure. so you have bonds generally down. you have commodities under pressure. you have the dollar moving to

the up jb side. a lot of people feel that job improvements will suggest the fed may stop or curtail the bond purchasing program. there's a lot of turmoil in markets outside of the stock market. and a lot of guys are trying to figure out what it's going to mean for stocks. it's a hot topic. carl? >> thank you very much, bob. bob pisani. in fact, we have one of the guys here next to us. i would love to just hop onto what bob just said. where is your head about a taper and where the effect may be? >> you have to see when it comes out. when do the fed presidents? yeah. because what they're facing right now is kind of funny

event. you can see the deficit is going down. you are having a smaller and smaller supply of treasury. and from the paybacks you'll have a smaller and smaller supply of mortgage backed bonds. if fed said we're going to buy 85 every month it may have a distors nargs they can say, okay. we're going to do $55 billion or whatever. the markets would take that very, very badly. they may say there are also alternative products we can buy with the $85 million. you've heard santelli talk about it. you heard a lot of people, but

nobody from the fed yet. the thing they have to worry about is supply and disrupting the market chblt let's see if they begin to pick up the topic. >> for a committee that struggled with communications policy, that will be a hard hill to climb, right? >> it is. you would think they would reserve it for the chairman or the vice chair. i think we will be on alert to see if there are any surprises coming out. if you look at it, how about buy on monday night. this year 67% of this rally and since the low last year, it's 83%. i've never seen anything like it in 50 years. >> no, rich peterson told me the

percentage of s&p 500 components that are up for may, 81%. you would have had to have worked hard to put together ha losing portfolio. >> absolutely. this is one of the more dramatic rallies i have seen in some time. most lap between 49 and 59 months. we're headed for the 52nd here. >> we're at 1655. yesterday vicks shows a little life. is that true? >> well, it's been a spotty indicator. but i can see where people look at that. lots of resistance points. 1660. and beyond that the charts are hard to read. beyond this land there will be dragons. there is no easy look at where

the next resistance point is. you see it happening in germany. you see it happening here. this is a very different kind of market than we've seen. >> whn we come back, a deer falling today thanks to the company's rather cautious forecast. should you be cautious of the name? we'll talk about how to play that. plus our exclusive with aig. just finishing up the company's annual meeting. we'll talk to mary thompson when we come back. with fidelity's new options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens and i helped create fidelity's options platform. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades

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wells fargo advisors. together we'll go far. welcome back. coming up next on the half, it's been a year and a half since a market correction of 5% or more. i should say it's been almost a year. mike mayo on why he raised the price target and what he thinks of the other big banks. plus it's time to fade the rally. two traders head off in front of tonight's earnings report. carl, back to you. it's been 180 days since the correct of 5% or more. but you got the idea. i hope. >> it's been since jason kidd scored a point. >> yeah, no kidding. >> unbelievable series. crazy. we'll see you in a few minutes, scott. aig is holding the annual meeting today. the shares up 50% over the last year. hey, mary. >> hey there, carl.

thanks so much. thanks so much for joining us. your third annual meeting. an eventful one, which is probably a good thing. tell us, just give our audience an idea of what you told the shareholders. back a year ago we said our prices in 2011 is over and last year we said we're going to focus on fundamentals. and a lot of people were saying for aig to get out from underneath government ownership is going to take a very, very long time. and we found out what a very, very long time is. it's basically from then it was about seven months. so we said we're going to build a foundation for this year. you can see the results in the

first quarter. >> talk about what needs to be done with the foundation. are we expects additional cost cuts? are we expecting improvements? >> we've already seen it. if we look at the ratio in the last nine quarters you see kipt improvement. you've also seen after we took the big hit in 2010 to that year, in terms of the reserve, the reserves have been going up slightly, but modest changes, because we've been working through looking at all of the things in that reserve to make sure we got the number right. so we've been adding more than we've been taking out. so we feel pretty kcomfortable n the reserve. now how do we take big data, which is the whole thing for companies today? how do we take all the claims and all the information aig has and turn it into a more technical model.

>> sald we're probably 40% 50% through. >> how does that make you more efficient? >> right now it's not making us more efficient. we used to have 28 data centers. we have now moved to two. it's going to save us $150 million a year. some this year. some next year. we used to have only 12,000 servers in the company. we're moving to 2500 bringing them into secured, controlled locations. but it's bringing them to secured buildings. had sandy hit new york we would not have been in position to issue our 10q for that quarter. our technology is right here. all of our technology was packed backed up on different

locations. so all of this is sfrukt it's building things so they are bullet proof and later in '13 and into '14 and '15. >> i was to talk to you, there was a recent departure from the company. they said it was a surprise because people don't leave aig that often. is this the start of something? were you able to fill those roles easily, and do you have confidence in your employees that they're willing to stay and stick it out with you? >> well, first off. let me put this in perspective. we have 3,300 people at the very top of our company in leadership roles all in our long-term plane. they're all senior people. of that group we have a strict performance management. 30% are at the top. 20% at the bottom for lower rewards. the people in the middle get target rewards. of the 1,100 at the very top of the leadership and performance, it's 1,100 people.

in 2012 we lost 70. so we're retaining almost 95% of our leadership. if you look at the experience in that group, 45 pk have been with aig. 15% more than 20 years. so we're we're going to lose people from time to time. this group to the left doesn't agree with the one aig strategy we have to make the company more integrated in working more as a team. there are too many and they're too big. we feel this is the right one. we have a lot of respect for the components and brands of aig. we have to work together as a partnership. so we're going to lose people from time to time. if you're retaining 94%, 95% of your leaders and the best performers we done have a problem with aig. >> we are doing a series on

comeback companies. is it a better company right now than it was before the financial crisis. and very complex organization. and something that hank and i debate, you know, the fact is there are very few people that can manage the entire sprawl of what was aig. and for now, i think what aig is, a smaller, more focused company. it's a company that is in the insurance business. we're out of some of the financial derivatives and other things we were doing. so really basically going back to our roots, which is an insurance company. so i think it's a simpler company, more focused company. and so, therefore, in my mind, easier to manage, and one that i think is much more secure for the future. so i think it's better from that point of view. >> i want to ask you a question about one of your peers, jamie dimond is the focus of a shareholder vote that could potentially cost him the job of chairman.

do you think that those roles should be split? >> i think that you've got -- the conversation's different. the issue with jamie is you've got to ask yourself, is jamie dimond running the company for the benefit of its clients, its employees and the shareholders in an appropriate way? my answer to that question is yes. and so, if you want to split the roles, the question is, why? and so, i don't understand the why, because it's clear what jamie's role is. there's clear leadership. when you have the roles divided, you do create political uncertainty about who's leading the company. you have to have a great relationship. i'm blessed to have steve miller as my chairman. the board is aligned with everything we're doing end steve's leadership. we're all working together in a great partnership. that's important. but there are other examples where the chairman and the ceo don't work together well, and then it creates dysfunction, and then the corporation is saying, is it mom or dad? who will win? people play politics.

that's the way it is in families, the way in business. >> bob, we want to thank you again for taking the time to speak with us today. >> thank you, mary. >> carl, we've been speaking with bob benmosche, back to you. >> a great interview. the tug of war over the future of the sacramento kings. will steve balmer come out notorious? a final vote is set for today.

watching shares of deere closely today, down almost 5%

after the company gave a cautious outlook, cited global financial pressures, weather, of course. second quarter earnings did beat estimates, but the forecast is weighing on that stock. it's good to have you. good morning. >> good morning. >> are they being too hard on themselves? >> no, i don't think so. i mean, you look at the state of the agriculture economy in the midwest right now, and things have been great for the last five or six years. but, you know, the farmers are off to a very slow start planting corn this year, and if they don't get out there this week and plant about 50% of their acres, we could be short of corn again, and that will destroy demand, and that's bad thing for the economy overall. >> yes, there is some comments out of mosaic today about plantings, just reiterating how far behind farmers are. assuming they can make up some lost ground, though, are some of these figures -- i mean, 3% in q3, five to six a year in

volume. is that respectable or not? maybe that's why you have your neutral rating. >> yes, that is indeed why i have my neutral rating. it's been great for so many years out there. we took investors out to plant corn last week, actually, and there was no planting going on. we did get to sit and talk to a lot of farmers in the midwest. you know, they have not hedged their crops this year, because they believe the prices will go back up. and if they get out in large numbers this week and plant corn and corn falls below $4, there are farmers looking at lower cash receipts and incomes than they have for the last couple of years. we're just worried that we are at the peak of the cycle and it's hard to foresee how things get better from here on out. >> ann, is there a name you prefer on broad economic stuff, too? what if housing takes off all of a sudden and we get some big construction site activity in the latter half of the year? >> yeah, you know, we did upgrade caterpillar after its last quarter's earning, and that

was kind of a controversial call. the resource sector is still under a lot of pressure, and every day we see commodity prices decline. but we felt that caterpillar, you know, we can see ourselves to a trough earnings number over the course of the next year or two, and, therefore, look to valuation for support of caterpillar, as opposed to deere where we're looking at the peak of the cycle and it will be difficult to justify a higher valuation for deere. >> yeah, i do remember that call. we'll keep a close eye on that. ann, thank you so much. always good to talk to you. >> thank you. >> meantime, nba owners are meeting in dallas today to decide the fate of the sacramento kings, as hedge fund manager chris hansen and microsoft chief steve ballmer rally to move the kings to seattle. jane wells has more on that story. hi, jane. >> hey, carl. the money being thrown around gives the kings the same valuation that forbes gives the miami heat. seattle painfully lost its team, and now wants to pay for a

losing team in a tug of way the nba has never seen. owners of all 32 teams will decide to let the league's relocation committee has already rejected the seattle move. but the whole group of owners could overrule that. why would they do that? the maloofs own 65% of the kings. they already have a binding agreement to sell their stake to those seattle investors, and the money is staggering. how much are ballmer and chris hansen, seattle native, offering? they've raised it to $406 million, which values the entire franchise at $625 mill n $625 million, plus they're willing to throw in a record $115 million in relocation fees paid to the other owners. the sacramento isn't taking -- they have nothing else going on there. the mayor is a former nba all-star. he's enlisted the aid of a silicon titan who already has a stake in the warriors, offering $ 304. the money being thrown around

shocks even the most ardent fans. >> stunned. it's astronomical to see what's happening. and just a couple months ago, i think people would have been shocked at the value of $450 million. and now we're looking at a $625 million valuation for the franchise. >> then there are the stadium wars. the kings currently play in the aptly named sleep train arena, the maloofs have tried for years to get a new stadium. sacramento is now promising one, paid for mostly by taxpayers, and some taxpayers are suing. in seattle, they've approved plans for a new sonics arena, mostly paid for by the team. here's the deal. if the league votes down the seattle sale, the maloofs still don't want to sell to the sacramento folks. they have a backup plan, carl, to sell 20% of the team to the seattle group, which would keep the kings there for now. but even that deal would require approval of most of the other owners. >> yeah, anybody who spent anytime in seattle, jane, knows they love their basketball. and apparently they're willing to stop at nothing to get them.

just an amazing story. >> apparently. >> jane, thank you so much. our jane wells in los angeles. dow's up about 45 points here here. let's do the tweet quickly. two bailouts, make 'em double. it's 12:00 noon on the east coast. let's get back to headquarters, wapner and "halftime." thanks, and welcome to the "halftime" show. four hours until the close. we're going to the wall. on the hour, the rally resoups today. dow up 45 points, the s&p, nasdaq now furmly in the green as well. here's what we're following on the "the half." pass the mayo. mike mayo gets bullish on morgan stanley. and after the bell tonight,