tightening. the fed will look awfully offsides at some point. >> larry, sarah, thank you so much for being with us. have a wonderful three-day weekend. on memorial day don't forget to thank the troops who were serving us in the past and do so now. take care. ♪ ♪ ♪ ♪ good friday morning. are we almost to the end of this crazy week? welcome to "squawk on the street." kelly evans and simon, and futures still wobbly here after the durable goods did crush expectations of 3-3 for april. japan, they were up and down and then up and closed up 128. as for europe, some shall

another ecb rate cut might be pushed back. our road map begins with the old becoming new again. p & g has underperformed its peers in the last year. is bill ackman behind the shake-up? st. louis fed president bullard says there is one more wild card he'd like to see. calling all shoppers, abercrombie & fitch, gap, aeropostale and sears, we'll break down the picture for us. a shake shack, a blue smoke. it's a new terminal from delta air lines. we will take you to jfk and talk to the ceo, richard anderson along with richard branson. >> ag lafley returning as chairman and ceo. the change has come as some investors have pushed for fast improvements from the household products maker. they unveiled the $10 billion

restructuring program last february. the stock was up 54% and underperformed the s&p and many of the company's consumer product competitors during lafley's ten-year ceo p & g shares fell 37% and the company outperformed its peers during that period. a lot of comparisons to jobs and schultz coming back to starbucks. whether or not making the old new again is a wise move. >> a lot of times people are so eager to get rid of the ceo and we just went through this to some extent with jamie dimon over at j.p. morgan. you want someone to blame then bring a new person that did not bring the company around and it's not a magic pill and the guy that was in charge. >> do we know if bill ackman was behind this? you're positioning, like he would. he was dissatisfied with the incumbent ceo.

it's hard to believe that he wasn't part of the pressure for this. >> the reports argue that the board was trying to make sure it was not beholden to ackman and it was to make it look like it was their doing and not his. >> i wonder if it will do the gillette-style deals that it did before. warren buffett has met his match. let's bring in procter & gamble shareholder now for his take. jordan posner is senior portfolio manager at matrix asset advisers. it's among your top ten holdings. good morning. >> good morning. >> do you guys like this move? >> we do like the move. we think it's a good move for the company and ultimately it's's good move for the stock. the management especially mcdonald's had been under pressure by shareholders and activists, and ultimately the board was feeling that pressure either from share hoeholders or

other performers because it wasn't holding up as consistently as it should have been and that created the need for a move. lafley is, we think, a great choice, and we know think it's a net positive for the stock. >> this is still one of your top ten holdings so you couldn't have been that dissatisfied with how the company was doing. well, to be fair, about a year ago it put in the new plan. it entailed focusing more on some of the price gaps and they were charging too much for some of their prices versus competitors and they'd not moved aggressively enough into emerging markets and they were behind and there were questions about capitalal kaegz and the plan that they put in place last year addressed some of those things and the stock has performed reasonably well. >> i guess what i mean is that even if you like this move, you couldn't have been that upset with what the company was doing.

wasn't that antagonizing for some kind of shake-up here? did it take you by surprise? >> it was a sorry prize and that's indicated in the stock price change this morning. we were not terribly dissatis dissatisfied with what was going on. yes, the last quarter was below trend and it was a disappointment. i think that added to the pressure. we were not instigators of that pressure in this case, but we do think that this is an upgrade and it's a very low-risk move for proctor. lafley's been in this position before in terms of making a turnaround and had very good results and obviously, he knows the company well and he's not an insider and we know that the opportunity for the company will be to execute better on a strategy that makes sense is in-ly's wheel house and we don't think it's likely that there will be a major reset in the fiscal year that begins in july. we think this is a smooth transition which can can create

upside. do you think it would be less of a move because bill ackman had forced it through. >> we're not really concerned what created the move. i think that the board is being more responsive and if that means that they're focusing more on being timely and getting execution from the executives at the company, we think that's a good thing to the extent that ackman was the one that had been leading the charge previously and i don't know if that's what he's been involved here. that's fine by us. >> what's the most important thing that you would like to see now with the new leadership? >> i think we need to see consistency of results and so obviously that takes time to demonstrate the consistency, but we'd like to see some recovery from the shortfalls that took place in the most recent march quarter. there will certainly be a little bit of a period where he's got to kind of reset and communicate how things are going to operate

within the company so probably for the next quarter. >> right. >> you couldn't expect very much, but we do think that wield expect to see a consistent trend both in terms of recovery and market shares, some improvement especially in emerging markets and better movement in terms of how the pricing in the u.s. for premium products versus the market share growth generates revenues over the next few quarters. those would be the key indicators. >> that is one of the shareholders of procter & gamble at least owning a big stake for their firm. jordan posner, thank you, sir. >> pleasure. let's talk about the markets, the s&p, the dow, the nasdaq on track to post their first weekly declines in five weeks is concerns about fed tapering clearly weigh on stocks. they're coming off their first two-day losing streak in over a month. this was the week that we realized however badly it was

communicated that the fed is intent on tapering and possibly tapering by the end of the year. you're frowning at me. >> i think that is still to be decided. we had this discussion as bernanke was talking. interesting, though, we've gone all year. we're almost into june and we haven't had three days in a row down and today might be that day. as you mentioned the first down week in five and we talked about a lot of people who don't think the message was absolutely clear. >> it was interesting to see the sharp 7% move and everybody thought it was the catalyst for a bit of a sell-off or a correction and the word healthy used more than any other adjective and we didn't get the sell-off because buyers were that quick coming into this market, even at these levels. >> jim from global investors, about $290 billion in assets under management. jim, good to see you. >> good to see you, too. >> did the world change this week? >> no. the reason that u.s. equities are going up is not really

entire liquidity and it's the fact that the u.s. business is doing well. we have cheap energy, high productivity and the recovering housing market. what else do you need for a momentum, and i don't believe the fed has been as untransparent or confusing as some people say. i think it's actually pretty clear. chairman bernanke has said if the economy improves he'll cut back and taper the asset purchases and if the economy hits a slow patch he'll increase them. that seems pretty clear and straightforward. the market is latching on for different pieces for short-term movements. they should be taken advantage of by the longer term investors. >> you see u.s. equities ending the year higher than now. even japan this week was a setback in a bull market. >> absolutely. the setback in japan, that 7% in one day, that was triggered partly by confusion over the fed and partly by bad numbers coming out of china and with with the

market at that point trailing 72-week basis, a 7% setback is that much. i think it was the nature of that move than the magnitude of it and when you look at the charts they're ugly and with a move of 7% even when there have been such outsized gains it didn't smell right or look right. >> i do think the key issue of japan, i think the key issue is can the government and central bank keep the yen down? if they keep the yen down weaker from here, japanese business will pull out of a 20-year slump which is caused by an overvalued currency. >> if you look at the export share that japan had and global exports at the time when the yen was weakening back to financial crisis and it continued to fall and it didn't help then, why is it going to help now? it appears to be more persistence and more conviction behind policy now.

it's true that japan has disappointed and i see japan as high risk, high reward here. the politics, some have fallen apart and the election that surprises us is the election in a couple of months. i'd see it as high-risk, high-reward, and i see it as low risk and the fundamentals for u.s. business remain very strong. you should be a central banker because you communicate in a way that gives people confidence about what's going on with the clarity and you believe that the stock market is rising for four fundamentally sound reasons and there are people that can't believe that. they are very concerned that the fed is not able to communicate with one definitive voice. this is the most difficult thing now for them exit from the positions that they had. we're talking about them cutting back on the liquidity that they're adding to the markets and still they can spook people. can they communicate and hold long-term interest rates down.

can can they keep the confidence of global markets and not just you. >> i think the key issue here. you're right that if you take all fed spokespeople, it is confusing because there are multiple views on the fomc. what you need to do is focus what chairman bernanke is saying and those closest to him. you are getting a consistent message there which is what with i was trying to describe. >> bullard is on tape today and he's over the past couple of days talked about how inflation is tracking downward. he wants to see that reversed before any tapering takes place. here's what bullard said earlier on. >> i do think there is one wild card, though, for the data in the u.s. and that is that the inflation numbers have come in quite low. inflation has been only by preferred measures been only about 1% over the last year. this is well below our target, and i think before we would see at least -- or at least before i

would be in favor of tapering, i would like to see some reassurance that inflation was going to move back toward target by a preferred measure. >> the way he makes it sound, jim, ppi and cpi will be more important than jobs number, perhaps? >> yeah, but that isn't what the chairman said. i think there is a bit of underlying confusion in the way the market is looking at it, and partly because of the weakness in the oil price. for most people it is a good thing, not a bad thing. it's equivalent to a tax reduction for the u.s. consumer. >> but even if you look at the trimmed inflation index which is to strip out those components you still see the same tendency to 1% year-over-year growth. >> maybe 2% growth, inflation in the 1% or 2% area and to simon's earlier point, will the fed be successful in keeping long-term rates down. the answer is i don't think they

will. >> that's huge. it is. and that's the reason why a lot of the most confused market commentary is coming out of many of the bond managers who have, frankly, too much dur egg in their bond portfolios. >> if the cap fits, wear it. >> any bond manager that has too much duration in the bond portfolios is ride for example a fall. the ten-year bond yield is going from 160 to 2%. it's headed to 2 and a half. if the economy continues to grow it will probably head for three in a year or two. >> that's why they're so jittery because they believe they're sitting on a time bomb, every contradictory signal that you get makes people in certain areas hysterical and that's the reason why. >> what it tells me is the light and long-term highwa-quality bos

and it can go up with rising long-term rates. we've seen them this year. >> we've seen them in past cycles. >> exactly. the ten-year yield has gone from 160 to 200 and the market's up 10%. that actually is a pattern that can be continued so one has to be very wary of long duration in bond portfolios. stick to larger duration and we like commercial mortgages and cmbs and some of the shorter data high-yield funds they can get and real estate. those are areas to go for if you're looking for a yield in preference to sticking it out. >> what kind of damage can we do for 2% to 3% here? >> it depends on how long it takes. my expectation is that it will take over a year. all it does is slow the growth in the market and participate in volatility, but you are still in that later bull market phase when equities are doing well. that would be totally rational. >> have a great weekend.

>> a lot of good insight. >> taking a flight this memorial day weekend? perhaps you'll be traveling through this place right here. delta's brand new terminal at new york's jfk. phil lebeau is there and he'll tell us what it could mean for travelers ahead. pandora jumping after results last night beat estimates. it was up 60% during that period. as you know, a lot of new competitors are coming online and we'll find out if investors can keep on dancing. imp implied open down. a lot more from "squawk on the street" in just a moment. ♪ ♪ [ male announcer ] how do you engineer a true automotive breakthrough? ♪

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this is a huge weekend when it comes to travel and not only airlines, but the roads around america. typically the kickoff for the summer vacation season. 34.8 million americans will travel. not a huge drop compared to previous years, 2.3 million and 89% of the travelers this year are going by ar acar and becaus that check out where prices are, down slightly and a big part of the holiday travel this year will involve rv travel. take a look at shares of winnebago and the other rv maker thor over the last year. these guys are not only buying and renting rvs. take a look at the index. up 2% year to date. international airfares are flat according to travelocity. don't forget, next hour, we'll be talking with richard anderson, the chairman and ceo

of delta air lines and sir richard branson and i'll have to keep my two richards straight and they are here at the delta t-4 terminal and the new skyclub. remember today, virgin atlantic will have a board meeting where delta owns 49% of the airline, semon and we'll be talking to them next hour here on "squawk on the street" about all things airlines in an industry that's really soaring right now. >> together, they've become the biggest transatlantic player. is that right, phil? >> i believe that is correct. the reason that delta took that stake is because quant us couldn't make it look to the degree that they wanted that relationship to work. that's where jfk is huge. this is the number one market for international flights in the united states and delta has a huge presence. >> okay. >> phil lebeau at jfk, thank you very much. this morning we are

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>> it's been a rough morning for the retailers. gap shares are lower despite results that beat the street. abercrombie & fitch down on news of a wider than expected loss and a revenue miss. same-store sales down 15% and sears' loss is much wider than street's forecast. it's calling the financial performance unacceptable. a headfake on sears. they had asset sales last year that sort of skewed result, but unless you were in housing this quarter, whether it was europe or whether it was the weather, it was the -- >> unless you were in housing or at home watching netflix that was the only company that benefit. you're right. what's interesting is to look at the sell-offs. if it's just weather, a, it's a known known and you're supposed to be looking ahead so unless they're expecting more

unexpected weather in 6 to 12 months it doesn't make sense that shares would be selling off this sharply on those cases. >> the abercrombie call has just finished and they're taking a modestly more cautious view of the second half which sort of points to a consumer that is -- i don't know, overextended, stretched? >> there's the payroll cut that came through. as far as eddie lambert is concerned, it's merchandising experts from across the industry. that's fundamental to the industry. >> they had to because if you look at how much they struggled to stem the same-store sales decline. >> opening bell after the break. ♪

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nikkei overnight and sort of an echo of yesterday. we are looking at a lower open. we know what happened sort of midday here yesterday and we'll be looking to see if this dip can be bought yet again. >> exactly. >> a lot going on. there's the opening bell and a look at the s&p at the top of the screen. the beg board is about a beautiful sight. members from all five branches of the u.s. armed forces commemorating memorial day, admiral scott lee sanders of the u.s. navy doing the honors. a huge round of applause when they walk on the floor. internet week new york celebrating its 2013 festival. so we'll continue to watch that. p & g will be the big mover of the moment. about a 4% move and a lot of discussion to what degree ack-a ack-ackman was involved. did it come to fruition or was the board going to get there

anyway? ackman telling cnbc that it took him by surprise. this is one of their top ten holdings and weil they had concerns it clearly didn't sound like a reason for them to start selling out of their position, for example. i just think the timing is interesting. >> if they took ackman by surprise should we be concentrating on the exit rather than the guy that's coming in? is there more to be found there, do you suspect? >> i just wonder what the catalyst was in this situation. >> if it wasn't ackman and shareholder unrest and it's also outperformed others as the chart we had up showed. >> sears is the biggest loser on the s&p and that's almost a 17% move to the down side. revenues down 8%, almost 9% and margins down to 25. it was up, for the year to date, it's still up 17%. it's still a mover. >> down 17% today. >> it's the fact that eddie

lambert said yes, we have underperformed. rather than getting my bricks and mortar monetizing those and selling what people want to buy in middle america. >> he did say the online business up 20% and not bad, but when your results are two estimates, the loss is twice the estimate. that is going to result in some pain. >> and there is pressure on him to monetize the real estate in other ways. we've heard this thesis over and over again if at some point you're not executing to the retail side, is there more you can do to unlock the value again? >> there is a faphase before th to stop what people are going buy at the prices that they want to buy it. that is the essence of retail. >> especially when you look at where the stores are, these are chains where -- i should say, these are franchises which were really growing and opening stores back a couple of decades ago in part of the country that

aren't as strong today. >> there is a problem with department stores in general across the country. that's fare to say. >> pandora is up 12% and they did match estimates and revenue, though, nearly doubles, $84 million and they put a cap on the number of hours they can listen to without a subscription and analysts say that's beginning to pay off. 66% of revenue versus 69 a year ago and still on record of finding a replacement of joe kennedy. >> the internet isn't free anymore where they can win the wall street journal for free and consumers are responding and they're okay with that. we're seeing the companies that forced them to pay up as long as they're not pricing the stuff, they're paying up. >> they have to use that as their advantage, though, in order to win share. it seems the longer term has a viable strategy. we're more established now and

we have enough loyalty among the customers. >> i would have thought ooh an obvious area to commoditize. the share price is performing in a way that suggests it won't believe. >> we did have them yesterday. >> the competition, although, a sliver of their user base, but the competition is there. crm. if krcramer were here he'd have field day. >> it's his name. >> 10%, but the forecast for the quarter is no good. it's down some 6%. ironically it comes a day after hp had their trading session. it was a favorite of meg whitman talking about the challenges in asia and enterprise. >> the sales force was such a strong name. this was a stock that was one of the best performers of the deca decade. effectively this cloud play, it took people understand the true value they were offering. so i think for one of the first times you are seeing their

fundamentals just questioned a little bit, and perhaps the stock humbled today. >> williams-sonoma, 41 cents and revenue did beat as well. they actually raised their four-year forecast. nice to see a retailer take their numbers up rather than down. >> within kelly's earlier point. >> com stores, west elm was up 12. >> you know where it will open store. the first williams-sonoma store will open in london. >> so many have expanded and it hasn't worked. >> pottery barn up 7.6, not too bad. the actual namesakes of williams-sonoma were up. >> west elm. i have furniture, and it's affordable and stylish and going back to the whole gap, retailing issue. j. crew opening a store in

london, as well. some might be able to make it work. >> is it just to say, london, new york, los angeles? that's part of it. not to make money. >> it's cheaper than hong kong, as well. do you know abercrombie is paying for their real estate in hong kong. it's millions a month. it's insane. >> heria a company. 91 cents, beats by 3 cents and a profit and ridiculous high. comps up 5.2. footlocker is up 7% expect there might be an issue with some getting leary. throwing out some of the names whose numbers within themselves aren't necessarily that bad. >> footlocker is one of these companies that had a great year last yore and the sneaker complex, if we can call it that did very well. the nba gave it a lot of momentum and the saleser doing very well and i don't know if that's fundamental change in the thesis or just the fact that they're taking a bit of a pause here.

>> keep an eye on abercrombie & fitch, of course, a loss of 9 cents and 4 cents wider than expect and revenues fall short. comp store sales down 15%. >> i can tell you when abercrombie will go through with bad figures because i'm on their email list and i don't know how i got there, but they bombard you. four days ago it was 25% off. so just check your email inbox if you're on the list and you c see when they'll come out and disappoint the market. >> they're having trouble moving their merchandise. >> maybe they don't cater to cool kids. >> does carl wear abercrombie. >> at the gym. >> i'm more of a hollister guy. let's get to bob pisani down on the floor. >> weird results on retail and get to that in a minute. rather modest declines here. so far the s&p is down what? 1.2% for the week? we've been up four weeks in a

row. the declines we've seen this year, remember the one in february? remember the one in april? 3% declines and this decline from the height, 1.2%. the story this year, pullbacks have been short, sweet and very shallow. so far that's exactly what we're seeing for the third modest pullback of the year. let me get to the retail reports. i'm sorry. they really strange stuff going on here. abercrombie & fitch that was not a top-line miss. that was a complete disaster. they were more than 10% off the estimates. it is very rare to have a 10% top-line miss. 838 million and 950 was expected and 941 was expected and a loss of 9 cents versus loss of 5 cents. q-1 same-store sales down 15%. that wasn't just weather, folks. i know there was something about inventory shortages in there. in other words, if they only had the right stuff people would have flocked to the stores. i'm sorry, nobody really believes that. hollister was a particularly weak point.

look at the trends here. i see american eagle. now i see aeropostale and abercrombie and all of them had negative results and zumiez, and i'll give them a little bit of slack on that, but 15% comp store kleins no, don't just get weather that this one. >> look at sears, 60 cents was expected. the loss was twice as big and those are orders of magnitude past what the analyst his expected here. kmart domestic same-store sales down 2.4%. sears, i mean, i thought they were going to be's beneficiary of what happened to jc penney. weren't they losing market share to a company like sears, and you've all been in sears and you've seen the underinvestment and that's been the story for years as sears and all i can see it happening was accelerated and i saw ross stores, they raised

their full-year guidance and it's doing great. here's another company that's benefitting from the home improvement trend over will overall. their guidance was decent and let me move on. next week will be fairly quiet, but there is one event that has everyone nervous down here. there will be a rebalance of the msci at the close on friday. given what happened yesterday when we had very strange openings in two utilities aep and nee because there was no circuit breakers at the open and at the close, traders are a little bit nervous about what should be a fir fairly routine rebalancing, there are no circuit breakers between 9:30 and 9:45 and this is an sec mandate and not from the nyse or the nasdaq. so because of that you get volatility at the close around these rebalancing and you could get strange. >> caller: rayings in the prices of stocks. that's got people nervous down

here. back to you guys. >> as we saw yesterday with the insurers. thank you very much for that. let's go over to the nasdaq and seema modi. >> it's been the catalyst for, quites this week. pandora after reporting an uptick in mobile advertising revenue which is an important metric that analysts watch as more consumers use their phone to access data and apps within the semiconductor space. novell tech and that's what happened it beat street expectations, i should say. ross stores another winner. first-quarter ownerings jumping 12% on same-store sales and that's another win or the nasdaq and lastly, here are biotech names on the radar ahead of asco, and the big oncology meeting that kicks off next week and highly anticipated data from the like of gilead and celgene. >> seema, thanks very much for

that. on a day when the dow is opening up 25 points. sharon epperson is over at the nymex. >> hi, kelly. it's been such a volatile week for precious metals and we are looking at gold prices right around 13.85 an ounce and it has been quite a volatile week and a lot of traders looking at that 1400 level for where gold prices need to go to really see more upside potential, but also with the volume that we're seeing right now, quiet trading and they're not expecting much to occur today. it has been, in fact, the best weekend for a month for gold prices. we are are also looking for oil prices right now that are weaker to perhaps see further weakness. we sent a lot of bearish data this week for oil from china's manufacturing data to what we've seen in terms of oil inventories at record levels. all of that should pressure oil prices and oil has been the first day that we've seen in oil

prices in five years' time. perhaps with the bounce we saw yesterday, there is still interest in buying on those dips so we may see more strength ahead in the oil market. back to you. >> when we come back, retailers are feeling the blue, gap, abercrombie seeing their shares take a had the. is that going to continue as we head into summer. let's take a look at the early movers. a lot more "squawk on the street" when we come back in just a minute. [ male announcer ] we gave the new e-class

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so you can. just now, 60 minutes into trade, it's clear that retailers are having a rough start this morning following earnings report last night. shares of gap down despite quarterly results that beat the street. abercrombie and aeropostale also down. how should you play the retail sector? two analysts with theira, nal sis. john morris is senior retail analyst with bemo capital

markets. welcome. thank you for joining us this friday morning. >> thank you. >> before we get down to the individual names, do we have a problem here in retail that people need to wake up to? do we have a problem particularly within clothing? >> no, we actually think things look pretty optimistic going forward. you know, i know these stocks are down this morning. i think it's a sell on the news kind of environment. you had a very tough slog in the first quarter, but the data points you're getting from the consumer research. we track social mead why and the consumer looks like we're optimistic and we're in the second year of a fashion cycle and things look bright and there's some pent up demand and looking a head to back to school you will actually start to see the consumer respond pretty well. >> did you say we're in the second year of a fashion cycle? what does that mean? >> exactly. fashion cycles are difficult to

predict. you don't know how long they'll last. we came through a period after the financial crisis and a long recession where there wasn't a lot happening and merchants weren't taking risking. you began looking at color bottoms and you saw them in the emails in your inbox, i think. >> yeah. >> you started to see things come back in. that evolves into more looks leak the black and white look, the nevada trend and the festival trend, so there are a lot more offerings out there than the consumers and it's harder for the retailer to execute that and this gets the consumers interested in shopping again. >> roxanne, is she more excited? >> you know, i think it's a bottom's up story. you have to look retailer by retailer and take in mind what the comparisons are versus last year and make your bets on certain retailers.

i wouldn't have a broad stripe, and regarding the manufacturing in bangladesh and their point is it will will be harder for these retailers to continually stock the shelves with new fashion in a hurry, and i wonder if that will take a bite out of the trendiness we're talking about. >> the retailers have got to make sure that their supply sources and factories are correct and they have to do a good job of monitoring what's going on with labor practices and so forth, but it's a very large, global world now. we've seen sourcing expand into hundreds of countries. it's harder for the retailers to stay on top of that, but there are a lot of good countries they can go to where the best practices are in place and what happened in bangladesh is unfortunate, fortunately a lot of the companies haven't done

sourcing there. >> several hundred factories that they deal with. >> let's cut to the chase, give me a stock that i should buy and one that i should sell. >> i think you should buy ross stores and that's been a top pick of mine year date and that's where the opportunity is, and that's where the market gains are at a time when mall traffic continues to be negat e negative. value is resonating with consumers and it's mainstream and crosses all demographic groups. we noticed in our research that it's the generation y consumer that's shopping off price and perhaps that's the consumer that's leaving one of these teen retailers and shopping at ross instead. you also had 25% of ross that's driven by the home cat combry and it's underperformed and represents a big opportunity in the back half of the year. >> if someone said this is the first generation that it will be poorer than its patients and

what are you least confident about? >> yeah. >> i haven't published with any official sell ratings, but on a relative basis, what i would say is i am most concerned about the teen space generally. it's just a tougher market and they're all losing share with abercrombie and ae aerodisproportionately so. it transitions to become a fashion forward retailer and that's not something that's an sdna and it's really got to do something fairly drastic in order to bring about change and it's not going to be easy. >> john, briefly to you. top pick? >> let me just do the counterpoint on aeropostale. although i like aero. . i like gap and i like abercrombie, but roxanne makes some very good point, but make it interesting here. aeropostale has a new merchant team in place. emilia fabric that comes from

bb. she's now been there since the fall. there's a team overseeing this fashion. when we do our research on the consumer focus groups tracking social media, what aero's customers really like is fashion. so as the year progresses, the stock's down this morning and it's pulled back, you will see more and more positive reception to that fashion. they've got a store remodel program. they're also closing some of the underperforming stores and they have a cost-cutting program and there's a lot to like and here we like aerowith the $20 target. >> are you at a disadvantage being a man analyzing this space? >> i have two terrific female associates that are working with me and it gives it a balanced perspective because you don't want to get too emotionally involved in picking stocks. >> it's good to see you stocks. have a good weekend, roxanne and john, thank you.

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>> shares of sears holdings sinking today after the company reported a first-quarter loss after the bell last night, double what people were expecting and it brings us to the tweet question today. it's been almost a decade since kmart and sears merged. neither brand looking quite healthy. what will sears look like in ten years. tweet us at squawk street and we'll get your responses. >> it sold it off to condos. >> fair enough. would you live in a sears? >> sorry? >> would you live in a sears? >> if it was refurbished. >> night at the museum? night at the sears. >> want to do the tease? >> don't we have to chat until the top of the hour? don't we think we have to chat for two minutes? >> i think you're good. >> attention for all of you who fly across the atlantic.

delta air lines ceo richard anderson and virgin chairman sir richard branson will be on the network as they try to grab more transatlantic flights by teaming up. we'll talk about what they're offering at jfk and a bull-bear debate on the market and we have more revelations about what the fed may or may not do and we'll also look at playing pandora's rally and whether the stock has done really well recently and can it continue to move upward friday morning. stay with us on cnbc. is locked. is locked. five seconds. three, two, one. standing by for capture. the most innovative software on the planet... dragon is captured. is connecting today's leading companies to places beyond it. siemens. answers.

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♪ ♪ ♪ welcome back to "squawk on the street." our road map begins with the shake-up over at p & g. it's out with the old, in with the new sort of. a.g. lafley back at the helm. is bill akly behind that move. >> >> we'll take you live to the jfk terminal and talk to two of the biggest names in aviation. delta ceo and sir richard branson. >> that's right. plus pandora's shares are popping today after the internet radio company raised its guidance, but should pandora be

worried about apple and google getting in to the streaming service? we'll discuss. >> first, all rise. >> the judge is in the house. scott wapner is in for the shake-up with p & g and we had a long discussion about how it had to do with this. >> it's my understanding that he doesn't have a lot to do with the move itself, but he's been very vocal against been mcdonald for the time that he was there which is interesting because he's got a 1% stake and it's not like the company has performed so terribly since he took the stake back in july of 2012. it may have underperformed some of its peers and kimberly-clark and others that you have mentioned, but the stock is up 30% since ackman got in the game and when i spoke with him last night, he's clearly happy about the move. there's no doubt about that saying ag lafley is one of the greatest ceos. we're glad to have him back and he made that clear from the outset. what's interesting is the

earnings haven't been bad. we had a conversation about procter & gamble before he tangled with carl e kahn. he seemed to be willing to give mcdonald's a chance. >> he put up a very good quarter and it was lower than competitor, but they're making progress and i hope bob can turn this thing around. he deserves enormous credit. he deserves enormous credit is what bell said back in january and look, if you go on with what the earnings have come in at and what the stock has done, even though it's underperformed some of its peers, it's not like the thing was going down the drain. >> some have criticized mcdonald's. his focus on emerging markets to the expense of the core markets. interesting today, just now ubs raising it to a buy. the price target goes 75 to 95. they've made miss steps in the emerging markets. it's the best-performing stock

today in the s&p 500. on a name that liquid. >> that's a big move. >> it's interesting for ackman, too. the herbalife thing has been going his way late ly. and that's a psychological level that had people raising their eyebrows as to how the whole thing will play out, but he's had some other pretty big winners on the year that a lot of people don't talk about that often because of the high-profile and public positions that he has in jc penney and herbalife, and canadian pacific has been a big winner. >> general growth. big winner and he certainly is feeling happy as he's sitting there today thinking that if he didn't directly have something to do with this, he had something to do with it because he's been so vocal and trying to get a change there. >> just coming back to the p & g thing, do you think it's a transition story without a catalyst to some extent. >> who knows why ultimately --

bob mcdonald said he's retiring for personal reasons. >> interestingly. they're not going give hem any severance and they're paying lafley 20% more than they were paying. >> this is to kelly's point and there's something about the guy that's leaving and why they're not paying him off? >> that's why i'm saying there's got to be more to the story. >> and why does ackman doesn't know anything about it? is he not in the loop? he's a shareholder, but he's not on the board and i would think, and this is only what i think that because he's been fairly critical of the company, i doubt that he's privy to everything going on inside the board. it's not like who knows how many friends he has on the board and, you know, friends on the board. he's been critical of the company. why would they -- why would they tell him what we're going to do? i mean, he's a big shareholder and he's only got 1%. there's also some discussion that lafley himself was worried

about his legacy having left a success session story behind that he thought could have been done better and maybe this is a way to say, you know what? i'll leave the company the way i did the first time. >> he hand picked him. that's what i'm saying. he wants a second chance to leave on good terms. >> when you realize, ag lafley is held in such high regard, right? you can count maybe on a hand or two some of these ceos who reach these iconec levels and -- he was only there from 2000 to 2009. it makes it seem like the guy was there for 30 years. >> it was an era when you could spend tens of billions of dollars and this is an area who is refrenching around the world. that's a completely different world in which to operate a big consumer products. >> i wonder how long. he's 65, right? ullman comes back to jc penney.

he's in the september of his years, as well, of the ceo, right? so you have two guys getting back into the game. >> to old line, century old companies trying to save the day, save the reputations and the leg cease of the brands that they love so much because of the time they spent running those businesses and those are great stories in and of itself. >> although ullman left not as revered as lafley wassas he left. >> nostalgia kicks in. it's like instagram. it looks posier and better so we'll see. >> second go around. >> the ackman tie is strange, too. >> i know, right? >> look, i don't think mike ullman was his first choice. >> scott, we know we have it covered top to bottom. >> i appreciate it. >> be here at noon. >> in the meantime the bears are fighting back on the rally. major averages are poised for the first weekly decline in five weeks amid jitters oversea, but is this a minor blip in what is a slow and steady climb for the

markets or the beginning of a major correction. let's boil it down and where do the markets go from here. and they end in 2014, maintaining his bearish stance, and the president of platinum partners. yuri? why so bearish? i think the market's way ahead of itself, and you saw the quality of earnings last quarter was really awful. it was really all cost-cutting and financial engineering and for the markets to sustain this kind of level, you'll have to see real top line growth and i just don't see where it's coming from. >> the most amazing thing this week is we may have had the fed signal that it is takenering. that's a huge thing to signal to global markets. this equity market in this country hasn't fallen out of bed with that. that would indicate underlying strength and we hear the big companies with the share

buybacks are trading quite hard to the dips. >> absolutely. i'm surprised that the market hasn't gone down more on that news. i think the fed really did tip his hand. i think the fed is what's been propping up this market, and i think that his people digest the news over the coming weeks and realize that the markets are about to stand on its own two feet, you will see a fairly dramatic correction as we go through the summer. >> how big. >> i think we can see 1400 on the s&p. >> 1400? >> uh-huh. >> that's 238 points lower than weir now. that's huge. >> that's what i think could happen. >> tony? >> i don't think it's going to happen. i mean -- >> why? >> look at it this way, you have the high-yield bond market that produced 50 billion through the first half of last year and near record low on high yield debt yields so basically what it comes down to is the market is driven by the direction, and it's not top line or the rate of

change and direction is driven by money availability and that's driven by fed policy and core inflation. it's not like the fed activity has happened in a vacuum. it's given the central banks policy room to ease and i would suggest that the currency valuation the market is far behind where it should be and the core inflation environment is 19 times. to me, i think while you are definitely due for a correction and we're in one right now. think of the high-yield debt market. 24% in 2008 which was forecasting a 50% default rate. you know, if it was strength of the economy, there's no way we would be at 5% on high-yield debt right now. >> go ahead. >> fair point, what about with what ari was saying? do you see a stronger recovery here that boosts revenue prospects. >> the top line has been slow and in the last quarter it was basically flat and earnings

growth was 4.9%, but again, it's very, very important to remember that the market doesn't correlate to the top line. if it did we wouldn't have been rallying from three quarters ago. it's not like we had strong top line growth through the entire cycle and what we lose track of and what people like me do is this is about money movement, where did the money go? it went into the highest risk of height -- of the debt market, remember, people would invest differently in the cycle and we weren't going to have the high--year-old debt market and it's heading into equities, it's quite persuasive that argument. >> i'm looking at the high yield debt market and the fact that some of these companies can come out and buy the bonds for a 5% return and thery a complete ignorance of rick and the

so-called junk bond market and that tells me that people will do the same credit work they did in 2007 and it scares the you know what out of me and the high-yield market is telling me that we're in for a major correction and the high-yield crash. >> that money is going to move into the highest return category and the only return category that can get pension funds are 7.75 to 8% return are earnings yield on the s&p 500. you definitely have to have positive recovery and positive earnings trajectory and then it will find its way and that's what's unfortunately driven the high-yield debt to valuations that are unsustainable and that's very good for equities. >> we'll leave it there. thank you. >> it's the memorial day weekend. enjoy, guys. thank you very much for joining us on cnbc. >> tony dwyer, a very important debate this friday morning. >> and we are seeing the dow

lower by 75 points this morning. keeping an eye on that and the nasdaq down .7% as well. delta's new jfk terminal 4 is officially opening this morning. the $1.4 million investment is coveting the business traveler. phil lebeau joins us from jfk airport with more. i hope you towelled off after that shower. >> a lot of people are talking about my shower, kelly. this is a gorgeous facility, part of the new renovation that delta has done here at jfk and the terminal 4 expansion. $1.4 billion that delta has pumped into this facility and it's all about attracting more business customers and attracting more international flyers and here's the reason why. when you talk about international flights into and out of the united states, jfk is ground zero. it's the number one airport in terms of international seats followed closely by miami and

los angeles. take a look at delta over the last year compared to the airline index. they have outperformed the index and 62% gain for delta compared to 63%. we'll talk about the efforts here at jfk as well as what's happening when it comes to airline stocks with richard anderson. the ceo of delta heir airlines, as well as sir richard branson, the ceo of virgin group. they'll be joining me in a half an hour and we'll have a number of things we'll touch base on including the club for delta. yes, the showers are very nice. i didn't take one this morning. i just shot one on camera. >> you probably did, but not on air, phil. one question for anderson is going to be how he manages to keep up to speed his plan to bring debt down even as he's also giving capital back to shareholders and if times do get tough and costs do elevate,

which comes first? >> right. i think what we'll hear him say is what he said last week or a week ago or two weeks ago when he was talking with investors that right now it's about both. it's about returning money to shareholders through the dividend, but at the same time they have got to invest for the future. so i think it will be interesting to see how he talks about balancing those two because many people sit there and say you can't do both. he believes you can do both. >> also a fascinating discussion when it comes to energy costs and what happens to crude from here on out. >> can't wait, phil, it will be a great discussion. we'll talk to you soon. when we come back, shares of pandora has been quite a chart topper and can it keep its mojo in the wake of the competition. >> something kelly cannot wait for, the return of "arrested development." seven years after the show got

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>> it's really a lifestyle project where for other services as you mentioned before is the music catalog, the best search

engine and all of those things that people want to use to go about their day. >> that was the ceo of songza, talking about what differentiates his company from other music streaming services. pan d'or a of course, a big mover this morning after delivering better than expected revenue boosted by new subscribers and how will the company fare in all of this increased competition. >> the street.com and from san francisco aaron kessler, senior internet analyst at raymond james. pandora on pandora, i love it, rocco. everyone wants to say there is a pandora killer out there whether it's apple or someone else. what did you think of the results and how much of a threat do rivals pose to them? >> there have been pandora killers for as long as pandora's been around especially sense the company went public. they're all formidable and we're all in a great space. if you're a consumer, there are all these different choices and

the way you can go about consuming the product. i saw the shout out louds at the el rey in hollywood. i discovered their music on pandora and bought their music on itunes and when i know i want to listen to them, i can listen to the whole thing basically for free. there's a small subscription fee every month. when i want radio and when i want to sit back and listen to my favorite radio station and discover a new artist i go to pandora. there's so much competition. it's complementary and i don't think pandora has anything to worry about. nobody has internet radio built out to scale like they do. 70 million users. aaron, i think you took your numbers you have on the revenue metrics. that's your target on it? >> we are here with a dollar 20 target and mobilization was very strong on the quarter and they increased the ad rates by 20% year over year, and also they

put it into a mobile can in the quarter and they drilled much higher subscriptions and they have 2.5 subscriptions and besides their advertising platform. momentum is very strong with pandora. do they have vulnerability here, aaron? >> competition is still a threat, there's about a $15 billion size, and they're going after that aggressively and they're more about discovery if you like the specific song. maybe use itunes and spotify. pandora has 70% market share out there. >> and maybe start increasing cash flow and to get the price above $20. >> right now they're monetizing mobile about 26, 27,000, and we think over time that doubles to 50 or so and their content costs are in the 60% plus range, we

think, just given the increased mobilization that the content costs go down to closer to 40% over time and that's over the next few years and you start to see meaningful cash flows from pandora. i'm obviously missing something here. please explain something to me. it's surelier rell vent about to launch pandora-style services and they being subsidize the big company companies and they could cross subsidize from other parts of the business and they could rip the heart out of pandora's revenue stream, couldn't they? >> i think people will discount the pandora brand and google should be the leader in everything and pandora has the hyper focus this market and they inveshted the human genome. >> there are no barriers to entry and that's the point i'm trying to make and there are big guys setting outside the door. >> there are no about barriers to entry and pandora has 70%

mark share. >> simon, what do you mean there are no barriers to entry. with all due respect there are huge barriers to entry and you can't just build the sales infrastructure and get into the systems that radio ad buyers use buy advertising overnight. it took pandora's year or two to get there and what they're focusing on now is poefrping the companies like clearchannel. these guys can go to their clients and say hey, give me pan d'or a do you think with that relationship they're not going bite? they are biting and it will grow out the infrastruckur and it's a misnomer that there are no barriers to entry. they're spilling music into a jukebox. >> i stand corrected. if google decided to do it they could mop up far more effectively and that's just the point i'm making. >> there hasn't been a pin drop after they've done it. it's almost a non-event for

pandora. >> we'll talk to you later. let's send it over to mandy drury. >> hi there, kelly. i have to show you what's happening with isig, this is a stock and company that herb greenberg from cnbc has been following closely and it is currently up by 5% and one of the biggest movers to the upside on the s&p 500. here's the story, guy, intuitive surgical has prevailed in a civil lawsuit that had accused it in negligence using the surgical robot machines. the prostate was removed by the da vinci robots and the share price was under pressure in recent weeks and months and investors were concerned about the safety of those machines, but they have prevailed. back to you. >> an area hard hit by super sandy is hoping to hear the sweet sound of tourists raising money. kay

kayla tausche joins us from the jersey shore. >> they'll make sure the jersey shore is ready and open for summer and it's a tale of two towns up and down the coastline. we'll tell you why. that's up next. can actually see like a human using stereoscopic cameras ♪ and even stop itself if it has to. ♪ the technology may be hard to imagine... but why you would want it is not. the 2014 e-class, see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services.

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♪ ♪ ♪ abercrombie & fitch, another story this morning, but almost seven months after being devastated by super storm sandy, the jersey shore is looking to rebound as the summer season gets under way this memorial day weekend. kayla tausche is in seaside height, new jersey, where they've been hoping for an influx of beach goers and tourists and it sounds like they're getting it. >> reporter: kelly, seaside heights is like field of dreams. they feel if you build it they will come. they've been racing to put new planks on the boardwalk and you can feel like the patrons are coming back in droves. that's not the picture just about a mile away in ortly beach where it hardly feels like six months plus have passed and hundreds of homes still waiting to be torn down and that's a really tough draw for an area

that largely depends on vacation rentals and rentals themselves, a huge part of the jersey shore economy. >> the business owners are very concerned. >> we need to rent our homes to get everybody -- the masses to come to the beach so they can spend the money at the pizza shops and buyingel stores and local restaurants and the boardwalks. so if we don't rent ours and they're going to have a bad summer. >>. >> to get those rentals off the market, they're trying to discount them for the summer, sometimes up to 30%. for his firm itself, if he did 70% of the business this summer than last summer he'd be doing wart wheels. carl? >> you were down there today on a day when the "today" show was there, and i'm trying to make a list of the who's who of jersey, the governor, fun, just talk about what you saw this morning.

>> it was definitely a cast of characters. there was a huge crowd and it was almost hard to see who was the rank and file and who were the people who were the guests here and there was just so much fanfa fanfare, but one of the interesting interactions was when snooki walked up to chris christie and he's been criticizing "jersey shore," seaside heights and that was jersey shore and she walked up to him and said sir, can i ask you something? >> ask me anything. >> why do you hate us so much? it was a very funny interaction and everyone was crowded around taking pictures and i snapped a picture of it and he basically said look, look. i didn't mean anything by it, i just want people who don't live in new jersey to know that we're not hard line partiers, that's not what the state is about, but we do respect you guys. >> it was a friendly exchange? was it smiling? >> it started off friendly and ended more terse than it started, but you know, all's well that ends well, right?

>> why doesn't he just adopt snooki as the jersey shore mascot and be done with it? >> reporter: the funny thing was seeing the relative size. snooki is probably a foot sho shorter than i am and seeing the two of them interact was almost like a cartoon, to be quite honest. >> okay. >> kayla, thank you very much. we'll come back to you. as summer shapes up on the jersey shore. also ahead on the program, phil lebeau will talk live with delta ceo and virgin chairman sir richard branson. the two executives counting on delta's new multibillion terminal at jfk to lift their carriers to new heights. ♪

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let's take a closer look at currencies on the heels of a nikkei sell-off yesterday, and how will that affect the euro, the yen, the aussie dollar. no one better to ask than david bloom joining us from london. >> thank you. >> it's great to see you and you guys were out this week talking about how there have been a fundamental shift under way and a strong dollar from here on out. i just have to ask because back in february you were saying, six years of weakness ahead for the dollar, so what's changed? >> this leopard has changed his spots, i'm afraid. i've been criticized for being negative the dollar and pro euro and it's the sea change, a

fundamental change. you can see the dollar is going to roar and put out a new note that it's going to soar. people are looking for weaker currencies in a sense, the ecb's cut rates and aussie's cut rates and new zealand's intervened and turkey cut 50 basis points and these central banks are trying to weaken their currencies and if everyone is trying to weaken their currency they can only be one counterpart and that's the dollar that took a lot out of me and i had my epiphany on the road to damage scus and it's hitting the strong dollar and we put out the note earlier this week and we pushed it quite hard because i honestly believe in it. >> i can see that, sir. just how strong a dollar are we talking about and how does this regard with respect to fed policy. if it's all relative perhaps it matters more what other central banks are doing it makes for a much stronger move, as well. >> i would say that obviously, if you add the fed in and the

tapering that the market's being looking for and also the u.s. is way ahead in the top of tightening cycle and withdrawing liquidity and the move has to be reasonably marked within 5% to 10%, otherwise the u.s. itself will get pretty upset that everyone else is devaluing the currency and the u.s. has to suffer on the other side. so beyond the 5% to 10% move on the dollar we might get a reaction by fed policymakers and the treasury secretary so one can't be too gung ho about the strong dollar because we might get a reaction from the u.s. policymakers and all of the ducks are lined up in my eyes for a stronger dollar, weaker euro and weaker sterling and weaker emerging markets and with the yen, i think, has done its thing. >> it may be an epiphany to you that if we have a central bank around the world that the question will rise. my question to you is are you

sure that that will not have implications for the u.s. economy that could be dollar negative, because you have to make a lot of assumptions as the fed tapers and communicates effectively which will not be the case. >> you are absolutely right otherwise we'd have 5% to 10% moves and you can't disrupt any top of economic momentum that the u.s. has got. we can't have the currency snuffing that out. we've already got the sequester that's hurting, but it's about the housing market in the u.s. it's about the employment market in the u.s. it's not about the export market that's leading a recovery in the u.s. so i think a 5% to 10% move in the dollar and the americans can take a bang on the chin, more than that, i think they'll get quite upset and i think that's yet dollar will go up. >> i'm know as clever as you, simon. >> it's been said before, david, but always worth the confirmation, thank you.

>> some have been describing the currency strategist, and people had come to think of gold as a currency to some extent when thai didn't want any of those backed by national government, but are we in a period where the dollar has been reembraced and what does that mean for both of those assets and it would beat a thorough thrashing and the chinese slowdown has a lot to do with it, but if you can believe in the dollar you don't have to believe as much in gold and obviously the dollar is a very, very big currency and you can buy a lot of it without impacting it where gold is much smaller. so gold has done its thing and from here it's sideways and more up, but there will be catch-up of other asset classes it should continue to be so and dollar canada, we've completely reduced our view, and now canada going

up it 110. so the greenback's on a role. what does that mean? how much further do we have to go here for some like the awes sne. >> the aussie, we think it could get down to 90 and it's one of the ones that would lead the pack with a 10% move or so. so new zealand coming off, but not as much because they're ahead in the monetary cycle and they want to raise rates so they had to intervene. again, some of the currencies we'll have to watch, but if dollar yen were to continue to go up and then the asian central banks were to kick in, the situation will get pretty rough and then we'll see quite a violent move in the dollar. >> we're not looking fair big move up in dollar yen, and if it does, then the koreans and the rest of the asians are also trying to weaken their currencies and the situation gets very hairy. >> so at the moment we've got a reasonably subdued 5% to 10% rally in the dollar and we'll

start to get interference as simon said into the u.s. economy itself. >> david bloom. thank for joining us, sir. very up front again about that change. we appreciate it. >> this leopard has changed its spots. >> that's right. >> i'm glad you returned a begger fan from david bloom as i am. >> he got me of leaving my tea bag in my tea. he said that was a major faux pas in london. >> the airline is officially opening its new terminal at jfk on the east coast today. up next, we'll go there live and talk with delta's ceo along with virgin's sir richardrichard bra. we are back after a quick break this friday morning. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. their quick trade bar lets my account follow me online so i can react in real-time.

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in a clinical study, over 80% of treated men had their t levels restored to normal. talk to your doctor about all your symptoms. get the blood tests. change your number. turn it up. androgel 1.62%. it is a very important day for delta. the airline officially opening its new terminal in jerkfk in n

york. phil lebeau is live at jfk airport with a first on cnbc interview times two. phil, good morning. >> good morning, carl. i am joined by sir richard branson, the chairman of the virgin group and richard anders anderson, ceo of delta air lines. and we are in the new terminal for delta. richard, let me start with you, this terminal you pumped $1.4 billion into this. how much of a difference do you think this will make? >> a dramatic difference for delta. first, we get to be with our partners virgin atlantic in this facility and it will be the preeminent facility for jfk which is the largest international airport in the united states. >> sir richard, years of travel around the world. you've seen more than a few frequent flier lounges. this one or a virgin frequent flier lounge, is that now

becoming not just a perk, but expected. >> it should be expected and, you know it's fantastic that delta has spent the money and actually given people from new york the -- the kind of terminal that they deserve, and it's something which virgin atlantic has always prided itself on building the best lounges and. >> the reason we're delighted to have partnered up with data who is our beg brother is they're investing enormously in improving their service and make it the best big airline in america. >> you talk about delta being the big brother, quant us was the previous partner and nothinnothing against quant us, but they couldn't make it work, why couldn't they make it work with delta. >> it was actually singapore. with singapore they didn't have the enormous feed that delta

has. i think that delta is one, if not the biggest airline in the states, and they've got a lot of cloud and a lot of feed and we think together, we have the same names, two richards and we should be able to do the same. >> he's the dashing richard and i'm the dull richard. >> you may consider it, but a lot of your investors would like to think you've made this commitment to return about 2 million to investors through dividends. >> correct. >> thei$500 million through sto >> can you keep that balance? >> we have strong cash flows. the last three or four years we've had 6 billion in operating cash flow and as we look out over the next five years with the transformation of delta, and our great partnership with

virgin atlantic we'll both enjoy good cash flows. >> you hear the critics out there and the skeptics and they say what we're seeing with the airlines now is not a new chapter and it is not a new day where they can stay profitable and can sustain profitability. what do you say to those skeptics? >> i think richard's -- richard's proven it wrong sense he's been running delta, and i think -- with virgin atlantic, with new planes like the 787 finally coming and obviously it was delayed by three or four years, i think we can see sustainable profits going forward. what's happened in the past since you've had these big, enormous heavy planes that have eaten up fuel and the airline manufacturers have managed to provide planes. >> you look at the cross-country flights and lie-flat seats and whether it's that or some other am entity, that has become part

of the calling card, has it not? >> for us, we've made the investment, but the pioneer in that kind of premium service is sitting here which is the virgin atlantic brand is the number one brand by all surveys across the transatlantic. so what we're doing is making the investment in learning from virgin about how we get our brand and our product and our delivery for the business traveler on transcon or transatlantic to that kind of great premium that virgin atlantic has provided. >> richard and richard, simon has a question. >> let me ask richard anderson and you're hinting at the unevenness of the playing field. i appreciate that mr. branson is sitting next to you because you spend $260 million to buy the stake. >> i appreciate the kind of money you are spending at jfk's terminal and you now discovered lie-flat beds that are of a cabin design, but there are

other people that do this extremely well, notably brettish airways and they travel across the atlantic over time they are far and away where people would normally go, just leaving virgin out of the equation there, unless you have a preeminent hub now at jfk, terminal 5 at heathrow is like a palace. you are coming from behind here so i think you would readily admit that. >> well, no, we love the position we have because actually we're incorrect in your assessment of british airways. if you look at the most recent customer survey data, the number one business class product is virgin atlantic and number two is delta. so we don't shy at all from being able to compete second and we have lie-flat installations in heathrow for several years

and we're well down the road of the lie-flat product and third, no one has the network and the strength in the marketplace in new york as delta does. oui the number one carrier here. we're the hub carrier in laguardia. so when you look at all of the pieces, we're pleased to be in that marketplace competing against british airways. >> you are obviously a british airways flyer. >> no, richard -- >> fly virgin atlantic and go to our lounges at heathrow and compare them to british airways and get the experience -- >> i was sitting in your lounge at jfk the other day when i was off to rio. let me come back to mr. anderson. you very interestingly said when you responded to my question that actually the top rated cabin was virgin atlantic -- i beg your pardon, virgin america or virgin atlantic? >> are you going buy richard branson's carrier here in the

united states as well? >> no. we are not. >> why? >> that's a separate -- a separate entity from the transaction. >> it's not actually for sale. >> it's not for sale. not for s >> why are you not selling it? >> go ahead. >> virgin america is making profits. virgin atlantic will be profitable. we'll have a fantastic relationship with delta. and we're going to make sure we keep british airways in their corners. so give us an hour or two of your i'm. this combination will be unbeatable. >> as long as we're talking about virgin america, one last question here. about a month ago there was a video put out.

what has been the feedback so far? >> it's been very good. you can also serve drinks to your children if they're sitting in different seats than yourself. but it's little options like that that make people smile. you know, set virgin america or sir gin atlantic up against our bigger competitors. and, you know, may our team keep oncoming up with them. it's also won the award for best airline in the states. and if you're smaller, you have to be the best. >> sir richard branson. ceo of delta joining us here on cnbc on a big day for the opening of terminal 4 here at jfk. carl, back to you. >> tell zir richard as handsome as he is, he's a more beautiful woman on the video the other

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tweet time on a friday. it's been almost a decade since k-mart and sears merged. the question is what will sears look like? buildings from the walking dead. chris writes maybe they could install a coffee counter and change the name for woolworth. when the opportunity for snarking is there, people take it. >> keep it coming. stick around as well because the rainy spring may have hurt retailers but netflix could be singing in the rain. and with the season premier of arrested development about to premier, it doesn't look like anything can stop it. and we're back.

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dow is down almost 60 points after a crazy week. yes, a look back at everything

that's happened. >> you know why you want to come back here and sit with us. it looks pretty interesting. >> we don't get gymnasts through. we have a little fun. >> it does appear that the vote tally preliminarily does indicate that he will hold on the to both. >> well, in terms of shipping products or making decision. this is a mission to serve an incredibly creative community, and that's the community that tumblr's big audience is built around. >> apple has real operations in real places with apple employees selling real products to real customers. we pay all the taxes we owe. >> because i'm asserting my right not to testify, i know some people will assume i have done something wrong. i have not.

>> if we seek continued improvement and we have confidence that that is going to be sustained and then in the next few meetings, we could take a step down. we are embarked on a five-year turn around. i think we're right where we sthaugt we would be. in fact, probably ahead of schedule. >> i think the people that have bought into the nikea. i think they're renting the stocks and not really owning them. that's why you see movements like you say today. >> we are likely in that one. we are also investing enormously and trying to improve the service. make it be the best big airline in america. >> good friday morning. we are live at the post 9 stock exchange checking on the

markets. the first three-day losing streak of the entire year. we're down 47 points. 15,247. s&p is down 8.5. pandora is up after earnings beat estimates. and a lot of retailers. abercrombie and fich down 10%. shakeup at the head of proctor and gamble. will he be able to clean up the consumer product giant's app. find out if the screaming context producers will help make it the stock more appealing to investors. and hedge fundize con addressing controversial comments about women, babies and trading. out what he has to say. first up is breaking news on proctor and gamble. scott walker is here with post 9. trying to get insight into

why bob mcdonald left in the manner that he did and what ag and his return, what his strategy is going o be. i have a couple of letters that each of these gentlemen sent to the troops. as for bob mcdonald, he says, and i'm going to read directly from the letter that i have in front of me, during the last year much attention has been focused on me from several angles. a distraction not in our best interest. i always believed we are one company comprised of great individuals. wen we get to a point where too much attention becomes a distraction, it's time to change that dynamic. you can obviously surmise from that that he is probably referencing some of what bill ackman has said over the last, what, year or so since he took the position in july of 2012. he was quite critical of bob mcdonald and the job he was doing at the time and was hoping for change. at least i think you can make an educated guess that's what he is

referring to. he sort of lays them out in bullet points of what the initial goals will be. strengthening core developmental market business. we talked about that the last time i was up here what needs to be done in the united states and europe and number two, maintaining dwong developing market momentum. driving cost savings and productivity improvements. he says he's going to be getting up to speed on the business. certainly he knows the business. he was ceo in 2009. if anybody knows proctor and gamble it's him. and this has become his mantra for the time he was at the economy. the consumer is boss, at the heart of everything that we do.

that really exemplifies what a.g. had always said. at least some insight into what they are thinking. >> interesting he doesn't reference succession in that letter. you have to think he's going to be here for a limited amount of time. he's not here for a multi, multiyear term. >> that's the point. he's 65. >> probably too early to say this stuff, but another way would be to say i'm also looking for something longer term. >> absolutely not. he sounds like he will be there for a while. he knows there is significant work to be done going forward to try to fix the parts of the business that have not performed to the tlefl that the investors and board also felt that something had to happen here. but it's interesting that mcdonald's addresses so specifically the distraction

again at a time where the stock has not performed so badly. it's up 30% or so over the past year. >> it feels like this is the story we had. if it followed a series of weeks or comments about the issues. the thing i find strange is it feels like it's coming out of nowhere. i'm not saying they were on the minds of investors. >> i think everybody was blind sided by this. the irs zone conference was just held in new york city a couple of weeks back. a number of hedge fund managers, activists come and give a big idea. big ackman happened to be on stage. and he wasn't talking about herbalife or jcpenney. he was reiterating his beliefs of bloproctor and gamble. why he was in the stock so he was talking about it only two weeks ago. >> in the same tenur that he

spoke with you about in the past where he is acknowledging the things they have to do. he was constructive about it. >> well, it's hard to be critical of somebody when the earnings are coming in good. now it u underperformed some of the peers, but not all of them. >> that's why it's so interesting. you may expect investors to sell us off on the news as they try to make sense of it. so that tells us this was enough of a concern that they prefer to see the past ceo gone. >> the stock may be moving more than you expect because he knows all the customers, right? he knows all the players within the company. so that any change that is going to happen is probably going to happen sooner than if you brought in somebody with a

steeper earning curve. >> i know we made the comparison to mike holm coming back to jcpenney. it's a guy coming back to fix something perceived to be wrong. who knows how long either of those guys will be in those positions? >> but right both of the boards feeling there is nobody better. but we'll see what happens. >> and his remarks on focusing on the consumer. we all know the leadership and the struggles wal-mart had came when they started to focus more on margins than consumers. a lot of focus will be on the beauty business.

i mean, they introduced a million different formulas of oils of olay. >> look, it's a big job at hand. and even a guy who knows the business as well as he does, there are challenges ahead. he is not coming to take the helm of a ferrari. there's work that needs to be done to get the car driving as fast and clean as we want to see it. >> don't go too far. i want to get some more. marion moore is a professor at dartmouth school of business. i think we have the senior household and personal care analyst at jpmorgan. is this a return to stability or a sign that succession is in real trouble? >> i think it's a return to stability. and i think it's really about acceleration. the street would argue that why

it's been nice to see the great productivity program that we put in place, and we're seeing new products on beauty, we're not seeing enough change now. they have competitors like loreal and colgate working harder and more aggressively. you need to come in and reinvigorate the organization and that's going to create greater productivity and greater product innovation. that's what the market needs to see on the beauty business, as you guys have highlighted. >> were you blind sided by this move? i'm trying to get inside the mind of somebody who follows this company on a day in and day-out basis who watched the stock perform admirably. were you blind sided? >> yeah. the way the street looks at things it's rare to see a ceo find himself in this situation. yeah, we were all surprised by the timing. there's no question if you look at the last couple of conference calls there's been a level of

frustration. again, more about sort of the, you know, the pace of change. proctor was very slow to bring in a lot of productivity versus their peers, but we felt like they were making some steps. so the timing in particular was very surprising to pretty much everyone i've spoken with this morning. >> in the letter that i just read to employees, laughley says innovation is in our life blood. does that suggest that proctor and gamble stagnated from an innovation stand point under bob mcdonald? >> a little bit. proctor & gamble is a market company. but if you look at what has drifen their success, it's about having better products. the r&d is historically a huge advantage. what we have seen the past couple of years while there have been successes, we haven't seen the type of disruptive innovation that we saw ten years

ago so i think that goes back to the pace of change. is ag the guy to come in, rally the troops and get greater focus on a higher level of change? >> marion, we're spending the day looking at the past examples of this. michael dell. as a rule, are there second second acts in american life? >> i'm sorry. i can't hear the question. >> i'm wondering if a ceo who returns to his own company historically has a record of success? >> i'm sorry. i can't hear. a return to stability or big change? i think that bringing them back is wonderful. it's not only a return to stability but a return to a philosophy, a spirit. it's not just stability.

i think we're going to see even more. i think it's going o be absolutely aspirational for the company going back to roger martin about question number one. what is the winning aspiration? it's winning with customers. that's where p&g has always been successful. so i see a big return to more than stability. >> we apologize for the sound quality of that line. john, if the focus on the consumer is what they need to do here and if this means a shakeup is coming, what would you like to see? what is the value of procto proctor& gamble shares here? >> people looked at the productivity program over the last couple of quarters and said, look, i feel like earnings are in the bag, so to speak. you have good visibility because they hadn't been cutting costs and now they can get the margins

up a little bit. if people look at the stock and say how do we get it to the high 80s, it's ab this 3% top line and getting it up to 5%. so, you know, that's going to be the key focus here. simply getting to stop losing market share and beauty. that probably gets them up to four. and then if we see the develop markets come back, that's when you get up to the 5% number. and that is really what the market is going to focus on on here. i think it could accelerate. >> we had one of the last remaining dollar bears on the air. you have to imagine the back end will have serious currency headwinds. we're looking at a relatively benign environment for the first time in five or six years. one of the things that proctor dealt with more so than the rest

of if companies given their footprint is buying growth in categories is slow. from 4% to 5%. so there has been no operating leverage. yes, you may get negative currency. you take less pricing and the volume comes back. if there is operating level on the volume and then the productivity flows through the currency may be a head wind but the market will give them a break on that. >> finally the, the sexy question people love to ask, do they have another gillette in them? is there something still at play? >> that's a big question here. there's big questions ab them going after an estee lauder, something like that. if we think that ag is back for a couple of years, that's not long enough. they need more skin care

exposure in asia ya. i don't think there's anything like that. this is something the next ceo will have to address. it's tough to see them staying around that long to pull off that size of a deal. >> john, you know it better than most. appreciate your time. thanks for bringing us that breaking news. the blues are back. arrested develop. your favorite series is back this weekend court see of netflix. just the latest in the original programming. you can't believe the difference that we're about to talk about. clients are always learning more

to make their money do more. (ann) to help me plan my next move, i take scottrade's free, in-branch seminars... plus, their live webinars. i use daily market commentary to improve my strategy. and my local scottrade office guides my learning every step of the way. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade... ranked "highest in customer loyalty for brokerage and investment companies."

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dow is trying to erase the losses. shares are among the bigger losers, and they're not getting any help from one gained retailer. amanda is back at hq. >> talking about the game stock, which today is down by 8%. and over the course of the week, carl, it's down about 16%. it's been hit by a downgrade from national alliance capital, which has cut the stock to the sale from market perform and the concern here is regarding the used game business from the introduction of microsoft's xbox 1. and it's down by just over a percent. back over to you. >> all right. amanda drury, thanks so much for

that. now arrested development is returning to netflix for the fourth season this sunday. this is an older episode featuring our very own jim cramer. in fact, he appears in the new season as well. cannot wait to see what that one looks like. will the show's return push shares of netflix stock higher? we got two pretty different takes from two top analysts. lead internet analyst at capital markets. he has netflix outperforming with a $250 target. and michael pachter has an underperform with a $65. just want to start with you. you have a $250 price target and upped the rating to overweight this morning. is that because of the arrested development series? >> oh, no, we've had a buyer on this for a while. look, on netflix we like this

franchise. they have $30 million paid subscribers in the u.s. the building is showing profitability in the u.s. arrested development is a great series. but one show by itself doesn't make the netflix story. the fact they can roll out more original content and still be a large -- that's why it's popular with consumers. >> you're saying whether or not arrested development is a success isn't that important? >> i don't think it's that critical. it's clear it will be a success. this shows you the popularity of the arrested development show. it will just be a couple of quarters. it's the whole package of content. the rest is the aggregated tv shows. the movie shows. that's what drives the subscriber appeal of netflix. >> all right. this arrested development show has an audience.

it also means high prospects for disappointment. is the risk of failure part of the reason why you have a 65 zlrz target? >> no. i'm kind of going to agree with mark on this. i think arrested development is going to drive a lot of subs. i'm not fearful that it's going to fail at all. they had 6 million viewers when they were canceled by fox. i have to believe at least 1 million of those want to watch it. my expectation is netflix stocks goes higher. i differ from mark here that they don't have u enough original content. and they don't own the rights on a limited window.

michael, we've had this discussion a couple of times now. i wonder what you make of the metrics, that if they were their own cable channel it would be the sixth most watched network behind the four majors and disney. >> our hats should be off to them for their success in attracting subs. as much as i dislike the stock. i watch netflix every day. i'm a huge user. the content is good enough for me and the price is right. 8 bucks. the question is, will they make money at 8 bucks, even if they get more subscribers? i think the content owners will seek ever increasing fees. we heard we should expect 8% growth. that means it's coming from somewhere. i think it's coming from netflix. content costs are rising in lock step with the subscriber growth. i don't see the company ever being as profitable as the price

target suggests. >> thank you very much. have a great weekend, guys. >> when we come back this morning, we'll talk about europe closing. if you have been shopping for hamburger meat, you may have suffered from sticker shock. jane wells is all over the story in california, asking where is the beef? hi, jane. >> well, it's here. and it's appropriately named green acres. green is a good way to describe the prices. so who is making a killing and who is feeling grilled? mine was earned in djibouti, africa. 2004.

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going to be a lot of people dusting off their barbecue grills for memorial day weekend. they better be ready for sticker shock in the beef aisle. jane wells has more on that story. good morning, jane. >> hey, carl. beef, it's what is for 1%ers.

even here at green acres. what they are paying is up 125% to 20%. and they're passing along a third of that. cattle futures are problem because they are concerned they are going to switch to chicken. lean ground beef is up 21%. averaging $4.80 a pound. that could be a record. and it's happening to others as well. demand always comes up this time of year, but also exports arising. especially to japan. especially with the cattle herd at an all time lowing due to drought. you may feel grilled at the grocier. >> just this week, for example, the prices rose. we were paying last year in the low $3 range. currently we're looking at $5. so that's a big jump. come on, babies. >> all right. you think this would mean

ranchers are making a killing. that say that's not the case as live cattle fall from earlier highs. he's having a buy feed. that's feeding to profits. so he has reduced to 360. and that number could go lower. >> if these are not pregnant, then i'm going to have to take them to hamburger. i'll save the ones that are bred and be able to feed them and hopefully maintain an economic unit. >> lower cattle price and higher demand is good for one group. beef processing margins have gone from a $50 ahead loss a month ago to a $70 ahead profit. so thinking of switching to chicken? well, it is cheaper but the prices will be going up more. a lot is balk of the success of mcdonald's premium wrap and

kfc's boneless chicken. >> jane wells is following that story for us. have a great weekend. european close is up next. you can find out the reasoning behind the controversial comments from hedge fund giant paul tutor jones. never see as many great women investors and traders as men, period, end of story. and that's a great thing. but even though we're living longer, one thing that hasn't changed: the official retirement age. ♪ the question is how do you make sure you have the money you need to enjoy all of these years. ♪

the european markets are closing now. let's bring in simon for the close on the uk and now europe. >> you can see there's a lot of red on the screen today. you get the impression more people are questioning the equity markets in europe more so than here in the united states. artily the someday that we have is the european markets are underperforming. so you didn't get the bounce back that you had. this is the weekly chart of the dow. there are the yellow ones. you see they are really not able to come back with full force. that's a fair thing to say. if you look at what is losing today, and relatively broad based. also a number of german

companies. and so clearly they're booking profits there. the key question is if sergio, the guy at the helm of chrysler, may do the unthinkable and take this fiat out of italy. we already know when they do the deal, they're going to take that and headquarter it in london. now italy's minister is seeking a face-to-face meeting in order to guarantee he doesn't move the rest here to the united states and headquarter it in the united states. and i have to say he is probably one of the most american of the

ceos that you would find. >> were you impressed by him? >> totally. and he wears the same black jumper every day. not the same jumper, but the same kind of jumper. he can't seem why he would be bothered to make choices. >> look at steve jobs. >> very similar. very similar. i great guy. the italians are in uproar. >> the problem is they can't do whatever is in their best advantage to stay profitable and stick around. now it's more important because they have chrysler, which is making the money here. they're going to buy the rest of chrysler, merge fiat into it. kind of obvious to headquarters here in the u.s. >> good weekend. >> you, too.

the european close already happened. let's get to sharon. >> hey, carl. we're looking at metals lower across the board. a lot of traders off ahead of the holiday weekend. we are looking at hoil prices that have had the worst week in over a month's time. it's been a decline in oil prices on several factors. we had negative data out of china as well as the oil inventory report that was seen as bearish as well. as we look at china data and traders are still talking about it, the worst that we have seen in seven months time. not only for oil but also copper prices. they believe copper will be particularly vulnerable to underperform in the next several weeks because of what is happening in china. and copper had a good month. up 4% or so in the past four weeks despite the slide we have seen over the last couple of days. very interesting in the gold

market. a lot of volatility in gold. we are seeing a little bit of weakness today. when you look at gold versus the s&p and look at gold versus equities really that seems to have been the trade. it's a reversal of of what we have seen over the last several months. a lot of people wanted gold. didn't get that. >> all right. now let's bring in bob pisani with a look at the big board. was wednesday a deflection point? are we going to look back three months and say ah-ha. and that's what everybody is talking about. those of us still at work. there are three points people keep bringing up to me. a certain camp thinks we are at the deflection point. very heavy volume in stocks. i still don't think the price

move is indicative of what's going on. the second is the dollar yen fluttering. that's been interesting, too. so let's talk about the heavy volume. they were met with heavy buying interest as well. right now we are 2.6% off. we hit historic highs back here. the story is very simple. we had a modest pullback in february, that was 3%. i'm not that impressed with this. bottom line is, if we see another 2% pullback, now we pay attention to the stock market. as of now i don't particularly see it. let's move on and look at the dollar end. and you can see, we are just coming off of the highs here.

we're -- maybe 2%. 2.5% off the highs. given the runup that we have seen still not up for concern. here's one thing that i have seen. that's the ten-year yield. you see them moving up here. now at 2%. finally we show you the junk bond market. it has been very hot recently. that is off of the highs. but very small numbers. thises the big bond -- junk bond etf. it's only down roughly 2% off of the highs. so far, guys, i would say jury is still out i do know the bond market has a lot of action.

mortgage rates are moving up. that is being impacted in the housing market overall. >> we're already seeing it in mortgage applications which are down. that's exactly it. >> thanks, bob. good weekend to you, too. bob. bob pisani. i want to touch on the controversial comments for paul tudor jones at the university of virginia s virginia symposium last month. >> you will never see as many great women traders as men. period. end of story. >> in my mind it's as big of a killer as divorce is if they both have children. and as soon as that baby's lips touch that girl's bosom, forget it. every single investment idea,

every desire to understand, every desire to understand what is going to make this go up or down is going to be overwhelmed by the most beautiful experience, which a man will never share. about a motive connection between that mother and that baby. >> obviously those comments about women have caused quite a stir ch we reached out to tudor jones for comment. hooefrs what he had to say. they were with regard to global macro traders who wer 24/7 and of whom there are likely only a few thousand successful practitioners in the world today. i believe great success is possible in any field as long as they have the skill passion and repetition to work through the inevitable life events that arise during the way. obviously a huge topic of discussion. hard to have an honest conversation about it. because it's so sensitive.

even tudor jones said i probably said too much and gotten myself into trouble. >> and it took a while for people to start talking about this as well but this is just the latest in a series of comments out there about what do we expect of women? are we expecting too much? are we not thinking they are up to task? he wasn't necessarily saying they weren't as good as being traders, it's just that priorities change once they have kids. >> also, should mention it's a "washington post" story. it was supposed to be private, but it's definitely a topic among traders. probably not the best. some say it's ridiculous. others saying i talked to my wife and it's true. it's not a good headline. and it's going to cause an

uproar. the way they handled it was not i deal. exactly. exactly. we'll see. i imagine the discussion on this continues as we have seen on this topic. up next, another ugly quarter for series saying the results are just not acceptable. you can see the shares down 16%. you can find out what it all means in the future of the company. we're back in two. you choose which accounts to track and use fidelity's analytics to spot trends, gain insights, and figure out what you want to do next. all in one place. i'm meredith stoddard and i helped create the fidelity guided portfolio summary. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.

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up next on the half from right here at the new york stock exchange a very special guest is with us. he has $5 million under management. he will help us plot the rally's next stop. plus, the land of the rising trade. why betting on japan is no sure thing. and energy's big turnaround. where you can still find value in that area of the market? guys, we'll see you at post 9 in about 15. >> sounds good, scott. thank you for that. in the decades since k-mart and sears emerge, both companies are still struggling to keep customers coming back. what may we expect from the company in the next few years? also at morning star they are joining us to talk about sears. paul, good to see you again. >> thanks for having me.

>> a lot of moving pieces here. you are closing property. you're trying to grow your online business. you're considering plans to monotize assets. where does it end up on the bottom line? is this a growth story or not? >> i have a model that is shinneni shinni shrinking going forward. the question in my mind right now is the assets are equal to the company. if you pile up losses in the meantime instead of any positive cash flow that means an increase in debt and shrinking of equity. >> so is investing in the stores or making efforts to bring them back in is that a losing game? >> and therein lies the problem, right? in other words, all this stuff that eddie is talking about. the chairman and ceo now. all the membership stuff that he is trying to grow is a positive.

but if it doesn't eclipse the losses, then you can't get there from here. can you grow that profitably, fast enough to make a positive cash fle for the company. >> meanwhile, all of this is happening on a relative tear. whirlpools of the world are doing really well. we know serious is a leader in applianc appliances. why has that not showed up? or is it being clouded by other issues? >> they did a conference call last night, which is knew for them, somewhat. because they usually don't. they didn't mention appliances. so they are picking up sears last year was gaining share or at least holding share quarter to quarter in appliances. and that's a good business for them. so i was surprised that it's not a brighter spot. i would hope that it gets better. hope depot and lowe's just picked up samsung and lg as

well. >> briefly as well that they haven't benefitted from the struggles of jcpenney. >> they might have. the apparel business is doing okay. in general, whether it's macy's or kohl's. people said we don't know where the jc penny sales went. so i don't think that anybody is too big of a beneficiary. >> and with the help potentially from jcpenney, again, not a good sign. thanks very much for your time. and again, happy memorial day weekend. >> thank you. >> this is why it's pornd to watch "squawk on the street." the mobile navigation app ways which we first brought to you back in september could be the target of a billion dollar bid l battle between two of silicone value's top bidding companies. plus, the latest breakthrough, the next one you should keep an eye on. squawk is back. another article that says investors could lose tens of thousands of dollars in hidden fees on their 401(k)s?!

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reportedly engaged in a billion-dollar bidding war. wade is seeking more than a billion dollars, has fielded expression of interest from multiple parties. could remain independent. we spoke to waze ceo back in september and we asked him about it. >> think about wikipedia, the way they built an encyclopedia, which has every possible piece

of information in it, the same thing we're doing with maps. local people solving problems that matter to them. and that's why we can build a map that's global. the map is global, but we can do it on a reasonable budget. we believe if you look five years out, there are going to be two maps of the world. google and waze. we think it's going to be the two of us. you tell me if i'm going to be the second map out there to google, shouldn't i go public? >> i love it. i love that interview. we all talk about mobile being the future. and the mobile maps are almost the single most important map. >> and tapping crowd. it's such a smart thing to do. let people generate the maps themselves. two may become one now that goolg h google has joined that race. straight ahead, "star trek" in

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it has been 47 years since the original "star trek" series debuted in 1966. you're way too young to remember. >> i didn't catch the original, no. >> but live long and prosper by bringing "star trek" futuristic triquarter to life. the scout can monitor and check your vital signs just by holding it up to your forehead for ten seconds. the results are then synced the your smart phone. walter debrow is the co-founder and ceo. he joins us this morning live from london. good morning to you. i'm not sure if you have a prototype or a working model, but i'm wondering if you can show us how this works and even demonstrate it if you can. >> it's a prototype, and it will soon be a product. so basically -- so this is a

very small device that connects via bluetooth, put it to your temple, and in ten seconds, gets all your vital signs. it stores them, you can go back to them, you can analyze them, you can share them. and an emergency room in your hand. >> in lay terms, how does this work? how does it do that? >> it's actually a small device -- we have all kinds of censors. basically takes your temperature and relates that to your smart phone. >> is this a couple producnsume? when does the fda come in? >> this is a consumer device.

we have decided to go through the fda, because not only do we want consumers to have real readings, we also want these readings to be accurate. so basically we're asking the agency, this is what people want to measure. >> anything to prevent people from using it on one another? >> no. we count on the outreach department people, so you can sometimes -- you can help your children, you can help members of your family. you can even over great distances see how your family is doing. so we're really counting on that empathy.

>> i'm just curious if you got any of your inspiration -- you're an entrepreneur, working on new businesses for years. but "star trek," did they somehow give you this idea when you were putting the business model together? >> of course, i come from that generation, so i think ten years from now, it will be easy. >> we talked about the price point. i think we showed $100 to $200. how many of these do you think you realistically sell in year one? >> well, basically we don't know, but in two days, we have like 2,000 paying customers already from 65 countries. so there must be something very universal in what we are doing. there must be something that the people really want. >> why not make it the kind of device you can just wear all the time?

>> well, so the scanning potential of this, so basically it would take data processing. so we believe this creates scanning. also the scanning of other people. we are just checking ourselves continuously. >> walter de brouwer, thank you so much for your time. fantastic. >> thank you. >> and thanks to you for a great first week. >> thank you for having me. >> i hope you'll have me back. >> good luck finding a place to live in new york. welcome live from the new york stock exchange. four hours to go until the close. let's take a look at where we sit on this friday on the street. oc