go in terms of yield? so i'm in e quites. >> so if you did see that sell-off you were talking about you would be? >> i would buy. >> do you have more honeywell or more ge? >> i've got more honeywell. >> did you always have more or is it worth more now? >> i prefer not to answer that question. >> that does it for us today. make sure you join us tomorrow. right now it's time for "squawk on the street." good monday morning welcome to "squawk on the street." i'm carl quintanilla and david faber live at the new york stock exchange kicking off the first trading day of june with a small rebound off of that ugly finish on friday, the worst day for the dow since the middle of april. a busy week here. auto sales today, ism tomorrow, and job sales on friday. the manufacturing pmis are still contracting and germany at a three-month high and the nikkei, volatility continuing down

almost 4% overnight and it is now down 17% from its recent high. our road map begins with the markets kicking off june today after that close call at the end of may, despite a 200-plus point drop. the markets are still on a five-month hot streak. >> merck, amgen and bristol all set to start off the month after positive news of clinical oncology meeting. >> investors could yank $4 billion from steve cohen today that would leave him with mostly his own money left to work with. >> that's still plenty. >> apple in court today to defend against accusations of price fixing of ebooks. a trial could be three weeks in duration. >> all right. as we enter june, the stock markets have yet to experience the losing month so far this year, but the last trading day of may, and you probably know it ended with a 209-point sell-off in the dow and the losses accelerated in the final hour of the worst session for the blue chips and the s&p since april

15th. futures as you saw moving higher this morning and so is the ten-year treasury yield and that could be the key here. it is above 2.15%. you know, it's funny, jim. we've talked so often about duration risk for those in bond funds and yet, we haven't talked as much during that course of it as should there also be a lot of fear of equities. because it wouldn't seem to be the automatic and somehow the market would be jolted as it seems to have been over the last week. >> the destruction in the cloroxes and proctors and looking at the jobs over the week and the destruction in colgate and the first energies and the aep american electric power is astonishing and i see the futures up and everyone wants to dismiss friday afternoon and in a really great tape, you get hit by a lot of stock and you buy it. so we can dismiss what happened. come on, when you have a widely telegraphed sell and you've got an opportunity to get in, well, you don't flee from it. so i still feel there's some

lingering effect from the change in interest rates. i'm not excited about this. i don't like up monday mornings, carl knows that. i feel very strongly that this market got damaged this week. >> why don't you like up monday mornings? >> they're not sustainable. >> to this day it's sustainable and most certainly. i just feel that that was a real sell-off and i don't like sell-offs to be dismissed by saying it was an imbalance because there tends to be something nagging at people that they don't take advantage of the imbalance. >> people are worried about cracks. so-called cracks in the market. the quality of this next bounce, is it a lower high? what does that portend if it's true? >> 16.30, jim, there's been minor damage to technical stocks overall. i can understand why people want to come back in. there have been stocks that have really been hammered. these bond equivalent stocks have gone from three to three and a half. that's a really high quality

company like coca-cola. there was really nothing that happened in coca-cola. it was just crushed. general mills, nothing happened and the commodity complex went down, but it didn't matter. these stocks have very little support here. if they bounce, i think people sell them. >> we talked about this last week. 215, by the way, i'm still curious as to who's getting hurt in that violent move that we've seen in yield and price in the last two weeks. >> i've been sending david some charts. these funds. these pimco funds, they are so horrendous in their declines. >> i know. and the municipal -- >> and by the way, that's where people have been. we talk so often about equities, but let's not forget the vast majority most likely of many of the viewers who are out there managing 401(k)s are in these very products. >> i know people still hate equities. >> we love to talk about how they should come back in, but a

lot of people just doing these bond funds and i was, like, saying no. that can't be. that looks like -- we're talking about everest, righthand corner sell-offs in some of these funds. a lot of damage. people who were in those getting crushed and never had a chance to participate in the early part of the year on stocks missed out twice. >> one of the great travesties, a lot of people kept waiting for revenue, but when those revenues come and as soon as you get revenue growth and bonds and interest rates go up and those who waited for revenue growth have made nothing. >> right. >> because that's the signal to the fed. you know what? we finally have the sales growth -- the fact that at 215 is sparking these conversations and moves is remarkable. >> i was looking through old files of a mortgage that i had nine years ago when i bought my apartment. 7%.

6%. >> yeah. i had one of those. that was a win. >> some disclosure, the president had to disclose some of his finances. his remaining mortgage is at 5.7 or something like that. >> he's got that white house. >> he rents that? >> when will we get back to a normalized, if you can even use that term, interest rate. that might mean unemployment falls below 6.15%. >> the fact that maybe the 30-year bull market in bonds is over. >> bill gross? >> i think bill gross is right. >> by the way, the commodity prices today we have a bounce because of the story in the financial times saying that the schein ease are back buying nickel. has anyone looked at the complex? >> oil got crushed last week and the bullet -- where is china? where is china? >> oh, it's there. it's very big and it goes on for a long while. >> a lot of time zones, although they keep everybody on the same time zone.

>> david will look at all that they're buying later on. >> we'll try to take a look and it continues the buying. including a lot of iraqi oil. >> that was some negative article, just a depressing article, but i do think we have to stay focused on the chinese, western to eastern migration, that was the great go east, young man, theory. i have a couple of are theory yes that stopped. there is a lot of industry developing in the wet. a lot of people say you can't breathe in these. >> i know. we can almost make light of it and almost seem as if -- that's true. >> you -- do you want your kids grow up in that environment? >> no. you'll never understand china and people who lived there ten years means they're not understanding it and they went into a hotel room and they didn't have a filter in their apartment last week when the -- when the air quality fell to a certain level and that's what you're dealing with in many of these instances.

>> i just think this is -- europe is doing -- there were some numbers that came out of europe that were slightly better. i think europe's bottoming, but there's no growth and it is bottoming and people are still shocked by that italian unemployment number and there isn't a number that comes out of china they think is satisfying. >> meantime, some interesting research that was satisfying for some of the drugmakers. the battle against cancer figuring prominently. shares of drugmakers rising on developments out of the so-called asco meeting. we'll go by these one-on-one, melanoma shrinking tumors. >> i don't want to give people false hope, but is this the end of skin cancer? >> big pharma, we are so used to biotech making breakthroughs. i know merck has been reenergized and this is the first sign it might be working. i was very encouraged by what merck put out. what you are hearing and i talked to people -- >> i was making merger calls.

>> some are saying new age of innovation that you're seeing that the meet, perhaps the most exciting meeting since 1999 when we saw the phase 2 data from avastin, and so there is a great deal of hope. it goes back to this idea of you've got getting the immune system to attack cancer. so it's immunooncology. that has been the way -- you can trace it back to the sequencing of the human genome, 13 or plus years ago and the advances that have been made on the back of that, but you can move along, but people really do believe it's a new age, and by the way, bristol-myers and merck. >> glaxo, this is not melanoma, per se, but ovarian cancer patients found the delay relapses. >> very significant. >> there say weird article in "the new york times" about maybe they re-opened the diabetes, the avandia that they got charged with such a huge fine.

i know the cardiologists were just up in arm, but this is big pharma, and kind of a comeback mode. when was the last time you heard about merck? >> having conversations about bristol-myers. people talking about new oncology drugs and the acquisition of metarex, and they'll have potentially another one and there's a great deal, by the way, that was done. . when you look at bristol-myers it's become more of a biotech. meanwhile, the biotech companies are doing great, but they did not shine. >> bmy is trading at a nice multiple to reflect expectations. >> i liked it at 33. i don't like it at 48. to me it's like people are coming in now. they're teslaizing this stuff. >> it shrank tumors in 31% in patients with advanced melanoma and this is early stage trial. amgen, a melanoma drug shown in

an interim trial to improve survival in skin cancer patients. a lot of activity surrounding melanoma. >> this is a disease that as the great book cancer is the emperor of abnormalities. the way we've treated cancer in this country is to carpet bomb the body and hope we kill cancer cells and it leads to a tremendous decline in the individual itself. it's a brilliant way to do it and it's taken forever. i think it is very positive. >> the way to think about it is the tumor typically sends a signal that turns off the immune system. if you can find a way to stop the signal from the tumor from being sent you can kill the tumor. we are talking about curing and not necessarily -- >> curing skin cancer would be such an amazing thing in our lives and maybe the beginning. cancer is a horrendous disease. those of us who have lost loved ones. >> i have not checked in for a

while with some of my various sources. >> yes. new age of innovation. very interesting. >> it sets off the thrust ralfr with things like alzheimer's and diebetties. >> a lot of firmses have been trying. one of the reasons why you saw the glaxo stories is that the fda is saying we've got to come up with something to fight this diabetes epidemic and re-opening drugs that have been bad and they've had side effects because of how little progress is being made by diabetes. >> you think fda has paved the runway for this kind of stuff. >> the director of the fbi has not gotten her due. i think she's not a self-promoter. she is phenomenal at what needs to be fixed and there isn't a drug company off the record that doesn't say to me she's real. she's real. they're all afraid. the fda has been so tough. rightfully so, we want a good

fda and weir all off the record saying, you know what? this fda is trying to encourage us. speed drugs up and takes too long to taik get new drugs. hamburg, if she were to grab the mike, but she doesn't. newer college, of course, i had a total crush on her, but these neither here nor there. >> times are changing, but she was amazing. she was amazing. hey, i'm out of the club. whatever. >> i've never heard him at a loss for words. look at him. >> how about one of those snapshots? get me out of here. >> we'll bring her in for an interview and sit her over there. >> tobias levkovich, he is also handsome. does he think we'll see another stock market day of gains. they were swooning for bernanke at princeton this weekend speaking to graduateses. his top ten advice list for life included gems like this. >> don't be afraid to let the drama play out.

>> you got that right. we'll tick off the remaining nine in the next hour. one more look at futures starting the week on a positive note and a lot still to come in a minute. ♪

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♪ ♪ ♪ ♪ it's redemption day at sac capital in what has been one of the toughest quarters in the hedge fund's history. investors must decide whether they want to pull capital from the firms. sac insiders are expecting to see significant redemptions, perhaps the majority of the $4 billion in external capital, but hasn't been yanked already. if it happens, sac could simply become a de facto family office and that's a fund manager, managing only his own money which in this case is not a small little bit of change. it's closer to about $9 billion. they also have some sticky money that would get them up to -- sticky being outside investors who will stick with them to $10.5 billion which is the size they were a few years ago.

so even with potential outflows with significance, they are still going to be a very large hedge fund, assuming, of course, that the government does not finally bring charges. >> a fabulous article by james b. stewart talking about the prisoners' dilemma in theory. >> and it does seem like these are all sideshows to what the u.s. attorney decides to do and what the u.s. attorney can do to break. i think that these stories all lack the single biggest issue that, you know what? fisher cut bait with the u.s. attorney. are they or aren't they the clock may indicate that they're running out of time with the five-year statute although these broad ideas can change that, but there are so many different things and it's hard to know where the truth lies in terms of the government and where they are in the investigation. sac for its part has managed to do fairly well to put up decent returns recently and in talking to people there the employee base has stayed relatively

stable again. he can support that base simply on his own money and their 9 billion or so even if every penny were to leave the firm. >> obviously, you feel beleaguered when money comes out, but when your largest guys are all. >> what's funny is whether the media is interested in whether the jim is getting rehabbed. whether if they have a sense of moving forward or backward at a granular level. >> if this passes by any action by the u.s. government, this mono doesn't necessarily have to be withdrawn. they have three quarters over which to withdraw and you can provoke the request at some point. not to mention if they're cleared and you never get fully cleared and you don't have any action and possible money can can start flowing back to this fund. >> one guy is it fell from aig. they put a letter out and said something. it doesn't happen very often. >> the financial services business at aig who is -- it was horrendous business and they put

out a release saying aig executive not to be pursued -- >> it doesn't happen very often. >> meantime today hotel industry power players are gathering in new york at the nyu international hospitality industry and investment conference. our simon hobbs is at the marriott marquee. that is the morning of the event. >> good morning to you, carl. if i said to you, who do you think the big customers are for hilton and starwood. guys like you and me checking into hotels. the real customers are the owners of the hotels who pay for the brands to run the hotels and this is a chance for the big ceos to talk to the owners of those hotels to press the flesh, to answer questions and show their leadership. it is also a great opportunity for us to talk to some of those people that aren't often seen in public. for example, the pritzker family who runs hyatt. i'll have a panel in a moment with tom pritzker.

his cousin will be the new commerce secretary and we'll sit down with their ceo at hyatt to talk about how they run the company and whether it's truly public. we're also going to talk to jonathan tisch from his corporation and he is the man responsible to bring the super bowl to new york next year which is a good idea provided we'll get back to you. >> we'll be hearing a lot from you, simon. when we come back, where can you find opportunities as we get into a new month. we'll talk to kramer and get a look at his mad dash. we'll take a look at the damage we sus tinned on friday with the 208-point decline. half of it coming in the last 15 minutes. a lot more "squawk on the street" from the nyse straight ahead. oh, he's a fighter alright. since aflac is helping with his expenses while he can't work,

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♪ ♪ ♪ ♪ less than six minutes before the opening bell, time for cramer's "mad dash" ahead of the market open with microsoft. they're doing a major restructuring, the stock has been too hot for me to think where there's smoke there's got to be something. >> how do you do anything with the stock up 27 to 35. maybe that's why it's been up. i agree with you. there's an entertainment division that is very, very strong here. they have skype. they can break those two out and give you the regular utility software with the very big dividend. don't dismiss this. the company's business is good.

>> it's also people with jeff that took a very large position and talking about their business in the plumbing part of the business and not pcs. exactly. it is ripe for some change here. intel with the samsung business and microsoft and intel, and the empire strikes back and speak of the empire strikes back. how about the fat empire. you know how we hear about how whole foods is doing well, and haines celestial, cracker barrel. i don't know if you're like me, i had that apple pie. >> right. >> and i'll have a slice of apple pie and it comes with a piece of american cheese and vanilla ice cream on top of it. >> this may be a revenge. revenge of people who are tired of thin, who are tiefrd feeling good and just would good-old-fashioned food. good numbers. there are still people when like taste, david. >> there are. i wasn't aware of that. >> i haven't been to cracker barrel -- >> tofu, this is not a tofu

place, david! >> no? >> this is not where you get your tofu! all right? >> i don't eat a lot of vegetables either. >> this is not tofurky. >> i prefer cheese. >> i have a daughter who is a vegan and a vegetarian and this place was off the list. i'm tell young. that's it. >> i like cheese and bread. that's basically my diet. various forms. >> so is the big dividend that yields 3%. >> the bond market equivalent and lots of cheese. >> we have a market open about four minute away. will june give the bulls a reason to celebrate? stay with us. first trading day of the month coming up. i want to make things more secure.

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[ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim. from td ameritrade. you're watching cnbc's "squawk on the street" on a monday. the opening bell set to ring in 40 seconders on so. friday was tough. it lost 208 points on the dow and it was the worst day since the middle of april. off the highs. off the intraday highs and 2.7 off of the high of the dow, so there's been some damage done here, jim. you don't sound gung ho on stocks buying the names. >> no, i'm not.

i want to be a searle of the companies that grow 2% to 4% that have 3% yield which is by the way, there are dozens and they're household name companies and i think they're broken. i just don't see any upside. >> there is the opening bell, by the way, and a look at the s&p at the top of the screen. stellus capital and over at the nasdaq, a life sciences company doing the honors. getting a lot of auto sales, jim. we've gotten chrysler already and phil lebeau has been on the case. hey, phil. >> hey, carl. slightly better than expected numbers from ford, a smidge better. up 14% in the month of may compared to the estimate coming in at 13%. it breaks down cars versus trucks with cars being up 9.4% and the cars being up 17.8% and guy, listen to this number the f-series sales last month up

31.5% and the best may for f-series trucks since 2005. don't forget, coming up at 1:35, we'll be talking at jim farmee and also in charge of the lincoln brand and we'll talk about the strength of the f series pickup trucks and the best made for the f series truck since 2005. guys, back to you. >> you've been covering a lot of brands today on chrysler. ram 24. dodge 23. i know cadillac numbers are out, up 38. you just tweeted the best may since 76. best since 76. you have to go back a ways. those are the kind of cars that jim liked driving around back when he was younger. >> oh, yeah. >> i had a ford fairmount. they make a fortune on the f series, right? >> yeah. oh, yeah. on average and there's basically an average when you talk with analysts. they believe ford makes at least $10,000 per f-series that they sell. you extrapolate that out, jim.

71,000 times 10,000, you do the math. >> that is huge. >> a lot of zeros. >> look, autos and housing and oil are the strong points of this economy. the opposite of these stocks i'm talking about the general mills and the kelloggs is ford and if we get any sort of upside at all in europe where they managed to get the costs down in europe, these stocks are going much higher and this is where the money's going. >> wow! >> let's go into growth then because that sounds like a potentially growth business. is that connected into housing which i mentioned so many times and i'm talking about the wealth effect. >> i think the f series is america's most popular truck. this is a truck that you buy if you're a small business guy trying to go into home depot and doing a little construction so it's a bullish time for the american economy. >> ford is up almost 2%. i've got to mention the drugmakers again. merck is almost up 5%.

>> merck at 49 and my charitable trust sold merck and i thought it was a good sale and it was not a 5% increase and a great american company with new management that is very energized. >> it's very nice to hear a stock going up on the basis of news having to do with a new product potentially a new product as opposed to a dividend increase or increasing the repurchase or some rumors about them going to split up animal health or whatever it might be and one of the things that happened is they reported a quarter and everyone yawned and it was the worst of the group and then they announced this gigantic buyback and people say what the heck is that? well, guess what? maybe it was a good buyback because they saw a good pipeline. there are many other drugs in the pipeline for merck. this is the beginning of the re-emergence of merck as a great drug company. >> it is. >> that's a big statement. >> yes, it is. i think it's very big. these big pharma companies they have a lot of stuff in phase three. they may not be doing the kind of stuff we like in phase one and that's what charles rivers had, in other words, early on

and they have a lot of stuff in the fda and the fda has become very pro and the drug industry and it's very big. >> keep your eye on apple for two reasons. one, these rumors about a radio service continue. >> right. >> the theory is they want to try to get this signed before the developer's conference on the 10th. pandora is off more than 2% and of course, going to court today to fight the civil charges of price fixing. all of the publishers have settled, but tim cook seems to want to do this on principle, jim? >> well, i don't know. i don't want to -- you don't -- it's a government -- forget it. let them win. >> usually you don't want to fight them. they have unlimited means. >> although apple has almost unlimited resources, too. >> the u.s. government and the apple, but it's never been a great battle to go against the government and steve ballmer might each tell you when the government was represented by joel klein. >> that's right.

joel klein now of news corp. $28.0 6, was there an upgrade. looking at that company approaching a market value. >> it was very hard to be able to come in against best buy. the competition lessened. suntrust upgrade. it's a double in a relatively short amount of time and you couldn't have gotten an lbo done in 16, 17 and it was at 28. >> maybe dell knows something, huh? the prices are low and it hasn't moved up. hewlett-packard and best buy are two comeback kids and it's been remarkable along with the airlines and some of the housing. >> how about microsoft? changes are coming to the balance sheet in a way they haven't in a long time. >> i know. and today all things deep. >> i think it's very real. change is going come to quote sam cook. i know again, steve ballmer, we often talk about ballmer not happy with the way the stock has

performed. >> if you do go back ten years, you still don't look very good. i've always been a defender of steve on that particular issue and it's not like anybody else in the pc business has done well. the main criticism they have of mr. ballmer that he has not allowed for talent and he doesn't have a successor. they've had numerous cfos and there was a question as to whether the board which is the board's role has been strong enough and saying it's got to be bill gates, though. you really need to have a path here for bringing people up who can conceivably take your job. >> i have used the touch screen, the kind of hybrid, tablet touch screen. it's kind of neat. intel doesn't go down anymore and have you seen that? intel creeps up every day? >> the second best performing dow stock every day. >> intel has a great balance sheet and a good yield and that is the kind of thing that people

will gravitate to as opposed to kellogg and there's my friend hershey which i don't want people to own right here. >> that is typical. >> you guys, we are so close, too. >> hershey? >> we were buddy, ever since they switched manufacturing, i've been friends with hershey. it was nice to be friends with hershey until recently. >> jolly rancher, twizzlers. >> yes, i have turned on hershey. >> yeah. i believe that this group is so wrong, and by the way, procter & gamble remains wrong if you want to really go at it. no one wants to go at it. have you ever bought a razor blade? how much have you paid? $70 or so? >> in some plastic case because people steal it. it's like tiffany's and razor blades. >> by the way, you can wait 15 minutes for someone to come by with a key. >> they never do it. >> i know. >> the profit margins must be

huge on it. >> unbelievable. i hear it's a razor blade business. >> then later they sell you the blade. >> isn't that something? >> like doing a surgical. like they're using intuitive surgical's model. they're copying. >> it is too expensive. i go to costco for my blades because i can't afford to go to cvs. >> you have to buy 100 blades. >> i try to get as many as i can because of that blade because of that very fact. no, i keep going. >> why don't you use the throwaways? >> let's get to rick santelli in the bond pits. good morning, rick. >> good morning, carl. everybody, of course, continues to talk about the japanese markets and the nikkei was down again significantly, 5% last week and a little over 3% today. the ten-year was making a beeline for 1%. it moderated significantly

close. let's get a handle on this. we're with elevated three basis points and hovering around 2.16 which happened to be the high yield close which comps back to april of 2012. keep that date in your mind. so is the jgb market something to really be nervous about or has it just played a very quick game of qe catch-up. look at the mark, hovering around the high yields right around the same comp as the ten-year. what's fascinating is now let's look to the european fixed income markets for that same comp. april of 2012. you can see boon yields and the pattern is similar and they're well down and they haven't reached their mark and they're still up 160 basis points and let's look at the yield in the uk and it's hovering very close to our tenure and up 2% and also not making it up to those comps in april of 2012. the aussie dollar against the

yen is a currency fly keep an eye on. even though they're well over 3% nowhere near where they were in the beginning of april. all of this is key for the interest rate differentials and let's put it all in context. the dollar index was around 80. it is now around 83 1/4. >> thanks very much, rick santelli. we like to follow the chinese and what they're buying in the u.s. last week was the very important deal. we'll see how it goes for smithfield foods and i want to mention a real estate transaction of some note. we are not buying control of the gm building which would appear perhaps the most highly valued office building in the united states and 40% of it has been sold in a deal that brings the software banking family and prominent chinese developers and they're paying a big number for this and it goes back to the theme of china trying to redeploy its assets here.

amazing to think when boston properties bought that building for 2.8, that it would go up in value and they were paying an enormous sum, taking on a very low cap rate and it goes back to the whole idea of trying to find yield in the yield-starved world, jim. very interesting to note that deal again for at least $700 million and not including the debt of buyers they're assuming. they have the apple store and fao schwartz, great retail, but great members. >> the empire state building have been at play. there's a very unreal world developing with manhattan and new york city real estate. >> a lot of money coming in from overseas. who would ever thought there was a shortage in midtown? there are no cranes in the sky. take a look at the cranes other than the financial. >> there's one in manhattan. there must be more in the hudson yard's development up in the

west side and that's a lot of the number of the real estate companies are involved and that's in the early stages, but that is moving forward. the crystallization of the larger issue. they've been stubbornly low. commercial real estate has been the biggest hold. when you get off the desk with big banks, they don't want to lend on them or they'll claim, we have open arms and then you have to do a spec in commercial real estate. i have a plan and no one wants to hear your plan. anybody that's been involved in commercial real estate knows this is the crux of what obama and the government should worry about. if not, you do infrastructure spending. when you do a commercial real estate project, that's when people are employed. >> right. >> and by the way, on the subject of the chinese buying here and i would come back to smithfield foods and the stock is down here this morning and we know we'll get a national security review. there's been a good amount of

press now to focus on shuanghui, the $7 billion buyer here, but i still have questions as to whether we might not see another bidder emerge. there is a shoernted auction of the company. there was other interest whether they would come out and beat that $34 a share number. we'll see. it was an aggressive number. >> and it comes in advance of the meeting by president shi and president obama for two days. >> i don't believe it. let's hope it's not. >> let's check out the action in the energy and the metals. the metals have been so bad. sharon epperson. >> you were mentioning china very much the focus of the energy sector as well and particularly the factory data that we got out that showed

slowing momentum. that sent brent crude prices below $100 a barrel and look at how oil prices have bounced and what seems to be taking front and center in traders' minds is what happened in the north sea and they're having operational problems and it's the largest field in the uk producing 140,000 barrels per day, and that, of course, is the key stream that is the benchmark for the brent price. we are also keeping our eye on gold. as you mentioned, gold has been a lot of volatility in that marketplace with the rollover next week with the options exploration and as well-being at record levels and that's what traders are paying attention to since last friday's report and they're still watching the key psychological level of 1400 and that will be the key level to watch in this session. back to you. >> thank you so much, sharon epperson. kelly evans joins us on the ten. i know a couple of things and shifting around.

>> it all kind of ties together. jim mentioned iron/ore. sharon was just talking about the metals and the fed though. this is going to be a week. we ended with the jobs report. we know how important that was last time around and resetting expectations about the exit, but i think what's happening and it's based on conversations and there's a sentiment out there that perhaps we've reached peak confidence in the fed that we might be at one of the critical junctures for fed policy since the recession and since the recovery. it's interesting to see the ft talking about hedge funds fighting the fed and i'm not sure it's a case of fighting them though as starting to question whether the fed is starting to do more harm than good. it's a sentiment you're starting to hear voiced from the fed itself. so going back to their advisory council and they meet quarterly and the latest report and the details of which we got on friday and this is from may 17th. go take a look at it. the last page of the report is all about the negative consequences of what the fed's

been doing so the real question is this. forget risk on, risk off. that was all about how weak is the economy and are we the at a period now where the dislocations caused by qe are what's preventing the fed from doing more even with inflation low, even if the jobs report is great, but not that great. so when you hear the guys like rosengren and john williams and some of the more dovish members of the fed talking about a strong jobs market and not necessarily focused on inflation and beating the drum to say we'll stay out there and do whatever it takes you have more and more people in the market wondering, is this a fed that is starting to be constrained. it doesn't necessarily mean they can ride into the rescue. >> i am kind of -- i was shocked about the decline in commodities and i'm wondering, how many hedge funds have been hoarding commodities, as long as rates are so low. if rates go up, it's a bad trade. you have to sort of look at the different baskets of commodities, right? on the one hand we have iron/ore

incredibly weak and china is buying some of the base metals as well. >> right. >> i will tell you, the point being if this fed exit is going to be a volatile one, why not be long volatility. why not bid for geld and silver which i know some guys are doing. >> there's a bid for the miner, even. >> exactly. it only makes sense in that context so something to think about ahead of that report friday. >> so you're looking at frank lautenberg there. the senator of new jersey dead at 89 and that's according to "the bergen record." longtime senator, senator from 1982 to 2001 and from 2003 from patterson. a big story for those in the garden state. >> automatic data. giving an appointment to the senate. >> lautenberg. >> senator christie? >> interesting. >> we'll see if we get more clarity from the associated

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>> ben bernanke giving princeton graduates ten pieces of advice in his commencement speech thisec wooend, like this one. >> don't be afraid to let the drama play out. >> that brings us to this morning's squawk on the tweet. what advice should be number 11 on his list? tweet us @squawkstreet. we'll get to your responses this morning. a joke he made regarding his leave status from princeton and he inquired about it so to speak, and they told him he they get a lot of applications every year and not very much room. apparently in the text to reporters it said this is a joke, but it's feeding speculation that he may not return for another term, not going to jackson hole in august. >> not going to fish with liesman? >> first time in 25 years the

fed chairman has skipped jackson hole. >> any reason given? >> i was not aware of that. >> alan krueger went back and he didn't want to lose his tenure at princeton. very nice man. very nice man. the economic council. >> i'd love to ask him the question when we bring him on to talk to him. i'm looking forward to that day. >> in real life he's a good guy. >> here's what's coming up on "squawk on the street." ♪ ♪ coming up, the weekend is over. it's time to get focused. there's no better way than "six stocks in 60 seconds" and cramer's got them when "squawk on the street" returns. [ agent smith ] i've found software that intrigues me. it appears it's an agent of good. ♪ [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time.

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let's get "six in 60." cme kicks this off. >> the market is anemic and both jefferies and ubs raised prices and it barely moves. >> they say buy it and it's down three. >> merrill says buy plum creek. the timber stocks have been horrendous. >> barclays, $100. they're saying it so the stream is not a fad.

>> this is troublesome with a lot of adds are saying we're coming after vmware. >> we finally have some real estate investment trust. >> colonial properties. these deals are so jiegantic and they really are. this is an apartment and two reits. the reits have been horrendous. >> wow! >> yes. >> with time to spare here, what's coming up tonight? >> we have one of the hottest stories out there which is charif souke. >> and should we allow some of our treasures to be exported biez the chinese need it and he has the plant that's most advanced. the stock has been a horse. well, you know what? i hear it will open in 2016, let's find out tonight. >> one of the most -- with the biggest and undercovered stories at large in this country is what's happening with this. >> you see the new numbers that came out this weekend from eia.

we are now importing the least that we've imported in 20 years. >> they are fighting amongst themselves. >> there was a whale in nigeria. >> we have so much here. union pacific will be shipping kinder morgan properties was going to build this rail line out from the basin to california and the trains are going to ship it, plus let's not forget, california is loaded with oil. the monterey shale. >> a bunch of stories. >> we have a lot of oil in this country at 6:00 and 11:00 eastern time. >> a double dose of key economic report and we get ism and construction spending when the market comes back. at farmers we make you smarter about insurance,

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welcome back to "squawk on the street." we have april construction spending up .4%, half of what we were looking for, but last month's down 1.7 was also cut in half to down .8. here's the surprise. ism for may, 49.0. 49.0. the last time we were under 50 was in november of 2012 towards the end of last year at 49.9.

so at 49.5 we have to go back to june of 2009. june of 2009, and if we look at employment it actually was 50.1 versus its last read at 50.2 so we have to pay close attention and that new orders, 48.8. they moved under 50 from 52.3. so unlike the confidence numbers and unlike the survey from chicago, the national number going in a different direction. carl, back to you. >> all right. thank you very much, rick. let's get more reaction to that data. steve liesman joins us at headquarters and what do you make of it? >> this is a weak number and i'll tell you, carl, the significance of it. it's the first number out of the box for the month. it's also been, by the way, overstating growth. so the extent that it's 49 is that growth is weaker underneath and of course, the people will look at that employment number which tick down and it's still above 50 as an indication of

what manufacturing may show in the friday jobs report where the estimate is 35,000. prices down, backlog of orders down. most of the internals aren't as weak as the headline number and this is a surprise and going along with the construction spending number, carl. along with what i thought was basically weak data at the end of last weekend and it's going to push out the tapering talk. back to you guys. >> thank you very much, steve liesman. s&p did spill a little bit on that news. dow's held up for a number of reasons and merck up 5%. >> it goes back to the question whether bad is bad again and we did see a weak close on friday. the old sell in may didn't quite apply to this market so what can investors expect as we head further into the summer. head of investment and client strategy with allianz global advisers and good morning to you both. >> hi, good morning. >> christina, let's start with

you. first of all, thoughts on the weak ism number. look, we're below 50 and not a good seen either for the manufacturing sector or the u.s. more broadly. >> and for the fed, as well. >> it could be greeted positively by the market because as we saw in the past week, when you get a lot of positive economic data or some good economic data points, the market, while it initially reacts positively begins to get nervous that it may be the beginning of fed tapering. so ironically, this could be greeted with positive fervor by the market. >> we certainly aren't seeing a sell-off. doctors are still positive this morning, but eric, we have seen, we've come down and we've cut in half the gains that we're looking at right where the number hit and there was a sense when we started to get data coming in disappointing accidth reaction was weaker stocks. >> as the other gives mentioned the worry that the fed would move up the taper date.

we never felt that was likely. we always felt that the fed at the earliest was going to begin tapering because the news is good, but it's just okay. it's not great, and i think this number today proves that what we're seeing is a modest economic expansion. we have had a second quarter slowdown that, you know, there are headwinds and particularly with the sequestration cuts hitting the market. we think the economy will get through it and we think we'll start seeing greater acceleration of the economic data in the second half. >> it's almost as if investors were listening and they're jumping up 60 points on the dow and look, we're talking about overnight data from china that people are looking through a little bit and yeah, the headline improved and then you get a number like this on the ism and what do you do with cyclicals here? >> we think that actually cyclicals remain a buy. if you looked in may and the dynamic russell 1,000 dynamic index was up just shy of 4%. the defensive index which had

led the year to date through the beginning of may was actually up only about 63 basis points. you saw over a 3% outperformance of dynamic stocks which are typically cyclicals in may along with small cap beating large cap along with russell one and two. christina, do you have a similar view here that this is still the best way to play the mark and this rotation is still under way? >> we would concur. there's a lot of attractive valuations in cyclicals and we believe the fed is pushing investors out on the risk spectrum. so in an environment you need to have exposure to e quites and it makes sense to move into cyclicals because they do offer some attractive valuations and some, in fact, also offer good yields. >> but how can it be the case that people are moving into cyclicals. at the same time we're hearing more and more people talking about hedging or bracing for volatility and we're looking at the fed that may be more constrained and we were talking about what more we can do with buying in mortgages and buying

in treasurys and we get exposure from gold or silver and how do we see an increase in the vix at the same time people like cyclicals and a traditionally a risk-on kind of play. >>. >> we've been hearing a lot about -- >> you're absolutely right. cyclicals are certainly very attractive, but we are likely to see more volatility in equities. think about last week. we saw the vix close above 16 for the fourth trading day in 2013. the first two times we saw this happen, one trading day in february, two in april. one was italy elections and the other two days were around cypre cypress. it looks like we're transitioning from an event-driven market to data driven and it's all about the fed and when it will taper. >> as a result, anticipate more volatility, but that shouldn't keep investors away from

equities. they need to be in there and they need to have a longer time horizon because of the volatility. >> we talked with cramer this morning about various cracks in the market and that after friday if this bounce turns out to be long lasting and not that impressive then you are left with the pattern of lower highs and lower lows. how concerning is that? >> i mean, it's something to watch. i think the economic data is more important. what we've been telling our clients all year is to be fully invested. if you're supposed to be 60% equities. you should be braced for a pullback because there were a lot of reasons we should get a pullback. do you think the pullback should be short lived? it will be months rather than quarters or years, and we think in the long run and the 12 to 18-month horizon we think e quites are a good value because cash and income don't look all that attractive. drift ina a

christina and eric, markets after initially selling off on the news we're back at levels we were trading at before the data hit. up a point on the s&p and up about 60 points, carl, on the dow. >> meantime, i believe we're getting some breaking numbers on gm with their may sales. our phil lebeau watching that too. a slighter better-than-expected increase, a 1.9% increase. vp of u.s. sales from gm headquarters in detroit. kurt, i want to ask you about truck sales because you have posted strong numbers for both cheffy and gmc. what is driving those truck sales right now? is it the contractor or people rotating in to buy new trucks? what's driving it? >> greetings, phil. yeah. we're seeing a lot of increased business due to the increases in housing. availability of consumer credit obviously isn't hurting us

either, and you know, the housing and the truck sales have kind of led, but we see the american family coming back, too, with pretty good crossover and utility sales. your cadillac sales last month up 39.9%. the ats being entry level at the bottom and clearly driving that increase. where are you bringing those buyers from because clearly they're just not cadillac customers repeating. you're bringing them in from somewhere. where are you winning over customers? >> we're seeing good growth out of cadillac to your point, phil. our year to date increase is up 38% and you've got to go back to 1976 to see that kind of increase, but to your question, their comment are out of a lot of imports. we think we've got one of the best products in the marketplace. it performs as good or better than the other german makes and we're starting to see people give us a chance. kurt, is leasing back?

what percentage of your sales were leasing purchases, if you will, and what percentage of the total goes to leasing right now? >> yeah, phil. you know, leasing, if you look at the entire gm family, it's about 20%, but it definitely skews a lot higher on the luxury end. i mean, the luxury nameplates, lease anywhere from 50% to 60% and if you look at cadillac. it's starting to grow in that direction and it's probably up in the 35% to 40% range. >> for overall, what you're seeing is more leasing and primarily on the upper end. correct. absolutely. >> kurt mcneil, vp for u.s. sales joining us on a day when we reported an increase of 3.1%. guys, we also want to mention that toyota has released its numbers for the month of may and an increase in sales of 2.5% and that's better than the estimate when it was forecasting i

believe a very, very marginal decline and 0.2%. so right now we're segal most all of the automakers reporting slightly better than expected numbers. >> i don't know how you keep all of those numbers straight. thanks. our phil lebeau innic which chick. those triple-digit losses into friday's close. is volatility here to stay for the month of june. tobias levkovich will join us a little bit later on. plus the fed chairman has words of wisdom. he gave these grads at princeton a top ten list and we'll run through it for you when we come back. [ male announcer ] what?! investors could lose tens of thousands of dollars in hidden fees on their 401(k)s?! go to e-trade and roll over your old 401(k)s to a new e-trade retirement account. none of them charge annual fees and all of them offer low cost investments. e-trade. less for us. more for you.

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>> the pattern appears to go something like this. you get data like we just did, ism, get all nervous, sell, and watch it come back as you remember that the fed is still out there. the dow was up triple digits for a moment and now up 92. take a look at the ten-year as well as we watch the yield on the benchmark treasury. 210. we were talking about that off-camera and the hundred yen mark. >> we are back below it for the first time in a couple of months and maybe six weeks at this point, but we saw what happened and the impact it had on the nikkei overnight. japanese stocks have corrected hard here and it's going to be a headwind for them. we have people telling us across the network we could be back below 90. so it will be a tough one for the correlation that we've seen between the nick day and the yen. the weaker yen will continue.

>> ben bernanke speaking to graduating seniors at princeton where he taught before becoming the chairman of the federal reserve. he talked about the top ten lessons for life including number ten. life is amazingly unpredictab u. anyone who thinks they know where they will be in ten years is lacking imagination. >> eight, from the bible, from everyone much has been given much will be requireded and to whom much has been entrusted much will be demanded. >> people who have say, little formal schooling, but labor honestly and diligently it to help feed, growth and educate their families are deserving of greater respect and help if necessary than people who are superficially more successful. and they're more fun to have a beer with, as well. >> six, public service isn't

easy, but if you are inclined in that direction, it is a worthy and challenging pursuit. number six, economics is a highly sophisticated field of thought that is superb in explaining to policymakers precisely why the choices they made in the past were wrong. about the future, not so much. >> four, a decision based only on money and not on love on the work is a recipe for unhappiness. >> number three, nobody likes to fail, but failure is an essential part of life and of learning. >> two, speaking as somebody who has been happily married for 35 years. i can't imagine any choice more consequential for a lifelong journey than the choice of a traveling companion. >> number one, let the chairman take it away. >> call your mom and dad once in a while. a time will come when you'll of the your own grown-up, busy, hypersuccessful children to call you. also, remember who paid your tuition to princeton. >> nice blend of real life

lessons and humor. he joked about his own return. >> right. in his post-fed life whenever that may be. >> a much broader speech than we're used to hearing from him. much more candid about personal matters and references that he made and it seems to have gone over quite well. >> i think overall a good season for commencement speeches, i think. >> there have been some real winners, oprah at harvard. bernanke here. >> when we come back this morning, this week's jobs numbers is coming on friday and the bond-buying breaks. thanks, guys. chief u.s. equity strategist tobiases leff kof itch, and the ceo of hyatt joins us in a couple of minutes. my mantra?

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suddenly, faraway places don't seem so...far away. ♪ regarding the nice nyse merger mode. bob pisani is back from vacation at post 9. welcome back. >> thank you. it's done.

they have approved the merger. ice will have to vote later on today, but that's been pre-ordained and it's virtually going to happen. bottom line, 65% of the shareholders voted 99% a ruf approval. this will be the first multi-asset company. this is a company that has significant dealings in the futures exchange business as well, of course, as in the cash equity business, technology business and ice has a significant clearing operation, as well and that was a very important part of this overall deal. the fact that ice essentially clears itself, a very important part of the deal here. i think the other important deal here is they're combining these entities in a significant way. we haven't had significant futures business combined with a significant cash equity business. the combined company, only 10% of the revenues will come from the cash equities business. 10%, 44% of the business will come from the derivatives side

from futures as well as the existing options business. this is a very different company, a lot more diversified than it was before. as far as the next step goes. ice is going to vote and that's going to happen and next step, regulatory approval and that will be june 24th. that's when the european union is expected to give its approval at least preliminarily and they can take several steps if they have questions and drag this out longer if they want to. there are minor approvals here in the u.s. that are required and these are much less controversial than the other mergers that are attempted. remember the deutsche bank merger and that was shut down by the european regulators on concerns about overlapping the business. remember, of course, that nasdaq deal and the nasdaq ice deal with the nyse, that was shut down by u.s. regulators and i'm concerned that there is too much overlap in the listings business. none of those concerns exist here because there isn't any overlap. there's no overlap between any other businesses. that's one of the beauties that was pushed on this particular deal. after two times trying to get

things going they finally got the combination right. >> i haven't paid attention for a little while. do we know atlanta-based ice, and a and b, do they come up with a name and everything like that? >> yes. >> they all decided all those things. intercontinental exchange group will be the name. the new york stock exchange will be on the door. that is not going away and the nyse is now a subsidiary of the holding company and the intercontinental exchange group and below that at the nyse. duncan will be the president and the ceo. he'll be the president of the company, but he's the ceo of the nyse. the subsidiary that will exist. by the way, of course, you've got a group over there and a significant group of exchanges and cash equities exchanges that exist over there. euronext and they're planning to ipo that group and spin it off separately. so that's one of the reasons that the cash equity business will be significantly smaller part of the group. >> so now the word euronext stays. they are planning the ipo and

the euronext business essentially and the nyse name will remain on the door. this building and this business will still be called the new york stock exchange. >> yes. a subsidiary of the bigger group which is still telling, thank you very much. >> the important thing is this is a multi -- first real big multi-asset exchange that's out there. thank you, sir. >> thank you sir. >> watching markets as well with the market up triple digits and its redemption deadline day over at sac capital. today is the quarterly deadline, and kate kelly has been following this story and she joins us now from hq. >> it's a tense day at stanford, connecticut, where they're collecting redemption notices from collectors who want to pull their money from the $15 billion hedge fund. expectations are that the company will lose a significant portion of its roughly $6 billion in outside capital, more than the 1.7 billion that it lost in the first quarter. these pullbacks come amid a darkening legal picture for sec

which has seen one current and one former trader indicted in the past year and subpoenas to provide information on alleged trading activities. the vast majority of sac's capital belongs to founder steve cohen who has invested much of his personal fortune estimated to be $9 billion in the hedge fund, but sac's outside capital is a symbolic measure in the alternative investment world where it has been one of the most sought after hedge funds. investors have shied away from the yej battembattled firm from cohen or the corporation itself. some like skywood have said they'll stay on and their biggest outside investor and the private equity firm blackstone stands for the second time this year and other major investors from morgan stanley and hsbc are no doubt feeling nervous as well. this all raises the question, guys of whether they'll transition to a family office managing just cohen's money.

a move, is ac insiders are denying it would make and it will become the de facto state of affairs if they lose enough money today. >> it registered with the sac and some have chosen that family office because they don't want to register with the sac. these redemptions take place over three quarters, correct? >> if you redeem your money today, david, you'll get equal portions of it back so you're fully out by the end of the year. that's an important thing to note. the reason they can note 1.6 billion still has the same today. a small portion of that went out and apparently new money was put in by insiders, i think, primarily. yes, it will be a gradual thing, but at the end of the year if they lose a lot of money today added to the first quarter losses and they're not able to refresh that with additional external investors and they could be looking much in the office even if they're not classified as much.

>> kate kelly back at headquarters watching that story. when we come back, house majority whip kevin mccarthy on everything from the economy to tax reform to the fiscal budget and we're definitely watching gold. what is the next key psychological traders are watching at above 1800? we'll check the charts after a break. wanted to do when he retires -- keep working, but for himself. so as his financial advisor, i took a look at everything he has. the 401(k). insurance policies. even money he's invested elsewhere. we're building a retirement plan to help him launch a second career. dave's flight school. go dave. when people talk, great things can happen. so start a conversation with an advisor who's fully invested in you. wells fargo advisors. together we'll go far.

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take you to a shot of the capitol in washington. you see flags at half-staff for senator frank lautenberg, the new jersey democrat, five terms in the senate since 1982. the chamber's last surviving world war ii veteran died today of viral pneumonia at the age of 89. he said in february that he would not seek reelection this year. >> two years left to go in that term. governor christie now points as successor. meantime, about an hour into trading, some of the stories we're squawking about, 7:30 on the west coast, 10:30 on wall street. manufacturing activity contracting as new orders slip, less demand for exports and the ism index falling to 50.7 in april. general motors saying auto sales in may rose 3.1% thanks to soaring sales of the cadillac brand and the international air transport association says they should post a profit in $10 billion an increase from the

previously forecast as airlines are freewaying more passengers and oil prices come down. now to a tenuous situation overseas. turkey has seen three straight days of unrest as tens of thousands of people in the country's four largest cities clash with police. our chief international correspondent michelle caruso-cabrera is following the story for us and michelle, this really took people by surprise. >> absolutely. i think it has, kelly. let's show you what happened to the turkish stock market. when it reopened today, it dropped sharp low lower, as you can see. lower by 10%. it looks like now we have a fourth day of protesters occupying the square in turk pep this started out as a protest about too much development, not enough green space. they were concerned about yet another mall. the prime minister of the country saying they were going to rebuild an ottoman, and they thought there wouldn't be a green space within istanbul and

another thing they heard from protesters is they felt the government was becoming too authoritarian and leaning away from being secular even though turkey is a mostly muslim country, this is a country that has a separation of what we would call church and state, but they would be mosque and state. so they don't want necessarily the mixing of religion and the state and this prime minister, some of them dom plained imposing rules about drinking liquor, et cetera that they are upset with. >> there's a trend out there to many call this a turkish spring, but let's say what this is not. this is not for a call of a democracy because theyal ved it. this is not a call for improving the economy because that economy has been doing all right. it's about something more than this and it's certainly taken the government by surprise. thousands and thousands and thousands of people on the streets in the last four days. here's the yield on the ten-year. it's been rising which would suggest that people are concerned about the country's ability to pay back debt or at least the costs will go up.

the turn irk lire has fallen two cents on the dollar. two cents is a big move in such a short period of time. watch and see how this plays out. right now the prime minister is taking a very harsh stand against the protester, carl. difficult pictures to look at every morning. michelle caruso-cabrera. we want to take a closer look at gold and the futures are falling since its peak in 2011. what can we expect in the coming months? lou green is with drw holdings and joins us from chicago. lou, good to have you back. >> thanks, carl. pleasure to be here. >> around 1400 this morning. in terms of what needs to hold, what are we looking at? 13 and change, 13 on the nose? after a few very bad days in april the market got down to 1320. and right below that is some key resistance, the midpoint of a long-term range at 1300. the gold is down 25 to 30% from

that peak in september of 2011, but back in '08 it fell about 34% and that's when the crude oil was getting hammered from 147 to 32 and the commodities in general were getting hit. it bottomed then at 681 and the 50% retracement and the midpoint of that range, 681 up to the september 11th, 1920 high and that's where it held. we stopped at 1320 and have recovered a bit. should that not hold we could go technically down to 1150. on the other side we bounced after hitting 1320 up to 1490. i see a band of resistance of 1590 up to 1503, but in order to get neutral and move into the bigger picture on this, the gold has to get back above and stay above 1516. so we're in a kind of a very large range here, but in the longer term it has to get back above there.

it's interesting. >> i was going to say, just to put a point on it, in order for the market to equalize back to the so-called long-term neutral position. you think that number is 1615, right? yeah. that's kind of where it was right before we had those -- that calamity in price back in april, and i think we need to get back above there and establish itself up there. one of the interesting things and we're given the charts and how the futures look. it's almost two different markets. the futures versus the physical. on the one hand you have the cftc reporting that large traders like hedge funds have reduced their long positions by 9%, increased their short positions by 7% and on the other hand the world gold council reports that they could have record imports in india because of a voracious appetite during the second quarter. imports could be 300 to 400 ton, the gold council says. it's almost two different markets on there. >> on that point given that we're seeing a lot of interest

in buyers in china. how much importance do you place on that generally? >> think -- that's indicative of the gold market whereas, you know, and i don't know enough about, you know, the deposit receipts and stuff like that, but the gold futures and the etfs are more trading based on the flows of futures and things rather than demand for the physical gold, and a lot of that has to do with almost an overtrading of it so that the physical can't actually account for all of the positions that are on. >> right. right. all right. lou green, thank you, sir, for your thoughts on that this morning and it seems like we could have quite a ways high tore go for people to start believing this move. perhaps you thought subprime was a thing of the past and rick santelli would advise you to think again. he'll be joined by the president and ceo of hyatt hotels. find out what he thinks about

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dow's halved its gains. let's get to rick santel willy in chicago. hi, rick. >> you're looking at the area i'm looking at, the stock market. if you recall not that many minutes ago we brought out the ism number and it was 49. 49 happens to be the lowest level since june of 2007 that is -- i'm sorry. 2009. now that is a big deal, but here's a bigger deal and it really goes to the point. if we look at a chart of ten-year note yields what happened when that data came out? they moved down rather

dramatically. if we look at the dow jones industrial average, right before we went on with that number, i found it fascinating it was giving up some ground and after that number came out, arguably it rallied making up that ground. we could question why it went down first, but i'll leave that to others, but i do think it's veries fascinating and we continue to be in this loop where data that really should push the equity markets lower and affected interest rates in a proper way and this comes on the heels of a lot of data. if we look at friday's data, university of michigan sentiment survey and we look at 84.5, that was the lowest since july or highest -- highest since july of '07 and if we look at the chicago purchasing managers survey of 58.7 and that was the best since march of 2012. so we're getting data that grows in many directions and conferences have been running at lofty levels. remember, what do all of these have in common? for the most part there is survey-type data because there

have been times when with manufacturing has led the way and the isms and psis in europe always moved markets and they can be affected like by stock prices. it's hard -- if you're an inserd, main street's sleeping on a rally and maybe for good reason, trust would be one and anxiety would be two, but the better data in this loop and the fed in the taper and that's somewhat depressing, if you ask me because even though the branch of the u.s. economy had a major snap in the credit croiis in '08, it's not grown back straight and there are a lot of issues grown back in the resilient proses. there's another story that's out there that you heard the tease and this is somewhat disturbing. wall street journal. c-2, there is a great article by al yune and mortgage investors get blindsided. where have all of the toxic

assets gone? this goes a little ways toward answering that and i'll read the first sentence. it's all we need to read. some mortgage investors got an unexpected refresher course on the risk of subprime debt when they received notice of $1 billion of previously undisclosed losses. 38% according to the journal that dodd frank has written and we have too many agencies all shuffling around a couple of pots of boiling water. we've had al voker, we've had the previous fed chairman on many times talking about in many speeches, by the way, talking about we just have too many regulators and no matter how you slice it. this story about subprime isn't a good story and it makes one wonder how many other little toxic assets are lurking under the surface. carl, back to you. >> thanks so much, rick. rick santelli. >> it's interesting to pick up on this point and look at the swing, the s&p's negative by more than five points and we

were positive by five points and i want to read a line from the advisory council's report from the fed and we talked about this in the first hour of the program and the effectiveness of policies in producing healthy economic and employment growth is not clear. so again, a dozen bankers talking to the fed about the impact of monetary policy saying it's created systemic financial risks and created problems for banks. my suspicion is part of the activity that we're seeing is the swinging around and is this one of those situations where the weak data says the fed stays in the market and helps us out here and is the fed starting to be constrained and they might have to taper because of structural concerns here. >> regardless of whether or not they want to taper. absolutely. >> dan greenhouse of btig saying probably a zero chance we get in any kind of announcement regarding qe in the june meeting at least because of ism. >> you better believe that it is praying for a strong one because

this week the two most important data are the ism and the jobs report. ism weak. no other way to put it across the board. >> you and your fancy economic mumbo jumbo. >> that's right. no fancy terms needed here. it is a clear signal. if it's a weak jobs report, too, they have a lot to think about and so do we. straight ahead on this program. we'll have an exclusive interview with the president of hyatt hotels. as reports revolley that the s irs -- we'll talk to one of the hospitality indstroh's biggest players. jonathan tish of loews hotels will join us after a quick break. ♪ c'est aujourd'hui ♪ ♪ et toujours ♪ me amour ♪ how about me? [ male announcer ] here's to a life less routine. ♪ and it's un, deux, trois, quatre ♪ ♪ give me some more of that [ male announcer ] the more connected, athletic, seductive lexus rx.

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the street." downgrade that stock to a hold, saying they remain positive on the fundamentals, but they believe significant earnings upside is already reflected in the current share price and analysts saying they'll be more constructive again in the mid-50 range. sim simon, over to you. >> thank you very much. welcome back to the hospitality

conference at the marriott marquee. the last thing you want to happen on a day when you have a margin conference like this, is to have a video appear showing irs employees at a conference having fun on the federal taxpayers' dollar and then for the irs to come out and say we spend $50 million on those sorts of conferences and 2 hun of them on a two-year period and it's inappropriate and it's not going to happen anymore and the reason you don't want it if you're here is because that's a big business. joining me now is the ceo of hyatt. a welcome to the program, nice to see you. you have big hotels that cater to groups and the groups aren't coming back. the agencies aren't coming back. the federal agencies nor are big private companies to spend money like they do. how do you respond? >> well, there's no question that there's been some decline in government business. this past quarter we experienced a significant decline in

government business that was part sequestration, but i have to say one thing and that was back in 2008, business meetings and group meetings especially by government agencies were all considered boon doggels and the white house came out in a very deliberate way and the negative. our industry as a consequence suffered tremendously for an extended period of time. >> it's not back here. >> well, there's been some recovery, i think, the problem is that when you have a video like this appear and gets sensationalized and probably over-dramatized in terms of what the underlying issue is because, in fact, businesses do derive real value out of getting together and having conferences and meetings. there's great value in actually assembling. so we have to remember that that's the case. and i think it's the government spending, yeah, short-term it's been weak. longer term it will -- mark, i want to talk about your business because you are the smallest of the big hotel chains, hyatt. you're unique because you're over 56% owned by the pritza

family. 80% of the vote. penny pritza. because they have this long-term holding strategy you're in a very different position. 80% of your income comes from own hog tells. hyatt doesn't do other government. marriott doesn't do that, why do you take a different approach. >> in a word, it's appropriate for us given where we stand in our development cycle. and if you look back actually hat a time where marry t yot was our size, larger than we are, they owned more real estate than we do today. so there's a natural cycle of using can usi using capital. that's why i think the strategy is appropriate for us. >> do you have a problem, you have a great -- analysts will say you have a great reputation, large hotels that are well positioned. highest occupancy in the industry. 72%. highest revenue per available room. but you trade at a discount to everybody else. >> well -- >> do you know why that is?

>> we've been public now for a little over three years. >> three years. >> and over that period of time we've evolved how we actually report and provide information to the street. and we've done, i think, a great job in continuing to listen very intently to what's -- >> the analysts are saying -- >> we've extended our reporting over that period of time. >> the analyst wants quarterly operating targets and formal earnings guidance. >> right. >> why do you refuse to give them that? >> frankly, our business is really very much measured in k decades, not quarter or years. we are committed to running the business in that fashion, which is why we didn't begin providing guidance to begin with. and so that's really the business purpose, which is not to become overly burdened with distracted by a specific quarter. >> i get it. i get it. i have huge compassion for you. this is the earnings transcript from the beginning of may. i have never seen a ceo go through the hostility from

analysts that you went through on that earnings call. it is astounding. how do you feel about that? >> well, you know, the fact is that there is a tremendous amount of focus and attention paid to very short-term results. and also predictability as it ended up being more important than ultimate absolute performance over time. so if it's not -- if it's predictable no matter what the absolute performance, sometimes there's a bias towards rewarding those stocks in that fashion. >> one of the problems you have is you keep to the point of the pritzas want to invest long term. you have seven big ones that you're doing up. that's 13% of your managed full-service reels. that's huge. it hits the quarter and they don't know it's coming. >> it is a smaller percentage of our total manage base. but the fact is that going through a major renovation is a phenomenal event because it demonstrates that in this case managed hotels, third parties, institutional owners are committing a lot of capital to our brands.

that's a great sign. and results that follow after you've refreshed a hotel and refurbished it, our hotels are there in their places of business for decades, is a very good thing. and those results will improve. >> one last word. hyatt has been in and out of the public sector. is hyatt -- should it be a public company or taken private? does it not fit where it is? >> we've been very much a public company for a number of years now even though we've been formally public for the last 3 1/2 years. in 2007 we welcomed two large institutions into our shareholder base, goldman sachs and medrone capital. we've been behaving like a public company then. >> thank you. mark hoplamazian there at the ceo of hyatt. who knew it could be so much fun. >> we'll come back to you later on. s simon hobbs. ben bernanke delivering a

speech to princeton on sunday in which he basically laid out his top ten tips for life after graduation. we want to know, what piece of advice did big ben have to leave on the cutting room floor? what was number 11? tweet us at squawk street and we'll get your answers after the break. it's monday.

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princeton graduates ten pieces of advice in his commencement speech this weekend, like this one. >> don't be afraid to let the drama play out. >> words to live by. brings us to this morning's squawk on the tweet. what advice should have been number 11 on the chairman's top ten list. john i did writes, if you have low interest in a job, taper your career, even if it quantitatively eases your money supply. bill write, lord, grant me serenity to grant me the things i cannot change, the courage to change the things i can, and a red ferrari. find a banker with a printing press and let the drama play out. he should have known when he wrote that on the page it was going to get picked up and played. >> i'm not sure a red ferrari is ben bernanke's style. >> maybe a jag. >> i think he goes understated,

honda. >> with all the volatility we're seeing today, s&p's gone between the red and the green today. dow has held up. in large part i was wondering how much merck was adding to the dow. actually it's 18 points, according to our producer. so it's not -- significant but not the lion's share of the dow's gains and up 58. >> divergence. if you take that out we would be up, what, high 40s in terms of points. s&p is still negative. might be things going on across pharma. not just merck perhaps boosting the dow. the nasdaq this morning is the weakest performer, down almost half of 1%. >> yes. as i tweeted earlier if you're not impressed by the market move today, the first trading day of june last year, dow is down 275 as obviously coming off a miserable may when we were down 6% from the month. >> right. well, and, you know, ju traditionally being one of the weakest months of for the market. you could say any number of things, right? to justify the kind of move we've seen. we know the first day of the

month typically is a tale for the rest of how it goes. it could be important to see how we close today. >> we will talk to tobias in a minute. june jitters, august angst. in the meantime, if you're just joining us this morning, here's what you missed earlier on. >> welcome to "squawk on the street." here's what's happened so far. >> we are going to have a correction. there's no doubt in my mind about that. i think it's in the 10% to 15% range and so i'm still bullish that if you're going to be invested you out to be in equities and i'm going to stay the same way in this market for as far as i can see. >> the first products will probably be watches. we know that companies like samsung and apple and microsoft and google reportedly are all working on such devices. >> i'm not excited about this. i don't wake up monday mornings. carl knows that. i feel strongly this market got damaged last week. >> why don't you like monday

morning. >> there's the opening bell. >> the opposite of these stocks i'm talking about the general mills and the kellogg's, is ford. if we get any sort of upside at all in europe where they've managed to be able to get the cost down in europe, these stocks are going much higher. this is where the money's going. >> we're seeing, you know, a lot of increased business primarily due to the increases in housing, availability of consumer credit, obviously isn't hurting us, either. >> when you have a video like this appear it gets sensationalized and probably over-dramatized in terms of what the underlying issue is because, in fact, businesses do derive real value out of getting together and having conferences and meetings. good morning. we're live here at post nine at the new york stock exchange. let's get a check on markets. the dow jones industrial average at this hour adding 50 points as carl mentioned helped by the

strong performance today of merck, the s&p, meanwhile negative by two points. it's been swinging around in a wide range this morning. down five, up five, the nasdaq underperforming. down half of 1% this morning. intel is getting a boost this morning after an upgrade at fbr to out perform. got a nice write-up in barron's over the weekend. samsung android tablet. the tablets will be available this month. intel shares are up nearly 4% as of now. >> yes. let's get the road map for this morning. the first trading day for june. and as we mentioned, pretty volatile one. is this a sign we're entering a choppy trading season? jim and tobias join us next. we are heeding to the hill for what can be a big test for republicans? we will speak to rick santelli on tax reform and the economy. reports revealing the irs spent millions of dollars on employee conferences and clearly did nothing for their dancing skills. now could that affect the

industry? we'll talk to lloews chairman tish. not quite as weak as friday but still shaping up to be a roller coaster of a ride. major averages jumped and retreated following a weaker than expected economic data. the ism report in particular, a point of concern. let's bring in tobias, chief equity trat gist and paul with wells capital management. good morning to you both. >> good morning. >> good morning. >> tobias, first to you. how worrisome is this i zrk m report? what do you think markets are doing? >> i'm not as worried about the ism report. tip towed into euphoria friday morning. the first time we've seen that since late '07, early '08, negative sign in terms of investor's positioning already. that's a little worrisome. i don't think it's a shocker. we don't have credit environments breaking down like we did in '07, '08. it suggests we have got to be a

bit more careful. >> just a technical move here is what you're saying. signs of over-extension. >> no major correction. 5% pullback would be normal. if other things were problematic like valuation, like credit condition, then i would be much, much more worried. we don't have that concern right now. >> i want to come back to that in a second. jim, what's your read here? are you still long? >> well, i've had a view of touching 1700 this year, kelly, and i'm not inclined to raise that number. i think that's going to be pretty close to the high watermark for the year. i think -- i agree with tobias. i think we're headed more towards a sideways moving market here for the next several months. i personally think it's going to be sort of a standoff between better than expected growth not withstanding the ism report today, offsetting sort of rising bond yields which we're already well into and i think that's going to continue. i think some of the market struggle here just in the last week is more to do with the fact

that ten-year yields moved up to the 210, 220 area after being in the 160, 170 area not that long ago. we're kind of digesting that. i think we're going to continue that. like tobias, i don't think we're going to have a big sell-off. >> i've got to give you some props because we had you on at the beginning of may where everybody was saying sell in may, go away. you said no. you said it would be more likely to have june jitter, august angst. >> july jumpiness. >> still feel the same way? >> i do. august and september is the area i'm most worried about. if we could have jackson hole, we could have some problems in washington about a new budget, continue resolution as i call the cr and you have europe still facting as a significant drag. i think people keep looking at sovereign credit in europe and saying that's better. in turkey notwithstanding right now. >> down 10% today.

>> but it's corporate credit in europe that is still very, very tight. that's not allowing europe to kind of move to what it needs. elections in germany are in september. not much is going to happen before that. hence, you get this confluence of events. >> walking pneumonia, the jobless rates continue to rise, pmis get better but still contractionary. >> they are going to get -- a lot of early indicators like credit conditions, like the mfib survey, hiring intentions. those suggest we look at a much stronger u.s. economy despite the best efforts of washington. >> jim, if you look through the details of the ism report today and the comments out there from industry sources, you know, the compilers themselves are saying they were surprised how negative of a tone they see in this report. it's not an isolation. we've seen weak data on the production side here consistently this year. we know the consumer saving rate was pulled down in january.

sentiment has been better but how fundamentally strong is this economy? is this not actually people questioning whether we've reached this point of sustainable growth? >> well, i think they certainly are still questioning that, kelly. i think we are. i agree production side has been weak. i think that mainly is a reflection of the emerging world which has bottomed out but it hasn't come back much. i think -- i'm like tobias. i think in the second half we're going to see more of the emerging world picking up a little bit more axwresively. i think we're going to see green shoots out of the eurozone as well where we see better data come out of the zone for the first time because we've now had a lagged period where they've gone from austerity to stimulus. i think that stimulus is going start to show some outcome with better results. and with japan doing better, i really think the production side of the economy which has been mostly tied to export markets that have been weak, is also going to do better. and we've already got housing doing well, autos doing well,

consumer doing well in this country. so i would -- i think the bigger catalyst to a tough market in the second half is going to be upward pressure on rates and the idea that the fed's not only going to taper but quit because growth is going to turn out a little better than expected. >> and that situation may be the one investors would actually prefer to see is that they leave because the fundamentals justify it. gentlemen, leave it there. jim, tobias, great to see you both this morning. meantime, shares of pandora falling sharply on news of apple which julia boorstin has. julia? >> that's right. pandora shares down over 11% as apple moves closer to launch a rival streaming music service. apple just closed a deal, both recorded music and music publishing divisions in order to include that music in xwha what we expect to be an i radio service which could launch at a apple, they will be paying morgan music twice the fees in the music publishing that pandora does. this could pose a big threat to

pandora competitively. back over to you. >> watching pandora there. began the day down, 2%. now down almost 11% as people are watching the streaming music service space pretty closely. thank you, julia. the manual asco meeting being held in chicago. who are the winners and losers in the fight against cancer? jackie deangeles has that. >> on the move this morning bristol-myers, you've mentioned it, presenting positive data on the immune no therapy treatment. results from a trial show that bristol-myers drug shrank tumors in 31% of the patients with advanced melanoma. the drug works by disabling a mask on tumors from the immune system. by blocking the masking action it allows the immune system to fight cancer as it would a attack other difficult veess. they have an existing drug yervoy shown to be effective in

10% of people with advanced melanoma. bristol stock has had a nice run already. more than 40% this year. but up more than 6%, nearly 7% today. meantime, merck stock is moving roughly 5.2% to this point. that's because merck says that it's going to move directly into a late-stage clinical trial with its immuno therapy drug. it shank tumors in 38% of patients in advanced melanoma. merck's findings put pressure on bmy because right now yervoy is the only approved drug for the treatment of advanced melanoma. >> i would say that the clear winner in the space funny enough is bristol's yervoy. the reason i say that is because the message coming out of the meeting really was on the opportunity and prospect for combination immuno therapy. >> it's that comp snags the analyst describes that's key to this immuno therapy space because bmy's yervoy can be use

with other drugs and analysts like it because it's got that first mover vooenadvantage. >> jackie deangeles. apple is depending itself today in manhattan against department of defense justice accusing it of fixing e-book prices. courtney reagan is live outside the courthouse with the latest. hey, court. >> good morning to you, kelly. that's right. it's been more than a year since the department of justice filed the lawsuit against apple and five publishers alleging that apple helped these publishers raise e-book prices. they have settled paying $164 million in fines. day one of the trial, department of justice ver jusus apple. they allege ahead of the ipad launch in 2010 apple and the five publishers, pen gwynn group, simon & schuster, polluted illegally to raise the

e-book prices above the $9.99 that amazon books were charging for most of those kindle e-book bs. amazon was the dominant player and had 90% market share. lawyers for apple are expected to argue starting today that the publishers were already involved in pursuing this so-called agency model before apple actually approached them. that would allow the publishers to set the price and then apple would simply or the other retailer take the commission that they were provided. now, unfortunately for apple the judge has said she has already drafted her decision based on the evidence that's already been presented over 834 documents, 50 depositions. she will augment it as she hears the arguments but it doesn't seem as if she's going to actually agree with apple's side of the argument and that she will, in fact, go with the department of justice's argument. this is expected to last about three weeks. each lawyer -- each side's lawyers will get 29 hours to

argue their case. we'll go back inside and give you the latest when it happens. carl and kelly, back to you. >> get comfortable, court. sounds like you're going have some time on your hands to listen. courtney reagan at the courthouse today. if you noticed more spam in your inbox lately? you can blame the stock market. believe it or not, there is a correlation between spam and stocks. we'll explain that coming up. first, rick santelli is going to talk to congressman kevin mccarthy later on. rick? >> absolutely. he's the lip for the house majority. of course, the republicans. these are republicans from california. i'm going to talk to him about all the current scandals but not as you think i am. from the vantage point of trust because without trust i can't see how any program currently on hold are going to get resolved any time soon. so you want to be there, ten minutes from right now. looking at covered call strategies to generate income? with fidelity's options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options...

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. welcome back. take a look at shares of tesla, that's knocked down sharply today. now more than 7 %. keep in mind, of course, it soared in recent weeks. no specific news on the stock causing the drop that we can see. there is is an article in the "wall street journal" today comparing ceo elon musk with steve jobs. tesla will hold the shareholder meeting tomorrow. some say could be the next tesla. that company makes charging stations compete with tesla whose shares down 7 %. >> first trade of the year was

35 bucks on january 2nd. >> wow. >> you're still doing okay despite the dropoff today. >> absolutely. meantime, after years of decline, sam e-mail is on the rise again. why you ask? blame the stock market. amman is live in washington with that story. >> hi, carl. just when you thought it was safe to go back to your inbox, spam is back. this from a new quarterly report from the computer security company mca fee. look at this chart and you will see what has been happening with spam. it's been kind of ticking along uneventfully over the course of the past year and then in the first quarter it has really, really jumped. you see below that the legitimate e-mail line is pretty much flat. spam by contrast really spiking here. what's the reason for that? mcafee makes a connection to the bull market. spam promoting pump and dump stock schemes was way up this quarter, no doubt riding the recent market wave to appeal to

speak higher gains. but mcafee says it's never a good move for traders to get involved in these type of stocks. they're seeing a big rise in north america, the pump and dump stock e-mails. those things that litter your inbox all the time. and if you check your trash folder and spam folder, you will see them in there. i do. the question is whether they have impact on the market. we'll look and see whether people actually act on those pump and dump e-mails they get. i can't imagine that they do but maybe some people do. >> that's what you would think. believe it or not, some people are just not, i don't know, they're not that in the moment, eamonn but they do get clicked on. >> i think it confuses a lot of seniors as well. important topic to watch. thanks very much for that. coming up next, house majority wlip kevin mccarthy will join our own rick santelli to talk about everything from the economy to the budget and tax reform. you won't want to miss it. and later, reports reveal the irs spent millions of dollars on employee conferences

that included dance lessons. could it lead to a crackdown on government travel and what does it mean for the hotel industry? jonathan tisch is with us live. "squawk on the street" will be right back. [ male announcer ] when gloria and her financial advisor

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let's get straight down to rick santelli now in chicago joined by a very special guest. rick? >> thank you very much. yes, i'd like to welcome house majority whip congressman mccarthy. before i get directly into a question, you know, trust has been a major issue i've since the autumn of 2008, whether it was t.a.r.p. or the stimulus. you know, many out there think things like trainfrastructure it a great idea but it's not a bad idea to end up with something like a restored power grid but there's such a low level of trust in government by many of its citizens that even something that makes sense isn't trusted to be put forth in a good way. i think since the new scandals with the irs it's not only about trust, it's about information. did it change the outcome of the election? i don't know. but i want to ask house

congressman whip mccarthy, do you think trust is even more under t attack now with the current scandals and how will that impact you whipping the republicans into cleaning up some of the things that have been on the agenda a long time like tax reform? >> i think trust is a number one issue that american needs. you want to be able to trust who you bank with, who you shop with, but you want to be able to trust your government. you want to be able to trust from election and others. the only way you earn trust back is that you have to earn it and you earn it through transparency. maybe the irs feels that it is uneasy to go through this but think how uneasy it is for an average american tax payer to go through an audit. that's why you'll have three different hearings this week. you will have taxpayers coming before the head to stand before theist in those questions. you're going have the government oversight talk about these conferences that the irs had, spending 50 million dollars in a couple of years. and even the one in anaheim for more than 4 million.

i think transparency will go a long way to correcting the problem and beginning to earn the trust of the american people. >> well with, i like that answer. now, let's get more specific. >> sure. >> you know, down on this trading floor everybody wants tax reform but they now view the word tax reform or the phrase as code for we're going to get another little exemption here. we're going to take care of somebody. we're going to tweak the tax code. we're going to make the monster an even bigger monster. is what the house ways and means committee, what they're working on, is it true, true tax reform, congressman, and can it be done in the current climate of lack of trust? >> now, look, it is true tax reform because i wants to take those 70,000 pages, wipe them away. the way that dave camp says start with a blank piece of paper and say what do you want the tax code to look like. do you want it simpler, fairer. when it started it was 400 pages. today it's 70,000. and when you think about america, america competes not just with america but with the

world. and in business today if we were doing a business olympics, for 100 meter dash we would start 20 yards behind and we would have to jump over hurdles while everybody else ran straight. let's let america be competitive. the only way to do that is create a tax code that creates entrepreneurship, that is fair in the process, and to my point, is simpler. that means everybody has an equal shot in this country. >> congressman, and i love what you're saying. i think many people would want to see that get done. but let's be fair here. according to the "journal" today, 48% of dodd frank is done. what are you going to do with that? i look at the gse's government-sponsor eed enterprises. they can't finish anything. these government-sponsoredsome business need to be reformed. how can you get me excited about good tax reform when the previous agenda has dust on it

and we haven't answered any of those issues? >> you mow why? because now is the best time. you look at the irs. at no other time does this country want to see the irs itself perform and the tax code itself. there is no bigger message to go through. and the one thing i think is you look at the "wall street journal" today. the reason why entrepreneurship is is sinking in america is because people are afraid of risk. it's the actions taken in the last four years by government that knocks down. and the idea if america takes risks, that's how we breakthrou breakthrough. and that code that you have to have a tax code that allows that take place. in my belief, yeah, it may be tough but i think it's worth fighting for. if i look at this congress of what we're able to do, we yeah, the senate may hold us up but we found real breakthrough this year even when we made no budget, no pay. that was the first dime in four years. >> i like it all. we're out of time. it's june 3rd. on july 7th, 8th, 9th after the holiday i want to ask you back

and see if we've made any progress on tax reform and on terms of the scandal. get to the answers. let's keep the political aspects of this down so the american people can see the truth and we can actually have transparency instead of the blah, blah, blahs and talking about it. thank you for coming. >> i agree with you. thanks for having me. >> thank you. carl, back to you. >> all right, rick, i'll pick it up. i think progress is something we can all agree on. we also want to remind you to tweet in your thoughts here. we've been talking this morning about federal reserve chairman ben bernanke glidelivering a commencement speech to princeton where he laid out his top ten tips to life after graduation. what advice did he leave on the cutting room floor? we're back in two.

european markets are closing now. >> well, it looks like pretty red day for markets across uk and europe. let's get out to michelle caruso cabrera with all the details. >> you thought they might have been better, kellly, because the economic data out of europe today, glass half empty, glass half full. you have the purchasing manager's index down again for the 15th month in a row. however, it was a slowest decline we've seen in 15 months. so in theory, it looks like perhaps maybe you're seeing

maybe the economy's come off the bottom there that didn't seem to help out a lot. may have been follow-on from japan. let's show you turkey as well because the continuing protests there. that market lower by now 10 1/2% as you can see. very sharp sell-off in what is no day four of protests that has spread to 67 out of 81 provinces. a lot of violence over the last couple of days. people protesting about too much development, not much green space in the city, and also concerns about the islamists-rooted government that's in power right now. perhaps trying to do too much social engineering. although it is a muslim dominated country it's a country that has a keen idea of keeping a government separate from religion, having a secular government. we also saw a sell-off in the turkish and sovereign department as well. we have seen that country's interest rates rising. as you can see, this is a one-week chart. what you see at the bottom is the dollar strengthening.

weakness across europe and also particularly in turkey. not surprising, kelly, because it's really taking a lot of people by surprise what's happened there. >> that's right. and concerns about syria causing broader unrest. thanks very much for that update. she mentioned japan, too. we want to keep you posted on this one because futures, carl, down again. we keep seeing this pattern. in fact, if we hold here, i think we've sold off, 7% there. that puts us in bear market territory. >> yeah. we were down at the close in tokyo overnight. down 17% from the high. the recent high. add another 3% or 4 hrs and they will be at 20%. >> one place to watch as well is the dollar/yen. 99.15. back in double digits giving up 1.2% on the yen. so where wl these two keep moving in tandem will be key as well. meantime, bob pisani is back in vacation just in time. >> you are good because that's the issue. the yen/dollar and s&p has been

moving close and that's closely watched drad. these guys are good. i watch them, too. they're just a great team. there's a lot of cross currents going on. it's hard to figure out whether the turkish thing is important for us in the long term or short term but it's definitely out there. i'm not saying it's not relevant but there are a couple of there things. i think this ism construction spending below expectations, that was a big thing today because we saw reversals of key charts here in the u.s. on stocks like interest rate sensitive groups. a japan, again, i'm reiterating, 3.7%, that's a big thing. look at the nikkei. longer term chart because we're about 17% off the highs that we had for the nikkei. just a short while ago. there you see the big drop in the nikkei. that was a couple weeks ago we were hitting multi-year highs on that. dollar/yen, when it broke 100 things started heading south real fast. that was a very important psychological level for a lot of traders. again, the reason people are watching this is the correlation

has been pretty good this year. put up the s&p 500 versus the dollar/yen. i know this seems like a obscure relationship. if you look at it it's pretty close. there's the dollar/yen. this is for the whole year. there's the s&p 500. it's tracking pretty close. notice the highs, exactly the same moment and the slight downturn we've seen also occurring at the same time. people are watching this carefully. after we got this data today, this crumby data on construction spending on the ism, we saw a number of changes in the market. interest rate sensitive stocks have had a tough time recently, reverse. that's because less likely the fed is going to go ahead with the tapering pole si. look at utilities. remember what they've been doing it. when that came out at 10:00 utilities had a nice rally here. builders, construction companies also weak on the numbers on the consumer spending. -- on construction spending. let me close by note that we had a historic day today, this morning. it was a bright day and a sad day for all of us at the new york stock exchange. we've been down here for a long time here.

nyse voted to approve the merger with the intercontinental exchange. i want to show you what the combined revenues are going to look like. put that number back up that chart back up. i want to show it to them here. 44% of the revenues from this company are going to come from options or from futures. only 10% of the revenues are going to be coming from cash trading. i know you all think the nyse is a cash/equities business but only 10% of the volume is going to come from trading. it's a sad day, guys, because this is the day when the nyse essentially stops becoming an independent company. i know there's a bright future for everyone, but it's always been an independent company. now it's a subsidiary of a larger company. life moves on but for the small group of us that were sitting in there for a long time, it was a bittersweet moment when the vote was issued. >> i'm sure. much broader discussion whether this is ultimately a good thing for the development of the stock market or what's left of it. bob, thanks very much. moving on this video causing

more headaches over at the irs. reports surfacing that millions of dollars were spent on employee conferences featuring dancing team building exercises. >> this is my favorite. >> did you -- >> maybe that was my favorite. they're all good. >> re-enactments coming. could we put a squeeze on government travel? that's a question we're asking, is the hotel industry worried? simon hobbs has an issue next. and tesla is boosting the super charger stations but it's not compatible with other electric cars. could this be an opportunity for eco tallity? the ceo of that company will join us later. ing ] ♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim

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usaa. we know what it means to serve. coming up next, we're in for a volatile week. we'll dpef ygive you the trades another ugly day for japan. now one fund manager tells you whether it's time to bail on that hot trade. plus, one discount retailer is on the tear but one of our traders says sell this high flier and do it nasdaq fast. carl, see you at the top of the hour. >> sounds good, scott, thanks. the irs is under fire again. this time for the amount of money they spent on conferences in the last two years. our chief washington correspondent john harwood has some of the details on the actual news here, john, and the optic s surrounding it, too. good morning. >> there's no sign that congress is going to let up on this irs issue of the wake of the scandal over the targeting of conservative groups by the irs. you had a member of kons

congress force the release of this video showing conferences in which in team building exercises there was line dancing going on, you have inspector general's report that the irs had spent $50 million on conferences over three-year period. echos of what happened at some other government agencies like the gsa which has since been cracked down bon and over the weekend you have darrell issa who is heading the house government oversight committee's efforts going very hard after jay carney, white house spokesman, calling him a paid liar. here's darrell issa. >> the administration still, paid liar, spokesperson, picture behind, he's still pimaking up things about what happens and calling this local rogue. there's no indication -- the reason that lois lerner tried to take the 5th is because there's a rogue in cincinnati, it's because this is a problem that was coordinated in all likelihood right out of washington headquarters. >> the white house and its allies hit back very hard

immediately. david plouffe tweeted out, those are strong words coming from mr. grand theft auto and suspected insurance swindler and arsonist. this refers to criminal charges and investigations that darrell issa faced in the past. it come out in news media reports previously when he ran statewide for senate and governor in california. but this is the white house saying if you want to turn up the volume on an integrity and credibility argument, we're going to come right back at you with that. and, of course, all this irs discussion is going to continue this afternoon. there's a house appropriations committee hearing. this might be an opportunity for the administration to move forward because danny werfel is going to talk about things he's done to implement changes at the agency. guys? >> we'll keep can eye out for that. on that note, let's send it over to simon hobbs who is joined by another special guest who may know a thing or two

about government spending. >> welcome back to the nyu tisch conference. jonathan tisch, from loews hotels, the chairman of this conference. you are a democrat but you're a fiscal conservative. is the irs right when it says it's inappropriate to spend $50 million over two years on 220 conferences for staff? >> i can't comment on the specifics of the irs meetings. i think it's important that taxpayer money be spent prudent li and wisely. meetings are important. it is these kinds of gathering where people can talk eye to eye. meetings are the back bbone of e travel and tourism industry. i hope in this industry we don't demonize the industry because when there are meetings in hotels it creates jobs. >> itth it is deem onized with the federal level and the successes we've seen from private industry. in all of the areas of the industry that is not recovering.

it is precisely groups. and if you run a hotel chain, i don't know what the makeup of loews. i know you have 19 hotels. do you have big banqueting areas that are empty frequently? >> absolutely. we have 35% of our hotel rooms are geared towards -- or the mix of business. 35% business. meetings are very important to us. they're very important to most of the players in the hospitality industry. but once again, it's important to know that the meetings side of the business has not recovered as quickly as the transient side. >> will it recover? >> yes, it will recover. >> you don't sell off those properties or refurbish them? >> no, at loews hotels we're going through a major refurbishing of our hotels in nashville, san diego. our regency hotel in new york is going through -- closed right now for major enhancement program is going to reopen at the end of the year. so we are enreinvesting our properties. we hope the meetings stri will start to come back because, once again, we have the ability in travel and tourism and

especially in hospitality to create jobs. >> i'm going to come back to that if we have time. i want to mention the other news we have this weekend which is that the new york hilton midtown is going to abandon room service. 2,000 rooms will no longer get room service. they will have a kitchen, a grab and go, i think they call it spp that the new frontier now? can people any longer afford to run losses on room service, keeping kitchens open and waiters waiting throughout the day? >> big hotels, small hotel, room service is always loss leader. i think what you're seeing is a demographic trend and it's an economic trend. people don't necessarily want to be in their room. we're all renovating our lobbies so there are communal tables. we're all upping if wi-fi in our lobbies so that people can do their work and maybe also download a movie. people are more social. and so the economics are such when it links up with the social trend, hotels are starting to make decisions about 24-hour room service. we have a grab and go in our

hotel in san diego. we don't have overnight room service anymore. we leave the grab and go open 24 hours a day. so these kinds of changes are necessitated by the wish of the traveler, which is something we focus on also. but also the economics. >> finally, let me ask you about this drive you have for the united states to recognize the demographic change around the world and to get more tourists to come here and spend money. there was a terrifying statistic you quoted in a recent survey four out of ten foreigners who had come here would not recommend the united states when they got back home because of the difficulty in getting through customs and immigration. but that may be sorted by the end of the month. >> very true, simon, because in the immigration bill there is language that would allow us, allow the customs and border patrol to hire 1500 new agents. here we are spending money through brand usa. we are triing to roll out the red carpet. the visa improvements have been

substantial. wait times are down in countries that are not part of the visa waiver program. and then when these people who have thought about coming to the states come, they're in a line for three hours. we as a industry want to help improve that. the immigration bill will focus on how to improve the customs situation and make it a more enjoyable experience so people go home and have positive things to stay about the united states of america. >> i hear the new york market is on fire. you, of course, have been a major player in getting super bowl here at the beginning of next year. what are you going to do if it's bad weather? >> we have contingencies for everything but let's keep in mind some of the worst weather has led to some of the best games in the history of the nfl. from a fan standpoint they're excited about an open air super bowl. we are working very closely, new york, new jersey, the host committee with all of the transportation systems. we will have every contingency thought about, prepared for, the nfl, the host committee, government, are all working to ensure that this is a great

super bowl. let's keep in mind it's going to bring about 150,000 people to new york and new jersey. $550 million of economic development. >> are you building hotels in the area? >> we're renovating the loews regency. >> nice to see you. this conference is one of the two go-to conferences for lodging which is a very big industry throughout the year. thank you very much, jonathan tisch. guys, back to you in the studios. >> give him our best. thanks. when we come back, the company that makes electric charging stations to compete with tesla ecotality. it's taken a hit since it's going to expand its network nationwide. looking at covered call strategies to generate income? with fidelity's options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens, and i helped create fidelity's options platform.

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tesla announced it will triple its super charger network. drivers will soon be able to drive coast to coast with those charging stations. they are not combatible with other electric vehicles. r r robbi, good to have you, welcome. what did you make of the announcement and the notion of whether or not we're over a tipping point as far as range and anxiety and people believing they can go long distances without too much trouble? >> we're very much headed in this direction. tesla's announcement is great. the number of charging stations out there is growing at the

pretty rapid rate and we're building range confidence. >> it's a west coast thing, you've got some in texas and tennessee, but is it sort of a green mentality thing that can exist only on the western side of the country? >> i don't think so, not at all. it's starting out on the west coast partially because that's where the vehicles were launched. nissan launched the leaf on the west coast. tesla is based on the west coast. it very much will be a national phenomena. >> for it to be a truly national fen nom men none, people need to have confidence they can fill up anywhere like a gas station now. if they aren't compatible, that will be a head wind for the industry broadly. when you see tesla expanding its network, for example, that's not compatible. >> tesla's network today is not compatible. it is reverse compatible or backwards compatible to ours in

the sense they ship the vehicles with the adapter. our network and others in the industry are compatible across all vehicles, including the tesla. the networks themselves, tesla, and ours are growing rapidly. it will give drivers range confidence to take the evs anywhere. >> how many are there today and how quickly are we going to ramp up over the next year or two? >> we have 12,000 chargers out there. two thirds are residential and one third are commercial. in the aggregate, there are approximately 35,000 chargers at this point. >> you've partnered with kroger and companies to help them. you help build out the stations, correct? >> we have. what we've seen and the reason kroger and ikea and mcdonald's and others are placing charging infrastructure out front, it draws a demographic willing to stay more and visit more frequently when they provide the

amenity to customers. >> we mentioned tesla, down 7%. there's the stock today. a lot of people still worried about honda. they cut the leasing price on the fit by a third. the leaf out there trying to push these products, maybe we're already -- the fad is already dying off. why is that not true? >> i think it's just -- i am a little biased but i think it's just starting. i have a new 2013 leaf which i leased for -- i bought one with every bell and whistle i possibly could. it's about $300 a month. entry level cars, $200 a month, they are manufacturing in the u.s. they have a battery plant and vehicle plant and motor plant in the u.s. that solves the end dollar program and cost of manufacturing a lot less. they are moving -- a lot of the buzz i guess has been about tesla and that's great because they are doing great things. but nissan, bmw, with the i3 at the end of this year, voekz swagen with the egolf, it's

getting started. >> you have a unit that does battery research. everybody says they have to get better. that's the linchpin. when does that happen? >> it takes time, obviously. it's a multiyear process to get more energy density into batteries. in the interim and long term, a charging structure available to everyone, everywhere, cost effective and easy, you look at the iphone and nab unit on the car and it guides you there. that exists today, all across the west coast and in other parts of the country, that infrastructure helps offset the fact it will take a while before batteries are really dense and large. >> just briefly, how long before we're at a point where you can charge your car as quickly as you can fill up a tank of gas? >> that's a good question. i'm not sure i have the exact answer -- >> you have somewhere to go? >> i'm in a hurry. >> it's really a different

model. it's a completely different model. instead of going to a centralized depot and spending ten minutes filling your car with petroleum, you're charging everywhere. in the ten seconds it takes to plug in -- like your iphone or android or blackberry, when power is around you plug it in and get in the habit of plugging it in. ev is very similar. it's automatic and only takes ten seconds to do. >> fascinating. thanks so much for joining us today. >> thanks for having me. >> ceo of ecotality. bernanke delivering a commenceme commencement speech to princeton undergrads. we want to know what piece of advice did big ben have to leave on the cutting room floor. tweet us here and we'll read your answers after the break. [ male announcer ] ok, here's the way the system works.

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yelp, shares are down 7% of that company as cfo saying he would be happy to partner with facebook for graph search if they are interested. it means google is less likely to acquire the company as a result shares down 7.6%, carl. >> bernanke giving princeton

graduates advice on the commencement speech. what did he leave on the floor? buy as much bittoin as you possibly can. move back with your parents and slowly taper your way out. in the real world, you don't necessarily have to clean up your own mess. my famous was don't mess with the fed. >> all right, thanks, welcome to the halftime show, four hours to go until the close. let's take a look at where we start the week and month on wall street. mixed markets as the s&p and nasdaq fall negative. dollar general, with shares now looming, what's the play right now. japan falling for the nikkei raising