>> it has to do with exhaustion again. you know, your staff is running out. your ideas are running out. and your energy's running out. it's a tough job. >> we're running out of time here, too. larry, thank you very much for joining us today. that does it for us today. right now it's time for "squawk on the street". ♪ let's get it started let's get it started let's get it started let's get it started in here ♪ good thursday morning, welcome to "squawk on the street," i'm krrl quihere with cramer and david faber. big morning for banking retail, tech, futures were staging what has come to be a familiar pattern this week. that was an up open. but obviously we've lost some ground. the ten year now below 27 and the final gdp was revised up and europe this morning has mild losses as well. our roadmap begins with citigroup trading lower in the premarket. 25 of 30 major banks passed the fed's annual stress tests, but

citi was not one of them. we'll tell you what went wrong. >> shares of lululemon on a roller-coaster ride. rallying higher and then slipping lower in the premarket. we'll tell you what's going open. >> and here's satya, the new microsoft ceo will make his first public appearance since taking the top job and he's getting ready to make a big announ announcement. taco bell rolling out its new waffle taco and new breakfast items today. we'll tell you exactly what, if anything, that means for the company and the competition. in the meantime, though, 25 of 30 banks have had their plans for increased dividends and stock buybacks approved by the fed. the most notable exception, of course, with citi, with the fed expressing concern about the banks risk planning. in a statement the ceo said the company is deeply disappointed by the fed's decision but will continue to work closely with the central bank to alleviate its concerns. they do have 30 days to resubmit five years after the crisis. still unable to satisfy some of

these basic requirements. >> this was really bad. and let me explain why. because it's kind of interesting. there was a lot of chatter when vikram was fired and he was fired, let's get that off the table. he was fired. why? because they failed. so, the idea was the actual entity that was reviewing didn't like vikram, didn't like the job he did. well, do you know what, today this says they don't like this guy's job either or the bank is irredeemable. and i found this to be devastating. we also i did not like the way the bank was claiming don't worry about the mexican issue. mexico is their biggest emerging market. the controls aren't there at this bank. they don't have control. they always tell you, hey, it's good. what this says is the fault was not with vikram. the fault was at the bank. >> i talked to one shareholder this morning said, well, the very least they can't seem to do any paperwork over there or run their models appropriately.

as you point out this is not the first time. >> no. >> and, again, vikram pandit lost his job as a result of the last time and some other things and yet i don't have the answer. i don't know, i'm not sure that their shareholders understand and they were caught unaware of, they weren't expecting this as i understand. >> i'm saying the idea was that vikram was sacrificed upon the altar of sicar. we got to throw that out. this is about citi being too big to fail. >> is there any blame on the regulator? you know, to the extent that this entire process is supposed to be a learning exercise or an educational exercise for the institution in question, because everybody wants them to be as healthy as possible. >> yes. >> is there blame perhaps on the other side, i don't know, not enough messaging signaling, not enough back and forth. to help them understand exactly what was needed of them. >> that is a great point. i mean, if you had a heads up, why not issue 50 million shares?

say, listen, guys, it ain't going that well. we're looking at this. this is not meant to be about a major test that you could fail. it's meant to be here's what you need to do. if you came in early, 7:00 -- >> it's a test. >> we want everybody to be -- >> although you run into the question of the legitimacy of the test and if everybody passes is it strong enough. >> it's sort of, like, we'll give you extra tutoring on the side to try to make sure you're at the level of everybody else. >> a financial coach guy comes in and said, listen, you need a safety school. i think that david is right. they needed to do equity. they were very cocky. i think they were cocky. >> kbw today, monday morning quarterbacking takes it down to a market perform. >> yeah. >> but polini on our air said he'd be buying the heck out of it a few percent. you? >> no. i thought they do, do the equity offering, if you want to buy the heck, do an equity offering. i think they have to raise equity. i think that's the purpose of this. they have to raise equity.

no one by the way has ever said including ali financial. that's, of course, the government -- >> that's the treasury selling 90 plus million shares. >> everyone will always deny they ever have to issue equity or saying we don't need to do that, we can solve it. >> like a jcpenney. >> well, yeah, like the jcpenney. but citi, how about i say this? the smart thing for them to do is to issue a huge number of shares right now at $45. get this passed. that's the smart thing. instead of battling, instead of complaining, just do it. get it over with. move on. >> should point out some other banking news, of course, bank of america we will report news on in the last 24 hours. a big settlement there with fannie mae and freddie mac on the long-standing issue of put-backs and the quality of mortgages and representations of warranties. >> and for kennel lewis personally. >> how do you like that? >> and meryl lynn of whirill ly fascinating.

>> ten years without being a public officer. >> many would say the merrill deal there were perhaps things that should have been told to shareholders about what was going on, programs they didnerh have the full amount of information due them and we wondered about the big price when merrill might have been out of business a day later. but countrywide is the one where you can't ever excuse mr. lewis. >> countrywide is what destroyed that company. hey, by the way, i think merrill is having part of the resurgence of bank of america is merrill doing quite well. >> and country wide is where the latest settlement with fannie and freddie comes from $5.3 billion or more. >> is this really it? my trust owns it and i read it and i said this is it. every time you say this is it, bp, they go into the government and the government says this is it. >> the government may be done but you have private put-back litigation that is still being -- still moving along that could result in some numbers. >> although at this stage they say they resolved almost 90% of the outstanding litigation,

right? resolved the bonds subject to some litigation. >> there had been a lot of talk that bank of america, the liabilities were going up, up, up, the subrosa text was the legal fees aren't done. this takes a chunk of legal fees out. >> right. >> and there's a large repurchase by them as well. it's 5.83 billion in terms of their settlement and then the additional purchases. >> things have gotten better in housing and it is repurchases, loans, that were any good? >> it's a good question. i think maybe some of them have gotten better, yeah. but i don't know. i don't know. let's talk about lululemon here. shares of that company volatile in the premarket. the yoga wear retailer posting better-than-expected quarterly results, but lulu's guidance for the current quarter and the full year were below what the street was forecasting for the company. i was in my lululemon for the first time a couple of weeks ago. >> hello, mr. shopper now. interesting.

>> gifts that i was returning. >> okay. >> but i did -- they'll do free hemming for you. did you know that? >> will they? >> free. >> yes. >> hem up your workout pants. >> in the meantime they've cut numbers so much, the reset, it finally looks like it's bottoming. i don't have a case for it. >> really? >> i don't have a case against it anymore, because they guided down, guided down. people want this stock to go higher. why? it's an interesting thing. people like to shop there, they figured, hey, it's got to come back, but be careful, it's still interesting. >> interesting story on dow jones the store development starting to run into areas where a nike is closer than it had been in the past or an athletica store is closer in terms of their new development, new stores. yoga's competitive. yoga ware is competitive and they are feeling the effects. >> gap has been forward on this. there's still a cult with lulu. when i go to lulu i feel like i'm joining some sort of, you know, kind of an interest group.

it's an interest group. >> do you ever do the yoga there on saturday mornings? >> no, i haven't. i often find i'm the only guy there. which isn't that bad, you know? >> now, lulu was higher for a while in the premarket. there had been a sense that the comps weren't as bad as they might have been given the warning or maybe the guidance wasn't as bad as some thought but that turned around before the open. >> we miss that old ceo. she was terrific. and i think that, you know, lulu -- people don't like high multiple stocks right here. they don't like anything expensive, right? they don't. and i think that's part of the problem. i think lulu would more likely go higher than lower. but the high multiple thing has been -- that's the subtext of this whole market and you got to buy it cheap or else it don't work. >> 62 russell components are down more than 10% for the month. >> wow. >> and we're talking toll, celgene, salesforce, tesla, horton, workday, netflix, you name it. >> geez, those -- many of those

are times sales not times earnings. >> to be fair many were up sharply even in the first month of the year and so there are still some of them sporting gains. facebook also has not been faring particularly well. >> but there are big winners. >> the question is with yellen's commentary and the whole idea what will happen to rates is this something we'll be living with for quite some time or is this beating up of the high multiple stocks and the growth stocks momentum names over? >> i don't want to pronounce it over until the ipo window closes. >> which may have yesterday. >> that was not pretty. >> we're the top. you know, i was thinking that cole porter song. >> "you're the top, you're the colosseum." >> that was a brutal day for the -- >> museum. >> i just saw the colosseum, by the way. >> yes, you did. >> that was built, what? >> eight days. you know, you are on top of though many things. 2,000 built in 8 days.

do you know how long it's taken us to get one world trade center up? >> the dancing candies if you were down here, oh, god, no, please. no, please. you personally are creating a top. but the ipos they have to stop for the software as a service. they have to stop for biotech. only then will these institutions stop selling their good but lock in the gains and start buying -- top bstop buyins stuff. you buy half on the deal and then they give you half on the aftermarket. you get a good basis and you are immediately up on the position. versus, like, riding gilead down to a loss. >> yeah. and an important dynamic to watch. >> yes. >> final story for the a-block, a big day for microsoft ceo satya nar della who will make his first public appearance since taking the job and he'll speak at an event in san francisco and among other things he's expected to announce a version of microsoft's popular software suite for apple's ipad, we're talking xcel and word and power point and something people

have been clamoring for for years. >> i got a take on this, i got to go for it despite the fact that i sound like froggy master. here's the deal. i think that windows is where you at branding has gone for years for microsoft. i think that's changing right now. i think they're going to de-emphasize windows, why? because our kids hate windows. >> you made the point yesterday. >> what can happen is you can repudiate windows if you are this fella because it's a gates/balmer thing. i think the emphasis will be on xbox brought to by microsoft. this is the beginning of the deep-sixing of the name windows, that's what this is about. >> all right. they still sell a lot of windows. >> never going to hurt that. sure. i'm just saying that microsoft has within itself, with mark penn, the image consultant -- >> yes. >> -- has within itself a problem. it's regarded as being old. but xbox is regarded as being new and i think they have to de-emphasize windows and how do

you de-emphasize it? say, listen, we now make a new product for ipad. they don't call it windows. >> this is all happening under the watch so to speak of both gates and ballmer even to some degree, right? they're not out of the building necessarily. >> they are leaning over his shoulder, saying, hey, what's going on there. i think this man has courage. i think he can make something happen i think even gates and balmer say to nar deldella, mak happen. we were two trick ponies. one thing my advice to steve, stay put. i have the same problem. jut stay put and get rid of the yellow shirt. these are two things. he looks like a banana, he should have been dancing with the bananas singing "you're the top." what do ronald mcdonald and the breakfast menu have in common? a new twist in the morning food wars. it's getting spicy. later on a lot more futures going mildly negative here.

a lot more "street signs" from post nine at the nyse when we return.

yum! brands up been the anteant ante in the fast food wars, 15

new products including chicken sand whiffs and rice dishes and taco bell rolling out new breakfast offerings including waffle tacos and weaking its competitor in a new commercial. >> to show you how much people are loving taco bell's brand new breakfast, we asked special people. >> my name is ronald mcdonald. >> i'm ronald mcdonald jr. and this is ronald mcdonald iii. >> my name is ronald mcdonald. >> what do you think? >> it's really good. >> i loved the new wrap. >> ronald mcdonald. >> i'm ronald mcdonald and i love taco bell's new breakfast. >> a delicious new breakfast everyone can love even ronald mcdonald. >> all right, so clearly the gloves are off, right? what subtly, right? starbucks making breakfast sandwiches and now this. >> david novak is maybe the most aggressive guy in the industry. don't forget chipotle was taking a shot at the value food of mcdonald's just to be clear i

will not be serving a waffle taco at bar san miguel. i won't follow suit. pancake taco. maybe? no. >> don't go there either. keep the tequila rolling. >> i have to tell you that i love david novak and he's just a killer. i think this could work. but, remember, it's all kfc. howard schultz was telling me they need to put up as many starbucks as kfc has. 900 cities and more than 3,000 units. >> 4,600 units and china. >> it's all kfc and china. that's what the stock moves on. >> no mas, it could help them in the u.s. if they do this. >> yeah. >> yeah. but they need -- look, they're always moving -- people hate mcdonald's it's incredible. i'm saying the competitors. >> oh, yes. >> still worried -- >> no lost lost on either side and we all know what a high margin, high repeat business

breakfast is. got claims down to almost a two handle today if you are on your way to work there's good chance you're stopping somewhere to get something to eat. that's been part of the thesis. >> kfc is a fighter. the stock has been stalled at 73 for ages because of chinese tv saying their stuff isn't up to snuff. i bet with novak. never bet against david novak. he had the same address i had. >> his car. >> in his car. >> you bet against a guy who lived in his car, not going to happen. >> maybe you try and find a portfolio of companies who ceos lived in their cars. >> i'll google it ceo/live in car. they'll have it. >> yeah. >> keep an eye on yum and mcdonald's and starbucks today. when we come back, cramer's "mad dash" as we count down to the opening bell and one more look at the premarket. we'll get the opening bell in just over ten minutes. don't go away. [ girl ] my mom, she makes underwater fans

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♪ eight minutes before the opening bell. time for "mad dash" on this thursday. all right, baxter? >> yes. okay. >> thinking to grow. >> thought this was funny, in "get rich carefully" my number one idea that baxter should poli split into two companies, and they mutt have read the book because they did it this morning. not kidding. my number one idea baxter should split up. >> can easily split into slow growing medical images company and a biotech company. >> i'm not asking for any fees from baxter because they bought

the book. they should come to the april 1 signings in white plains. >> stock is up sharply. >> it's going higher. >> i don't know what -- maybe it was ukraine, i don't know, but suddenly that train seems to have slowed again in terms of deals at least announced deals in the last couple of weeks. but splitting companies. >> they listened to me. breaking up is easy to do. thank you, baxter. now, david, all day yesterday, directv, dish, other news organizations made it sound like -- this weekend. >> yeah, no way. not this weekend. listen, you know, i've been -- i've been making calls as you might expect on my other job trying to cover m&a and media and know a lot of these players, there's been a lot of chatter after comcast, time warner, a lot of chatter, what will they do in terms of the spectrum they bought and would they sell? would a dtv/dish deal be something regulators could look at positively. would you now timingwise want to try to get something before them

at the same time comcast and time warner is before the doj and the fcc because it would either be yes to both or no to both. but mike white and that board my sense has been for some time, looked askance at a potential transaction and believe the regulatory hurdles would be very difficult and that the problems or the management focus would perhaps be moved to other places during that time that they were seeking approval. so, we'll see. also, i don't believe there are any full engagements going on between both sides at all. did charlie erogan said let's do it. that's absolutely the case. >> you raise a good point. they are very good ceos and it sounds like mike white is saying don't distract us, we're putting together great numbers here. >> latin america very important for dtv in particular, but, yeah, you can't rule it out. timingwise would be interesting. the other factor i would introduce here is the idea of at&t and dish.

>> yes. >> that's been out there for a long time. if there is a sense on at&t's part that there is something really significant under way here, would at&t choose to perhaps make a move. something you can't dismiss. >> in the meantime the companies are doing quite well. i do worry about argentina. i worry about anything latin america. latin america seems very unstable here. >> we got the opening bell, of course, a few minutes away. "squawk on the street's" coming back right after this. [ indistinct shouting ]

♪ [ 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 from td ameritrade. ♪ you're watching cnbc "squawk on the street" live from the financial capital of the world. the opening bell in a little less than two minutes and what a week it has been so far, if the last three sessions the s&p has made its intraday high roughly in the first 45 minutes or so only, of course, to turn down. nasdaq having led in 2012 and 2013 is now a laggard to the s&p, jim. >> yesterday was a good example. you saw europe up. we open up. i think people did not emphasize enough the kinds of things that president obama was talking about. >> about nato. >> about nato, about beefing this up about really almost kind of making a military statement.

hey, you know, we have a lot of companies that do business there. when merkel talked about doing sanctions, she went to volkswagen, are you okay? volkswagen said, listen, we'll do what's right. our companies did not get a similar heads-up from what i understand and, yet, well, there's a lot of business being done over. >> "the journal" with a piece of the ceo of seiemens meeting wit putin trying to stave off some horrible exit of capital from that country. >> a company i like very much alcoa up in the premarket. they have a big plant in russia. klaus kleinfeld knows his way around. keep track of saber rattling because the next thing you know, remember what happened to bp in russia? hey, guys, love uf. we'll take half. >> you know, you're going to take, can't pass it up. >> yeah. as we await the opening bell here in a few moments, and we'll get a look at the s&p at the top of your screen, down here at the

big board, a provider of outsource d hr services celebrating their ipo. you'll have them on tonight. >> they're also the loudest. and not fancy. i don't see any trinet candies dancing. >> the indicate ibiggest ipo fi flop of the year. over at the nasdaq, square one financial holding company for square one bank. also celebrating its ipo. i imagine citi will be one of the clues today, jim? >> yeah. i mean, look, citi is going to say it's get better capital controls, well, you know, that's what we thought would happen when vic left, right? hey, we'll get good capital controls. i think you do a zions and you do a deal. and citi will deny it and saying it's idiotic.

they ain't so idiotic. what do you do to get the regulators off your back? say, listen, we'll have better capital controls? but did they have capital controls in mexico? i came out here and i said this mexico thing's a big deal. no, it's not. i'm not wrong 100% of the time. citi. >> you've lost confidence i think it's fair to say in citi. >> that's what's happened. and i really like them and i thought they would pass it and i was wrong. i made a mistake. i blame myself. >> right. meanwhile a lot of investors will probably choose to stay the course figure they'll work it out. to a large extent. still a play on emerging markets which may be okay. >> but, you know, geez, there's winners. wells fargo, wow. warren buffett so right. just so right. what a well run, such a great ceo. no capital control issues there. >> you think it's more a function of controls rather than

their geographic layout and global strategy? >> the mexican thing which has always been their crown jewel shows what kind of controls they have. you go google about that company that they have a problem with and there's article offer article about how dangerous it was to do business with them. why did we find out about it only after default from citi? that worries me. google should not be as knowledgeable as citi. >> interesting to note shares of wells fargo are up sharply. there's some rotation out of citi and into wells. >> wells did everything right. rotation is into lulu as you finally cut estimates enough and you beat them. >> lulu is up about 5% this morning. been as we said earlier a bit of a roller-coaster ride for the stock. >> here we go again. >> guidance that programs did not meet what the street was hoping for but a better quarterly number. >> what happened is the high multiple stuff is getting oversold. there was a brutal piece by morgan stanley that said that the gilead, regeron just

neutral. they'll all go down today. >> there's been a violent move in the high multiple stocks and you may see it reflected in hedge fund performance numbers if it continues. a lot of the stuff that might have been a value play has been going up or at least hanging in there. >> caterpillar. >> and it's been -- it will be interesting to see what those numbers look like especially from the hedge funds. but -- who chase some of these growth names and momentum names bus because it has been a violent move. even though percentagewise you may see facebook up 9.7%. >> take twitter at 44 today, it's down almost 20% for the month. but obviously above where it went public at 20. >> right. people are trying to lock things in. yesterday i got a call from a -- two different guys saying do you know what's the greatest value play in the world is apple. and it is. >> i could have told you that

last week or a month ago, probably three months ago, six months ago. >> but it wasn't moving stocks then. now it's moving stocks. ibm has no revenue growth and it's been going up. apple has a little bit of revenue growth. the earnings per share peaked in 2012. and no one wants to admit that. i might get a call on that that i said that. >> facebook shares are down a bit, $60 a share but the stock still up almost 10% for the year, but a bad day yesterday. $2 billion for virtual reality. reading a bit today about the young man behind that company. >> oh, yes. >> fascinating story, 21 years old. some people from whom he raised the initial funds from are a bit disappointed with him. >> yeah. >> in terms of his decision to sell it. >> even him admitting that zuckerberg got a pretty good deal at $2 billion. >> whatsapp was largely stock not all. this one is stock and cash. zuckerberg can do what he wants. we heard a guest who knew him

well said he'll be extraordinarily aggressive. one has to applaud that but at the same time does he think his stock is overvalued? >> and "the journal" looks at why these things are happening and they point to a cash hoard and they also use the word paranoia about preserving your space to some degree. >> i keep thinking about t yesteryear companies. what would have happened if microsoft had decided mobile was everything. i think it's defensive about the new look. my charitable trust bought some on it. clearly wrong right now. clearly wrong. definitely wrong. >> but these were acquisitions that are of size but they are not changing strategic direction of its main business in any way. whereas sometimes when you see a company make an about face even though it may be the right thing for them to do it's very difficult to abandon your cash cow business even though you see the future approaching ala microsoft. >> kodak. >> kodak's back. actually had a bad day

yesterday. >> do you know what's having a nice couple of days is pvh, we talked about manny chrico and goldman backs it up. >> i led off "mad money" with pvh. goldman is saying you can imagine here's a double digit grower. it shouldn't stop here. it goes higher. it went to 148 before it was revealed that the business was bad. manny chrico is a fabulous ceo. fabulous. they also need to raise capital. no regulators this. no secar when it comes to 50% of the tie and shirt market. it should be justice department. >> you make an interesting point on the regulatory front. another name in banking is jpmorgan with mike cavanaugh leaving and we had a number of important news stories where there's bankamerica, put-back and citi, of course, missing and cavanaugh's decision to go to carlisle, a couple of days old but an important news in terms of leadership of that company.

>> cavanaugh i thought was an inside track. >> and lot of it appears to be based, hey, it's not as much -- it's more difficult. >> were you going to say not as much fun? >> and i thought better of it. >> when i got to goldman, geez, i'm not having fun, my boss, was that the purpose? >> exactly. >> i gree it's not but you can make a lot more money at private equity and i suppose that's an important consideration for many people in the financial services business. hence, you might make that decision. >> blackberry one to watch. not a huge mover down about a quarter of a percent but it's taken to a sell. and i think earnings are coming the latter part of this week. tomorrow, i believe. >> it's more of a break-up name so i can understand why it's going down. i do believe that they raised a lot of cash. i don't have a call about why to buy it. just because it's not doing as badly? folk ka, alcatel, lucent, they bounced and let's move on to something else. >> amazon down another 1.5% like

google earlier in the week cutting their prices on cloud computing services 10% to 65%. some of these price cuts make no sense, jim. >> no. look, this group is under severe pressure. amazon, a lot of companies prided themselves being on the amazon model. we are -- there's so much opportunity we can't afford to show a profit. suddenly that -- if you hear that mantra, it's sell. people don't want to hear we can't afford to be profitable. >> if that construct falls apart for amazon, lord knows where the stock goes. by the way, the entire business could be challenged because compensation at amazon is heavily weighted towards equity and that's how they attract and keep very strong talent. not to mention, of course, it's how they can continue to potentially if you talk to tom stenberg from staples, for example, outprice their competition because they're not getting penalized. we are talking about amazon web services which is a giant in

cloud and could conceivably be the biggest out there and others have to wonder how can we compete with it. so many of the names public or private will try to compete with amazon and provide the services that it offers. >> amazon when you talk to retailers they hate amazon because they think amazon has been given a free pass. all the other retailers have to meet or beat numbers. amazon doesn't. i still think it's a rotation. i'm not saying it's the end of the world. i think it's the rotation. >> with that we are in the red earlier than usual here down 52. bob pisani's on the floor, hey, bob. >> hey, techs were down earlier on, although i see emerging markets, again, doing very well. but the big talk and discussions about the ipo business, remember after the disappointment of king, pricing now becoming very important. pricing right, opening with a mild pop here. here's trinet, trinet priced last night here, human resource outsorcer. primes e priced 15 million at $16, the middle of the price range. and applied genetics small

biotech firm they priced below $12, the talk was $13 to $15 but they raised the number of shares. they had to raise $50 million and they got pushback on the price so they lowered the price and raised the number of shares in order to get the $50 million still, though, still below the range. square one financial essentially a bank that's out there. that helps other companies. the important thing here they price 5.7 million shares at $18 above the range. come back to me. i want to show you trinet indications are 17$17 to 19 and pricing at $16 and $17 to $19 is very important. the average ipo has had a pop of 22% on its first day and with the disappointment of king everybody is watching how they price and open and close. the one to watch would be something like a trinet here not a small company like applied yi

genetics and you want to see a pop of at least 13% to 15%. why? because that's the historical average. recently we've had really good openings around 22% has been the average. but these things if a trinet or a square one financial can't close today up 13% to 15% and the historical range, then there's going to be all sorts of talk. there will be more problems pricing down the road. remember, the most important thing here is the health of the stock market or the second most important thing is how recent ipos have been pricing and when you get a king falters, they say, uh-oh, is this an issue with king or is it an issue with the ipo market. if you get a few of these now today that falter, now it's going to be an issue with the ipo market, not an issue with king. that's why everybody is watching this very carefully. the early indications are very good news. let me go on and put up the bank stocks today and you hit on citigroup and generally good news for the rest of the morgans. bank of america, wells fargo, all of them other than citi raising their dividend and buybacks. what i want to point out is discussion on bank valuations.

that's what everybody is talking about, are they getting pricey. look at the bkx, the indicator we use for bank pricing. it's near the highest levels in five years right now and if you look at some of these bank valuations, remember back at the bottom back in 2008, these were trading at multiples of book of 0.5 times book value. these things have all risen ratherdramatically, and comerica and suntrust and now they are 1.3, 1.5 times book. bank valuations today most of the big banks are 1.1 to 1.5 book value. some of the regionals are as much as two times. we're talking three or four times what the book value was just a few years ago. i guess the question, carl, is whether they are overpriced or not. and i think not necessarily. remember, bank stocks are the ultimate rising rate trade. it is a natural trade for a generalist portfolio manager to buy bank stocks in a rising rate

environment. if they can get the rates up and get the long growth up as well and a somewhat steeper yield curve, the answer is they're not cheap at least not yet. guys, back to you. >> all right, bob, thank you. you mentioned king, by the way, which is down another 3% today after falling almost 16% yesterday. you might have seen the headlines this morning calling it the biggest ipo flop of the year. certainly the biggest one-day drop since last november. >> they need to do buyback. >> by the way, the recent trend is holding with many of the high multiple names that we know well down at least two 2%, google, amazon, netflix, tesla. it is yet again and that has the nasdaq comp down almost 1%, 0.8 percent. >> repealing until they get to the -- until the ipo window closes. it's great that trinet is doing this great deal. but there's a lot of other software as a service play, once

again they'll be sold to get into the trinet deal and i think we have to keep watching. when do the stocks go negative year over year and then people might say, i don't need to lock in any gains because i don't have them. >> high multiple stocks not doing well. how are the bonds doing? let's get to rick santelli and the cme in chicago. how we doing this morning? >> it's very fascinating because yesterday, of course, we had a five-year note auction and the baton handoff from the old five year to the new five year made the curve look like it was steepening a bit. today it's making rates looked like they jumped a bit but it's just an apples to oranges issue that will disappear in a day. let's look at a two-day chart of tens. the thing to glean from this chart is how the structure of yesterday's trade was so much higher. today even though we're flirting with a 269 unchanged, there was no big test of the upper 270s like there has been. this is something to pay attention to. and the yield curves are all flattening. also need to pay attention to it seems to be associated with lower rates. now, if you look at tens to

twos, you can see even that's flattening a bit. here's where it gets interesting fives to tens have comped back another ten months now to the end of 2012. if you look at fives to 30s, maybe the widest but most impressive flattener to look at still hovering at zones we haven't seen since the end of 2009. if we look over the water, and compare our tens to tens in europe, we continue to see that that structure is pressuring rates lower in the overseas european markets, think of their meeting a week from today and all the talk of easing or quantitative easing so the spread is something to pay apension to. the dollar/yen always keeps you in the know but now it's in the no man's land. resistance at 103 we hover in the middle. you want to know the direction on this chart. why? it will give you clues as to the direction of interest rates. carl, back to you. >> all right, rick, thawnk you o much. the federal government has a lot to do with allied financial

should you buy what the treasury is selling? "squawk on the street's" coming right back. i'm beth...

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allied financial announcing it is offering an initial public offering. we've got the latest as if you didn't have enough to watch, k.t. >> i love the busy days. this is really a stress test story, what happens when you can pass it and give money back to shareholders, a company like ally can finally start paying back the treasury. they started this process in earnest a couple years ago but right now take a look treasury owns 37% some of that is in preferred stock. some of that is in common stock. just on a private basis 63% other mostly private investors and we'll get to that later. the deal announced this morning treasury will be selling more than half its stake and get the ownership down to 14% and sell 95 million shares between $$95

and way per share. it's a smaller deal than maybe the edadvisers had hoped. it will value the company up to $13.5 billion. interesting to note, though, that's still smaller than the bailout they received as a division of gmac in the financial crisis. they received $17.2 billion from the government. they filed for an ipo in 2011 but there were a few key issues. one they didn't pass the stress test and, number two, they had a big lawsuit outstanding with residential capital. that was the subprime mortgage unit and they put it into bankruptcy, that set the whole thing in motion when investors could quantify the losses. they started paying preferreds back and they sold the international unit this was the watershed moment. they raised over $9 billion in net asset sales and used it to start paying treasury back and you had third point getting in there and cerberus, fortress and some of them see it as a good

exit guarantee for a company that needed to go public at some point. >> at some point. any idea, though, why now and why they've chosen this moment as opposed to perhaps waiting some more time? >> it's interesting. i think a lot of the investors who were early private investors cerberus and fortress which i mentioned wanted to exit and treasury wanted to exit as soon as they possibly could because ally did perform so well and the health of the company is strong right now with the boom in auto sales and the boom in auto financing and you have really good credit story there right now and you have a good market. i don't think anyone can deny that. >> citi saying don't need to raise equity, we're fine, everything's terrific. if everything is so terrific, what happened. >> here's what happened. in 2012, jim, we were scudiscusg this. they failed in both number and quality. not only did they not have enough capital but they also didn't do a good enough job figuring out what the risks were. this year they had enough capital. >> why? >> they just didn't have the -- >> if you put back holdings, do

they really have enough capital? >> no doubt holdings is a big drag, they know that, but at this point they have so much capital every single quarter when you see them announce earnings they say, you know, we are socking away half of this cash to hold against holdings. >> they should have gotten approval. >> if you read the fed case, citi did not do a good enough job qualifying their stress tests. and jpmorgan added 7,000 employees in risk management they only got half the slap on the wrist that citi got last year and they were defensive. >> interesting point. 7,000 employee in risk at jpmorgan for a variety of reasons. >> even as they take employees out of consumer -- >> they wanted to battle it. >> maybe the stock goes to 50. we'll get stop trading with jim in just a moment. t a moment. change engineering in dubai, aluminum production in south africa, and the aerospace industry in the u.s.?

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really quickly here trinet opened during the commercial break and a day after the king debut, not bad. opens at $18.50 kind of like a nice chip shot right on the green. market's happy to see that. >> software as a service and now the other older software as a service play, again, the process

may have been going down as soon as a new one comes in, old ones go down. be careful. >> let's get "stop trading" with jim. >> herb greenberg says that micron the pricing is rolling over for drams. this is a much-loved stock, mu, we talk about profits. this stock was at $9 last year this time. the stockin instock's at $22. we were talking during the break, hedge funds uniquely poorly positioned. >> everybody i talked to who runs a hedge fund right now is saying, you don't understand how bad it's been this last week. a lot of the concentration in a lot of these names is from hedge funds. we'll see, again, what the numbers really look like. >> you know, there's this notion when i say micron, aig was thought to be a hedge fund name. >> gm. and what happens is that they have such group think that, wow, i mean, they're all fighting each other for the exits. they want to be in trinet, they don't want to be in salesforce. >> a way to deliver alpha.

>> today could be a turn. deliver alpha, holy cow. today could be a turn day because as david pointed out the one that really just started the rollover is twitter. and twitter's higher. just pointing it out. >> after a rough march so far. you do have trinet tonight. >> yes. burt is terrific and i have workday, they are direct -- i'm sorry, paychex. workday, paychex and trinet are all competitors. and paychex is the low multiple name. trinet's the middle and workday's the high. workday is probably the best in the industry. >> don't forget vocal rest. >> i know. >> and good luck to the sixers tonight. >> means that we have to lose. the tanksters not the sixers. >> we'll see you, jim, what a tro trouper. trouper. [ bagpipes play ]

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♪ welcome back to "squawk on the street," i'm diana olick with breaking news from the realtors. pending home sales down 0.8 percent in february month to month from a downwardly revised january figure. pending home sales, these are signed contracts for existing homes, down 10.5% from a year

ago. regionally the sales index down 2.4% in the northeast, up 2.8% in the midwest. down four% 4%. and sales year over year in the west are still down 16%. that's because of extremely low inventory out west. the realtors, though, say they are looking at buyer traffic in the market now and it seems to be improving. they say that the slowdown may be easing but these pending home sales are now down for eight straight months to the lowest level since october of 2011. again, not a lot of supply on the market. still not so much buyer demand coming in. there was no mention of weather, though, in this report. back to you, simon. >> i think it's significant, diana, you have the six months of losses at the end of last year with a thumping decline of 5.8% in december. and the jury was out on the recovery. this surely now raises more serious questions, doesn't it? oh, we appear to have lost

diana. never mind, let's get on it. citigroup has failed to get government approval for the dividend and buyback of stock. august the likes of jpmorgan and bank of america detail how much money they'll be returning to shareholders investors in citi are being forced to wait. we've got a senior research analyst with oppenheimer and sqoining us on set anna crane the director in the risk and regulatory group of moody's analytics. welcome both of you to the program. chris, are you surprised thatcity ended up in this position? >> it was a shocker. i think that -- to the street and the company as well. >> so, why do you think we ended up as we are now? >> well, you know, i -- by the numbers citi passed. and they objected on qualitative reasons. and to me it's a very surprising

thing. because -- and let me put it this way. i think every year the fed has a sacrificial victim in there. last year it was goldman and jpmorgan, which got a qualified pass. the year before it was citi and suntrust. and i think the mexico -- the hiccup that they had was an excuse for the fed to say no. and just in general i think what the fed is probably extra cautious on banks that have global operations. but, you know, when i look through the numbers and you look through the fed stress test document, it's the fed that has weird and inconsistent assumptions and conclusions not citi submission. you know, for example -- >> right. carry on. >> can i give some examples. >> yes. >> for example, in a severe stress environment where the fed has the unemployment rate going up to 11% and a 45% decline in the dow, the fed assumes that the banks are going to increase

their risk weighted assets. you know, the banks had them down by 10%. the fed had them up by 3%. another example is citi has home equity loans in its runoff portfolio. it's only $29 billion. citi's assumption was that those would run off in a stress environment. the fed had them going up 20% to $34.4 billion. so, you know, there are all these really weird assumptions in the fed's document. >> okay. anna, there will be people who look at this and say, actually, is there a bigger problem with citi? is it too many disjointed businesses that don't fit together? they are actually paying their ceo $14.5 million last year explicitly because he was improving the situation with regulators and he was improving the risk outcomes and the controls. what you see that the fed came to citi and said as they say you have a rob and they failed to fix it. you might wonder whether it's possible to fix it or citi has serious problems which lead to

as chris mentioned there a $400 million fall to mexico. >> to be quite honest with you i don't think citi is all that different from other institutions. what the fed has said with what the signal is essentially is that it's not just about the numbers. the banks have been throwing numbers at quick fix analytics. and what we see with citi, what we see with hsbc and santander similarly that the fed is looking at it as a way to improve or force banks to improve risk management. risk management has to come from the back office and has to become sea level focus and that's i think what we're seeing with citi. >> who do you blame here? do you blame the current ceo corbat or the prior ceo pandit? >> there's no one ceo to blame. this is an industry challenge. the industry has underinvested in technology and process and

governance and, you know, whether you look at citi as a sacrificial lamb or one of the largest banks in this country that had to improve dramatically over last year, what we see actually one note i want to make is that the requirements keep rising. it's a horizontal review. the regulators are looking at best practices and taking them across the industry. >> do you think controls in general are capable of maintaining global exposure in this era or is that really a thing of the past? >> i think historic -- i actually think that this is not just about technology and not just about analytics. it's about staffing up. i think we saw pwc do an analysis that said banks will need to invest 50 to 1 $100 million each in better technology but also better staffing. so, i do think this is something that is fixable. >> forgive me, i didn't mean to

cut you off there. chris, we should mention that zions also didn't do so well through this review. what you do have now, though, is $80 billion across the industry that will be returned according to some estimates to shareholders during the course of the year. where do people go as an investor? what catches your eye, chris? >> well, you know, for the most part the capital returns were roughly as we expected. and i think the industry is normalizing. and i think relative to the market, the bank stocks broadly are still reasonably priced relative to the market. the only one that is really really cheap is citi. but i'd also say, you know, we think jpmorgan is attractive. capital one. discover. and cit, those would be our other key names. >> good to see you both, thank you for your analysis. >> thank you. we're watching shares also this morning of lululemon as you

can see moving higher here after the conference call up almost 8% after the company reported mixed fourth quarter results. stock has been swimming around all morning. here fresh off the call joining us sam poser. senior research analyst at stern a.g. he's got an underperform rating $43 price target on lululemon. obviously the company is in turnaround mode. it's trying to improve its brand, its image. you heard a lot of humility on the call, sam. were they convincing? >> well, i mean, i think they're convincing that they're going to fix the supply chain and do a lot of those things. my concern is i don't think the comp -- the same-store sales guidance is a lay-up. i think the existing lulu customers doing quite a bit of continues to shop there and be excited about it. i'm not sure how well they're doing about bringing new customers into the gold and that makes me concerned especially given that the stock, you know, at the moment looks like it's trading at almost 30 times next year's number or more given the numbers are probably going to

come down a bit given the guidance. so, i'm not sold yet. we'll be following up with the company shortly. >> yeah, i mean, it sounds that way. you talk about the power of the brand lululemon. i'm a fan. i think that people are loyal. they use the yoga pants, but with all of these problems, the sheer problems, the company's missteps in terms of talking about the sheer problems, can they really afford to have this problem right now in such a competitive environment? nike, gap coming hot on the heels stealing market share. >> i think one of the main things, one of the things that got left off of the conversation, i didn't get to ask the question offer at least not before i had to come down for this interview, is that they really talking all about product and i think a large percentage of what the -- of what the problems are at lulu is the engagement in the stores and i think the engagement in the stores isn't quite what it used to be and i think that combination of really great product and great engagement is what brings the value to the brand. and i think they lowered the bar

to some degree and it's hurt that -- hurt the brand a bit and i think that's hard to recover from. and unless they can bring a lot of new people into the brand i don't think we're going to get back to the high single digit comps that are running that we've been seeing over time. >> how specifically do they do that? the ceo said today that 2014 will be an investment year. where do they need to invest? >> well, i mean, it's a lot of product. i think they really need to really think about, you know, how they engage the customers in the stores. it used to be you go into the store and, you know, they really help you while you're in the fitting room, they're handing you lots of new product and trying on things getting big multiple sales. we've seen some falling off of that. and we don't think that they're converting quite to the degree that they were and i also think that the customers that spent $100 on a pair of yoga pants and given all the issues they may have tried nike and under armour and many others and say i can

buy a $70 pant it's not as good as lulu, it's only 70% of the cost that may become a better value proposition. i think those are the issues they really have to watch and that's a combination. you're paying for that in-store experience as well as the great product they make. i do believe they'll fix the product but the overall value proposition i think it's a bigger nut to crack. >> there was some confusion this morning as to whether or not they were rolling in e-commerce in their comps now. are they or are they not? >> well, the guidance is saying flat. they are which belies a low single digit decrease in their brick and mortar business for the first quarter. and then continuing to show strength in the e-commerce. but even the e-commerce business in the fourth quarter while still up 25% that was down from seeing almost 40% increases throughout the year, throughout the three prior quarters. you know, this is just really

got to watch it. >> yeah. >> i think it's going to continue to grow and they're going to fix it but the valuation just still scares me here. >> thanks for your honesty in bringing us the case. and just a programming note, here our own retail reporter courtney reagan will be getting an on-the-record commentary from lulu's ceo and we'll bring you the headlines after she speaks with the new ceo. forget breakfast burritos and scrambled eggs, fast food chain taco bell is debuting its latest breakfast offering the waffle taco and some others -- >> is that what you're going to have breakfast really? >> you're not into it. somehow i don't think you're an egg mcmuffin fan either. how should the competition fight back? tweet us @squawkstreet. simon, get thinking of what you'd want to see. >> maybe it looks better when it's hot.

when we come back, remember this? >> developers, developers, developers developers, developers, developers, developers, developers, developers! yes! >> that was the balmer approach. satya nadella gets his turn in public today. is the nadella effect priced into microsoft shares? we'll talk about his first appearance since taking the job in just a moment. in just a momed opened some credit cards in her name. checking her experian credit report and score allowed her to better address the issue...and move right in. experian. to manage your money.r guy around 2 percent that's not much, you think except it's 2 percent every year. go to e*trade and find out how much our advice and guidance costs. spoiler alert. it's low. it's guidance on your terms not ours. e*trade. less for us, more for you. we are the thinkers. the job jugglers. the up all-nighters.

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microsoft's new ceo satya nadella will speak at an event amid rumors we may be seeing the debut for microsoft office for the ipad. morgan brennan is at the event in san francisco. good morning. >> reporter: good morning, yes. so, it's still very early here in san francisco. not too, too much buzz here at the physical location just yet. that said, we are seeing press set up and we have seen some microsoft employees come through the doors of the venue which is right behind me. one of the things we're hearing from sources here basically to temper some of the expectations that have been swirling ahead of this event. what we are hearing, what is being buzzed about is that satya nadella will talk today about mobile and cloud, two areas that microsoft has lagged behind competitors in. also hearing that he will be potentially discussing office for ipad which has been very long awaited. number of analysts releasing reports this week ahead of that in anticipation. looking at some of those estimated revenue impacts we're looking at somewhere between

about $1.2 billion on average in future annual revenue, so we're going to be listening for that as well. one of the other things coming up today ahead of the event, some folks hoping because this is nadella's first public appearance in front of the press and in front of wall street that he'll be laying out a very grand vision of the future for microsoft. our sources here telling us that's an unrealistic hope. investors will be listening closely to what he says and how he says it to see if he can hit the refresh but onmicrosoft and its strategy moving forward. back to you. >> morgan, thank you very much for that. for more analysis on the event and what it means for the company and the stock price and nadella himself, norman young is a senior analyst at morningstar and jon fortt joins us at post nine. s >> i think what satya will look to do is shift the strategy and philosophy a little bit. right up to this point microsoft

has had kind of office 365 for the iphone. like, if you subscribe to mic microso microsoft's overall cloud product you can get access on your iphone but that hasn't been really that popular on the app store. there's been a barrier to entry. maybe there will be a free option here but i would tamp down expectations about how much revenue microsoft can get. apple already has its productivity product for free. the top grossing apps are kind of small in app purchase revenue generators not a big 10, 15, $20 generator like you might think office would be. >> norman, what is your take both from a tactical and strategic standpoint? >> we see it as a nod to reality. it's been four years since the ipad first came out so there's been a lot of time for competitors to really throw their stakes into the ground and create an office competitor. what is happening now there have been roughly 130 ipads sold in the last 2 years, you can get

10% of those to subscribe to office 365 at $100 a pop that's over a billion and a quarter in revenue right there. i don't think it's completely unrealistic, but the point here is he's trying to shift the focus of microsoft to services. no matter the hardware device he's trying to get people to tie more into microsoft services. >> what excites me is the speculation that he might come through with a very big solution, a promise to companies that there will be a whole suite of offerings that will basically enable them to manage what their employees are using at work and anything that they bring to work for use at work, whether that's mobile or something else. if he has a holistic approach and a new strategy for engaging enterprise that includes the ipad that sara might bring to work, that is potentially very exciting, isn't it? >> that's correct. and i think that's probably, if that's the announcement that comes out, i think that's really the bombshell announcement. it's not the office or the ipad, it's the pad that, no matter

what kind of hardware you're bringing and especially in this new environment no matter what kind of hardware you've got, microsoft can help you manage it. and not only will they help you manage it, they'll tie you to the services, you'll have outlook and skype and azure and 365 and all of the things to tie more into microsoft's ecosystem of services. >> but they still have a problem when it comes to devices. what do you think satya nadella is going to do? the windows phone barely making a dent in the market and surface tablets even further behind. >> true. i don't think we'll hear that much about devices here. i think we have to remember microsoft's build conference which is the big conference for developers is coming up in just a few days so he's going to be focused on developers big picture and this is the guy who last year at the build conference brought out an apple mac book pro and showed that microsoft services, its software, works on the mac. that was kind of mind blowing for people for him to bring out rival hardware. this is where satya nadella

wants to take the company. >> for investors what is the potential upside for the stock here? >> he can move a couple of financial levers. he can -- he can pay out another dividend. there's $61 billion in net cash right now. there's plenty more to do but without any of those it's speculation, we've got a $39 fair estimate value. >> jon fortt, what business could he get in, cybersecurity, what's left? what do you think is the microsoft way forward? >> i think there will be more investment in infrastructure and kind of the fundamental technologies that will change things like networking and storage. we'll see that out of the microsofts and the intels of the world not so much the end user delivery stuff like box is doing. microsoft already has its own strategy for that. >> we'll have to see what he announces. first time we'll hear from him.

norman and jon, thank you. coming up the federal reserve says no to citigroup's capital plans. we'll talk to new york state's top financial regulator benjamin l l lawsky. lawsky. (announcer) scottrade knows our clients trade and invest their own way. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. their quick trade bar lets my account follow me online so i can react in real-time. plus, my local scottrade office is there to help.

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beat their 10-year lipper average. t. rowe price. invest with confidence. request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. hiring our heroes kicks off today in new york, a job fair for veterans, active duty military guard, reserve members and military spouses. 125 employers are there including goldman sachs, walmart and our own mary thompson, hi, mary. >> reporter: hey there, carl. you know, job fairs like this one are critical in bringing together the military and private employees. hiring our heroes is responsered

over 680 job fairs around the country and the result has been that 21,000 veterans or more and their family members have been hired directly from these job fairs. now, along with meeting perspective employers these fairs offer classes for veterans on interviewing skills and resume writing. ben lam who is capital one's vice president of service member affairs, for veterans telling their story in a way civilian employers can understand and appreciate is one of the biggest challenges that veterans face in finding a job. >> it's about communication. it's about how you describe the experiences and the skills that you learned and put to work in the military, how you describe that to a private sector employer. it's not about, hey, i was an infantry man, or i worked on a ship, it's i led teams. >> reporter: veteran anthony maldonado agrees. he said selling his experience to the military to some

employers has actually been a tough sell. >> the majority of it is hard because they don't understand, like, what you have done or what you have accomplished or what any of it means and then there's the one or two that understand it. family of military or military themselves. so it depends i think. >> reporter: over the next couple of years a large number of veterans are going to be transitioning into the private sector between 280,000 or 300,000 each year over the next four to five years 30% above normal. looking to tap into this talent pool many companies including starbucks, jpmorgan, toyota, home depot, they all have programs of their ohm aimed at hiring veterans, so if you are looking for someone who is good with team work and self-starter, et cetera, you ask the employers and they say anyone from the military has these traits if you are looking for someone who has that them, carl? >> thank you, mary thompson. new york state's top banking

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welcome back to "squawk on the street," i'm reporting from the nymex, the department of energy out with its weekly natural gas storage report for the week ended march 21st. we did see a drawdown in supplies of 57 billion cubic feet, that was in line with expectations.

prices were up ahead of this report and they continue to climb a little bit after. just want to point out that one ubs analyst was saying last week believe it or not was about 8% warmer than was actually expected but at the same time 32% colder than the five-year average and that is why the five-year average is so much less than the kinds of drawdowns that we've been seeing the last few weeks. other traders saying they expect the nat gas to be volatile. you'll buy the weather news one day and sell it the next and they are expecting that until the weather calms down a little bit. year to day nat gas was up almost 5%. on the month it is down 1%. looking at these prices right now we're about 46. carl, back to you. >> thank you so much. let's get a market flash here, sheila. >> hey there, carl, check out the momentum stocks they got whacked at the open but here's the thing they are now coming off their session lows. netflix, in fact, is in the green right now. you can see priceline, amazon, tesla and facebook still slightly negative.

here's the thing, it has been a tough go for several of these names. they are well off their highs. some even, in fact, in bear territory. tesla and netflix both down more than 20%. facebook and amazon and price line getting very close to the bear market territory, simon. >> okay, sheila, thank you very much. good news on the economy, consumer spending surged at the end of last year pushing the final reading of gdp to a gain of 2.6% for q-4. it will be slightly shy what some economists had hoped for. let's get some analysis, and we've got jim doubunigan joins with pnc wealth management. this figure for consumer spending is actually very good. consumer spending rising at its fastest rate as we came into winter a gain of 3.3%. do you think that we've got sufficient momentum to pick up strongly again this month? >> i think as you suggest it's good news. a lot of the upward revision came from the services side and

i think there's a few special factors in play. one of which is that people had to spend more money on utilities as a result of the winter and that would show up in the services number. so, i think for q-1 we should expect to see some slowdown in consumer spending. we saw that in the retail sales numbers. but i think it's temporary. i do fundamentally think the consumer looks a lot better this year as a result of stronger wealth gains and improving consumer confidence. >> you know, jim, one of the big questions as you know better than i for this year is whether ceos will be able to tear themselves away from buying their own stock and actually invest in the economy. within these figures there's a real stand-out that profit growth is slowing down. in fact, it slowed down from 2.6% to 1.9%. do you think that will make ceos more or less likely to put the investment into this economy that it so desperately needs? >> i still think, simon, they're

going to continue to invest. we see the economy improving here and capital expenditures are a big part of that. so, as employment improves, the economy picks up, i think ceos will continue with their capital investment plans. profit margins are high. we don't think they'll deteriorate from these levels but i don't think they will stray far from their plans to continue to invest as we see manufacturing renaissance, energy independence, all positive factors for the u.s. economy here within our borders. >> michelle, we didn't see that in the durable good orders yesterday. business investment was disappointing. we've seen two big declines in the last three months in that area. why is everyone expecting businesses to start investing in their businesses and not buying back stocks and dividends when we really haven't seen any sign of it in the data? >> i mean, you're right, sara. i think that is one of the concerns is that business investment has been slow to recover in this cycle and it doesn't make sense. this has been a recovery.

we're seeing plenty of cash on the balance sheet. to me i think it goes back to the consumer. that's been the missing link. consumer spending has been pretty sluggish. if as we believe consumer spending will start to rebound this year, if we starting to see an environment where wealth gains matter in terms of expenditures, that will feed through to the business community that will increase confidence and in turn should help to encourage greater investment. i think the challenges that the feedback loop in the economy has been somewhat broken, the hope is that it starts to be repaired this year. >> jim, what do you think of the recent price action in the market? the fact that the momentum stocks have gone into correction mode? the fact that the nasdaqs a sima was pointing out is now down 4% during the course of the past week. what is happening here? what is the dynamic and where does it take us? >> no doubt that the market feels like it's got a wagon hitched to it here. activity feels a little heavy. i think we need to see probably as we get into first quarter

earning season some activity that, in fact, profits will continue to grow here. we'll probably see continued effects of the weather. but i think the market's looking for some evidence that the -- continued evidence that the economy is improving and profits will follow that and i think we'll start to see -- i think the bias is still to the upside overall, but it does feel a little heavy here in the near term. >> well, that's not very encouraging, jim, for somebody in your position. i would have thought you would have been more upbeat than that. >> well, i say, the bias is to the upside but i do think we're looking for, you know, as we roll out some of the old scripts from the cold war, some of the international tensions the anxiety is up there but as we look at the fundamentals we think for the year earnings will be positive. we're looking for 116 on the s&p 500 and probably some improvement in multiples on that. so, at the end of this year, we'll be higher than we are today, but in the near term i think the ride's going to be a

little on the bumpy side. >> if it comes down to fundamentals, michelle, final word to you, blame it on the weather, blame it on the weather for investors and the federal reserve. shouldn't we start to see the giveback now, shouldn't we start to see getting past the weather? are we there yet and what if it's not all about the weather? >> that's the key question and i do think we're going to see a rebound. i think we have to look to the sectors that are most sensitive. look at the jobs report next week. that's going to be critical. we should start to see pretty healthy readings in the labor market and housing should start to rebound a bit again. so, i have hope that we will start to see stronger data as the weather passes. >> oh, my word is it a jobs report again already. thank you for joining us, michelle maya from b of a, merrill lynch, thank you, guys. 25 of 30 major banks passing the fed stress test with one big exception this one, citi, what went wrong and what does it mean

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♪ keep your eye on the sparrow the federal reserve dealing a blow to citigroup attacking the bank's financial projections saying management practices or capital cushions could not withstand a severe economic downturn. joining us benjamin lawsky the new york state department of financial services superintendent. good to have you here on this day. >> thank you. >> how is it that we are five years since the financial crisis and one of the most prominent, biggest financial firms here based in new york cannot pass this capital raise plan? i know the tests were not done by you, they were done by the federal reserve. why are we here? >> i think we have a banking system that's continuing to heal

post-financial crisis. it's five years later, but, yes, it's continuing to heal. things are clearly improving. but, you know, i think the fed is at a point and i think rightly so where they want to make absolutely sure that all of our largest institutions can withstand the ups and downs of the future. and it's like training for a marathon a little bit. we used to require the firms to run 20 miles at a nine-minute pace and now we'll require them to run 25 miles at a is ex-minute pace. and it puts you through your paces and it's a lot harder to meet the goals, but if you get to the race some day or when things get adverse, they'll be in better shape to deal with it. and i think long term that's better for the health of the economy. >> was there anything in the release of these reports from the federal reserve whether it's citi or others that makes you want to take a closer look or take some action perhaps to protect new york's financial system? >> look, we work very closely with the fed on the banks that

we supervise. we don't supervise citi, it's a national bank. we'll continue to work closely with the fed and communicate with them closely. >> we should point out that citi hit its numbers it's the other stuff it's being criticized for. >> yes. >> and let's be very honest about it. let's talk about what people are saying behind closed doors. what's coming from regulators it's political and sacrificial and oftentimes it's vindictive if you don't listen to what i say, we'll come back and hit you harder. that's what it's saying we warned you about the processes and now we're not letting it go through. you haven't listened to what we said. and it happened to jpmorgan and jamie dimon had to take the flak. would you say there's a process under way with the regulators in general? >> i don't think it's political. >> in terms of who is in charge? >> i don't think it's vindictive to say we told you to fix something and you didn't fix it and now there will be consequences.

that's just called being a regulator. >> but that's what the analysts are saying, we had an analyst on within the last half hour, every time we go through there's one sacrificial lamb, this time it's city. >> i can't comment on the internal decision making of the fed. i have no reason to believe they sit around and say, let's have one sacrificial lamb this time, who is it going to be, let's roll the dice. i don't think that's the way regulators work. i think the fed, look, we all lived through this financial crisis. everyone at this table. and it impacted the way all of us think about regulation. and i think that the fed takes very seriously the need to ensure that all the institutions especially the largest institutions are really, you know, in shape to deal with whatever may come and i think that's what's going on here. >> what about the give and take that goes on between a regulator and the banks and/or the regulated entities? it would appear here at least that citi may have missed some signals that others got and i'm curious to the extent you have insight not between the fed

per se but your own experiences, can that happen? and is it solely the fault of the company in question or can the regulators also be at fault? >> not commenting on this particular case because i frankly don't have the facts of the interactions between citi and the fed, but, yeah, look, certainly there can be miscommunications and it takes two to tango when there's that kind of miscommunication. we've been a part of that at times. but i think the fed and citi were having a lot of backing and forthing. and i think a lot of these large institutions, we regulate a bunch of them, it's a real iterative process back and forth, back and forth, and it's very important that we work closely with our institutions. >> i did want to follow up on one back-and-forth process. a number of weeks ago you joined us on cnbc. you were asking questions about and asking for information from the nonbank mortgage servicing companies. a couple of them went down fairly sharply. we had one large shareholder from carl bass from hayman join us and he's long the stock. he pointed out the complaint of

the number of loans seriously delinquent at the nonbanks is far lower than it is at the banks and the average, nation star and aqua, 2.2% for the banks and question whether or not, in fact, your asking qes was politically motivated. i'd love to get your response. >> i love the use of political we get thrown at us whenever people don't like what we did. there's nothing political about it. we're trying to be responsible regulators and, look, it's a fair point to make. the number of complaints we received is one metric we look at to decide whether we should continue to look at something, but there are lots of other metrics and, for example, the firm you probably know called aquin, we put a monitor in more than a year ago. we saw a lot of problems that were not being manifested necessarily always through complaints. so, the fact that, you know, you may have one complaint number for nationstar and another complaint number for a bank i don't think means all that much necessarily.

again, with nationstar we're just asking questions. we're looking. we're reviewing the documents. the proof will be in the pudding. and we're not going to prejudge it. i don't think mr. bass or anybody else should prejudge it. let's do our jobs as regulators and see where we end up. >> finally, i just want to get your thoughts on bitcoin. you've joined us a number of times in talking about your efforts in trying to regulate the virtual currency. we've seen some developments. you are being deemed the bitcoin supporter, the regulator that's actually on the side of the bitcoin believers. have you made any progress? >> we're doing work. i don't believe in picking winners and losers. i think the bitcoin platform the technology holds potentially a lot of promise but it needs real regulation. that's why you see the irs getting involved. that's why you see others getting involved. >> what's next from you, though? >> from us i think we're going to put out our regulatory framework and we're probably a couple months away from doing that. we're working very, very hard on it. we have a couple of different touch points which we'll

probably need some regulation. at the exchange level, at the wallet level and we'll see where else. and we're continuing to do our work. >> ben lawsky, always good to talk to you. thanks for joining us especially on the results of those stress tests. new york state's financial regulator. still ahead on the program, tech investor and the former ceo of take-two and atari weighs in on the state of gaming from king digital's ipo this week to gamestop's results today. "squawk on the street" will be right back. back. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price, maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today.

send it over to sheila to get a market flash here. i think you're watching king day two, right? >> that's right. talking about king digital. shares are down for the second day in a row as if being the worst ipo in 2014 wasn't enough. it's down another 2% today. talkable a candy crush. >> thank you very much. let's get to rick santelli for the santelli exchange. good morning, rick. >> good morning, simon. thank you. i'd like to welcome our special guest today, representative jim jordan. thank you for taking the time out of your busy schedule, sir. >> good to be with you today, rick. >> you're on committees and subcommittees that deal in three

areas, energy, reform, and health care. my questions are going to be in those three categories. >> okay. >> with regard to energy, do we even have an energy plan, congressman? >> the house republicans have a plan. i don't think the president does. he won't approve the keystone pipeline. he won't tend natural gas we have an abundance of in europe to help the situation in europe and ukraine and putin. i don't think the president does. we have a plan which is use the resources, the good lord has blessed us with, use it in a way to help our economy and help the allies and help the world situation. >> i agree with you. i'm in your camp 100 -- 1,000%. it certainly seems as though that we are being held hostage by some of the extremes with regard to climate change and global warming. listen, we need to prioritize better. >> no kidding. >> no economy moves without energy. if the economy doesn't move, there's no money for things like taking care of people, entitlements, and all that. >> well said. >> anything coming up that will make a difference?

>> readily available energy at affordable cost is a key to growing economy. one of those fundamentals to a growing economy. couldn't have said it better. i don't think so because it's tough to deal with this administration and the hard left who has such a handle and control on what policies they go for. the keystone pipeline, we've talked about it for years but it's the best example. even the environmental study came back and said do this and yet the president won't approve it. >> i'll make you a prediction, congressman, before the next election coming up for the midterms, i think, somehow mysteriously that's going to get moved forward. okay. reform. when i think reform i go to one area, irs. yesterday was another hearing in the new irs commissioner, i believe his name is john. >> yes. >> basically said, hey, you guys may have to wait years. you may have to wait years to get some of these subpoenaed e-mails, on one hand. on the other hand, 1.1 million documents they say they've provided. is there something there or isn't there? >> we don't know until we get the documents.

now, here's the thing, rick. you know this as well as i do. the american people know this. they've been combing through lois lerner's e-mails for over a year. we subpoenaed them six months ago. we send a second subpoena last month and still he says it may take two or three years. if it takes that long we should hold not only lois lerner in contempt but him as well. >> if people are taking the fifth, what about contempt charges? is this going to move along before people have a chance to vote? i think it's important. i think these issues with the irs have silenced voices. >> i agree. we will -- i believe we will hold her in contempt and may hold john in contempt. i called just l.a. week in the "wall street journal," i called for a special prosecutor because this investigation that justice department is a sham. >> 30 seconds left. i want the last one especially. with health care, of course, the deadline march 31st getting pushed forward. that's not as big an issue to me. here's the big issue to me.

nobody talks about the back end. okay. reconciling the accounting, real accounting, with insurance companies needs a back end. it's not done. is anybody on the hill worried about this as i am? >> we're worried about everything with obamacare because, as you know, this thing has been a disaster. that's why i didn't vote for it. that's why it should be replaced with something that makes sense and helps americans address health care concerns. this thing is a mess. no one has talked about that directly but that's just part of the overall problem. >> something about that back end though, sir, because if you can't reconcile the money everything else is just a rumor. >> i hear ya. >> thank you for taking the time today, congressman. >> "squawk on the street" gang, back to you. >> thank you. >> rick santelli, thanks as always. sweet time. fast food chain taco bell debuting the waffle taco. simon is not a fan. how should their competition fight back? what happened to good old

fashion pancakes and waffles?

tweet time. fast foods chain taco bell is debuting the waffle taco.

we're asking you, taco bell's waffle taco has arrived, how should their competition fight back? noah tweet, should get into the breakfast biz with a china stix. crust breakfast pizza. i don't understand that. jason tweets, free pepto with a waffle taco receipt. and bob tweets, perigi pizza. sorry, hot pockets already has it. i messed that up completely. >> i was thinking more of a cinnamon ginger pancake. that would be my response. >> don't mention ronald mcdonald. >> serious business. breakfast wars are heating up. taco bell is giving mcdonald's a run for their money. carl, how are youing looking for the 11:00 hour? >> we're not going to let you do tweets again. >> i'm so bad. i will think about that all weekend. i'll be like, you messed up the

tweet. >> i know you will, too. >> sorry. >> thank you for clearing that up there. >> see you guys a little bit later. 11:00 a.m. on the east coast, 8:00 a.m. out west. here's what we're watching for you. meet the new boss. microsoft's satya nadella is making his first public appearance today and he's got a big announcement. it's not good to be the king, not this week. shares of the candy crush maker falling again during trading this morning. former ceo of take two and atari tells us where the company goes from here. watershed moment for college sports. football players at northwestern are, in fact, employees and are able to unionize. the union rep manage that case breaks it down in a minute. debate of the moment. and taco bell is where the waffles are. waffle tacos that is. breakfast lunch is attack cobell stores across the country. we'll do our own taste test later on this morning. joining us for the squawk feed. i almost said buzzfeed. jon steinberg, ceo contributor and jon fortt at the post.

first up, satya nadella taking the stage in this event in san francisco. first public appearance as microsoft ceo. now nadella does have a big announcement when he's expected to unveil microsoft office for the apple ipad. we talked about this in the last hour with jon. >> no one is getting with this story other than jon fortt, it just can't b be ipad microsoft word. that alone is t not much of a story. there has to be collaboration features, element of pricing. perhaps it's a platform where they say you can move documents to box or evernote or something like that. that alone can't be the story. >> the analyst on last hour said just give 10 million subscribers to pay 100 bucks a pop and voila, a billion dollars in revenue. if it were that easy, why didn't they do that a long time ago? >> it's not that easy. 100 bucks a pop is a lot for your ipad user. they spent a lot of money on candy crush but are not going to

pay that for what they can get for free from other app providers. what microsoft has to show is an enticement to get the people trying on software mobile again and to get a little bit more for upsale over time. >> it's a signal of deemphasis on windows and more of an emphasis on gaming, xbox, which features the microsoft name on the box? >> it's an emphasis of what works which is fantastic. they still have the world's best office productivity suite. everybody still uses it. other products and other areas are being de-emphasized. lean in to office which everybody wants. apple is weak in web-based software. i photo is great but doesn't have a great web-based compone t component. they could do something spectacular here. >> i don't think the emphasis is on xbox. xbox live which is probably the most important strategic component runs on azure, soon to be renamed microsoft assure. they're a cloud. there's a big pricing war going on in cloud right now as i'm

sure we'll talk about. but this is a way for microsoft to acertaseraassert itself as t platform of choice for the cloud. >> do you see a subtle admission of defeat on the surface? >> i don't think it's -- surface has been doing better in recent quarters. i think it's an acknowledgement in some cases bundling makes sense, software in a phone perhaps. and in other cases debundling makes sense, productivity software. apple did bring office to the m ark c. this is almost the exact same thing happening again here. >> i tell you one thing for all the news at microsoft, you don't see analysts coming out and bumping up their price targets as a result of any of this. >> microsoft has such a huge revenue and profit base from legacy businesses. from windows, from office that runs on your pc. it's really unclear when the momentum that assure has and some of the services like office 365, when it breaks through to the point to start to effect the top line and bottom line in a

significant way if they can kind of tweak the right things in mobile. if they can get the right things going with sharepoint and link and other things on the enterprise side. moving on. a week after pulling its struggling music app twitter launched a new music strategy. twitter announced a partnership with billboard which will track music conversations on twitter with some realtime charts, working music strategy might be able to help the stock which despite having a miserable march so far down some 20% this morning has turned around today now 4%. maybe because of this. >> you know, i don't think it's because of it necessarily but in the past week look what they've announced. last night they announced photo tagging and the fact you can upload four photos. a new music experience. testing of removing at replays. new profile changes. the one change they need to make is it needs to be a consumption change, not a usage change. there are just not that many people that are going to want to tweet and do all this stuff.

they need to buy or build something like flip board to allow normal people to consume content from this platform. >> i agree part of the reason why twitter is up a lot of those high beta stocks and social media stocks we saw take a beating over the last couple of days, this feels to me like a bit of a reality check for twitter. they tried to dive deep into music. that app didn't really work well for them. people didn't really adopt it. now they're going back into the data saying, people tweet a lot about music. maybe we can get good data on that and turn that around and sell it down the line. modernization again and engagement. they need to work on the core product and make it easier to use. >> observers are saying why does twitter need to be in music in the first place. >> i'm so tired of the music thing. everybody has to have a music service. everybody has to do streaming music. it's a little bit much at this point. to jon's point, this is a very muted take on music. the original music approach was a app where you could stream and play music. this sounds more of a data analysis, a conversational type analysis. so i think this is have peared

back approach. i agree. >> broader conversation over the next few weeks into earnings about how they get the consumption going and the content delivering down. >> they can't put up million new users again. if they do that again it's really going to be bad. >> meantime, as jon just mentioned, the cloud getting cheaper. samam amazon saying it will drop prices beginning april 1, a day after google outlined its own price cut. the 42nd price cut for amazon's cloud service into the introduction eight years ago and we're notth not talking 5%, 10% here. well into the double dinlg jgit >> it's mind boggling how cheap it is to get your start-up or your company service up and running on somebody else's cloud here. this isn't pricing for everyday people. it's not even pricing for someone who wants a service from box which has filed for an ipo. i think what it shows is, if you're in the business of just trying to sell storage, simply

storage, the margin is gone in that business. now you've got to have some kind of application on top of that. you've got to have reliability. you've t got to offer something that gives the customer a sense that you're providing more value. that's the only way to get an margin. >> old-fashioned price war on a commodity. every single week my cfo comes into the office, jon, i've t got better pricing terms. i got better storage, i got -- we use a lot of vendors for these different things. he's always trying to take a victory lap. mark, how much cheaper is it now, right? if you look. rbc did a good analysis. google has cut 37%. do an analysis across storage and transport. ibm, 21%. small cuts from microsoft and hp. tech crunch says s-3 storage put 63 to 65%. ac-2 cut 40%. >> the three to watch here really, amazon, microsoft, and google. google's actually the cheapest now. they're the challenger.

came into this later. amazon is the leader so they have a lot of the customers. microsoft is the legacy owner of this group, the enterprise platform. and their pricing is pretty good, too. >> the question at this point a lot of the companies have been able to have an edge on price. that's how they built their customer base to a certain extent. when you have the giants moving in what does that do to competition? sgli >> gone are the days where sales force was the one talking about the cloud. the giants were slow to respond. they had the first mover advantage. now the big movers are moving. we're going to see people -- >> we have this first big start-up on google. snap chat runs on top of goolg's structure. we're on amazon. we've never had google come to us saying we will do the whole migration, it's totally painless. there are switching costs but they're becoming less and less everyday with the transport play layers and storage layers. >> how does it relate to a drop box? >> i think the way it relates there, not directly in these

particular players but take emc, the big enterprise storage company. they've got a little ancillary that does same thing that box does. i checked out their app a couple days ago. it's very slick. and they've already got this marketing and sales force that they can leverage to sell this. box is spending twice as much as they're taking in on marketing and sales when emc really continues to gear that up, it's going to be trouble for them. >> you guys are like secret shoppers of the tech world. >> we use drop box at buzzfeed and we looked at using box as well. there are a few things not quite right for our needs. we move huge ams of images. so there is room for innovation in these spaces and differentiation. we are in the point of cycle where there's not a lot of differentiation either at the low level or at the higher level, a dropbox. >> give your cfo a raise. tell him hi. >> they're just free. i should say to him stop telling me you did great work on that. easy get. >> thank you. coming up next, another rough day for candy crush maker

king down another 1 1/2% after slipping big in its debut. we will talk to an expert in this space, the former ceo of take-two and atari. gamestop earning and a whole lot more. but first, rick santelli, what are you watching today? >> well, we're watching three distinct areas. the first area we're going to pay close attention to is what indeed is going to go on with the yield curve? what have we learned from the five-year note option yesterday? second area, talk about the meeting next week by the ecb and what it will do for the euro. last but t not least, i yen to figure out what direction that currency is going, all after the commercial breaks. any became big business overnight? ♪ like, really big... then expanded? ♪ or their new product tanked? ♪ or not? what if they embrace

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welcome back to "squawk on the street." opposite direction after reporting earnings. ga gamestop falling the fiscal fourth quarter profit declined even though same-store sales rose. the company did say it planned to close 2% of the video game stores. it's a different story though for winnebago. rose 53% as sales and deliveries jumped. that top street forecast in spite of the severe weather that disrupted production. this stock is off the premarket highs but currently doing still very well up about .7%. we want to look at shares of king. the stock b was down over 15% today making it the worst debut for ipo so far this year.

right now it's down more than 2 1/2% at 1849 after opening just above $20 a share yesterday. is king's ipo though a cautionary tale for other tech companies planning to go public this year? let's bring in jeff lapin, former ceo of take-two and atari and starwood hotels. the list goes on and on. you're a vc investor in l.a. you're ypo executive member. quite a long cv but, jeff, at the heart of it you're going venture capital. when you see companies like king hotly anticipated have a market performance like yesterday, what does that make you think? >> well, i do angel investing so i invest in early stages in these companies. i see lots of different tech companies every week. but king is an interesting story. you know, i don't really -- as an investor, as a stock investor i don't pay at tension to the first couple days because there's a lot of potential buying and selling by the investment bankers and selling in the after market.

i wait until things calm down a little bit. remember what facebook did, it went down substantially in the first period and now it's way up. so i don't look at it. but if you look at king's numbers just by itself, i mean, they had 1.8 billion or 9 last year and $800 in ebitda. fantastic numbers. why is it not behaving right? probably because the world thinks it has one game, it's a one-trick pony. >> it can't seem to shrug off that reputation. interestingly you were the ceo of take-two and "grand theft auto" and other successful brands. how do you run a company when the perception is so different from reality? >> i'll tell you that every gaming company started off on the backs of one or two hits. so every company i've been with started that way. and in all of the companies started that way. so the question is, can you take

the proceeds from your hit and leverage that into something else? one of the problems today as compared when i was making games, when i was making games you pit it in a box, you couldn't change it, it was done. you distributed it through brick and mortar stores throughout the world. and developers needed publishers in those days because it was so expensive to distribute a game. so developers would line up at our doors to come and present us ideas. so we had a wide range of content being presented to us all the time, both from external sources and our own people. today, developers don't really need publishers to distribute games. a couple people in a garage can make a game, put it on apple, put it on android and they don't need the big publisher. that flow of content in today's gaming companies is less than it was in my day, when i was selling boxes. >> they don't need the

distributor but they also don't need the places like gamestop. the company is closing a lot bode of stores as it's seeing traffic go down. when you look at a a company like gamestop in the news a big way today, people have said this is going to be happening for a long time. how much longer will we see the existence of some of these brick and mortar game stores? >> i don't disagree. look, gamestop management has done an amazing job over the last ten years. eight, ten years ago the internet craze started and people started shifts from brick and mortar games where you had to go to a store and buy a game to put in your console to internet games. when iphone came in the shift accelerated. gamestop reacted by selling used games which they did at a higher margin to new games to the she grin of the publishers because the publishers didn't make money from the yuused games but they hung on for a long time. it was just a t matter of time before gamestop started losing share. i can see my own family's

hobbits. my kids don't ask me to buy games anymore because everything they play is on the internet. i see further declines in brick and mortar. in addition in gamestop's case they owned the used game market forever. over time, if you go into a gamestop now you will see most of the shelf space is devoted to the higher margin used games. walmart and i think i saw best buy getting into the used game business. they're getting hit with several whammies at the same time. >> going back to king for just a moment. the issue to me seems to me they want to be valued like they've already got the next hits off of candy crush when we're still not sure whether they can do it. i mean, isn't that right? if they were valued at around $3 billion market cap, it would be a different story than wanting 6 or $7 billion. what in this might convince you that they can actually move on from here and become a mega gaming company. >> like i said, it's really tough because i don't think they have the access to content as we did in the old days because

publishers -- developers don't need them. so they have to do it internally or they have to making a question situations at very high multiples. you know, for example, you look at what zynga did back two years ago. they came out with foarmville ad all the villes, they did a great amazing job on and got a whole new segment of gamers playing games online but they couldn't diversify internally. so they went out and made acquisitions. the biggest of which is img pop and they spent $200 million on that. 20% of their ipo proceeds. they closed it 18 months later. so it's a tough environment to predict the future. you've got -- take rovia which i don't think is public. they made angry birds. they have one hit. again, that hit can last for a long time but unless you diversify the portfolio and come up with more, it's a tough

situation because everything ends, especially in the mobile casual sector. >> i know it's hard to predict the future. we appreciate you taking a stab at it today. jeff lapin from tech coast angels fshlg breaking news, and we turn to what she'll back at hq. >> it appears the government of turkey is trying to prevent citizens from accessing youtube. reuters reports on twitter about people not being able to access youtube, reuters says the tu turkish telecom authority took administrative action against youtube. it was a week ago they banned twitter in turkey as well. this is the head of controversial elections on sunday. the prime minister there under fire increasingly seen as autocratic and there have been lots of audio and video releases out, some that suggest that he and his family members were involved in bribery and corruption. but once again, it appears that the turkish government is trying to prevent citizens from accessing youtube. back to you guys. >> michelle, thank you very much

for that. it has been a rough day for shares of citi. currently down more than 5% after failing the fed's annual stress test. is now the time to start worrying about the bank? landmark ruling in college sports. the nlrb saying that football players at northwestern university are employees and can unionize. the union rep in charge of the case will tell us what it means for college sports a little brit later on this hour. ♪ [ male announcer ] when fixed income experts... ♪ ...work with equity experts... ♪ ...who work with regional experts... ♪ ...who work with portfolio management experts, that's when expertise happens. mfs. because there is no expertise without collaboration.

welcome back to "squawk on the street" and thursday ears edition of the santelli exchange. i can't talk enough about yield curve because the yield curve is the game right now and we all know it's gotten pretty flat. you see that chart on your screen of the 5s, 10s, definitely flat.

if here's our yield curve we know on fed day it did something like this. you know, it flattened. it wasn't driven by the long end. it was driven by short maturities like three year and five year. but yesterday's auction did something interesting. it pushed down the curve again. and you did see a little steepening because the five-year option went well because rates moved higher. many traders on the floor believed the yield curve may steep an bit but that ultimately it's going to scale down. so yields will go down on most maturities but the curve still may remain flat. the jury is out. we want to watch how the seven-year goes today. one week from today we're going to have an ecb meeting. there has been so much chirping going on. are they going to go quantitative easing u.s. style in are they going to ease more? there's some anxiety regarding the issues. but my point is much more simple. as you look at a year to date chart of the euro versus the

dollar, if one week from today they don't do anything new other than guidance or lip service, boy, you could see this euro pop to 140, 141 or higher. but of course, if there is a quarter point or they definitely focus on some u.s. style type stimulus you could be at 135. so it could be a digital day for the euro currency. last but not least, is it the yen of the line for japanese stimulus? listen, there's, of course, the tax hike hitting april 1st. their banking stocks have been flat. the yen has had some bounces over the last couple of weeks. although as you can see on a chart, mostly sideways. here's what's important. if it is deemed by the powers that be that the stimulus isn't accomplishing or the sustainable to their goals, and they ease off on it even a little bit, that yen could rally rather substantially and have a big impact on the japanese carry trade, the yen carry trade.

we want to watch 101 versus 103 as dinlg at the breakout on the yen/dollar versus yen. kayla, back to you. >> steve, good to see you, too. thanks, rick, for that. yen is such an important indicator. it's good to get a look at that. also want to look at citigroup. it's not a good day for citi. it's down 5 and some change percent slipping to the downside after the bank failed the federal reserve's annual stress test. the management practices and capital cushions are not robust enough to withstand a severe economic downturn. earlier this morning on "squawk on the street," our own jim cramer had advice for citi. here's what he said. >> the smart thing for them to do is to issue a huge number of shares right now at $45. get this past them. that's the smart thing. instead of battle, instead of complaining, do it, get it over with, move on. >> we should note those are jim cramer's opinions. for the record when you look at the numbers that citigroup

posted they cleared the fed's hurdles with flying colors. the fed asked for 5%, citigroup posted 6 1/2% tier one capital. this is an issue about citi's qualitative or their planning practices. their ability to project revenue losses in the case of a severe crisis. now, they sought $6.5 billion in buybacks and sought a nickel of a dividend but that can't happen. back at the status quo and ceo mike said he was deeply disappointed. wall street has weighed in. kbw downgraded it to market perform. lowered the price target to $52 saying we believe citi's discounted valuation relative to peers is warranted based on the lack of capital return. bernstein downgraded, price tar ge 52, saying it puts a 12-month delay on any plans for increased capital distributions. also raising questions about the company's relationship with its regulators. that is the big question for a company this big right now. finally, evercore, maintain the price target at $58 but says the

issues previous lie indicated by regulators hadn't been improved upon sufficiently by management, that's disappointing. but the capital deployment request is greater than expected. they had high hope, carl, even if they couldn't carry it. >> cramer's point about issuing equity, would that help if they're putting tier one above the mark, right? >> it's unclear at this point because when you look at the numbers, they did clear the mark and way better than a lot of other banks did. we talking about comparisons to 2012 and 2012 their capital levels were far below that. that didn't happen this year. it's interesting about the relationship that they're keeping up with their regulators. whether they're actually delivering on some of the lessons that they're trying to be taught. >> you talked this morning on "squawk" about what this similar thing did to vick. this short-term into his tenure. >> he just took the reins and the planning has been going on in ernest for several months. i don't think citi expected this at all.

i have to believe the board didn't expect it. to think he could be on the chopping block, we'll see. citigroup's shareholder meeting in st. louis, april 22nd, the year that citi failed us this last time, the pay was struck down. we'll see what happens. a lot could happen for citigroup. >> good stuff. all right. meanwhile, coming up, between box and candy crush it seems like ipos coming down to pipeline are geared toward consumer facing tech. have we reached a peak? jon fortt joining us with more. jon, we were just talking about consumer facing tech, the challenges there. what's your take on this? >> calling a top, kayla. calling a top in end user facing tech. i'm talking things that, you know, the technology that people actually look at and feel having in their hands. includes things workers in the office might use. box that really face that way whatsapp. the valuations, everybody knows they're crazy but the question is will they go higher? i look at this king ipo and its performance.

look at facebook buying oculus as opposed to other things they could have bought. oculus isn't shipping a product yet and it's about the fundamental technology there more than it is about the end product that shipping today. i think the bloom is starting to come off of that rose. it's been going up for a while. going t bought ways for a billion dollars. facebook, instagram for a billion dollars. looks like a bargain. then we have whatsapp at $19 billion. we have nest at $3.2 billion. remember snap chat, all that $3 billion talk about snapchat, i would be shocked if snapchat could get that same $3 billion today, much less 4 or 5. just given the way that things are shifting. >> plenty of cash on the books of these companies. >> there's a lot of cash. >> or equity. >> there's a lot of cash out there but more of the investment announcements that i hear coming from these bigger companies. a lot of interest is in the more fundamental technologies. i think people feel like the table is set as far as who has

power and the potential to grow in this economy and they're starting to prepare for the next wave. as zuckerberg said, mobile is kind of established. now we're looking for the next thing after mobile. that's fundamental technology. >> mobile just happens, doesn't it? we were just talking about facebook being late to mobile. >> yeah. but the growth in smartphones has peaked out. tablets' growth has started flattening out sooner than people had thought. i think, uf you got to realize at this point apple won tablets. apple and samsung and google eco system wise won smartphones. you've got to look at the next thing now. >> look at the ipo pipeline over the next four quarters, guilt, evernote, ubr farther out. are these companies doomed? there's still peak and interest no those companies. year just saying they will be worth less? >> i'm not predicting a crash. we'll see what develops. i think there's a peak. i think if you look at king, i

think they tried to get ahead of things a little bit. the optimism on what candy crush might continue to do but that last quarter just kind of hit them. you know. but before they came out actually came out that last quarter hit them. i think you're starting to see that in a lot of cases. look at box' numbers. they tried to cut their marketing spend in that last quarter before the s-1 came out. you've got to wonder if they continue to power revenues that way. i think people will pull back and look at the fundamental technologies that will drive the next wave of mobile and cloud and invest in those instead of the shiny object. >> already calling it forth east top, march 27th, 11:30 eastern time. we'll save this tape. >> we'll see if i'm right. should college football players be allowed to unionize? they say the answer is yes and that ruling could change college sports forever. we'll talk t to the union rep in charge of that case in just a moment. moment.

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historic day yesterday as national labor relations day ruled that football players at northwestern university are employees and can unionize. it's a huge first step for college athletes. joining us on the phone is tim waters, political director of the uaw, they worked on rights for college athletes for more than a decade. good morning to you. >> good morning. let me make a quick correction. usw, united steelworkers. >> thanks for that correction.

bad read on prompter there on my part. looks like you're up against a pretty stiff appeal here. what's your confidence it turns into a long lasting ruling? >> i am extremely confident this is going the withstand the challenges from northwestern. if you take a close look at the -- we sat through a hear for four or five days, extensive record was developed for the regional director to make his decision, and the decision was pretty concrete. frankly, it's a pretty simple case. it's not as complicated as everyone is making it out to be. the main question being, are college football players at northwestern university employees the university, do they work, do they get paid? yes. do they get disciplined? yes. are they told when to show up for work? yes. how long to work? yes. all the things that go right down the line of determining legally whether someone is an employee and whether there's an employee/employer relationship. we feel very confident that this

ruling, knowing it's going to be appealed and go to d.c., we feel very, very confident this is going to withstand that appeal. >> tim, it applies to private universities, right? >> yes, sir. >> what's your sense as to whether or not this would spread to state colleges as well? >> well, state -- you know, state employees, which is what we would suggest that the athletes are at state schools, are covered by state labor laws. so it actually goes state by state by state. the nlrb covering private employers. in this case northwestern, there are 17 schools in the same spot as northwestern on the private side. the big-time football programs. we expect -- we expect this to move on into the states, frankly. i mean, there's been -- we've had a lot of contact obviously from ply players who are interested in learning more. and we're taking a close look. and i just want to say, you know, for a lot of people who are speculating, the

steelworkers union took a very long and dleliberate look at ths before we got involved to help these guys on this particular effort. we've been involved with them helping college athletes for about 12 or 13 years now. we took a long look at this. >> really? >> we're very confident in this argument. >> what it was con argument to getting involved? is there any sense that a legal victory maybe was uncertain, that it wasn't -- out of your wheelhouse, anything like that? >> we never felt like that. we just wanted to make sure that the legal argument and the legal definition of what an employee is was -- would work in this particular case. and every single question we asked every time we came around, the answer was yes, they're employees, yes, legally they're employees, morally they're employees, and common sensewise they're employees. >> the story that crosses the lines between sports and business.

tim, we hope you will come back. >> appreciate you having me on. it's a multibillion dollar operation. change the coming. >> tim waters, political director for the steelworkers joining us on that northwestern nlrb decision. dow has gone negative. sheila has a market flash for us. >> check out shares of alcoa up nearly 6% to a 2 1/2 year high. this is afternoon a favorable ruling from united kingdom high court. the ruling halted the london metal exchanges they plan to cut industrial metal in warehouses. it will help support aluminum prices and alcoa's bottom line. stock is up 19% year to date. carl? >> sheila, thank you. when we come back, this is the taco bell waffle taco in all its glory. it's all available in stores. who better to do a taste test than our own jane wells. >> well, it passes the smell test. when the doors are open at 7:00

a.m. atta taco bell number 71, man ordered 26 of these. this has bacon. should mcdonald's be scared? i take prilosec otc each morning for my frequent heartburn.

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hour, citi first failing the stress test, now shares are sinking. wait until you hear what analyst mike mayo says has to happen w now. a former trader is speaking out for the first time about why he left the firm last year. what he's doing now. then, top tech investor dan nile says now is the time to play it safe. he's doing to tell you why and how. that all straight ahead. >> thanks. it is the moment you've all been waiting for. breakfast now officially available at taco bell and who better to do a taste test than our own jane wells live at a taco bell in burbank. good morning, jane. >> good morning, carl. okay. so you're going to force me to this. hold on a minute before i totally embarrass myself. $1.99, $3.59. can this guy start to eat this guy's lunch at breakfast? mcdonald's own 30% market share. the taco bell ceo says, quote, will go down in history as it done the largest menu roll out over with an ad campaign less

about product and more about declaring war. >> to show you just how much people are loving taco bell's all new breakfast we asked some very special people. >> my name is ronald mcdonald. >> i amran nald mcdonald. >> my name is ronald mcdonald. >> what do you think? >> it's really good. >> i was surprised how good it is. >> i love the new am crunch wrap. >> i'm ronald mcdonald. >> i amran nald mcdonald and i love taco bell's new breakfast. >> well, breakfast is the fastest growing category in fast food. taco bell hopes to break through the clutter with the waffle taco and a.m. crunch wrap because here in california it's largest market, people drive with one hand and eat breakfast with the other. while the menu addition, quote, will not require any new equipment for operators it does come with extra costs. expanded hours, 13 new menu items, by the way it means changing the menu at 11:00 a.m.,

nine new ingredients and three new employees per store. more at this store. yum brand ceo told rbc capital markets, quote, if you look at mcdonald's in the united states they have an average of $2.5 million in sales per store with 25% of the business being at breakfast. get this. taco bell isn't just about getting you in the store for all parts of the food day, its president tells qsr taco bell increasingly aims to position itself as a lifestyle brand. now, the company is a ways away from earlier prediction of $14 billion in sales for this year. only did about 8 last year. this will help. since mcdonald's sales have been sluggish, guys, can yum hamburglar get more market share. i'm going eat so you can ask me some questions. >> i'm going to ask you a question. >> we'll wait until you finish eating it. is it good?

>> it's good. it tastes like a waffle with some scrambled eggs. >> that's probably -- >> and bacon on it. you can have it with either -- you can have it with syrup or salsa which, you know, you've got to have your salsa on your eggs in california. it's a little salty. it's a little salty. you know, i'm having another bite. >> a lot of people go to taco bell when it's basically time for breakfast anyway. >> got a question from an undergraduate demographic which asks, does 2:00 a.m. count for breakfast? >> it will be at some stores in is a 24-hour drive-thru. why don't you start serving it earlier at 7:00 a.m. if there's a demand for it? >> at 6:00 they start here. excuse me, i'm going to burp. >> we'll let you do that off-camera, jane. jane wells, what a story. this does bring us to this

morning's squawk on the tweet. taco bell's waffle taco has arrived as you just saw. how should the competition fight back. we will get to your answers later this hour. the sweet 16 tips off tonight around the country. tickets are not cheap. the average price for tickets for a sweet 16 game at madison square garden is higher than the price of a ticket to the final four. ceo of tick iq will tell us why when "squawk on the street" comes right back. announcer: where can an investor

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♪ welcome back to "squawk on the street." we are watching bitcoin. prices tumbling on reports that's china central bank ordered domestic banks to stop doing business with websites that trade in the digital currency. bitcoin down more than 9% at 523. carl? >> sheila, thank you. sweet 16 tips off tonight and one stadium getting a massive boost from the games is madison square garden. average price for a ticket at msg is almost $1500. a new record and more expensive than a tick to the final four. can msg monetize by franchising the sweet 16? let's bring in jesse lawrence. he joins us here at post 9. great to have you back. first off, let talk about the prices here. what are they telling you at msg about this series?

>> sure. they're telling us that college basketball fans in new york are starved for a championship level basketball. big east was here this year but not in the form that it has been in years past. and i think people really miss out and uconn made it to the sweet 16 which is a big regional power house and people are paying up. >> relative to other big sporting events, where is this running? >> this is right there. this is about half the price of the super bowl, unbelievably. more expensive than the bcs national championship game and more expensive than seven out of ten nba and nhl final games. >> your recommendation is essentially take a page from what they're already doing with billy joel, right? >> i think it would be a great idea. msg is running the risk of losing the mantel of the mecca of basketball to barclays. acc tournament in 2017 is going to brooklyn. you've got syracuse, you've got north carolina, duke. that's a big tournament. msg doesn't have that anymore. i think the sweet 16 is an opportunity to sort of keep their anchor planted until

college basketball world. >> what would be the hurdles to them doing it? we just interviewed a union worker talking about the debate over the labor laws and whether athletes at northwestern should be able to unionize. there are some questions over how profitable you can make college sports experiences. >> absolutely. well, for the garden they're somewhat separated from the leagues themselves. i think that decision was fascinating and has huge implications for college sports. for the garden, it's about filling seats and buzz around events and they've sorely lost that with the big east moving away, especially for college basketball and for pro basketball isn't exactly in the best state either at the garden. >> in new york in general? >> weia. >> although could change, right? jackson coming to the knicks. kidd doing some magic in brooklyn. >> absolutely. it's an opportunity -- could be on the upswing. phil turns the knicks around. get a franchise with the sweet 16 for basketball. and the rangers are playing well. so, you know, we've at least got one team in the hunt. >> billy joel plays once a monday at madison square garden.

they're sold out until may, or they were, and i haven't been able to get tickets. this is an annual even. >> right. >> how long term a deal would they need to make to make it worth their while? >> if you look at the regional tournaments booked. acc tournament at barclays is two years. there's a bidding process for the ncaa tournament every year. there may have to be some sort of exceptions made for msg to be an annual but i think it would benefit the sport, it would benefit the garden and i think the players would love to -- it's the biggest stage in college basketball and they would love to be there. >> one thing i tweeted about yesterday was the summer concert starting to come online. what's pricing like versus last summer for the headliners and all the stix, foreigner. >> the consistent thread is one direction. most expensive last year, most expensive last year. i don't know if you follow one direction. >> no, my girls are still too young. >> they played arenas last summer.

and this summer they're playing stadiums. so they've moved up to, you know, double, trip the capacity but it's still the most expensive ticket. some other big ones out there, miley cyrus is still touring. somewhat controversial. lady gaga is starting a tour. cher is on her latest farewell tour. so there's a bunch of big concerts that are out there this summer. >> all looking to dethrone one direction. hard to believe. >> that's right. good luck. >> keep news touch. it's interesting thesis and obviously a huge story for fans in business or sports. jesse lawrence joining us here. tweet time, forget breakfast burritos and fast chains. they're debuting the latest breakfast offering. oh, yes, the waffle taco. we want to know, it's arrived. how should its competition fight back? tweet us @squawkstreet. we'll read the best answers coming up next. coming up next. life's an adventure when you're with her.

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tweet time. fast food chain taco bell debuting the latest breakfast offering called the waffle taco. jane wells just tried it on our air and we had to cut her mike as she was finishing up. we asked you, how should their

competition fight back as the wars for breakfast get more fierce. hilda writes, bring out the woven bacon shelf and then watch america's demise. david writes, the competition would rather not taco about it. matt writes, pancake twhoppers, pancake-whopper. >> it's getting dangerous. i think jane liked it although she said it was salty. >> she's probably going to be eating it all day. we don't know what she does off camera. >> don't doubt david novak and the marketing power of yum. it will be interesting to watch them and starbucks and mcdonald's in the next coming months. we want to get a check on the markets because we turned back on the downside for no apparent reason. the dow is down by just about 25. but really the nasdaq has taken the sharpest move to the downside. down about 27 points. right now that's just about half of 1%.

art cashin just came by and said the support level for the nasdaq, 4131 is the area to watch today. movers right now, accenture, gamestop, citi to the downside. certainly that nz news is moving if markets. >> cashin's point, that would be a double bottom intraday. scott wapner, we will see. >> the activity of the momentum names, carl, is what's driving the action. at one point of the day they're down, the overall market is down. they try to come back. it's watching those stocks as a whole that gives you a good idea of where we're going. >> we know you're going to be our guide. at least the next 60 minutes. >> have a great rest of the day. welcome. here's what we're following today. tale of two cities. the street has loved the stock but what now following the fed smack down. super analyst mike mayo is here live with a bombshell. inside scc, a former trader speaks out on the markets and why he decided to leave the embattled firm.