into a conventional reit. >>sive seconds, anneck ster, is it going to be sold? >> i don't know. we don't want to make comments on that. >> thought we would try. make sure you join us now. "squawk on the street" begins right now. ♪ and congratulations to the uconn huskies on their fourth national championship in 16 years. good morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. we're going to watch the market open carefully today. futures are mildly positive but the s&p trying to avoid its first four-day losing streak of the year. the ten-year remains critical too, back above 2.7. the bank of japan saying it's not considering new stimulus and the nikkei did fall on that

news. uk had its best manufacturing numbers in three years but the ukraine tensions remain as well. our road map begins with the markets right now futures edging higher as the nasdaq looks to bounce back from the worst three-day drop in over two years. will i turn around? >> citigroup agreeing to pay over a billion dollars to settle claims dating back to the financial crisis in 2008 but that's not the only tough news for the company's stock. we'll explain in a moment? another rough quarter for samsung, operating profit falling over 4% this year. does the tech giant have some reason to smile? it's coming in a box this week. we'll talk about that in a few minutes. first up, what will it take to end the stock market's losing streak. the nasdaq suffering another big drop closing at a two month low and down more than 6% from their recent highs hit a month ago. the dow and s&p posting their worst three-day losing streaks since late january. jim, yesterday on this show you said you would not be afraid to take a flyer on one or two and there was some breakdown of

momentum on the downside. here's what jim said on camera yesterday. >> i would take a shot at one or two high multiple stocks. right here. >> all right. >> buying. >> i would. >> prepare to be wrong to erm? >> i am prepared to be wrong. i would take a shot. i think there's strength underlying. i know it's early. that's a dangerous thing. i'm saying one. not saying that this is your bottom. that's false. but i think some of these act better than i thought they would. >> if you had chosen wisely you might have done okay on that deal. >> thank you. the ones that we all now are familiar with has been the leaders of the decline did reverse. you know, look, we had kind of a mini rally after the margin clerks were finished. usually they finish between 1:00 and 2:00. started seeing stabilization at 2:00, but 2:30 to 3:30 looked good and profit taking came in as people said i can't take any chances. but the analysts are out of the bunker today. i see a number of reiterations. i've been waiting for.

more importantly, the second thing you started with the ten yi, the ten-year is not in that kind of freefall interest. prices are finally going down and that signifies to some people, maybe we're not as -- in as much trouble. i think people take their cue from bonds whether they should or not because the bond market is so big and got scared yesterday. thought i'm missing something, going to do selling in the industrials not just the high teches. >> took their cue from janet yellen a few weeksing by a and that's where the stocks started getting no mowed and high multiples coming down. i say this every day but i have to tell you the pain felt in hedge fund land and so many of these names, jim, i think are particularly vulnerable when they're owned by hedge funds. talk to tmt guys, telecom, media, technology managers or funds focused on it, you can't imagine the losses that they've taken in march let alone watching their year go away and

being down. sometimes down as much as double digits because these stocks, even though the nasdaq is down a bit, the s&p is flat, man, the pain is plentiful. >> it's funny in this period in 2000, after a lot of people didn't want to compare the run up to nasdaq and we had people saying it's very different, you and i have gone back and forth, but this was in 2000 if you go back to this week and next week, you saw the biggest volatility and what you saw was the beginning of the major divergence. the fact i remember this, i don't know, but there was major divergence starting now which was the s&p held in and the nasdaq kept rolling over. the rollover had to do with the insider selling, the nonstop deals. we have more deals now. when are these deals going to be -- >> this is the busiest week for ipos since 2007. 14 deals will raise almost 5 billion. >> i was so excited this morning between 5:30 and 6:30 the market

looked like it was rolling over the way the nasdaq did and the futures ticked down to 3, 4, and my hope for bulls, that you would open down and people would come in. this is the exact opposite of what you want. i don't want an up opening. you have to shake people out some more when you start hearing what david was saying, some of the hedge funds are turning capital. i find the underperformance so glaring. were these people saying i'm not trying to beat the s&p, i'm trying to make a fortune. usually there's a let's beat the s&p so-called delivering alpha and we were all making fun, the papers making fun of warren buffet not delivering alpha, he's delivering performance. >> i think many of them are trying to deliver alpha. what you talk about when you talk about hedge funds and they own an awful lot of stocks, why many should be aware of the names they're heavy in, you take down the book, sort of the way they would talk about it. you take down your leverage, exposure, running one, eight,

you're running one four. it's not about the money. it's how many times you're levering it, what's your gross. you cut your gross by what, 35, 40%, that takes the stocks down in terms of your ownership. >> everybody has -- i'm looking at imf things comes out, u.s. is stronger. honestly if you own these stocks, high multiple stocks you're betting that there's going to be subpar growth because these companies can exceed growth in revenue and that's not what's happening. you're seeing -- yesterday was because of the ten-year. people sold everything except for -- this is a general mills market yesterday. companies that don't have -- profits. shares. companies are very profitable. ibm, no one, that had a rema remarkable day. kelloggs, general mills, campbell soup, companies in the tech space where there were no gains and in the mean tooimg the withdraws and the redemptions truly were ferocious yesterday

and then they ended as they typically do, in the last hour when the margin clerks are done. having served as a margin clerk for one period of my life i can tell you i really didn't have causion with you. i debated whether i should take the keys to your house or let you have another day in your house of which i tended to get a lot of heat when i let you have another day. i wanted the keys. >> where did you do that? where were you a margin clerk? >> i worked at goldman sachs. >> right. >> oh. oh. okay. that was -- oh. i get it. yeah. look, margin rules are margin rules. >> i'm not saying anything. i wanted to make sure i hadn't missed something in the work history. when you were at goldman. >> you're like when my daughter was a freshman and said dad, i cannot believe it, did you really work at goldman sachs? like i was a war criminal. >> that was not the reference. >> you made me a war criminal. >> i don't think that's what david was saying. yes or no. let's go into the high frequency. >> established work history.

>> i did work at goldman. >> i didn't work at jordan belfort's firm. >> we are going to go over some of the upgrades you mentioned earlier. the fireeyes, netflix, later on today. we'll talk citi will pay over $1.1 billion to 18 institutional investors. that payment will settle claims involving mortgage backed securities sold prior to the 2008 financial crisis. they will take a charge of $100 million related to the settlement. the journal says they're warning investors they may miss a key profitability target after the fed rejected the capital plan last month. hoping to hit 10% return on tangible common equity by 2302015 and the journal telling people that won't happen. >> it's biblical there. >> biblical? >> there's jobs and then jobe. it's got a jobe feel going on there. they don't need capital. i know. what i was trying do was apiece regulators. say, listen, we will do what you want. pay fines, you want us to do --

we will do what you want. throw yourself at the mercy of the regulators, bring them in and say what do you want us to do? i think that when you look at the staffing of some of the other banks, in compliance, i think you basically are saying i got to take down my return on equity because i have to take up my payment of people who are dead weight loss. date dead weight loss compliant people. they don't add to the bottom line. they subtract. >> on this metric return on tangible equity a lot has to do with the denominator being how much equity you got, more than they would have had because they were planning on buying some back, right? >> right. >> unless i'm missing something. unless the numb rater is smaller than people expect i wouldn't think it should have much impact. >> what this is, if you look at -- you see these companies in the food business, that's revert to that, growing at 1 to 2% and their earnings per share is growing at 12 to 13, that's the wonder of buybacks that was supposed to help. >> how long is the market and are investors going to continue

to be happy with that? i come back to media stocks which, you know, i tend to focus on. there it has been so important but investors have been willing to not necessarily accept earnings growth organically as opposed to manufactured through what are significant buybacks. >> i thought this was the year you better show revenue growth. let's watch alcoa today tonight. i know he's going to be on "mad money" and don't expect the blowout numbers, but you need to hear revenues are getting better. you need to hear that europe is better. i mean uk, you mentioned the uk. >> yeah. >> so you need to hear if --s growth in the world is rising, the revenues should rise, not just the earnings. >> 4% of the s&p already report and they're missing the bottom line by about a third of the time. that's above average. obviously a small sample of what's to come. but if that continues that's not going to be good. >> no. it's not been a great run so far. 2014 has been a very rocky period.

when the s&p is down a point, two points and you're losing 8, 9, 10, 11 maybe you have a problem with your portfolio management. no one said, there's a lot of increased volatility and i said on "squawk" having been a former manager increased volatility that means i got it wrong, lost you a lot of money, betting on stocks that went down. volatility is a great way to put it, makes it sound like you're almost like jefferson. >> or simply at the mercy of something bigger than you. >> wow. existential conflict that caused me to be down 9%. i like that. >> what could you do? not much, right? out of your hands. >> it's noah. how is that movie doing? >> i don't know. >> got beat out by "captain america". >> "captain america" on the cover of booek all about marvel saving disney, the thing we've been talking about a week or two. >> i would have thought disney would be up on the marvel. yesterday was a day that should live in infamy for the longs.

>> yeah. >> when we come back we'll talk live with white house senior adviser valerie jarrett, a lot to discuss including the president's equal pay push by takes part today. the past month has been rough for tesla shareholders. not stock the electric car maker from launching something new. we will talk about that. one more look at futures here as the s&p tries to get back in the green for the year. hasn't fallen four straight days since december 13th. back in just a minute.

♪ we showed you the imf outlook at the top of the show. international monetary fund saying global growth is projected to strengthen 3.6% in 2014 led by strength in the u.s. head winds remain as figures remain are 0.1% below the previous forecast in january. we will talk to olivier blanchard coming up in the next hour. samsung estimating operating profits for its january to march quarter fell 4.3%. as smartphone sales growth continues to slow. puts the company on track to post a profit decline for the second consecutive quarter. they're hoping to get a boost from the new galaxy s5 which

rolls out globally on friday. a lot of reviews, embargo was lifted on them overnight. "usa today" a strategic decision to tone things down, all those crazy features they've had in the past, sometimes less is more, and arguably goes further than any rival device in pushing health and fitness. the journal, jeffrey faller, you'll see on the screen in a minute, barely moves the needle. smartphone evolution stalled? >> yeah. this is familiar. i did the same thing you did. immediately turned to the tech page of "usa today" and i said well, should i switch? i know that verizon is offering a compelling switch offer but not for this one, for the 4. and i think that one of the things that's happened is that it's not just tech slowing, it's just that, you know, they're indistinguishable and i think that look, my charitable trust buys apple, just too low. enough is enough. >> what's too low and enough is enough? >> it's a value stock and a lot of the value stocks are trading up. if you look at ibm, they're supposed to have a 2% decline in

revenue and that stock can't stop going up. i mean eventually apple will have the same thing. i know that's -- look, that's not fireeye. i am not telling you it's fireeye. but then again when you're at home, you tend to use your apple not your fireeye. i think that this was -- i was looking for the samsung to blow them away. i didn't see anything in the reviews that made me feel like, jim, your apple get rid of it. it's like old fashioned. i didn't feel that way. >> mossburg did say very good fun but not one compelling to replace last year's galaxy or current iphone. >> that's where i am. look, i'm an upgrader. i always like to upgrade. >> you're an early adopter no doubt. >> i have a nice verizon store, i like to go, and a really good apple store. i love going into apple. they're always cordial and fun. i find it's -- i like to shop for phones to learn and this didn't sound like anything. i know i saw the big -- i love the big screen because i'm, you know, one of those what do you call it, challenged in terms of

like my eyes. >> yes. >> i can't see jack, i'm legally blind so to speak. but i'm fine. i didn't think this was -- samsung is not going to have some big growth off of this. >> it is water tight. dip it in a margarita as the journal did. >> dip them all the time in margaritas and it's been a foolish trade. >> for the highest margarita you include a phone sometimes? >> we dropped -- we -- our avocado margarita, i drop them all the time. it's amazing. the avocado, it's a joy to see what it does to the screen. >> it's funny on apple, talk about it being a value stock. we talked about it last week, samsung viewed that way despite the growth because it does trade at a low multiple to earnings and not to mention it has a large cash position, not as large as apple's almost $160 billion but a significant one that is also going up quickly. >> look, these stocks are -- they got out of favor and now

they're -- people are searching for what's in favor and what's in favor at least momentarily is the so-called derisk you mentioned, let's sell the high risk and go to value. that could revert. one of the reasons i said look, yesterday, you got to buy one of these, that gets to be a tiresome trade. how high can you really take kellogg? i mean kellogg, talk about something that is not like -- you're not going to see "usa today" coming out and say the new corn flakes, they are -- you should switch corn flakes. because these corn flakes are new and improved. you tend not to see them. >> on the subject of phones, how high can you take at&t? that's another one that's been defying the -- what would seem to be the reality. >> which would you -- interest rates are low and people searching for yield. i regard steve -- i think randall is randall like he's my buddy, i met randall a couple. >> you know randall stevens, ceo and chairman of the at&t. 5.2% yield is a significant one to your point. >> exactly. next together former vice

president cheney and randall stevenson didn't recognize cheney because of stevenson. i think cheney thought i was like wow, i just wanted to ask about the dividend. >> you did say some of the safe havens are safer than ever. >> yes. at&t is a good safe stock. >> there are people who worry about that. >> that's why. >> and steve -- >> given the needs of the company. >> he's never going to tell me anything. i'm just a fly spec. >> when we come -- >> you are a fly spec. >> when we come back we'll get cramer's mad dash as we count down to the opening bell. one more look at the premarket on this tuesday. "squawk on the street" is back in a minute. a minute. look at them. making moves that would put an adult in the emergency room. yet all they really want to do is grow up. it's funny, everyone i know wishes they could go back and feel younger. sound familiar?

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♪ all right. a little clash. you and i are not going to clash. >> no. >> we never do. >> we don't clash. listen to me -- >> do a mad dash. >> here's the deal. yesterday there was riveting selling in the high -- these high flyers, but this was a shocker. >> this is incredible. >> mallinckrodt bids for questcor. people talking two plus two equals five. i had mr. trudeau on, the ceo, david, people hate this deal. >> permission to touch telestrator. >> permission granted. >> what the heck is this? that's what, four hours?

>> this was a recognition maybe they made a dumb acquisition. a lot of people -- >> get rid of it. >> a lot of people who went from -- to -- because they felt that what happened is that questcor is under investigation by the department of justice. questcor has historically been a -- one product company. mallinckrodt has the irish domi sill soil, add in one company doing well for the gel. i asked him twice, you're a pristine company, mallinckrodt, i know the tradition before it was spun off by ka individual yon how could you affiliate with a company under investigation by the southern district of new york? he told me not a problem. he told me due diligence. i asked again, i wasn't satisfied. he said look we have looked at this thing basically nine ways to sunday. but david, people do not trust this deal. >> we'll see how it performan performance -- performs today. yesterday our featured deal given the tax inversion statses

you in mallinckrodt. to your point becomes kind of a one product company. >> mr. trudeau said he would have done the deal without the tax status, that's another thing. people were -- what is that? >> come on. >> he would have been bought without the tax status. >> all right. we got a lot more coming up. keep an eye on mallinckrodt, a lot of the high flyers have not been flying high lately. opening bell a few minutes away. [ 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. opening bell in about 90 seconds or so. watching a number of names and watching the s&p try to avoid four straight down days. something it has not done since before christmas. tesla is a story today. rolling out a leasing program. testing a leasing program for small and medium sized businesses. barclays arguing that demand for the model s may have plateaued. >> yeah, this barclays piece is a little -- other than the u.s. model s line, it's not all that

negative. you're not allowed to say, this breaks the whole karma of tesla. i use the word karma because there's an aura that you are really so far away from peak demand that it's just a question of how many years you can generate big numbers. u.s. model estimate may have plateaued, tesla boasted 5100 models in north america. the pace has slowed third quarter at minus 4500 units. the company is going to offer probably a spirited event saying some of these units are going to china, my own view, maybe europe, but obviously this is a piece which just says, we are not buying into this. although it's not a sell. it's a hold. >> yeah. equal weight over at barclays on tesla. early you tweeted and said nice to see some bottom action in stocks yesterday. they need to open up and stay up today. tough feat. >> tough feat. you really wanted to see -- let's use fireeye, work day, look these are all trading as one stock. when i look at all the underwritings this week i say,

don't run right up, please, because there's going to be underwritings that look just like so many of these companies and these big growth companies, growth mutual funds and hedge funds aren't done. they're not done. so be careful. >> all right. the s&p at the top of the screen. a look at the opening bell. down at the big board texas based clayton williams energy and over at the nasdaq defense of international markets and exchanges, a forum, being held today, in new york city. earnings season, of course, is tonight. unofficially. we usually say unofficially, alcoa will post after the bell. you've been a fan but they've had a run up, 50% over the year. >> i have mr. clinefeld on tonight. it's run so much. there's a lot of estimates all over the map. and the company, what you want to do if you own al woe ka, look at the -- alcoa, look at the gas turbines, there's auto, truck build, there's consumer, and you

want to hear all the different segments before you take action. i think what will happen is people say the stock has run too much and sell it. this is a company that is starting to really clean up its act and lower its break even on the possibility of building very good plants that have low costs, closing high plant. do not judge this company on the next 24 hours of its performance. >> when should you judge it? >> well, i mean the time to judge it is when deutsch bank took it to a sell at 8. >> which you did note right here if i remember. >> i was very critical. used the word trashed because i trashed him but i would rather say very criticalp. >> did want to impart a bit of news this morning, nothing we don't already know, time warner did announce proposed $1.4 billion financing for time inc. take a look at shares of twx. getting hit like so many others in the media larger media industry if you will.

but remember, we're going to get the split off of time inc very soon and it will join, of course, news corp which is now a pure play newspaper or print company. and the tribune split also coming down the road. you'll have a lot of opportunities to go back and try and see if you think these guys can get it together digitally on the old print front. but they're going to take on $1.4 billion in debt that is -- is time warner. and -- or i should say time inc, excuse me, with this debt offering of unsecured senior notes and a lon as well. not unexpected they would take that debt, jettison them along with that. >> news corp did not load the -- >> no. news corp -- >> very significant. >> news corp sent it off with a good amount of cash. this is -- you want to pay your special dividend to time warner. the way it works. lands end, this is how these work. but it's not going to be leveraged in any way. >> time warner will buyback

presumably more stock with a great buyback. i want to ask david a question. you follow this industry well. david letterman retires. you see -- you worked for nbc so you can say why is talking up fallon? does it matter, does it matter in the vast scheme of things we read these articles about the ratings, i mean cbs, does cbs actually get hurt here or isn't it just really the packaging of all their longer term dramas and comedies? >> yeah. there's not a great deal of impact. obviously you don't know what's going to replace letterman from that loss conceivably when it comes in 2015. i mean at the margin, but no, it's a much, much larger pie than that. of course producing your own content, distributing it and all sorts of different ways. as you point out the prime time skeds really they dominated for so long. with that being said, flip side, nbc, think what thursday once meant to this network 15 years ago. >> a much different media environment. >> a lot of leverage, though,

still a lot of leverage, i'm not talking about debt, i'm talking about being able to turn it quickly in the network television business there is if you can get hits. >> when i'm talking to people about the market this is what people talk about. they talked about does it matter for cbs? non-market participants. i've been recommending cbs. i've been saying cbs is a great stock. >> it's not -- >> i wanted to point -- >> over the top matters. cbs' ability to function in the new world as it keeps coming at us as people slowly but surely start to disconnect their video feed so to speak and things become more and more offered over the top that matters. especially when you are relying primarily on content to a certain extent advertising and don't obviously control any distribution. >> thank you. i just myself and, you know, i can sit here and talk plug power and they're going to talk about new uses of hydrogen or talk about a stock cbs has been one of the great stocks of this year and people are saying well, does that -- going to be impacted?

>> dallas unable to muster -- trying to find legs. nike getting an upgrade today. >> i like that upgrade. my travel trust owns it. this stock has been straight down. it was a 79, reported a good number, went to 82 in the dwroofr market and the conference call was negative, perceived as negative. i thought it was mostly -- the stock breaks from 82 to 74. can't find its own footing. my travel trust owns it. a lot of levels that i think where you're going to bring out sellers. they'll bring out sellers, stock up 2%. >> internet analyst jordan rohan recommending facebook, netflix, yahoo! and retail me not. upgraded yelp out of sun trust, fireeye out of wedbush. >> vast shelling and machine gunfire completed and these guys come out of their fox holes, can i just say that jordan rohan is a bloodied analyst who's come back. he stayed in the game and saw the dotcom period. i think this is an important

moment in terms of he is capable of making a credible stand on these stocks. >> is he? >> yes, he is. >> they are making a stand looking at the -- obviously facebook up, google, amazon, ebay, yahoo! twitter. twitter down 32% for the year, but up today. amazon down 19% for the year, up today. >> now you can't just get a term without people coming in, the margin clerks saying you have to sell, take advantage of the -- of this increase but jordan does quality work and i think that it's important to remember that some analysts really have lived through it and other analysts, robert peck at sun trust i kind of thought his call to buy twitter going to the mid 50s seemed fact tu was, turns out to be dead right. important conference call tomorrow. these analysts are doing different things from 2000. they're being consider eight, not just saying reit, they're light weighting and jordan has

gravitas twitter does get an upgrade out of janney and they announced this redesign on the "today" show, looks more like facebook than it did before. >> we've been saying you need to have people want to go to twitter not just to tweet. almost like they listened to the show and said we're going to develop a product that doesn't make it so if you have nothing to say you don't want to go. i think it's important. you know what's funny watching the ncaa game last night, and you're really conscious, cbs by the way is carpet bombing you with that, certain point it was less, less can be more less, but i think there's -- like they have shows that come out and hashtags in them and i'm saying this is amazing how twitter did get engrained in society quickly. it's not such a great idea to write them off because the stock went up and down. there is, you know, not facebook, facebook has a very profitable business, but i just point out twitter answered the prayers of people who said i need something, a reason to go there more than just i want to attack cramer for his, you know,

philosophical moronic nature. >> you'll see more landscape, the photos larger, more metrics, the number of photos you've posted, and then the tweet of yours, for instance, that has gotten the most engagement will be larger, type face. >> i put up a piece yesterday that talked about the bonuses of wall street and how high they are and, you know, i was -- i was just attacked mercilessly as if what -- what is -- how is that news that they made so much money? i'm not begrudging anyone for making money. not attacking the 1%. they said your athe 1%. bonuses are big and they could -- it's a concentrated element of wealth of which the founding fathers weren't crazy about. they weren't. >> no, they weren't. >> they weren't so into that. >> aaron bur and -- they had that to do both from elizabeth, new jersey, by the way the county -- >> avoid an air row stockcracy. >> yeah. >> what was it, the thing you

had to study with the primo jenter, intel -- >> maybe it's generational. >> break up the land ap give it to the guy born first. >> i was with you at aaron burr but lost you. >> 20 seconds of my life. >> once offered a teaching job at a major university if you can believe that. >> i can't believe that kind of. >> "the wall street journal" reporting greece is planning on issuing a long-term bond. put that in your pipe and smoke it. >> wow. >> yeah. >> greece. we've come a long way. >> we sure have. i think one of the reasons i felt that there was a misdirection play going on. a kind of a classic seattle seahawks misdirection play yesterday with the bonds. interest rates going down that a lot of people were selling industrials, interest rates going down feel there must be a slow down. i think it's because do you want to pay 6% for greece? i would rather pay 2.7% for u.s. >> you would? how about spain? yeah. >> spain? >> i mean wow. how did spain get there? >> how did that happen so

quickly? >> because -- >> by the way, you point this out. >> master of illusion. >> sovereign debt on the books of banks. >> and finally starting to take some of the losses over there. >> versus citi. >> i was taking how long it would take you to get to -- >> buy sen tendare and sell citi. it has a really good balance sheet and they've done a lot -- lot of jpmorgan people at sen ten deer. >> i'm supposed to be comforted by that? >>. >> let's get to bob pisani and see what's moving on the floor. hey, bob. >> a lot of awkward pause there. we're flat here right now but there are old groups that have -- market leaders doing well this morning. put up the chart here. gold doing well. gold miners. emerging markets keep chugging along, steel stocks doing well, defense stocks moved in positive area territory but they were negative right at the open here.

the big question about the rotation, about the growth versus value here. i have been saying for a while essentially only a two or three dozen stocks in the growth area that have been the big movers we keep focusing on but i am a little concerned by the fact that a lot of companies have -- or a lot of traders seem to be buying a lot of protection in the last week not being reflected necessarily in the vix. the vix is stuck at 15. where are all these people buying these protections? i think what is happening people are finding ways to buy protection other than buying puts in the s&p 500 which is what the vix represents. a lot of other ways to hedge now that other than using the s&p 500 puts and calls and i think that's what's going on. i'm not sure the vix is really ax crately representing the level of pro -- accurately representing the level of protection buying in the last week. shorting of the sectors of the biotech index and shares to buy back. we're a coiled spring again on some of these heavily sold groups right now. growth has been outperforming

value. very active etfs, iwo, for the russell 2,000 and the iwn which is the value. if you look at that, that white line, the growth. there's all your biotech stocks, all of your internet stocks. see growth has been outperforming value all throughout the year and then suddenly in the last few weeks, it plunges. so value is now down 0.7%, growth is down 3.6% on the year. i have a problem with telling people to buy growth versus value because there are weird names in all this stuff. it's a squishy subject growth versus value. look at small cap growth names this month. picking from the russell 2,000 growth index. companies like yelp in there that are tech and you have biotechs like biotime and galena and creigay, this is where this whole game gets squishy. small cap value the other side, a lot of semiconductor names in small cap value like lattice and

triquint. remax. home builders in value stocks. the way these things get sliced and diced, price versus book undervaluing them is not always representative of particular seg tors and -- sectors and true of large cap stocks as well. s&p 500 value stocks you might be surprised what is considered a value stock. energy names which have been great, like anadarkal petroleum up big is a value stock. cisco is a value stock right now. all the old school tech stocks, ibm is a value stock, hewlett-packard is a value stock. you have to be careful when you're slicing and dicing these and trying to figure out what's going on. earnings expectations, earnings tonight, alcoa absurdbly low, like 0.3% for some of these for the s&p 500, it's not going to take much to beat expectations. normally we'll beat by 3%. there you see some of the movers here this morning, guys, and as you can see, modest moves in

some of the news-related names today. back to you. >> bob, thanks a lot. bob pisani on the floor for us. when we come back wild rides that are not on wall street. the ceo of six flags on how the theme park operator plans to do big business as the weather heats up. never a dull moment when "shark tank's" kevin o'leary joins us. "squawk on the street" comes right back. right back. (vo) you are a business pro. maestro of project management. baron of the build-out. you need a permit... to be this awesome. and you...rent from national. because only national lets you choose any car in the aisle... and go. and only national is ranked highest in car rental

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♪ breakfast wars are heating up again. taco bell taking another swing at mcdonald to promote its breakfast menu rolling out an ad that goes after the fast food giant. check it out. ♪ i've been eating egg mcmuffin

since 1984 ♪ ♪ but when i saw taco bell made a waffle taco i figured i would get with the times ♪ ♪ so i got a hair cut and i got some tighter pants got a smartphone took down my lover boy poster ♪ ♪ now i'm eating tacos and i just made $700 on craigslist ♪ ♪ >> move on with the exciting new breakfast menu. >> first words of the "usa today" story mcdonald's starting to look like taco bell's private punching bag and close saying executives say they're just getting started. >> david novak i think is a terrific executive. it's always surprising to people you could have a war with mcdonald's and taco bell and all that matters is kfc in china. i don't mean to say that none of this matters in the u.s., but it is the marginal buyer of yum the stock, wants kfc to reaccelerate

and this is all kind of -- >> what about the marginal seller of mcdonald's? >> mcdonald's has held up well because it's a value stock that has a nice yield. up 2 bucks since it reported what was considered to be a subpar quarter. yum has held up well during this period. i don't expect this to move the needle other than the fact that i thought that commercial was nutty. >> versus the no mas i loved the mas. >> sold the stuff on craigslist. didn't go ebay. interesting. yeah. >> whatever happened to ebay. >> ebay does own a little bit of craigslist. >> what happened to carl? >> carl and ebay? >> he has been quiet. >> the battling -- >> maybe doesn't like the new twitter -- >> send blog post have stopped a bit on ebay. >> moved on to snap chat. >> we will revisit it in the not-too-distant future with carlp. >> he's been doing the selfies, the snap chat. fewer characters than twitter when you send that.

when you send your snap chats to your kids notice how few letters you can -- >> it's banned in my house my friend. >> david is that guy in the commercial that -- >> i have an 11-year-old and 8-year-old, no snap chat, no, thank you. >> i can't wait to take five lipitor pills to watch that ad again. that's what it takes. >> do you do 20 mill, 100? >> lipitor, crestor if your fingers get locked because of lipitor and then you have to take apcar, questcor's miracle drug. >> like a pharmaceutical house. >> well -- >> i believe you. let's get to sharon epperson and check out commodities. >> looking at commodities here gold prices would seem to have gotten a safe haven bid up about $11 topping that 1300 level and we're looking at the tensions continuing to heighten between russia and ukraine and as we're

watching what's happening there, particularly in the eastern part of the country, and with kiev saying they want to exert military control over that area, that is something that traders have been watching very carefully. look at what has happened over the last two weeks. we've seen gold prices above the 200 day moving average. two-week high for gold prices. 1320 the next technical level traders will be watching. oil prices also getting a little bid here. we have both brent and wti above the $100 a barrel level and they are watching what is happening there in the ukraine. oil traders paying attention to the weakness we've seen in the dollar as well and they're watching libya but the fact we may see more exports coming on-line that is something they're not that concerned with at the moment. more concerned with what's going to happen with the american petroleum institute report out tonight on u.s. inventories and energy department tomorrow. back to you. >> sharon, thanks a lot. sharon epperson. when we come back we'll get stop trading with jim as the markets try to look for direction on this tuesday morning. "squawk on the street" will be right back. right back.

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to cramer and stop trading. >> we could talk the voxle jet, 4 million shares offering, but i want to focus on gilley adand the war between the war between gilley ad and the express scripps. they have this amazing help c pill. i think the drug is a wonder drug and the insurers will pay up. express grips is canvassing a lot of employers saying we should not pay up for this pill. i think in the end gilead wins because a cure for a fatal disease is worth a great deal to the insurance companies that otherwise have to maintain and not necessarily succeed in saving people's lives. gilead one of the weakest stocks in this market. i like the fact that the market opened down and held, that was one of the things i wanted. gilead is a wonder company and i bet they win in the end.

>> tonight alcoa. >> klaus kleinfeld, i wish the stock were down, darn it, the big run makes it more difficult for the stock to increase. there are estimates all over the map. mr. kleinfeld the stock is up from 7 an change to 12 on tough actions, closing factories that cost too much, getting the lightweighting of trucks and cars. i'm excited about what he's doing. >> how do you separate the capacity they've taken out with real mack kro economic activity some. >> the darn thing is a 5 million tons being added in china in the desert of china. you need water to make aluminum. the chinese are not sensitive to anything. they're in a put to work mode. it's insane! >> so? >> i'm saying the price of aluminum still set by the general -- >> marginal seller in china. any other big macro take aways we might want to get today? >> aerospace has been stalled.

2 million fasteners and screws in every boeing plane. autos. >> aluminum cars. >> we think that's been terrific. watch the truck build. a truck bull market everywhere other than brazil. stay tuned on the turbine business and what they make, they make the skin of the apple ipad, never talks about it. i don't think you're allowed to that we'll see you tonight, jim. "mad money" 6:00 p.m. >> when we come back white house senior adviser valerie jarrett and goldman's david kostin, don't go away. look at them. making moves that would put an adult in the emergency room. yet all they really want to do is grow up. it's funny, everyone i know wishes they could go back and feel younger. sound familiar? then test drive one of these. current non-gm owners and lessees use your $1,500 allowance to lease the 2014 cadillac ats for around $359 a month

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♪ our road map begins with the markets. goldman sachs' david kostin with us live at post nine to weigh in on the recent sell-off and where we go from here. >> the imf says it will lead world growth this year. the chief economist will join us. >> six flags completed the tallest drop ride if the world in time for the 2014 season. will it help keep them at the

top of the industry? the ceo with us live. >> president obama is taking action on equal pay. senior white house adviser valerie jarrett will join us with the details on that. >> all right. markets have been flirting with the flat line after that rough three-day losing streak but this is the sell-off in momentum stocks a sign of a simple rotation or something greater? david kostin is the chief u.s. equity strategist for goldman sachs and joins us this morning at post nine. great to have you back. >> nice to see you. good morning. >> when did you guys come out and say we were going to have a rough patch some time in 2014? when was that? >> end of last year and we anticipated a pullback or a correction at some point with a pretty high degree of likelihood. the thing we've been focused on right now is the characteristic of this rotation. and what's unique about it or the common attribute is the stocks that have the highest expected sales growth and those are the companies, it's not just those in biotechnology or social media or internet it's a broader theme, the expected sales growth has come into question and in

general, a value based vatgy has something over time been more successful than purely looking at growth particularly on the top line. we've been focusing more attention on companies that are focused on buybacks as one strategy or companies with high degree of operating leverage as way to mitigate the risk of just looking at the highest sales growth. that's really a common theme. >> it's playing out pretty much the way you thought it would so far. >> so far. >> you still see 1900 by year end? >> well, i think the -- that's a target. i think you're looking at 1900 at the end of this year, maybe 1950 at the end of -- middle of 2015 for next year. i think that's the general trajectory of the market. we're really reflect the path of sales growth or earnings growth because there's no margin improvement. remember, margins have been flat for the past three years. really not looking for any heroic measures on that front. >> if you are expecting the market to gain do you expect these high flying stocks with very high price to earnings multiples to continue to resume

their leadership position or is this it for them? >> well, the -- there are a variety. i think it's difficult to paint all those stocks in one broad category. i think the question is, in an environment where the economy is getting better, we want to be in -- portfolio managers to be focused on those companies in a position to benefit from an improvement in the economic activity tifts. the companies with the fastest expected sales growth are perceived in many respects as the secular growers. in a sense we want cyclical growth and those are the companies that will benefit from improvement in economic activity where you get your high leverage. >> do you see a step change in the economic environment, though? do you see an acceleration that would push the market up another 100 points on the s&p 500? >> well, the things in general, things are getting better. the economy is improving. you've heard my colleague appear on this program that broad economic data is expected to and has been -- >> slow. >> generally -- >> as christine lagarde said it's super slow. >> the economy is improving.

difficult first quarter in terms of weather and that's behind us now. first quarter earnings about to kick off really tonight actually. but that will ramp up at the latter part of april and early may and that's really -- there's not going to be a lot of new information in terms of the first quarter what we're going to learn, a tough environment but rather the prospective activity. as an example, we've talked about capital spending in the past. >> yes. >> we look at what are the companies saying about capital spending? well, already, half of the capital spending for last year, the companies that spent half the money, have already given guidance and they're planning to spend up 7% for this year. so in terms of evidence or a road map of where we see some of the key drivers of an improvement in the economic activity, capital spending would be a critical part of it. that's something we'll be focusing on in the quarter. >> you mentioned the reversal in leadership for the high sales names. michael lewis' book, candy crush's debut, all the things

arguably chipping away at confidence is that a threat to large-scale participation in equities? >> the money that has thus far been entering the equity market in 2014, about a third of that, only a third, has actually come into u.s. stocks. about two-thirds has still gone towards international companies viewed in some respects as sort of better value, more attractive value. the market, the s&p 500, trades around fair value. this has been a view we've had for a while. we're currently around 1850 and that's pretty much where fair value is today. sort of growing in line. my expectations growing in line over the course of this year towards 1900. looking around a 5% return in the net horizon. >> will people get higher returns elsewhere in the world if they had the gumption to do that? is that what you're saying when two-thirds of the money is going elsewhere? >> myself and my colleague strategist around the world have a view there will be better returns elsewhere, particularly in europe at this juncture, from these levels. the starting point for the s&p 500 trades today at 16 times

forward earnings. and the median stock, the typical stock, trades at 17 times. 1 times -- 17 times forward earnings an expensive multiple for the market. it's not just about the earnings, we're starting out on a valuation that's pretty rich. >> i'm curious on what you see for margins this earnings season? that's been a continued theme you've watched in your beige book. >> margins have been flat. in 2011, 2012, 2013, now we're starting 2014, they've been hovering in there just a little bit under 9%, your net margins. that's a historic. we're looking for those companies to have an ability to improve that, not a lot, that's where the operating leverage comes in. the intuition is you have an improvement in economic activity which drives the sales and some companies that benefits their bottom line more than others. we want to identify those companies. that and another strategy is buybacks. if you're concerned about the draw down in the market, one of the things -- >> you know where we're going with that.

>> one of the things ability the market has been the stability of the share prices of those companies that are aggressively engaged in -- >> what about larry fink saying it's harmful to long-term growth, it's a short-term, myopia, right? >> that is a correct commentary except the data supports the idea that companies are spending money. they're spending -- they'll spend over a trillion dollars in terms of cap x and research and development. the companies are spending a lot of money. there's no am biguity about tha. the largest cash is still -- >> they're going to spend a trillion investing in jobs and growth. they spend half a trillion buying back their own stock. it's not like the bulk of the spending is going into the economy. >> the largest use of cash for corporate america is spending for growth. spending for growth would incorporate both spending on research and development, spending on pure capital spending and cash for used for m and a. growth initiatives. more than half of all the cash is spent in that direction. the other use would be buybacks

and dividends and companies are raising dividends with the very high margins companies have the capacity to do a lot of things with their money and different companies are focused in different areas. but if you're concerned about the level of the market and the -- some of the volatility here, the idea of companies buying back their stock has been a pretty stable, those stocks have outperformed the market, they did well in the january and february, and in march, the they basically did not move that much, down about 1%. there's been a stable. that's the idea behind companies buying back their own shares, sort of a self-help story. it's not dependent on other attributes. >> david, always good to talk to you. wish we had an hour. david kostin, goldman sachs, thanks a lot. up next on the program, the fed is giving an extension to big banks for part of the volcker rule. what does that mean for those stocks? bank analyst dix bove will weigh in when "squawk on the street" comes right back. [ hypnotist ] you are feeling satisfied

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welcome back to "squawk on the street." check out shares of alkermess after the experimental drug to treat symptoms of schizophrenia met its goal. the company will submit the drug for fda approval in the third quarter of this year. you can see that stock currently off session highs up about 4% on the day. back over to you. >> thank you very much. the fed is giving banks an extra two years to conform with part of the volcker rule that would force them to sell riskier forms

of debt. dick bove an analyst at rafferty capital where he joins us now. good morning to you. >> hey, simon. >> i guess the central question we're talking about collateralized loan obligations, if you force the banks to sell 120, $130 billion worth of them, who is going to buy them and what sort of capitals losses are they going to take? they haven't, though, solved the problem, have they? >> no, they haven't. they are the problem. because basically what they're doing is they're asking the banking system to sell, you know, 100 plus billion dollars of these securities and then they're telling the banking system, that we don't want you to make those types of loans anymore. what is happening here? basically the government is directing capital flows inside the banking industry through to the economy and doing it to harm the private sector in the sense that they're cutting off one source of funding for the private sector. so what they're doing makes little sense from any perspective. >> and yet, presumably, i

appreciate the industry has obviously got some give here and we saw the clo market reinvigorated in anticipation of that, still this is going to come back and haunt nous two years -- haunt us in two years, is it? >> what we've done is shifted risk away from the regulated portion of the system and i didn't answer your earlier question, which i apologize, basically, we've shifted it to the non-bank financial sector. in other words, there are hedge funds, pension fund, life insurance companies, there are a wide variety of potential buyers of this type of debt. it's just that the buyers and the creators of this type of debt are no longer going to be part of the regulated system. so we've increased risk in the system by taking away regulation because we didn't take away the demand and we didn't take away the money that's out there available to meet that demand. >> is it reasonable to assume, dick, that going through the process, if they are effectively forced sellers at some point, they will take losses on that and that will show up in the bank earnings? >> it could.

i mean basically, you know, if zions bank, for example, was forced to sell all of its covered bonds at the moment it would certainly hit the earnings of the banks, but, you know, banks are huge companies with sources of earnings from multiple places and we've now had 17 quarters in a row in which bank earnings have gone up year over year with only one not doing that. 16 out of 17 quarters over what is a four-year period and banks are now looking at all-time record earnings, so, you know, all of this activity related to regulation in the banking industry have not hurt the banks. it's hurt the people in the economy. it's hurt consumers, hurt businesses, it's hurt the government. it basically has not hurt the banks. >> dick, just before we let you go, you'll be aware the journal is reporting today that citi's investor relations department has been calling around invests lowering expectations and saying specifically that the co is not going to hit its target of a 10%

return on tangible equity next year. is that a function of the fact that the fed said look, you can't buy back the stock that you want and, therefore, why you can't flatter the denominator on that ratio if you like? >> yeah. it is. but i think the message, hidden message, which is most important here we're not going to increase our dividends in 2014. we may not increase our dividend in 2015. so that what they're really saying is because we're forced to increase capital which, of course, lowers the return on capital, but what we're really saying is you're not going to get a stock buyback, not going to get a dividend out of this company for at least 12 to 18 months. that's the message and it's not a positive message. >> let me just leave you with one thought, dick, as we go to jpmorgan and wells fargo on friday and the kickoff of earnings season in which bank would you be longest going into that? >> i think wells fargo. i think wells fargo has proven itself to be one of the best managed banks in the united states and, you know, it's had i

think seven quarters in a row of record earnings and i think we'll have another record earnings quarter when they announce it in a couple days. >> okay. dick, good to see you again. thank you for your time. dick bove joining us on the banks. sara, back to you. >> all right. up next from the banks to the retailers, it has been one year since ron johnson was replaced as jc penney ceo and the stock still down 40% over that time period. can the struggling retailer pull through? white house senior adviser valerie jarrett joining us live to discuss the president's push for equal pay. we're back after a quick break with the dow down 22 points.

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♪ welcome back to "squawk on the street." check out shares of american airlines, the stock is flying low after the carrier lowered its first quarter guidance blaming flight cancellations because of bad weather. it canceled more than 34,000 flights during that time period and as another way to increase revenue the carrier is announcing if you use miles, to get a free ticket on a flight, you may have to pay to check that suitcase. those shares are off session lows but still, sara, down about close to 2%. back over to you. >> yep. let the weather excuses begin. dominic chu, thank you very much. today marks one year since jc penney made the changes in the corner office. replacing ron johnson with the former ceo mike olman. has the change been enough? if you look at the stock up today but down over the period since mike olman took over as ceo a year ago. it was interesting about this stock the last earnings report at the end of february, actually showed some signs of a turnaround with on-line sales up and some of the strategies mike olman brought back to undue what

ron johnson took -- put in place. i guess the jury is still out on this one. >> these turnarounds can take some time given how badly the company had been managed prior to mr. olman coming in. it's interesting, sara, he was an interim ceo, haven't heard much lately, though, about the decisions in terms of anybody going to take that job after mr. olman. >> remember, we were talking to steve saydo a board member, talked about that decision. >> asked if he would take it he said absolutely not. >> want to mention the elle macpherson. >> do you want to? >> for the news, she has a new lingerie collection which is coming out at the weekend. >> yes. >> we have a photograph. there we go. only 600 stores to begin with. a relationship forged with ron johnson. this is a hangover from that era. apparently lingerie is absolutely key. they lost a lot of -- petty

executives say they lost traffic to victoria secret and it's one of the battlegrounds. >> people have been pointing out they're fortunate they're trying do a turnaround in the midst of target and the data breach, kohl's falling apart, sears splintering into a number of businesses. could have been tougher if rivals were stronger than they are. >> the pressure on brick and mortar, the big competitor is macy's who's been stealing market share and customers. macy's has been laser focused on the fashion side of things, on line, terry lundgren getting high marks from the analyst community, can jc penney win back some of the customers it lost? i don't know. elle macpherson and lingerie may be the ticket. >> it's the start potentially. >> and also bringing back home goods. >> up next on the program, would you ride this? six flags just completed the tallest drop ride in the world all in time for the 2014 season. that is not a computer animation.

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the theme park operator six flags is hoping new rides and new technology can push margins at its 18 sites above the current industry best of 40%. and grow what each visitor spends beyond its current high water mark of $40 a head. here in the cnbc exclusive, jim reid-anderson chairman and ceo of six flags entertainment. good morning. >> it's a pleasure to be here, simon. >> let's talk about the new ride ps we were seeing footage of the drop of doom, which is a nride t jersey which is attached to an existing ride. talk us through that one. a lot of people will travel for that. >> it is attached to king, which is the tallest, fastest roller coaster in the world, adding the tallest and fastest drop ride in the world. 415 feet. we currently hold the world record in our park at l.a. and this will be the new world record here. >> it is astounding to look at. carl? would you do it? >> yes. i love -- >> you would?

>> i would ride anything you can design. my favorite are the tweets that are coming in, no thanks, i'll just watch the nasdaq chart. >> is that right. >> carl, you and i have to go together. >> i would do it. >> have you done it? >> they can't make rides that are fast enough. >> as we speak. so when it opens, i'm up there, yep. all of the ride snas rides obviously coming through across, a new water park. what about the new technology, the new admissions technology, the biometric technology, talk us through that. is that to look like you're kind of keyed in with what's happening or about head count and cost cutting some. >> i would say first, innovation is in our dna. and it happens with our rides. if you look we have world record-breaking ride, but in addition, we've just made the top hundred, the elite hundred of information weeks i.t. companies. we lead the way in innovation in theme parks. one of those is biometrics. what we're trying to do is speed the process for guests coming to our parks. >> the printing or?

>> we never take a fingerprint. it's a scan. that creates an algorithm to allow us to know if this is the guest that bought the season pass. a simple process. instead of having to wait in a line you will basically use your -- the scan and get through a lot faster. >> can you take staff numbers out as a result? your big thing is returning cash to shareholders. you're really exceptionally disciplined the analysts would say of what you do or trying to be. would you take head count out as a result of that? what about the higher minimum wages in your states? >> as you've noted we're very disciplined. gone from generating no cash four years ago to now generating 2.45 eps per share. we pay out almost $2 in dividends. we have a 5% dividend yield. i think we've driven from 24% margins to 40%. we'll always look at how we can become more cost efficient but i have to tell you, my number one goal and the goal of our team members is guest excellence.

we want it to be a better experience for our guests. not that we want to take costs out. and we have driven up our guest satisfaction surveys and that's why more people are coming to our parks than have in at least a decade. >> disney raised ticket prices a couple times at walt disney world. do you feel that power right now? >> we do. i think that we're in the middle of a process that will take many years to increase prices. i think the company itself, part of its challenges historically was discounting too much. we're being disciplined about pricing, discounting, and about managing how we generate our revenue. >> but that value proposition has enabled you to keep the parks fuller than it otherwise might have gone. >> we think there's room to make them fuller. we believe there's a lot of space, we have excess capacity and we can generate more revenue by driving attendance. >> i think in the interest of journalism we should mention the terrible accident you had last july at texas where the woman fell to her death. the court case continues between

you and the german manufacturer of the ride that was there as to who did what and to blame. what will people see in the parks as a result of that? more seat belts, more of the testing to see if someone is too big to go on the ride? >> first i have to say, everybody at the company was, you know, terribly distressed and saddened by what happened. our number one priority is safety of our guests and if you think about it, our kids, grandkids, all go on those rides. so it's our number one priority. safety of guests and employees. very unfortunate. we are in a court case. i'm unable to talk about that case specifically but you can rest assured we do everything we can to make sure that parks are safe. we have added -- >> more seat belts. >> we've added seat belt, test seats like you said, safety pads, so we do everything we can to make sure the rides are safe. you're 100,000 times more likely to be involved in a car accident than you are to have an incident at a theme park. the numbers are staggering. when they happen obviously

they're horrifying. >> i'm curious, in terms of the guests you're seeing, the folks coming to the park, has it changed at all? are you seeing people who say don't want to spend a lot of money on a european vacation, come spend it at the theme parks instead? what where you seeing economically and what it tells us about where the consumer is in the country? >> i think six flags is a tremendous value offering. in a tough economy we have found that to be really powerful for us. even as the economy has improved, we've seen further improvements. i think what's happened is there's a mentality now with people that they don't want to just spend their money, you know, just needlessly. so for our guests coming to our park, let's say $45 or even 70 there is for a season pass they can come all year to our parks, create magical environments for their friends and families in our parks. so this economy is actually working in our favor. the mix of the guest has not changed. it's still 50% family, 50% teenagers, it has been for a decade. and in terms of the

demographics, we're seeing more people who are spending more money. >> $40 a head? >> absolutely. and increasing, simon. >> before you go, you have a lot of excess land at certain of the parks that people would like you to sell off and return cash to shareholders. will that happen any time soon? >> what's ahead? we have pricing we talked about, season pass, membership increases, land, but we also have international expansion that i think will be a tremendous opportunity for us over time as we take the six flags brand overseas. >> you're going to do it? >> i think we'll do it. >> great to see you, jim. >> let us know when the ride goes live. >> i will be with you. >> we'll do the first ride together. >> good. >> jim reid-anderson joining us. >> carl, didn't know you were such a daredevil. >> about one hour into trading. the stories we are watching. 7:32 on the west coast, 10:32 on wall street. starting with nike, it's the biggest gainer on the dow right now, up more than 2%. steeple upgrading the stock to buy from hold due in part to what the firm is calling nike's

standout fundamentals. tesla started offering a leasing program for small and mid-sized businesses creating financing plans to help customers pay for or lease its model s cars. eli lily and takeda facing a total of $9 billion in damages imposed by a federal jury. the case involved claims that company's concealed cancer risks related to actos, ta key da planning to appeal the fine. $9 billion fine gets your attention. >> dominic chu a market flash on knee kia. >> that's right. a positive story for nokia, received chinese regulatory approval to sell that division to microsoft. the department of justice and ftc have approved it as well. the stock up about 5% in today's trade. back to you. >> thanks a lot. when we come back you've heard about the tech and momentum names taking a beating over the last month. not all gloom and doom. there are winners out there.

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interesting day today. the s&p is trying to avoid their first -- its first four-day losing streak of the year. it hasn't happened since the middle of december essentially and at this point looks like it's on track for one, 1841 a decline of almost four points, dow lost ground despite nike being a top performer and upgrade at stifel. cramer was saying you begin to

see on hourly charts yesterday some stabilization, break down in momentum, not everything trading as one single trade, that's healthy, a minor positive, and he was looking for stocks to basically hold and hold to the upside for the course of the day. that was an important thing in his mind. it's not happening right now. >> you're certainly not seeing the rebound you might expect after such steep selling. talking to traders and strategists what we've seen has been orderly selling, at least not so much panic and perhaps it's a healthy thing. some of the risk adjusted pes come back to normal reality in terms of some of the multiples, the high flying stocks that were priced so far ahead in terms of growth and the earnings multiples. i think it's important today's session to point out some of the international events overnight. clearly still concerns about ukraine and russia and escalation of tensions there. overnight in japan, the yen surged and the stock market plummeted because the bank of japan disappointed and didn't signal further easing, something

a lot of people expected with the consumption tax hike. >> can i pick up the point about the immunity you have from the situation in ukraine, europe is down quite heavily today, the dax down about 2%, there's been no follow through into this market despite the concerns that you have three cities in the east of the ukraine that have russian supporters commanding some of the important institutions there and yet this market remains, carl, totally immune to that crisis. yet again unlike europe which i think is a bullish sign, albeit after the nasdaq fell 4.6% over three sessions. a big fall. >> for the past couple days we've had the analysts come out and jordan rohan today pounding the table on facebook, netflix, yahoo! retail me not, upgrades of fireeye, upgrades of yelp today and so far it hasn't had as big effect as some might have expected but we'll see if that does take hold. >> again it all comes back to the economy. we start earnings season today. here we are going into another earnings season with sort of

revised lower expectations and hoping to see something at least on guidance. david kostin of goldman sachs says if the economy continues to improve as they forecast, you should see earnings growth doing better and that capital investment picking up. we'll see. >> as you know tech evaluations have taken a big hit in the past week. some investors have been rattled. josh lipton is in the valley with a check up on that. hey, josh? >> hey, carl. valuations, they say, had gotten out of whack and this breather in the market according to the vcs i was talking to, a degree of bounce but a lot of red on the screen if you look at facebook, yahoo! yelp down 35% now from a recent high, but vcs are saying listen, nothing has really changed when it comes to the core fundamental trends driving tech right now. the move to social, mobile, cloud, and using big data and analytics to drive better evaluations and decisions, tech is still a smart place to commit capital they say if you can find

the companies disrupting whole industries. think ubber and what it's doing with transportation and hospitality. vcs say they expect more acquisitions potentially, tech titans, cisco, ibm, oracle could be more aggressively on the hunt looking for those targets whose stock price has dropped. as for the ipo pipeline in silicon valley, menlo ventures tells me he expects demands to stay strong but ipo pricing could be impacted. darlsings like box he said could take a hit because of this pullback. back to you. >> it will be interesting to see if that happens. thank you. still ahead on the program, president obama is set to take executive action on equal pay today. senior white house adviser valerie jarrett will join us with more on that with what the initiative means after this break. s break.

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name stocks have taken a beating over the last month, but there have been a few big winners. dominic chu is tracking some of them for us this morning. lay it on us. >> carl, good news first. we want to be more positive with what's happening with the recent market, at least mini correction here. if you take a look at some of the names that have been doing very well since the market peak on march 4th, big day for xhdsty stocks, alcoa reports after the bell, but another material company doing great since the market peak. it's gone up to the tune of 15%. that's u.s. steel. ticker simple x, those sthars -- simple x, those shares have shown strength. if you take a look at another one, game stop, remember we talked about how walmart was going to be encroaching on their space for used games. game stop shares have risen 18% since the peak march 4th. the biggest name in the s&p 500, posted a gain since the market peaks, it's solar, first solar, up 26% just since march 4th.

we don't want to forget the fact that the markets have been showing some weakness so it's across all market caps. we wanted to highlight a few names that have been real standouts in terms of their declines since the market peak. on the large cap side, biotech no surprise here, celgene shares down 14% among the worst losers in large caps. mid caps, check this out. american eagle, teen retail, down about 18% during that time. and even on the small cap side of things, especially hit hard, check out a name like x 1, 3d printing stocks, 32% to the downside. carl, losing a third of your value just since march 4th. there's good news and bad news. depends if you're an optimist or pessimist about the future. >> dominic chu back at hq. the senate approved a five month extension of federal unemployment benefits last night. the bill now goes to the house but speaker jon boehner has already called it unworkable and then today the president will make the push for another part of his economic agenda, paycheck

fairness. joining us this morning is senior white house adviser valerie jarrett, she joins us from the white house. it's good to have you back. good morning. >> thank you. good morning to you. >> a couple parts to this. he'll sign an executive order that bans federal contractors from retaliating against those who discuss or complain about their comp and the labor department will establish rules requiring federal contacters to submit data on their comp based on race and sex. >> exactly. >> what is a federal contractor under these rules, a company that sells to the government in any form? >> exactly. anyone who does business with the federal government. exactly. in fact, i just left a round table discussion with lily ledbetter who after whom the famous lily ledbetter act was named and she was telling her story about how she was working for a federal contractor and a part of her problem was she had no idea for 19 years that she was not receiving equal pay and by the time she found out, the statute of limitations to bring

a lawsuit against her employer had lapsed. so we corrected the problem about the statute of limitations by passing the lily ledbetter fair pay act but still far too many women have no idea that they're not receiving equal pay and more importantly, they're afraid to ask because they're afraid of retaliation. another woman said she needed her job. she was a single mom trying to take care of her children, couldn't afford to lose her job because of retaliation from her employer. >> we keep hearing the 77 cent figure, the pay disparity between men and women. but some argue that doesn't really -- it's not apples to apples. look at people in the exact same job the gap is narrower and getting better over time, some cases women are making more than men in the same job. >> well that is actually -- >> the government should weigh in where the private sector seeming to do work on its own? >> because there's still an enormous disparity. it depends upon professions.

for example, in stem fields, science, technology, engineering and math, those are fields that disproportionately have low representation of women but very high paying fields. when people finish school we find pay disparity coming out of stanford business school there's a disparity. we're saying let's work together, let's think creatively and employers, employees, academics, everybody come together and let's think through what we can do to close the gap and what the president is doing today is taking a step in the right direction. it's not the complete solution because it only applies to federal contractors, so he's challenging congress to pass a bill that would apply to everybody under the basic theory that transparency is important and so it doesn't solve the entire problem. there are lots of factors here. but it certainly will help. >> i would imagine this affects a large number of businesses. i mean a large number of companies do business with the u.s. government. and i understand why transparency is certainly a good thing. it will clean some information

about this issue. but in our economy where we desperately need wage inflation and wage growth, does this do anything to move the needle on higher wages? >> we actually think it is good for the economy and think about it, often oftentimes, employers aren't aware of the statistics. and so, let's give them the ammunition they need, the data they need to make informed decisions. we believe that when women succeed, america succeeds. it's good for the economy. and so, take this, for example. women who are being paid equal, they're going to be more productive in the workplace. they're not going to feel as though they're second-class citizens. they'll be less likely to leave their jobs, sow won't see the turnover. they'll be more loyal to their employer. there are reasons that have to do with united states' global competitiveness, why it's in the employer's best interest to pay women equally, in addition to how important it is for the women. women are now making up a greater percent of the workforce, over half the workforce.

two-thirds of all families are headed by a woman or two bread winners in the family. so a woman's contribution to the family's income is more important than ever before. but these are all factors that we should be talking about openly, and one important tool is transparency and that conversation. >> you know, some people have written, valerie, that the white house itself, when you look at men and women, pays women about 90 cents on the dollar. will the white house be making any changes in-house, as well? >> well, let's talk about the white house. in the white house, we have equal pay for equal work. everybody from the most junior staff to the most senior, for people at your level, you get equal pay. the other senior advisor, a man, gets the same pay i get. the most junior staff, the same thing. we have 16 department heads, the majority of whom are women. we have recruited diversity, and we've been looking for young, talented people. and a lot of our workforce that are women come in at entry levels, and the president thinks that's important, so we can create a pipeline of women who

will move up in the organizat n organization. and so, in his administration and subsequent administrations, they have that experience. and the final point i would make, as i was sitting around our senior staff meeting last night, and i was counting the number of women who are at the most senior position, assistant to the president, and nine of the ten have received promotions -- >> right. >> -- under president obama to the most senior spot. >> well -- >> so we are very interested in having this conversation. and the reason why you know what the pay differential is in the white house, is because of transparency. >> valerie, i just want to point out, that women were also very critical to the election of president obama to the white house. they've been very critical in terms of electing democrats before. this is no coincidence that this is a midterm election year. how do you defend yourself against critics that are saying this is political posturing ahead of the midterms? >> the very first bill that the president signed when he took office, and right after his first election, was the lily ledbetter fairer pay act. he created the white house council on women and girls

within the first three months of his first term in office. this has been a fight he has pushed for consistently. we had a forum here at the white house years ago, three years ago, on workplace flexibility. we've focused on day care, on improving the workforce, and the skills women have so they can compete for the great jobs. this is not a political issue. this is an issue that is near and dear to the president's heart. it comes from being raised by a single mom, seeing his grandmother hit a glass ceiling, seeing his wife when she was practicing law trying to balanc those of work. we welcome republicans to participate in this conversation. why would you be against exploring ways to close that pay gap? this is a conversation that everyone should want to participate in. >> all right. but no coincidence that president won female voters by 11 points. valerie, that's all the time we have. thank you for joining us on this important issue of gender pay discrimination. >> you're welcome.

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obviously, we're awaiting the start of earnings season with alcoa tonight, and more importantly, the banks when we get through to friday, with both jpmorgan and wells fargo. at the moment, after a loss of 4.3% on the nasdaq for three sessions, we're relatively stable. >> yeah. you really haven't seen the rebound that some might expect to see after the last few days. i know the momentum stocks are in focus. health care was one of the reasons for the sell-off this morning. >> it's certainly true the technology sector has seen major declines over the last few weeks. that's hurting some of the hedge funds. kate kelly has more on that, i think from manhattan. good morning, kate. >> good morning, simon. thank you so much. the carnage we're seeing in the tech sector the last few days is hitting major hedge funds hard. the question now is, who is willing to stay the course despite the short-term setbacks? in recent days with the nasdaq suffering the biggest drop since 2011, portfolio managers have

been selling in large numbers. of course, that's anecdotal, but we're seeing the move down. and also the people bailing out. names like yahoo! and twitter are seeing double-digit losses so far this year. and some of the bigger-cap market names are struggling. all of this means that tech-heavy hedge funds are rethinking things a little bit. just this morning, john reported on co2's management plan to return $2 billion in capital after sustaining a 9% loss in march, thanks to losses on both the long and short side. meanwhile, other hedge funds are reckoning with the tech holdings. look at three key names. netflix down 7%, lands' down and d.e. shaw among the top hitters, and twitter down a whopping 33% this year, owned by lands' down, the new york firm, andor, that reportedly lost 18% in march alone, and blue ridge capital. yahoo! down nearly 17% on the

year, prominently held by d.e. shaw, lands' down and thirdpoint. so far, nobody is commenting on next moves, guys. i should add that given the delay with quarterly filings, it's certainly possible some of the funds are out of the names already. but if this downturn continue, simon and sarah, we could very well see a rotation into what is perceived to be a safer or more growth-oriented names like the ibm, intel, versus the twitter or yahoo!. >> you know, kate, i've been hearing that it is hedge fund driven, a lot of them getting out of the bigger names. any idea as to why, what the catalyst now? what is the concern withholding some of the high-flying growth names? >> i'm glad you asked that question. just, again, anecdotally, one thing i heard yesterday in talking to one of the hedge fund managers on the long-short side, isn't into it heavily, king digital, the ipo we saw well, overpriced, didn't do well in the aftermarket, felt like a turning point. and the high-growth sector

favored since 2009 is starting to lose its edge. >> yeah, and a lot of people heavily wo heavily borrowed into those positions. kate kelly, thank you very much. >> it was the strawberries, i guess. >> yes. >> interesting to hear kate narrow it down to that. thanks a lot, guys. if you're just joining us this morning, here's what you missed earlier on. welcome to "squawk on the street." here's what's happened so far. >> i think people take their queue from bonds men because of the bond market, because it's gotten so big. i am missing something. i'll do some selling in the industrials not just the high techses. i was looking for samsung to blow them away. i didn't see anything in the reviews, it's apple, old-fashioned, get rid of it. i didn't feel that way. >> a look at the opening bell. >> in terms of evidence, the key drivers of an improvement in

economic activity, you know, capital spending would be a critical part of it. that's something we'll be focusing on. >> we've increased risk in the system by taking away regulation, because we didn't take away the demand and we didn't take away the money out there available to meet that demand. this is "squawk on the street." 11:00 a.m. on wall street. some of the stocks. imitation is the sincerest form of flattery. twitter unveiling a redesign. we'll show you how it looks and what it looks like. >> better when wet. that's what some critics are saying about samsung's newest submersible phone. recode's walt mossberg is with us. > ibm trims its growth globally. and how the recent market sell-off impacts the ipo market,

venture capital spending, and valuation of a lot of companies. we get an update from a very influential venture capital veteran. joining us, kevin o'leary, author of "the cold hard truth on men, women, and money," and our own jon fortt. good morning, guys. first up, tech stocks making a comeback after major losses over the past few days. the nasdaq is up today, not long after posting the biggest three-day drop. the rally seems to have come to a screeching halt. the nasdaq down 6% from highs that were hit obviously a month ago. kevin, how has this hit home for you, the decline of the shares? >> you know, i learned years ago, carl, i don't invest in stocks that don't pay dividends. i'm old school. 70% of the returns of the last 40 years have come from cash flow. different ends. -- dividends. having looked at that as a student of the markets, you can't talk me into a part that doesn't pay a dividend. sorry.

i watched this volatility from afar. i hope you're enjoying it. [ laughter ] my portfolio is like a chicken on stick, dripping cash. >> interesting. how long have you had that rule, and do you ignore the sales forecasts for some of the industries? >> i learned it from a remarkable experience. my mother died seven years ago, and she had a secret account. i wondered where she had this money. hid it from both of her husbands. i became the executor, 50% stocks, 50% bonds. around 55 years. do you have any idea what the returns were? it beat everything. i started to study that. she was not an analyst. she had this intuitive feeling that she would not invest in anything that would pay her to wait. she sold me from afar, from heaven. i only buy stocks that pay dividends. >> the nasdaq has been the leading indicator of this market. but two influential voices, jim cramer saying there's no reason

for a stock come to the nasdaq bleeding, and patty saying any bounce in the nasdaq will be short-lived. do you see anything to dispute that? >> i don't. and as we talked about yesterday, patty and i were trying to put our heads together and figure out when all of this started. you see the stocks highest right now, the tech stocks on my space, rack space, pandora, yelp, zynga, blackberry, and we have a wave of earnings next week. we'll get not only some data, but also some more subjective feel on the earnings calls for what the second half looks like. there's a lot that can happen in that timeframe. i don't think you can get too attached either to the stocks falling out of bed or the hope that we see in some of the momentum names this morning. >> kevin, i know you're enjoying watching the volatility from afar. for investors who want to play this market. do you have any house rules for how much of the nest egg you should be willing to put in or keep on the sidelines? >> i look at it this way. this rule works and has worked for decades. i never allow a name, a twitter, for example, a pandora, to

become 5% of my portfolio. equity debt included. maxed out at 5%. a sector should never be 20% of your holdings. if you live by those guidelines, you can live through all of this stuff. the tweak i changed is every month i look at the cash flowing in, and it warms my heart. [ laughter ] so if you show me something that doesn't pay daddy -- which is me -- i don't buy it. >> i'm glad you clarified that for us. some people might have been confused on that. >> speaking of twitter. they're rolling out a new redesign. new users have first dibs. existing users will see tweaks. the biggest emphasis is on photos. popular tweets are highlighted, showing up bigger than others. and you can pin certain tweets at the top of the timeline, highlight what you find important. didn't take five seconds, jon, to say it looks like facebook. >> yeah, it looks like facebook and also google plus, which i think attacked this design idea first. this isn't going to address twitter's core challenge right now.

which is growth and sort of simplifying the experience, making it more lean back. twitter might be optimizing for the wrong things, they show you how many people are following you and how many people you follow. and sort of the sense as long as more people follow you than you follow, you're kind of okay, kind of popular. they probably want to optimize for the conversations, so if i'm clever, fun, i feel like i'm having a good experience. they haven't done that yet. >> a lot of criticism, kevin, from users of twitter. they don't like change. they don't take it lightly. when you look at a redesign of something that depends on the way users interact, is it better to make drastic changes like this or introduce more subtle changes along the way? >> the changes are needed to keep it fresh. i'm going to tell you an anecdotal story you may find interesting. a couple of years ago, the people at mark burnett, abc, sony, decided they want to link viewers of "shark tank" to the

new york feed. so they told the sharks, listen, you'll tweet exactly at these times, when the commercial breaks are hitting at new york. let's see, can we engage the west coast audience to the east coast and build audience through chicago and l.a.? i thought it would never work. i was not a twitter guy at that time. it -- not only did it work, it was stunning in how the two screens have linked together. now, it has 9 million people watching, and expect live tweets from the sharks. part of the experience. this platform has tremendous potential to link the television screen to the user live. and i think it hasn't really done that yet. of all of these things, this is the one i'm watching. this is the company that if they get it right is going to link the television screen to the experience. and they've hired somebody remarkable to help. the head of cbc television out of canada was hired by twitter, kristen stewart is her name, to do exactly that. link the networks to this base. i think she's doing a fantastic

job. >> the argument is your user growth is not as robust as it could be, because it is a little arcane, the interface is difficult, curation is hard to do. is this a step in the right direction? >> i think it is. show me another social platform that has done the linking. to me, the majority of advertising dollars are still on television. the majority of viewers still on television. you have to link to get those people. i think twitter is doing a good job doing it. >> here are numbers that i think are interesting. facebook after the ncaa final last night said more than 15.3 million people on facebook in the u.s. have 46 million combined posts about the tournament during the whole timeframe it was on twitter, said just last night, more than 2 million tweets. so one day, twitter is clearly the winner over facebook, and they're touting their engagement on that date. even lebron james tweeting about the game. but facebook is still somewhat in this game, if they can figure out how to engage more in these

big moments. >> i'm sure it will be a heck of a contest. when i think about what twitter can be in a few years, to me it's a viral experience around a celebrity with maybe 2 million people that want their own radio station of that person. they could start selling advertising, proprietary content. there is so much they could do they haven't done yet. for me, it's show me, pay me a dividend, and maybe i'll buy the stock. >> we've heard a lot of dividends this morning. >> all good news. >> glad to hear it. when you think of the stuff on facebook, going viral on twitter, and now a more multimedia focused redesign, where you can sort the videos and photos, is that ultimately a good thing with the interlinking of tv? >> i can't afford not to be a part of this, and facebook as well. so i actually have staff in my office at o'leary ventures that is looking at this, and they like it. because they're going to make the experience richer when you follow kevin o'leary tv. you'll get a better experience. we'll tell you more about what

we're doing in a visceral way that's bigger. i mean, it can't be bad if actually experience is more engaging. you know, people don't like change. they don't like change in many things. but they get used to it real fast. >> yeah. >> i think you'll see it happen here. >> speaking of change, uber is launching a new service. an on-demand currier service, allowing users to order and pick up, uber rush. it's a lifestyle and logistics company, as the ceo has put it. this is big news yesterday, jon. >> yeah, it was. and lifestyle and logistics is really what this is about. one of uber's investors was telling me a couple of years ago the value in this company, not so much in just a black car on demand. it's in the local logistics. they know how to get from one person -- from one place to the other. it will be interesting to see where they take this next. because urban logistics from amazon, ebay and others going to be important to speeding up delivery of various things. uber is playing at the high end.

>> the thing they don't have is a fleet of cars ready at their demand. kevin, if you look at a company like this and they have that infrastructure, what other markets could they get into? >> i think it works in markets like new york, like miami, you know, chicago, the big cities, the last quarter mile just getting here to see you guys today, i had to walk. a car is useless here in the middle of the day. the traffic is so brutal. this service is going to work. i call this incremental platform leverage. here's what i mean by it. i use the service, all right? my credit card's already in there. that's why i continually use it. if you offer me additional service such as currier to take a package across town, i don't have to set up an account. i just click it. it will work in manhattan. it won't work in champaign. it will work in the dense, populated areas. i think they'll make money, incremental. and to me, it's a good idea. >> finally, valerie jarrett was just on the show talking about executive orders the president's going to sign trying to lead the

country to equal pay between men and women. take a listen to this. >> we've corrected the problem about the statute of limitations by passing the lily ledbetter fair-pay act, but far too many women have absolutely no idea they're not receiving equal pay. more importantly, they're afraid to ask, because they're afraid of retaliation, and another one of the women in our roundtable said she needed her job. she was a single mom trying to take care of her children. couldn't afford to lose her job because of retaliation from her employer. >> kevin, if you're a federal contractor, you're going -- you'll have to start providing data to the government based on your pay divided by race, by sex. >> carl, let me ask you a question. it's core to america's success. how does this help create one incremental job anywhere in america? it doesn't. it retards the process. i have no problem paying women more than men if they're better at their jobs, if they excel at

what they do. there is no place for this kind of thinking. >> well, wait a second. >> that's what we don't need right now. >> how so? >> tell me how it creates another job in america. >> first of all, creating jobs is not the ultimate good -- >> it's the only thing we should be worried about. >> no, it's not the -- >> no way. >> it solves all the problems we're having right now. >> it does not. if you're not fair, and there are people paying women less systematically, creating worse jobs and paying women less doesn't do anybody any good except the person getting the discount. >> companies that even try to do that go bankrupt. everybody knows that makes no sense at all. the market determines the value of work, and let it do what it did for 200 years in america. creating the greatest economy on earth. we are putting shackles on it with policies like this. every time you hear an idea like this, ask yourself this question. how does it create one incremental job anywhere in america? >> i don't say how you can say 200 years and shackles. >> you're not arguing there's

pay disparity in the past. >> i don't agree with minimum wage. let's go back to the beginning to say let more jobs be created by letting the market -- we're retarding the growth of america, period. >> kevin. >> period. no other debate. >> i can't even count how many strategists have come on this program and said the number one most important thing in checking growth in this country is growth and person income, and in wages, because that will fuel spending. do you disagree with that? >> i do. have you asked yourself over the last five years why we can't seem to get growth in jobs anymore? and the reason is, for every incremental job and every incremental state or city today, there's an alternative outside of america to do that work at a lower cost. and so, instead of actually letting the market determine what the price of labor should be, for men and women alike, we let those jobs go somewhere else because we have put the legislation in place that retard our growth. that's my platform argument.

>> kevin -- >> you would be right -- you would be right if there was history that employers were universally moral and fair in how they pay or not pay workers. that's not the case. >> i have a suggestion for all of us. take a localize ed jurisdiction like puerto rico, have no minimum wage, and give it 36 months, and watch what happens. let that be a lesson for -- >> good luck. >> -- everybody in america. it will solve itself. all of a sudden, that will be the fastest growing state in this country. >> that will remain a hypothetical. >> and we should do it. >> kevin, thank you for coming in. don't miss kevin o'leary on "shark tank" on tuesdays. back-to-back back-t back-to-back episodes. when we come back, the one and only walt mossberg with his review of the samsung phone. is it san iphone killer? later on, bitcoin heads to the hill.

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welcome back. markets rebounding with nasdaq leading the gains. the health care sector is pulling weight to the downside, and dominic chu has more. >> it is the health care sector

among the worst performers, second worst performing sector on the wall street. look at mylan, moving lower. you're talking about losses from a 1.5% to 3% for the big names. a big day to the downside for some of the health care names across the board. carl, back over to you. >> all right, dom, thanks a lot. declining smartphone prices taking a bite out of samsung profits for the second-straight quarter. the company says it expects operating income for the quarter of about $8 billion, down 4% from a year earlier. this as the world's largest smartphone maker debuts its newest edition, the galaxy s5, but will it be a game changer in the smartphone market? who better to ask than walt mossberg, and he joins us from d.c. walt, good morning. >> good morning. and the answer is, no. it will not be a game changer. >> it sure sounds that way. i would argue at large the reviews have been mixed. walk us through your view.

>> well, look, it's an evolutionary modification of the galaxy s4. in my column, i said, if you have a galaxy s4, iphone 5, there's not enough in here to make you want to upgrade to this. you know, the camera's a little better. the screen's a tiny bit bigger. and a little bit better. that kind of stuff. it's a $660 phone on lot. this is not one of those samsung or other phones you hear about where they're going for the emerging markets. this is a premium phone. it does -- and it has several features that i didn't think worked very well. you know, they've copied apple on the fingerprint reader. only it works much worse. it was barely usable for me. they have a heart rate monitor on here. i don't know how many people would use that, how often.

but it worked not most of the time for me, and i checked with a couple of other people for whom it also didn't work as well as it should. the one thing -- the one thing that makes this impressive is if you should drop it in the toilet, it will survive for about half an hour. >> now, walt, that is impressive, i guess. at the same time, if i recall, you said something similar about the iphone 5s. if you've already got a 5, no need to rush and upgrade to this. i mean, have smartphones sort of jumped the shark at this point in terms of the value of -- >> well, carl, it's a great question. i don't think they've jumped the shark. you know, with the iphone 5, at least they had the fingerprint thing, which is new technology and a couple of other things. i think we're at a pause. i think we're at a kind of

moment where -- especially in the developed world, in countries like the united states -- you really have to have something dramatic and different, you know, to separate yourself from the pack. and we haven't seen it for the last, you know, 18 months or so. and i had a long talk with somebody very, very high up and central in this industry, the high-end smartphone industry, just last week, who said, look, we are at kind of a pause on features, but i think you're going to see with the wearables that talk to these phones, coming along in a more advanced way. you're going to see a bunch of new excitement around it. but right now, this person said, and i think he's right, we're kind of at a pause. it doesn't mean they won't sell a bunch of these. and we saw, for instance, the

iphone thing you pointed out, you know, they sold 50 -- what was it, 51 million iphones in the last reported quarter, which was a record. so it's just that the growth is slowing quite a bit. >> well, walt, we're seeing the declining prices of smartphones hurting samsung. given the device you see as is, do you think $660 stand alone, $200 with a two-year contract, is the right price point? if not, where do you think this should be priced to get consumers to actually buy it? >> well, this particular model, you can see this high-quality, fake metal/plastic border on it. it's an all-plastic phone. and i imagine there's some margin they could take out of this. this is their flagship phone, and i assume they've built various things into this that -- including things like the water

resistance, that make it inherently more expensive. i mean, samsung's strategy, as you know, they have a bewildering number of models and phones, particularly if you think globally. and that's where the prices are declining. and they need to decline if you get the next 2 billion people onto smartphones. it's just that in europe and the united states and some of the wealthier areas of china and maybe, you know, wealthy places in brazil or latin america -- or india, lots of people have these already. so, you know, the right -- the right price for this might be a hundred bucks with a contract and 300 bucks without. i will say verizon is doing something very unusual, and you can interpret it one of two ways. >> right. >> they are doing a -- buy one

get one free on this phone, which doesn't go on sale till friday. for the $199 with the two-year contract, they're giving you two of them if you want. and, to me, that's really unusual for a high-end thing like a samsung galaxy right at the beginning of its run. >> absolutely. >> it's usually what carriers do with failing phones. some people interpret it as, okay, we know this is a new phone, verizon is going for a big market share grab. >> sure, sure. well, it's good to get your view on it, walt. we'll see if that evolution you speak of reaccelerates in the back half of the year. walt, we'll see you soon. >> take care. >> walt mossberg. a reminder, nbc news group is a minority investor in re/code and we have a content-sharing partnership. and the nasdaq is up about 39 points after a three-day rout on that index. we'll get you a check on it next.

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seeing a comeback for the nasdaq. nasdaq up 34 points. seema mody has some of the winners. >> hi, carl. after fluctuating between gains and losses, the nasdaq is up at session highs of the day. what's interesting is that we continue to see a sell-off in some of the bbiotech names. regeneron is trading in positive territory, but gilead trading in negative territory. the high-growth momentum stocks staging a little bit of a comeback today. companies like yelp, pandora, facebook, and tesla, higher on the day. in fact, steeple analyst rojan is recommending facebook. it might be encouraging

investors. lastly, the broader shift we've been seeing in old-school tech names. many of the names in the semiconductor space, like intel, broadcom and qualcomm, higher on the day. carl, back to you. >> all right, seema, thank you so much. about to get european -- the european close in one second here at 11:30. simon is here to walk us through what the day was like. >> and there is a lot of red around again. if anything, europe is selling off slightly to what we witnessed here at the end of last year, friday into monday. they've had two heavy days of selling. one of the reasons for that, of course, is the tensions that persist with the ukraine, and another reason why they've been low. a general move, a concern generally about the earning, about the european recovery, a concern about where we are with deflation. it's relatively broad based. even the u.k. home buyers are lower on concerns about exactly what might be there. you know, do we have a bubble in the u.k. housing market? inevitably, as you've seen on this side of the atlantic,

you'll see some of the big momentum plays not lower. let me give you a selection. for example, some of the italian banks, perjo, down quite heavily today. 3%, 4%. look at the three stocks here, trading so far this year. you'll see if i show you a chart of that the degree to which they've actually managed to rally substantially. still up 58%, 48%, 23%. that's kind of the bigger picture. one stock that i did want to mention to you, which has hit a lot of the food plays in europe, is sudzuko, a sugar manufacturer. sugar prices are under pressure in europe. and sugar substitutes. today, they issued a profit warning. look at this stock, down 49% so far this year. a great short it would appear on the session so far. >> thank you, simon. weak trade even though the u.s. market is beginning to turn around. when we come back, he leads investments in consumer internet

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welcome back. two hours into trading, and the major averages are near the session highs today, even though it has been a volatile one. stocks on the dow up 32 points, nasdaq was up 39.

it's now up just shy of 36. so certainly a reversal for a four-day losing streak on wall street. we want to bring in neil hennessy, cio and portfolio manager with hennessy funds. good to have you with us today. >> thank you. >> when you see a reversal like that, what do you make of it, especially after the four-day streak we've just seen? >> i know. basically, the market has been a downer for the last week, week and a half. when you really look at it from a different perspective, that right now i think the market's in great shape, that if you can make some money on the pullback by buying in, that'd be great. basically, the market will continue to go up, because companies are in great shape. >> but there are still naysayers who say this bounce will be short lived, that we are about to have a stream of negative earnings, and we're about to get notes from the fed that basically confirm our worst suspicions about the first quarter. i'm wondering, do you think any of those catalysts are particularly detrimental to the market we're in, as fragile as it is? >> no, i don't think so, simply

because if you look at when the companies take care of shareholders, the market will do well. what are the companies doing with the cash and cash flow? they're initiating dividends. they're making acquisitions. this is all in favor to the shareholder. when you take care of the shareholder, at some point in time people will notice it and the stocks will go higher. this is just, you know, a little bit of a pullback. there's no euphoria in the market. when i talk about that, i'm talking about, you're not going to get a 10%, 15%, 20% correction in the market simply because there's no euphoria there today. >> neil, you mentioned the companies are in great shape. we'll see if that's true when the results come in this quarter. why doesn't that simply reflect the run-up we've already had, both last year, leading up to the end of last year? >> carl, i've been saying for a long time, the companies don't necessarily need to make any more money than they're making today. the reason i say that, record -- i mean, corporate profits are at record high.

cash flows are at record high. the problem with it we're still hitting headwinds from washington, because we don't know what the rules and regulations will be, the taxes, where health care will go. we need some guidance from washington, and then the companies can go out and hire, which will then turn the economy into maybe a three-plus growth range. >> neil, we've been having the debates for several years at this point. >> right. >> it seems like people are starting to invest ex-some of the solutions being brought to the fore. where do you find value when you think about the fact that washington may not bring some of the issues to the table for some years from now, given it's midterm electionier? >> well, it's interesting. if you look at washington from my perspective, and i hear we have to worry about our children, grandchildren, a lot of the politicians are getting older and are going to retire. so you'll get fresh blood starting to come in. i think what will happen at some point in time we'll start to play within the 40 yard lines. right now, washington is playing

from the 5 yard line. so we're not getting any compromise whatsoever. i think that's coming. and, you know, it's about being -- time in the market is not about time in the market. essentially, if you get an opportunity and you haven't been in this market since march '09, it's a good buying opportunity to at least get some of your money in there, because you're not making anything in fixed income. >> and that is definitely one of the bull cases now, neil. we'll see where it gets us. thank you for your time. talking markets, which, as we mentioned earlier, close to the session highs of the day. we also want to stalk about what effects this recent market performance will have on the ipo market. coming up, we have a guest that leads investments in internet companies like care.com and diapers.com. a top venture capitalist will join us to tell us where he's investing. plus, the chief economist at the imf will join us. in today's market, a lot can happen in a second.

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welcome back. markets near the highs of the day. sam on "squawk box" was talking about why the sell-off was needed. here's sam zell. >> i think the market, and particularly, you know, what i call the basic stocks, haven't gone down in this thing. we're talking about twitter and all.

i mean, it's worth $15 billion and 55 employees. all of these things, i don't get it. and i can still count on my fingers, and when i look at these stocks and try to count on my fingers, you know, i can't figure it out. >> the sell-off has hurt the tech sector the most, which could have consequences for the ipo market. how is that affecting venture capitalists? tony florence is at new enterprise associates, and nea is one of the bigger funds out there. you have taken a bunch of companies public. when you hear sam zell talking about how they can't come to terms with where the market is, how do you respond to that? >> i think from an nea perspective, we're long-term investors. we get back to the fundamentals that we're seeing in both enterprise technology, consumer technology, that get us excited. in the public markets, you know, some of this repositioning is healthy. i think, you know, there's certainly pockets of frothiness.

i think our view is that this is sort of a healthy rebalancing. at the end of the day, the positive -- the unintended positive benefit, we have a whole class of investors how to think of media company, the new age of advertising, cloud computing with big data. we think that's a healthy thing for the long term. >> when you talk about a healthy rebalancing, you have to answer to your portfolio companies. you have taken a lot of them public recently, and workday, cvent, all down more than 10% in the last five days. so how does that change your mindset in taking some of the companies public? and what do they ask you about? >> well, look, you know, these companies, we've been investors in the companies for a handful of years and we expect to be long-term investors. they're still very early in their life cycle of value creation. and i think, you know, the reality is that what we tell them is not focus on the stock price. focus on the fundamentals, building the business, focus on recruiting and employer retention, all the things that

are in the long run what public investors and venture investors like ourselves really care about, and what ultimately creates most value. >> when you talk about the ipo pipeline coming up, and looking at the tech route threatening the pipeline for the ipos, you obviously own guilt group. you're in close conversations, and that's a company seen in the near-term pipeline. how does it affect conversations? >> the outlook depends on if this is a short-term period of volatility or more pronounced. i think you need stability to come back into the market. i think, right now, you know, public investors are focused on a lot of what they have in their portfolios. it's hard to get them focused on new stories. at the end of the day, when you take a step back, the s&p is growing revenue 3%, 4% overall. the companies we're talking about are growing 20%, 30%, 40%, 50% in terms of top-line growth. so we think at the right point, a lot of the companies will be great public stories. >> has it concerned you that -- we're going to get 14 ipos this

week, right? busiest week since '07. >> right. >> so are they all trying to get in before the door shuts? does that sort of bottleneck action make you nervous? >> i think this point in time right now -- a lot of the companies have been on confidential filing for a while, and they're just coming out and given the quarterly reporting, a time period when you expect a lot of companies to become public. it depends on the company's specifics. the companies we see coming out today are scaled, they're healthy, doing well. i think they represent, you know, really good long-term opportunities for public investors to transition in the capital structure, and then participate in long-term value creation. >> you have a lot of money to spend, tony. a few years ago, nea raised what was thought to be the biggest vc fund, $2.6 billion. i imagine you haven't spent it all yet. where are you putting that money to work? >> look, this is sort of what gets us divorced from the current volatility the most exciting, which is we're seeing unprecedented opportunities, and taking the enterprise technology market, for example.

it's sort of mainframed -- you know, the client server model, now mobile computing. the whole infrastructure stack is being rearchitected. the application sect is being rearchite rearchitected, and it's frankly up for grabs. that's exciting. mobile computing is putting enormous pressure on ientel enterprises. 20% of the $500 billion went to the internet. we're so early, even in the most advanced market in online advertising, let alone when you look at mobile advertising, e-commerce and other sectors that are still fundamentally very early on in their penetration. >> tony, we'll have you back. there's obviously a lot more in this space to discuss. we've just pierced the surface today. we appreciate you being here. tony florence of nea. >> thank you. when we come back, bitcoin goes to washington. we'll speak to a u.s. congressman who's bringing a

bitcoin atm to capitol hill as he tries to spread the digital currency gospel. that's coming up next on "squawk on the street." huh, fifteen minutes could save you fifteen percent or more on car insurance. everybody knows that. well, did you know bad news doesn't always travel fast? (clears throat) hi mister tompkins. todd? you're fired. well, gotta run. geico. fifteen minutes could save you fifteen percent or more.

many lawmakers in congress may not fully understand what bitcoin is. but today, they'll have the

opportunity to get their digital hands on it. congressman jerry polis is scheduled to deliver remarks for robo coin at the u.s. capitol. congressman polis joins us this morning from capitol hill for a "first on cnbc" interview. good morning. >> good morning, carl. >> i wonder if this would be easier gospel to spread at 1,200 rather than 400. nonetheless, why are you doing it? >> well, it's not a gospel to spread. it's frankly natural curiosity about a phenomena that washington has struggled to -- washington is struggling to grasp. we have lawmakers on both sides of the aisle who are curious. what is this new online currency? what does it mean for the dollar for the fed? what does it mean for crime? what does it mean for monitoring an irs and other activities. we hope to really bring it, make it accessible, people can actually buy bitcoins at an atm, insert dollars and have a

bitcoin, and spend the bitcoin and see it's nothing to be scared about. >> we've had janet yellen essentially say it's the wild west, don't expect the fed to get involved. we've had state regulators start to launch investive panels. is it something that needs to be regulated? >> i don't think so. it's buyer beware. plenty of scams abound. there's no question that there's a lot of questionable operators, just as there are in the dollar marketplace, as well. again, it's simply a new online digital currency. i think the concept is here to stay, whether it's bitcoin or something else. we'll clearly see more transactions using alternative currencies to the dollar -- or rather, national currencies, because you have the advantage of reduced transaction costs and facilitating commerce internationally without going through a conversion. >> congressman, you'll have an event tonight with a bitcoin atm

operated by robocoin, and they say it's easier to actually cash out your bitcoins into cash. obviously, congresspeople could only do that if they own bitcoin already. do you know anyone who has bitcoin? what have they said about their willingness to transact? >> i think it will be the other way around, where people will be getting dollars and perhaps getting their first bitcoins. they're extremely speculative. they should not be considered an investment. they're simply a currency that can be used for transactions. what many people do who use them is they don't hold any value in bitcoins. they simply convert their native currency into bitcoins for purposes of transaction, engage in a transaction and receive the product. >> have you talked to senator manchin about it and asked him why he wants the government to ban it? >> well, you know, it makes absolutely no sense to ban it. as i pointed out in my letter to

him, he expressed concerns about crime. if you want to do something about crime, ban dollars, because guess what, 99% of all crime involves dollars, briefcases full of $100 bills. just get rid of dollar bills and you'll make life for criminals a whole lot of harder. >> although, you know, you can understand how some people take some comfort in a currency that's backed by essential backer, right? >> well, some people take less comfort in it, because it's backed by a central banker, too. it depends on what one's opinion on the fed is on any given day. currencies like bitcoin is the quantity of the bitcoin is established by a transparent algorithm, so you know how many there will be. it's not was side of the bed janet yellen wakes up on on a given day. it's transparent and predictable. >> do you mine yourself? >> no, i do not. no, i don't. >> that would be news. i have to tell you, if

congressman polis spent his off hours mining for bitcoin, we'd have to come down to your office and do your story. >> there are more important things to do around here, despite what some say about this town. >> congressman, it will be interested to see what the reaction is. there's nothing wrong with trying to educate members. >> great, 2103 rayburn, 4:00 to 7:00 p.m. >> we're on our way. congressman, thanks. >> thank you. when we come back, the silicon valley war over search. what apple, amazon, and google have in common when we return. (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. because they know i don't trade like everybody. i trade like me. i'm with scottrade.

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make a my financial priorities appointment today. because when people talk, great things happen. the breakfast wars have escalated after taco bell's ronald mcdonald ad. they have a new ad out in the war over your breakfast dollar. take a listen. ♪ i've been eating egg mcmuffin ♪ ♪ since 1984 but when taco bell made the waffle taco ♪ ♪ i figured identify get with the times ♪ ♪ i even took down my loverboy

poster ♪ ♪ i just made, like, $700 on craigslist ♪ >> announcer: move on from your mcdonald breakfast with taco bell's exciting breakfast menu. >> where you did not address your competitors like that, and now you do. the very real attempt of taco bell to take share away from mcdonald's in the profitable business. >> if i was david pogue, i would be suing. that guy looks like david pogue. the song sounds like david pogue. >> although i will say my dad has a mullet in the year 2014. >> i can't believe you called him out like that on international tv. >> it is interesting to hear the egg mcmuffin by name. i wonder if there are any issues? is it trademarked? >> i think the gloves are off. they'll find out where the line is later. that's apparently where the marketing is all headed. speaking of breakfast wars, jon is looking at another war, this time in silicon valley, right? >> that's right. apple has poached an amazon search executive. i think this points to the battleground for this year. phones themselves not as

exciting anymore as walt mossberg was telling us earlier in the hour. it's more about the services, having the depth of ekeco system. -- ecosystem. now we're going to see some evolution of maps at the conference coming up later this year. they want better search for their services. not only on apple tv, but also in maps and other places like that. so it will be interesting to see what this yields. >> on twitter, there's a discussion going on regarding twitter's redesign. >> yes. >> and the comment you made in the past hour or so about whether if the ratio of followers to followed, right? if you follow more people than you actually are followed, you're not cool. >> what i meant to say is, that's what twitter seems to imply by putting the numbers front and center. i don't think that's a good thing. who says you have to be followed by more people in order to get -- to have a good time on twitter? i'm very much in favor of people having a leaned-back experience, enjoying what's happening on twitter, not feeling like --

>> jon fortt sits at the cool kids' table at lunch. >> yes. a lonely table. >> a great dresser, and he has a gazillion followers, as well. >> way fewer than you two. >> more on that later. we'll see how the redesign is received. and for the time being, the dow is currently up. scott wapner. >> plenty of meat on the bone to discuss. you have a great rest of the day. welcome to "halftime" show. here's what's in our playbook. fire sale or falling knife. is it time to load up on facebook, netflix, and yahoo!? a top analyst says yes. paying dividends. with investors playing the safety trade, is your best move to stick with what's working? motif of the month. how to create your own portfolio from the hottest trends in investing. the man who can make that happen is here live. let's meet today's starting lineup, pete, joe, josh, jim leventhal, steve suttmeier is