lucrative franchises. sold more alsoed toys last year than "star wars." back to you. >> okay. >> all right. thank you very much. i guess we're done. we got to go. the director of "godzilla" protecting the planet against global warming. >> we got to run. have a great weekend. join us on monday. "squawk on the street" begins right now. >> did you know that? ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. looking for some relief from yesterday's tumble. worst day for the dow in five weeks, futures are stable on the back of a good beat in housing starts. consumer confidence this morning. ten-year is right around that 2.5 level. a level by the way that bill gross says seems fair for now. we'll talk about that a little later and then europe is flat

for the time being. our road map with the markets under continuing pressure after logging their worst day in more than a month yesterday. >> jc penney reporting a smaller than expected first quarter loss and nordstrom reporting a better than expected first-quarter profit. >> the seafood lover darden selling red lobster to golden gate capital for $2.1 billion in cash. >> a whale tale, the money swimming into verizon. we'll explain that later on. >> all right. futures as you said, you saw relatively stable after the stock market's worst day in about five weeks. the dow posted the 167-point drop. s&p fell almost 1% and the nasdaq is now in the midst of a three-session losing streak. during our program yesterday you saw the ten-year note fall below 2.5 for the first time since last october and the russell intraday hit that official correction territory, managed to claw its way out by the end of the day. >> a lot felt that bounce was significant. you know what, i think that dave tepper really -- this was a dave

tepper sell-off and the bonds certainly complied with what tepper was saying. on tuesday will we remember what tepper said? i don't know. last night we were looking at tepper's holdings, buying stocks that would indicate what he was saying, listen, don't be double long. lot of hedge funds at that conference. it wasn't like there was people who were not 140% long. saying i would get off margin, i wouldn't be levered here. we'll go back to picking stocks and so much good news today, i'm talking nordstrom, jc penney, rack space, darden, the only one being bad was wwe which i think now i realize was a short squeeze, so you end up saying to yourself, i don't know, i mean should we be as negative as we were? >> let's do some of those retail numbers. you mentioned jc penney. smaller than expected loss. comps 6.2. it is the second quarter in a row penny's reported higher sales after nine straight quarterly declines. nordstrom beating expectations with the first-quarter profit of 72 cents.

comps 3.3. dillards not bad with comps up 2. >> that's a tough place to shop too. lap customer is back. quotes from mike alman in a gad quarter. homes -- the home business was strong. that's certainly contrary to everything we've been hearing. two call outs, pvh and nike selling very well. i guess what i'm dancing around the travel trust i have which is macy's which did not say good things about shoe, did not say good things about home, about traffic frankly. although at the end of the month things were good, but this was a good, clean quarter. we're in the go forward phase. congratulations mike. >> who is going to stay ceo by the way. >> yes. >> no talk any longer at all about a replacement for him saying that sales started to accelerate when the weather turned in april indicating that momentum has continued into may. >> yes. >> that's important. >> which is important. >> remember, they went from clearance back to promotion, private labels very good.

i think he can resurrect it. i've always liked mike. >> i know you have. >> you thought there was a chance it could be resurrected. i pointed out they are coming from a low base. >> fair. >> you have that -- >> 30 straight months of bad comps. >> i think he refers to it as a $5 billion -- that's what the ackman thing, the johnson era cost him. about $5 billion. >> he's had a clear out, lots of merchandise. se forera, of course, was his initiative. a store within a store. i'll go there this weekend, go back to jc penney this weekend because i think mike's real deal and if he's got bargains that are promotion a.m. with product that i like, i'm going to be a buyer. >> don't forget they have a third more shares, something else to keep in mind. >> they've got -- >> when they did -- when they bagged everybody. >> all right. that's true. >> see cash flow break even. $2 billion in cash. >> right. this quarter is a pull through quarter. there's a lot of tone in the conference call that indicates

for me, hey, walmart may be walmart, execution problems. okay. kohl's they're trying to do a reimage, don't have a chief marketing officer. jc penney and nordstrom have the pulse. nordstrom in particular. i pulled up with blake nordstrom not that long ago and blake was talking positive, doesn't do much tv, talking about rack and the look. these were extraordinary. the stock is up largely because of the credit card sale, but this -- >> one of the last retailers to have that in-house. >> they need the money. they spent multiple billions on their omni channel, live across the street from amazon. >> right. >> they have a very good omni channel. rack, fastest growing retailer division in the country and people don't talk about it much at all. >> no kidding. >> put up a thousand of them. >> i had a question as well. kohl's, what -- to what extension is kohl's contributing to penny's? or is that notp part of this. >> or target?

>> don't know about target. that's going to be very important. kohl's by itself is saying listen, we are going to embark on a new journey here to fix up the stores. they need help because the stores to me, versus my kids, my kids think stores look great. i think they look the same. but kohl's is not a short. kohl's could be a long. >> circling back to penny, mike ullman asked about succession. here's a brief listen as to what he said. >> as for succession we've made it clear that the 2014 is the go forward phase of our strategy. we're all together with this. the team is very aligned about executing that strategy. no major changes on the horizon. >> when i pulled up with mike he looked great, crisp, strong, forceful. >> where was this mike ullman prior to his leaving? right? >> that's a good question. >> second time around. >> that's a good question. i think he has it in him. look, mike is -- can be an inspiring guy.

117,000 jobs were saved. i think that's important. >> darn right it's important. >> right. >> it's important because that's an actual portion of the country that obama does not need to go down and it's not going to go down. i urge everyone to listen to a conference call that is really about a company that has recovered that most people thought couldn't recover. >> no. customer count going up. move on to a company that employs about 200,000 people, darden restaurants, announcing it's selling its red lobster seafood chain to golden gate capital for $2.1 billion in cash. the deal addresses key issues shareholders have raised including the need to preserve the company's dividend and regain momentum at olive guard wherein same-store sales fell 5.4% in the quarter ending january. an interesting transaction for a rare isty of reasons. $2.1 billion sold to golden gate. they do dabble or have a presence in a number of well known names, california, pizza, zales, but their focus on

technology, enterprise software. they're separately doing a $1.5 billion sale leaseback with american realty capital properties. >> most aggressive reit. >> buying 500 red lobsters and giving $1.5 billion to golden gate. golden gate separately is borrowing the money to pay $2.1 billion to darden to own red lobster. you could kind of net them out and say they're spending about $600 million to buy red lobster. >> buy a money loser. >> right. they'll be paying rent on these locations obviously to -- they're calling it a cap rate at 9.9%. that's what this will yield to arcp. >> there's a number of plays in here whether arcp or darden. i have tried to call jeff smith from starboard this morning, i have not spoken to him. i left a message. haven't spoken to him. to see if you recall, the big activist investor saying do not spin this off, do not do anything, let's have a special

meeting, and figure out what to do with you. he got 57% which was an incredibly high number to agree to call that special meeting. it ir' still saying at darden they will call the meeting but this does not need a shareholder vote. >> and otis keeps his job. otis keeps his job even though they've put out a lot of stories he does too much work away, private jet, all this stuff. he keeps his job. a strong transaction for darden. the buyback will be aggressive. people tell s selling have to understand olive garden still has a great crowd. >> why is that some. >> it tastes good and inexpensive. >> why is red lobster tired some. >> people are tired of the oktoberfest, same old same old. people associate that food with a not great healthy for you. the deadliest catch guys when i pull up with them, they hate red lobster, say that's the price generator of everything they bring in. if you like the guys -- which i

happen to on "deadliest catch" i never went back after they went back. >> i've never been. >> the trouble when they are all together, is red lobster is not large enough, if you were to turn it around, to offset weakness in olive garden. >> red lobster, geez, when i go there, it's like wow. it's -- i just find that -- i want seafood that make mess lose weight, not gain weight. >> what gave it away, the cup of butter or the fried shrimp. >> the schooner? >> the cup of butter that's a good call. i think that chipotle where they -- how do you like the way they slap those guys down, but, you know -- >> crazy. >> yes 75% vote against on the compensation plan. >> may be overcompensated but some would argue hey, they've delivered an enormous amount of shareholder value. >> a surcharge on guacamole. they're putting food price increases ever so -- regina my executive producer got slammed with a $2 surcharge.

raising prices. numbers are coming up. that stock -- you know what -- >> as kevin kingsbury pointed out on dow jones. red lobster 2, cmg is 15 in terms of billion to market cap. >> cmg has other irons in the fire and roll things out slowly. i was shocked so many voted against their pay. was that not unbelieve smbl. >> important story not getting quite enough attention. >> especially -- >> paying it some right now. that's an important story in the compensation pay. there's going to be more. one i'm looking at closely we'll talk about it next week. i have to keep doing my work. >> you're still focused on the work. >> i am. >> you always let the facts get in the way of the story which distinguishes you from so many others. >> try not to rush it. just rounding out on darden, just they are using a billion of the proceeds to retire debt and another 5 to $600 million for new share repurchase. >> right. >> up to $700 million in fiscal '15. they're also talking about g and a being steady at 5% of sales at what remains, of course, which is essentially olive garden to

sort of -- we'll keep an eye on that stock. if i hear from jeff smith what he had to say as well. >> a rather remarkable transaction. the spinoff thing i thought was flawed. could be a fraudulent. >> you were against the spinoff. now they do the sale. >> wouldn't have been bad. >> regulatory filings show buff let, lobe and paulson have added those stake ps in verizon. should you do the same. also ahead, electronics arts founder, former strategy executive trip hawkin, silicon valley entrepreneur has a unique take on tech. stick around to find out what we're talking about. one more look at the premarket. s&p on track for a down week. know what that means. first back-to-back losses since january on a weekly bases for the s&p. "squawk on the street" live from post nine at the nyse when we return.

shares of verizon on the rise this morning. buffet's berkshire hathaway dan loeb's third point, paulson and company have added new stake in the dow component according to regulatory filings as it applies to berkshire. about $528 million and talk about how todd combs is evolving the portfolio, maybe deep near tech. >> i mean verizon is a yielder that has consisting cash flow that did a good deal.

i know everyone is jumping all over the stock and by tuesday that will be forgotten. people say why did i pay up. what was going on. i happen to like verizon. you pay up 74 cents -- on a -- one of these statements the 13 that is filed and they sold it the next time you see it. i mean this is just stupid. it's stupid. i like verizon. not going to hurt verizon. ivan was the ceo. but you jump all over it because of these filings you're dumb as wood no offense to louisiana pacific which makes the best board there is. >> we point out the 13 fs are dated oftentimes. the vodafone transaction, the largest of all time, you know, great decision by them in terms of where they access the capital at the rates they did. although they missed the bottom of it. >> yes. >> you can't complain. you can't complain if you're verizon. you got it done. by the way there's going to be paying down debt for a while that may actually prevent them from participating in what seems to be this potential next rounds of consolidation. we get at&t and direct, which i

don't know -- >> you're right. >> or whatever may happen. you know, also i wonder how many guys were in vodafone and end up from verizon. i don't want to draw -- it's interesting a little. a little. >> yeah. right. but i mean look, verizon is not -- you're not buying salesforce.com when you're buying verizon. >> how about icahn upping his apple stake. >> he kind of tweeted he was going to -- tweeting his 13 filings. look i think apple remains an inexpensive stock. i know no one wants to hear that. they want to hear something is going to happen. it's not. it's just an inexpensive stock. >> 600 has proven to be resistance. >> that's just wow. you can't get through that brick wall. >> why is that? >> i don't know. the chart is telling me over and over again, the guys are telling me -- >> when is the split happening. >> shortly. >> that will be interesting. >> that will do away with 600. >> remember what happens is people get seven shares will

probably sell three four. not like an event you want to get ahead of. >> the developer's conference is the beginning of june an rumors that somehow if there is news to be had it might come then. we'll see. >> i tend to not like the situations where you guys celebrating they got a deal and then come in on monday and we didn't see a deal. some people must know something and others don't. that's not good disclosure just for the record. >> when we come back, jim's mad dash and count down to the opening bell. the last one of this week. on monday an entire you do not want to police. an exclusive with the ceo of pepsico indra nooyi. sara will have that. another look at futures, more "squawk on the street" from the nyse is straight ahead.

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all right. nine minutes before the last trading session of the week. we've got -- >> two shockers. >> may in the works here. >> two shockers. >> start with rack space. okay. rack space on the call on may 12th and it's like wow, it's good. the cash flow is real good, starting to get better and jpmorgan said look, said listen, it's time to buy the 15th. buy rack space it's overweight. bingo. they're for sale. >> come out and say they've gotten inbound inquiries. morgan stanley has been hired and now they're considering selling themselves. >> i find this shocking. i mean did it really all happen within the quarter? could they not mention on the conference call. how does it work? >> well -- >> how is that possible? >> well they make a decision to

put themselves up for sale essentially is what they more or less have done. >> just announcing the quarter. is that right? >> the timing is a bit strange, i agree. i don't know when the inbound inquiries came in but i agree. >> talking about going to a conference -- i like rackspace -- >> intelligent cloud what's it worth? >> cisco is moving in. i think that cisco newly -- newly -- >> not -- >> energized. >> rejuvenated. cisco, i believe in you now. but emc is coming in. i was shocked at this. shocked. i mean there's people short rackspace up the whatzoo. >> they're covering now. >> saying like we're 60 plus -- >> that's wrong -- >> little high -- >> the company does have intelligent cloud and everybody thought they could be amazon but they have value added. it shocked me. >> from up 20 to down i don't even know, wwe, certainly a body slam. >> benchmark security telling you it's going to happen two all

my hulk maniacs take your vitamins and you'll never go wrong. you better lean on the hulkster. the money from the new deal with nbc is disappointing. >> in other words, they renewed, what nbc already had. >> domestic tv deal spoo but they kept it. they didn't find anybody else an didn't get necessarily a higher price. it was less than expected. the key is the costs having to do with the new network, the wwe network, what they're going to get to in terms of operating income before appreciation and amortization given their cost structure which seems to be going like this. >> right. i think it's just deferred. i think it's not destroyed. i think there's value here. i think this is an over react -- they feel very -- >> there's value here. value right there. i'm just kidding. >> base camp two is always -- whatever. i don't think it's so bad. >> you don't? >> i think they -- look there were -- >> do you have a thesis on why

it's not so bad? >> they still have a road pap. it -- road map. it's going to take longer. >> to get to the $125 million they're looking for, they need to get to over 2 million subs instead of -- >> their credibility is completely shot. i hear you. but at nine bucks, i don't know. waiting for eight months to see how they do, it might pay. this is a wild company by the way. it's been a wild trader. and it's like electronic arts. some of the stocks have gigantic moves when they move. must have been a short squeeze up there. >> anybody short today is feeling good. a lot more to follow. the opening bell five minutes away.

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[ bell ringing, applause ] five tech stocks with more than a 10%... change in after-market trading. ♪ all the tech stocks with a market cap... of at least 50 billion... are up on the day. 12 low-volume stocks... breaking into 52-week highs. six upcoming earnings plays... that recently gapped up. [ male announcer ] now the world is your trading floor. get real-time market scanning wherever you are with the mobile trader app. from td ameritrade. welcome back to "squawk on the street." i'm phil lebeau. breaking news regarding general motors. cnbc has learned that general motors and the department of transportation will be entering a consent decree, essentially this decree is general motors agreeing to pay a substantial

fine regarding the timeliness of how it handled the ignition switch recall in terms of conveying information to the federal government as well as to consumers. we understand that the consent decree is regarding the timeliness. we do not know the fine general motors will be paying regarding this issue. during a press conference coming up later this morning, the department of transportation will make it clear this investigation into the ignition switch recall is continuing. there are a number of issues that still need to be worked out but at this point, we can tell you that general motors will be paying a fine relative to the issue of how quickly or how not quickly the company handled getting information to the federal government regarding the ignition switch. back to you. >> phil, we should point out you're going to take stock of the entire recall in your documentary this weekend, right. >> absolutely. and this is front and center in the documentary failure to recall. the investigating general

motors. front and cen center is what did general motors know, when did they know it and why didn't the federal government get more information from general motors in a quicker fashion which obviously the government says look, if we had more information, if we had more detailed information we would have prompted them to initiate a recall sooner. that's in the documentary. that is a central question we're going to be looking into. >> phil, substantial could mean a lot of different things. >> absolutely. >> to a lot of people. any sense in terms of actual size here or not? >> no. too early. i've talked with a number of sources in detroit as well as in washington. nobody wants to put a number on it yet, but keep in mind, you know, the maximum fine for d.o.t. is $35 million. that's a slap -- not a slap on the wrist for general motors. i think it's going to be much more substantial than that. >> okay. >> we'll see what they say at 11:15. phil's documentary airs sunday night, 10:00 p.m. eastern time, called "failure to recall". right here on cnbc. meantime we got a day where housing starts beat all three

retailers, post positive comps. will be a record for nordstrom. >> nordstrom sold the credit card receivables. worth pointing out, they don't like the darden number but they do love the [ inaudible ] number. dillards is soaring. they've got dillard, jc penney, of nordstrom. and you start thinking wait a second, how bad is retail? you get that housing start number, start thinking how bad is housing. a lot of people say jim you don't know what you're talking about, the housing number is bad. this is a lying eye to the situation. my eyes saw it. they could be wrong. i have to get to the op that mol gist. i look at the number better than expected, never outthink it. >> you can't hide your lying eyes as the eagles once said. down at the big board, jumeje of beauty products celebrating its ipo. lot of chinese ipo. >> over at the nasdaq,

celebrating its ipo truecar a website that offers up front car pricing estimates. we'll talk to the ceo after the stock opens. and your tip about vips got a lot of attention. >> look, i want to -- my hat's off to jim stewart who introduced my to vips a long time ago. his columbia class which is the most -- journalism class, mixed, but does -- they dot most thorough analysis. i had the privilege of addressing this class. came up with that one as the best stock for 2014. i kind of jotted it down. holy cow. >> i know. interesting. in the 10:00 i interviewed john burbank who runs passport. >> that was a great interview. >> second largest or third largest holding as i mean -- as it would be coincidence. talking about that when we think of e-commerce and china you may think alibaba, that's all you think, but there have are a lot of smaller but important companies. >> with great bargains and large

brand names that we're all familiar with. it's like is it going to be the on-line walmart? i don't know. but it's got good pricing. attractive site. i could not read a word of it. >> how is that going? >> i don't know. how is your mandarin. >> not as good as -- i feel like the greatest speech ever, the kevin durant speech, where i don't understand a word you're saying but i like you. >> dow is relatively flat but what the benefits are going to come from verizon today. best performing component. >> look, again, i go back over who's filing, who likes this, doesn't like that. you saw leon cooperman loves jpmorgan and other guys who say listen, you can't touch jpmorgan. we don't know. i mean maybe bought jpmorgan at the absolute bottom and the other guy sold jpmorgan before the breakdown in the quarter we don't know when people sold. we don't know when people bought. >> importantly yesterday in addition to all the internet rules so to speak that we received or different things that we got from the fcc, we got

the rules on the auction of so-called incentive auctions that will take place in 2015 of what is held by the broadcasters. it's been a key consideration, in fact, not just for sprint and t-mo to see how much might be available to them and not to at&t and verizon, but also, for at&t and verizon. they can still secure meaningful low-band spectrum at the upcoming auction. it didn't come out that badly for verizon and at&t in terms of not being able to participate perhaps to a certain extent. >> that's news. >> and that was helpful. that may be another reason why verizon is up. importantly, of course, sprint and t-mo looking and watching closely to see what rules are and now i think you start to see potential momentum again for something i've been talking about here for a very long time, which is softbank's desire to get a deal to try and acquire t-mo by sprint which it controls, getting getting the

germans to agree to hammer out that deal, even though it's clear there will be opposition from the fcc and the doj. >> that stock sprik spiked yest. i watched the spike talking about disclosure, give me a break, come in and buy that stock up you know something that's not right. some know more than others. >> you have to figure out a break fee and how they go about doing that and what the numbers look like. a lot to consider there, but again, as i have been reporting for some time, it is -- >> what's going to happen -- >> it is the single focus of massa son and softbank to get this done. we need scale. >> we wake up on monday and a lead story in the journal say sprint and t-mobile might merge. won't mention any of the month work you did and i will come in and say they broke the story, david. >> well -- >> jc penney up 16%. we've been through the numbers. gross margins up, comps up 6. they only forecast 3 to 5 back

in february. >> look, liquidity off the table, first thing you do when they do a turnaround. well done. secondly you clear the merchandise out that was bad. third you try to bring back st. john's bay, worthington and pvh they have izod which a lot of us felt was a tired brand but he said this was an important initiative for jc penney, close to mike ullman and pvh travel trust should go higher. >> highest of the year for jc penney. >> unp the two for one raising their capex a touch for 2014. >> people are going to say let's buy trinity the railcar company. the stock is up big. not surprising that it's not giving -- that it's giving up a little. >> almost a 52-week high. >> union pacific has done so many great things. they preannounced around 160, dropped to 150 and then it's been on fire. they are a huge, huge, huge mover of oil and you keep coming back to these oil companies,

basically saying you know what, you don't want to do pipe, we got to get it to you, use rail. union pacific forward looking. they're also just a big intermodal and shipping to california to be able to send to china. i saw the baltic freight up again. baby steps, third straight day. >> is that important? >> baltic freight determined the big decline in china. if it stabilizes people will say stabilization at a lower level. >> right. interesting to note that darden shares we mentioned are down 3.5% on this deal. >> people feel otis keeps his job and there's no takeover. >> there was more to be realized from red lobster. i know smith at starboard has been talking about that, but -- >> i see. takes the steam out of the move. >> might have been more value perhaps, although again i haven't heard from him. just looking back at his presentations he's been making. not a great reception for that deal. >> and getting pushback that rackspace is for sale and won't mean that much. look, rackspace if there was a

buyer, this stock would be up more than it is. if there was something else going on, a buyer waiting in the wings for darden it would not be down. maybe there's no buyers waiting in the wings and people made contact -- >> rackspace. >> isn't up as much as i thought it would be. >> we'll see. just important to point out -- >> inbound inquiries, i have nothing to share. i have not spoken to anybody in terms of getting sense as to whether there is a process or will be or how significant the inquiries are. >> i have been negative to the quarter. the quarter was strong on the cash flow basis. people felt this was a commodity product, able to distinguish themselves in a world where amazon keeps cutting prices. >> right. >> a couple reports about start-ups, pinterest raising a couple hundred million, valued at five and reports ubber is looking to raise hundreds of millions valued at ten. >> air b and b is at ten. >> these fees on hold that's why i don't like that group. i know when we saw at the white house correspondent dinner the man behind ubber, travis, he was

telling me basically he will be the richest most powerful man on earth certainly eclipsing massa son. and it was like one of those moments i said fine, i'm going to get cocktail. good for you. >> looking forward to having an interview when they take that company public. >> the most powerful man on earth. >> before that i had been with the most interesting man on earth when i have a beer i like to share. the most interesting man, most powerful man. quite a moment. >> he was bullish on travis and ubber. >> yes. >> ubber. he said do you have an account? i said yeah, i got an account. he's saying $10 billion is -- the sky is the limit. >> what is interesting about many of the companies that choose to stay private and do these continual rounds, raising the valuation is, that a lot of their growth is taking place and when they do hit this floor or when they come public, we will start to question whether the best of their growth is behind them. >> oh, yeah. >> and many of these venture investors in as opposed to

perhaps the larger -- although we see now hedge funds starting to do more venture investing and the likes. the public markets are not able to participate as much. >> i don't like the value -- if they -- they got to keep pumping out these stocks, i'm going to tell you, the ipo market will not be receptive to the valuations that venture capitalists are but the bankers will feel beholden to the capitalists and get the deals done and force them down the public's throat issuing maybe only 7% of the stock, fool everybody and fool none. >> you get the lockup expectation as we did in twitter. benchmark is not a seller every other firm was. >> walk outside a piano hits you on the head, wow that hurt. >> all those guys. >> i'm with you totally. >> sold to you. >> sold to you. >> with that, dow is up 7 and bo bob pisani bob pisani is on the floor. >> mixed markets but the action in the ipo space. look at jumai here. waiting for a pop for one of the ipos and got it. on-line beauty products priced

11.1 million shares above the expectation shares at 22. the price talk, 19.50. 25 to 27 is the indication. increase in the size and price, i haven't seen that in ages. i had to check on that, all the way back grub hub the last company that had an increase in the size and price, that's a good indication but tough market for ipos. a deal on nasdaq not as successful so far, truecar, which is auto comparison website, priced at $9. price talk 12 to 14. what happened there? totally different space. much smaller margins and hard to get repeat customers on that. how many times do people buy a consider. has not opened. we'll see how that opens. very tough in the ipo market so far. look at renaissance capital ipo, here's what's important. it closed at a new low yesterday. that's the main indication. 60 recent ipos. there's your indication.

st still waiting for a clear bottom. half of the 107 ipos that have traded so far this year are still below their initial price. half of the 107. that's not a good healthy market. meantime everybody is talking about india, mody, landslide win there since '84 single party has won a clear majority. the bombay sensex, your main index, new high, how do you play india and there's etfs, a number of etfs. you can play a lot of ways. one of the main wanes, the nifty fifthy, 50 biggest stocks in india at a hue high as well. wisdom tree has a well-regarded etf. here's the one i think is most interesting, infrastructure etf for india, amazing how they sliced and diced these. consists of 30 companies that are in the infrastructure business, there it is, inxx. mody made it clear that infrastructure is a primary way he's going to try to move the economy and a lot of people are

interested in looking at that particular one. take a look at india stocks. the big names. ta tta, the big bank, they trade in the united states. flat right now. icic bank up 7%. retail earnings you have lit on this. i'll make it blunt to you. nordstrom and jc penney and dillard had generally their numbers a little above expectations but pretty dismal and here's what one encouraging thing i would say. the guidance has been stable. i think that's very important. so macy's and nordstrom at least reiterated their guidance. last week, cato, gap, l brands also raised their guidance. i think that's fairly encouraging. it's been pretty awful if you look at the numbers. so the 51 companies that have reported so far, retail metrics, earnings are down 3.7% year over year for the 51 companies. about 120 retailers. half of the season is over and earnings are down 4% year over year. tough start to the year. the dow down 7 points.

>> thank you very much, bob. from one floor to the other, let's get the bond pit action, rick santelli in the cme in chicago. good morning, rick. >> good morning carl. i know the housing numbers were much better than expected. we all agree. we also need to be very objective. the existing home market is bigger than the new home market. look at multifamily, i believe they went from 303,000 on an annualized basis to 423. that's, what, close to 40% increase whereas single family moved from 644 to 649. that's 644,000 to 649,000 on an annualized basis. that's a little less than 1%. not that it isn't good news. but in the context of the entire housing market, we need to acknowledge that multifamilies have been on a tear as of late and the economic implications are that family creation single family creation is more robust for the economy. now if we look at ten-year note

yields they're up a couple basis points today. they're down about 11 basis points on the week. one day and a two day are pretty interesting. if you open it up to july, you know, many were saying we didn't close the lowest yield since july. depend where you marked the market on the close. in my case it was since july of last year. others saying october. we're splitting hairs. the fulcrum around 2.5%. the boon yields it is at a one-year low hovering higher than the 130 it hit yesterday but does drive home the point that you have the same dynamics in europe that you have in the u.s. sovereign, ends up going lower yield, as things disappoint a bit but you have to do the spread against the southern europeans. speaking of which, look at a 20-year chart of ten-year spanish rates. 20-year chart you can see they popped up yesterday and back down a little today. they're virtually at the lowest yields ever. you need to ponder that considering if you dig down in their internals wow, they've wall papered over termites.

month to date on the euro versus the dollar. it stabilized. it stabilized at lower level but this stabilization does call into question can the eurozone and ecb and all the technocrats deliver their promises on the ba zu kas. amendme i'm not sure. back to you. rick santelli. when we come back we are on ipo watch. car pricing comparison website truecar going public today. still waiting for their opening. when that happens we will talk with the ceo scott painter who actually once served as an early adviser to tesla. "squawk on the street" is back in a minute. monday we enter squawk alley. intersection of wall street and technology. >> focused on three things, growth, operating efficiency and

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boasting and vulgar comments are not okay, the message deutsch bank is sending to traders according to the ft. the co-head of deutsch's investment bank has taken the step of sending out an internal video with a severe warning to traders about their on-line behavior. take a listen. >> some of you are falling way short of our established standards. let's be clear our reputation is everything. beings boastful, indiscreet or vulgar is not okay it will have serious consequence ps for your career and i have lost patience on this issues. >> that's an issue in some cases keeping them off the bad habits

social tends to breed. traders aren't that different. >> okay. that was terrific. i like that. mr. fan i woongts screw with him. he's lost patience. >> yeah. >> and people are not -- what's been going on there? >> makes me want to get the tapes. >> i want to see. e-mail me guys some of the best e-mails. i'll do a best of on "mad money." >> i have lost patience. >> send me the best of. >> a couple instants of where culture is. the ceo having to say hey, guys, let's get it together and rally. >> always think when you send your e-mail that it could be on the cover of -- on the front page of the "new york times." i know you -- just imagine on the front page of the "new york times" how does it look if not so good for me. >> no question. >> that would not be -- >> we'll get stop trading with jim. market relatively flat and

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stop trading. >> here's one that you want to keep track of. it had an amazing move and kind of stabilized called itmn. a good analyst, brian scorny, writing very positive things. they have a pulmonary fibrosis drug, it's a fatal disease, when they announced the initial results people got excited and nothing going on. phase three results from their study at the american thoracic society annual meeting and i think there's going to be fireworks. i think this could be a good thing echoing what baird is saying. good chatter i believe. >> it's been a lot of health care, pharma news this week. hard to read. not one of those sectors on a week like this -- >> no. remember those stocks are still out of favor and they're all part of the collapse of when you mention the -- when bob pisani gave you that information, the biotech stocks have been horrible, the ones that came public, the worst of the worse. i think intermun is for real. think about taking a look at it.

>> abbott news today picking up a uit. >> latin american company. >> $2.9 billion deal we didn't mention. brand of generics. >> it's not an inversion. >> right. doesn't count. >> latin america -- latin america, a lot of companies go down and get killed in argentina and killed in venezuela, they don't care. clorox, big venezuela business. >> it is amazing how often we read an earnings release and see currency change because of venezuela. >> no one wants to leave. >> rick santelli has consumer sentiment. >> breaking news! preliminary may michigan consumer sentiment 81.8. now, it's easy to find the comp. we go to the winter months. march. when it dropped down to 80.0. if you overlook that and try to look beyond the weather implications you're looking at november when 75.1. this could change. this is following a final read last month for april which

stands at 84.1. back to you. >> all right. thank you very much, rick santelli. we want to talk about what's coming up on "mad money" tonight. >> we have aqua america. a lot want water plays. this is a water play. solid kind of quiet growth stock. trying to feature companies that are not wild that people can say you know what, this is not going to be an inversion necessarily, it's not going to blow up. not software as a -- as some sort of disservice to your portfolio, not biotech. it's water. you know what you can do worse in this environment than water. >> when you think back to this week. does it make sense at 2.6, everything was okay, but at 2.46 the world was falling apart? >> absolutely not. we'll say why didn't we think it was just because there was a bond shortage. spain. having traded bonds for a living, the money is just -- you can go buy spain, german, italy on the wire, and i think what's going to happen we're going to say interest rates going lower,

always good for stocks. so let's not lose sight of the fact that the market had moved up a great deal, david tepper i think is a smart man, not taking anything away from him, but stocks that got hammered yesterday that are coming back today. let's not lose sight of that. keep our headser. >> have a good weekend. see you tonight. >> pulitzer-prize winning columnist jim stewart, growth versus value after the sell-off and tenth anniversary of the queen mary 2. live to the berth in brooklyn in just a minute.

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10:00 a.m. eastern time. this is "squawk on the street." our road map, is this the year of volatility. a day after a rough ride in the markets yields dipping below 2.5, relatively quiet this morning, is it the time to sell in may. >> hedge fund moves into mature names like verizon and out of high flying tech names. start-ups like pinterest and ubber see sky-high valuations this morning. we'll ask jim stewart, growth or

value, which market is it. >> american retail is dead until last night, cold weather, weak consumer blamed for bad earnings and then jc penney and nordstrom blew that story out of the water. stocks up huge this morning. >> the major indices are stable this morning after, of course, being hit hard yesterday as bond yields fell and the ten-year dropped below the key 2.5% level. the dow lost 1%, the s&p 500 almost the same as you can see. let's get analysis bringing in charlie, vice chairman and portfolio manager with aerial investments to offer technical perspective, dan fitzpatrick. gentlemen, good morning. >> good morning. >> charlie, it seems to me this was a very important week for the markets because we had genuine fear, visible this week and a widespread concern now that we're not going to see the sort of explosive growth that so many people had said we would do. what is your take now as we head

into the weekend? >> you're absolutely right. that's the best time to be a buyer when there is fear. we've had people be relatively confident about the economy at the end of the year and people have gotten negative. people who had been bullish are getting bearish. we thought today's housing start number was very solid. wing think there's -- we think there's better opportunities to invest today than a month ago. economy is going to get better. housing will help the economy. energy is strong. autos are strong. we think we're going to have a good 2014. >> charlie, we interview on this hour equity strategists from big banks all the time. and very, very seldom do they actually say what david tepper said yesterday, which is the market as far as he's concerned, is looking dangerous and you shouldn't be too freakin' long of stocks. why is that, charlie? why do so few say what david tepper said sp. >> actually, i think that's becoming more of a consensus view. there are a lot of people who are very nervous about this

market. wave gone up a long way over the last five years, and people do correctly say markets don't go up forever. people are nervous about the economy. the first quarter numbers, flat gdp growth scared a lot of people. we believe that a lot of that was weather related and that we're going to now start seeing the true fundamental strength in this economy. >> dan, a lot of the tectonic plates in the market have moved significantly, not just the yield on the ten-year, the russell 2000, everywhere you look stuff seems to be happening. from a technical perspective, what can you pick out for us as being the most important? >> well, what i look at really lately is the railroad index, i look at that, financials. we are in consolidation, simon. this is not a momentum driven market anymore. so i'm looking at key levels. we actually tested a key level just heard you mention about the ten-year treasuries, the yield, down at 2.5%. that really has to hold. that's to me a big deal because -- but we've tested it

several times over the last five months or so. i think three times tested it again yesterday, and that's held. every time it's been tested the market has continued higher. i look at that. if you want to go into that chart even more, though, you can see potentially a double top. there are definitely technical issues with this market, but when you really think about it, as our other guest just mentioned, these technical issues every time it seemed like the market was topping, have actually been buying opportunities and you have to stick with that pattern until the one time when it breaks. nobody can really predict when that is. >> charlie, i wonder why we haven't seen a full-blown correction or anything like it. even with the bumps and bruises, the volatility we've seen recently, the dow is pretty much unchanged for the year. >> yeah. >> because there's nowhere else to go with your money. the answer to your question is, there are no good opportunities in bonds. bonds are grossly overpriced. people don't want to earn zero

on their cash. and so equities relative to other alternatives may not be screaming cheap but they aren't overvalued like bonds. that gives an underlying floor to the stock market. >> we offer, charlie, importantly, we have one underlying floor of the stock market that's being removed explicitly and that is the federal reserve which is exes itting its money -- exiting its money printing and will move interest rates. if you don't have that floor, and you have confidence ever slightly, doesn't that mean that the multiple at which the market trade, in other words the price that people are prepared to pay for stocks on a given revenue stream, could slip and, therefore, the market could fall? >> you're right. that is the big risk. what happens if interest rates go up a lot. i would argue that if interest rates stayed at 2.5%, the stock market is grossly underpriced. the stock market is already taking into account an increase in the risk free rate. so i would argue that if we get

what everybody expects, which is a ten-year at 3.50 it won't be that bad for the stock. >> dan, how do you square the fact that the small caps are clearly in the cross hairs and bearing the brunt of the selling and have actually been in 10% or more sell-off territory with the fact that you see a better economy and a more optimistic view of corporate earnings and of this economy? >> well, the small caps, the pullback in those, that's really just pure momentum. that's the way i look at that. and there's a consensus out there that once the small caps crack, the rest of the market follows. and that's really not born out by the data. so you have to look at the small caps but i just see money coming into the market as literally a lack of opportunity. you're always looking for growth. what's happening? this money is coming out of the momentum names going into these solid stocks. a lot of these dow components, a lot of the industrial stocks, some of the -- not so much the

financials, but definitely the industrial stocks are up. they're continuing to track along these all-time highs and that's really what you want to see. frankly, the healthiest thing for the market would be to just driven sideways and frustrate the heck out of investors for as long as possible. >> wow. >> that's really the way i look at it. you really want to see a base built here. i don't want to see the momentum names come back. i don't want to be a cheerleader for the market. i want to be an investor in the market and make money slowly and steadily. the momentum names have broken. it's going to take a while to repair that. >> okay. so many questions, guys. thank you for answering at least some of them. dan fitzpatrick and charlie. have a great weekend. >> thanks for having me. >> you have deal news today related to a contested situation involving darden restaurants. it has announced it is selling its red lobster unit to golden gate ka tall for $2.1 billion in cash. the deal price will result in

$1.6 billion in proceeds after tax to darden. a billion of that will go towards retiring debt and $600 million toward increase in stock buyback up to $700 million. darden will maintain it 2.20 cent annual dividend. starboard the activist fund which owns more than 5% of darden shares succeeded in having shareholders call for a special meeting or get consent to call for a special meeting to stop what it felt was an unwise and rapid -- too rapidly deployed plan to spin off red lobster. darden saying they contacted as many as 70 potential strategic and financial buyers for this unit, ran a real estate process to facilitate a sale leaseback financing. that is a part of this deal. golden gate will have a $1.5 billion sale leaseback of the more than 500 red lobster

restaurants it will take possession of with american realty, tripling at least reit, so they're going to take in 1.5, give out 2.1 billion, what's it cost them? about $600 million to take over what is a -- not a strong performer at this point in terms of red lobster. for darden it's saying we can now focus on our olive garden franchise to a certain or lesser extent, capital grill, longhorn steak house. they announced the plan to separate back in september despite what was significant opposition from what might have been a lot of their shareholder base. for how they're responding this morning, you saw the stock down a little less than 4%. does not require a shareholder vote although darden saying they will hold at some point this special meeting that their shareholders did request using the consent process. >> first red lobster, 1968. did you know that? >> i did not. >> i remember going as a kid. >> long time. >> rbc out saying they estimate

60% of the new darden will be olive. that's a lot. >> it is. and, you know, clearance otis for his part seems to have kept his job for now. although a lot of criticism? terms of what the company is doing and how they're performing. their claim once we get red lobster out of the way, they say they're selling nine times ebitda, we're going to proceed with our plan to remake this company and focus on that franchise. >> when we come back, obviously a rough week for the retail sector. major names like walmart, kohl's, pulling the index down, but it's not over until it's over. some bright spots from penny, nordstrom, dillard's spiking on positive results. how to play that. you've heard about gm's recall. what's it really like to be driving when your car just shuts down? we're going to demo that next here on "squawk on the street." (announcer) scottrade knows our clients trade

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announcer: make sleep train your ticket to tempur-pedic. ♪ your ticket to a better night's sleep ♪ shares of jc penney and nordstrom ralingly after they reported numbers after the bell that did exceed wall street expectations. jc penney notching its second quarterly gain. joining us michael bennetty and equity research analyst at ubs, cnbc retail analyst stacy widlist from sw retail advisors. you know, michael, serious signs of hope in this jc penney report wouldn't you say?

>> look we upgraded it from a sale to a neutral last week and they're doing everything they can. the stock story felt pretty bad to us until recently you look at what they're dealing with a year ago when, you know, they had the ceo ron johnson from apple really started feeling like his job was at risk and strategy unwinding it made for easy comparison and the business looks like it's improved a bit. >> a bit is the key word you said there. clearly mr. ullman has managed to stop the bleeding but it's going to take a long time to get this company back to growth and profitability if he can do that. can he? >> i mean, absolutely. i think as michael said you have to look at the comparison. we're up against almost a negative 20 on top of a negative 20. so yes things are getting better. i think one of the crucial keys is that they're bringing back private labels, something that was taken away. it has a much higher gross margin so that certainly is helping here. basically he's undoing, he's doing a lot of damage control,

from what ron johnson brought in. but i think, you know, the second half of the year will really be telling in terms of after we get through all that mess and comparisons get tougher, what is the business really look like? >> michael, what about you. the company is still losing money. can he return his company to profitability and when does that happen? >> i still have my doubts about that only because they had to take on so much debt to stabilize the business last year and they have a big, big interest payment that's going to lean on their cash flow for a number of years. what stacy said is directionally correct. going up against having almost 20% of their square footage off-line and construction on the home department. more normal business comparison in the second half of the year it's easier than the first half to show that your business is growing or improving sequentially. as they start to lap business conditions, they're going to be in a lot of the same situation that other retailers are as we see from macy's and kohl's this week it's very competitive throughout. >> you know, stacy, seems to me

the danger here is everything gets black and white. ron johnson bad, ullman good, here we go, short covering rally, stock shoots up. any recovery to which both of you are alluding is going to be very difficult, very patchy and going to go forwards and backwards presumably down that track. so my question is, stacy, can people buy in because this is the bottom or would that be a dangerous thing to do? >> yeah. i mean simon, the stock has moved on average 12% over the past six, seven quarters going out of earnings here. so you have to look at the business. obviously not going to be a straight line here. there are things they can do again to undo things that ron johnson did to stabilize the business, but again, their margins are down almost 1,000 basis points from several years ago, lost 40% of their sales so getting back to stability and profitability, it's a long way away from here. >> the other big question looming over this company michael is the succession issue. mike ullman was asked about it. sort of dodged the issue.

should investors be worried that there doesn't seem to be a candidate in sight? >> i think that, you know, it's been -- the company has been embraced the fact that he wouldn't be there for a long, long time, ever since he got back and he was the right guy for the job at the time to help stabilize it. it's not like it's new news if they say we are looking for somebody. if there's credible retail management out there looking to do something else, this is one of the very -- one of the harder situations i can think of to come back from in the u.s. it's going to take someone special to do this but there's still a lot of challenges ahead. >> all right. thanks to you both for joining us on jc penney. certainly it is a stock mover today. the stock up nicely, michael and stacy on jc penney. >> coming up in just under an hour the department of transportation is holding a press conference and cnbc has learned it will announce a substantial fine against gm relating to its investigation into the faulty ignition switch that led to at least 13 deaths.

2.5 million cars were recalled due to a deadly ignition switch problem in which some vehicles would lose power. phil lebeau experienced that first hand and joins us with more. >> the faulty ignition switch resulted in at least 13 deaths and 31 accidents. it is hard to understand exactly what it would feel like for a car to suddenly lose power while driving so i went behind the wheel of a recalled chevy cobalt with the faulty ignition switch. take a look. >> jake fisher, director of auto testing at the non-profit consumer reports, is showing us why 2.6 million gm cars are being recalled. >> how easy is it going to be for me to accidentally turn off the ignition and put it in -- >> depends how much is hanging off the key ring. >> there. >> after a tug on the key chain, i deliberately steer the car back and forth. >> the power steering is gone. >> there's a lot of engine power, power steering and power

brakes. >> it is not easy to avoid the cones. i did it, but it's not that easy. >> how much effort did you have to use in the steering wheel to use? >> quite a bit. >> the flaw in the ignition system makes it possible to turn the key off accidentally. on the road it can lead to an anxious moment, sudden surprise, or worse. and the other thing to keep in mind when the ignition switch is going back to the accessory mode, in other words not in the run position but back to accessory mode, you have the loss of air bags. no power to fire the air bags in case of an accident and that's at the center of this investigation that's being conducted by the national highway traffic safety administration and department of justice as they look into what general motors knew or didn't know and shared with the federal government over the last ten years. so this is at the heart of this entire recall, carl, this issue of the key sliding back into the accessory position, how easily can that happen and general motors by the way have made it

clear that they think these cars are safe to drive until they're fixed with just a single key in the ignition. nothing hanging off of it. no weight at all on it. >> phil, we can't wait for this sunday night. phil lebeau. tune in sunday, 10:00 p.m. eastern and pacific for the premier of "failure to recall investigating gm" here on cnbc. let's send it over to dominic chu for a market flash. >> carl, so check out what's happening with canadian solar which is getting hit hard and tragsds the solar panel maker forecasting much lower than expected quarterly sales as it expects to recognize most project sales later on. investors are being impatient for right now. the stock is down toward session lows. back over to you. >> thank you very much, dominic chu. up next we're live on board what some call the grandest ocean liner ever built. the queen mary 2. celebrities and royals have been passengers. now it turns ten. a birthday celebration. next. on cnbc. all stations come over to mission a for a final go.

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here in new york one of the mightiest cruise ships is celebrating her tenth anniversa anniversary. the queen mary two will leave bound for southampton in the uk with much fanfare. joining us now from on board the qm 2 is david dingle the ceo of the line which is three ship subsidiary of mickey arison's carnival corporation. welcome to the program. nice to see you, david. >> good morning. lovely to be talking to you this morning. >> i hear we're late to the celebrations. what have you guys been up to? >> well, this is the second celebration within the space. last monday queen mary 2 sailed from southampton to mark the tenth anniversary of her first westbound transatlantic crossing and today here in new york, we're doing exactly the same in

reverse, an we are celebrating the departure of the tenth anniversary ebay transatlantic crossing back to southampton. >> is she still the world's largest, longest, tallest, widest and most expensive ocean liner to be built and fastest sailing today? more than the titanic or qe2 that preceded her? >> oh, yes. this ship in terms of sheer volume is twice as big as the qe2 and about four times as big as the titanic. yes, this is the largest oceanliner which has ever been built and, of course, is afloat today. >> to people who don't cruise the emotions you guys have about ships is something of a mystery. but how do you feel about the ship? >> well, this ship is absolutely unique in this day and age. unlike the very many cruise ships which have entered service

in the last 10 or 20 years, queen mary 2 is an oceanliner and there's a really important distinction. this ship carries forward the great traditions of sailing by sea on these liners which was i think in its hayday in th the '30s, '40s and '50s. what we offer on board is designed for today's modern traveler but the heritage, the style, and the sheer glamour is preserved here on "queen mary 2" as on no other ship. >> the heritage and the style. i was trying to work out when you were bought by mickey. i think it was 16 years ago. you sit in the carnival corporation. you were going to interrupt me some. >> i think you're absolutely spot on around 1997/1998 when the acquisition took place. >> so, of course, now you've got this new ceo who's acting for mickey arison, arnold donald, what he's saying there are ten

brand, all of you have been fiercely independent and he's going to make you work better together to leverage the assets that you have in return value to shareholders. my question to you would be, what have you done to help the rest of the business recently or do you stand aloof and british on your own with all the tradition? >> no. we need to be very, very clear about arnold's vision for how our corporation works. we have ten very distinct brands within our business and preserving the distinct identity of those brands is vital. that is what differentiates us from all other cruise corporations. behind the scenes, how we leverage our scale, be it in our purchasing ability, be it in common system platforms, and the sheer exchange of ideas and interaction amongst the people within our business, that is what we believe is going to make an enormous difference and give

us the next big step forward in growing the success and the profitability of our business. >> david, enjoy your celebrations tonight. it's nice to see you. david dingle joining us there from on board the "queen mary 2." thank you very much. big valuations for profit light start-ups this morning as filings reveal a shift to conservative plays from big hedge funds. jim stewart of the "new york times" will talk about that in just a moment. lot of purchases for my business. and i get a lot in return with ink plus from chase like 60,000 bonus points when i spent $5,000 in the first 3 months after i opened my account. and i earn 5 times the rewards on internet, phone services and at office supply stores. with ink plus i can choose how to redeem my points. travel, gift cards even cash back. and my rewards points won't expire. so you can make owning business even more rewarding. ink from chase. so you can.

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there are the markets lower as you can see across the board. talk of valuations being too expensive. air coming out of the high flying names like twitter and tesla. ubber just reportedly gets a $10 billion valuation an pinterest $5 billion, expensive cheap, a bubble. he's seen it all before. jim stewart columnist at the "new york times" joins us to talk about these markets. on-line scrapbooking, $5 billion. >> well -- >> which is it high valuations or not? >> nobody gets it. these young start-up companies you can't really value them. it's about looking at the future. i think the big number here, the big name, was whatsapp. the venture world said oh, my god we're ratcheting the up the values across the board. venture is in a world of its own. not like the market. you see what's happened to twitter. reality does begin to descend eventually on these stocks. so you might get a big gain, really super early investor but longer term these valuations are

ridiculous. >> the despaisparity there, the highest since early 2000s. seems like this is a sweet spot for the early start-up companies to raise money for investors. >> they get a whole portfolio of these things. say drilling for oil. you only have to hit really big to bring up once maybe the whole portfolio, but the average investor has to be really cautious if they don't have the resources to diversify like that. >> i love jim stewart. comes on and says i want to talk about bond yields and inflation. >> does anybody get this? i mean we've got the ten-year at 2% and i mean -- inflation at 2% and ten-year at 2.5. where's the margin for error there. who is buying this? this bond rally is utterly baffling. i'm glad i don't try to time the bond market. >> maybe i can help you. on reflection one of the reasons because of what's happening in europe, major economies are not growing, some of the major economies are going back into recession, so that is dragging

yields down right away across the board. i think that's the issue. european central bank that may or may not come in to drive yields lower from where they are here. >> also some big unanswerable questions about rush why and ukraine that has something to do with it. >> right. but the stock market investors seem nervous about the inflation front. they were pulling out. i don't think it had much to do with first quarter earnings. which is history at this point, the bad weather and all that. you saw gold going down. the traditional inflation hedge went down. mine there's a lot of disconnect from these markets. you may be right, simon, certain investors are looking at geopolitical issues, europe, u.s. stock investors looking at interest rates, different frames of reference but looking for logic which is usually a mistake you're not going to find it here in my view. >> it is interesting to watch the correlations we've been used to seeing in these markets post-financial crisis start to break down. what sort of message are you getting right now from the economy? ru lo-- are you looking to the

bond or stock market? >> these things work out and end up being harmonizing. you have to stay clear from the static day to day. sometimes you will get disconnects but over time i think the logic will reassert itself. it usually does. >> i think the most important thing you're saying there is the frame of reference, the different people have. those that are exclusively focused on the u.s. economy and stock market, big institutional investors, for example, are very worried about china which is something we don't talk about so often but their fears over china are growing in the background and that's probably what is moving those bigger seas like the fixed income markets i imagine. >> could be. carl and i were talking earlier this sort of scenario is kind of what the federal reserve really wants. i mean they would like to see a little bit of inflation. they would like to see interest rates moving into a more normalized range, but normal to the average stock investor today has negative implications for these valuations. you're going back to the ipos. it's hard to sustain and justify some of these valuations if

interest rates start going up. >> i want to come back to this idea you said it's some of these valuations are ridiculous for the companies that are still in venture phase. i would argue, ubber or air b and b they are real businesses with revenues and actually potential free cash flow in the not too distant future, lot of investment to make and staying private longer so the growth rate is stronger. i mean, and they're more mature when they come to the public market. i don't know if i would call it necessarily ridiculous. >> you know, i haven't really zeroed in on their balance sheets an income statements exactly but i still think that at this stage they're essentially stories. they're never going to be a ge when they come to market. you have like decades of predictable earnings behind them. there's always going to be an element, high element of uncertainty which means a high element of risk. and if the story takes over, the better the story, the higher the multiples tend to get. >> sort of a new model. before we let you go want to ask

about your column this week. interesting topic, fossil fuel divestments. >> fascinated by graduation time. i talked to students and they had a big win when stanford said we're going to divest coal stocks. i can tell you, i've heard from people, every investment committee at every college and university is revisiting this issue now that stapford is doing it. it's kind of amazing a bunch of kids, whether you agree with this divisive issue, whether you agree or not, it's a tribute to this country that a handful of college kids could like organize and decide to do something and suddenly they've got a -- $18 billion endow mment doing what they were hoping for. >> some cases canceling commencement speakers. the students have a lot of leverage these days. >> i don't feel quite as positive about that but i do think for investors, the energy sector, keep an eye on this movement. it's still very young but if it really gains steam you're going to see multiples go down in the energy sector.

>> looking forward to the column. pulitzer-prize winning columnist jim stewart of the "new york times." >> still ahead a contrasting view of the subjects. re/code's kara swisher will join us from the west coast on ubber, pintere pinterest. we're back after a quick break on cnbc. monday we enter squawk alley. the intersection of wall street and technology. >> focuseded on three things, growth, operating efficiency and leverage. >> in the long run i expect to see us grow into large media company. >> how this company is going to -- how it's always reinvented itself, done it the past two decades and will do it again. >> the structure of the organization of the company we're building it's been about the snigs a big investment on original content. >> it all starts monday at 11:00 a.m. eastern.

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welcome back to "squawk on the street." i'm phil lebeau. the federal government announced general electr general motors agreed to pay a fine of $35 million related to the ignition switch recall. this is regarding the timeliness or lack of timeliness on the part of general motors when it came to turmg over information and alerting the public. that's one headline. another part of this agreement by general motors and nhtsa is the fact that gm has agreed to give investigators from the federal government from nhtsa full access to gm's internal investigation that it is currently conducting. that investigation is conducted by a former u.s. attorney. when mary bare ra was testifying before congress and members of congress said will you give us the results of your investigation she said we will re lease what we deem appropriate. now they're saying you will have full access as part of this agreement. record fine of $35 million when it comes to the ignition switch

recall. back to you. >> thank you very much. that's on top, of course, the $200 million charge they announced yesterday. we've got phil's documentary on this issue sunday night, on cnbc. let's send it over to rick santelli as we wrap up what has been a major week for the markets. rick? >> thanks, simon. i would like to welcome andy brenner. thanks for taking time on the weekend. >> thanks for having me. always a pleasure. >> all right. you know, the first thing is a simple issue, when i listen to all the pundits talk about markets it almost hurts them to even consider the idea that the fixed income market would be a place any sane rationale investor would hang out. when i look at the best of the three stock indices it's the s&p is it not, up almost 1%. now last i looked, total return, i love looking at the page in the "wall street journal," total return for five years is 2.17, 4.1, ten-year 6.3%.

no result. this is a rodney dangerfield trade, isn't it? >> well, rick, a lot of guys including myself thought with the tapering you would go to higher rates first, but you're going to lower rates. people have gotten very complacent, a real lack of liquidity in the marketplace and i think yesterday you pretty much saw a buying climax. i think it's going to take a lot of work to get through 2.47 on the ten-year. >> all right. let me be the devil's advocate. i think you meant 2.47 to the downside. what if we did see two and a quarter percent, what kind of world would that rate depict or just out of kilter with representing fae fundamental dynamic with global or domestic economy? >> you might start seeing the refinancing boom coming back, home sales strengthen. you had good numbers today. we think given what mel watt said he will do with fannie and freddie the housing market will get easier. you're going to see if you see

those rates you're going to see a spur of housing both buying, selling and building. so that would be one positive. i think it would say a sour note about the economy and i think the economy is fine. i really do. >> i think the economy is fine as well. but could it be more fine, is it on a relative basis going to be adversely affected by those less fine. when i look towards europe the 2012 draghi comment about the ba zu ka and doing anything he can did get him a lot of mileage. do you think they're going to be able to deliver if the markets start to get fin na ki about the microphone and want to see action, do you see them delivering? >> i really don't, rick. i mean i think this quantitative easing thing is more of draghi's moral situation. >> smoke and mirrors. >> i don't see him doing much. where they need the helpers in the small business, they don't need help with lower rates. look at your rates in spain, italy, portugal and throughout

europe. they don't need lower rates. >> these are smart guys. they're talking lower rates and look to the u.s., where is big benefit. housing is still questionable. it has to be about the euro. want to weaken the euro and they will do anything they can, would you agree with that? >> absolutely. they need a weaker euro and i don't think they're going to get it. >> i have to run. always a pleasure talking to you. have a great weekend. simon hobbs, back to you. >> okay. thank you very much, for that, rick. >> what is old is new again. it turns out in the soda arms race, pepsi unveiling its latest weapon which is a futuristic throwback, a self-serve pepsi soda fountain called the spire. basically pepsi's answer to coke's freestyle machine. touch screen and allows for a broad choice of flavors of soda. customize your own, creativity. it is a big deal for pepsi. big enough i'm flying to chicago to sit down with indra nooyi.

that interview will be live here at 10:00 a.m. eastern time. coke has been dominant in this restaurant retail category with its freestyle machine. pepsi going up against it at a time when its beverage business is under increasing scrutiny. >> not just a piece of equipment i read. >> no. >> it's about community and relationship, throwback to the '50s and '60s. >> vanilla raspberry pepsi? >> i wonder whether that's going to drive sales. put that in the corner. will ever rush over and apparently it has cartridges that are more expensive rather than the old bag in the box system. which is significant if you're a vendor. >> yeah. that's how it looks. it is futuristic. we'll see, again the goal is to drive traffic and business for restaurants and retail. we'll see if they can do it. >> have fun in chicago. >> thank you very much. >> the national restaurant association meeting. >> find out what flavor indra likes. >> if the cubs are in town, that's what you should do. >> i'll be sure to do that. that wasn't on my list. >> when we come back, it's our

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we are waiting for truecar to open at the nasdaq. it priced last night at $9 a share, well below the expected 12 to $14 range. the ceo will join us here we do matched, and are open on truecar. >> all right. cnbc's million-dollar home competition is back. seven homes duking it out to see which one gives you the best run for your money. since we're weeks away from summer, all the homes are located in favorite summer destinations. here's how it's going to work. in each show, two $1 million homes face off. the winner advances, the loser is eliminated. the champion will be announced on "closing bell," and to make it more fun, reporters, of course, do not say where they are. we'll figure that out after we get a look touring the homes. this round, morgan brennan and josh lipton. ♪ >> with a majestic mountain backdrop, this custom luxurious log cabin sits on nearly three

acres of landscaped property. the home has a heated four-car garage, covered front porch and friendly neighbors. it spans 4,700 square feet, has vaulted ceilings, lots of light and a gourmet kitchen opens onto this great great room, complete with a two-story stone fireplace. there's five bedrooms, four baths, an upstairs, and additional family room for kids to hang out. here, in one of two master suites, it's all about the views. and did i mention the storage? take a dip in the hot tub or go play in the great outdoors with nearby hiking and fly-fishing. it's a quick commute to the airport, and close to one of the most scenic national parks in the country. all of this for $950,000. this contemporary condo on the west coast is located in one of the country's premier year-round getaways. it comes fully furnished. all you have to do is move in. inside, this unit is 1,750

square feet. well renovated open kitchen has granite countertops, alder cabinets, recessed lighting and high-end stainless steel appliances. three bedrooms and three bathrooms. the master bathroom boasts two sinks, custom cabinets and floor-to-ceiling tiling. the residence is made for those who love the outdoors with access to world-class skiing in the winter and hiking, biking, and boating in the summer. all of this for $995,000. >> all right. joining us this morning, real estate super broker, dolly lens at post 9 to tell us where these are. i'm from colorado. the lake shot made it look like josh is in tahoe. >> mm-hmm. but go ahead. and the other? >> i don't know. you have a guess? >> i was guessing jackson hole. but i don't know if it would be that cheap in jackson hole. >> what do you think? >> don't ask me, i'm a foreigner. >> oh, great answer.

>> i did think denver. i did think colorado. >> tahoe. same thing. >> yeah, maybe utah? i don't know, those look like the rockies. >> exactly. the log cabin is in montana. boseman, montana. i think that's how it's pronounced anyway. >> it is, yeah. >> a spectacular log cabin. the other is lake tahoe. >> nice. >> on the california side. >> all right. so which one's the bigger bang for your buck? >> well, you know, they're both interesting in their own respects, right? the log cabin, wow. i mean, what can you say about that? it has everything any of us has ever seen, right? we've seen three-bedroom condos, a dime a dozen everywhere, right? but this log cabin, wow. it just has everything -- vaulted ceilings, everything. a good boy. >> close to $1 million in boseman, is that a good deal? >> it is a good deal, actually. by the way, unemployment rate in boseman is under 3%, which is unbelievable. probably one of the lowest in the country that maybe because there aren't many residents, i'm not sure. it's a terrific place.

i know people who live there and love it. and that house is beyond spectacular. >> she did say it wasn't too far from the airport, which is something i was wondering. >> no, exactly. and even better than that, it's 85 miles to yellowstone. so it's closer than the hamptons. i mean, really, you have it all. >> dolly, you should go out, it sounds like. >> that house won over my heart. and my eyes. my brain might be a little slow on this. but my heart and my eyes. and i have to tell you -- >> you think the condo is one? >> no, no, the log cabin. >> i agree. >> the log cabin. >> by a long shot. >> yeah, you know, real estate -- >> i'm sorry, is this for someone to live or resale -- >> it's a cornucopia of stories, to live, to resale. if you're sticking $1 million somewhere, you want to know you get it out some day. >> unless you're going to retire to the log cabin, by would be lovely. >> who retires? nobody is retiring anymore. >> all right. so you like the log cabin?

>> log cabin wins, okay? we all agree. >> we all agree on that one. >> yea, log cabin wins. >> a lot of bears at neighbors. >> exactly. >> something to be aware of. >> horses. >> it comes with a gun, i'm sure. all right. so the log cabin wins round two. >> yeah. >> and we'll move on. let us know if you agree. tweet us using million dollar home. dolly will be in the "halftime" here at the exchange for the next round, and then will crown the winner during the "closing bell." always nice to see you, dolly. >> thank you. thank you for agreeing. >> yes, fun. summer homes. coming up on "squawk on the street," truecar's ipo today at the nasdaq. the ceo will joins live first right here on cnbc. we're back after a quick break. all stations come over to mission a for a final go.

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welcome back to "squawk on the street." check out shares of world wrestling entertainment, getting pinned by invest s taking a hit, after the company said its new online network won't make up for lost pay per view and streaming video on demand business until the year 2015. if you want to talk about a body slam, this stock is currently down, guys, carl, 44%. back over to you. >> yeah, certainly better than the premarket. what a mess. thanks, dom. meantime, the market is

placid here. the market is unchanged. if you're just joining us this morning, here's what you missed. >> announcer: welcome to "squawk on the street." here's what's happened so far -- >> i'll go there this weekend, all right? i'll just go back to jcpenney this weekend, because i think mike's the real deal, and if he has bargains that are promotional with product that i like, i'm going to be a buyer. [ bell sounds ] >> we have to think of a lot better opportunities to invest today than there were a month ago, because the economy is going to get better. >> we have ten very distinct brands within our business, and preserving the distinct identity of those brands is absolutely vital. that is what differentiates us from all other cruise corporations. >> reality does begin to descend eventually on these stocks. so you might get a big gain, with a really super early investor, but longer term, the valuations are ridiculous.

-- morning, pinterest now worth $5 billion, uber may be twice that much. the big question is, are the companies really worth it? kara swisher will weigh in. >> plus, which tech company should you trust with protecting your personal data from the government? some familiar names are on the list, but the worst offender might surprise you. the apple/beats deal came out of nowhere, mostly because it's a huge departure from what apple normally does. the head of marketing will help us get into the process later on. >>. >> why is amazon putting a giant orange box in the middle of downtown san francisco? we could find out maybe next week, maybe a little longer. but in the meantime, we've got our crack team on the case, live on the scene, to investigate that in just a few minutes. all right. first up, kara swisher,

co-executive editor of re/code joins us. great to have you here. our own jon fortt is here at post 9. let's start off -- if anyone thinks tech valuations are too high, don't tell that to pinterest and uber. uber is in talks to raise new financing that could value the company at more than $10 billion. kara, have we crossed some line somewhere? what's reasonable right now? >> well, no, i guess if people are paying the money, that's what they're paying. i think they're starting to get lofty. it used to be $1 billion valuation was a big deal, and now it's 10 with uber and 5 with pinterest, and so many other hot ones are getting valued. snapchat is doing the same thing, raising money. i think they're all worried about the competition, in uber's case lift, which is raising money and dropping prices using that money. they all feel they're going to get while the getting is good, presumably. >> i guess justin timberlake

will have to reprice the line, you know what's cool, it's $10 billion now. it's not just $1 billion. these in particular don't strike us as that crazy. you look at pinterest and the data, in terms of women in the u.s. seem to be more on pinterest than on twitter. you don't go there to talk politics. you go because there's something you want to buy or make. it's inherently commercial. they're starting to gear up commerce. uber, at the same time, not just a black car company. i think of this being a logistics, realtime dispatch company in urban areas in particular, and as am sdplon and other e-commerce giants are looking to do their own delivery, what uber does, the data they have, could be increasingly important. >> uber also has a very developed infrastructure. they have cars that they lease. they have a network of drivers. and this is a company that smoke signals would indicate is making a lot of money, just a couple of weeks ago in new york, kara, there started popping up the ads

on the back of buses recruiting drivers, saying $5,000 guaranteed in your first month. that appears to me to be a company that can guarantee those type of earnings, then it's making more than that. >> no, it's making a lot of money. it's one of the few -- think about it. the first time you use uber, you pay them, what, did 35 or whatever it costs. that's not very many companies that you pay immediately and keep paying for the use of it. pinterest is a very powerful company, a catalog company, online in a lot of ways, but hypercharged. i interviewed the head of williams sonoma, and she said, pinterest is the way people got to the product. it's a direct-leads business. it would be interesting to see if google snaps it up or something like that, or amazon, because the leads it brings to commerce are really -- that business alone is very powerful. >> jon, in terms of the capital raising itself, kara mentions concerns about the competition. obviously, it makes sense. are they doing this because they see the ipo window fading?

>> well, i don't know if pinterest is really that close to that right now. i mean, they've just started to show that they have a business to start generating revenue. they probably want to do that for a few quarters before they start talking ipo. i don't even know if they're trying to make this window in particular. uber, a different story. they've been very outspoken about how good that business is. what do you think? >> we heard from jim cramer, of course, in the 9:00 hour. he was talking about his interactions with the ceo, and talking about drawing this business model, i took uber to a meeting uptown, we passed by goldman/sachs and my uber driver said, i call them every single day asking for shares in this company, and no one ever picks up my call. do you think this company goes public soon? >> no, no. no, absolutely not. i don't think so. and pinterest, the same thing. i don't think it's in this window, this year, maybe next year. i think they're busy growing. they have plenty of money, great

backers, and they need to expand and work on operations around the world. they just opened in abu dhabi. i'm working on an article for "vanity fair," and so, i spent a lot of time with them. it's an interesting company for sure. it really is in a lot of ways the real deal compared to a lot of them. it's not an internet company per se, but it really leverages the internet. >> he's already battle tested in a lot of different ways. >> he's a tough guy. he's a tough guy. >> yeah. next up, which tech company should you trust when it comes to protecting your data from the government? according to a new study from the electronic frontier foundation, not snapchat. it earned one out of six stars, the lowest ranking. nine companies received all six stars, including facebook, microsoft, google, and twitter. pretty interesting, snapchat's defense, jon, they don't have the data to turn over to the government when asked. >> or maybe they do. maybe they just found it, i don't know. apple earned top ranking here. i think it's important to point out this is specifically about

how easy it is for the government to get data from these companies, whether they fight for privacy in congress, whether they require a warrant to turn over data, whether they notify users that the government's trying to get their data. it doesn't necessarily mean just for privacy in general these companies aren't keeping your data. it doesn't mean that their security measures are all that great. it's very specific. this is about the government and how quickly these companies cough it up. >> so obviously, snapchat is the worst, but when we look at the chart, you see amazon, at&t, foursquare, companies that actually do have a lot of your data, especially as they're getting more into the cloud -- >> comcast. not in such a great rating, either. >> it has three stars, as well. kara, i'm wondering what your take on this is, with a company like amazon trying to build out its cloud business and has, you know, two stars and questions about how easy it is for the government to get into some of that data? >> well, that's for the case. some companies like twitter very vehemently defend against government requests, and others

don't. amazon doesn't. you know, comparatively, i guess, in this list. you know, it's interesting. it's good for people to be aware of what companies are doing, and various companies are going to do various practices. in the case of snapchat, you know, they put out a lot of other problems getting their technology together. and so, i think probably need more management going on there. it happened to facebook in its early days. that doesn't excuse them by any means, but, you know, this again is a government request thing, and certain companies have gotten very good at resisting government requests for information. >> while we have you guys, we should mention truecar has opened for trading over at the nasdaq, up 13%. priced last night at 9. of course, below the range, which was 12 too 14. ceo's going to join us first here on cnbc a little bit later on. online car shopping and research site. the low ball of the ipo price is what got people's attention this morning. >> well, it's in good company. a lot of companies that have gone public in this market have priced below the ipo price. but i have to give credit to the underwriters here. when you know that the demand is

in a certain level, you price it conservatively, because what you do want to see on that chart is green on trading day. the worst thing you can do, price it in the middle of the range, even though demand isn't there, and it flops. >> yeah, goldman and rbc lieding that charge. what is amazon hiding in a giant orange locker in the middle of san francisco? nobody's for sure. that's why we sent josh lipton to find out. josh? >> yeah, carl, it's the big mystery in san francisco this morning. what exactly is inside this giant orange locker behind me? here's what we do know. it's amazon's locker. you can see amazon's logo splashed across it. there's another little sign on there that says, hello, my name is giant." now, i can tell you the locker, it's big. it's big enough to accommodate a car. you could easily get an suv in there or a minivan. in fact, some guys came by a few minutes ago and applied this nissan decal to the locker, as

well as this other decal that reads #giantlocker. we know amazon, of course, already operating the delivery lockers in different cities. apparently, there is going to be a promotional event here today. i can actually see some cameras here. and they're professional cameras, the kind of cameras you would use if you're shooting a commercial. apparently, people will come by and use the lockers. we'll stick around, see what else we can find and bring that news as soon as we get it. guys, back to you. >> why does it -- thank you, josh. josh lipton in san francisco. why does every big tech company need a giant mystery out west? the barge first with google. now this. >> i think there's a viral marketing manager actually inside that locker. you know? getting incentive pay. >> at first, i was thinking, okay, maybe bikes, a lot of people in san francisco ride bikes. maybe suitcases, people take the redeye out there, as well. if you're going to meetings, you could drop off a bigger package in there. of course, the nissan decal really doesn't leave much to the imagination after that. you have to think that that's going to be storing your car,

right? why else would they be sponsoring it? >> kara, you have some thoughts? >> i don't know. it's drones. it's all the money that pinterest and uber are getting, piles of cash. it's donald sterling's sense of decency? i don't know where that went. i don't know. it could be anything. >> you only need a mailbox for that. >> yeah, it went somewhere, right? who knows? >> is it out of character for amazon? >> no, it's a stunt. it's a stunt. it's a stunt. it's a stunt. they did it with the drones. they do it all the time. and we fall for it, and here we are putting a picture up. i'm going to put an orange box in the middle of something and see what happens. i don't know. >> you can fit a dozen viral marketing managers in there. i don't think it's entirely out of character. these sort of stunts are common these days, particularly for tech companies. get a little buzz going. giant locker. i think radioshack kind of backed away from the amazon locker program. the lockers will be increasingly important for amazon and others as they try to push more products into urban areas, and deliver when people aren't home.

they don't -- >> you are all about the logistics. you're about the urban logistics to this. >> i think that's really, really key. >> the lockers in the stores haven't worked out as spectacularly as they can. >> and they're kicking amazon out, which is why they need these things. >> all right, kara, thanks for the laugh and the information. have a great weekend. "squawk on the tweet" as you know monday, this hour will launch as "squawk alley," the destination for all things tech and innovation. we've been doing it for a while, but we've want to change the name. we'll do it like market cap big, attention-worthy viral stunt should we pull off? tweet us @squawkstreet. we'll air some of the ideas later in the hour. >> i was thinking maybe if gopro ended up going public this month, i'll rappel off the wall of the stock exchange with a gopro. but that won't be the case. >> kara, if you have ideas, by the way, feel free to weigh in. >> i'm not sure. i'm going to think all day about it, you know. >> giant carl outside. >> yeah, yeah. >> i sense some sarcasm from

kara. >> yeah. >> i'm on it. i'm on it, because i have nothing else to do. i'm on it. >> all right, kara, thanks. we'll see you much more during this hour. when we come back after the short break, the department of transportation set to announce that gm will pay a $35 million fine regarding its ignition switch recall. that should be announced at a press conference in just a few minutes. when it happens, we'll bring you there live for all of the latest news. we also want to bring you back to shares of truecar. they rose initially after they opened for trading. t.r.u.e. is the ticker. now up 9% after going public moments ago. should you buy the stock this morning? the ceo will make his case when we come back. >> announcer: post 9 is sponsored by fidelity investments. the most free research reports, customizable charts, powerful screening tools, and guaranteed one-second trades. and at the center of it all is a surprisingly low price --

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ya know, cause we're going to start making babies. let's do it. what? yeah. now? yeah. barb's right there. not that part. oh. yeah. that moment you decide to buy. that's your moment of trulia. you could win 50 thousand dollars for your next home. visit trulia.com slash win today. some breaking news. we are awaiting a news conference from the department of transportation on its investigation into the cobalt recall at general motors. as we wait for some details, let's get to our own phil lebeau who prefaced all of this with news about this $35 million fine. phil, what they're saying is some unprecedented oversight by regulators, as well. >> right. and the thing to keep in mind here, carl, is that in this agreement -- and we're just getting a first look at it -- general motors is telling the federal government, you can have

full access to our internal investigation. that investigation is being conducted by a former u.s. attorney. they expect to have it wrapped up within the next couple of weeks. remember when mary barra went on capitol hill and testified, a number of members of congress said, hey, will you turn over your report to us, and she said, we'll look at it and we'll share what information we think is important to be shared with members of congress. well, now, the federal government is saying, huh-uh, you're giving it all to us. so that is the most significant part here. the $35 million fine. nhtsa will say it's a record fine. yes, it is a record fine. it's the most they can fine an automaker. in the end $35 million for a multibillion-dollar company, it's not a huge impact financially. >> they had already agreed to pay what some saw as a comically low fine, phil, of $7,000 a day. >> right. that's part of -- and that continues for not sharing all of the information for the 107 questions that nhtsa asked them for. the maximum fine is $7,500 a day. and so, that's -- you know, at

the end of the day, people look at this and say, okay, another $7,500. but that's the max fine that's allowed. >> what sounds interesting, as well, is this notion that they're going to have to revise their own internal reviews as they regard to safety in-house. >> right. and they're already starting to do that. jeff boyar, who is basically the safety czar that's been appointed by mary barra, a long time gm engineer who is now in charge of all of the safety issues at gm, he's been going to washington on a regular basis and meeting with representatives from nhtsa, as has mark royce, who is the worldwide leader for vehicle development at general motors. so they've been in constant conversation with nhtsa. i think what this is is nhtsa saying to them, we want to know how you're going to revamp your oversights of any safety-related issues and how you're going to ensure in the future that you don't have another situation like you've had with the ignition switch recall. >> of course, we've seen some high-level retirements, phil, in the past few days. >> right. >> jim frederico, who was the

highest-level executive, with safety in his title. >> right. >> now gone from the company. as a lot of the pressure now obviously focuses in on mary barra. >> and there have been a number of executives who have worked in the engineering department at general motors or who had some connection with the ignition switch who have quietly been moved into other positions. and that's interesting. i think that's an indication that mary barra is taking steps necessary to make it clear to the federal government that this is not just business as usual, that there will be changes made. but they're not going to trumpet it. they're going to, as quietly as possible, move people either into other positions or if people have the opportunity to leave general motors, i don't think they're going to fight it and say, no, you have to stay with the company. >> as we wait for them to set the mikes there, phil in washington. let's think back to the most recent auto sales numbers. six-nine was a beat above the five-seven expectation. mary barra has said the recall got a lot of attention that other things have gone right.

and we haven't really seen, i guess would you say, immediate sales fallout -- >> and i don't think we will, carl. i don't think we will. when you go back and look at what happened with toyota, there was a bit of an impact, not a huge one, but a bit of an impact in terms of market share. because you were talking about a recall at that time related to unintended acceleration with vehicles on the lot being sold. this recall involves vehicles that were built between 2003 and 2007, and then it was extended to models built through 2010. they're gone. they're not even being built anymore. so for the person who is going out and considering buying a general motors vehicle, this recall, i'm sure it's perhaps something that they're aware of, or they're considering, but it's not like they're looking at a current model and saying, is it under recall? because it's not. it's in the past in that regard. and i think that's reflected in the sales numbers. >> does this strike you as a shift in the way nhtsa and d.o.t. are going to approach automaker safety? >> yes. and i think you're going to see

them continue to be much more aggressive. now, there have already been some in detroit who are saying that there is this hypersensitivity amongst the automakers about recalls, and, therefore, you've seen a flurry of recalls. we always see this after a high-profile case. the real test will be two years, three years from now when the spotlight is not on nhtsa, and it's not on the automakers for a big recall crisis. will they be as vigilant? because we saw this after the ford-firestone issue in 2000 and 2001. we saw it after toyota in 2009. and we're seeing it now. the question is, will there be this vigilance on the part of the automakers two, three years from now? >> all right. we'll tap dance more until they start the press conference in washington. phil, nice job. >> thanks. elsewhere in the auto industry, watching an ipo, truecar, the online shopping service, opening higher in its debut on the nasdaq. the company is backed by microsoft co-founder paul allen. it priced at $9 a share, below

the expected range of $12 to $14. even so, in today's trade, it's up by 15%. here first on cnbc, fresh off ringing the opening bell at the nasdaq, is scott painter. the founder and ceo of truecar. i'm hearing the presser is starting, so we'll go back to washington and we'll get back to scott as it happens. >> -- safety of the traveling public. it always has been. achieving that goal isn't easy. it takes commitment from everyone with a stake in our transportation system. and we know no one is perfect. but what we cannot tolerate, what we will never accept is a person or a company that knows danger exists and says nothing, literally silence can kill. back in february, general motors issued a recall of the chevrolet

cobalt and other models due to a defect in their ignition switches. the defect led the air bags not to work when they should. that's what gm told us in february. but what we now know is that gm knew about this issue years before this past february. since at least november of 2009, gm has had information linking ignition switch problems with air bags failing to deploy. they had that information and they told no one. they didn't tell nhtsa. and they didn't tell their customers. in the meantime, those customers were driving cars with a dangerous safety defect. crashes happened and people died. had gm acted differently, perhaps some of this tragedy might have been averted.

our department searched for a defect would have certainly taken on a different course. we looked at this issue not once, but twice -- in 2007 and 2010 -- searching for the data to justify a full investigation. had gm told us then what they told us back in february, things no doubt would have proceeded differently. but the fact remains gm did not act and did not alert us in a timely manner. what gm did was break the law. they failed to meet their public safety obligations. and today, they have admitted as much. in fact, today i can announce that for failing to report a safety defect in a timely man r manner, general motors has agreed to pay a $35 million civil penalty, which is the

maximum penalty under the law. it is also the highest civil penalty ever paid as a result of a nhtsa investigation into violations stemming from a recall. but even more importantly, today's agreement doesn't just penalize gm for inaction in the past, it also looks to the future to ensure that gm's existing cars on the road are safe and that vehicles they manufacture going forward are safe, as well. that's because the agreement includes unprecedented oversight requirements, ensuring that gm takes the steps necessary to change its safety culture so something like this never happens again. acting administrator friedman will have more on the specifics of this investigation and the agreement in a moment. but for now, let me just say, together these penalties should put all automakers on notice that there is no excuse and zero

tolerance for failing to notify the federal government when a defect puts safety at risk. and to make that point clearer, d.o.t. has sent the grow america act up to capitol hill which would raise the maximum penalty for offenses like this from $35 million to $300 million. so our work doesn't end here. we'll continue working towards a safer gm, a safer auto industry, and a safer transportation system for the united states of america. thank you all again, and i'll now turn the podium over to david. >> all right, that is the transportation secretary anthony foxx talking about that fine for gm, as part of the consent decree as it relates to the recall of the cobalts. phil lebeau, your reaction? >> not surprising. we knew the information nhtsa was gathering from general motors made it very clear that gm knew about this for sometime.

and they said it pointblank, gm knew at least in 2009 that there was a link between ignition switches failing and air bags not deploying, and obviously, there are 13 deaths related to this defect. so it was very blunt language. that's what we expected from the d.o.t. what is interesting is that we still have the doj investigation out there, carl, and you can bet that if there is some kind of settlement or a fine at the end of that doj investigation, which is a possibility, you can bet it's not going to be $35 million. just look at toyota. i think people are looking at that as sort of a more of a benchmark of what we might expect if doj does hand down a criminal penalty against general motors. >> that's a departure from where we are right now, for sure. >> you bet. >> phil will have a full-length documentary about the recall, "failure to recall: investigating gm," sunday night here on cnbc. "squawk on the street" is back in a minute.

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truecar, the online auto shopping service, opening higher in its debut on the nasdaq. the company's backed by microsoft co-founder paul allen, priced at $9, below the expected range of $12 to $14. here first on cnbc, fresh off of ringing the opening bell at the nasdaq, scott painter, the founder and ceo of truecar. scott, good morning to you. >> good morning. thanks for having me. >> this kind of action takes some of the sting out of the pricing. how do you feel? >> it's really great to reach the milestone of becoming a public company, and we're looking forward to just producing great results for our shareholders and employees going forward. >> scott, the usaa opens, what, around 26% of truecar? 43% of the vehicles that you guys moved last year, i believe, came from matching from them. is that a problem? how are you going to expand beyond that massive influence of that one organization has over the company? >> we're a ten-year-old company.

we run the auto buying programs for most of our nation's trust marks and large membership organizations. so it's not just usaa. it's also american express, consumer reports, aaa, geico, progressive, and many, many others. and so, what we find in those organizations is that trust really does get transferred in the form of goodwill into the buying of a car. and so, really our partnership with usaa, i think, underscores our commitment to really making car buying a better experience. they're very committed to their members. usaa members in total buy about 220,000 cars a month, and about 17,000 of those were done through the truecar platform last month. we've still got a long way to go. it's not really a concentrated customer for us. it is a big one and very important one. >> where are you directing most of the proceeds, scott? >> i think as a company we really want to get to the point where we can grow our brand. today, not a lot of people know about truecar. we represent about 2.3% of the new-car market in the u.s. it was originated on truecar through the 8,000 dealers, which

represent one out of every four dealers in the u.s. we want to grow that awareness. we want to expand our reach and become more a part of the overall car-buying process, you know, across all sectors. >> you think -- you're coming into public life at a time where the long-term trajectory for auto sales is going to start an upswing? >> well, i think that the long-term prospects for auto are great. i think, you know, the notion that, you know, the markets are very cyclical and have seasonality, that's obviously a reality. but we're really focused on helping people save time and money when they buy a car. and we really focus on that, even when times are tough. people want to save money. so whether car sales are up or down, we feel the opportunity for truecar to redefine the future of car buying is an opportunity. >> you were an early advisor to tesla. you're a friend of musk's. you drive a model s. >> yes. >> of course, you know about the friction between the nationality -- statewide dealer networks and tesla. i assume you think they should be allowed in? would that be healthy for the

dealer network and the company? >> i think really our focus is serving franchise dealers. we make car buying, which is normally fraught with a lot of anxiety, a really great experience, and we do that by arming the consumer with powerful information on the front end, information they've never seen before about what others pay for a car, and it makes a first-time car shopper an expert in under 60 seconds. >> so i'm not clear, though. does that mean the dealers should let tesla in or not? >> i'm not involved with tesla, so i can't comment one way or the other. i think tesla has a very compelling product, and i think that they've got their own direct challenges in term it is of how they get that product out. we're focused on serving franchise dealers and how they relate to the modern customer who wants to buy a car a modern way. >> what a day, on especially a day when gm is in the news, and you're in the news. thank you for taking the time. congratulations. >> thank you. >> the ceo and co-founder of truecar. simon hobbs is going to wrap

up the global markets. >> you know the stability on this side of the atlantic has basically allowed the european banks pummelled yesterday -- particularly in italy, spain, portugal -- to come back quite strongly. so green on the screen. car registrations now slowing down, sales slowing down to a five-month low. the real concern is those economies that are contracting that we spoke about yesterday. notably, italy, also the netherlands, finland back into recession, and whether the ecb is too far behind the curve. importantly, this week one of the key bets so far this year failed. and that was was that the europe european sovereign debt markets would continue to rise and yields fall. yesterday, we went into reverse on that. you can see it on the weekly chart. in italy, the yield spiking there. you see it also in spain. you see it also in portugal. and tomorrow, of course, portugal exits its bailout, its official bailouts, it gets its

economic sovereignty back, still saddled with $300 billion of debt. but the prime minister of portugal in an exclusive interview with cnbc says, yes, there may be volatility on the bond markets at the moment, but they are offering now long-term stability. take a listen. >> portugal, this year, will present a primary surplus, and for next year -- and i think until 2018 or '19 -- we'll present the same path. >> in the meantime, i should mention to you that the financial times in a completely unrelated subject, got hold of an internal video overnight from within deutsche bank from the co-head of the investment bank where he's explicitly warning people about their behavior. take a listen to this. >> some of you are falling way short of our established standards. let's be clear. our reputation is everything.

being boastful, indiscreet and vulgar is not okay. it will have serious consequences for your career, and i have lost patience on this issue. >> colin fan, the clean-cut canadian, who many think will be a future ceo of the investment bank, if not the bank overall. reading between the lines there. what he's trying to get over to people within the investment bank is all their communications now -- e-mail, phone conversations -- are being actively monitored because of the scandals that they've had and the regulatory environment they're in. he's obviously trying to head off further trouble. >> any trader who doesn't know that isn't paying attention. thanks, simon. when we come back, going behind apple's thinking behind the rumored beats deal. we talk to the form he head of marketing and founder of electronic arts, trip hawkins, with us in just a moment.

welcome back. as consumers await a conclusion to apple's rumored $3.2 billion deal for beats electronics, does this signal a new strategy for apple ahead of the developers conference? our next guest has insight, head of the marketing in the early years of apple, and the latest venture is if you can. trip, thank you for joining us. first of all, this game, if you can, really interesting. it's all about social and emotional learning for kids, trying to get dogs and cats in this kind of fictional world to get along again.

it's been in the app store for a couple of months. how is it doing? >> it's doing fantastic. we've had 300,000 downloads and 90% of consumers that have reviewed the game have given it five stars out of five and are very enthusiastic about it. >> wow. what kind of revenue is it generating? >> we haven't started charging for it. it's a free trial period. it's a service you can subscribe to like a magazine, and we move the curriculum and story forward every month, so we'll start offering that subscription service next month. >> so you're part of apple's present in the app store, doing games, which is your specialty, of course, and you're part of apple's past. what do you think of the rumored beating deal? not very apple-like in the recent trajectory. but any way you can see it working well? >> this is an amazing brand. so i admire apple for stepping up and taking that kind of action. i think it's a very interesting move. apple really changed the way that human beings have a relationship with computers, and in some ways that's maybe the most historic thing about the

age that we live in. and apple really transformed that. i was delighted and had a lot of fun being a part of that. and i think, you know, who knows what will happen in the future. it feels like the major computing devices have been invented, and we'll see what apple does next. >> you're coming from an era when it was all organic. this would be bringing it in from the outside. do you see a problem with that? >> no, big companies need to think outside the box, sometimes literally. you know, you're inside your own four calls. get out there and see what other people are doing. a lot of the innovation and disruption often is happening in smaller companies that are disrupting the space. >> talk to me about gaming. we've had really interesting moves over the past several months -- sony doing pretty well with the ps4. microsoft over the past few days trying to make a box with xbox one, dropped to the lower end way of they sell it, dropped the price by 100 bucks. what's happening in gaming? it's driving so much commerce, so many device sales.

what's going to happen next in gaming that's really going to push things forward? >> well, what we're doing with if you can company, a good illustration of this, because we're on a tablet. and within a few years, everybody's going to have a tablet. you know, there were over 1 billion smart devices, smartphones and tablets sold last year. it's just cranking. this is the new -- >> -- kind of flattening out a bit, the tablets has. you think there's still room to run? >> actually, ipad's flattening out a little bit, tablets are not. >> okay. >> and other devices similar, like chrome books, are really hot right now. it's a different user experience. it's very convenient way to use the computer, everything is connected over the air with the internet. and i think it's time now for us to recognize that everybody's that's growing up is a digital native. they're expecting and accustomed to using these kinds of devices, and it's time to innovate new services. our game if is kind of a flagship and a new wave, because we're trying to take serious curriculum and assessment of learning of that curriculum and tie it in with really fun game

play. every kid is playing a game now. and that's where their attention is. that's where their motivation is. and that's the best way to transform learning. >> you're talking to parents of young kids. we know exactly what you're talking about. >> and parents want what's best for their kids, that's why i think there's a great chance here for parents and teachers to see a whole category develop of new kinds of tablet content like "if" that helps them curate what's on the devices, because we can see the development too. >> we've had so many gaming discussions since king went public here a few months ago. and everybody wants you to have a hit. but if you have a hit, they say, why do you only have one hit, right? and how can that be replicated? is there an answer to that in terms of the model when it comes to game makers? >> it's funny you mention that, because one of the reasons we call our game "if," it's not a noun or verb, it was easier to get a trademark. you need to assume that people need to remember a name, and they're going to be using search features, whether they're in

google or in the app store, to find things. and you're going to learn about things through viral media, through your friends, and clicking on things and tapping on things and getting a chance to try things for free. this is really the big breakthrough in digital media. remember the days when you used to get in a car and go to a store and pick up a videotape, or buy a video game if? basically, it's happening through the cloud and onto the billions of new screens and you get to try stuff for free. that's a marketer's dream. >> yeah. >> you get to try things for free. >> maybe we're entering an era where we'll tell kids screen time is okay. it's making you a better person. trip, thank you for joining us. >> my pleasure. >> great stuff. thank you very much, trip and jon fortt. we're excited to launch "squawk alley" kicking off monday at this hour. we're soliciting ideas. what viral-worthy stunt should we pull off for the debut of the big show? tweet us @squawkstreet and we'll discuss your ideas later. financial noise

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in baltimore, where we'll get the traders' preakness plays, all straight ahead on the "the half." carl, we'll see you in a bit. >> we'll find out if the blackjack tables were good to you. >> i think i left my voice in vegas. some things do stay there. let's get to the cme group. rick santelli? >> wrapping up a friday, there's so many things i consider important. let's start out with china. many are talking about if china gets a little better, it will make a huge difference. i don't disagree. one of the areas many are focusing on -- copper. let's throw up that chart of copper for a year. you can definitely see copper has improved. there's a myth about copper and i'd like to debug this myth. here is a two-year chart, '08 to '10 of the dow jones industrials average in the black line and copper in the red line. you can clearly see that copper did a lot better holding on before the crash hit, and if you really looked at the

differential there, the spread, it wasn't a great indicator. so i caution that we all look to copper to be the sentinel commodity, but i think china's taken commodities to a new level, introduced a much larger speculation, with all of the warehousing and using collateral for loans. i think it ends up like gold. it's really hard to relegate the fundamentals to that commodity. if you want a commodity that i think is at least a better picture, something happened today that is important. we had benchmark 62% iron ore hit a 20-month low today, and the price is right around 100. that's the within i'd pay attention to. now, we'll finish up the week -- everybody is talking about interest rates. let's keep it simple. okay? we talked many times about how the first five weeks of the year, you basically went from a 3.03 yield beginning of the year in january down to a 2.57, which stood as the low yield up until a couple of days ago. so basically, from january to february 3rd, like four and a

half weeks, we did the biggest drop of the year. and then we went sideways for three months. this is very key. because many are saying, well, you know, if we get back, we're not going to trade under 2.46, 2.47, that's not the way to look at it. the entire trade was 2.80. we went over the retracement, 2.77, off by a factor of three boy basis points. you look at the last break of 2.57. here's the key, trading interest rates right now, stay long looking for lower rates until you get a close above 2.60. could it be any simpler than that? and one final note here. when it comes to looking towards europe right now, much of the activity that's pushed those southern securities lower is the notion of getting in front of what looked like qe or what looks like imf involvement. if they don't deliver, you're going to see those rates really spike. carl, back to you. >> you got that right. thanks so much, rick santelli.

when we come back, we know what's in the amazon locker. >> announcer: monday, we enter "squawk alley." the intersection of wall street and technology. >> focused on three things -- growth, operating efficiency, and operating leverage. >> in the long run, you know, i expect to see us grow into very large media company. >> that's how this company is going -- it's how it's always reinvented itself, how it's done it the past two decades and how it will do it again. >> the structure of the organization, the company we're building, for me it's about the mission. >> it's a really big investment on original content, no question. >> announcer: it all starts monday at 11:00 a.m. eastern. you probably know xerox as the company that's all about printing. but did you know we also support hospitals using electronic health records

for more than 30 million patients? or that our software helps over 20 million smartphone users remotely configure e-mail every month? or how about processing nearly $5 billion in electronic toll payments a year? in fact, today's xerox is working in surprising ways to help companies simplify the way work gets done and life gets lived. with xerox, you're ready for real business.

all right. here's a question we asked you this morning. what is amazon hiding in this giant orange locker in the middle of san francisco? you'll see it eventually. it has the #giantlocker on the side, and the nissan logo. the nissan and amazon had teamed up for stunts before, for the versa in a large corrugated box. today, our producer e-mails there is a car in the box, a red one, saw it through the back door. as we see the latest stunt from amz, jon. >> yeah, and this doesn't mean amazon is going to start selling cars in boxes. they've done this before. it's just kind of a nice way to get out the fact, yeah, we deliver stuff in lockers and nissan is along for the ride. >> i did like your theory earlier, which might be proven

to be correct, it's another play in storing moving goods along the distribution change in urban settings, right in. >> they've got to do it. the packages get swiped from the front door. everybody's dealt with those issues. it's a hassle calling back and forth to amazon. they can lock it down, all the better. >> yeah, we'll keep our eye on that. fun times in san francisco. we're days away from the launch of "squawk alley" and we're asking you for ideas. what attention-grabbing viral-worthy stunt should we try to pull off for the debut on monday? tweet us and we'll discuss your ideas later on. we're back in just a minute.

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all right. squawk on the tweet this morning, we've been asking you, because at this hour we'll officially launch as "squawk alley," renovation for tech through the lens, the destination all things tech. we wanted to kick it off big like whatsapp-value big. we have been asking what stunt we should try to pull off. brian writes, have the hosts land on set via special delivery by amazon drones. carl should jump off the

building. noah says, have the "snl" crew sit in and do a parody, which would be keeping in the comcast way. we would love the "snl" guys to do that. >> will they actually expect us to do something now? >> i don't know. producers are leading the charge. >> all right. we're about a minute away from the top of the hour. markets have been interesting all morning long. we haven't discussed retailers for most of the hour, but nordstroms is the best performing s&p component. 72 cents, a beat by 4 cents. comps are up 3.3, looking for a partner in the credit card receivables, which is one reason for the jump. and jcpenney, too, up 19% in the premarket. not quite that much right now. but comps up 6.2. margins were higher. april, the first month in 30 with positive comps. and they're going to end the year with about $2 billion in cash. so some of the death march stories we've seen on jcp coming to an end. >> and the credit facility helps, as kayla pointed out yesterday afternoon, shorts getting squeezed there.

a lot of people still negative, but they're doing better than people expected, nonetheless. >> get some rest this weekend, because you'll need it for monday and the launch of "squawk alley." as we hit noon time, let's get to "fasttime" at post 9. >> carl, thank you very much. an interesting market to talk about today. you guys have a great weekend. we'll see you on the other side. welcome to the "halftime" show. here's today's playbook as we return from vegas to here at the new york stock exchange. "danger zone." hedge fund heavyweights revealing they're biting nails about this market. should you? still a bull. legendary investor laslo birinyi isn't scared, and he's to tell us why. whale watching. the biggest money managers piling into which stocks. the lineup, stephanie link, mike murphy, jim leventhal, and we couldn't pull him out of vegas, but still made it to the studio, jon najarian. only one of us had to rough it back to new york? how'd you get that assignment out there? >> well, judge, somebody has to do the dirty work, and usually