james bullard will be our special ges guest, with us starting at 7:00 a.m. eastern time, and this is huge given all the news from the fed this week and all the questions the market has been asking. the two-days of declines we've seen in the markets has pretty much all been blamed on the markets that we got a couple of days ago. we will talk to jim about everything that was happening inside the room and try to get his take to where we're headed here. let's get you up to speed on the morning's headlines and before that, i'll tell you about hue yet pack yard, coming in and topping estimates. ceo meg whitman says that the company's turn around plan is gaining traction, though there is work to do. we'll be talking more about hp in just a few minutes with a fundamental manager who focuses on technology. in our tech news, texas instruments is raiding its quarterly dividends by a third. shares of pi have risen about 10% since the beginning of last year, but they are still 70% lower than the 2000 high. shares of gardener denver rising on reports that kkr is bidding $

louis, james bullard today on squawk box. >> it is very easy and it will stay easy for a long time.hink policy is much easier than it was last year because i think that the outright purchases are more potent tool than the twist program was, and we replaced the twist program with the outright purchases. i don't think the market has absorbed that switch. >> giving you their analysis of those signs in a moment. but first, let's focus on the price action we have heading into the weekend. bob pisani has that. >> remember we started falling apart when we had the fed minutes at 2:00 p.m. wednesday. that's when the market changed and it changed around when bullard said they would stay for a long time. i think bernanke will imply that next week in his testimony. take a look at the dow. this is what you saw throughout january into february, up until wednesday. slow melt up into the afternoon again. starting to get close to the historic highes. look at big multinational companies that i watch carefully. signs of people risk on-risk off appetite. all up, some of them up 2% or more. we add tough

the one and they are suggesting that they are considering pulling back at some point on qe and james bullard on our air is saying qe is in for the long haul. >> the fed is going with a mandate of confuse and conquer. confuse the marketplace as to when qe will be pulled back. the biggest embarrassment now is if the stock market goes vertical and the economy doesn't, the fed in a way has to temper the pace of equity gains. >> don't want any bubbles anywhere? >> what about the suggestion that the federal reserve is going to start winding down qe3. you know, what does that create in terms of disruption in the market? are you expecting that to create a selloff? this is all coming together at a time when we're also worried about rates beginning to spike over sequestration and a credit problem this country has. >> it has to happen at some point. let's say sequestration does happen. that's bond bullish and might replace the buying that the fed might over-wise do. while you might have concern over the exit plan, we don't know what the supply is going to be. in other words, could you see yields go now

i presume you're making that statement because bullard, james bullard was on cnbc exclusively this morning saying fed's easy, fed's staying easy, don't worry. >> that note does not apply to doc because happy hour never ended for him. >> no. i'm always happy. >> with a tie like that on today, he better be. >> get a free bowl of soup with that tie. >> bullard helped the market. he said, you know what, you can continue to feed at the trough because we'll have easy money for a long time. what a lot of people don't really understand is that easy money is when rates are below 3%. that's been historically true. you've got a restrictive fed policy when they're above 5%. we're nowhere near that. but if you take a look at where the hedge funds stand, they have the highest market exposure now since 2008, which is 60% net long. their favorite group is consumer. their second favorite group, their financials. they've increased their allocation -- >> is that because they're chasing performance at this point? a lot of them didn't do all that great last year. >> i agree. they can't afford to have another d

louis fed press james bullard will discuss the economy.e'll hear from pepsico, directv, molson coors and agilent. >> for the moment, the dow is called down 48 points. currently down on the nasdaq by over 12 points and the s&p is just over five points down. >> cnbc has confirmed the boards of amr and us airways have approved their $11 billion merger, this following a similar deal for amr mergers. the deal would combine 932 planes and 3,700 daily flights. phil lebeau first brought us the news last night and joins us from dallas. phil, hope you got some sleep. what are the press pekts for this corporate tie-up? >> we're going to hear about this from bog of you. the eeo of us airways and the ceo will main the joint announcement here in dallas and later on in the doug, doug parker will be to tempe, arizona, ask talk with the employees there. doug parker is going to be the ceo of the new american airlines. he'll effectively be running it day-to-day. tom borden will be taking the position of nonexecutive chairman at least through the middle of 20

louis's james bullard and san francisco's john williams. >>> and walmart, yes, will report earnings before the open, so, too, about l chesapeake energy and hormel foods. walmart, fascinating story, is it not? what did you think when they happen talking about how to start february results here. >> we had highlighted the fact that there may be some rebate issues with regard to tax. and there is are payroll increases. but walmart is a cash flow machine. it uses its capital allocation. you've got to simply look at walmart per year for the last ten odd years. >> do you still like them here? >> i do, yes. they basically buy back stock. they increase dividends and they can -- they basically can might want earnings to 10% per year and they've done that historically over the last ten years. so i'm not worried about up two, down one. as long as it's not majorly declining, we continue to like this stock. >> because it's a different story for hewlett packard, for example, that is a company that you are much more worried about from a fundamental point of view. >> sure. hewlett packard, the big problem

james bullard will be on squawk today at 7:00 a.m. eastern. ♪ ♪ ♪ [ male announcer ] what's the point of an epa estimated 42 miles per gallon if the miles aren't interesting? the lexus ct hybrid. this is the pursuit of perfection. >>> welcome back to "worldwide exchange." these are your headlines. brussels warns the eurozone economy will contract for a second year in a row in 2013. more optimistic tone out of germany's ifo. the business confidence survey jumped to its highest level since 2010. and c he o meg whitman says the turn around is still on track. >>> now, just about a week to go before automatic spending cuts go into effect. but one high profile investor tells cnbc all the focus on the sequester is obscuring the real issue, the exploding costs of entitlement programs. >> the hype oversee quest ragz is a joke. >> same thing about the fiscal cliff? >> it can net out sandy. you're talking about a quarter perts of gdp. read more about that and the budget battle in washington as well as the fed and see his interview with maria bar

louis fed president james bullard and san francisco's john williams will both be speaking this afternoonarnings, look for devon energy, dish network, mgm resorts, and sodastream before the open, then crocs and tesla after markets close. >>> the obama administration is expected to release a report today under which the u.s. government would consider fines or trade actions against china or any country found guilty of cyberespionage. this comes as beijing disputes the findings of a security firm that a secret military unit is responsible for a recent slew of hacking attacks on u.s. companies. the latest possible victim is apple. the company says a small number of macks at its -- macs at its offices were hacked, although it appears no data was gleaned or stolen in the attack. for more, john reed, national security staff writer at "foreign policy" joins me. thanks for your time. and first of all, you know, this report, does it basically bring to the public issues that people behind closed doors have been concerned about for some time? >> exactly. confirms --des evidence of a problem that we'v

james bullard, elizabeth duke, charles l. evans, jerome h., jeremy c. stein, daniel k.turello all voted to support you and the policies. there was only one person dissenting, and that was esther george. so it seems to me you have strong support for the actions that you're taking, and the leadership that you're giving. and i'm very appreciative of that. i -- you know, i am surprised at myself for, you know, the confidence and support that i'm showing, because you know i've disagreed with you in the past on a number of things. but i also find myself a little bit surprised that i am focused a lot on what happened with a recent research note that was released last friday by the bank of america's chief economist ethan harris, where he warned that harsh budget cuts due to start taking effect this week would hammer the economy, potentially dragging the country back down into a recession. mr. harris wrote that he expects this painful shot of austerity to slow gdp growth to just 1% in the second quarter, with job growth averaging less than 100,000 per