wells fargo has two point eight trillion dollars of exposure to derivatives you have no idea how much exposure that really is why they're hedging is appropriate whether they're kalat. world that they're offsetting or receiving from counter parties is adequate you simply cannot know anything about that they have about one point five trillion dollars worth of exposure to off balance sheet vehicles we remember off balance sheet vehicles when they were called special purpose entities and were related to enron and enron's collapse the accounting is similar now for the biggest banks they're now morphed into a new euphemism called variable interest entities they have interests in off balance sheet vehicles all around the globe and the question is how much and what is their true exposure and how much control they have over that and the answer is no outsider can tell so there are a variety of black boxes at the banks both in their trading operations in their loans you can't really understand what their reserves are for their loans they don't adequately disclose that either so you simply d

wells fargo earnings dealing with softness down as well.y 1.8%. >> trying to accumulate during the break some analysis of wells fargo. they're saying, listen, 10% annualized loan growth, not as bad as you think, jim. i'm going to say, yeah, maybe when i say, listen, the numbers are going to like, the cellside likes the numbers. the interest margin will turn. my travel associates are saying, listen, cramer, you're just talking your books. no, i like the number more than i thought. that's important. >> meantime, i do want to play a piece of sound from the faa press conference, speaking the faa administrator. take a listen. >> from day one, we have worked with boeing to certify these systems and to further ensure that this innovative aircraft meets our high level of safety for the flying public. we believe this is a safe aircraft. >> in addition to that, the faa said they logged 200,000 hours of work during the certification of this airplane tight, flew on numerous test flights obviously. boeing executive guys saying that the problems, jim, ar

next is marked with wells fargo. >> hello, i work for wells fargo bank. i cover the northern california region. i usually focus on about $350 -- $350,000 of sbe loans. last year, for 2010, i did 43 loans. so we are lending. i usually focus on six different types of loans. start-ups, business acquisitions, real estate purchases with ti's, working capital, a partner buyouts, business expansion. when i am looking at a potential loan, i use the standard five c's of credit. the first one is character. what we are looking for is a minimum score around 640. we would like to say no recent bankruptcy foreclosures, bankruptcies, tax liens. if we see a loan that has been modified, we would like to see a reason it was modified, what ever reason it may be. it cannot be, i did not want to pay that payment any more. the second c, conditions. basically, how precise will the money be used? we are looking at a business plan. when you look at a business plan, that is just a start up. we are looking to see where there will be the need for lending. if you are an existing busi

with wells fargo. >> a spokesmans says they advocate responsible lending and loans originate with wells fargo perform better than with other banks. >>> there is a new call to tear down a part of a san francisco freeway. how interstate 280 could change and the motivation behind the idea. >> plans for a new casino a prompting inspections, what residents worry may be in jeopardy. >> cool, wet weather, i will have what you can expect for tomorrow and when i expect the rain will arrive. >>> mayor ed lee is proposing to tear down part of interstate 280. consumer editor tom vacar is live with what is behind the idea. tom? >> reporter: advocates want to tear down this part of the 280 freeway all the way downtown to create a wonder down under. >> reporter: it exists because voters caused a portion of the damaged central freeway to be torn down. here commerce with traffic and little parking flourished. >> i got a good vibe from it. people relaxing. enjoying themselves in the -- themselves in the sun. >> the director is proposing to do the same thing under the 280 approach from the city to 16th st

disappointment about that slowdown in mortgages at mortgage lending, and mortgage applications at wells fargot does this mean for profits going forward at wells? >> well, it really depends on your view of mortgage product. with rates as low as they are, and if they stay low, there's only so much refinancing that can occur. if you have a view that mortgage lending will pick up, not just maintain, but pick up, you have a bullish view on the stock. if you think tell maintain or slow down which we've seen in the last quarter, it puts a little bit of pressure on the earnings in the coming quarter. >> susie: there certainly was pressure on bank stocks today. and next week we have a bunch of big bank that is are going to be reporting. let's look at the calendar. j.p. morgan reporting wednesday as well as goldman sachs, and then thursday, bank of america and citi. what do you think is going to be the theme of these banks reporting besides mortgages? >> i think the theme is going to be one time. even if wells fargo, there was a number of one time events. private equity gains. gains on securities. ther

wells fargo reporting a jump of 24% in fourth-quarter profits. why is the stock down? well, we'll find out what wall street is worried about when we talk with the company ceo. >> apple's show they will become china's biggest market. >> and after the bell the flu sweeping the country. flu shots are selling out. we'll talk about a top farm suital company on the front lines of this scary outbreak. >>> welcome back. wells fargo leading the banks lower despite better than expected earnings. kayla tausche with more. >> reporter: the heart of the bank do two things, take deposits and reinvest that money as loans to make a return or net interest margin which is the simplest margin of bank profitability. no wonder with wells fargo seeing this metric decline for two straight quarters, rock bottom interest rates is pretty bleak. deposits jumped faster than expected and faster than they could lend them back out and they put it in treasuries and other low risk short-term securities and hence the lower yield, but with all banks in this business it's no wonder the sector is down today

what about wells fargo, which comes out with earnings on friday? that is a stock you were watching. > > tomorrow's earnings report from wells fargo is going to be key, not just because wells fargo is part of the financial sector, which is expected to lead this season, but more importantly, wells fargo is the largest, i believe, originator of mortgages in the united states. they are going to be able to tell us not only how many mortgages they sold or wrote, but what they are sort of seeing out there in the credit markets. i think that will help us get more guidance to both the housing market and to help the consumer. so i am going to be listening closely to wells fargo's report, and i think a lot of folks out there could gain a lot of knowledge about the housing situation just by that report on friday. > jared, there are some happy faces out there now that facebook is trading higher these days. what do you think about this stock? > > you know, i am not convinced that facebook has done the right thing. don't forget, they too have to report earnings t

>> wells fargo let her borrow up to $500. had to die to it her monthly direct deposit from social security. as soon as the next check was deposited wells would debit the amount you plus a fee of $37.50. >> only alternative was to borrow, again. >> i don't know how much money she makes every month but the social security check is her only source of income. so that is around a thousand dollars. the loan amount? $500, the fee about $37.50. that means there is a $462.50 for food, rent, utilities for the rest of the month. andre luke yetta. >> you can't make other expenses taking on another loan that. cycle goes on and on. >> this cycle repeated the following month and month after and after and after. and it's been going on five years. wells fargo declined an interview but in an e mail told us during financial emergencies, wells fargo direct deposit advance service provides short term yitd to customers whose accounts under good standing it's n expensive form of credit not intended to solve long term needs. there is a call for stric

bottom and when it reacts poorly to okay or decent move, that is a concern for the downside and the wells fargo news was not so overwhelmingly bad, but the market did not respond that well. >> that is the interesting thing, because if this is the best shot that the bears can take at the market, then it seems that the market is never going to go down again and the vix is at 13 and exactly where it ought to be, but on the other hand if you are like me and you think that you cannot always see the train coming, then it is time to buy a little volatility for the reasons that the guys have laid out, because longer term volatility says that the market is going to go back to the bounsz bouncey situation we had last year and part of what is going on is the fact that financials had done so well and they had come back a little bit and dan does not want to chase stocks but when it comes to the financials, maybe you have to chase them and they will come back to you a little bit. >> and scott makes a point that wells fargo is considered best of breed. certainly one of the highest valuations with the bank sto

wells fargo reporting.h an analyst. >> problems piling up for the boeing greenliner. cracks in a cockpit window. oil and fuel leaks. and an engine fire, marking a tough week for the new aircraft. >> are you telling us absolutely everything? >> not exactly. we're also out of coffee. >> phil lebeau and an airline analyst will join us at the top of the hour. >> and the s&p closing at a five-year high but can the optimism survive next week's earnings reports? the third hour of "squawk box" starts right now. >> welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernen along with becky quick and andrew ross sorkin. our guest host this morning, david walker. founder and ceo of the comeback america initiative, and a former u.s. comptroller general. more from him in a minute. first becky is -- has got the definitive word -- >> no, i don't. they're not out yet. go, go, go. >> on wells fargo -- >> we're waiting for wells forgo. >> looks like i got them here, 91 cents a share. that's two ce

wells fargo kicking off bank earnings.treet estimates with investors worried about the bottom line in the months to come. to talk to what the impact, community banks, which ones should you choose coming up. ♪ paris financial group with his next big bet. state and. have given way to sleeping. tossing and turning where sleepless nights yield to restful sleep. and lunesta®(eszopiclone) can help you get there. like it has for so many people before. when taking lunesta, don't drive or operate machinery until you feel fully awake. walking, eating, driving, or engaging in other activities while asleep, without remembering it the next day, have been reported. lunesta should not be taken together with alcohol. abnormal behaviors may include aggressiveness, agitation, hallucinations, or confusion. in depressed patients, worsening of depression, including risk of suicide, may occur. alcohol may increase these risks. allergic reactions such as tongue or throat swelling occur rarely and may be fatal. side effects may include unpleasant

and some wells fargo, because the -- >> there's nothing new to the story. erperformed, did well this year, vastly underperformed some of the other bank stocks. >> and so do a lot of other things. >> absolutely. again nothing wrong with it, just better gains in other stocks. >> i know ma we'lla and i at 3:00 will be speaking with the company's cfo first on cnbc, but joe terranova, who made the more com beg argument? >> i like wells boils down to earnings, a battle between cost management, lower expenses which wells fargo is acceling in. i believe rates are going higher, therefore i'm not as concerned with the net interest margins for 2013. >> pete, i know you loved wells and you still have it. do you still? >> because of the fact that maybe they aren't exposed to europe is why you don't get the bang for your buck. like as far as where is the next catalyst. you're not buying this name to see it go up to $50 ra share. it's probably not going to happen. i think you will get a fair valued company that is very steady, low beta, but also give you the 2.5% return an

she didn't have the money so went to h her bank wells fargo.ldn't give her a traditional loan but suggested she might want to utilize a wells program called direct deposit advance. >> i didn't have to have collateral or a credit check and i felt that that was a good service, you know. >> reporter: are wells fargo let per borrow up to $500. the catch? high had to tie the loan to her monthly direct deposit from social security. as soon as the next check was deposited they he would automatically debit the full loan amount plus a fee of 37-point the $50. >> my only alternative was to borrow again. >> i don't know how much money annette makes every month but her social security check is her only source of income so that is around a thousand dollars. the loan amount, $500. the fee about $37.50. that leaves her just $462.50 for food, rent and utilities for the rest of the month. >> andre leuketta is with the california reinvestment coalition. >> you are suddenly in a position where you can't make your other expenses and you take out another loan and t

just to remeepd you what is on today's agenda in the united states, wells fargo is the first of the u.s. banks to report earnings this season.thely during that hour, best buy is going to be in focus, as well. we wanted to look at the governance reform. >>> still to come, all the latest on the italian elections when we come back in a few moments. ♪ [ male announcer ] don't just reject convention. drown it out. introducing the all-new 2013 lexus ls f sport. an entirely new pursuit. [ male announcer ] how do you turn an entrepreneur's dream... ♪ into a scooter that talks to the cloud? ♪ or turn 30-million artifacts... ♪ into a high-tech masterpiece? ♪ whatever your business challenge, dell has the technology and services to help you solve it. >>> we're going to be discussing italian auctions. just to remind you what we're looking for, 3.5 billion in three year notes today. that yield should be dipping under 2%. we'll get those results out fairly shortly. as soon as we do so, italian elections next month. we've got berlusconi on one side, pasani on the other hand. the monti interest party i

wells fargo kicking things off tomorrow. can this run continue? let's take our positions ahead on the banks ahead of the reports. what is your inclination, dan, in terms of where you go here? long, short? >> wells fargo really set the, you know, set the agenda last quarter, it had a very disappointing quarter on a bunch of different metrics. the brokers are breaking out here to multi-month highs here. and citigroup massively outperforming. b.k. and i were talking about this for the last couple days. these stocks have massively outperformed. not wells fargo, but the banks and money centers for the last four months. they probably need to pause before they can go much higher. i know they're cheap but we need to see visibility for the balance of the year. >> just this year, financials are up more than 4%. goldman sachs, not just a month higher here, the highest level since august 2011. black rock, highest level since 2010. state street, highest since 2009. >> the whole idea of the yield curve steepening, that's really taken on in the first ten days of

wells fargo is starting up its own jet-leasing company. originally, the financial firm was "lending" money to customers to buy or lease jets. now it's going to lease out directly. wells is taking a majority stake in avalon jet charter. jet leasing is said to be a $100-billion-a- year market. and according to reports, other large banks are likely to follow wells fargo's lead. american airlines has a new look. the new silver jets and streamlined logo are meant to look modern and vibrant, and to reflect the change on the inside of the company, according to ceo tom horton. some unions wanted the bankrupt airline to wait to make changes until after its pending merger with u.s. airways. the pilots' union claims such costs are what sent the airline into bankruptcy. gold is on the move from new york city to germany. germany's central bank, bundesbank, will withdraw 300 tons of gold from the new york federal reserve. germany stored the gold there during the cold war to protect it, and it has stayed there - for no extra cost - as a backup currency in

i do have one question for wells fargo. what are the typical rules for applying for sba loan of less than $50,000? how much money do we need to have in your bank to apply for a loan? >> i am on the smaller side of the bank. i am a transaction guy. i do not technically require one to have an account to do a loan with. what i look for, i generally start at 100,000 and up. when it is a requirement of 50,000 or less, i tend to call of the micro guys to help me out. that is right in their box. for us, the capacity for us to do the smaller side is not there as much as it is for them. on getting a loan through my side of the bank, i do not require an account to do that. we would like to have it, but i do not require it. >> last question for the opportunity fund and a critic representative. are you a cdfi? is san francisco and s.p.a. in support of cdfi's being established in san francisco? >> yes, we are. we were founded in 1999 with a small business loan. that is how we started our tenderloin office. >> opportunity fund is a certi

. >>> we'll kick off with wells fargo, kicking off q4 results. the lending business came in a little bit lower than many analysts expecting. the numbers coming out after american express announced plans to cut 5,400 jobs and the s&p closed at fresh five-year highs. jim, it's been said, wfc, probably the most important report of the week. what kind of grade do we give it? >> the whisper was they weren't going to do this anyway. i don't know anyone would think they would -- people were certainly thinking because the stock market was 32, 35. maybe somebody knew something. but in the end, they didn't do

wells fargo's stock is getting hammered right now down 1.7 percent down 64¢ to 3480.s a smaller margin of profit and their lending business. that is hurting the bank's stock right now even though there reported record profit and strong oregano. >> a small turnout last night and my team as as contra costa county fire officials talk to residents about the closure of fire station 12. the station is at the close on tuesday along with three others in walnut creek, lafayette and clayton. the closure is expected to save the district about $1.6 million a year. at least one more fire station is slated to close in july. last night, fire officials assured residents and martinez is that they would do their best response to emergencies in the area but also expect a long response times. >> gas prices are expected to be lower this year than last. forecasters say ample oil supplies and weak u.s. demand will keep prices low. the energy department says the average price of a gallon of gasoline will fall 5% to $3.44. aaa predicts gas won't surpass $3.80 a gallon this year. here's a look

i think the back- door way is to go through wells fargo.hink the mortgage crisis situation, where people can't get mortgages, is going to get solved, and wells fargo is in a position to really take advantage. > > wells fargo is my no. 1 bank. i think they have the least european exposure, they have the most to the u.s. housing debt. that's a good bank, that's my no. 1 bank for 2013. > > the target is about 30% higher. looking for it to get to 48 if it breaks above 36. > on to the bonus round question of the day: when was the last time crude oil dipped below $50 per barrel? > > high crude oil is a sign of economic strength, so you go ahead sir. > > age before beauty. > > it's 2009. > > '08. 2008. > it's 2008. thanks for being on the show. we will be right back. matt cavanaugh of cmz trading joins us now for chart talk. good morning to you. gold futures sold off by $25 yesterday. what does that tell you, and what triggered the sell-off? > > i think that gold has had a really good start to the year. it is up in the beginning part of this year

right now wells fargo down. 1.3% decline.ells fargo ceo timothy sloan will be on -- excuse me, cfo -- i gave him a pro foegs there, he should be happy. but his boss won't be happy. the bell, he will be on bell, 3:10 p.m. today. the banks results and outlook first on cnbc. >> all right. payday for many americans. if you think your check is a little less than usual, you're not alone. eamon javers, say it ain't so. >> hi, sue. it is so. there is a big bite coming out of your paycheck. if you check your first check of the year this week, you will notice there is a lot less money coming in. i will explain why when we come back. at optionsxpress we're all about options trading. we create easy to use, powerful trading tools for all. look at these streaming charts! they're totally customizable and they let you visualize what might happen next. that's genius! strategies, chains, positions. we put 'em all on one screen! could we make placing a trade any easier? mmmm...could we? open an account today and get a free 13-month e ibd™ subsc

joining us with his thoughts on that, scott wren, senior equity strategist, wells fargo advisors. so scott, are you changing any of your forecasts for this year based on this strong january? >> well, susie, really january has been stronger than what we thought. we've had a 15, 25, year entarget out there for the s&p 500. and we're certainly reassessing that. we want to look at the fundamentals. we want to look at our models. and just see what we think is going to happen. but i do think you said in the intro 20%, i think that's extreme. we've been looking for about a 10% year including dividends. maybe we're a little conservative. but i don't think we're going to see a 20% year in the stock market this year. >> as you reassess things, one of the things that comes up usually you get these stock market rallies when you have a robust economy. we don't have a robust economy. so does it make sense that we'll get a double-digit rally in this environment? >> you know, based on the work that we're doing right now, no. but saying that, i think stocks can do well in a modest growth, modest in

that's what wells fargo did during the recession. the government was desperate to save the banking system and allowed wells to go from 10% of the mortgage market to more than 30%. frankly that's perhaps the most outrageous and outstanding and astounding market share grab i have ever seen in my career. no bank has been able to have that much concentration in the history of modern banking. wells has been spending the build out from a regional national brand taking share in every market it touches. once it gets its hands on your mortgage it will expand to take over all your banking business. cross marketing is the hallmark of the great bank that warren buffett continues to buy shares of in the open market even as he's the largest shareholder. for all that wells has become a hated bank. critics talk about runaway expenses shrinking the interest margin. severe overvalue litigation. if interest rates are going higher which i think they are. wells fargo might be the greatest investor atm of the era. the reach is magnificent, management supe

last but not least, we have our conditional lender represented here by wells fargo. mark cyrus is the senior fda banker for the region -- the senior sba banker. he held businesses choose the best loans for the growing business and focus on a comprehensive understanding of their goals for their business. mark is responsible for helping entrepreneurs with sba loans every step of the way. i would like each of you to speak a little bit about what your organization does and, more importantly, address the audience here and let them know what your looking for when you are hoping to fund their loan. we will start with you, mark. >> absolutely. thank you. i want to thank speaker pelosi for putting this together. i want to thank all of the of for coming out on a smell it -- snowy san francisco date. [laughter] we've been told we should get us know when we go back outside. not sure what to expect. second, i thank speaker pelosi for all the work she did to support the jobs act and before that, the stimulus bill, the original american recovery act bill that allows sba to be able

>> i think wells fargo is the best name in there, a third of all american mortgages. the housing play, we like the financial sector and clean balance sheet, it's all domestic, no international play, wells fargo. >> credit quality continues to improve. i take the other side, mastercard above 500, transaction plays, stay with that, visa working well, discover if you could grab it on a pullback, do it, american express i like all of them. >> up next shares of hp ringing in the new year with strong gains and we debate whether that company can keep uhm the momentum. we appraised today's jump in gold prices with dennis gartman when "halftime" comes back. to the gas station i amg about once a month. last time i was at a gas station was about...i would say... two months ago. i very rarely put gas in my chevy volt. i go to the gas station such a small amount that i forget how to put gas in my car. [ male announcer ] and it's not just these owners giving the volt high praise. volt received the j.d. power and associates appeal award two years in a row. ♪ with scottrader streamin

wells fargo climbing nearly 3% this month alone, after rising better than 20% in 2012. wells fargo chairman, president and ceo is john stumpf who joins me now in a rare and exclusive broadcast interview. welcome to the "closing bell," john. >> thank you. nice to be here. >> thank you so much for joining us. i want to talk first about the broad environment, what you're seeing, because we talk so much here about the challenges as a result of washington and this slowing growth story for the economy. what are you seeing? >> well, 2012 was the year housing really made its statement at its back. it's not back to where it was, but surely we can now say housing has turned the corner so that's a good thing for the economy. when housing does well, everything else seems to do well. quite a multiplier effect. in fact, there's been no recovery in this country of size or stability without housing participating or leading. energy is doing pretty well. we see some manufacturing, but to be honest about it, the recovery is still not as strong as it needs to be. there's still too much unc

jpmorgan, wells fargo and bank of america. we put pulte in our stock super bowl. you know what, i think it's nonsense that people think we focus on these only. i plow through all the banks, but i really plow through wells and bank of america to find out how wells and bank of america themselves are doing. if you want to read on the global economy, go to jpmorgan's conference call. you want to read on the standard of both corporate and consumer, you listen to jp morgan. it's lively and straight forward. yes. the conference calls are actually entertain when they're from jpmorgan. i think jamie dimon will be thrilled to show how the company is performing and has put the whale behind him. that said, i don't want you to buy it or any of the banks ahead. it's too hard. especially after wells fargo dropped today. even though it reported a pretty darn good quarter. we get results from ebay. the longest time i have stood behind ebay, but my charitable trust recently sold it after a huge run-up. it kept going higher. this stock, though, did get hammered the last time it repo

it's not that big of a deal, i think, for wells fargo.rought us close to, especially to a bank like wells fargo, boom, refinancing can want go on forever. they cut so much on that this year; right? >> that's another concern is that the pipeline of applications was done 20%. a lot of people pointing at that saying the refinance boom is declining. we're on the opposite side of the trade believing it will be robust in 2014 and have elevated levels because people have an economic incentive to refinance and capacity unable to grow because of the regulation out there that's brand new relative to a couple years ago. that's an area we like mortgage banking, but you're right. that's causing some of the noise to people trading that off also today. ashley: switching gears, paul. the five year an anniversary of bank of america, teaming up, taking over country wide. we have a little graphic up for you, happy 5th anniversary. is this going to be considered probably one of these worst, you know, contracts or acquisitions in corporate history? certainly

connell: we bring in a analyst from wells fargo. more high tech workers and all of these things in cars, will they be acting like american express and doing less because of technology? >> i tell you, i think we will see unemployment, i think we will see the brake improved, the labor market will improve. companies are in business to make money. when they see their business increased to the point where they need more workers, they will hire more workers. when they are uncertain, they probably will not. when they see on performance that they will cut back on their employment. technology it allows companies to run more efficiently with fewer people. if companies think times will be good and improving, they are more than willing to hire. they are just uncertain right now. connell: the deep recession we just came out of, are we in the new normal that so many people have talked about? >> i wish i knew what the new normal unemployment rate was. i think it is higher than what it was in the past. we are seeing a secular high unemployment rate