Transcripts For CNBC Squawk Box 20120525

energy stake. kate kelly reports that the firm believes the corporate governance issues are a distraction. also thinks that the permian asset sales will go well. >> and some of china's biggest banks will miss annual targets for the first time in seven years. suggests companies are delaying investment due to uncertainty about the economic outlook. signs of acceleration in the first ten days of may. but the commerce ministry says it's facing a relatively stern trade. >> europe, shares in bank i don't oig are suspended on the madrid stock exchange. the basket expected to ask for a rescue of more than $19 billion. and german consumer morale holding steady going into june. european shares for a second straight day are mixed mostly to the down side. concerns about the global economy and europe's debt problems. more from london in a few minutes. >> time for early stocks to watch. verafone which makes credit card swipe machines that forecast third quarter revenue, you can see what happened. rue 21 reporting better than expected earnings and revenue. second quarter store sales guidances is believe current expectations. >> rue means street. >> it does? a french thing? french know fashion. who are you, aren't you our economics reporter? >> senior economics reporter. >> how late were you out last night? >> i was out very late last night. i was the exact opposite of the guy you had yesterday. you had this guy arguing for sleep. i'm here to argue against sleep. i think you can get more done if you sleep less. you could play music late at night, come in it and be an economics reporter on television in the morning if you reduce the amount of sleep. and if you consume enough coffee, you're fine. i don't know what the guy was talking about. >> people are waiting to hear this news on enfoe blocks, but -- >> are we talking about only companies we've never heard of this morning? >> do you a lot of covers in your band of the dead. and i was thinking i listen to the dead coming in in the morning. there was one from san diego in 1979. the actual cover should suck a little that you did because at times they were really bad. >> there were things you actually get wrong to get they will wrong. i mean, because like where there are different harmonies that you don't quite get exactly right. the way garcia harmonize the at certain songs, it sounds right. >> you've only done four gigs together. >> last night was the first time we were a five piece. >> that even brought in more uncertainty and i realize it's good to cover the dead because there are many times where people might say i think they were trying that. >> it's interesting. a good point. purposely getting it right. >> and you were stoned last might probably. >> not at all. i have to remember lyrics to on bob dylan. >> did you have a drink? >> i had one drink for each set and one drink afterwards. we played these sets. >> yesterday was dylan's birthday. >> and we played a lot of dylan. >> i don't want to be someone whose most accurate portrayal is by a woman. >> that's interesting. we did a couple tributes for doc watson who is in the hospital. he fell and was this critical condition. we did a couple tributes to him, as well. so it was a tribute to a tribute. >> a lot of people out there our viewers are saying would you get to info block, please? >> or back to rue 21. >> infoblox, in case you're wondering if you're one of the only people, it's a network control solutions company and earnings and revenues both beat the street. let's check on the markets this morning. futures, we've got positive numbers and we're happy about that. >> really? >> couldn't believe the futures were higher yesterday for the same reason. all these lousy economic numbers and the markets ignored it. >> aren't you starting to think that even the germans are like worried about letting greece go? they may be the first ones to fold. but that just delays it again. what are people saying by january 1st. >> i don't know why they think january 1st. some say it could happen faster. >> they always fold. >> until they don't. there has to be a point where you say we want you here, but -- >> it used to be there's no way greece will leave the eurozone. two, it's greek's choice to stay in the eurozone. >> they're talking about 50 billion euros or something that the ecb would have to give up and say we'll they ever get that back. they're taking their time from the point where it would be a real concern and a huge blow up to we're kind of dealing with this. >> do you think the germans are sounding like they're ready to let greece go when you hear what they're saying? >> not necessarily. >> i saw a couple people say we could handle it, but i think -- nobody has benefited from this whole thing more than the germans. the greeks have had a pretty good time, too, but the germans -- >> even if positive carry on the bailout stuff. because if you look at what the bund is at and what they lent to greece when they do these loans, they actually have positive carry on that. >> let me tell you about oil which is back above 90. you think that maybe you'll see a trade in the 80s stick but it didn't. but gas was pretty cheap when i was coming in this morning. and then in the ten year -- >> $3.60 is cheap? >> gas coming down about half a cent a day over the last month. and it's expected to continue for the next couple of weeks. >> is it normally in may -- >> the very end of may, but it's already the 25th today. >> you didn't even know we had monday off. >> no, i didn't. >> it's -- we always have memorial day off. >> normally i prepare for being in a good mood and i wasn't prepared. >> i'm upset that we told you. it would be funny for you to show up. >> 1.77 on the ten year. the dollar, this can't get cheap enough for me. 1.25. the euro i'm talking about. i don't think there is a number where i would say stop. but 1.2582. 1 would be good. then i don't have to do the math when we go over in july. and you still have to do math over there because the v.a.t. every hotel that you're quoted on, first you got to do -- looks like 300 and then it's really 400 and then wait a minute -- mini bar. >> that's one thing that drives me crazy. they quote you like $100 room rate or something. and then they add like $30 -- >> i usual don't stay in a room for an hour. i don't rent a room for just an hour, steve. >> i knew the porn music was coming. the great thing about being on squawk is if you can say something and get the porn music going, you've done well. >> all right. read that. >> me? time for the global markets report. kelly evans is standing by in london. >> good morning, guys. for all the talk about greece leaving the euro zone, as you can see, things are roughly split this morning. take a look at what's going on in the stoxx 600. currently up about 0.2% on the day and that's after fluctuating between stronger gains throughout the morning. a better tone in bond markets. spain is back toward the 6% level before ten year gilts, spanish debt 6.14%. italy down to 35.. take a look at what's happening in commodities. you mentioned gold. that's up a bit, but want to draw your attention to plat thumb. we've had several guests including patrick armstrong talking about how lat number is the new gold. that is something to keep an eye on. and closer look at some of the bourses, ibex 35 here in spain bucking the trend of what has been a little bit stronger performance, down 0.01%. cac 40 up about 0.3%. ftse struggling to stay in the green. what's interesting about spain, though, all the buzz over here is about this euro vision contest on saturday. i'm still learning about all this myself, but apparently it's a long running europe wide competition. spain which has its postora solar in the running say they might not be able to afford hosting the competition the following year because of their austerity measures. so a lot of people worried saying if she's joking about not wanting it because they can't afford it, doesn't bode well for the region. >> they'll find a way. >> i want to see steve in the euro vision competition. >> absolutely. we were having a discussion earlier. are the germans ready to let greece go? what's your take on it? >> the fascinating thing is the headlines this morning, first you have ecb or bundesbank chairman talking about how euro bonds aren't going to solve anything, how the ecb has to stick to its mandate specifically regarding inflation, forget about some of the other measures. and you've got german officials talking about how it wouldn't be a big deal if they delay the next round of aid to greece. greeks might feel a little differently. i'm not sure what exactly game of chicken they're trying to play here, but i have to suspect by the way that markets are looking today and people are starting to talk that they think the most likely outcome here is going to be a fudge. they'll find some way to keep a little bit of money going to greece, some way it to maybe keep it in the euro and keep this whole thing going on a little bit longer. that could support risk for now, but clearly no long term solutions. >> are you left out in the cold on the monday off or -- >> yeah, they have to work. >> i have the worst of both worlds because not only do i not get the u.s. holidays off, but when the uk has bank holidays, we're still on air because people in the u.s. want to know what's happening. >> you need to go on the continent itself where basically every day a holiday or where there's four months off in the summer. le >> she needs joe's agent. >> monaco has the big races there. >> i think that's a zero tax enclave, too. where all the tennis players all end up. with what i heard we're paying you, that would be a good thing to do. you and spiderman. >> i think we should start doing "worldwide exchange" from monaco. i'd be okay with that. >> all of us would. all right. thank you. >> have a great weekend. as we approach the end of may, let's take a look at the good and the bad. best and worst performing dow components, best performer believe it or not, walmart. ever since the "new york times" story, the stock has rebounded strongly. shares up 10.5%. a huge mum. what day did that story come out? >> wasn't that last month? that's a weekly chart. >> if you could put up a two month chart on that. >> there it is. >> still above where it was when the story -- >> well above, yeah, where it was. >> the whole point of that piece was that shareholders would look at it in a morally ambiguous way. because if you add up all the costs of one, just in a really -- all the costs, all the things that could finally happen and how much they gained by doing it, shareholders might be like -- >> a couple shareholders said they didn't think it was the right thing, but none of them sold the shares. >> almost like -- >> did you see the credit suisse report? they did a really -- it was just clinical break down of how much one of these cases costs. and it's not that much. no moral sense to it, just here the numbers. >> you peel good with that as a law and you feel like you have high ground, but you can at least have it stated that that's your intention. but then even at the company, maybe the officers that are here are like, you know, we want you to do really well in mexico. we want you to build things really quickly. and they don't really say it and then the guys down there go they don't really mean it. so that's why i think we need to make sure that the law here doesn't completely fly in the pace of the way business is done down there. where you can't compete -- >> they could do a deal that our guys couldn't do. and i tell what you happened, they came along to our way of thinking and they then adopted laws like ours. because we were a world leader. we were the exceptional americans and we led the world to the right place. >> but then the same people that would argue for leading the world to the right place in business practices, they look at nation building or trying to go in and spread democracy, where that's a total -- you're going to have an argument at that point. iraq, afghanistan, trying to do any nation building. you can't export democracy. why try to export all the laws that go along with democracy. wouldn't you rather help women that don't even -- aren't even allowed to go to school in afghanistan? wouldn't that be more important than making sure there's no bribes in afghanistan? >> bringing down the taliban was p an important thing. >> and a lot of people are better off. especially the plight of women, a woman, i can't even believe that she's still alive for what she's -- it was so impossible to even go to school 15 years ago over there, ten-ye1 10 years ag there. so what's more important, unfair business practices or -- >> or let walmart be a part of nation building? >> no that's not exactly what i meant. just liberals will be very quick to say we definitely have to make sure we get our laws -- same laws over there, but if they don't want to have democracy, fine. there may never be democracy in the arab world. >> i'm not sure that's a liberal point of view. >> about if i were going come to someone to find out, i would ask you. >> i don't think it is. >> see how i just immediately put you into sorkin's chair? >> that's my role today. >> it's not an uncomfortable role. >> and i won't address sitting in that chair. >> you're a former print guy. live in new york. >> not in the city, though. >> can i tell you about the worth performing dow component? >> the guy who deserved it. >> so bribery mf- >> jpmorgan stock down 21% this month amid revelations of the big trading loss. if it falls another dollar, it would have been the worst month since september of 2002. >> much bigger market cap loss than even the worst case scenario for that trade. >> what cramer and others have pointed out, you used to give a premium to jamie dimon. >> what's the teflon of jamie dimon is th dimon? wa was it worth $20 billion? >> as loss like that won't happen again. >> and you you can mark down the entire sector because of what the law will do to the possibility of trying to make money that way. with the profit center. coming up, a lehman brothers bankruptcy estate acquiring a bigger stake in an apartment building owner. the details next. plus your holiday weekend weather forecast. first though sports buzz, thank you, thank you, the continincin reds something they haven't done in more than 30 years. they beat the atlanta braves in their finale of a four game set. they swept the braves. remember they beat the yankees twice, too. so that's six games. reds picked up six in a row and they stay home for a three game series against colorado tonight. they have to be at least tied for first. r you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. 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[ all ] i'm with scottrade. ortho weed b gon max. with a new continuous spray wand. so you can kill invading weeds down to the root. without harming your lawn. guaranteed. ortho weed b gon max. u.s. equity futures indicating up. lehman is buying a stake in archstone. archstone was the old -- she said things and they weren't necessarily marked where they should have been. goes back to sam zell. >> looking in to lehman, the regulator regulators aren't going to bring charges against any of the former executives. where did i read it will? maybe in politico. but they say there's no charges to be brought after four years of digging into it. >> i don't think there's been charges brought anywhere. >> it's not against the law to be stupid and make bad trades. >> it's against the law to sign off on financial statements that may or may not have been true. and i guess -- >> i don't know. he's a lot of things, but i don't know if he was -- he seemed like he wasoff come with uberous right to the very end. he turned down chances. >> completely different from enron where when you unpacked it, it was like you got to be kidding me. whereas some of the lehman stuff was in hindsight it looks stupid, but when correlations rent to one and models show it wouldn't go to one of-anyway, coming up, your weekend weather forecast plus euro crisis. we'll talk to the man responsible for foreign investment in ireland. but first we're getting ready for a three day holiday weekend and if you're hitting the road, you want to hear this story. national motorist association has updated its rankings of the states and cities more likely to pull over speeding drivers. nevada is the state most likely. followed by georgia and alabama. meantime, wyoming, the estate least likely to issue a speeding tick account followed et follow. u.s. companies spent 8% higher than one year earlier when though the number of business travelers dropped. the road war yours are expected to get more done on fewer trips so companies are employing game if i indication to stir healthy competition and cut costs. game if i indication is an emerging management tool that uses rewards and recognition to encourage the most efficient travel decisions. coca-cola was an early adopter. the company developed a core card to tally travel transactions. those who booked cheaper flights and stay at company preferred hotels rack up points, cash them into company perks and walk away with priceless bragging rights. i'm jackie deangelis and that's your cnbc travelers check. and people. and the planes can seem the same so, it comes down to the people. because, bad weather the price of oil those are every airlines reality. and solutions won't come from 500 tons of metal and a paint job. they'll come from people. delta people. who made us one of the biggest airlines in the world. and then decided that wasn't enough. 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[ male announcer ] ducati knows it's better for xerox to manage their global publications. so they can focus on building amazing bikes. with xerox, you're ready for real business. welcome back. i'm joe kernen along with becky quick and steve liesman. u.s. equity futures are higher this morning. equities are okay. first we're look at the percentage move. there's europe. even greece is only down -- that's kind of flat trading. >> i got a story for you to read. >> on lehman? >> no. about attacks on private equity. refuting some of the attacks. while we do that, takes three day weekend. so let's get your weekend forecast. alex wallace joins plus the weather channel. cross our fingers or not? >> for some of us, should turn out to be pretty nice if you like the heat. it willing be hot for a lot of areas. a couple systems, one moving across the midwest, another across the southwest. that will be impacting the northern tier of the country as we head to the weekend. ahead of those, we have the heat and potential record highs as we head on through the afternoon. widespread 90s out there for us. that will continue all the way to the ohio river valley, as well. so very, very warm numbers out there for us as we head through today as well as as we head into our saturday. we've got 90s showing up in places like louisville back towards st. louis, 98 degrees for the afternoon high. we're talking temps nearly 20 greers above average. so this this is the story for many of us. be prepared for the heat as you fire up the grills. >> alex, thank you very much. >> this is a great piece. the great thing is -- they're talking about in the obama ads calling bain a vampire, that steel dynamics would have closed without the $100 million infusion. so it was a blood bank, into the vampire. it finally did succumb after romney was gone for a couple years. but confused with the inconvenient dreams, the obama team then tried to float above them and help at the go to this will axelrod, my favorite, he suggested, axelrod suggested that private equity firms harbored an economic theory that isn't the right theory for the country. >> and this was part of a campaign ad where they attacked bain capital for closing down they say and causing the steel mill to shut down. but they point out the steel mill would have been bankrupt earlier because the bank came in and infused $100 million. >> and the ad came out that monday when obama was at tony james' house who made his millions in private equity. and talking to sorkin yesterday, he had not read the "new york times" piece quoting people that attended that fund raiser. they said they were absolutely incredulous that he was there, had a $40,000 plate fund-raiser, running elbows with all the people that made their money in private -- and they said couldn't you have waited a couple of days before at least releasing the ad on private equity, the vampire ad basically. >> am i required on step in and attack private equity? >> no, you say you want to push back. the irish are just a few days away from a one off fiscal referendum that will determine their direction of ireland's relationship with europe. that's a key consideration for foreign direct investors. joining us from dublin is barry o'leary. he doesn't sound irish to me. ceo of iba ireland. responsible for the development of foreign -- mr. o'leary, i probably was an o kernen at some point, but good morning. tell us what -- >> good morning to you from sunny dublin. >> it's not sunny here, so there's a switch. land of great golf, that's for sure. tell us what's at stake here? >> so what's at stake really is the referendum next week essentially ireland is in the bailout program at the moment and depending on what way the economy will develop, whether we can go into the markets again ourselves or whether we'll need access to a bailout, it's a type of insurance policy. we want to make sure we have the facility because as a country trying to attract foreign direct investment, you have to have a very stable environment. so really access to funding is the key issue. >> of all the problems we've seen, one that's been the most depressing is ireland was really held up as an example of what going down a pro capitalist path could bring you in terms of lowering corporate taxes. and very disappointing when ireland got into trouble. but it was a different situation, right? you can explain exactly how it happened? >> sure. we got into trouble a massive property crash and what that led to was the banks were exover about possessed in property.value of the assets fell by above 50%. the state had to bail out the banks. as a result of that, there were austerity measures that has led to domestic demand being very flat. but we are relying on to get us out of the predicament on the export led economy. the multinationals in ireland account for over 80% of all exports from the country. >> it looks like it will pass pretty easily at this point, right? >> we wouldn't want to be c complacent. the statistics would show you 31% against and 19% undecided, but often it's the case that people who feel strongly would say maybe i won't. so i think it's very important we maintain the arguments in favor of the referendum right up to the last day which would be this day week. p. >> we watch what had's played out in greece and there's all this talk now of whether greece will leave the euro, whether there will be a renegotiation. and if greece renegotiates the terms that it has set up with europe, do you think that ireland should get to renegotiate its terms, as well? >> i think you have to separate the two things really. the immediate issue is the access to the funding. of course then there is the much wider negotiations on ireland's bailout. so i think it's important that the population don't actually confuse the two of them. and ireland, though, i think is very different case from greece because if you look it at the profile of industry in ireland, we're very active in the more modern sectors of the economy, the life sciences, the digital media. a and so we actually can see a wave exporting significant businesses out of ireland. so the economies are very different. but as they say, they are slightly to different questions. >> but if the ecb is more forgiving and backs off on some of the austerity that they have forced on greece, do you think they should do the same not only with ireland but with portugal, spain, anybody else who needs help? >> i think there is the balance definitely that quite clearly austerity is not working for europe, it's causing more and more problems. growth is very flat all together. so i think that's part of a wider question on the need for stimulus to try to get the balance right. because certainly our economy, the domestic economy, unless it gets stimulus, it will not recover. however, in the recent negotiations with the troica, we've disposed of 3 billion state asset. we'll now be allowed to it hold on to half of that for hopefully job creation type initiatives. >> thank you for being with us today. we appreciate it. i can't say it's going to happen for sure, but it sounds like things are going your way. hopefully that's the outcome. thank you. >> thanks very much. key with ireland is they did not overspend. that was not the case. you pointed that out. but if there's a morality to all this, that some of these countries are get wlting what t deserve, nobody think that's true of ireland. >> cnbc will have a one hour special on the eurozone crisis today at 1:00 p.m. eastern time. >> if you have any comments or questions, e-mail us at squawk@cnbc.com. when we come back, we'll ask if the dow has a shot at its fifth positive close this month. joining us from the futures pits, ben liechtenstein. we've seen the markets move down steadily. what happens before a three day weekend? >> we probably won't see extreme volatility. one thing i'm noticing this morning coming into the trade is that we're at this upper extreme of value that's been established all week. we rejected lower levels around the 12 area in the s&ps and now working back up. the dollar is seeing enormous strength. i think there's a little relief rally in just the consensus that if greece were to leave the eurozone or the economic community there, that again for the most part that we won't see the bottom fall out and that came late in the afternoon yesterday. i think trader sentiment is basically that again as we get some certainty or start to get -- seems to be some resolution to the uncertain that i we've seen. >> it's baked into the market at this point that the idea that -- >> yeah, i think so. i think that some of what we saw off those lower extreme off the 1300 level and the rally we saw yesterday, there seems to be rumor that it was imminent and again we seem to see a bit of a big reaction that one they think i was also looking at is just the fact that if you look at year to year right now, we're basically in multiple major markets. trading at the exact same levels as last year. one market that's not the case is the dollar. we've seen a huge run up in the dollar and i think it was right around 75, 76 this time last year. >> big part of that is the euro. >> no question. >> i think what you're saying is big and what's nice about what you're saying is it puts together a lot of different themes that are out there. if indeed we have how priced it in, i just want to be clear, we're at 12,500 on the dow. 177 in the ten year. you're saying that's it. 1.25 on the euro. greece leaving the eurozone is priced in. >> i think in terms of some of the equity prices that we've seen in the rally that we saw yesterday, i think that was contributing, yes. i think in terms of the euro currency that we've seen, it's been a huge sell sooff on the w down. i think the fact that the selloff slowed around that 1.25 level in the euro currency probably was the bottoming effect if you will. now, again, i don't think that the euro currency is out of the dark, if you will, or out of the -- it still could have issue as rise and -- as the case with the dollar. again, for the most part, we're looking at -- >> the market would price in the real effects and some discount for the unknown, right? so it would go a little further than it would need to go on a strictly dollar basis or loss basis. >> and if you look at some of the number, that would contribute to the up side, as well. so it's a multikind of major factors contributing again. we saw housing data that came in stronger than expected which is always a boost to the market. but getting back to the holiday market type activity, we have an abbreviated session in the bonds and currency, so we could see a slower than usual type trade. >> do you think he's right that the market has now priced greece leaving the euro? sgli . >> i was trying to remember the first time you told us you've stopped thinking about greece. had to be over a year. >> my point was -- >> i know. right. but it was like yesterday's news to talk about and i don't know. it's the size of delaware, but i think it's what happens to spain and italy, right. >> and portugal. >> you already made somebody in portugal mad. you said they had four months say situation. he said theyed had had e22 day. >> i think some of the gloom and doom comes into play where traders were concerned about the domino effect and what we're seeing is relief rally from that. it doesn't appear we'll see spain, portugal, ireland, greece and other majors go down. i think we're starting to see this concerted effort. we've seen bernanke and other leaders, european officials -- >> who? >> bernanke and other officials -- >> who? >> saying we'll support this -- >> how can we take you seriously if you can't say the guy's name? >> but again i think the traders are looking forward and saying we're not going to have this all out debacle, if you will. >> all right. i'm just so happy i'm off monday. i'm not saying anything for the rest of the show. anyway, hang you. >> have a great weekend, guys. >> coming up, we head to chairs -- >> i like the viewers who an abbreviate your name. li-i-e-s l-i-e-s-man. coming up, we'll head to chairs and chat on the stores catching our attention. plus i'll show becky and joe what i was up to in new york last night. but first sports news. kentucky derby winning trainer doug o'neal has been suspended 45 days because one of his horse exceeded the allowable limit. but one begin until july 1st. and i'll have another jogged around belmont for a second day in a row yesterday. he's scheduled to remove galloping today as he prepares to go for the triple crown. stus our guest host will be thomas fanning from the southern company. plus the donald will weigh in on jobs, politics and uncertainty in the markets. don't miss "squawk box" on tuesday starting at 6:00 a.m. eastern. today is gonna be an important day for us. you ready? 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[ male announcer ] solutionism. the new optimism. and gas pies are lower, especially on the east coast. part it have is because of private equity. gas prices on the east coast have fall i don't know in large part because of a big refinery in philadelphia that was scheduled to be closed but sunoco at the edge of june. carlisle group is negotiating the former joint venture here and so that's part of the reason prices have been so low on the east coast. here on the east coast we have seen more of a benefit, of a boom from this because of private equity. >> in our poll from this, they asked people about private equity, what up thought of it. 9% were in favor of it. 19% were not in favor of it. so 72% has said what? >> we do this all the time. people have no eye key. >> i would say the 28% that did weight in, if you ask them, you might be down to 2%. >> i'm excited. we have an hour to beat up on tom friedman. >> no, he's already here on the set. we're going to welcome tom friedman. he is a pulitzer prize winning columnist, we're set to induct him into the squawk book club. wait till you see his latest book, too 37/ in here, great food demands a great presentation. so at&t showed corporate caterers how to better collaborate by using a mobile solution, in a whole new way. using real-time photo sharing abilities, they can create and maintain high standards, from kitchen to table. this technology allows us to collaborate with our drivers to make a better experience for our customers. 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[ male announcer ] michelin knows it's better for xerox to help manage their finance processing. so they can focus on keeping the world moving. with xerox, you're ready for real business. time for another blue chip book award. pulitzer prize winning author "new york times" columnist tom friedman adds another notch to his belt and tells house how to get america back on track. >> get the intel before the trade. expert from the floor giving you the information you need before the bell. >> and it's time to hit the road. >> you're going the wrong way! >> the busy summer driving season kicking off this weekend. how big a hit will your wallet take the next time you fill up? we're keeping track of the facts, as the second hour of "squawk box" begins right now. ♪ red and white blue suede shoes ♪ >> good morning, everybody. welcome to "squawk box" on cnbc. eem becky quick along with joe kernen and steve liesman. andrew has the day off. >> morgan stanley says no order will be filled for facebook at more it and $43 per share. and tim cook is voluntarily giving up more than $45 million in dividends income. that's from a new apple program that allows employees to accumulate dividends on restricted stocks that are still vesting. and cbc broadcasts and cnbc are suing dish network. it allows people to skip commercials entirely. >> i talked to tom rogers about it the other day with tivo. >> is it over and done? >> people say just because you can do something doesn't mean you should. he said back when he went to tivo or when he was at nbc, it was possible to do it back then. i think this one you don't have to skip them. i think the dvr doesn't even record them. sorry. >> another revenue model bites the dust. >> do you know which side to come down with on this issue? >> i'm learning, i'm learning. i'm in favor of skipping the commercials. >> no! >> darn, you're smart. >> you are. >> you gave me a chance to get it right. >> you know that check that you hope flip will cash -- >> it's not as big a check as yours. >> so what is the difference? >> i have to work with you, man. >> it is time to present another blue chip book award. this time around it goes to the world of is flat. tom friedman, it is a pleasure to have you on set today. i want to talk about your most recent book. we've got a copy of it here. why don't you start out by telling people why you wrote this book. it's a fascinating look. >> becky, i'm a columnist for the new york city and people ask how do two foreign policy guys write a book about domestic foreign policy. we start of day talking about the world. the last four, five years we would end of day talking about america. it was clear that america is really the biggest foreign policy issue in the world because america we believe provides an enormous amount of global public goods in the world. we make our share of his take but we're a hugely constructive force, managing the trade system or keeping sea lanes in asia open. if we cannot delay plai that role, your kids just wouldn't grow up in a fundamentally different america. this question if we can pass on this dream to another generation, our generation can do that, it has enormous global implications, not just domestic ones. >> it took two months to fix two escalators going up the stairs but -- >> we are optimists. >> but you're frustrated. >> we're frustrated optimists. we think if america stays on the trajectory it's on it's slow optimism. we got the balance right. when we educate our people, second, we have the best infrastructure. in in century the most open immigration policy, to bring in the first round intellectual draft choices and fourth, we had the best rules, the right balance between a regulation that incentivized risk taking but prevented restlessness and the best funded research and our venture capitalists were able to pluck off the best flowers. if you look at all five of those, they're all going in the wrong direction. infrastructure, flying from hong kang to legislate a. is like flying from the jettisons to the stone age. and we're telling people get the heck out of here. and rules and regulations, it looks like an ekg headed for a heart attack. if you think of the five things that really made us great that, nourished us from republican and democratic president over 200 years, all five are not heading in the right direction. >> when you talk to people in washington, because that's where you live, is there a recognition of this or do they push back and say you're wrong? >> there is a recognition. i think everyone feels and this is no great insight that our political system right now really can't rise to this moment. we have a section in the book from mike murphy who is a campaign adviser for john mccannon. mink tells a story when he was a young man he was just getting into campaigning and he had a friend in the ad business, they were talking about negative advertising, whether it works or doesn't work. there's a question out there, why doesn't mcdonald's put negative cam panni-- campaignin again against competitors. and they say never kill the category. >> the things about edge case are all all-in that little, discretionary spending portion of our budget, aren't they in. >> i don't think it's so little. >> but the problem is in the entitlement. >> yeah. it just seems like we could almost handle those things -- we could do it easily if we could get the bigger problems -- if we could figure out how to fix those. that's what people want to do, right? >> that's right. that's why i've been a simpson-bowles supporter from the givening. >> how much is entitlement for our budget? it's like 70%, right? 70%. it just seems like -- i want to do education, too. i'm just trying to figure out, 259th in the world, that's outcome, right? >> tests of 15-year-olds comparative. >> as far as how much we spend, we're not 25th in the world, we're probably spending more than anyone else. >> we have the worst possible outcome, spending more than anybody. >> how would we fix that? and you can see why government is broken. number one, it's a bipartisan problem, this entitlement issue. we can't get either side -- you even got seepier citizen republicans that doesn't want to touch medicare, social security, anything else. we have a bipartisan gridlock for teents and we have both sides on the education debate up abe to decide what's wrong really. isn't that really a big issue? >> can woo do charter schools? look at the backlash for charter schools. i think someone came do you know on the side of charter schools but in no way will ne give the okay for that, right? >> we address this whole education problem in the book. we need to recruit our teachers from the top -- where the top performing education systems of the world do this they recruit from the top third or 10% of the class. >> by paying them more? >> and by hiring status. and we need a teacher evaluation system. my sister is a teacher reform system. it's not perfect but it's got it in the balance. she's voldmore -- >> a lot of people have put in an evaluation system that both the eacher's union and administrators many are coming to an agreement it. but we need parents who say to their kid what did do you today, woo do better homework. we need better neighbors. >> you can't really legislate for parents. >> you can't legislate any of this. weep need what better students, who don't leave them what they're looking for. we have a liberal arts iowas in chinese. of those 43% had put through declined at of college. that's not what you're up against anymore. you want to go to beganel clnl in central iowa, you'll be competing with almost 800 people having demonstrated imps. it isn't just one this evening. we can't just outsource the problems to teachers. >> we have to go to break. but among the prizes you've won here, where does the squawk bood clb come in? >> i want to go to a break. i've got a couple of questions for him. >> you go to break and eel ask my question on the back side of this? >> heuer. some i want you also to lay out for people, you dwru up in minnesota and you grew up in a place where you had people from both sides of the aisle and it was very close i -- working people, people worked together in that community. mean we'll talk a little bit about that when we come back. >> would you want jesse very turia had presence certaining. >> i could be quiet. >> in the next hour three new masters of the markets. beendetective some of the best product who was voted the most active. the markets watching def netly today. memorial day weekend is here and millions will be hitting the road. we talk goes priess and cap theer kid. ♪ [ tires squeal, engine revs ] ♪ ♪ ♪ [ male announcer ] not everything powerful has to guzzle fuel. the 2012 e-class bluetec from mercedes-benz. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services. we are continuing our conversation with tom friedman. his latest book "that used to be us, how we fell behind and how we can come back," that's one of my number one picks. >> i'm wondering if tom would talk about the markets here. we're looking at facebook, a huge debacle. as i understand it, we've lost our lead in ipos. tom, we talked about the failings of government, of the political system. what about the markets? are the markets different from how they were? are we still the world leader when it comes to markets? >> well, who is sub planting us? is it the hong kongs? is it london? i'm not rahal sure where at that ipo business is going. if i look out at the world now and i think of the companies just killing, amazon, apple, google, twitter, microsoft, zenga, that's are all american companies. that's the exciting part of it. the scary part is if you look all their employees, i think you could fit them all in yankee stadium. >> i don't think there was a single moving part. there was no metal, no smoke stacks. not even any trucks with facebook. i don't think at the need any trucks. >> so they create enormous wealth, a noum of tools for other people. >> didnbut you need lots and lo and lots of these. our vision is that america today would be to the world what america of the 60s -- what cape canaveral story was to america of the 60s. we're in the going to have one big national moon shot anymore in what we want america to somebody the launching pad where everyone in the world would want to launch their moon shot. >> it sounded like when you listed those five things, a lot of it is because we're aging we're an older society. and that's created changes, created the need for more government spending. it's created a huge crisis as to how we're going to pay for all of this. >> it made us more xenophobic. >> we've gone from the greatest generation that believed in save and invest to a baby boomer generation, my generation, that believed in borrow and spend. >> i reject that idea. i reject the idea that somehow things were better always in the past and people were smarter back then. i think there's a delusion of nostalgia that is faus upon us by an older generation. i don't think that's right. >> i don't think we're dumber. i think it's a question of values and priorities. let put it way. was a hugely disappointing force for this country. can y-- we miss this disciplinig force. at the end of the cold war we made the biggest mistake a country or species can make. we misread our environment. we thought the end of the cold war was a great victory but we thought it allowed us to put our feet up when in fact it unleashed 2 billion people just like us, with enormous pent-up aspirations. >> that's what makes me optimistic. absolutely. >> everybody's playing american football. they didn't go to soccer. it's our teams, our game! >> they're playing it like a champagne bottle that was shaken, 50 years and there's enormous pent-up aspiration there. >> last week what were you are ferreting out, some of the issues facing, california california. >> i heard a speaker yesterday say los angeles is america. i like do go to california, to silicon valley, to seattle, to these entrepreneurial hubs to understand where the pluming is going, to understand where the technology is taking us. i find it enormously exciting because of what's going on out there. why are we still hospital mist? see what's coming up from the bottom up. >> there are so many oum there that china's eating our breakfast and so i have to foxed up and federal governmented up and made up. i of i was visit -- it's the delg ham got their wait a minute right. it was tied to a gpe, it shocked every shot that you make, from where you made it. just reese lent lip become an iphone app. this is where innovation goes. now you're assess all their games so you're not very good in sand trap. they have a program with golf digest that push you from golf diejest's library to a book on the best vice on sand traps. but then they'll tell you they're doing a lot of their oft wear written. jaefr see not. it's also creating wealth that will lead to other inowe here. ultimately that increases the pie for everybody? that's the story. that's what ewoo live pitch. that's conventional wisdom. >> i do believe it also depends on the fundamentals you had. >> i want to ask you -- what i wanted ask you coming in here. i saw corey booker, good bless him. heap said something and then he heading back trad peacekeeper. >> you see need bloomer, a let thirt run, the shoots u storm that you faced -- >> can you say that? >> is a brad of dog. >> it's scary ho pell up know kaebl and. >> i have to renege? do you still believe that? i still work "new york times." what was your point. ? what that fj if the and then them -- romney talked about the ryan plant and independent candidates say what does that do to discretionary spending ten years out money or baum would talk about his plans and the independent candidate would say let's look at those numbers. do they really solve the problem? >> a different voice. but we're only going to have two. >> who should we vote for? >> we're not allowed to endorse anybody. >> can you whisper it to me? i won't else nen. >> and guess what we have to do. just look at this. i know you have a couple of pulitzer prizers. you have a drawer can you put this in, don't you? you want to sign all these books. >> wonderful, thanks so much. >> you ignorant slut. >> can you even say that? >> i don't know. >> by the way, it's scoff logic, one word. i looked it up. you're right. >> you'll love it. do you know how many things it would say to me? >> you're playing, keeping track of all your sports. you get best -- country -- it's going to be a three-day weekend. you going to get out there? >> down in the d.c. area? >> absolutely. >> up in baltimore, one of those -- >> it's supposed to be a great weekend anyway. >> thank you. >> great to be here with you guys. >> comments, questions about anything you see here, jacques at cnbc.com. and what you need to know before hitting the beach this holiday weekend. ♪ ♪ right when you see them, they're yours, it's like, ah, it's part of me. it's me again. now that i'm retiring they all have plans for me. i'm excited. ♪ i can do anything ♪ i can do anything today ♪ i can go anywhere ♪ i can go anywhere today ♪ la la la la la la la [ male announcer ] dow solutions help millions of people by helping to make gluten free bread that doesn't taste gluten free. together, the elements of science and the human element can solve anything. solutionism. the new optimism. of how a shipping giant can befriend a forest may seem like the stuff of fairy tales. but if you take away the faces on the trees... take away the pixie dust. take away the singing animals, and the storybook narrator... 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[ male announcer ] sustainable solutions. fedex. solutions that matter. ♪ ♪ >> i like it. you said yourself this is -- >> you want to hear a little bit? >> why do you leave the tag on your guitar is it. >> it's sort of an emotional, mental thing. it's a really nice guitar. i always wanted one. i never quote felt like i deserved one. >> did you take it back? is. >> if my another what i spent for that guitar, she would kill me. >> what could you do if you wanted to be alternative? you can't grow your hair. would it be tattoos you think? piercings? >> i think it's the music. i think people are so beyond that now. they don't care -- >> let's say if you were single and you wanted more attention, how could you look like a rock star? >> i could shave my head. but some people grow their hair and put a pony tail in the back. >> that might work or shave it or get the pirate earring. >> i drag my son to baseball and he gets his ipad and he plays me all this really cool music along the way, acoustic stuff and stuff we're going to learn. it's really a nice thing we can be together with a 14-year-old. >> we got sirius. >> connecting with music with my son is really great. >> i'm stuck on 23. >> let's get to our headlines on this friday morning. it's a pretty light day on the economic calendar. the university of michigan sentiment index is expected to rise to 78% for may compared to april's 76.4. and china has filed a come plant with the world trade organization challenging u.s. tariffs on 22 products with an annual export value of $7.3 billion. china did not specify which products are involved. and the company that made twinkies famous is talking with several potential buyers as it tries to make its way out of bankruptcy. hostess talks with possible bidders. >> time for the friday trade, what our traders are watching ahead of the holiday weekend. at the cme, my good friend david. john is president of m3 capital. kevin, let's talk about the euro. i think everybody wants to talk about that. 125, is there a sense of how loaf it can go? >> i guess the big thing here that i would point out, steve, it's all about the positions. so one of the largest positions throughout now is the short exposure in that currency. so a sharp shock in the opposite direction is what traders are really, really keeping an eyeball out for. on the bond market i would say watch the ten-year note, the new high in prices this week and now down on the week. in relationship to the bond, this is the sixth inside session. >> what's your sense of the euro right now? 125 going where sp. >> i think very near term we're probably a bit oversold, as kevin suggested. so a little bit of up side, very near term. but what we're seeing any kind of these countertrend bounces, the risk on trade has been increasingly short lived. it's kind of like thelma and louise driving into the grand canyon. markets are looking for it. 120, 118.75 was the low from 2010. that's a reasonable level. greece is a disaster. it's hard to reconcile how they can keep it in and contain a fallout from a greek exit. the down side is pretty wide open. >> john, can you make a case that greece leaving the eurozone is something that would cause you to buy gold and the dollar or is it one or the other here? >> it comes with the manner with witch greece leaves the euro. if u a disorderly exit, it will cause a lot of concerns. however, if tles a sense th-- t sense there some some unwind -- we want to understand the context. within that context, we can better understand where goal is going to head. >> give as you number here. is this a place you want to put your money for appreciation? >> i want to be clear about this, steve. i'm wildly bullish. what we've seen over the last 11 days has been very bullish. and looking at the tral bank bind going on and the bear trap and especially with gold being what it, is i love gold in this spot. >> you didn't send me any e-mails after my vice president with dudley. you most always do, i was missing it, i should have sent you something. he seemed like he walked back a little bit. what did that do to your outlook? >> good interview, steve. >> that's what i needed kevin. where were you when i needed you yesterday in. >> sorry. whenever you talk to the new york guy, i always get tuned out a little built because they're in a special position. i would say this, tough tough a -- talk tough and carry a weak currency. i would expect that to be the main focus. but we're not the problem here so i think he can take a step back and let some of these other central banks that are making classic mistakes, textbook mistakes in central banking to try and catch up to the curve. >> david, real quick to you. 125, you like the euro here? >> no, i don't like the euro. i don't like it at any level in terms of owning it. >> there has to be some level. 70, i mean, 60. there's got to be some level. >> i mean, these are wild guesses. this is dart throwing. i think the level we need to look at is a little bitnd 119 in the very near term. parity is something that's not off the table if everything goes incredibly badly and we have to look at greece as possibly another lehman event on steroids. we just doesn't know what the other side of that is and if that really becomes the reality and freezes up the global banking system, run on collateral, repo system closes down, money marks need bailing out, the fed gets drawn in again. who knows how low it can go. >> all right. kevin, john and david, thanks very much. interesting discussion. can we talk about what andrew did? he saw the price for the euro and got on a plane. that's what he did, right? >> went right to paris. >> long on the dollar. went to europe. >> are you going to go this weekend? >> no, july. >> take penelope. >> you going to -- >> france. >> can you imagine parity? >> did you get the -- that done at the airport? i've never done it but you've always seen like that return thing. >> you haven't been recently? >> yeah, i've been several times. >> pink floyd channel. >> we just had david gillmore. >> when we come back -- >> former shell executive and oil man john hofmeister will join us. and three squawk masters will join us. stay tuned to find out who they are. with scottrader streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor, right at your fingertips. 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[ all ] i'm with scottrade. it's another reason more investors are saying... you know, those farmers, those foragers, those fishermen.... for me, it's really about building this extraordinary community. american express is passionate about the same thing. they're one of those partners that i would really rely on whether it's finding new customers, or, a new location for my next restaurant. when we all come together, my restaurants, my partners, and the community amazing things happen. to me, that's the membership effect. checking futures right now. what happened? what'd you do? >> me? >> i don't know. we were up 46 points. >> must have been the music. >> we were up more than that. >> we were up in the 40s, right? >> we were up about 46 points. the news from the european banking sectors. shares of bankia have been suspended. that might have something to do with it right there. >> but that's been out there for a while. >> not that share suspended. they were in trouble last week but they were supported by the government. >> there's an evening announcement with the bank expected to ask for a rescue of 15 billion euros or $19 billion. amazon says it addressing issues that prompted a slew of protestors at its annual meeting in seattle, plans to improve working conditions in its warehouses, it's dropping a membership in a conservative public policy organization, the american legislative exchange council. >> and drivers are seeing relief at the pump. john hofmeister, what do you attribute the recent gas prices in gas and oil to in. >> i think it's the lack of economic growth. when i was bullish a year ago and talked to $5 per gallon of gasoline, we got close to that but that was predicated on 3% growth in the u.s. and we're not seeing anything near 3% growth. >> do you think traders are looking around the globe at china and europe and everywhere else? >> yeah. i think it's a sagging growth issue. but something else has been going on nobody talks about. the saudis i think have been teaching the hardliner at opec a lesson. if you remember a year ago, the saudis wanted to increase production and the hardliners said no. well, the saudis went ahead anyway and increased production and they've been running about 2 million barrels a day over an average and that's built up a glut. >> oil supplies are at the highest level in years here in the united states. >> working off that glut will take a while. i don't think the prices can go much lower because the saudis have a huge social bill to pay. >> not only did niemi raise production. >> they trained us where we thought the higher prices are better. >> we've got to move natural gas into transportation fuels. whether it's pickens' plan, boone's plan or we have a group with the energy security council now that are working on meth nol for natural gas to add to the ethanol. >> do we need a government sector initiative in this regard? >> we have a two-page bill already in both houses which calls for open fuel standard, which means competition for fuel, which means flex fuel vehicles. >> what's preventing it now? >> partisanship? >> would this be government subsidies? >> no, not a penny of government subsidies. >> why would you have a 2,000 page bill when you can have a two-page bill? >> would boone pickens be behind this? i think he would. schultz is leading this along with bud mcfarland, along with jim woolsey, myself and a number of others. we're trying to get it moving to create a methanol. >> how do you have create consumer demand? >> give us the two-page bill with mandate that by a certain date all cars sold or made in this country would have to have flex fuel engines. >> so it doesn't create demand, it creates product. >> the flex fuel. >> any fuel? >> it would be alcohol fuels. so alcohol has a different effect on the metals on the fueling system and the btus available. you need an adjust mpt in the fuel system, in the soft rate in the burn engine. $100 a car. it it's $100 a car to do that. it's not like retro fitting cars. it's -- a lot of the suvs today you'll see flex fuel. it's alternative fuel. methanol sells for $1 a gallon. >> you would not need a government initiative for it if you just made this tweak? >> you just make the tweak. the cars are out there. somebody comes in with a cheaper, better product and suddenly, wow, the market takes off. >> i think we could do this in a much more expensive way. >> john, straight in hormuz now? >> no. >> i suspect there's a little quiet period. >> and iraq is back where it was before? >> iraq is back but it just got there. libya is getting back, too. some of those things are stabilizing. >> are the saudi fields just about run dry or not? >> no, i think saudi has a lot of strength. i was in a meeting earlier this week with about 20 mid-level managers and they're pretty bullish about their outlook. >> and shale. >> and shale's a big deal. trees don't ever grow to the sky, we know that. the amount of product coming out of shale declines very quickly. so you got to do a lot more drilling to keep up. so can you grow for a bit but if you try to grow even more, you're drilling, drilling, drilling continuously. that adds to the cost. >> would you say that the worm has turned now on the hack kneed line we can't possibly domestically supply our own energy needs? five, ten years ago i heard that from democrats of day that there's no reason to drill here, we can't possibly -- now we're going to be exporters. >> i've never accepted the peak oil theory. there's always technology, always a way to do more. we're getting a lot more out of reservoirs because of hydraulic fracturing. let's go from ten million barrett a day up from seven, let's do two million a day for trucking, let's do three million barrels a day with methanol. we're getting better mileage and get the rest from canada. it's a north american market we can take care of with north american supplies. >> all right. thank you. >> what's the same we want to look for? >> it's an open fuel standard. >> excellent. >> thanks a lot, john. great talking with you. >> coming up, three all-star market masters. you'll meet them the next hour. >> and we hear from disrupter john steinberg. we'll get his take on the facebook controversy. that's just ahead. >> up next on "squawk box," don't start your day without knowing the names that will make you money. joe has your list of stocks to watch right after the break. ♪ on the road ♪ and we know that it goes on and on ♪ [ female announcer ] you're the boss of your life. in charge of making memories and keeping promises. ask your financial professional how lincoln financial can help you take charge of your future. ♪ ♪ oh, oh, all the way ♪ oh, oh in here, great food demands a great presentation. so at&t showed corporate caterers how to better collaborate by using a mobile solution, in a whole new way. using real-time photo sharing abilities, they can create and maintain high standards, from kitchen to table. this technology allows us to collaborate with our drivers to make a better experience for our customers. [ male announcer ] it's a network of possibilities -- helping you do what you do... even better. ♪ ♪ ♪ let's take a look at some stocks to watch this morning. chesapeake energy, according to our own cnbc reporter, blackrock has substantially increased its stake in the energy producers in the last four days. verifone beat expectations. they are focusing on estimates for the fourth quarter. a little gloomy. cme group announced a five-for-one stock split. apple ceo tim cook has voluntarily given up dividend income. out of that $400 million that he made, whatever it was, do you remember the number? it included a lot of things, options -- he's number one in terms of competition but it apple. the news comes from an s.e.c. filing which says that cook asked to be excluded from that program which aloe lous you to -- that's typical if you restricted stock, you get the dividends to come flew. heinz down graded. i would do that on this liqui glass stuff. are you going to not talk about my ketchup bottle? >> no, i just want to know. we're having some fun this morning. were we missing the sense that the world's coming apart? are we missing some kind of apocalypse greece is going to leave? why don't we have that feeling? >> yesterday, i don't understand today. >> i want to make sure i'm not being too flip here. >> it seems like some days you come in and, organization, my gosh, these headlines add up to really bad news and a big loss. other days people are nonchalant about it. >> with did you bring that up? >> i'm having a great time. >> you're hungover. >> i'm not hungover. i want to make sure i'm not missing something. greece is going to leave -- >> why don't you wait until the spread is falling out until -- now there probably will be a disaster this weekend because of you. >> dent say that. don't say that. don't say that. >> because of you. >> doesn't jinx it. >> hey, no traffic in new york. ooh, slam! >> coming up, we're going to welcome three new names to our market master list. and then john steinberg on facebook, technology. >> you know, what get off the set. >> i'm leaving. om done. >> thanks for having me. >> hide, hide, hide. >> there he is. >> if you're just tuning in, you're two hours too late. >> the austerity is not working for europe. it's causing more and more problems. unless we get stimulus, it will not recover. >> we think it just stays on the trajectory, it's going to be in a slow decline. we think we got here because we have the greatest public-private partnership in the history of the world. >> cape canaveral is a place where launched our one big moon shot. we're not going to have one monday shoot again. we have the best infrastructure, education policies. >> the third hour of "squawk box" starts right after the break. ♪ i can do anything ♪ i can do anything today ♪ i can go anywhere ♪ i can go anywhere today ♪ la la la la la la la [ male announcer ] dow solutions help millions of people by helping to make gluten free bread that doesn't taste gluten free. together, the elements of science and the human element can solve anything. solutionism. the new optimism. today we induct three new members into our squawk masters. >> welcome back. i'm joe kernen along with becky quick. debbie downer steve liesman has been forcibly thrown off the set. you've always going to be here at 8. >> he's upstairs. >> was he that negative? >> it was weird. he said things have been going along well, how do we know there's not going to be a disaster this weekend. i asked you if spreads were blowing out or the ten year -- if the ten year breaks under one point i figure there's something going on. >> we have a nice three-day weekend ahead. >> maybe he's looking at the futures but they've been positive. came down a little bit. still up 14 points sore so as far as fair value goes. >> in our headlines today, it has been one week sense facebook went public. after the botched offering, morgan stanley says it will adjust thousands of trades. the form pr-- firm promises ord to sell will be filled by no more than $44 a share. and claims against nasdaq over this are expected to embassy seed that amount. the, chang is facing lawsuits from investors and threats of legal action from brokers. >> i did see -- i noticed that they say $42.99. unfortunately it was at $32.99. >> exactly but it's now a little higher. just over $33 today. gary, you were there a week ago at the nasdaq. >> i was. so wa do you think of the last week? >> despite what you made have heard last night or read, there was a conference call with morgan stanley, a number of press releases by various people discussing the potential losses, this is far from over. this is still a way developing situation. for those who are sick of facebook, unfortunately that's the case. here's the problem -- there are thousands of people, brokers, that have put facebook shares in their client's accounts. joe, you know from your brokerage days, you have people that went in for the deal, had no plan, no -- their game plan was no to the not to hold these share. they know own a stock in margin. this is a developing situation. you have to make the decisions with the brokers bhap do we do now? facebook represents 50% of your account now. what are you going to do? psychologically people don't want to talk losses. this is going to play itself out over the next several weeks, not many days. many people across the world now own this stock. >> and it's even more when you talk about the liability that the nasdaq holds. >> absolutely. i think that's a complete joke. >> $13 million is what they're looking for. $3 million is what the s.e.c. has them liable for. they have to asked if permission to rise it up and everybody sort of days -- the one thing that people are consistent on is all roads lead back to the nasdaq. while morgan stanley says, yes, we shouldn't have raised the price or raised number of shares, if in fact they had halted it around 12:15 of of friday last week that you can't prove that but all roads seem to lead to the fact that the nasdaq did not sandle the sell orders coming in. that's their point. >> i was really glad to see it trade higher for a couple days. i wanted to see some value. you. >> mean that it was up for the last couple days? >> yeah. >> i think unfortunately this had a lot to do with the fact as was detailed in the paper was to, there was significant short sales. pi the way, there's this whole question, too, which is still unanswered, did morgan stanley using the -- it was theoretically going to stabilize at 38. do they wait, watch is crash? again, developing situation. >> my -- the reason -- i'm trying to found out in my mind what the true value of this company is likely to be. and i don't know. i really don't know because of all the the questions. and 106, that's priced for -- is it worth $80 billion? >> i have no idea. i have no idea why it was going to come public at the multiple of projected revenues it was coming at. but the arkt absorbed that price and let them do it. >> our squawk box master class is inducting into the market. >> we used to have full fair debate. >> i'm looking at the wall. we've got the prnial bulls on that -- there's people who always like plaques on that wall. >> this is him here, although heap has his glasses on. he's here for the -- there you go. all right, it is you. >> now i can't see you, which might be better. >> funny. >> people do impersonate, try to get on that wall, master wall. >> this is a great view. i'm taking a look at it right here. >> do you have those glasses that used to have wood on the side? >> yeah, yeah. >> professor of a harvard university is also be inducted. being the greatest chest player at 14 years old was one thing but this supersedes that. and then ragu rajon, professor at the university of chicago, booth school of business. that's a good group. adam, let me just get an update from you on your year end target and whether what we've seen in terms of weakness in this country and elsewhere, does that make it more likely that could be one of the reasons you're right? >> well, we have a year end target for this year of 1167 on the s&p. >> and at 1,300, 1,400 you had to be wondering, right? >> it's a silly exercise but we're sitting in our office saying what are 2013 earnings going to be and how are you going to feel about them on december 31st of 2012. so the issues, the fiscal cliff, chan policy and i don't have the results in a couple months ago. i'm not panicked by it. there's a lot of risk to the earnings outlook. the world is a risky place. i'm not ot all surprised to have had great risk factors that you brought up were almost cliched by that point. but they've all come back with a new nuance. well, yeah, we thought greece was handled but they come back and it's like a totally new couple and they're not. >> i feel like i've learned the phrase "this is all discounted." we hear this every week, the greek exit or -- what you pay for those earnings should be a lower number. >> what is your estimate for 2012. >> for 2012 we're right about $100. theish sue 2013. i think the market looks forward a little bit. the bottom out numbers are $119. >> so your earnings, compared to very optimist being strategists, your watch is below consensus? >> but plaxico burress in terms of military many for the s&p. they working to 15 and a half times rning. what causes multiple that goes up and done. growth and rates extreatment lip low rates. the other shoe is gross. if you think gross will be lower and choppier because that huge cliff is there, i don't want to pay a huge preem i am pore today's earnings. so market doesn't anticipate it until it happens. ken, we want to talk to you and ragu about a lot of stuff. i want to start and reference an article with saul last week again about the last 60 years i think there were 11 recoveries and the point was that this had been the -- by every metric the worst recovery. i wonder at this point are you willing at this point to say that anything that we've either done or not done has extended it or was it always going to be this way because of the depth of the financial crisis? where are you on that now? >> i think it was always going to be this way because the depths of the federal government crisis but now we're a few years out and the strategy that the advanced economies look, the u.s., europe, et cetera, really trying to bail everything out, trying to kick the can down the road means it stretches out the problem. we're likely to face lower growth for a secular problems for a couple decades compare to what it had said. that sid, if we developed it fast ever, there was po easy election. >> yikel being tles super keynesians and maybe you. should we be doing a lot more now? what's the beef between you and krugman at this point? >> well, i think we should do what we can. i think the point is what is going to have the most effect. it seeps the most effect can be had right now. perhaps by writing down debt in the areas most debted. there are households that are tremendously underwater. so their spending is going to be very limited. if you do a super still louse in washington, it going to have mild effects on people in vegas. if you really want to tack vak who a-- take it down because we are politically in debt. >> so what do we do? >> there's a movement for homeowners to quid pro quo, to give up some of the up side. they need to restrictier a lot of the dead. then the overis just out there. that's what we're macing. i finally agree that plsimplist, keynesian tactics don't well. stimulus is a a very crude instrument. yes, you should worry about the government debt over the longer term. it not a free lunch. >> we're going to take a quick break and come back with our newest squawk masters. one week later we'll talk to the president of a social content site about all things viral. as we head to break, check out the "squawk box" market indicator. dch in every way, shape, and form. it's my dream vehicle. on a day to day basis, i am not using gas. my round trip is approximately 40 miles to work. head on home, stop at the grocery store, whatever else that i need to do -- still don't have to use gas. i'm never at the gas station unless i want some coffee. it's the best thing ever. as a matter of fact, i'm taking my savings so that i can go to hawaii. ♪ okay. there are the futures, which have even come down a little bit more. and also in the headline today, i just got one more thing about this ketchup, if you look at this. people are writing in, who's going to use glass? i'll tell you why this might work. you use the squeeze tubes because you can't get it out, that was the invention. >> it's not the glass. it's the spray you put on it, which you can probably put on a plastic bottle, too. >> this works for jelly, not just for ketchup. but you know how much those plastic caps are incredibly plastic intensive. >> you can recycle this. >> you don't even use it. 25 million tons of those plastics. >> you could probably spray it on those plastics, too. >> this is an mit invention. and i do not have an investment. >> to prevent waste. there's a lot of it. not just for ketchup, for shampoo. >> do you trip out when you can't get it out? >> i know how to do it. because you go side ways. the air has to go in and displace -- >> you're supposed to hit the 57. >> i like the physics. >> he knows the physics of it. >> ask ken. >> let get back to our conversation with our newest squawk masters, adam parker, ken rogoff and raghuram rajan. yesterday the fed said they're not looking to put any monetary policy as well. if there's not monetary policy and not fiscal still laws lust co -- stimulus, what does that mean for the economy? >> monetary stimulus i would lick to see. the euro needs to be going down. but if there's no monetary stimulus and no further fiscal stimulus, obviously we're going to continue to grow slowly. but that said, i mean, just pure fiscal stimulus, pure spending would have some effect. but we're in a situation where we could be in secularly slow growth for decades given the overhang of debt. so what i really object to is the idea it's a free lunch, interest rates are really low, there's nothing much po worry about, why are you leaving this low hanging fruit? i really think that's overly simplistic and very dangerous thinking. >> ken, you were on a panel earlier this week. ken be you were on a panel with adam earlier this week. >> a few weeks ago. >> and what came out of that panel, too? >> i totally agree with what he's saying. at the end of of the day, our earning were too high. the numbers the analysts are using are 12.5 earnings growth for 2013, so ek sell rating earnings. we have all the stimulus propping up of the economy and the companies are in great shape, record profit. so why wu pay a high multiple being produced in this environment when you know ult paltly they're going to have to be unwound? >> adam, what happens if there is something where the ecb gets its act together, there are euro bonds issued, maybe greece goes in or stays out but they deal with that situation. what do you deal with the fiscal cliff here. >> i'm talking union corns and rainbows going by me. these are long odds. >> any kind of action like that you'd get a temporary risk on trade. >> you think it's temporary. >> i think it would be temporary. you still have to deal with a mountain of debt. you have to deal with things like why putting -- i think we're still in for a lower and more volatile growth in the future. that means you shouldn't pay a lot for corporate earnings. >> the nuance gets worse because i thought eventually rates are have to go out. i thought maybe they're discounting rate are going to go up and you think rate eventually do go up a do they? -- >> we keep rates down -- the relationship between the multiple for earnings and rates is shaped like a frown. if it's really high, it's bad for the multiple. and if it really low, that's also bad. it's about what you believe it's going up. when you create a trillion dollars on a computer and buy your own securities, you're takes the possibility you end at that frown down. ultima ultimately i'm going to have inflation problems or why am i doing it? >> is there a scenario where you see multiples contract further. >> for sure. >> when would that be? >> low, very low growth and fear that policy won't be there or that policy won't be effective when it's done. because if you create it and it doesn't work, there's no free lunch. there have to be ramifications at some point. how do you feel when the ten-year yield is rising? do you feel it's kind of an out of control thing? so we don't know yet but we know every time we create a trillion, it's a problem because we're creating it out of thin air. >> if you had to handicap a recession in this country in 2013, what would you say the chances are? >> i think i'm a little more optimist being thic than what w heard. there are two or three good things going on. aside from the areas that are level i didn'ted, there's been a fair amount of deleverage. in that sense we've come a little way away from the heavy debt loads. second, oil prices have have been coming down. and, third, the housing sector has been so, so dead in the water and has been constructing very little. as jobs pick up and they are picking up steadily, not spectacularly but steadily, more and more people are going to be willing to buy and that's going to give some boost to growth. so put all this together, i think we're in for less than potential growth but i doubt very much we're going to have a serious recession unless we have a financial panic coming our way from europe. but that apart i can't see why we should suddenly go to negative growth over a sustained period. >> so even in europe, the continent in is a recession -- >> the u.s. is not that exposed to trade from europe. they're about 30% of our trade, which is about 3% of gdp and pick the problem countries that's been maybe 1% of gdp or less. is that going to knock you back into recession? no. a financial panic would. i'm not sure the positives don't outweigh the negatives. >> i don't think we're that far apart. our base case the morgan stanley is about 2% growth. but i think even with that huge fiscal cliff also there, you know, i think that it's certainly above normal the next couple weeks. >> do you think it's one in three, one in five, one in ten for 2013? >> more in the one in five range. i only put this that high -- we're talking about an outright recession osh meaningful recession. it would be generated by some kind of financial panic coming out of europe or out of the fiscal cliff. but make no mistake that could happen. they're playing russian roulette in europe. i'm not sure how many bullets are in the gun. >> we've had debate here about what exactly the definition of the recession is. >> i really mean a real recession as opposed to some technical resection where you're mines 0.1. we don't even measure it that well but the chance that it grew -- if people listen to your outlook in terms of strategy in the s&p and they think of that, okay, what do i do with my money now, if you don't want to take the risk of owning equities and you know what interest rates are and you've got some savings, what do you do in the environment that you see? >> we obviously have guys who do asset allocation for a living. >> i'm not asking you to pick stocks. >> we're recommending the sectors that have yields that are way above the ten year, stocks that have that dividend that's safe. so we're overweight secretary oars like health care, utilities. the last three months do you know what the best four performing segments are in telecom, utilities, staples, health care. the market hasn't taken you there. other than that, i think there's some opportunity for even high yielding bonds. they've all pushed out financial obligations in the upcoming years so you're fiend. >> that's the very last -- one comment. it's the very last comment. >> thank you, guys. >> adam, i'm bringing you back, giving you a shot. >> coming up, how europe's debt problems affect your portfolio. cnbc bringing you a one-hour special. and a completely redesigned interior. ♪ the 2012 c-class with over 2,000 refinements. it's amazing...inside and out. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services. we don't have a word for retirement. in the latino community the word that we use is jubilation. as you're getting older, you should be able to do the things that you love. welcome back. toyota will roll out eight compacts for emerging markets. it's an attempt to catch up to the front-runners such as vo volkswagen and general motors. cme declares a stock split to attract new investors. >> joe, back to you. >> markets are focused on the crisis in europe. that's the subject of a cme special report today. michelle caruso-cabrera joins us now with a preview. are we just willing to pay whatever -- like you don't have any tickets to greece right now? >> i do actually. i have a bag packed upstairs ready to go. >> my question is whether we prepare or are we ready to pay full boat. >> we are prepared to pay full boat. right now i'm scheduled to cover the elections, which aren't until the 17th but there's a question about whether or not we would have to go sooner if there are issues with the banking system. >> steve brought that up. >> that's probably one of the reasons we haven't gone yet because you'd have to pay the cameraman a lot of overtime for sunday and monday. they make a ton. two things have happened. european leaders have said out loud, finally admitted, okay, it's possible greece could leave the eurozone. second thing that i think is far more frightening is that we're openly talking about the possibility of bank runs, to wit page one of the "new york times" today has a full article about the possibility of it happening in spain. this is very significant because we always restrain ourselves from talking about bank runs because to merely talk about them week fear we may cause one. so everything is now fair game. so at 1:00 we want to really dive into not so much about how we got there but where are we going. here's little snippet of what you're going to see at 1:00. >> life for young people in greece is terrible now. >> i don't agree with the way the society is organizing now. uncircumstances i am not violence and if the police hit me, i will answer. >> since 2009, athen, the capital city of greece, has at times look like a war zone than of one of the must-see destinations in europe, anarchy taking the streets, turning the historic city into destruction. the seens of civil unrest and rioting are visible everywhere from burned down buildings like this one set on fire during the worst and mo violent of protests to graffiti that is visible on nearly every corner, anti-government and anti-authoritarian. this one says "let's refuse to live as slaves." >> it's decayed so rapidly over the last year or so. some of the questions we're going to try to answer are what are the chances that they leave? what does it mean for us? how do you make a new currency? we're really in an unprecedented situation. physically, logistically there's a real issue about how long it takes to print currency. you want a real quality currency, it would take about six months but you want to work in secret. no way. >> when was that video shot when in the part of central athens? >> that would have been february and march. this is the i'm. >> this is where if you are business person in greece, this is where you make your money. are those getting half the population that they're seeing now? >> i think it's less. >> if you go for half price if if they brought the drachma back. >> you could live like a king in northern europe if they brought the drachma back. >> it doesn't matter how cheap the laeb would have been in the hotel that never got built. can you try to devalue your way to competitiveness but their salaries, they're not the on problem. they haven't build a really good new hotel in greece in a very long time. why? it's nearly impossible due to bureaucracy and everything else. you would struggle to find a super high end place. >> you don't go to athens. you go to san toriny. >> i would say, yes, those are very cute little mom and shop pops. but that is not acceptable to them. ewant it to be easy to get there. >> but we now know if you give a region -- if you say austerity is what -- it's the german's money, the people are going to ride in the streets. but if you devalue the currency, they're stuck with it and they can't say no to devalued currency. you foist the austerity upon them remember than -- >> so the former prime minister when i interviewed him said the counter to that is if we don't stay in the europeio, but i think this is what they meant. busting the unions, getting rid of huge swaths that pressure goes away. >> emean, it's just -- >> like a wedding. >> they're not getting married. >> 1:00. >> you know, liesman really affected me as he does you. three-day weekend, we off monday. he said shouldn't we be worried about the end of the world this weekend. are you seeing any indications in spreads anywhere, any markets that look like maybe something happens in the next three days in europe? >> you know, i can't tell you that i can pick out something that gives me insight into a time frame down to, you know, 72 hours, 100 hours, 48 hours. but what i can tell you is the markets aren't telling you when but i think there's very little question on the if side. and even the euro bonds, which, you know, if we're really honest about it, it's the german engine to this train wants to load their caboose with some of thieves weaker economies and be the parent that basically caves in to the kid who didn't clean his room, didn't get as and bs and still gives him a raise on the allowance, they're not going to be able to make it up the hill either. so growth categorically will come down a bit and make the u.s. even look better. but in the long run, i'm telling you, this isn't going to end well period. you know, 1929 the crash, there's a lot of theories. i know the most simplistic theory is all that margin was pulled out from underneath the cab drivers and the shoe shiners and that same dynamic on debt is going to catch up to the nations. >> what steve said is he was questioning a lot of the so-called bullish strategy analysts have said we're pricing in. heap said his issue was that they're pricing in a greek default and the futures are down now. >> adam parker just told you -- >> well -- what is this? spain region requires assistance, running out of options. he said that just hit. >> they get into debt on their on without the permission of central government and so this is a huge battle between the federal government and the regions. so if -- one of the other questions besides bailing out the banks is will the federal government in spain have to start bailing out the region. and they're the second region we seen in the last year that has cash flow problems. >> we told liesman he predicted this. he caused it. >> there were a bunch of people i think in chicago had mentioned they felt a greek default, greek exit of the euro, greece falling off the face of the earth is out of the market. >> no more or less than pricing a lot of our major banks are going to do a lot of the same thing. look at the credit default swaps there. the reason this is a tough question is i'm not sure what a default means anymore to the financial markets. >> i agree totally with you. i have no idea -- sorry, rick. >> liesman! liesman! very funny. >> okay, that's better. >> you could have greece default again, and have them stay in the you're your and that would need their european partners forgiving them and saying you can stay even though you can't pay your bills. >> this morning we had the ceo of the irish government who brings in foreign development. the point with him was what do you guys want if greece gets forgiven or if they renegotiate the terms? what would ireland like to see with anything they've got coming down the road? >> it's a valid question. what do you do wahl this stuff? >> michelle, thank you. >> the printing press question. >> have a good day. >> 1:00 you can get that special on the eurozone crisis. michelle will explain this and much more so make sure you tune in. and coming up, we'll break down the the numbers coming up. up.und delight again. that's the power of all of us. that's the power of all of us. that's the membership effect of american express. welcome back, everybody. joining us is john he talks about everything viral. it's the perfect time to you have here. you think facebook could be a decent stock. >> i think facebook will define media in the coming years. social is really the new starting point for how we consume all content and this is the defining company of that transition. >> they're also redefining ipos at this point. does it give you pause -- >> ipos are sort of disconnected from the fundamentals of of the business. they're really breaking into a new type of product. the sponsored story, the idea of a brand having content, it defines their message, which is really kind of ground breaking. the ipo itself -- as an operator i see the traffic we get from them and other publishers. >> how can you say the performance of the ipo, when apparently the guidance for revenues was selectively disseminated in the period leading up to the pricing of the deal that the revenues noous were going to be anticipated, that to me sounds like a fundamental in the business. >> the ads they've been selling in the few years are those number nail units. it will take more time for agencies to come around for them. we see a buzz stream, these perform much better than the interrupted banner. >> how does it work? if you're seeing it on your own site, the sponsored stories, how does that work? >> toyota, pepsi, ge, nobody wants banners. if you're a brand, you're going to do social. facebook has 900 million people that are virtually logged in almost every other day. you have to put on content that educates and provides interest to people. that's what we do on buzz feed. we have brand in yellow that are sponsored. we do that instead of a banner ad. >> it tricky to try to come up with something that somebody doesn't feel like they're being played, right? >> but it isn't masquerading. >> i admit, i follow some brands on twitter. >> it really isn't masquerading. it harkens back to the way advertising was when it really was good, when they explained the benefit of a rolls-royce or mary wells doing an advertisement describing how great it was to fly on poochy colored planes. >> if it yellow, wount -- i wouldn't look at it. >> we have great infomercials on saturday. let me just say that first of all. they're some of the finest -- they're ones i actually would watch but who would watch an info commercial. sn. >> we doing an ad for the toyota preus, which is one of the top 20 hybrid animals. >> what is do that mean? >> like a half horse, half zebra. people love this content. they share it -- >> liger. >> a brand affinity -- >> are you saying based on the data you're looking at, to becky's question, are you saving you think the migration for mobile will be successful for facebooken generating more wins. because i'll tell you why. banners were even worse in mobile, 1% 2rks%, as opposed to a banner that has ten basis points. >> i heard cramer say the problem is in regular advertising, you get $1 for it, when you go to banner adds urn get 10 cents for it. >> we find in premium direct advertising we get higher rates in mobile than we do at desk top. and if you have a premium direct ad that has a good performance on, it you should conceive blif get a higher rate on it. >> like how much? >> we are getting 50% uptick on mobile relative to desktop. it's a more focussed experience. people tend to be more focused, they have more down time. i think twitter is going to do the same thing. >> how long down the road before you can get advertisers too buy in at those ritz in bulk? >> we're already seeing the big networks, every order that we do right now as a healthy component with those rates in. >> you have to come up with more. >> we're going to have to have you back. if i see bill rancic or bruce jenner on tv, i go right past it. richard simmons. click. >> the peg ratio, the 2013 earnings the tock price it is on facebook, 1.4, compared to linked in, >> can we figure out another way to monetize? >> it could be what google did for search. >> swear. >> i'm not going to swear. i'm saying could be. it's the defining ad product. >> seriously, we do want to have you back. we got distracted on this mobile conversation. but please come back. >> the last trading day before the long memorial day weekend. find out what you need to know. we want to head down to the new york stock exchange next. e anno) most life insurance companies look at you and just see a policy. at aviva, we do things differently. we're bringing humanity back to life insurance. that's why only aviva rewards you with savings for getting a check-up. it's our wellness for life program, with online access to mayo clinic. see the difference at avivausa.com. that could adapt to changing road conditions. one that continually monitors and corrects for wheel slip. we imagined a vehicle that can increase emergency braking power when you need it most. and we imagined it looking like nothing else on the road today. then...we built it. the 2012 glk. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services. let's get down to the new york stock exchange. carl and melissa joining us. carl, what do you think we'll be talking about at 11:00? >> i think it's going to be a reflection of what we were saying at 11:00 one week ago today. the lessons that we continue to learn. melissa and i were just making fun of the headline in usa today. ipos are risky and can decline. that is the headline. >> it actually says that. it's ridiculous. >> carl, as i said earlier, and i think you and i discussed every day this week, people don't understand that this is a developing story. unfortunately, as many people e-mailing saying they're tired of hearing about it. it's a huge fan of yours who says this has done such damage to the retail brokerage community that you cannot fix it. >> i just saw annie. that's an ipo. it's all green. it's so good. we just had a guy explaining facebook to me. we need him to come back because i'm still not sold. >> that's the first time that i started thinking maybe there's a future for them. >> it sounds like you have to really trick people into the content. >> all right, guys. >> we will have mark holbert. he's out of the report today saying facebook should change for 13.80. >> i don't know when you put the actual market cap on, what are we down to? 80 billion? you know, i don't know. what it's it worth? we'll know some day. >> thanks, guys. carl, i'll see you at 11. >> bye, guys. coming up, the stock of the day. is it in your portfolio? we're going to find out right after this. is.en to every store in the franchise to get the word out. that could work. or you could use every door direct mail from the postal service. it'll help you and all your franchisees find the customers that matter most: the ones in the neighborhood. you print it or find a local partner. great. keep it moving honey. honey? that's my wife. wow. there you go. there you go. 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