Transcripts For CNBC Squawk On The Street 20120427

sharp improvement and gross margins. will this break investors who are questioning evaluation and spending habit snuz. >> a different story from starbucks. investors apparently wanted more from quarterly results after what's been a huge run in the stock price. >> guidance in a lower waiting on shares which will, in turn, weigh on the dow today. >> don't forget spain again. s&p downgrades its rating again. the action reigniting the debate over whether france may be next. >> as for amazon, at least 8 brokerage firms are raising prices. shares are jumping sharply after blowing away industry forecasts. revenues up 34%. amazon spending aggressively on expansion, pointing to success selling more digital products through its new kindle fire tablet. going into the quarter, there were so many doubters. >> they basically told us to doubt him because he didn't give us any clarity about when the spending would turn into profits. sometimes you just have to mar value about companies that are this well run. i have actually, in my career, never seen so much money spent and having a payback in the quarter? kind of shocking. >> yeah, now, do they have a lot of levers they can pull to make things on the profit line look a bit better one quarter to the next? >> i think they can. they're talking about how they have distribution room. they're doing a lot of third party distribution. they're making a ton of money on people and fulfilling people's orders. the other thing i liked, i'll tell you, the contrast between walmart and amazon must be made. 173 million active accounts at amazon? >> up from 164 million last quarter. >> and one has a lot of brick and mortar overhead and one has a lot of fulfillment centers. you wouldn't have thought that from all of the different chatter that we've seen about apple. it's amazon, it's apple and it's google. i find these three are duking it out. and i don't want to be google because of the new enemy they have. >> the u.s. government. >> with yeah. >> on the u.s. government perhaps preparing some sort of an antitrust case. >> you don't bring her in. she's heavy. you need total disclosure. >> i had used the firm. you used them in order to win. >> right. >> you know, the other guys who send you the friday night notice of deposition. i love them. i have to admit, i've used them for 25 years. you don't want to be on the other side of paul weiss. >> what we're talking about is the u.s. government hiring wilkinson that will potentially lead the team that will at least be examining google in terms of search. you mentioned in points of multiple, at this point, it seems, hey, you know? >> the margins on that, almost a hundred percent. so the shift towards third party, that really, really helped. climbed to 21.6%. that was the rough estimate on the street out there. in terms of media revenues, this is the bulk of their business up 19%. so that's not bad. >> if you're doing fulfillment, eh-bay is the only game in town. just like you might believe that apple is turning on samsung. i believe that e-bay can't pick up some business here. remarkable against the conspiracy to keep book prices high. look, because of the government, we're able to lower prices. this reminds me of the joel cline europe. when he was an antitrust and suddenly, you had a government that said microsoft, you're making too much money. google, nows maybe you're making too much money. and what the government wants is a level playing field among amazon, among google, among apple. it's just an amazing time. >> yeah, we should of course mention that amazon continues to give you this broad range of losing money or making money for the next quarter. so we're leaving it wide open if you're one of the people who want to follow it. >> what a smear. you're on these conference calls and everyone is always trying to figure it out. and amazon says why would we ever tell you this stuff? i love their arrogance. it's okay when you're making big money. it doesn't fly when you're all script. a history of delivering. believe me, i can remember 12 years ago, we would have a conversation doubting the multiple, doubting your ability to grow. look at the company now. >> we would sit there and discuss how could we -- well, amazon was one of a hundred companies that we all believed it. >> and it's not that the stock did not come down sharply, it did. but it is one of the great survivors and thrivers. i sounded like walt frasier there. >> do you die your hair? >> no, but i'm working on my suits. our favorite, at least mine, the knicks going to playoffs, by the way. all right, star bucks increasing 40 cent a share. but the coffee sales came in short of estimates largely due to weakness in europe. as a result, moving lower in the premarket. they've had a great move year-to-date. they've had a great move overall and you've got to wonder. people say okay, let's just take a little bit of money off the table. >> yeah, but, also, howard schultz identifies europe as the turn around machlett like he did to the united states. i want to have faith in him. here's a great concept. starbucks. what were the two markets that amazon went in aggressively? italy and spain. i love the humorous of amazon. too much in europe, i will defer to the fact that he's got an incredible number of people that this growing chinese middle class, he calls that out at the front. and let's not forget, he's introducing a keurig-like product. i think it's overshadowed by europe and i don't like that. he's talking about opening 1500 stores in mainland china by 2015. i think he'll do far more than that. >> it's the 7th consecutive quarter. staggering. he's doing 7, 8% in the united states. the only company i saw that did more than that was chipotle. and you're seeing these, again, dominant companies. i like to call it the dominant companies because i find that when their stocks go down, it's a good chance. >> i think you need to film some people in the starbucks using their iphones. i think that will wrap it up for people. >> exactly. >> i was told to help consolidate the investment case. >> we talked about mobile. the best i know is e-bay. so what's my action, e-bay? >> what is your action, jim? >> i think that the other customers want a horse race. no one wants google to be dominant. no one wants amazon to be dominant. no one wants facebook to be dominant. even zynga, wow, they actually did pretty well. >> they depend a lot on facebook. wouldn't facebook help zynga a lot? >> it would. yes. they have to show that they can live without facebook. can i just say that "squawk box" this morning, what a great story they are. >> that was a great series. >> on the 4.5% and 4.25% in terms of starbucks, people wanting to get in after they feel like they missed out on the run? >> i think the way that people justify these things is they suddenly justify why they missed out. so, no, yack they come in immediately. i think that they should come in because i believe howard schultz, i remember when the previous ceo who was not doing -- he's a very nice man. he was not doing a great job. he called me and said jim, i am going to make it happen. i had complained about my starbucks not being clean enough. there's been very few executives who have ever given people personal pledges and then completely delivered. i'm with howard. >> it's hard not to be. >> do you ever think about the starbucks stories in the second half? it will be a tail wednesday because coffee features are a two-year low. i know a lot of people are out there scratching their heads. why would star bucks be complaining? because of their hedging programs. there's a delay. we'll see that impact in the second half of the year. >> will they lower my triple venti c venticapuccino? >> i wonder what component of that drink costs? is it the wet part? >> they give you 99 cent back and then you put it in the tip thing. >> what are you dunken donuts? >>. >> i'm not creating more and more waste with those k-cups. >> mr. coffee, yeah. >> fantastic quarter. >> they had a very good courter. they own mr. coffee, that is true. you have to replace them every year. >> how about you went with the market with the jimmy warren buffet, didn't you? >> i've got the big one. and jordan has been a remarkable winner and people have been shorting him all the way up. >> let's move onto proctor and gamble reporting earnings this morning. the consumer products lowering sales volume in developed markets. more specifically, they also cite a higher tax rate -- a significantly higher tax rate that will cut growth by about 6% which is the current quarter. wouldn't you hear about a higher tax rate? how much of that do you pull out and say it's a tax rate? >> when i hear about a higher tax rate and then i read that they've obviously raised the price of gilette too high, you're seeing a remarkable decline. i'm talking about remarkable declines. it's so clear. they want to go to hair care volume. >> you're buying a 10-pack of blades. >> i have to go to do it. congratulations to carl, our partner. home care volume decreased low, single denlites. these guys decreased double denlites in the developed world. they've obviously raised prices too high. >> just sort of the direction of the company. i don't want to put words in your mouth -- >> don't put in the knicks are going to win the championship. but oral care volume decreased low, single digit. these are the products that we love. this is why parigo is doing so well. this is why the kirkland brand of costco is doing so well. if anybody remembers that devastating day when they went down in the '90 does. i think there's going to be a come-to-judgment proctor. this will be unruling and difficult. >>. >> how much is it? >> it's over 25 bucks. >> really? >> yes. i'm not making that up. >> plus, larry david taught us, right, in curb your enthusiasm. you need a machete. i'm not into that, either. >> no. >> i'm going to start looking. i didn't realize they had been raising prices so aggressively. when is the call? >> i've got to get out of here. i just want to hear the theater of this. king lear, richard iii. >> this is very different than the rest of so much of what we've got in terms of earnings, which has been very positive, across the board, oftentimes. better than anticipated. even if you take out apple, although not as much. >> 4.2% versus 6%. that's incredible. >> amazing. >>. >> colox better. j&j maybe even a few better. >> let's move onto spain. data shows that the country's rate jumped to 24.24%. that is the highest level since the early 1990s. that's after standard and poors dropped the credit rating. plus the firm citing worries, nothing that we venality talked about many, many times or been concerned about. i've had an opportunity being in new york now to catch up. and i will say to a person, they are greatly concerned about spain. and it alms raises my focus, if you will, because they don't think it's going to be able to avoid a restructuring. >> how does it reshape their adjustments? >> you can short bonds. and then you do worry about full allocation of stocks. we talk about whether there will be a full connection. when that restructuring comes in their opinion, who knows in terms of time. it could be very soon. tekti it could be a little later. it doesn't seem to be in the opinion of people i believe to be very smart, a great deal of hope that spain will be able to avoid a restructuring. >> when i hear these numbers, 25% unemployment, may actually be larger. you're talking about the level of unemployment we had in 1933, '34 in our country. >> so how do you do austerity? how do you maintain the face of austerity? >> the hi gemny of germany is going to end. this is a case where i think the e.u. countries are going to gang up. paul kruben, who i think has been spot on at the new york times, is talking about this open rebellion that's coming. it has to happen because austerity is not working as a strategy. >> well, the socialist candidate in france who's probably going to be the next leader -- >> he's a pro-growth socialist. >> i obviously should quote directly, but they were on the lines of what you're discussing. >> they're not trying to tribute the particular government that ran germany from 1934 to 1945. but a lot of people are saying did the germans win world war i ii. and obviously, in illusion to the fact that merkle is pulling every string. she is the puppet master and she is not doing a good job. >> the count down to the quest for the triple crown. not only is churchill downs getting ready for the kentucky der derby, its stock is getting to the races. let's take another look. we had to collapse the opening bell of the week. we are looking at a higher open. stay tuned. welcome back to "squawk on the street." well, we had our first look at first quarter gdp and it was a bit disappointing. but, if you look at the market response, at least thus far, it has not been large. and as i talk to traders and you look at the many, the s&p futures contract trading on the electronic platform, you can clearly see it moved lower, but it rebounded. it's moved up just a bit bringing in some light selling. so the issue is many traders say they didn't expect a great number. other traders say it was close and there was some mitigating factors and the bar was pretty low with respect to growth. there was a positive consumption and we'll see how the full-blown session really handicaps this first look at the first quarter gdp. back to you. >> well, just when it seems there appears to be a starbucks everywhere, the coffee chain will accelerate new store growth compellablely. so that brings us to this morning's cake on the section. complete the following sections memo to howard schultz. the only place that still needs a starbucks is blank because blank. we've got your responses throughout the morning. where do you think it's needed. alpha s alpha centuri would be a good place. >> i haven't been there lately. when they get there, there better be a star bucks. it is impressing all of these guys and their rocket ship dreams. >> there may be a cafe. they're very forward thinking management. >> again, we've got your responses throughout the show. how do you end the week on a profitable note? of course, the answer is run to cramer. he's coming up next and let's take a look once more. much more squawk on the street live straight ahead. ona here wae that ford dealers sell a new tire like...every five seconds, how's that possible? well, we purchase 3 million a year. you just sold one right now didn't you? that's correct. major brands. 11 major brands. oop,there goes another one. well we'll beat anybody's advertised price. and you just did it right there, what's that called? the low price tire guarantee. wait for it, there goes another one. get a $100 rebate, plus the low price tire guarantee during the big tire event. look at that. it's happening right there every five seconds. your not going to run out are you? no. carfirmation. only hertz gives you a carfirmation. hey, this is challenger. i'll be waiting for you in stall 5. it confirms your reservation and the location your car is in, the moment you land. it's just another way you'll be traveling at the spef hertz. ♪ >> all right. five minutes before the opening bell, time for cramer's mad dash. we're starting with -- they make airplanes, i think. >> boeing, it looks like they're going to win the order that was meant for air bus. they don't like the carbon tax. david, you and i kept spain front and center. >> europe spent a lot of money being green. do you think there could be a rebellion against the pollution laws of the world? >> it seems as though there's not a lot of climate deal. i wonder to this point whether you're making does spain pull back on those things, especially if it means losing jobs because you're losing contracts a lot, boeing getting a deal that air bus might have. >> if you asked me what the single biggest most important driver to this -- it's not ford, although i did like the north american. it's not gm, it's not automobile. it's aerospace. if boeing start taking share, boeing -- this boeing -- this goes to a hundred if air bus is going to be knocked out by the third world, so called emerging markets. they're tired of being dictated to. you've got a whole continent. i think there's a change. of course, high pers pash lee. europe must turn air bus on. >> interesting. an important point and one to watch. so much for that. so much for combatting it. all right. let's go over to melissa. >> we are looking for some very big opens. 18% and it's about 1%. so a big, big open. also, an exclusive with the president of churchill downs straight ahead. he national mathd science initiative... ...which helped students and teachers get better results in ap courses. together, they raised ap test scores 138%. just imagine our potential... ...if the other states joined them. let's raise our scores. let's invest in our teachers and inspire our students. let's solve this. guys. come here, come here. [ telephone ringing ] i'm calling my old dealership. [ man ] may ford. hi, yeah. do you guys have any crossovers that offer better highway fuel economy than the chevy equinox? no, sorry, sir. we don't. oh, well, that's too bad. [ man ] kyle, is that you? [ laughs ] [ man ] still here, kyle. [ male announcer ] visit your local chevy dealer today. right now, very well qualified lessees can get a 2012 equinox ls for around $229 a month. like in a special ops mission? you'd spot movement, gather intelligence with minimal collateral damage. but rather than neutralizing enemies in their sleep, you'd be targeting stocks to trade. well, that's what trade architect's heat maps do. they make you a trading assassin. trade architect. td ameritrade's empowering, web-based trading platform. trade commission-free for 60 days, and we'll throw in up to $600 when you open an account. just coming off the ringing of the opening bell here. a purity group celebrating its ipo today over at the nasse doc, churchill down celebrating this year's 138 run for the roses may 5th on nbc. we'll talk for the ceo of churchill downs in just a couple of moments. but here we are. we were looking for that big open in amazon. and we are getting that big open in amazon this morning. we are seeing it trade higher by a whopping 15%. >> look, this is -- it was a big market value. >> it was the easiest short member. i felt -- look, when a company goes out and tells you there's no -- this is not the time for profitability and it's not pando pandora, you know, you tend to believe -- you say, wow, he wants world domination. that's his goal. if he can do world domination and at the same time spend like that, i would be shaking if i were a brick and mortar retailer. this guy has got so much fire power. >> bank of america and merrill lynch updated to buy from a whole. is that a call that basically came too late? or do you think that is actually -- >> no, i think it is a too late call. you had to be gutsy. it did take a lot to come in and say this is the bottom 18190. the stock can still go higher, but i think in the end, when you have a stock up 30, it usually means that the institutional buyers are coming in. >> they're spending a lot of money, still. fulfillment centers, which we knew, and cloud services. so if you read between the lines and connect the dots, that could spell bad news for maybe a google that computes cloud computing now, very price competitive at this point. >> i want to point out that you have big data when you collect cloud, you get eqix, e-q-i-x. tipco which makes the software which says oh, you like this book on world war two. perhaps you'd like the books on churchill. that's tipco software. very, very well run company. i just point out that if cloud is a creator of jobs -- >> there's corporate cloud and consumer cloud. they're somewhat different. i can use amazon, as well to back up my photos. the same way i can use apple service. >> i'm surprised you didn't talk about netflix because amazon is clearly dominating there, too. >> when we talk about the second half of the year and their planned addition, there is concern. although netflix doesn't seem to think so. they're not spending nearly enough money now to really make amazon prime and the video part of that a robust service. >> but you cannot feel -- >> you can find it on the web site. >> that's true, but you can't feel any safety if you're netflix. i'm going to dominate that business. >> you can flip a switch and there you go. >> better than expected earnings, but the stock is down by 4%. they had recently raised guidance. so -- >> right. i think at sometimes, these companies, when they raised their guidance, people then expect them to add a penny since they've raised the guidance. >> i think they raised guidance a few weeks ago. >> tough gain. when people want them to say listen, in the last eight days, you can't do that. >> that was an interesting raise. they raise guidance after jim said on "squawk box." and then they came out, they raised afterwards. that very day. so that was a fascinating little back story. >> one more to mention. i know you were probably covering last night on the show, as well. over 23%. priceline may be getting a little bit as a result of expedia, also. >> expedia is what happens is you don't need a night clerk. you see how many rooms they took, you give them a little bit of money back and it's a remarkable business model. expedia is your friend, not your enemy. >>. >> it's been an out-of-favor stock. >> let's check with more. >> welcome to qe 3. i know it never went away, but it's back with a vengeance. it was obviously on display this morning. fol folks, i'm sorry. that's a disappointment. i don't care what the excuses were, and i've got a whole e-mail box full of them. business spending, shocked business spending was amiss. government spending down a bit. i don't care. if everybody knew about it, why wasn't it in the estimates? what side of the growth are you on? that defines where you err at. this is going to give am in addition for the bears. you saw a three% drop. three-points on that? and then it lasted five minutes. that's qe three. >> never mind s&p has been calling for fiscal austerity. you can say see, it's not working and we've got to find ways to stimulate the economy. now, over in italy, the voice of reason said we cannot define growth as simply stimulus spending. deficit spending. he was very clear on that and gave an excellent commentary with mr. ba pricks osso. he said we've got to do structural reforms. that's the only way out. don't use deficit spending. terrific. responsible. meantime, you know what the new market leaders are? it's real estate investment trust at a 3.5 year high. low financing and a recovery have really helped. jim had spectacular numbers in the last 24 hours. i'll make it very simple for you. we're seeing rents rising and occupancy rising. i want to say it again, rents are up and occupancy are up, jim, at the high quality because they're able to bring in new tenants, new vital tenants to replace the older ones that are getting worn and tired. and that's certainly a very, very major move. by the way, we had a beter day overall for some of the earnings pictures. bob, one of my six in sixty is one of the most amazing quarters of the last 24 hours when you take into account that amazon is supposed to be destroying bricks and mortar. they're making a great call out by you. >> yeah, importantly, remember something. rents are almost 94% in some of these malls that they've got. they're getting more people in. and i know that there's a problem with the big space for some of the big box guys who are coming out. but, bottom line is they're able to hold on very well. guys, back to you. >> all right, thanks, mr. gassani. let's head over to the opening bell to kick off the beginning of its name sake's racetracks. the 138th season. the kentucky derby next saturday. churchill downs had a very, very nice move. you can see it right there. the stock up more than 40%. he's president of churchill downs. nice to have you with us. how important is the race to your overall financial performance in a year? >> it's the haeartbeat of our company. but we've diversify pretty extensively over the past five years. it's still a great shot in the arm. the economics continue to improve. but we've grown well beyond it to weck several revenue streams that have taken us through prosperity over the last couple of years. >>. >> right, that is true. i am curious, though, in terms of your expectations, i know that 2011 saw a fairly significant increase over 2010. are you anticipating that same kind of percentage increase as a result of the race this year? >> well, i don't want to jinx us. so, so far, as we head into the derby this year, everything looks strong. everything looks very, very solid. let's just hope the weather holds up and we have a great, great day and entertain the 150,000 folks or so that show up on race day. >> sir, you were riding a wave of something that i didn't realize. you're running a wave of state government budget problems, aren't you? >> that's the story of many companies in the gaming field. gaming has expanded in the united states and sometimes it's a result of state governments needing more revenues and the gaming industry has been willing to invest, and we have, as well. >> i was curious how your ability to participate in online. a lot of the big casinos are investing in online and getting exposure there. are you diversifying? >> online has been a huge impetus for our company. we went in online in 2007 wagering on a horse race online is legal in this country and has been for years. we've invested in terms of capital technology and people if there is an expansion in the country, we hope to play in a significant way. >> thanks for joining us. >> get started with those mint juleps. >> very nice to have you. the kentucky derby next saturday. you may have seen, by the way, video of the space shuttle on its way to the intrepid here in new york. if you plan on bringing the kids, don't go quite yet. i think july is when it will open as an exhibit. but, wow. isn't that exciting? challenge hill downs, i've been there many times. maybe one of the most exciting thievings in the world. >> go look at the horse auctions, if you can. i mean, there's beautiful farms. churchill downs. really a great trip for family, not the actual race, obviously, because it's for adults. but it's a great event. let's shift the bonds and the dollar. >> to truly understand how the machlett has digested the first look at the first quarter gdp, the stern really starts in the middle of the night, 1, 2, 3:00 a.m. eastern time. if you look at a 24 hour chart of tenure no yields, they were down at 1.90, they were down at 1.88 at 2:00 in the morning. we haven't closed under 1.90 since the second of february. the dollar index and the e-minis were under much more duress at two in the morning. so they're trying to get their gps in lieu of the expected gdp. >> let's check out the latest moves in metals. >> commodity traders are digging deep into this debt. when you look at the headline data, weaker than expected. where did that come from? we're spending less in terms of government spending, not in terms of government spending and personal consumption was actual le pretty good. that is why we're seeing copper prices at the top end of the range chlgt we're seeing a rally across the board in the metals market. and in thornilys of oil prices, it's pretty much in a cover from the loss overnight. and now we're looking at prices that are above that market. and when you look at the volatility index, that's what a lot of traders are looking at to see where oil prices are headed. that tells traders to stay in this 100105 range for some time. >> all right, thanks very much, sharon. >> i'm going to take a look at fund flows. we've got some numbers this morning from j.p. morgan. and it is an interesting part of the market dynamic to note that money continues to flow out of oblong with wequities and into funds. that is where the money. continues to go. it's important for us to mention that with the ten-year, let's call it 2%, 193, your risk in these bond funds is -- and i say ever because should there be a snap back in rates. >> i want you to explain to people, david, because you know this better than anybody. how can somebody get their money back? well, you newlywed. >> why is it that people don't understand that? >> i don't know. i don't know the prices. >> it's going to be the big problem for many people. lilt's remember, price goes down when yield goes up. now, we've talked about a high yield by the way in the past. and the fact that there aren't even enough deals for some of the funds to put their money in. you want to be able to hit your benchmark. if you're in cash, you're not going to be able to. we did see prices move down sharply at one point during the height of the crisis in europe. that was towards the end of last year. but they've come back a good yield. when it comes to equities, it's 228 million versus out flows of 7 billion last week. nondomestic equity saw inflowings. s. >> david, bank of america, 6.28%. why do i call this out? bank of america doesn't want anymore high yield. i've not been positive on it. i have to tell you, this is positive for b.a.c. >> at the end of the day, money market funds are being sold. 73 billion was the last inflow going into february. look at at&t. how can that be not the thing these people should be in? what are they thinking of? >> i can't really say much more than that. >> well, believe it or not, starbucks says it sees 1,000 new stores. memo to ceo howard schultz, the only place that needs a star bucks is blank because blank. as we head to break, take a look at this morning's early here on wall spheroid. early 26%. [ male announcer ] we imagined a vehicle 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. i don't know... i forget. hello, neighbors. hey, scott... perfect timing. feeding your lawn need not be so difficult. get a load of this bad boy. sweet! this snap spreader system from scotts makes caring for your lawn snap-crackin' simple, guaranteed. just take the handy, no-mess bag, then snap, lock, and go. it's a new day for lawn care, feedings never been so easy. to see a demo of the snap spreader, go to scotts.com. feed your lawn. feed it! time now for squawk on the tweet. it's time for about 1,000 new source globally. so this morning, we asked you to complete the following sentence. memo to c.e.o. skip pi tweets because of all of the jobs they're wiping out, the only coffee drinking will be at those companies. eric tweets to us the only place it needs a marketplace is my living room because gas prices are too high. and the only place it needs a starbucks is the white house because somebody needs to wake them up. and then we need a tweet from anne. bay city michigan needs a starbucks. >> wow, there's a city that does not have a starbucks? >> that could change very quickly if howard is watching. >> bay city michigan. howard schultz. >> what do they do? do they go to dunken donuts? >> i don't know. mr. coffee? >> it's funny, there's a great deal of competition. within one block of me, i've got a new place, the coffee bean or something which is a chain in california. another up and west sider tells me. >> you stick it to the man. i get that. >> coming up, market reaction much more ahead on "squawk on the street. 16789d take a listen to what cramer says. don't worry, it will only take one minute. six dots in 60 seconds. "squawk in the street" will be right back. peter. i can see that you're busy... but you were gonna help us crunch the numbers for accounts receivable today. i mean i know that this is important. well, both are important. let's be clear. they are but this is important too. [ man ] the receivables. [ 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. ♪ now i'm free ♪ free falling ♪ and i'm free ♪ free falling >> rick santella here. we have april final, university of michigan sentiment survey. 76.4. 76.4 is much better than expected. let's put it in reference. 75.7 was the mid april. but the final march was 76.2. so it's a two tenths improvement over the final. it's a bigger improvement over the mid read and it's better than we were expecting. and 76.4, well, to put it in context, that's one of the better numbers going back to april of last year. so, david, i'm going to kick it back to you as the market digests. and i'm sir pleased that the futures and the s&ps or the stock market isn't doing a bit better on that number. >> yeah, 76.4, well, we'll see. time for six in 66.60 seconds. let's start with a name we haven't mentioned. international paper. >> i think it's paying off for rp. >> it actually works. >> i think it was too warm. wow. and the tom brady, we'll say high patch. >> agnico eagle, aem? >> finally. they finally got it together. i like it. >> ford? >> trading up early on the latin america terrible europe. western digital, i'm sorry. >> this is finally back in the equal lib raceme. as soon as your equilibrih quiq comes, sell, sell, sell. >> europe is just so bad, very honest. look, we don't know when europe is going to buy them. so we can't know when ford is going to buy them. >> members of the board resigned, cfo resigned. this is a company that i have my cell block. be very careful. they're the winner. sell all scripts. it's not a two-for-one split. last night at one point it was at 16 and it was at agt. i thought it was a 2-for-one split. has that ever spelled a good thing for you, david? >> usually, that's not a good thing. that's not a good thing. i have a keen sense. all right. "mad money" tonight. >> mike, is that a loom that, david? is that what happened? was a lumina that deal didn't work? >> maybe it kept within a price that it didn't feel comfortable going above. there was significant competition we're talking about smaller and smaller units that eventually could be in a doctor's office. >> and cyprus, they had a better-than-competeed quarter. these are the polls. >> all right. we'll see you tonight. >> hey, barton biggs coming up. that's next on "squawk on the street." laces? really? slip-on's the way to go. more people do that, security would be like -- there's no charge for the bag. thanks. i know a quiet little place where we can get some work done. there's a three-prong plug. i have club passes. [ male announcer ] get the mileage card with special perks on united, like a free checked bag, united club passes, and priority boarding. thanks. ♪ okay. what's your secret? [ male announcer ] the united mileageplus explorer card. get it and you're in. : and a happy friday morning for all of you out there. squawk on the street, amazon with a far-better-than-expected profit. kindle numbers and that hefty valuation in just a moment. >> the gdp is coming lighter than expected. spain catching a credit downgrade last night. they will break down the latest market moves. >> another strong move under pressure. we'll tell you how to trade in just a few. >> all right, well, regulators are widening their probe into the potential invollment of goldman sachs employees, that according to the wall street george and others. u.s. prosecutors looking to whether a senior goldman investment advanced word of a number of pending health care deals. the second largest with spiking oil prices and made up for a decline in oil and gas production. chevron's first quarter profit rising to $6.5 billion. proctor and gamble recording 94 crenelates a share. the consumer estimates lowering its full-year profit outlook. it did cite slowing sales. that is down about 3% right now at 64.85. >> the one thing you expect with png or companies like that that have those very strong brands, they have pricing power. they're able to more than compensate for the additional costs that they have. i mean, you've seen that arguably with pepsi. you've seen it with colgate. gld unless they just raise prices along the way too much. they don't want to pay more than $20 for a ten-pack of blades. so now he's looking for an alternative. >> i am. i hadn't really noticed. i did note the last time i went in and bought razor blades that they were extraordinarily expensive. you don't buy them enough to realize that the prices went up. have you brought them up too quickly? apparently png has and is going to have to roll back some prices. >> i recently went to a five-blade razor because i thought that might help. it doesn't. >> you look very smooth. you look to be taking the skin off, too. you should be careful. >> thank you for the analysis, guys, thank you. >> let's talk about those moves right now. joining us on the phone, bartin biggs. barton, i've had a lot of conversations with hedge fund managers, have a good belt on things. they remain very, very -- two veries -- concerned about spain. i'm curious to your thaugts about spain and europe and their impact over here. >> well, i think europe is a big concern to me. it's fairly clear that the so-called streets, the people of europe, have sent a message to the politicians that they're tired of austerity and they wanted more stimulation and more growth. and so it's very hard to see how that's going to work out. on the other hand, the numbers this morning, are a little less than expected. but basically, real gdp growth in the u.s. has averaged out to 2.6%. and the gdp deflator is just 1.2%. and for an economy that's on a sustained growth pattern, you couldn't ask for anything better. >> just on the question of growth, do you not fear that the quality of growth that we're getting is actually extremely poor? two-thirds of the growth is inventory build-up. and, ofblg, this quarter, it's slower than many people expected. and a lot of it has to do with consumer spending being brought forward by the weather. are you not concerned that actually we're not getting the growth that we should have at this stage in the cycle. and that the market could wake up to it? >> i think that the consensus wisdom is that the second quarter real gdp is going to be down a little bit from what it was in the first quarter because of the weather. but, still, the u.s. economy compared to almost every other economy looks healthy. and in pretty good shape. >> if you characterize the u.s. economy as healthy, how do you characterize the chinese economy, especially with the short sellers out there who are shorting china fairly aggressively. are short sellers off the mark? >> i think they are. they've certainly been right so far np shorting china. i think they've had a soft landing and stabilized growth at around 7-8%, which is pretty darn good for the second biggest economy in the world. and i think the markets are starting to suggest that their commercial real estate markets. and i think china is fine at nine and i think china is going to be a very positive surprise in months to come. >> i see of your investments, you've got a lot in asia. but also oil services and u.s. tech. what most excites you in tech and oil services on this market at the moment. >> well, we what most excites me about tech is that i think we're still in the second or third year of a spending boom. and it's going to continue. and that the valuations on the old mature companies, the ciscos and microsofts are very reasonable. they're almost a little bit below that of the s&p and these aren't dynamic growth companies anymore. but can they grow 8-10% when the market is going to have 5 or 6% growth? yeah, i think they can. >> so it's vm ware and cisco, and intel. are those your main technology picks? >> no, they're in my technology baskets, but i have a basket of the old technology companies, which i had mentioned, which would include cisco and that group. and then i have a basket of new technology, what i would call new technology, which are things like apple and broadcom and vmware and names like that. all right, barton biggs, thanks for your time. >> all right, let's send it over to brian sullivan for a quick market flash. >> i want to quickly hit on wdbc. the stock is really taking a hit today. i'll tell you what's interesting. they came out with number that is on the surface looked pretty good. the stock moved higher yesterday. now as analysts dig in, there's concern about supplies and orders. that stock is down nearly 12%. so the stock is one of the worst performers out there. people dug into pricing to order inventories. they said you know what, we think things are different. i think right now they are the second worse performer in the s&p 500. >> thank you very much. brian, amazon doing extraordinarily well this mourning. what about that spiking evaluation? we'll talk about the comments after the break. stay with us. or creates another laptop bag or hires another employee, it's not just good for business, it's good for the entire community. at bank of america, we know the impact that local businesses have on communities. that's why we extended $6.4 billion in new credit to small businesses across the country last year. because the more we help them, the more we help make opportunity possible. vrm frets we're heading into major territory. stock's first quarter profit raising nearly 5%. the first kwaurter sales continuing to pick up pace. the stock up four. vf corp. with strong demand in asia and europe. the company also raising profit estimates for the year, but it dips as the market dips and merck's first quarter earnings beating estimates by a penny. >> amazon is currently trading higher -- sharply by about 13.5% following earnings results. that blueway analyst with ever-corp. par ne'ers. jason is exceptive director and senior analyst with open heimer. i'm going to start with you. you raised your price target, i believe? you eve got an overweight rating on the stock. what makes you believe that given the trajectory and the spending on amazon that we will actually see that price appreciati appreciation? well i think there's certainly room for improvement. we were expecting 2% margins. i think the company did not denounce any new fulfillment centers. and so i think that gives initial comfort. also, i think in terms of the media spent, it was nice to see some acceleration there. >> jason, i'm curious in terms of margins, we did see improvement in quarter. a lot of that was driven by the increase in third party. do you belief that that's significant? >> i map, you know, what we saw was two things. we saw the higher third party mix with margins and also media helps margins. those are really the two things that people want to see. you know, at the end of the day, the earnings number could be anywhere from $1.85 to $3. you just don't know. when people see continuation of sales growth and they see that third party mix moving in the right way, they want to stay in the stock longer. >> jason, you mention that big range of potential out comes for the next quarter. this keeps you from actually having to work. it makes you care about what amazon is going to do given that huge range. >> i think most people take the midpoint of the guidance and see where it shakes out. this is a very hard stock to try to make money. we look at the amount of, for example, e-commerce gained. it looked like on average almost 300 basis points in the u.s. so these are really what people look for. they look at revenue per customer. so revenue per customer did slow to 5%. if you add back kind of the impact of the third party mix, that uh's probably like 80%. and then if you take the second quarter, it looks like they could get back to an adjusted 10% growth in revenue per customer. at the end of the day, it's about how much money amazon can take from the consumer. now how that gets divided up, they're not telling you. but that's really the story here. >> you know, to some people, it's about how much profit they can make than revenue. i appreciate the great story to date. it's a great move on the stock. it's a fantastic trade. but is there a point to reach the valuation matters. the column says, look, let's say that he gets to where ever he wants to be. give it a 6% operating margin, the same as walmart has, and the price earnings fall inevitably for 180. but only down to 48 times earnings. and that is sahh very, very expensive stock. >> i think it will stay expensive for a while. i think when you look at the revenues, though, on the multiple revenues, it's still about 1.4 times, which isn't that outrageous. i think when you look at the vantage with consumers and enterprise, i think there's so many other opportunities that will come from the higher margins than traditional retail. i think that's where that valuation will actually be earned. >> you mentioned that you're comfortable with the company not spending as much because the fulfillment centers are known at this point. but at the same time, they're going to spend on things like media content which can have infinite price tags. they can spend a lot of money if they choose to compete. they can choose to compete in cloud services. >> i think absolutely. what amazon really won was the ability to charge consumers less or charge below what they're paying for the wholesale of the woke. book. so i think from the margin standpoint, that is a concern. consumers are going to amazon to buy books. in effect, the competition sort of moves in that direction. and i think the power that you build in a platform like that is very strong. and i think it supports valuation. >> before we leave, i want to talk about google. do you cover google? >> yes. >> it's full yvette fact that it looks like the federal regula r regulators are hiring some high prosecution lawyers. not just with the federal aspect, but also the way in which facebook is teaming up with microsoft, we've seen the exchange of patents there. and some people talk about perhaps further deals that they might deal with in search darn the line. we're always mindful of the regulatory issues. so far, they kept themselves out of hot water. >> such as when the browser went off and an overarching relationship. it doesn't seem that google has put themselves in that position. they don't like in the fair market. google does offer its own products. we think it's a balance between its own product as well as the products it's selling to its customer. there are a lot of things going on with google right now. how will it impact. that stock is very extensive. you're looking to apply the secular trend in the internet, we think google is very interesting. this is an important story. i imagine it's going to be more important for google. >> i don't think it could be more off base. it's very backwards looking to me. >> that's not unlike the u.s. government to do that. how many 25-year-olds are going to type in things that they want to buy? i don't think it's nearly as secure. i think for google, they're in competitive, murky waters right now. i think the idea of a justice department going after them from an operational standpoint could be fairly lethal. but it just doesn't make sense to me given the way the trends are headed. >> i think they listen to consolidating power. >> the coffee giant saw international surge in china. we're going to break down the lower costs and the depen's boost after the break. on my journey across america, i found new ways to tell people about saving money. this is bobby. say hello bobby. hello bobby. do you know you could save hundreds on car insurance over the phone, online or at your local geico office? tell us bobby, what would you do with all those savings? hire a better ventriloquist. your lips are moving. geico®. fifteen minutes could save you fifteen percent or more on car insurance. ♪ strea-ea-ea-ea-eam ♪ ...stream, stream, stream... ♪ whenever i want you, all i have to do is... ♪ [ female announcer ] introducing xfinity streampix. stream your favorite movies and full seasons of shows instantly on any screen. find out more online. good day for earns down here. the profit earning less than the street thought this after the company gained its first investment-grade credit rating over six years earlier this week. let's join up now. let's link in with cnbc for more. hi, phil. >> hi, simon. really, an interesting earnings report. on the face, people look at this and say really not that bad. but when you look at the underlying numbers, there is some concern there. overall, what we're looking at is ford reporting a decline of 20% year-over-year. even though it was a profitable quarter, beating the street at 39 cent a share. you look at the revenue side, sialolithly better than the street was expecting coming in at 32.4 billion. but here's the two tales. on the positive side, look at north america. ford earning 2.1 billion. best quarter since 2000. now, this is getting a lot of attention on wall street today. 11.5% well above where the company expects to be by mid decade. that's the positive. the negative, take a look at what's happening in europe. this is really because where the company took an impact, a loss of $149 million. when i tooked to ford ceo early this morning, he said listen, we're not sure if the european economy has bottomed yet. if you look at shares of ford down 2%, 25% on the year, the question a lot of people on wall street had on the conference call which just wrapped up, guys, is does ford look at the rest of this year and say things will improve in the second half? is that the benchmark going forward? or do we look at this year and say oh, it's okay. it's not bad, but it's not as wonderful as people would like to see in an automarket that is surging in north america. all of this comes back to what we're seeing with europe and the slow down and the fact that they have no comforts in thornilys of when things improve. so which is the best-performing automotive maker? >> eh think you look at these numbers from ford and say look at what they're doing. look at the numbers we saw yesterday from ciscos luhr. i mean, everybody. there's not one automaker that is head and shoulders above everybody else. everybody is doing very well in north america. the issue continues to be europe and how low it continues to slide. and who can manage it the best. now, ford has minimized the loss better than others. really, the only one who has come through europe okay are the european automakerings who are primarily centered over there in germany. >> okay, phil, thank you very much. thank you for joining us. and those regular viewers will realize that phil being where he is means that we will have allen mulally later today on fast-money at the halftime report. that's at 12:00, noon. >> natural gas making a nice move this morning. let's send it over to sharon. >> david, it's worth paying attention to this june contract, the new front month contract for natural gas because we are up nearly 2% here. and there was a big kind of debate going on among traders whether this new contract would do the same as the may contract and stay around $2 as we've been trading for some time. a lot of folks thinking that we would see natural gas under pressure with so much supply staying around $1.75 or so. that has not happened. in fact, we've seen a nice rally in this june contract and quite a bit of volume. we are still looking at some traders talking about a $2 to $2.30 range for the june con tract and we'll continue to watch the volatility here. this is where a lot of traders have been playing and they're planning on natural gas being above $2 for the next month or so. >> interesting to see that move. significant one. starbuck shares, by the way, are down. as we see over 6% this morning, after really what was a pretty good quarter. why the move down? 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[ male announcer ] good choice business pro. good choice. go national. go like a pro. hrs 1. >> 1 hour into trading, the university of maine coon suumer census index. a final reading of 76.4, that is up two tenths from the dip earlier this month. shares of expaid yeah with the all-time high say the travel web site up 28% on news of its better-than-expected results. so reporting a slide in first-quarter earnings. >> it is early quiet if you look at the indices overall. flat, flat, flat. if you look at the individual sectors, they're barely moving. energy slightly lower. tell come off a bit. we had hoped that we would be able to extend that big rally that we've had. the three-day rally that took the dow up over 2%. look at the move so far today. a lot of issuings relatively balanced. let's have a look at where we are. >> take a look at this beautiful shot. the enterprise making its way to new york city. it will take a position to the new york city area. >> yeah, they're doing tours. we're sort of flying around so people can see it. >> it's an amazing sight. >> you do know my twiter question andives overruled by the executive producer. >> that's awful. but this never flew. enterprise never flew, did it? enterprise was the pro toe type. am i right in saying that? it was the first one that they built but they never put engines in it. >> it ocean got a lot of the equipment in there. a great edition to the intrepid. >> all right, joining us now, gdp numbers this morning. >> don't you look at that and wonder about monetary policy? around the world. >> you and i had this conversation many times. ben would love to stuff a trillion dollars into europe. he would love to be able to d that. >> you're absolutely right, simon. they need to stuff it full of euros. >> and china, the same sort of thing. >> let's settle from that into the disappointing gdp numbers. let's go right to the details. these numbers disappointed. we were hoping for 2.5 or 3%. there's the number. we can see that march up that we have and we've gone to talk about this a minute here. the deja vuins all over again. now, 2.2% was the number. but consumer spending, 2.9% pretty strong. some commentary that that brought former from. investment surprisings to the downside. a big reason inside that that nobody can make any sense of is mining structures with two tenths by itself. and then that's bouncing off a low level. exports minus 410, government spending a big part yvette decline there as well, with federal down 5.6 and states, again, creating a total of 3%. here's some of the commentary out there. the question is how much of the momentum in consumer spending can be maintained. now that it's slowed. chandler saying the main drag is coming from the government itself. one is still on an uncertain footing and a window of risk exists given the global slow down. i will tell you that the market has begun to focus further down the line. we all know the fourth quarter could have a huge decline. they're talking about the fiscal cliff. the question is when the market starts to focus on that. >> i'm really glad you're here today. i'm depressed by these figures. i'm depressed of the low quality of growth. you know, the fourth quarter, two-thirds of the growth there was about business inventories. it's also a major factor in this quarter. it may have been brought forward. this is actually very poor growth for america. we should recognize that. >> it's poor growth certainly from a level basis, simon. we've had more job growth. we've had some income growth. i'm not surprised to see these consumer growth spending numbers. i'm okay with that. what concerns me right now is what's going on with business. there could be an issue from the fourth quarter. those ran off would be maybe seeing as pay back here until it normalizes. if business is going to stop, that has medium and long-term investments. >> last year, i'm still waiting to see if we had a housing rebound that could help. business investment not picking up the slack. then it's going to rely on the consumer and the best you can hope for there and a normalized nonweather push basis here is probably of a 2 to 22 image. >> that would see an impact in the market. >> i think it's one of those things wrote you're looking from above in the demarcation line. i think there's a dramatic market going on between people who think the fed is going to come in and give us qe. these numbers are a little bit squishy and the government numbers right-hand turn right and the business investment numbers are not right. this is the first print. standard deviation on this is going to be by the final bronalide. 1%. so let's say it could be 32 or 12 either way. remember, very good forecasting. their forecast was 3.1. >> i understand that they're still 6 neolyte. the earning numbers are the object. >> but 4.2 when we check out the whole thing. but none the less, yeah, up 4.2%. but you get back to ceo comforts. you get back to the idea of spending in this year. yet, we may see a lack of comforts. >> that's very true, simon. but you can look at the glass half full, glass half empty. and america has turned out to be a lit bit of a fortress here for growth relative to what's going on. >>. >> i would have hoped for the amount of money that we would have had better growth by now. >> given the federal government spending. >> next tuesday on this show, i believe at this time i'll be out in l.a. talking to dennis lockhardt. only the second time we've ever done that. and then don't forget, the market is going to be looking for that april jobs number and what it says on friday, we'll get adp on wednesday. >> you know, steve, you did mention the fiscal cliff. and it's something that's going to come into more and more focus. $500 million or so. and when you get those automatic spending cuts, that's got to become a huge issue. >> what's so entrustsing is it's a bad enough problem on its own. it's a horrible problem, a context of the political fight. >> thank you very much, guys. let's take a coffee break. starbucks is currently trading after its results. the retailer reporting second quarter earnings. however, the slow down to steve's point in europe and, indeed, rising coffee stocks are weighing on the stock. joining us now is matt defrisco. also, heath joins us as he covers starbucks for credit sweets. what do you make of what they say? >> let's keep it in perspective. i think the big thing here was it's not that coffee costs are higherer, right. it's how much the deflays flags flows through in fiscal 13. some others expected more. and really what happened was they bought more than the slightly higher prices than we thought. you certainly get the full benefit and just a little bit more of it pushed to 13. >> matt, what would you suggest? >> i'd suggest buying it. i think you have to focus on the comp sales and the u.s. they've been concerned with their guidance all year. i think they're in a well position to continue. in the high single digits looking at all the new products coming down the pipe. they're ready for six quarters in a row. i don't think that's appropriately valued in the stock. >> they're signing her to turn around the european business. keith, i'm curious, how long of a time frame should you allow for this european turn around? >> i think there will probably some weather issues in this first quarter that impacted as well. we saw this with some of their competitors. there's a proven play book for how to turn this around. they did it in the u.s. it's basically taking the same operational programs, putting them in place. it becomes more important in the next couple years. if we see some progress, i think that's going to go a long way. by the way, defrisco, i like the look. >> defrisco, what changed in your look? what's going on here? >> i've had this unique haircut for several years. i think he's commenting on our like appearance. >> yeah. if only you had glasses. >> in terms of matt, i'm curious, how do you see the european stock panning out here? >> i'd agree. i believe about $40 million for a company that did 1.7 billion in f.y. '11. i also think they did highlight that a lot of the miss was due to investment there on the margin front. it wasn't just the economy. this is an example where they didn't understand the market well enough and they're attempting to make changes in the way that they do things. but that was a bad error on starbucks. and you wonder how often that might be repeated as they seek to globalize? >> sure. but france had a positive account. germany and ireland were the two countries that were the most troublesome. >> i think they're looking to pair back. latin america was that for mcdonalds and it proved out to be very profitable. >> mcdonalds in france has offered alcohol for some times. >> right after this break, stephanie joins us to talk about all of those burning investment questions you've been tweeting to us. so back in two with all of the answers. standard keyless access, and standard leather-trimmed seats, then your choice is obvious. the lexus es. it's complete luxury in a class full of compromises. see your lexus dealer. [ shapiro ] at legalzoom, you can take care of virtually all your important legal matters in just minutes. now it's quicker and easier for you to start your business... protect your family... and launch your dreams. at legalzoom.com, we put the law on your side. welcome back. let's send it back over to hq. brian? >> yeah, i do like the tears for fears, by the way. all right, look at all scripts. guys, this is an ugly story. this is a story that is fraught with intrigue. the stock is getting down and over 42%. the company basically came out with 42%. the stock is tanking and then three board members themselves quit in protest over the other members voting to oust the chairman. in other words, guys, this is a company that is in disarray and i know you guys like analyst stories here. and i want to give you one on deckers. you've done the news. 25% haircut today. from 120 to 65. how about that? >> yeah, that's a lack of confident there, i guess. >> cramer highlighted it in 6 in 60, brian. but there's a lot more going on there, isn't there? >> you've got the chairman being ousted and then three board members and the other voting members. david, i know you've been doing this for a long time. you don't see this kind of, you know, sort of fighting, infighting on a board. >> that kind of acrimony would be unique. >> okay, stocks to watch. sound disk got graded to buy upc target raised from $95 to 85. the stock there is rated a strong buy. >> that's actually new yorkers, i think, say, florida? >> i have to learn to say hops. it is time now for the post-nine investor club. and now we're going to answer a few of those tilts with a customized analysis because we are here for you, the today's equity expert is stephanie link, the director of research and vp of strategy at the street, a cnbc contributor as well as jim cramer's right-hand woman at his charitable trust actionable alerts plus. great to see you again. >> thank you for having me. >> what do you think about devin energy? it looks like a cheap stock. the company itself seems to be solid. that's tricky because it may look cheap but may be cheap for a reason. >> we own, in full disclosure, in the fund. we've been buying it today. the company is going through a transformation over the last couple of years selling noncore assets and foe ccusing on north american assets. going away from natural gas to more oil, liquid based projects. this is going to lead to higher growth, better projection growth. the company increased their production growth. great balance sheet, $7 billion in cash. we like it. >> we want to move on to nicole. can you talk about caterpillar? thanks. it's for economics class. >> okay. well, this one i think you can wait on actually. it's a global industrial company. the problem is the global growth is slowing so there are head winds and the company reported earlier this week and a lot of built-in inventory in china. i think if you want to be in the industrial space, which i think you do, you want to focus more on north american assets like construction, like housing so there are better places, i think, to put your money now. i do like it for the long term. >> are you still a big fan despite they obviously overestimated the supply in china? they have a lot of inventory they are shipping around the rest of the world. >> right. they wanted -- they deliberately increased inventory because they wanted to gain market share over there. clearly that was the wrong decision or wrong timing. a little suspect, i think. i think overall i like what they've done in terms of acquisition and have done a good job in other parts of their business. this takes a pass for a little bit. >> to get more exposure to north america, even though the stock is close to an all-time high now. >> you are really seeing the better trends there, seeing the momentum. and, you know, i think, again, you want to focus on where you're seeing pockets of strength in industrials and that has been a common theme that north america nonres is improving. >> can you talk about swfm? >> what's not to like about this company? they've done such a great job. it's the theme is health, wellness, organic food. they are growing their store base. they are controlling their expenses. i like it a lot. at 31 times earnings, it's a bit rich. we are seeing with starbucks when the high growth stocks have a hiccup, they pull back. wait for the hiccup. there's going to be a hiccup to get a better buy point, i think. >> leon tweets, alpha natural resources, i have watched alpha since it acquired mee. dividends anytime soon? >> i don't think so. i think if you like the call space and you want beta, this is it. i like the acquisition. >> do you want to be in the coal space? >> i think four times priced in. this is one of the best in breed. i think you can nibble. it gives you revenue and cost s synergy buffer. you have to be patient. you have to have a strong stomach. >> before we let you go, you said in the break, you mentioned your charitable trust, that you moved 13% now into cash and that was the highest that you could remember. that was a huge move for you. >> yeah. >> why are you doing that? >> first, we've had a pretty good start to the year in terms of performance so we want to protect our gains. i look at some of the u.s. economic data points and, you know, we know europe is bad. that's not the issue. we know china is getting slow. they probably will ease. but it's the u.s., i think, you are kind of starting to see maybe we've seen the peak numbers. i don't think you will see a collapse, so to speak. >> numbers on growth or earni s earnings? >> well, we've seen big numbers on earnings. and we've also seen in terms of the u.s., the economic data points, we've seen good numbers up until march. march started to tail off. i think it's good to have cash so that we can buy, we can be opportunistic if we get a pullback and add to the position. >> stephanie, great to see you. straight ahead this morning, better than expected revenue for zynga but the stock is down over 4% reversing an after hours gain. analysts were disappointed as they failed to show stronger growth for its facebook games. how you trade it in a few. ermal night-vision goggles, like in a special ops mission? 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[ brian ] there's a bright future here, and there's a chance to get on the ground floor of something big, something that will bring us back. not only this company, but this country. ♪ welcome to hour three of "squawk on the street." here is what's happening so far. >> our data, you know, started programming in the '60s. you would do a prime share with a boeing time share. so he actually started competing in the cloud, and then it went to the desk tomorrow and now it seems to be going back there. >> we're about disruption right now. there's a lot of work to do in the i.t. industry. we're not looking to sell out at all. there's a lot of work to do to shake up the norm. >> and survey says, disappointing 2.2%. we were looking for 2.5%. we need 3.5% but were hoping for 4%. >> sometimes you have to marvel this companies this well run because i have never in my career seen so much money spent and having a payback in the quarter, shocking. what the government wants is a level playing field among amazon, among google, among apple. this is an amazing time to have companies that are dominant in the united states companies. the other customers want a horse race no one wants google to be dominant. no one wants amazon to be dominant. no one wants facebook to be dominant. i mean even zynga, wow, zynga did pretty well. i don't think they want facebook to be dominant. you see coming off the ringing of the opening bell here at the new york stock exchange. it's clear that the so-called street, the people of europe, have sent a message to the politicians that they're tired of us a it territory and that they want more stimulation and more growth. good friday morning. welcome to the third hour of "squawk on the street." a look at our markets looking past a number of opportunities to sell at least. spanish down grade last night. weaker than expected gdp this morning. s&p is up above 1,400. and the nasdaq holding up almost ten points this morning. expedia, the whole online travel sector ride that go wave today. orbitz, priceline and tripadviser. for the second time since october some of these price increases are not sticking. let's get to our road map today. it's been a big week of scandals, as you know in the corner office. chesapeake under fire for those controversial loans. walmart, avon, bristol-myers dealing with some bribery probes. how can companies recover when bosses allegedly behave badly? then spain hit with the downgrade but europe shrugging it off. how it ofx u.s. markets. plus, the internet startup, taking the doctor's office by storm. the ceo is here talking about the business plan and whether he plans on going public soon. and as you probably know, amazon blowing away estimates last night. the online retailer already put huge dents in barnes & noble and best buy. after this quarter who will amazon take out next? that and more coming up in our next hour. we will begin with zynga. they beat expectations, posted a net loss in the first quarter, though, as their costs jumped sharply. that news pushing the shares down almost 4% today, down 34 cents. i want to bring in a zynga panel this morning. the analyst at evercorp partners, mark may at barclays capital. >> good morning. >> what was the hick yum hecup ken, in your view? >> the fact margins came in lower, that cap ex was guided three times what they were before in expansion. most importantly you have a period now between earnings and the expiration of the lockups where it doesn't seem there are as many catalysts. for some investors, they are saying, look, i'll take a wait and see. >> interesting. mark, average billings per user lower, even though they had more mobile users and people still talking about limited barriers to entry, high valuation. how easy or how hard is it to build a bullish case on zynga right now? >> i think the average revenue point that you make is an important one. there's a shift that's happening across the internet and it's particularly impactful for zynga where more and more of their users are actually playing games on their mobile devices and as it stands today these mobile games are monetizing at a half to a third of what their traditional web-based players are monetizing at. that's certainly a problem that not only zynga is facing as the platform shifts but certainly other companies that we cover as well. >> why is it? why is mobile bringing in less mon money? >> these games are not necessarily adapted as well, at least today, to convert users into paying players. also, mobile advertising rates are less on mobile than they are on pc. at least as it stands today. >> that's not good, ken, when the whole world is going mobile. or is it? i don't know. >> from a monetary growth, the users on zynga is largely due to mobile. when you look at the opportunity for them on facebook, that is starting to mature somewhat, and i think the cost of acquiring new users on facebook is going up. fundamentally for us, the concerns we have is they're still facebook reliant. the cost of marketing to acquire new users on facebook is going up and i think the opportunity for them to basically have a platform separate or become multi pla multiplatform on mobile, et cetera, brings with it lower mon at thisization and higher competition. >> is that a problem for others that have been riding the facebook train? once you are hooked, is it going to be hard to didvorce yourself from that? >> we're restricted on talking about the social network that you are referring to, but i think that in general companies can certainly thrive on these closed platforms or open platforms. it's just the way they build their businesses around it. but zynga itself is certainly aggressively an inorganic efforts like relaunching zynga.com attempt to go do their best to build their own platform. >> and last night we took your target, ken -- >> i took it down. >> from eight to seven? >> and really the reason was if you look it at the stock they're paying, about 40% of revenues. they're still guiding for that to be a third of the revenue overall for the year in addition to increasing their capex three times. even though the billings number came in it higher than expected, if you account for defrls, revenues were in line, margins were down and the full-year margin guide was down on a reported basis. >> we know they've been aggressive from the beginning. we'll see where things go from here. gentlemen, thank you both for your time. >> thanks for having me. >> mark and ken. gary comiskey joins us talking junk bonds, muni funds, and some rangers, too. congratulations. what did we say about game seven? what did we say? >> all i know is you said, look, they took -- the bruins are gone. that would have been a concern, right? and so a lot of the things they wanted to happen are happening. >> game seven, even if you're not a hockey fan, we both agreed yesterday, game seven hockey, what a great event. >> yes. it's a friday. i always like to think about the week. and let's think about what we know today that we didn't know a week ago. what we know now for certain despite a couple of bad earnings numbers yesterday, for the most part q1 numbers, earnings, were better than the street had anticipated. and when you look at the gdp number today, we know that the issues about what the u.s. economy is going to look like in terms of growth the rest of the year, those questions are not going to go away. and what we certainly know after wednesday and bernanke is qe is still on the table for more qe when and if the market ever says it needs it. so those are things you did it not know a week ago you definitely know them now. i tell you, i was reading some data this morning, i want to turn my back here, if you take a look, this is interesting. for the week that ended wednesday before bernanke spoke, you had mutual funds saw inflows of $644 million for the week that ended wednesday. which was just a tick higher than the $637 million that was there the week previously and even the muni bond side, the muni bonds saw about $459 million of inflows up from $159 million the week before. what does that say? it says as much as bernanke wants to try to push everybody out of cash into stocks, you know what, a lot of retail investors aren't going to do it. if they decide, i cannot keep that money in the money market account, i can't keep it in a savings account, they're going to find alternative ways to try to deploy that. and you're seeing them in muni funds and junk bond funds. guess what, when you think about what you know today that you didn't know a week ago, that will continue. look for the inflows to continue to increase. >> interesting. i was talking to wopner it down here, going to do "fast money" from the exchange, his point before i came onto the set was post-apple the market is going to be more like ly to give any data, economic, corporates, the benefit of the doubt. do you think that's true? >> you know, i'm going to sort of have to reflect back on exactly what we got out of this week and to think about what is going to be. you're now in that sort of vacuum where you got the data that you wanted, apple earnings, if you wanted apple earnings to be at an upside, surprise, you got it. what we haven't figured out yet, the answer is i don't have an answer to that. i don't know. i'm going to show you some data at 11:30 in terms of where the best performance were in the month of april and that's going to be surprising, it may tell the tale of what you will see in may. >> and you will wear that jersey. >> it will come on later today. >> thank inspector arer f e e r for loning loaning it to us today. >> reporter: there is a huge difference between word and oox, between talk and implementation. you know, americans, a lot of americans like to roll up their shirt sleeves and do a job. you know, yesterday at the national press club, the interior secretary, ken salazar, was being questioned about the current $9 gas price increase and is this something possible that we could see in the u.s. where gas prices are going. you will see that on one side of your screen. on the other side of your screen, me a month ago rolling up my sleeves, not talking about all of the above energy strategy but actually making a vehicle work on both natural gas and gasoline. listen to ken salazar yesterday. >> where it will all end no one knows but what i do know is this. that all of the above energy framework is what we need to stay the course in order for us to be able to avoid the kinds of upheavals that we have seen since the formation of opec, since the gulf war one, two, and so many other events that have transpired since the early 1970s. >> reporter: you know, it's pretty simple. we have to get off the reliance of foreign oil. they don't like us. we have armies. we have young men and women dying to procure our energy. the right side of that screen, we need to create not mono fuel vehicles, bi-fuel vehicles where it can run on natural gas, gasoline, get into multifuel vehicles where you can switch a dial and it's all old it technology. they can make these on the assembly line if they wanted to. do you know what my definition of an interior secretary doing an a-plus job would be? rolling up his shirt sleeves and sitting down with the energy guys, the exxons, all the engineers of ford and gm and sitting down and working it out, all of the above. all of the above. i tried to do something about it. i challenged our interior secretary in the office of land management to do something about it. americans deserve action. back to you. >> rick, you didn't just try to do something, you actually did something on this very program, and i'm sure you're not done. we'll talk to you in a little bit. >> reporter: i'm definitely not done. thanks, carl. a as we speak of scandal between chesapeake, walmart, avon, bristol-myers. no short of corporate controversy. and you know what that means. time for the bosses behave badly segment. still to come -- >> what's up, doc? >> we'll tell you what's up. it's the ceo of zocdoc telling us about the business of making doctor appointments. any type of doc you want and matching your insurance to boot. all that and much more when "squawk on the street" returns. walmart is in the midst of a huge scandal. our michelle caruso cabrera is live. >> reporter: what you see behind me, carl, is the original walton's store, the store that created the huge global empire we know today, sam walton's five and dime. they're having a lot of trouble, more than 1,000 miles here in mexico as you mentioned. the latest is now there is a lot more scrutiny coming from mexico than we saw earlier in the week. if you recall our earlier reports, the stories are barely making the papers but now seven newspapers have run the story on the front page. we're showing some of them to you right now and executives here are waking up to find out there are power separate investigations now under way in mexico as well. and the chief of the government there put out a statement saying we are reviewing store by store everything. there are many different types of permits, used permits, construction permits, licenses. what we are doing is reviewing every authorization that was made during the time period in question in the newspaper article. that, of course, is "the new york times" article from the past weekend where the allegations of bribery were first expose d or first alleged. walmart it continues to say that they are making every effort to look at the nature of the investigation, take the allegations very, very seriously and they've hired a corruption czar now to look at compliance with corrupt foreign practices act. carl, back to you. >> michelle, i know we'll be talking to you very soon. it has been a week filled of drama. chesapeake ceo in the hot seat regarding his pay and the use of company funds. walmart, avon, bristol-myers all dealing with various alleged bribery scandals. bill george is a professor at the harvard business school, former chairman and ceo of medtronic, and jeff simonfeld, associate dean at the yale school of management and a cnbc contributor. gentlemen, happy friday, or not so happy, jeff, as the case may be. first, broadly, what do you think is going on? i mean, the stories i've mentioned, is behavior getting worse or are regulators getting more perceptive? >> regulators are on the ball a little bit more for sure, but these are extraordinary lapses, unexplainable and inexcusable lapses of iconic companies especially, of course, walmart, the most devastating news of the week and maybe one of those stories of the year if it's only $24 million or $30 million of bribery, it doesn't matter. we don't know what else is happening in there and getting into india and china, it's the model that is devastating, invading sacred lands, putting up walmarts right next to these great pyramids and things. it's nonsense. to have one out of five walmarts in the world in mexico, this can't be good for shareholders eith either, driving out other competitors. one had to leave because of this monopolistic behavior. surely not creating more jobs. it's a ruse. it's displacement. what in the world -- violating the practices act, sets a bad model. how can you enforce any rules if they can't model at the time. >> sure. bill, we talked about walmart earlier in the week. this chesapeake story, though, changed yesterday when the board essentially distanced themselves in a way. what's your take on what he did and whether or not the board was there to monitor what he was doing? >> well, i don't know, but i think he is the founder and i think there's a clear conflict of interest here and it strikes me, carl, that he's never made the distinction between owning your own company and being a publicly held company, by the way, with debt now double-a-minus and maybe going down. i think the board acted somewhat late on the issue. it should have been cleaned up a long time ago separating the interest of the corporation from any personal investments of the ceo. i know as ceo i would never invest in anything that came close to any business medtronic was in because i knew it would come back to bite me. >> you don't think that kind of behavior is illustrative of how most ceos behave? >> oh, no. no. i served on any oil and gas company, i would be shocked if i heard that kind of thing was going on. i think it has to do with them being the founder, carl. >> jeff? >> i completely agree and i'm glad, bill, you commented on that. i can't imagine that exxon mobil would operate in this way. they're the leader in this space. i think as this company is running behind the tremendous miracle of energy triumphs that we have, of course, in natural gas, it's perhaps a quarter of our country's supply right now and it's roughly that for the world. but india, you know, it's maybe 7% and china 3%. a lot of opportunity here. this is the first time since 1949 this country he's exported any sort of oil and gas products. that's great news. you don't have to cheat to do 0 it this way. for this ceo to have this reckless personal financial scam and to be backed up by the company this way with warning shots over the bow back years ago to clean this act up, you have to wonder how this founder is getting extra credit, issues of facebook that have come up. >> and then there's avon, right? just yesterday this executive leaving the company in connection with this probe into possible, again, bribery overseas. i guess my question is not just specifically about avon, which is a good story, an interesting story whether or not they can fend off cody, but interested in getting stocks again, is this good in any way? i mean, it seems it would turn people off to business overall but maybe in a strange way it shows that the bad behavior is coming to light. >> well, avon is a complex story. i know andrea junk and the new ceo is not quite clear what's going to happen there and i don't know the back story other than they have a huge investment in china and i understand that's where the investigation is going on of their practices. they've got 6.5 million avon representatives around the world. and so this is a very big and sad story. and i think honestly speaking in this case the ceo stayed too long. she is still chair of the board. with cody breathing down their neck they often sweep in at the time when a company is vulnerable and i think this is a company that is. it's a wait and see right there. but the chairman is a very successful and aggressive business person. >> before you start, let me just say thank you because i want to show the viewers a live picture here. you don't get this very often, guys, the shuttle "enterprise" landing at jfk. of course you might have seen it riding piggyback as it left this morning on its way to new york city but will eventually make its way to the hudson river and the intrepid. just amazing, as someone wrote the other day, american innovation atop american innovation. an orbiter on that on top of a modified 747 safely made its way to the big apple. thank you very much, guys. i'm sure we'll talk to you again soon. a new kind of space race between private investors and right now there seems to be one clear leader in the industry. jane with wells is live in los angeles with that story. good morning, jane. >> reporter: hi, carl. yeah, looking at the space shuttle there. hear how the space business has worked. lockheed or boeing getting paid by nasa to make equipment which nasa owns and operates. nasa pays for services giving the company money up front which allows spacex to build the equipment that spacex owns and operates with certificaservices resell over and over as long as it works. >> we'll see the status of the spacecraft, the status of the rocket, where it is in the world. you'll see thefounder, elon muss being, when they launch supplies to the space station in a test. now musk farthered with $100 million of his own money. nasa has so far handed over $400 million or $500 million on contracts plus up front money from customers. the key to success is reusing the equipment repeatedly, something the space shuttle did not do cost effectively. >> i think we could probably find flight dragon at least ten times. maybe some parts that need to be replaced. but i think the primary heat shield will be able to last something like ten flights. the engines even long er and th avionics 100 flights. the primary structure 1,000 flights. but we first have to convince our customers that they want to fly on a spacecraft that's been retrieved. but i think over time we'll be able to do that. >> reporter: so you have to be a used space capsule salesman? >> yeah. absolutely. >> reporter: to make this work. >> absolutely. if you think of any other mode of transport whether it's planes, trains, automobiles, bicycles, horses, they're all reusable. >> reporter: musk says spacex could go public by the end of next year and there are plenty of people who do not like a private company owning and controlling this space. do you think you have fewer people rooting for your failure this time than you did before? >> well, technically i think we've probably got in absolute numbers more people rooting for our failure but in relatively speaking, i think we have more people rooting for our success. i think the growth of supporters has been greater than the growth of those who oppose us. >> reporter: a slower growth industry -- >> the ratio of lovers to haters has improved. >> reporter: carl, later on "street signs" why he has succeeded where so far richard branson and the google guys have not. back to you. >> talk business but a lot of guys are interested and girls. thank you very much, jane. jane wells out in los angeles. a few minutes left in europe's trading day. we'll get to that close in 3:30 and see what the impact is this afternoon. ts ran across an ad for a hot dog cart. my mother said, "well, maybe we ought to buy this hot dog cart and set it up someplace." so my parents went to bank of america. they met with the branch manager and they said, "look, we've got this little hot dog cart, and it's on a really good corner. let's see if we can buy the property." and the branch manager said, "all right, i will take a chance with the two of you." and we've been loyal to bank of america for the last 71 years. to provide a better benefits package... oahhh! 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[ male announcer ] while others are content to imitate, we'll continue to innovate. the lexus rx. why settle for a copy when you can own the original? see your lexus dealer. wow. it's been quite a 24 hours in europe. the spanish unemployment, the italian auction. simon hobbs will put it into perspective after another crazy week. >> what is really interesting is that european equity markets, carl, have rallied where wal street has not. despite that downgrade from spain because if you didn't know that with 24% unemployment in the second is recession in spain that things were bad there, you didn't really need s&p to tell you. so italian spanish markets, a lot of europe has rallied through in the course of the session and actually if i show you the main components, it's the banks that have done so. let's have a look at where we are. there you go. acs is the big construction company that we need to keep an eye on. >> the european markets are closing now. >> decent solid gains around europe, despite some markets, not all clear ly, despite the fact wal street has been unable to rally. a look at where we are, it's important as carl mentioned, that we talk about the s&p down grade to bbb-plus. they have adequate payment capacity. the thing to watch moving forward as to whether that is true for the sovereign is how they recapitalize the spanish banks. the european central bank and the imf, for what it's worth, are anxious that money comes from outside international money straight into the spanish banks. if that doesn't happen, and it has to go through the spanish state, the government, then the government sovereign comes under greater question. so that's what you have to focus on moving forward. if we look at spanish yields, on the one-month track, you will see that broadly we have gone no are where during the course of that month. we bounce more or less below 6%. that is not true of italy where borrowing costs over the last month have actually been rising, not hugely as you can see, but they have been rising. today italy has an auction, not great timing after the downgrade from spain overnight, but actually they don't need to tap the market at the long end of the market next month or the month after. they are 40% through their funding. so actually now things will quiet down in italy as things go. did anybody mention to you that they have a deal on the budget in the netherlands? i thought not. dutch yields have actually come down, as you can see, as we head into the weekend despite the fact that the dutch prime minister, of course, resigned. so the spanish, the italians, and the dutch, all of those politicians have their feet held to the fire and they are going through with usausterity. let's bring in the video and just check on the second largest economy in the eurozone. by that i mean france which is not as we head one week from the presidential election discussing us a it territory and balancing the budget. these are the final it tv appeals or some of them, at least, as you can see. what sarkozy is trying to do is get the 6.5 million voters that voted for lapenne, who is regarded as a racist, now being fascist by talking about rising immigration controls or the right for police officers to be protected under the law if they happen to shoot suspects. and so we move on now one week from the french presidential election. >> yeah. something we have to look forward to just a few months from now. thank you, simon. have a great weekend. our capital markets editor gary comiskey up next. carl, when you think about the global markets, you think about europe, i'm thinking about what goldman sachs chairman jim o'neill told us on wednesday about the world today. let's take a list en to what he said as a reminder. >> the world is different, particularly people from our generation, the world is not the same as the one in which we grew up in. the countries that are driving the world's growth and not europe, not the u.s., it's what i call the growth market economies of which china and the absolute cornerstone of them. >> now, again, he said that on wednesday. we obviously know what the gdp looks like this morning. larry mcdonald put out a piece this morning. look at the global equity markets. we'll be closing out the month on monday. look at what we see here, shanghai up 7%. the dow is essentially flat. the nikkei down 2.58%. you look at the lower performers, brazil, italy. brazil being one of the brics but look at spain. moving out of these markets that will be the no-growth markets and whether you want to call them emerging markets, the action you saw in shanghai is telling me what we were told on wednesday, you are seeing money move into the markets where you are getting the top line growth. you may not believe the numbers. maybe that growth is not real. that's where the money is moving. >> beginning to see some flows -- i mean, would you call it a reversal or a slowdown of the money that has continued to flow into bonds over time, gary? >> you know, i think when we talked about at the top of the hour, carl, you are still seeing a lot of money moving with the bonds. you see money move into certain equity markets but i don't think it's coming out of bonds or cash. it's coming out of other equity markets. that's what you're seeing. >> interesting. all on one side of the bar bell. bob pisani joins us here. >> we are 30 points on the dow away from a four-year high with a lousy, frankly, let's call it that, gdp number. that's a big, big dividing line. and the bears have got a lot more ammunition right now. but you would neve know that. our markets, 5-4, advancing to declining stocks. here is the dow industrials and the number, of course, 13,264. we get above that, that's a new closing high. so 30 points away. it is rather strange because qe3 is very much back. if you look at groups that are down today, guess what, once again the financials can't do anything. put up the financials. all the big names are down again. ever since earnings came out, they have no traction. most people feel they are fairly valued at this point. if you get a flat yield curve which you get for a long time now potentially, that is not helpful to financials at all and that's what you are seeing today. the only thing that makes me more optimistic, we are seeing a little bit of stock picking show up. real estate is hot again, my friends. guess who is at new highs? home builders are at new multiyear highs today. did you see that article, carl? "wall street journal." bidding wars. when was the last time you heard that? my wife has been a real estate agent for 26 years. she's seen that as well. these are all new highs. and these guys are taking more market share away from nonpublicly traded home builders. take a look at some other numbers going on here. i want to show you new highs. stick reports from simon property, high quality malls, who would have thought retail is doing very well. bottom line, it's simple. rents are rising in the highest quality malls and they're able to hold on to the major tenants. let me just move on and talk about the rally. apartments are strong. malls are strong. there's a little bit of a recovery in hotels. we saw that from star wood the other day. suburban office malls, that's the big challenge. we're not seeing much recovery there. still, three out of four ain't bad. final finally some comments from gary about how we're doing on the global stock markets. notice once again, and i don't talk about, you know, bifurcations because i get hate mail but, again, the united states is outperforming the rest of the world this week. china just cannot get anything going. it's been a terrible year for china. we're doing better. >> yes. >> we're doing better than the rest of the world. >> yes, we are. haven't had a down april since '05. >> that's right. >> and it looks like this one may be positive, too. thanks, bob. rick santelli is in chicago. again, rick. >> reporter: not only do we have one great guest, we have two. we have peter schiff with us as well, famous author. we had a gdp number this morning and, believe me, it was less than expected. it was weak. some parts made it weak like less government spending which i personally think is a good thing. defense spending down dramatically, took away. the bright spot was consumption. peter schiff, give me your weigh-in on the consumption side of this number. >> i think that consumption is the dark part of it because we're borrowing all of that money to consume which means we're getting poorer not richer. our debt is growing faster than our gdp. we need less consumption and more production, that's not what we're getting. plus, of course, i think the government is understating inflation. the deflator is not large enough so it makes inflation look like growth so i don't believe these numbers at all. >> reporter: so you are saying by keeping inflation low, the other side of that equation is it dramatically makes growth look bigger than it is. >> if they are underestimating, we have no growth at all and i don't even think it's growth. borrowing money and spending it is borrowing from the future to indulge the present. but what happens when you have to pay that money back with interest? >> reporter: today we learned the japanese more quantitative easing. i look at the yen. it's doing pretty well. the pound, they're two quarters in the red. they're in recession. the pound is not doing bad. look at this 20-year chart of the dollar index. we're off that about by a bit. is this a positive? is that a positive on the dollar? >> no. ours confounded many people especially this week. we had the australian dollar under pressure. bad news and yet they've all resurrected themselves on a weekly basis and resumed finding strength. as you point out, last night they hit the $10 trillion and yet the end still stronger. there are things afoot and we haven't gotten to the metals yet. >> reporter: mr. schiff? >> i think the dollar index has broken down the last two weeks despite the fact you have a lot of negative headlines out of europe. and look at gold. we've had new 52-week lows in a lot of gold stocks but not the metal itself is. it has been breaking out the last couple of weeks. we can have a big move up in gold and i think people who are selling the gold stocks down here are making a big mistake. i think there is incredible value. >> reporter: listen, real quick, one sentence, what is something concrete we can do to make a positive difference beyond all the politics and blah, blah, blah? >> vote for ron paul. >> reporter: ira? >> i'm an apolitical guy. >> reporter: no, this isn't about politics. my answer would be more natural gas, a huge boone in jobs. >> when you really go back to it, natural gas has saved the obama presidency. whatever the pump has taken away, the heating pills have given back to consumers in a big way. and so whatever growth, why they belittle it, natural gas has been phenomenal. >> reporter: you heard it here fir first. we're at the tipping point. natural gas is going to permeate all the energy needs in our life down the road and i don't think there's a force to stop it. domestic fuel, we love domestic fuel. bring the boys home. back to you. >> made in the usa. thanks, guys. have a great weekend. rick santelli in chicago. straight ahead, amazon has made barnes & noble and even best buy obsolete. we will tell you who the online retailer can take out next. but first some of the winners and losers overseas. 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[ male announcer ] the united mileageplus explorer card. get it and you're in. welcome back. investing in a 2% economy. yield or growth? a list of names you can buy now. plus, can anything stop amazon after its blow-out quarter? and trading the auto names after a first on cnbc interview with ford's ceo allen ma laly. shares up more than 14% helped by strong demand for kindle. a big threat to barnes & noble and best buy with but who else could amazon take down? dennis berman is the marketplace editor of "the wall street journal" joins us from new york. this is like watching godzilla go through the landscape because he could take out anything by blowing fire on something is. walk me through the business of eyeglasses as a possibility. >> i love the analogy. it certainly makes sense. what's happening right now at amazon, basically destroying retail and retail conventions up and down the supply chain across each industry. you mentioned eyeglasses, carl. there's a company that's valued roughly at $100 million or more just like amazon, bought zappos for shoes. it seems they will get into more and more specialized categories so perhaps amazon buys a warby parker and deeper into eyeglasses. >> we haven't talked the words b to b in a while. >> look what amazon announced. they said they were going to get into more supply and distribution, things that can companies buy, that builders buy. and that puts direct pressure on companies like ww granger. granger has a big market cap and they do very well. but i'm very concerned if i'm granger looking at how amazon is able to not just build a relationship with the customer but build a better supply chain where products are delivered faster at a better price. >> so do you think this means m&a, organic growth, how much can they do on their own? how much do they need to buy? >> they can buy anything they want right now. what to me is the most fascinating sort of development in retail right now is it how amazon is putting pressure across industries, and this is what i mean, carl. marginal people, marginal retail players in any given industry, are being forced out because of the price pressure that amazon is putting on that category. so take jewelry, for instance. is tiffany going away? tiffany is not going away. are some of the more marginal jew jewellers going away because pressure from amazon and other e-tailers is pushing them? you bet. basically elimination of 10%, 15%, 20% of the retailers we know with much flowing up to amazon and residual power going to only the best in class names in each category. >> and even those guys may be forced to partner with them, you think, in some way or potentially make a product only available through them, right? >> this is the most profitable business for amazon. they are collecting a toll for a third party that sells through amazon, roughly 10% or so. and as amazon gets more power, you almost can't not deal with them, right? so you can't not strike a deal with godzilla, carl, because you can make peace with godzilla or he will come burn down your village and that really is the threat. and so you can see over time companies that are really on the defensive back foot having to cut special deals, hey, a special product via kohl's or target. they've had a tortured history in the past. so you can't not deal with them or you probably face being krushld. >> although having covered m&a for so long you know more than anyone shorts especially in this name are looking at a valuation that you could argue looks stretched, right? >> $100 billion? what are you talking about? that was pretty incredible, carl. the profit margins at amazon, still roughly 1.5%, okay, that's just not very much to work with. they are in the volume game. so i think the valuation on a current p/e ratio is something like 100/80. what's amazing is like apple, amazon is a growth stock in the body of a big cap. and if we see growth retreat we will see a similar down turn in the stock. they are on that fine edge of growth and punishment. >> yes. pretty amazing chart to look at as we're talking to you. >> it's amazing, yeah. >> have a great weekend. >> great to see you. when we come back the company bringing doctors appointments to your pc, zocdoc is here for an exclusive interview. finding a good doctor quickly is always a difficult trick. one can company is taking the pain out of that process. zocdoc allows patients to find doctors and make appointments online. the company launched in detroit making it the 17th market to offer their services. and joining us this morning the ceo of zocdoc with full disclosure before i even knew about the company, used myself trying to find an orthopedist. you, yourself, got the idea after a ruptured ear drum, right? >> correct. i was on a flight across the country. i ruptured my ear drum, need ed to find a doctor. went to my insurance company website and took me four days to get an appointment. i thought there had to be a better way. we're doing our grocery shopping online, our reservations on restaurants or travel online. and health care when you need it is one of the most important things in your life. so we thought zocdoc would give you access when you need it. >> you knew how business models were created and generated. how has this gone relative to your expectations? >> it's gone great. the company was founded in the beginnings of the financial crisis, so we spent 2 1/2 years at a time when people thought startups would never be able to raise outside capital again and it enabled us to focus on building a great business in one city and we focused on new york for the first two and a half years and the last two years has been about a nationwide rollout, covering 17 markets right now. we have a new market launch next week. so we're really hoping to take zocdoc nationwide by next year. >> and you mentioned raising capital and making announcements. could we expect something on that front in the next year or two? >> well, you know, we recently a few months back raised $75 million and right now we're focusing on the nationwide expansion. we really don't want to get diverted from that at all. so it's great to have the capital and the great investors behind us to make that a reality. >> there are good symbols available at the big board. just letting you know this. look, we're in an economy where a big part of the growth engine is silicon valley. >> yeah. >> and i'm wondering if you feel that, if you think we are in the second, third, ninth inning of that as facebook plans to come this summer. >> i think a lot of the companies going public now are companies that have substantial revenue, business models that are vetted and they have significant scale. so i think there's a lot of great opportunities for businesses that haven't even been founded yet. i don't think it's the ninth inning by any means. there are so many -- every day i hear of another great company i think is going to be the next great thing. a lot of opportunity in my opinion. >> that said, and i don't mean to bring up specific names, but a groupon, is it an area where they knew they had to get big. it clearly is not the answer to all of their problems. >> yeah. >> so is your plan to get big fast or to manage your growth along the way, keep expenses low and hope for the best? >> well, obviously when you have a model that works you want to do it as quickly as possible because the modern day of the internet has suggested as soon as you figure something out there's lots of people, smart people, well capitalized people who can take your model and do that in as many places as be possible. i think our business succeeded because of the fact that we -- that wasn't the case four years ago. that wasn't the case in 2008 in the heart of the financial crisis. but right now there is a bit of entrepreneurs out there. i think the statistic now for business schools is 20% of people who are graduating from business school actually want to become a entrepreneur. >> right. >> and so there's a lot of talented people, a lot of sophisticated investors. so if you have something that works, you need to make sure that you do that. at the same time i think one of the things that's really important for me as a entrepreneur who wants to run and guide this business for the rest of my natural life, it's very important we do have players and find great people regardless of economic situation, something that's really hard and so we spent a lot of time recruiting, my entire management team spends time looking for great people. it's hard to find as many as you need. >> i have a feeling we've not heard the last of you, cyrus. i hope you come back. >> thank you. >> whether you're private or public at the time. keep those tweets coming this morning. we're going to talk some starbucks today, asking to you complete this sentence. memo to howard schultz, the only place that still needs a starbucks is blank because blank. send us your ideas at cnbc and we'll get them on. [ scott ] i grew up playing with little toy trains and now i build them. i am a bigger is better kind of guy. i absolutely love building locomotives. i knew i wanted to design locomotives from when i was very young. [ jahmil ] from the outside it looks like such a simple device. when you actually get down into the bare bones of it, there's so much technology that's submerged. [ rob ] my welds are a signature, i could tell my welds apart from anybody's. you lay down that nice bead and you look at it, i love it. they don't go together by themselves. there are a lot of little parts, and everyone has their job. [ scott ] i'd love to see it out there on the open tracks. and when i see it, i'm gonna know that i helped build that thing. [ train whistle blows ] here she comes! [ bell clanging ] [ train whistle blows ] wow! [ charlie ] well, it's one thing seeing them built, but then to see them out here, pulling freight across america, it makes us proud. ♪ let's get the squawk on the tweet. starbucks says it will generate new store growth to about 1,000 net new stores. so we're asking you to complete this sentence. memo to ceo howard schultz, the only place that still needs a starbucks is blank because blank. the only places that need a starbucks are subway stations because we deserve $5 coffee while we wait for delayed trains. drew writes the only place that still needs a starbucks, the gingrich campaign headquarters so they won't be the only ones selling something so bitter. and joe writes your local landfill because home roasted green beans is the only way to get fresh coffee. rick, let's get a takeaway for this friday. >> reporter: the takeaway is it's very hard to look at the greenback, the dollar, and really ascertain, you know, is it worth more? is it worth less? today we look at countries like japan and the uk, the latter in recession. the former has had decades of problems. both currencies are doing better against the greenback. very difficult when you're b benchmarking yourself against other weak currencies. >> all right, rick. and finally, gary, big week all around. your thoughts as we close it out. >> the internals aren't that bad. 124 stocks making new highs.

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