Transcripts For CNBC Squawk On The Street 20120517

the year. investors widely anticipating a down gragrade of spanish banks. >> walmart earnings, same store sale, guidance sole wlid. is t solid. will the walmex scan dedal be material to earnings. >> insiders upping the amount of shares on facebook they're unloading tomorrow. is this a sign to stay away. >> fresh numbers out of spain confirm that country is in recessions as reports say bankia has lost a billion in deposits this week. >> and jpmorgan's bad trade reportedly it getting worse according to the "new york time times". how does the bank unwind its position? walmart posting first quarter profits of $1.09 a share. same store sales rising helped by warm weather and an earlier easter. so its conference call, mike duke addressed the mexican bribery scan dell. allegations from last month saying we take compliance with the practices act very seriously and continue to strengthen our and itity corruption programs around the world. the investigation is ongoing and we're working aggressively to determine what happened and we will take appropriate action if violations of the law or our policies occurred. the bottom line is he says it won't be material to earnings. so should we discount this as a factor for stock? >> i think the answer is you have to. this is a left of conviction that smacks of they know more than we do about where this investigation is. i think they'll say it's old. this this number is a sign that the u.s. is gaining traction. the pull here is that it europe is losing traction. 100 million people go walmart. >> and a lot of discussion about they've been underperforming, but maybe that margin is getting narrower. >> at least at this corner it certainly did. it may not seem like much, but a strong number. especially stories look pretty good. i had a chance to talk briefly to david berman, he liked the numbers, as well. their cash position is the sale. overall seems to be a quarter it that will be rewarded by investor, but still with the overhang of the foreign corrupt practices act. and to your point, you simply don't know where investigations like it that are going to go. walmart may tell you one thing, but you got to remember the doj on the other side. >> the risk is not political. a lot of people might think it is. but if you want to make a stand against a company that it's perceived as being anti-labor, you bring a powerful lawsuit on the eve of the election. >> one of my favorite tweets, josh brown writes, in jest, walmart will not violate the 1999 federal law that says its stock must trade between 50 and 60. >> splay been an amendment. constitutional amendments do pass. there is something interesting that's happening. i love dollar tree, but could walmart finally be waking up to the dollar offerings and recognize they have to shore up their bottom end? i think that it wall mars has been losing share to dollar stores. they may have changed the skews. this is a company that duke has done a good job. he's done take good job. >> the turn around in same store sales is proof in the putting of that. and they cite increasing pricing separation from other retailers and it that may speak to the point that it is pricing better to some of the dollar tree stores gaining in general merchandise and some of the grocery items that it had struggled with for so long. >> they changed their mix. they've gone much more toward natural foods. but sears had great numbers. >> gentlemen. making jcp -- you pulled out the long nines on jcp. >> the night of the long nines. some were asking is ron johnson dreaming. the ceo. is he dreaming. with a since that they're 29% around the turn. i often found when you use that level of specificity, it is faux and it does not make me feel better that they're 29% turned around, it not 30%. >> he showed it no humility and you said this company is in big trouble. >> we heard a lot about it yesterday. i think you have to give him always moa little more time. and there is also a new trend, if you will, of going nongaap again and having a lot of charges that are gaap charges and everybody pointing to nongaap. and i think they want to give us nongaap guidance. something for investors to keep an eye on. we all know something is a charge that really is not part of your ordinary business when in fact it would seem to be. >> and do you know who is giving you gaap? >> who. >> gap! >> next week, the special on j crew. >> never it too early to start promoting. we'll see if we can get mr. drexel to come on our show, as well. >> do we have a clue in jeopardy that is also involved in the crew special? >> yes, we do. there was an answer of somebody who will be on the j crew special that i got right luckily. sunglasses is a hint. on sears, the stock will be up this morning most likely. very tight float. we all know that. let's not get overly excited here. they're still talking about comp store sale declines. still haven't got it going the right way. >> they're spinning off canada. and that was the weak spot. they had a huge decline of 6.3%. >> canada was in additionally one of things that eddie lambert felt was a huge percentage of the company. i saw -- here's a shocker, apparel good. apparel for sears. may i just say it that you'd want to be able to give johnson the benefit of the doubt. 90 days not a lot of time, but 90% same store sales decline is hard to buck. sears only a percent or two. >> mean time facebook's ipo slated to be priced after the market closed today. if at the top of the range, valuation $104 billion. filing yesterday reveal that had insiders and early facebook investors were selling more of their stock in the offering. and goldman, tiger, peter, more than doubling the amount they want to sell. red flag or not? >> of those peter teal worries me. when he decides he wants to up his selling, i think that means you don't want to buy the other side. obviously because of the frenzy that we're getting. can i just say that you're all on twitter. here he's the big issue. people are saying you said not to it buy facebook, now you're saying buy. they don't understand that it if you get in on the deal, it's a lower price than you might get it in the after market. isn't that frightening? that's reminiscommend reminisce 19 the 9 9. >> and pinterest now values at infinity times revenue. >> the numbers are pretty stark for what happens if you buy in the arreftermarket. you've lost a lot of money in the social media numbers. >> linkinkedin has done okay. >> and it's the most similar. if they trade at 50, it is still dramatically cheaper on the outgear numbers than linkedin. >> your point is it's more of a linkedin. >> yes. and if they solve -- there's millennial media came out that said there's mobile ads that are going to be great. i think the trick here is can facebook transition from a desktop to mobile and whether people will click on those ads. >> i feel like in all the conversations we had about facebook over the past couple of weeks, enthusiasm overall on the deal has not been dampered by every revolution that for any other issue would have dampered our enthusiasm. to say it's not work and good-bye, we'll take our money elsewhere, for facebook to come out, amend its s-1 and say they're not monetizing because they didn't anticipate the shift, the increase in mobile users, that's frightening. and the fabt that insict inside doubling the stake, that's frightening, too. groupon, zynga, very, very small amounts of shares sold by insiders. >> we have to differentiate in the fact that it's facebook. it has 900 million years auserse largest tech epo ever by far. may challenge visa of all time. >> june quarter on apple is usually weak. there's a host of other reasons for apple. >> it if you're talking $13 billion, $14 billion, it has to come from somewhere. >> in theory you wouldn't necessarily -- i don't know. >> it's an idea. i don't know if it's happening in practice. but linkedin -- facebook is as we know -- >> 15% of the world's population. >> let's say apple's ipo way back when, i'm not sure how many insiders sold, but do you think looking back, let's say somebody did sell that they would say i wish i had held on to those shares? >> and then you're facing almost bankruptcy, so who knows. there was no internet when apple went public. >> steve and i were good buddies and steve was more inclined to it buy than sell. bill gates more inclined to it buy than sell. i don't hear a lot of bif buyer this deal. >> and jeremy siegel on "squawk box" said he had done a fair amount of research in what it's like buying ipos in general. here's his report card. >> unfortunately, the research i've done is long term holdings of ipos is not a good investment. very much like a lottery ticket. one or two big winners, hundreds of losers. >> today at 1:00 eastern time, cnbc will go inside facebook literally. we'll see how the company makes money, if you should invest and find out just how much money everyone involved is going to make. today 1:00 p.m., facebook, the social offering right here on cnbc. >> let's talk jpmorgan. massive trading loss has jumped by 50% in recent days. jamie dimon has said that loss could double within a few quarters, but the "time" says the time frame has been accelerated by the action of hedge funds and other investors. that just goes to show you how efficient the market is. >> when there's blood it in the water, every shark knows you make your quarter betting against daimon. >> and he said that on the initial call a week ago, it could get worse. by the way, solely "new york times" reporting it. so let's make that clear. i don't know exactly what the parameters are. and i've talked to any number of people trying to understand it fully what the trade is. i'm not sure that's possible either completely. i'm sure jamie now understands the trade and every other guy over there. but it he did say it would conceivably get worse and as you said, they know they're at a disadvantage. how long can they hold on and potentially keep this trade on to any extent without just taking the losses is a question. >> but the loss itself even if it doubled again, we have to put it in context, it this a fortress balance sheet. i'm only doing this this to offset. it. >> even its quarterly number. 4 billion wim paould impact ear. >> but not as much as the market cap. the >> we were worried at 37 last week. 35. is the story much different? >> i think that it would be if spain were it going to have fortress balance sheets for its banks. >> we got to it talk about before we go to break spain, we have to talk about europe here because morgan stanley back to $13.50. continued worries about moody's downgrades of our bank, but even more so what's going to happen over there and this this idea of bank runs. suddenly it's coming to the fore. i sat here on monday and we said aren't the greeks ready, are we ready for a greek exit. it no, we're not. i've had enough conversations now to realize that deposit wise, deposit insurance scheme that you would need to prevent bank runs is not in lays. the firewall, not in place. and the likelihood of a greek commit is going exit is going up and the next 30 days are very important. greece is not of a vital importance, but it's spanish bank runs, italian bank runs, you have to keep an eye on that. >> so has the real crisis begun? >> yes. 135 spanish banks are trading the way greek it banks traded. they have to up with something that says here's the plan if you get drachmas why you should keep then in the bank. and i can't come up with something. >> bankia down 11%. and they don't halt trades just based on moves like here in the united states. they halt trades when there's inside information that certain markets have and others don't. so the decline could continue. and in terms of sentiment, seeing 11% declines after 11% declines or even more, that's not good. >> lord knows what they'll go out at. >> it if it's not bad enough, the stripperses at crazy horse in paris are on strike because the wamg wages are so bad. saw that this morning. >> strippers at -- >> on the ground reporting maybe. >> exactly. when we come back, we'll find out from one technology fund manager why facebook accounts were 12% of his more l. a route map shows you where we go. but not how we get there. because in this business, there are no straight lines. only the twists and turns of an unpredictable industry. so the eighty-thousand employees at delta... must anticipate the unexpected. and never let the rules overrule common sense. this is how we tame the unwieldiness of air travel, until it's not just lines you see... it's the world. the teacher that comes to mind for me is my high school math teacher, dr. gilmore. i mean he could teach. he was there for us, even if we needed him in college. you could call him, you had his phone number. he was just focused on making sure we were gonna be successful. he would never give up on any of us. breaking news on facebook. amended filings before the bell. a source telling cnbc the current price range is final and there will be no amendments today. now, what that means is that the current price range of $34 to $38 a share is what the company and its underwriters will be working with going into today's pricing call. but under sec regulation, facebook can still price up to 20% above it that range meaning that $45 here represents an absolute maximum. i'm hearing investors saying they've been sounded out around $39 a share. oftentimes if an issuer is assessing whether to go above the current range, they'll float that idea to investors it first. it happened in blackstone and zynga, but those deals priced at the existing ranges. more details will come throughout the day. back to "squawk on the street." >> thank you very much. jim, if it you were a betting man, would you say $45 is where it it prices tonight, which is the maximum? >> they have to. there's just way too much demand. very reminiscent 1999. a lot of people will get hurt on facebook tonight. a lot before. >> some made the comparison between facebook and aol time warner. only 20 million years, not 900. >> the sins of the fathers. but we have to understand that there is a real frenzy among people who know nothing about the stock market. >> a lot of people still want in december fight warning signs. >> if you want to get in simply because it has such a big market capitalization, maybe you'll get your allocation, maybe a third of it, those are people who will have a great basis it at the end of the day. >> got to take a break. when it comes to investing, cramer has been your friend long before there was a facebook. his mad dash straight ahead. ♪ ♪ i can do anything ♪ i can do anything today ♪ i can go anywhere ♪ i can go anywhere today ♪ la la la la la la la [ male announcer ] dow solutions help millions of people by helping to make gluten free bread that doesn't taste gluten free. together, the elements of science and the human element can solve anything. solutionism. the new optimism. tdd# 1-800-345-2550 the spx is on my radar. tdd# 1-800-345-2550 we're hitting new highs. tdd# 1-800-345-2550 and i'm on top of it all with charles schwab. tdd# 1-800-345-2550 tdd# 1-800-345-2550 i use streetsmart edge and its tools like... tdd# 1-800-345-2550 screener plus - i can custom build my own screens tdd# 1-800-345-2550 or use predefined ones. tdd# 1-800-345-2550 and i can trade wherever i want, tdd# 1-800-345-2550 whenever i want. tdd# 1-800-345-2550 the kicker? tdd# 1-800-345-2550 i pay $8.95 a trade. tdd# 1-800-345-2550 that's a deal in any language. tdd# 1-800-345-2550 open an account tdd# 1-800-345-2550 and trade up to 6 months tdd# 1-800-345-2550 commission-free. tdd# 1-800-345-2550 call 1-800-790-7706. we get to the mad dash. facebook. we'll start with a couple stocks. google. >> looks really good versus facebook. they make more money per user. people starting to recognize it if you really like facebook, you should love google and that's bringing a lot of money in. you would think that would go down to raise capital. no. nice move here. >> we talked a bit about sears comps. what's your view on the stock? >> i think that the short squeeze in sears will be horrific. because it this is a case where a few months ago, we were debating liquidity. do we have enough money to do business. when i see numbers like i'm seeing, the closings that we did were smart. >> up almost 10%. great market. melissa. >> all the action straight ahead with the opening bell. stay tuned. it it but proven technologies allow natural gas producers to supply affordable, cleaner energy, while protecting our environment. across america, these technologies protect air - by monitoring air quality and reducing emissions... ...protect water - through conservation and self-contained recycling systems... ... and protect land - by reducing our footprint and respecting wildlife. america's natural gas... domestic, abundant, clean energy to power our lives... that's smarter power today. in every way, shape, and form. it's my dream vehicle. on a day to day basis, i am not using gas. my round trip is approximately 40 miles to work. head on home, stop at the grocery store, whatever else that i need to do -- still don't have to use gas. i'm never at the gas station unless i want some coffee. it's the best thing ever. as a matter of fact, i'm taking my savings so that i can go to hawaii. ♪ take the privileged investing tools of wall street and make them simple, intuitive, and available to all. distill all that data. make information instinctual, visual. introducing trade architect, td ameritrade's empowering web-based trading platform. take control of your portfolio today. trade commission-free for 60 days, and we'll throw in up to $600 when you open an account. how do you get a smile on james bonds it face? let him ring the opening bell. james connery here. very proud scotts man and looks genuinely thrilled to be here. >> one of my heros. >> i love that. looks great. >> fantastic. >> i don't think we'll get to talk to him, but just having him in the building is a thrill it for everyone. trust me. over at the nasdaq, tel aviv stock exchange hosting anen investigati in investor conference. >> dell. >> they have a tremendous government business and europe business. >> they do say the fundamentals remain tough. apple at the high end. some signs of pc business may be stabilizing. they say guidance for the coming quarter may be a bit muted. >> michael dell has been muted. he's not out it there promoting. >> so maybe there's a reason for the recent yuunderperformance i the shares. >> gtech has not been anything o write home about here. >> speaking of tech, apple got a lot of comments. daid david einhorn looks apple. didn't necessarily indicate his positions in apple. but then we also had jeff dunlop who is short apple and says people aren't going to line up for iphone 87. >> i don't know that picking stocks is his strong suit, but he did say to short bank of america shares. a great call. that was over a year ago. we'll see. he's been on our show talking about it. some of his reasons are technical. he's always thinking differently about things. i'm sure there are many who would dispute his take on the iphone. >> i want to go back to what was said about einhorn. he did say the multiple is too low. knock knocked herbal life down and the stock jumps 15%. >> i want to ask you about it that. all of you for that matter. he gets on the conference call. he asks a couple of questions which the company says are rudimentary questions to be asked. the stock just plummets 20% or something. we don't know what his positions it in or out are. he does not mention it, it's a positive, so therefore the stock is higher today. you have to wonder, i don't know, there's whole trade to be made just around him getting on a conference call and asking a couple questions. >> we've seen this happen at various times where we so worship at the altar managers. it has it not been a long term bet to make. go all the way back. you knew if it they were going to be negative, you you had to short the market. i don't like these kinds of things. i think of world of einhorn, but i don't even think einhorn likes it. >> yesterday some of the biggest loser were in retail. today anf of a sister yesterday's action downgraded on wells fargo. >> limited gives you bad outlook. not even down. walmart biggest in show doing well. obviously jcpenney is the elephant in the room. i like what's happening at sears. retail overall gap stores upgraded, very strong because it's domestic and domestic is still good. i know people at home are saying you guys make too much, you kept me out of walmart. i think that the intersection is industrials, technology and financials. >> yesterday on fast money, we had larry king on talking about his new internet tv venture and he said to us i have a question for you, you know, i like graham crackers. i eat them here. but why is what's going on in greece preventing me from buying the company that makes graham crackers? >> he has a good pint. actual cardboard could go down uses natural gas to do it in bulk. and finally getting it to the stores. diesel coming down. so he's right. >> but greece is the problem. >> so you buy what larry king is thinking. >> we're talking to a day where a juggernaut in american business is going public while banks in greece and even spain are seeing actual runs on the bank. the dichotomy is stunning. >> and i think this is what worries me. you have a lot of people coming in and saying i don't know that i like graham crackers, but i like facebook not realizing that there's a lot of sophisticated players in facebook so worried about spain and greece this they want to sell. sellers are motivated by a huge profit. but also motivated by the absolute worries around the world. >> sean connery is here to celebrate the 600th anniversary of -- >> oh, doreen, we'll talk to her about that. >> look at her smile. haven't seen her smile like that in a long time. >> he really is being generous with his time. sometimes they're in and out of here quickly. >> i got to meet him when he was at the -- geez, he came to harvard. and i got to shake his hand. and there it are very few people in the world that you want to meet and really be proud to have met them and he's one of them. >> look at david faber. wow. >> we're not doing an interview. 600 years of saint andrews. congratulations. >> mr. connery actually narrates a documentary. >> the girls want to say hello. come on in and say high. >> bob pi ssani is having a bal. >> we'll keep an eye on ser sean as he makes his way through the floor. but lucky for pisani and david to get a chance to shake some hands. >> it this is better than an interview. >> we'll do an interview with carl imitating him. >> david, bob, recovered yet? >> i'm a little shaken. not stirred. >> there you go. >> not only the women want to say hello to sean connery. all the men do, too. sellek her. the hunky men. >> how about spain. >> it's getting serious. i think the whole krd about whether there is such a thing as contagion is over. contagion has won. they're clearly enter linked. they're hitting multi-decade lows. it if you look at some of the big banks up today, unicredit, commerzbank, they're at multidecade lows. and there it's obviously a problem now where the ecb will have to step it in. >> saying the ecb will step in, but it's not just a discussion going on with my friend karl bass and a lot of people at the barefoot economic summit in 2010. not even last year in terms of how do you ring fence the deposit base in europe to prevent bank runs when greece has to exit. >> the ecb has to step in and provide fully liquidity. it's that simple. merkel will have to write a much bigger check. >> can merkel even survive? >> the answer is the christian socialists are now aligning with the french and saying we're going to get growth initiative, spending more money and try to force them to it write a bigger check. austerity is under attack, absolutely. soo we don't know whether the greece can form a government or not is key. >> but more important, the contagion debate is over. there is contagion. banks are enter linked all of them and they'll have to write a much bigger check. that's a simple fact. here it in the u.s., we are not unaffected by this. we're in correction territory in a number of major sectors. so if you look at materials for example, energies, financials, they're all down more than 10% from their recent highs that they hit this year. and it's not like this is happening in one fell swoop. wire having every day down 30, 40 points. it's death by a,000 cuts and slowly but surely it in may, we've been slide to go the point where now you have 13% decline in energy, 12% decline in materials it in it the last couple months. now it's starting to get noticeable. even the tech business which had been a market leader until going into may is also on the verge of being down 10%. so i think that's important. it's almost never been a bigger difference and/or a higher yield given where rates are. >> yielding 1.59%. the s&p 500. and the ten year yields 1.8%. by the way, happy birthday to the nysc. >> want it go back to hq. steve liesman has some news for us. >> david, thanks very much. the new york fed has delayed the sale of a maiden lane three cdo. the fell hd had been selling of those assets that it got when it bailed out aig. and they've delayed the sale of two particular, $1.7 billions if bonds. a source selling cnbc that new information has come to light about these cdos and delaying, not canceling, the sale because it wants to it give investors a time to analyze and digest it this information. it this sale will be rescheduled. shares are down. decline seems to be connected with this aig, obviously has an interested in this maiden lane portfolio, and it's unclear as to whether or not the selloff is because the thinking is the value it might get from the maiden lane three portfolio are down, or if whether or not aig may take an interest in this. it had expressed some interest in purchasing some of these cdos. but the fed apparently will reschedule the sale whether or not the new information would reduce the value sun clear. jimmy. >> okay. thank you very much. yeah, they have to print money in europe. got to shift money to bonds. >> i don't think i've ever seen so many people in chicago staring at that jumbotron. they love sean connery. listen, one thing they continue to love, treasuries. one thing they don't continue to love as much is spanish yields and spanish paper. as you look at it that chart of three year notes in spain, they auctioned off about 2 1/2 billion euros worth. a little over $3 billion worth. and they paid 85 basis points more than just two weeks ago. if you are don't get your fiscal house it in order, the price of poker goes up and that's pretty clear to see just by looking into the marketplace. it's unreal. we're thousand 11 waives points, flirting with yields we haven't seen since fall. shaken not stirred back to you. >> let's go to sharon epperson. >> in the gold market, we've seen gold prices fall about 130 bucks just in the month of may. and now we're seeing a little bet of a bounce here. a little bit of a consolidation after gold prices hit that that very key technical level just about 1525 an ounce for the low yesterday. keep in mind, though, the problems have not changed as bob and david were outlining and traders continue to watch them, but this is more of a technical bounce traders say for the gold market. oil priced action also very interesting. the spread particularly twenty brent crude and wti crude futures. we did get reports yesterday that president obama will be asking the g-8 nations to consider a coordinated strategic release of the -- from the spr if needed due to the iranian embargo. so if that happen, that can continue to pressure prices. also the reversal of the key pipeline to the gulf coast. another reason we've seen the spread fall by about $4. more updates on twitter. back to you. coming up, tech one manager making a big bet on facebook. the social networking giant makes up 12% of his portfolio. take a look at this morning's early movers on this thursday's session. being led off by sears holding better than expected earnings here. [ male announcer ] the inspiring story of how a shipping giant can befriend a forest may seem like the stuff of fairy tales. but if you take away the faces on the trees... take away the pixie dust. take away the singing animals, and the storybook narrator... [ man ] you're left with more electric trucks. more recycled shipping materials... and a growing number of lower emissions planes... which still makes for a pretty enchanted tale. ♪ la la la [ man ] whoops, forgot one... [ male announcer ] sustainable solutions. fedex. soons that matter. and people. and the planes can seem the same so, it comes down to the people. because, bad weather the price of oil those are every airlines reality. and solutions won't come from 500 tons of metal and a paint job. they'll come from people. delta people. who made us one of the biggest airlines in the world. and then decided that wasn't enough. when we launched, we were hoping for maybe 400, 500 people. har vrd didn't have a facebook, so that's the gap we were trying to it fill. and now we're at 100,000 people. so who knows where we're going next. >> who knows where we're going next. 1:00, we'll take stock of the ipo, their business model, who will make money, where they put in culturally both here and around the world. facebook, the social offering. the s-1 they say we're not supposed to be a company, we're here to fulfill a social mission. it that is the point. not to create profits. and we'll talk about whether or not that is possibly -- whether you can do both. >> the market not feeling good at all. b but. >> we have to bridge that here. as important as facebook is around the world, things are quite bad and domestic company, retailer bucking the trend. but at the same time, people who come it in and buy in the arrest it t aftermarket, be aware there are other things happening and they're not that hot. >> and the social network giant reportedly carrying on the tradition with one last all nighter. hack-a-thon is a chance it for employees to tinker with ideas and turn them into real products. the sleep overis expected to take place tonight with the company's headquarters in menlo park. and that brings us to the squawk on the defeat. we ask you what next big idea you think will come from the hack-a-thon. one last time in menlo park. unique experience. >> yes. >> oh, i get to talk now. okay. we were talking about the market and it doesn't it feel good in so many ways, it feels reminisce of last year. may now three years running has been a very difficult time we move our focus to europes once again and the continuing crisis that they have done nothing to solve. we were talking during the break carl mentioned apple's dividend yield. on the s&p now 2.6%. it that's 50 basis points above the ten year yield. only happened two other times. so there are arguments that say my god, this market is cheap. >> and if god keeps going higher, that's a it tell that perhaps they will start printing in europe. i want to present the other side nonbear case. we're really oversold. people are very negative. it if we did get something out of europe, stock market works, but it's europe. good news out of europe, whatever that news is, you got tinder. >> the ecb will do something. they usually do. but it then of course we revisit it whether it's a month later, three weeks later, always seeming to revisit it. just getting a fat guy bigger clothes is not going to solve the problem. >> unless he shops at big and tall. because then you can go as big as you want. >> i like men's warehouse here. >> you're not dealing with the underlying problem that you're going to have a heart attack. >> true. >> good cholesterol or bad? >> i got lots of that, too. >> trading day still young. a lot more "squawk on the street" still ahead. coming up, jim cramer's on fire. well, not literally. but his six stocks in 60 seconds are super hot. feel the heat when "squawk on the street" returns. optionsxpress, where you can trade your favorite products, all in one account. keep watch on the markets. or use our exclusive tools to help find ideas. it's powerful, easy-to-use technology for trading stocks, options, and futures. keep trading whether you're at home, in the office, or on the go. optionsxpress, the broker smart traders deserve. open an account today at optionsxpress.com. recently, students from 31 countries took part in a science test. the top academic performers surprised some people. so did the country that came in 17th place. let's raise the bar and elevate our academic standards. let's do what's best for our students-by investing in our teachers. let's solve this. in the next hour we'll look at how the spanish appear to have prevented fears that there's a run on one of their banks getting out of control. we'll talk to a facebook shareholder with 600,000 shares of about what he thinks about the fact that insiders are increasingly selling and we'll take a deep dive it if to walmart which reported today and is trading higher. >> let's get six in 60 this morning. important stories to tell. millennial media. >> a secret facebook story. they do how to advertise on cell phones. >> ross stores. a stock i know you like. >> again, if we get anything good out of europe, a good place to reach. >> gap. >> next week david has a special on drexler. gap is making a turn here. been going on for a while. >> canadian pacific. >> bill ackman wins. what do we do? i don't like the rails, but now the overhang is gone and people want to own the stock. >> united rentals. >> this this is a stock that has been on fire. negative catter. they are a huge caterpillar rental. >> and sales force.com. >> is this the first day? this is maybe the most richly valued, but also the best computer. >> it and tahat's tonight on ma. >> 350 points lower on the dow would it take us flat for the year. >> and that's what i said last night could happen. we obviously a lot of the dow stocks are very in-vulnerable because they're it domestic, some very vulnerable. i earn people to recognize if europe does something, we all have a short squeeze. i can't be 100% bearish. won't pay off. >> we'll see you at the special on facebook. we'll get philly fed after a short break. welcome back. may philly fed down 5.8. we're looking it for up 10 to 12. 8.5 last month unchanged. leading indicators just a little older. this an april number. and it is down 0.1. we were looking for up 0.1. so both of these numbers disappoint a bit. indicators usually is a market mover. it philly fed is. and we do see a doubling town on the losses on the down. now down 50 plus. and we see that the ten year note has breached the seek logical level of 175. back to you. >> rick santelli, thank you very much. let's break down some of the data that rec just brought us. steve, obviously a disappointment, all it though sometimes these regionals don't and a half up with the ism. what do you think? >> and this contradicts yesterday's index. this is an index more it followed by the market and the internals are very negative. employment the average workweek fell, number of employees fell, delivery time fell, unfilled orders fell. so when you look at it, the top line number is justified. huge surprise because of yesterday's empire state number, we were looking for maybe a surprise if the philly fed. the tenor has been such that people said maybe we're pouncing back, but it does not appear to be the case. i'll need to dig more into the details to wonder what industries is really driving this neglectment sentiment that's out there. the lei was less, there was talk it would be negative in part because of what happened to building permits. less concerned about it that. but if something is going on in the manufacturing sector, which has been a leader of the economy, it would be a reason for the market to take note. we'll wait for more returning data. i would say right now the philly fed would rule in the mind minds of investors rather than the index. >> just to be clear, we're coming off weak job be reports in march and april. is the u.s. economy slowing down and how rapidly do you think? >> i don't think it's slowing down. the estimates have been we've taken down the first quarter into a 1.8% range and we put some of the growth into the second quarter in part because we didn't have the inventory bill and the idea was it that we would be building inventories in the second quarter. the numbers we've seen have been still in that 2 to 2.5% range. this is a warning flag, one of the probably redder warning flags i've seen that maybe there is more of a slowing going on than is currently estimated. but it does sort of stand alone in how negative it is. >> dow down llalmost 70 points. get to our road map. walmart beating the street's estimates. but is the retailer losing ground to rivals and what's become of the scandal about mexican bribes? we have your walmart trade in a moment. >> and you might have heard about facebook going public tomorrow. we're sitting down with a portfolio manager who holds 600,000 shares. >> plus the bad news just keeps coming on it for jp more dwan as the huang's $2 billion trading loss it could rise by at least 50%. we'll break it all down next. >> share price of bankia continues to plunge on news that customers have withdrawn according to press reports. this this as reports surface that moody's plans to downgrade up to 21 spanish banks later today. i think the story is the very rapid comeback that you've had on bankia which was down 0% after the local press report. the deputy finance minister said there's no problem. the chairman of the bank, and this is a conglomeration created by seven savings banks. he said there wasn't a problem at the moment and the stock was down if we can have a look at the chart 30%, but it's climbed back very rapidly. it's brought the and you are row back with it and all it though we have a number of other weaker banks around europe in negative territory at the moment, it is interesting the degree to which certainly here at wall street we haven't fallen out of bed. as we were discussing earlier, it's impossible to predict now what the major indices will react to on european news at the moment at all. >> and of course all of it this goes back to it this basic idea that if greece leaves the euro, we're seeing a lot of money withdrawn from greek banks, but the question is if you're a depositor in spain do you say i don't want to take the risk of one day being converted to some other currency. i'll make the move to make sure i have my euros where it's safe. and this is the larger question of course because we are still sitting here three years after the -- 2 1/2 years after the beginning of this crisis without a plan for how to safe guard deposits euro wise. and it's not just spain obviously all the peripheral nations. i'm not sure if we can show some of the weaker banks. comes to an interesting question. cnbc europe has dispatched reporters on to the streets of athens and madrid to look it for cues of people outside of banks. in the modern age where you have internet banking, what would a run on a back look like now? >> if you can sit here and transfer out of bank i can't to wherever, you don't know. >> you can move behind the scenes overnight to -- particularly more wiggle room for a bank that is in difficulty. >> still the same problem and we're waiting to see what the ecb does it and whether germany steps up in some way that they haven't yet at least given a sense of. all right. let's move on and back to the most widely anticipated ipo in recent history. and by that i mean going back to when the east india went public. facebook. kayla tausche will run through the pricing. >> years of planning will culminaticul culminate on this one number and that's the price for each share.current range of $34 to $38 is the final range that underwriters will take into the pricing call after the market today according to a person familiar with the matter. but that's not to say that it can't still it price above that due to sec regulation, it cannot price more than 20% higher than it that upper end to that bracket meaning $345 would be the ceiling. as i reported earlier, investors are currently being queried on a price around $39 a share, that's $1 above the current range. if that does ring true, that deal would raise $18.9 billion, making it the u.s.'s second biggest ipo of any sector ever. to at that time stop spot would require a top price of $4 # a share or higher. but perhaps as important to traders as price is the amount allocated to retail investors. some 10% to 20% of the deal is likely to get parcelled out to individuals. but it if it that portion is higher, there's big fear in the market that roughly $5 billion of stock will be held by investors with no particular thesis on the name it that would be more likely to trade on any given headline in the day. but we'll get answers to all those questions throughout the day as we cover this historic ipo. >> and we'll have a fund manager who already owns a large number of facebook shares on the program it in just a few minutes time. kayla, thank you very much. on on a programming note, carl will be hosting a special cnbc edition of facebook the social offering. it will air at 1:00 this afternoon live. see how the company makes money. hear if you should invest in it. and sfiptd out just how much money everyone involved in this offering is actually going to make and the degree to which those insiders are increasingly cashing out. that is the breaking news of course over the last 24 hours. >> now to walmart trading higher since the alleged wribly sc lbr scandal. shares down about 5%. david has a buy. let's start with you. in terms of walmart and the share games and the progress it that it's making, is there evidence that they're sacrificing margin by cutting prices? >> there's evidence, but that's been it their strategy. they said that's what they were going to do is give up gross par begin to drive market share. this is the best quarter that they've had, i don't know, in five years. dollar it tree did 1.7 billion in the entire quarter. walmart sales gains in the u.s. were $3.7 billion. it just tells you that they're it gaining traction and their traffic is up 1.1%. second time it's been up in a while, second quarter in a row, with you they are gaining a lot of traction. >> but the quarter was better than expected. does it get you thinking that maybe it's not a market perform, maybe its eye better? >> we were worried about the stock performance after the last quarter where international didn't do well. that was a notable change. international performance was significantly improved and pretty balanced across the geographies. so it's a very good company. and we like the company a lot. but the shares we thought would be fairly flat. and we'll review the rating as we do our work over the next short period. >> david, i'm wondering how concerned should ininvestors be about the department of justice and the sec investigation in to the foreign corrupt practices act. >> it could be a big deal, but i would argue the same thing when it first broke. there could be financial ramifications, but nothing to damage walmart's balance sheet in our opinion. and it at the same time, there could be personal ramifications as well as it they go through the investigation. but we've talked to a lot of customers throughout stores and from that perspective, it doesn't seem like it's having any impact. >> so what's the worst situation financially in terms of yielding something? >> if it you look at siemens which was the biggest impact, the one most impacted by a violation of scpa, it was $800 million in the u.s. and $800 million in germany. and that was much bigger than anybody else. that was the worst that we've seen and it would still be something that i think walmart would absorb pretty easily. >> we joked about the made up federal law that walmart cannot trade anywhere other than between 50 and $60, but it is breaking those rules a little bit today. how long does it lasts? >> we'll see over the next period of time. it's been bound in a range for a very long time. obviously a large name. that's the issue that the stock faces. >> is your target well above 60 or not? sdwr we don't have a target price when we're not buy rated, but our target price was $65 when we had our buy rating. >> if walmart is gaining traction, at whose expense? >> dollar tree, we saw weakness out of those guys. i think it's probably the expense of a little bit of everybody. i think from a stock stand point, look at some of the consumer noncyclicals like kimberly clark. they exploded to new highs. this this could be the next one. >> all right. thanks for your time. it is the eve of facebook's public debut. up next, we'll sit down with a former yahoo! executive who is the current ceo of a 7-year-old start up. his take on the next big wave of ipos. but first -- >> hey, have you heard about the facebook thing? apparently it's a big deal. and we're it goito bring you al ipo action from the nasdaq in new york to the headquarters in california. what's not to like? that's it tomorrow on "squawk on the street." at bank of america, we're lending an in communities across the country. fro omrevi htalielzeping t a neigbrhbooklyn..or.ho financing industries that are creating jobs in boston... providing funding for the expansion of a local business serving a diverse seattle community... and lending to ensure a north texas hospital continues to deliver quality care. because the more we can do in local neighborhoods and communities, the more we can help make opportunity possible. of how a shipping giant can befriend a forest may seem like the stuff of fairy tales. but if you take away the faces on the trees... take away the pixie dust. take away the singing animals, and the storybook narrator... [ man ] you're left with more electric trucks. more recycled shipping materials... and a growing number of lower emissions planes... which still makes for a pretty enchanted tale. ♪ la la la [ man ] whoops, forgot one... [ male announcer ] sustainable solutions. fedex. solutions that matter. advanced automatic it toe parts down more than 14%. 15i78 store sales coming in about half consensus and forecast was weaker than what wall street wanted. deutsche it bank downgrading from a hold to a buy. shares are down. >> within 24 hours we should have the first public quotes on facebook. what will the business itself do with the cash that it's raised from tomorrow morning's ipo? jon fortt is there where it's 7:00 it in the morning. >> that's right, i'm it actually here on sand hill road where a lot of start ups come through. facebook will have a lot of cash after that ipo. enough to buy a lot of hoodies and have quite a bit left over. let's take a look at what this cash situation is likely to look like for facebook. back at 2007, they just had $305 million in cash on the books. post ipo, they estimate $10.3 billion. but if they price at the high end of range, we could be looking at more like $11 billion. how does that stack up among others? aem of course has around $110 billion. google likely to have twice as much as ebay and event bay isba too bad these day. facebookinstragram but it that was highly unusual. they've done a bunch of acquisitions, but don't tend to spend a lot it for them. a couple dozen total over the years. but just about 13 of those were actually ventured backed start ups. a lot they bought smaller operations and brought in the talent. so they generated $441 million it in cash from operations. zuckerberg said not to expect a lot of big purchases. a number of people i've talked to around here say they would be smart to hold on to this cash. it's strategically valuable going up against the likes of apple and google in these plat it form wars. and just it looks good to be able to say if we need to deploy a lot of cash, here it is. >> it fascinating. thank you very much, jon. >> it has been referred to as a crafty cross. recently raised $40 million. could value the site at around $700 million. unlike other start ups, etsy is already bringing in revenue. thousand looking to expand its international reach. could an ipo be in the future. i have a feeling chad won't answer that directly but good to have you with us. you're coming on at a heck of a time. you have the valuations skyrocketing out west in this country and if you go east to europe, things look much different. where is your head right now? >> etsy has always been a global marketplace. we have numbers in 150 countries around the world and 28% of transactions happen across international borders. so etsy is and will continue to be an international force in the world. >> europe is a focus of investment for you right now. >> europe is a foe did you say for investment, yes. >> does business look tough? >> for us business doesn't look tough. people are getting tired of impercent al retail. so etsy brings the ability to buy something from somebody you can have a connection with. so very much like a farmer's market. when you buy an ear of corn from the farmer, you enjoy the conversation just as a much as you enjoy the corn itself. >> although the farmer has to have cash it if his pocket if items going to buy anything. >> indeed. >> are you seeing weakness in the consumer on the european continent? >> we're actually not. it's growing very quickly. we think the consumers are choosing to buy things on etsy rather than buy them in other places because what they buy is really special. >> does it factor into your thinking what the opinion of the customer is? you have a certain sort of brand and you stand for a certain thing in the marketplace. does it matter what they think, do they actually have a distaste for big corporations so therefore that will govern what you do? >> it absolutely matters. and with the recent fund raising, we're actually xhigt ourselv committing ourselves. >> in the internet world -- >> i think what you're asking is are we planning to go public soon and i think our commitment is really to stay independent for as long as we can. and i think etsy is an independent company for as far as the eye can see. >> tomorrow will be a very big day when facebook epos and very big american day and a lot of people will reflect on a lot of aspects of that. a lot of people will say is what you you do and what zuckerberg does, is that america's future, is is that how we compete against brazil and china? there's an op-ed raising an important question as to whether the innovation it that you bring too e-commerce and social media can break out into transport or energy or health care. those which other people might say are actually bigger issues. what do you sti peopyou say as o focus on it that? >> it's a new way of doing business and i do believe that type offen know va ein-know van current wave of the future. etsy is an alternate any. not only are people buying and selling on the web, they're making thing its in countries all over the world and buying and selly. so it's really a new economy. >> can we tempt brilliant people like in you to energy or transport or health care? >> i think you can. my focus is obviously making etsy work really well and serving the community, but i do think that the way companies like etsy can connect people will inspire people to share information with each other and do things that are better for the world. >> chad, thanks for coming in. look forward to watching your story. chad dickerson. still to come, breaking news on nat gas inventories and we'll talk to a fund manager who currently holds 600,000 shares of facebook. facebook's mission is as to make the world more open and connected. >> facebook. i it's everywhere. it changed the way we speak and keep in touch. it turned a small group of college friends into billionaires. >> for the first time ever in a single day, we have half a billion people use facebook. >> in this this cnbc special, we're ask position the key questions behind what may be the most important initial public offering of the decade, including is facebook something you should invest in. see how much the facebook founders will be worth tomorrow and see how corporate america is cashing in now. >> the story of your life. >> facebook, the social offering. today at 1:00 p.m. eastern only on cnbc. [ male announcer ] if you believe the mayan calendar, on december 21st polar shifts will reverse the earth's gravitational pull and hurtle us all into space. which would render retirement planning unnecessary. but say the sun rises on december 22nd, and you still need to retire. td ameritrade's investment consultants can help you build a plan that fits your life. we'll even throw in up to $600 when you open a new account or roll over an old 401(k). so who's in control now, mayans? and i thought "i can't do this, it's just too hard." then there was a moment. when i decided to find a way to keep going. go for olympic gold and go to college too. [ male announcer ] every day we help students earn their bachelor's or master's degree for tomorrow's careers. this is your moment. let nothing stand in your way. devry university, proud to support the education of our u.s. olympic team. devry university, proud to support the education we have product x and we have product y. we are going to start with product x. the only thing i'll let you know is that it is an, affordable product. oh, i like that. let's move on to product y, which is a far more expensive product. whoaaa. i don't care for that at all. yuck. you picked x and it was geico car insurance and y was the competitor. is that something you would pay for year after year? i, i like soda a lot but for a change of pace... a tough time to be an investor. emerging markets continue to struggle. let's go trading the globe with tim seymour managing partner. good morning. kree mer kree merging markets really dangerous. >> it's been a tough time. 24 billion flowed in. a lot was etf. a lot hasn't left yet. so as much as valuations look cheap, there it's major deleveraging it going on. some of these big emerging etfs. and i would be concerned that some of this flow is still yet to come. therefore, i might try to be more defensive rather than just buying these names outright. i try to find the multinational tact. >> so you'd be back to big u.s. equity plays? >> it's it no secret that we know there's big u.s. and multi-nationals that have tremendous exposure to emerging. i would then say you want the emerging consumer, this is the one place people universally agree to transfer from poverty into the middle class is the em consumer. so people like procter & gamble and and -- >> yesterday we had an interesting conversation about how certain parts of asia are decelerating and other parts are not. so i wonder if the split rather than having a general em play on an etf or proctor and gamble you should pick the countries. it's country specific e tfs tha might be the traction. >> i agree places like the philippines and vietnam, indonesia for sure, malaysia, have done well. they have consumer cultures that i think are chugging along better than china's attempt to transition to more of a consumer economy. but if you look at what korea's been really beaten in the last few days, more of an industrial story and therefore more pressure as the world starts to slow. >> great to see you. it thank you very much. don't miss trading the globe and tim's exclusive interview with yum brand c evecheo at 7:30 eas. >> let's get over to sharon epperson with breaking news on natural gas inventories. >> we're waiting for the number to come out. natural gas prices slightly under pressure. we have anticipating that we'll see an increase in storage of around 52 billion cubic feet. in fact the increase was 61 billion cubic feet. up 61. so it this is an injection that is greater than expectations and progra perhaps part of the reason we saw the rally in natural gas prices. prices are coming off once again here toward the $2.50 level. that is the key support level that traders are watching. keep in mind we have seen a great deal of coal to gas it switching a lot of power generation demand that has caused the injections into storage to be less than the historical average. the 61 bcf level is still less than we stau a year ago but greater than expectations. expectations were mid 50. so natural gas prices coming off. but it's been quite a run. >> certainly has been. sharon, thanks so much. >> melissa, i can just tell you real quick about gold because some may be wondering about the price action. it's up over $30 right now. and it hit a high of 1574 an ounce. part of that due to the philly fed data that came in negative smp now calling in to question the manufacturing activity, consumer confidence, and for the moment, we're looking at gold playing that safe haven role once again. rallying along with the other precious metals. >> amazing in terms of the trade on gold that could have been viewed as a safe haven for so long and snaps in to one today. >> and does is i it does turn m moment. >> all right. it thanks so much. and we're not seeing the dollar weaken. it's up for the 14th straight session. >> so not a qe argument. >> coming up next, we're sitting down with a portfolio manager whose fund holds more than 600,000 facebook shares for his take on the social media's ipo. how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea. [ engine turns over ] [ male announcer ] we began with the rx. [ tires squeal ] then we turned the page, creating the rx hybrid. ♪ now we've turned the page again with the all-new rx f sport. ♪ this is the next chapter for the rx and the next chapter for lexus. see your lexus dealer. one hour into trading. the philly fed index moving to negative tear story coming in weaker than expected. sears holdings the biggest gainer up about 11% right now. participants of sears and k-mart posted a narrower than expected operating loss for the it first quarter. and for a third con secretary could you it difference week, the average rate on on a 30 year fixed mortgage fall to go record lows now at 3.79%. >> the markets down now for a fifth straight session. so it in four and a bit trading days, lost 300 on the dow. quite a choppy market if you look under the surface, consumer staples, telecom services are higher, holding their own. others falling away. the breadth of the move as mentioned here at the nyse, wow. 3:1. and over at the nasdaq which of course has its big day tomorrow, 2:1. let's just now cross over to chicago and link in with bob. one misit take at a time. >> or two. >> all right. >> kidding. >> welcome to the show, sir. what do you think of the market that continues to sell off? >> you have to keep an eye on the dollar strength. it's not good for the market. i think the fundamental story is slow at least for the last few days. you talk about trading versus investing perspective. and the last time the dollar index was up here, s&p was about $40 lower. and gold was about $100 higher. so you're seeing about a $40 rise in gold now seeing the s&p sell off a little bet after that philly fed index, more dollar strength. just kind of holding in place. i'm looking for a little more weakness in that s&p as the day goes on. >> cut to the lowest level since may of 2009. where medium term do you think the market therefore is likely to go? >> don't vary from your strategies. as a trader, i'm looking at about 1285 is a safe play to buy. i know that's a lot lower, but it just doesn't make me comfortable. i'm actually bullish, you but i want to put my canoe in the right spot in the river. it. >> bob, thank you very much it for your time. >> let's send it over to brian sullivan. >> a name familiar to casual diner, red robin gourmet burgers. coming in with sales that were much less than expected. customer traffic was up about half a percent which is well below the street consensus of a 2.3% gain for customer traffic. you should buy on the weakness. it they like what's kaled the double tavern burger, but you can see red robin getting la whacked. down 15%. >> and a story about how restaurants are using social media to boost sales. they row filed red robin. >> the blue rib about an burger clocks in at 1041 calories wut t without the french fries. i know you work out all the time. >> you're 8 feet tall. it takes 12 of those burgers to meet your caloric intake. >> and i plan to eat them today. >> see you later, brian. all eyes on facebook. many insiders actively selling shares. how does it impact the run up and is it a good investment? our next guest currently holds 600 thur6 600,000 shares. you were born and raised in the valley. you have a degree in electrical engineering. you're one of the nation's best known technology investors. are you a buyer or a seller with your cost basis around 31. >> right, 31.50 give or take is the blended cost. so we've been buyers. i think our whole strategy was to get out of the private markets and not wait to fight for the ipo allocation, you get our position if place beforehand. >> i've read this is the most hated deal of the century, the most loved ipo of the century. how is it received? >> i love the quote you should pay attention to what people do instead of what they say. so when i see lines of people around the block to get into the road show and then you interview them on the way out and they're skeptical about price, they waited in line for something. so this looks pretty strong to me. >> in terms of what people do, though, i'm curious as to your thoughts about a lot more insider selling than we might have anticipated adding another $3 billion. they seem to want to hit the bid here. why wouldn't you? >> first of all, when we buy in the secondary markets, second are markets or shares post or something like it that, we're buying restricted shares. so the shares that we own we'll be holding up it goes in to the index. but looking at the deal getting bigger, i would say it this way. you have for have a handover of shares from the people who currently own it to let's say a year from now, most index fund, most closet indexer, most growth managers will have to move at some point. >> so the shares you own are subject to the lockup period, but you said you will hold on to the shares beyond the lockup go expiration until they get added to the s&p 500? >> there's an interesting happening. when they picked the nasdaq to list, one of the things that magically happened is nasdaq changed its seasoning period. brought it down to six months. that kind of lines up that hand over into the nasdaq 100 with the lockups coming off. so we don't necessarily have to sell right on the day that the lockup expires. we may wait a few more months or something like this. >> so basically you're saying that you anticipate that there could actually be some sort of floor to the stock or support for the stock because coincidental with the first one expiring, that period in which it would be added to the nasdaq 100 miraculously overlaps? >> how about it that. and i think they may try to finesse it, do a secondary or something. but you get the feeling that this group of really smart people has actually thought this through. it th that's a good thing. >> this might be their first rodeo, but it's not yours. and i wonder if it the lessons of the dot combust back in 1999 have colored your view. if you're anymore skeptical now than you were back then. >> just being reflex sifly skeptical on everything is how we missed out on making a lot of money after the google ipo. back then could you take google's market cap and say it's bigger than all these other internet properties and that biassed us against owning it and cost us a fair amount of money. opportunity costs anyway. just like all public stocks are not created equal, all ipos are not created equal. there are stingks out there and there are good ones. >> if there's one thing could you point to, what would it be in it terms of your positive view on the future of this company? >> 900 million reasons. that's the argument you keep coming back to that you just can't knock down. people talk about all the things that facebook still needs to do. sure, they need to make sure that 900 million people keep using facebook when they go around holding their cell phone and they need to figure out how to monetize it. they're pretty bright. i think they'll figure that out. and as an advertiser, i couldn't knock down the idea that these people know more about more people than anybody. got to be worth something. >> before we let you go, and i it know we're out of time, what was the last thing that you bought, when next will you make the money? >> we have purchased a share called solar city. i know sole similar a dirty word right now, but solar city is the company that will put panels on your roof and zero dollars out of pocket for you. so h. they're in the solar financing side of it. it's good news for them that solar prices are really xheep. as long as one or two people stay in business, solar city will do even better. even when airlines are going broke, starbucks is making a lot of coin at the airports. solar city is kind of that to the solar industry. >> kevin, we'll be watching closely. hope you'll come back. >> thanks very much. >> today at 1:00 eastern time, we'll go inside facebook literally. see how the company makes money, find out just how much money everyone involved is going to make. 1:00 eastern time facebook. the social offering right here on cnbc. >> and up next, ahead of tomorrow's big debut, who exactly is sheryl sandberg you may ask? what do investors need to though about facebook's chief operating officer? we'll have your inside scoop right after the break. a route map shows you where we go. but not how we get there. because in this business, there are no straight lines. only the twists and turns of an unpredictable industry. so the eighty-thousand employees at delta... must anticipate the unexpected. and never let the rules overrule common sense. this is how we tame the unwieldiness of air travel, until it's not just lines you see... it's the world. who have used androgel 1%, there's big news. presenting androgel 1.62%. both are used to treat men with low testosterone. androgel 1.62% is from the makers of the number one prescribed testosterone replacement therapy. it raises your testosterone levels, and... is concentrated, so you could use less gel. and with androgel 1.62%, you can save on your monthly prescription. [ male announcer ] dosing and application sites between these products differ. women and children should avoid contact with application sites. discontinue androgel and call your doctor if you see unexpected signs of early puberty in a child, or, signs in a woman which may include changes in body hair or a large increase in acne, possibly due to accidental exposure. men with breast cancer or who have or might have prostate cancer, and women who are, or may become pregnant or are breast feeding should not use androgel. serious side effects include worsening of an enlarged prostate, possible increased risk of prostate cancer, lower sperm count, swelling of ankles, feet, or body, enlarged or painful breasts, problems breathing during sleep, and blood clots in the legs. tell your doctor about your medical conditions and medications, especially insulin, corticosteroids, or medicines to decrease blood clotting. talk to your doctor today about androgel 1.62% so you can use less gel. log on now to androgeloffer.com and you could pay as little as ten dollars a month for androgel 1.62%. what are you waiting for? this is big news. sheryl sandberg is the highest paid employee at facebook taking home $31 million it in cash and stock last year. that is more than 20 times of her boss. so just who is she? julie boorstin joins us from menlo park with the low down. >> facebook only names two employees, the loss of whom could harm facebook's business. mark zuckerberg and sheryl sandberg. the two of them sit close to each other in facebook's open offices here behind sand buburg business, oversees hiring, while zuckerberg manages facebook's w zuckerberg at a silicon valley holiday party which led her to leave google where she ran sales and online operations to join facebook in 2008. before that, larry summers' chief of staff at the treasury. she has known him since harvard. and under her leadership, facebook has become profitable and grown from 70 million to over 900 million monthly users. >> my day job keeps me busy. i'm busy launching products and building our business. >> the mother of two is married to another silicon valley ceo, david goldberg, who runs a site called survey monkey, sits on the boards of disney and starbucks and is a member of the president's council on jobs and competitiveness, though she's not on the board of facebook. no women are. and that's not all. sand berg has become an advocate for women in business, urging women to stay in the workplace after having kids. she has done this in numerous speeches, speeches viewed online hundreds of thousands of times. carl, over to you. >> julia, thank you very much. seeing a lot more of you in the next 24, 48 hours, julia boorstin out west. the war is still yet to come for jamie dimon. we'll break down the bank rate in just a moment. and then i have eleven grandkids. moment.ters y right when you see them, they're yours, it's like, ah, it's part of me. it's me again. now that i'm retiring they all have plans for me. i'm excited. of how a shipping giant can befriend a forest may seem like the stuff of fairy tales. but if you take away the faces on the trees... take away the pixie dust. take away the singing animals, and the storybook narrator... [ man ] you're left with more electric trucks. more recycled shipping materials... and a growing number of lower emissions planes... which still makes for a pretty enchanted tale. ♪ la la la [ man ] whoops, forgot one... [ male announcer ] sustainable solutions. fedex. solutions that matter. now that we know that jpmorgan's trading loss could rise by 50%, how will it impact shares of the stock, as well as other big banks? paul miller is managing director and head of financial institutions research at fpr capital markets. he downgraded his rating on jpm to market perform just last week. obviously, the shares, a huge amount pulled last week. where do you think we're going to go now on this loss, and how does it impact the stock moving forward? >> well, you can see today when the headlines hit, it might have lost another billion, the stock down almost a dollar when i got on tv today. so and it's underperforming the group and going to continue to underperform, i think, until we get further color on exactly how big these losses could be. but, you know, markets can go up, down. they could turn and make money off this trade. i believe they probably will continue to lose money, they will probably offset those losses with some security sales, where they have some gains that are not quite recognized yet. so when it's all said and done, it's really not going to impact earnings to the bottom line that much. but these headlines are going to drag on the stock. >> to the point -- to the underlying point you're making, and we saw it at the shareholders' meeting, when we talked to people going in, if you hold the stock, you're far more concerned about losses on the mortgage portfolio, for example. >> that's exactly right. the mortgage portfolio is losing a lot more money than this trade is losing. butt issue is that the lack of control of the trade, and i think that's what the concern is. you know, when you look at jpmorgan, you always looked at a company that had we thought some of the best risk management out there. and here is this trade sitting in london that they lost control of by their own admission. that is what's concerning and that's why the stock is underperforming in the group and will continue to underperform in the group until we have a better understanding exactly what the trade is, and how they got into this trade. >> paul, i'm assuming you're running all sorts of scenarios out there. at what point does the stock have a natural floor? at what point is it a buy? >> you know, we like to point out, six months ago in november, this stock was at $28, so it could go sub $30 again. but when it starts -- if it starts to go below 32, i would be buying it. probably doesn't go below 30. there is a buyback that should help support the stock a little bit. but the bottom line, it's not just this trade that's driving these stocks down. you've got the ten-year at 175, 176 today. none of these stocks, including jpmorgan, is going to trade newspaper that environment. >> yeah, but the point is, presumably the share buyback has been used to support the stock where we are now. that's a realistic assumption, paul, no? >> it is. you look at last year, the stock was at mid 30, had a buyback and dropped below 28. i'm not a big proponent these buybacks won't support the stock. >> paul miller, thank you very much. facebook is looking to carry on tradition and pull one last r & d all-nighter as a private company. hack-a-thons are a chance for employees to turn things into real products like facebook's chat system and an early version of the time line. the sleepover is to take place tonight at facebook headquarters, and that brings us to this morning's "squawk on the tweet." what next big idea do you think will come from this hack-a-thon. tweet us at cnbc. we have your responses, straight ahead. ahead. high schools in six states enrolled in the national math and 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. i bathed it in miracles. director: [ sighs ] cut! sorry to interrupt. when's the show? well, if we don't find an audience, all we'll ever do is rehearse. maybe you should try every door direct mail. just select the zip codes where you want your message to be seen. print it yourself or find a local partner. and you find the customers that matter most. brilliant! clifton, show us overjoyed. no! too much! jennessa? ahh! a round of applause! [ applause ] [ male announcer ] go online to reach every home, every address, every time with every door direct mail. just wiping away the tears, because we're going to say goodbye to carl for now. >> i can see you're all broken up. we'll see you at 1:00. we'll compress everything we know about facebook in one hour. >> we could have done that previously, it would have been great. >> better late than never. >> we look forward to it, carl. 1:00, again, the social offering. let's get to it. let's see what you might have missed if you're just tuning in. >> welcome to hour three of "squawk on the street." here's what's happening so far. >> if you buy facebook, you have to buy it saying i am going to own it for the next five, ten years. >> jpmorgan was stood up as the paragon of risk control. i just don't see how a $2 billion or $3 billion loss, oh, my god, this means we need more regulation. >> blastoff! 370,000, which is unchanged, from a slightly revised, 367. >> this number that walmart reported is a sign that the u.s. is gaining traction. the pull here is that europe is losing traction. our country is gaining. remember, 100 million people go to walmart. and boy, are they spending. peter teal worries me, one of the great investors of our time. and peter teal, when he decides he wants to up his selling, i think that means you don't want to buy the other side. >> how do you get a smile on james bond's face? 11 million opening bell. >> we have may philly fed down, down, 5.8. >> if there's one thing you could point to, what would it be in terms of your very positive view on the future for this company? >> 900 million reasons. that's the argument you keep coming back to. you just can't knock down. >> good morning, and welcome to the third hour of "squawk on the street," let's get a check on the markets and where we stand now. certainly the markets tugged by the weaker than expected philly fed number, but paired our losses. the dow down by 28 points, 12,569. the s&p 500 down by just 3 points and the nasdaq down by about a half percent. sears, the biggest gainer on the s&p 500, up almost 12% after swinging to a profit in the first quarter and shedding some real estate. home builders, some of the biggest losers, pulte, kb home, toll, dr horton all down. facebook sets a price this afternoon to make big money tomorrow when it starts trading. but how has facebook made all of its money before now? we've got the details. plus an analyst who will cover the social network is getting more and more cautious on the ipo. see whether you should be wary of investing in facebook right away. and rumor that is spanish bank might have been in trouble might have run on deposits, making headlines overseas, denied in madrid by the government. we'll see how the trading day ends in europe in just 30 minutes from now. >> that should be a good close. and chuck schumer and casey enveiling the ex patriot act. the news conference set to happen in minutes in washington as they attempt to prevent people from renouncing their american citizenship, like facebook co founder ed wardo satisfy rain. we'll talk to sellers at casey about the bill today in 45 minutes time. we start with walmart. it is the biggest gainer on the dow today after beating quarterly estimates, saying the bribery scandal in mexico will not be material to earnings, you have 5.25% right now. courtney reagan back at headquarters with the details. courtney. >> reporter: today, walmart making positive headlines and at least for now, wall street isn't so concerned about the bribery allegations in mexico. the world's largest retailer beats on both the top and bottom line, reporting earnings of 1.09 a share on revenues of $13 billion. second quarter guidance, 113. arguably the most important metric continue the positive trend, 2.6% above guidance, and the best comp. in three years. both traffic and average ticket increased. in its 8 k, walmart has been informed by the s.e.c. that it is the subject of investigations into possible violations of the foreign corrupt practices act, but says it doesn't believe it will have a material impact on business. shares in losses first detail the allege $24 million bribery. while the allegations of bribery are not forgotten, only one firm has downgraded its rating on walmart as a result. >> probably less concerned about the financial impact and more concerned about the headline risk, what else comes out of this investigation, do you have resignations, things of that nature. >> reporter: mike duke notes walmart is increasing price separation across categories, perhaps taking back share from dollar tree, one of the retailers shipping away in recent quarters. dollar tree did beat with its profit, ironically posting earnings of $1 per share. but issuing disappointing guidance for the current quarter, pressuring shares despite raising its full year forecast. but daniel bender, notes dollar tree's management guides conservatively, and likes shares on the dip today. bender thinks at the end of the day, the dollar tree business has better legs than walmart. simon? >> interesting. thank you very much for that. the next major event for the markets is, of course, the pricing of facebook tonight. julia boorstin is live at facebook's headquarters with all that we know so far. julia. >> reporter: well, simon, facebook's bread and butter is advertising. the company has massive reach, over 901 million users on average every single month. and the more people spend time on facebook, the more ads facebook can serve them. facebook users share an enormous amount of personal information, what movies and music they like, what they're buying on amazon, what starbucks they frequent, all of which enables facebook to closely target ads. but that's not all. facebook capitalizes on information about users by delivering ads with a social context. and users are much more likely to respond to an ad about coca-cola or amazon if they know their friends like the brand or just made a purchase on the site. advertising accounted for 85% of facebook's revenue in 2011. the rest of facebook's revenue comes from payments for gains. it takes a 30% cut of all the virtual goods purchased for zhenga games, making zhenga a key piece of business. between the cut of virtual goods and ads zhenga runs on facebook, the social gaming company generated 12% of facebook's revenue last year, $445 million. the key to facebook's future revenue lies in mobile. over 500 million people access facebook on mobile devices every single month. and the company just started serving ads on mobile devices in march. now, here's the thing. the ads -- facebook actually purchased fewer ads to its mobile apps than it does serve up on its regular website. so there's some concerns that facebook is not going to be able to grow revenue quite as fast, considering the fact that more people are now using the service on their mobile devices. simon, back over to you. >> thank you very much, julia. busy 24 hours ahead. now let's get to the cme group, rick santelli there with the santelli exchange. rick. >> thank you, melissa lee. of course, this morning we looked at philly fed and it painted a fairly 180-degree different picture than, for example, empire. but there has been a lot of split decisions on data this week. we saw starts look good, permits not so much. we say a 1/10 increase on sales in headline and even though we all get lulled into come placey when the number matches expectations, you need to take a step back and just realize that 1/10 of 1% is not a strong number. why is -- this forensic so important? because whether it was last year or how we started to go into the summer and lose horsepower, or it's the notion that it's very difficult to dodge what's going on in europe. but the mixed call, keep it simple on the data this week, is definitely making some traders reassess their positions. greece. why is greece so important? pretty much everybody i meet that isn't on the inside baseball, that's the question. why is it so important? they've had multiple bailouts, we kind of know the exposure, why is it important? it's important for one simple reason, in my opinion. that is because in this room of the european union, there really isn't an exit. if an exit gets painted and greece goes through it, that is going to create a dynamic where it's easier for the second or third countries potentially to do the same. this is the boundary line, the imagination line for the current complexion. that's why it's important. last but not least, dollar index. look at the charts. sibls the fed meeting of the dollar index in stocks, they've had historic runs, stocks down, dollar index up. many say, well, it's because all those people that were worried that we were going to see inflation, although i call it higher commodity prices, were wrong. no, no, no. they were completely right. as evidenced by this chart. the issue of most people who were nervous about the dollar and higher commodity price denominatoring dollars is the fed and central banks in aggregate's behavior. less qe, the dollar rally stocks go down. we are floating rafts on an ocean of liquidity, and that is the issue. the biggest issue for the green back. back to you. >> sure is, rick. thank you very much. we're down 22 on the dow now. let's get a market flash with brian sullivan. >> might be taking on water right now, a trader's favorite guise getting whacked. last night, s.e.c. opening a formal investigation which is where you can compel documents to be released into dendreon, saying they made misleading statements, down 10.5%, but now down 80% over the past 12 months. also wfr, the cfo leaving the company, that stock down 16%. guys, it's a $1.77 stock, but this was a $91 stock four and a half years ago. part of the solar flare-out. back to you. >> wow. brian sullivan, thanks for that. coming up next, whether you should buy or sell facebook stock. we've got the inside scoop from a social network analyst. that's right after this break. ncer ]e a what if you had thermal night-vision goggles, 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. trade commission-free for 60 days, would you mind if to be i go ahead of you?omer. instead we had someone go ahead of him and win fifty thousand dollars. congratulations you are our one millionth customer. people don't like to miss out on money that should have been theirs. that's why at ally we have the raise your rate 2-year cd. you can get a one-time rate increase if our two-year rate goes up. if your bank makes you miss out, you need an ally. ally bank. no nonsense. just people sense. new data out from the department of transportation on airlines and fees. phil lebeau is live in chicago with details. phil. >> it appears when you look at this data that people are understanding that they're going to be paying to change their fees or to check bags. if you look at the fourth quarter data just out, it will show that the airlines collected lower revenue from baggage fees and reservation chains. overall, baggage fees, $792 million a drop from a year ago. reservation change, $567 million, both drops from the third quarter, as well. when you look at the top five when it comes to baggage fees, delta at the top of the list followed by united, continental, american, usairways and air tran, all lower than a year ago. melissa, the reason we stress that, it's clear that travelers realize they're going to pay to check bags or to change their reservations. more people are carrying on bags, no doubt about that. >> absolutely. phil, thank you very much for breaking that down for us. mean time, facebook's much-anticipated ipo now only a day away. what will industry analysts be watching as facebook sets to price tonight? herman lund is an analyst, joins us now. and herman, you have a note on facebook, you recently lowered your estimates based on what they said in the revised s-1, although you don't have a rating. i'm curious as we're learning more details about insider selling, which is more than we originally anticipated, does that change your view of this company at all? >> no, i don't think -- i don't think that changes, really the view of my -- of the company. i think that's just a shift of more private-based investors, more to the public side. and with the amount of demand i guess we're seeing on the retail side or at least what we're hearing, i think that's going to drive the stock to be, you know, relatively healthy in the first day. >> right. in terms of how the stock trades in the after market, a lot of people are wondering this, because they're thinking about buying the shares. and we had one guest on who already has 600,000 shares of facebook which he acquired around 31.50. he said what he believes is that at the lock-up period, the first lock-up period, that's around the time when facebook will be added to the nasdaq 100, if not to another benchmark index. and therefore, that could create some sort of support for the stock. what's your feeling on what happens in the after market, and whether or not this will actually help support the stock if it is added? is. >> well, i think, you know, whether or not the indices -- i think there's a russell 1,000, as well, that i think gets reweighted at the end of every quarter. i think at the end of may, i think there could be an opportunity there. you know, i think the s&p, it took google a little bit longer before it gets added -- even some larger indices, such as the s&p 500. but, you know, relative value, i guess, on a facebook basis that's probably going to trade at 50, 60 times next year's earnings, compare that to a google, i think google will actually look very attractive at 13 times next year's earnings. >> right. in terms of the pricing, what we are learning right now is at the higher end of the range and assuming it prices 20% above, which is the maximum allowed by the s.e.c., it could price as much as $45 tonight, we won't know until tonight. but at that price, herman, what's your general take on the stock and where your estimates are, and what sort of multiple should be assigned? >> i think i can't comment really specifically on whether we should buy or not buy the stock. but what i will say is that, you know, the estimates that i put out last week, i lowered it slightly from, like, 3% on revenues and 5% on profits. simply because i think two things that investors -- when they want to buy the stock, they should keep in mind. i think one is mobile. mobile is out, obviously growing for facebook massively. and they don't monetize the same rate on mobile as they do on the desk top. and the second one is sometimes, you know, the company might put the users first, and when they put users first, financials -- results might be a little bit choppy in the near term. >> to be fair, though, herman, there aren't that many internet companies out there that successfully monetize mobile. google is one, yahoo! is another, are we putting too much on facebook when other business models don't successfully monetize their mobile users either? >> i think that's a fair point. but they highlighted this as a point last week, and that monetization for facebook users is only a growing percentage in the more mature markets, such as the u.s. so i think that's something to keep in mind. that's obviously a risk for all of the internet companies, as well. but, you know, for facebook, especially, when the usage rate is so high on the mobile front. >> can you give us an apples to apples comparison to understand the difference between facebook, their ability to monetize mobile versus, say, a google or any other company you covered that you wanted to use? >> well, for a google, for example, you know, users can actually do a search, and those searches are monetized, you know, on -- for every single search that goes on for google. for every single time you check on facebook, check the news feeds, they might not have sponsored stories, which is the only way they monetize today, and there are several opportunities for them to monetize in the future. but, you know, that level of coverage, you know, we just -- it's very low today. >> all right. herman, we're going to leave it there. thanks so much for your time. >> thanks. >> herman leung of susquehanna. today, a special coverage of facebook with our very own carl quintanilla. straight ahead, rick santelli fighting for the individual investors. see how he's doing that, next. and let's get a check on energy prices. nat gas inventories did send natural gas futures down pretty sharply. and on crude, we are seeing an update, actually crossing above the $93 mark at this point. be right back. if you are one of the millions of men who have used androgel 1%, there's big news. presenting androgel 1.62%. both are used to treat men with low testosterone. androgel 1.62% is from the makers of the number one prescribed testosterone replacement therapy. it raises your testosterone levels, and... is concentrated, so you could use less gel. and with androgel 1.62%, you can save on your monthly prescription. [ male announcer ] dosing and application sites between these products differ. women and children should avoid contact with application sites. discontinue androgel and call your doctor if you see unexpected signs of early puberty in a child, or, signs in a woman which may include changes in body hair or a large increase in acne, possibly due to accidental exposure. men with breast cancer or who have or might have prostate cancer, and women who are, or may become pregnant or are breast feeding should not use androgel. serious side effects include worsening of an enlarged prostate, possible increased risk of prostate cancer, lower sperm count, swelling of ankles, feet, or body, enlarged or painful breasts, problems breathing during sleep, and blood clots in the legs. tell your doctor about your medical conditions and medications, especially insulin, corticosteroids, or medicines to decrease blood clotting. talk to your doctor today about androgel 1.62% so you can use less gel. log on now to androgeloffer.com and you could pay as little as ten dollars a month for androgel 1.62%. what are you waiting for? this is big news. now to rick santelli in chicago to discuss why broker rebates are costing clients as much as $5 billion a year. rick. >> yeah, it's an interesting article. and this was compiled by woodbind associates, and from that group is matt samuelson. welcome, matt. matt, when i read this, this was a big topic on the floor when this research came out many oppose ed's regarding this research came out. as i read it, i thought high frequency traders were going to be the culprits here. but that isn't the case, is it, matt? >> no, rick. our report really focuses on the fact that brokers as financial intermediate arrestees have certainly responsibility to their clients, but in some instances, their economic incentives for them to do things that are more in line with their interests than their clients'. >> now, it's a complicated topic, but you had had a great analogy, and it actually involved my chicago cubs. maybe you could share that with viewers and listeners. >> certainly. to really break the issue down, let's say you want to go see the cubs play ball, but the wrigley field is sold out. you turn to me as your ticket broker, pay me a $5 commission, and ask me to go source tickets for you. you don't care where i'm going get the tickets, but you're going to pay the price that i get you. i, as the broker, have let's say two sources. one can get me the tickets for say $30. and the other for $100. let's say that the source that can get me the tickets for $30 charges me a $2.50 handling fee that goes right to my bottom line. and the other broker charges $1.50 -- or sorry, the other source charges $1.50 for those tickets. the $5 you're paying me as commission, and the fees that i need to pay the source go right to my bottom line. so it's in my interest to go with the cheaper source. now, i may go to that cheaper source, pay the $1.50, maximize my bottom line results, and get you $100 tickets that you're pleased as punch to have, but i'm sure you would have been happier, had i gotten you the $30 tickets if you knew they existed. >> so what we're really talking about here is, is that the brokers' interests of not only his commission, but what rebates he may get in this process you outline in this article may be at odds with what is most beneficial to the client, and the client's visibility is somewhat less than optimal. would you not agree with that? >> i think the client's visibility is somewhat less than optimal. but clients and we're generally speaking also about institutional clients here, are certainly able to speak with their brokers to see how their orders are being handled and routed. and by the same token, this is how the markets have evolved. i'm not intending to vilify brokers here. brokers are under, you know -- have certain fiduciary responsibilities, which they often meet. and their on going businesses, so they need to do what's in their economic interest. however, the market structure is such that this conflict exists, and in certain cases, fiduciary responsibility can be met, although at the end of the day, the investor may not get the best results they could have ultimately received. >> listen, matt, we have to run. but it's an interesting article. i urge everybody to google it and read it. thanks for being our guest today, matt. >> thanks so much. >> back to you. >> all right. an important story, certainly, for the individual investor. rick santelli, thanks. a few minutes left and europe's trading day. we'll bring you the bells and closing action, live, right after this. [ male announcer ] at scottrade, we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. our teams have the information you want when you need it. it's another reason more investors are saying... [ all ] i'm with scottrade. olaf's pizza palace gets the most rewards of any small business credit card! pizza!!!!! [ garth ] olaf's small business earns 2% cash back on every purchase, every day! put it on my spark card! [ high-pitched ] nice doin' business with you! [ garth ] why settle for less? great businesses deserve the most rewards! awesome!!! [ male announcer ] the spark business card from capital one. choose unlimited rewards with 2% cash back or double miles on every purchase, every day! what's in your wallet? just over a minute to the european markets close overseas. so there's only one person to turn to at this point and that's simon hobbs. >> do you know i already feel like we dodged a bullet potentially in europe today. when we came into work, the headlines coming out of spain were very scary. local press reporting that bank intuit, that collection of seven savings banks, put together by the government, there may have been some sort of run on the bank at the beginning of the week, and a billion euros have come out and we thought, oh, wow, has it spread from greece to spain, and the move on bank interstock was ferocious. at one point today, it had lost a third of its market capitalization. now, the good news is, the chairman of the bank came out, and reassured investors that after the finance minister came out and reasured investors, and it seems to have worked. if you look at the price action and that we were able to contain what could have been a very nasty situation for anybody invested in world markets. in fact, the dow here, the futures barely moved on that news whatsoever. the euro also came back quite strongly. we were lower, we were below $1.27. there we go. i've got to show the map. we closed up now and you can see. that's to the second, medical list. >> i know. we usually have that nice woman announcing, and we didn't have it today, so it didn't occur to me that it closed. >> it's a religious holiday for much of europe. the ascension day, and she may be observing that. so we're down -- just check out portugal, right down there at the bottom left. do you see down 2.5%. greece down there at the bottom in the middle has also fallen 3.4%. so the periphery of europe continues to be on the huge amount of pressure and that's to do with the banks. let's pick up what i was saying here. we actually fell below $1.27 on the euro. we regained that, we're now coming back down. it's a big move for the week now, down 2%. the euro increasingly sensitive to what is going on. and it is about the banks. will you get that crossover of contagion from greece, where it is alleged money has been going from the banks to italy or to spain or to belgium or other areas. so look at the banks that have fallen. this is a portuguese bank, italian banks, they're clogging up the bottom of the market in europe. let's move on. let me show you, for example, unit credit, one of the big players in italy. that stock down 4.6%. dutch bank, spanish bank and greek bank again in negative territory. what's interesting, actually, though, despite those concerns and some of the banks stocks being hit around the periphery of europe, if you regard belgium as the periphery, the yields are relatively stable at elevated levels, but relatively stable. have a look at where we are on the spanish yield, and you can see that we are down from where we were earlier in the week. we did get a bit of a move higher. but we are relatively contained at 6.3%. that's a high level, but it's not 6.5 and not 7. let's have a look at the italian yield, and you'll see exactly the same there. there we go. see the way that it's moved slightly higher, but we are still below 6%. i know it's more consolation. i know that the yields are very elevated. this is a huge amount of fear around. but for the moment, we haven't moved substantially higher. >> and simon, you mentioned the turnaround in the banks, you saw the pairing of the losses and it's interesting to see the interplay between the u.s. banks and the european banks, because that's also when we saw a lot of the u.s. banks really pair their losses well in terms of the positive with morgan stanley, which, of course, has been one of the u.s. banks particularly tied to europe. that is now trading sharply higher by almost 3%. >> american investors, i think you can say they have kind of disconnected. they don't follow the european headlines in the same way they did a year ago. >> not as a whole group but certain ones like bank of america. >> absolutely. >> all right. let's check in with rick santelli at the cme for his take on europe. rick. >> well, you know, i'll keep it really simple. we've already talked and seen the great numbers and charts that simon had. as you look at this three-year note yield in spain, obviously it isn't at the worst level, but it's getting awfully close. and when you try to keep it simple with regard to europe, we all hope things get better. but it's very difficult to buy into that storyline. and when you now look at our ten-year, which is only two-and-a-half basis points away from a new all-time low yield close, 1.71 from september 22nd. when i say all-time, i'm going back to the early '60s, late '50s, the eisenhower administration. but this is significant. and i think no matter what you look at on the fixed income side, you see two different pictures. one is extremely low rates and boons, ten years, guilts, and obviously hyper i have ral rates. and many traders can't see how this will end well. we have seen the rtos and it's a slow-motion train wreck and that's the sense i have on trading floors. back to you. >> thanks very much, rick. rick santelli with fixed income. let's go back to the american equity markets with bob. bob? [ no audio ] >> i think we've pretty much settled the idea of contagion. the european banks are interlinked. and two issues i saw debated this morning, number one, would it be possible to set up some sort of pan-euro deposit guarantees that might be out there the union could set up, and to what extent is the ecb going to have to set up the whole issue? i think it's important to note the tremendous declines. we're at multidecade lows in most of the major big banks in europe. and here you can see declines today. but we're seeing these declines, 2, 3%, every single day. some of the big banks, for example, are down 20, 30 and 40% so far this year. and most of the big ones, as i mentioned, are at multi-decade lows. clearly there's a sense that something extra is going to have to happen, whether the ecb steps in, pan euro deposit is guaranteed, something like that has to happen fairly soon. let's look at the united states here. not in correction territory, but i do want to point out that we're sliding in that direction. every day, 40 points on the dow. pretty soon the numbers actually start to add up. put up how we're doing for the year to date so for after the highs. we're 4 or 5 or 6% off our highs. look now, we're getting a little closer on the s&p 500, down 10% on the year. the industrials, not quite there. but some of the other big sectors. for example, materials, s&p material index is down about 12% from its recent high. so some of them are down in double digits. i want to point out that caterpillar today, the numbers, caterpillar provides their dealer sales levels every once in a while and the numbers were rather weak today. take a look at caterpillar. a stock $116, just a couple of months ago. that's a 20% decline for caterpillar. bottom line, they're seeing some deceleration in their machinery sales. that's the most important sector for them. brazil is actually negative, and over in asia, while sales are still up, guys, for caterpillar, decelerating, up 5% in april compared to the same period last year. caterpillar put up incredible numbers at the end of last year. those numbers are now decelerating. >> bad news. all right, bob, thank you. let's bring in steve with muzuto securities. troubling fed data this morning. steve, great to have you with us. >> thank you. >> you issued a note yesterday prior to the release of the philly fed and you wrote your first line, the domestic economy is in no immediate danger of dipping into a recession while europe teters on the brink of decline, et cetera. does that scrview change at all compared to what euro expectations were? >> no, not really. the philadelphia fed numbers, especially the headline component of it, was substantially weaker than the underlying component. don't get me wrong, i'm not trying to defend the philadelphia fed numbers being a strong number for the economy whatsoever. but it's consistent with what we have been seeing in terms of an economy that's going to be growing at about 2% at best going forward. and we get these starts and stops and indicators like the philadelphia fed as a result of that. we've had some outside up movements and down side to correction. that's all that's taking place. in terms of the index of leading indicators, that's a number where we should have seen a lot more ability to be able to accurately predict the number and the streak clearly overestimated the index by 3/10 of a percent, because they missed the underlying orders component and that, again, is the thing that's showing you, there is no real upside movement the in demand, and without that, we're not going to be able to get this economy moving to a higher growth trajectory. >> at what point do you believe the fed will step in terms of easing? is. >> well, i think the fed will step in at the next fomc meeting, they have to do something. i think the economy already justifies it. >> already. so even regardless of what is going on in europe. but i'm curious, as a u.s. economist, to what degree are you watching europe? at what point do you get more learned? for instance, you walk in, and there are reports about a run on banks in spain. do you think automatically, yes, there's an impact here on the u.s. economy? >> well, there is an impact on the u.s. economy for our ability to export product overseas and our ability to generate profit in our overseas companies. in the old divisions of our international companies. however, from domestic manufacturing in the united states itself, the impact will be much, much smaller than you're seeing, because part of the thing we're getting is the benefit of the decline in long-term interest rates that's taking place in europe, is helping to keep downward pressure on long-term interest rates in the united states, which implies a partial offset to what we're already seeing from the drag from export activity. >> so steven, just to double back, do you think that whatever the fed came up with could improve the situation? >> no, i think the fed has to make sure the situation doesn't get worse. that's really what they're dealing with at this particular point in time. the fed really -- the economy is not in a position to absorb a higher level of long-term interest rates, or a steepening of the yield curve in the belly of the curve. and therefore, the federal reserve has to do something to counteract that, but once operation choice expires. >> can it protect the economy, though? that's what i'm saying. whatever they could now pull, would they actually have a material impact? >> protect the economy from a situation in europe, i think we've already done that by the amount of liquidity we've provided, even in the banking industry, both in europe and in the united states. there's almost no cross border banking activity taking place. and there's very little domestic banking activity taking place. between banks. because banks are flush with cash, and therefore we're not going to see the type of illiquidity that would disrupt bank behavior as we have seen in the past because of excess reserves sitting in the system. >> thanks, steve. now another market flash with brian sullivan. >> not a lot of news on two big cell phone makers or formerly big cell phone makers. but nokia is up fractionally. this is a low on nokia going back to 1996. mean time, research in motion in an otherwise pretty lousy market is actually up, third-best on the nasdaq 100, got approval to use its blackberry os 7 by the uk government, but i can't imagine that's moving it up 4%. i just wanted to call your attention that rimm up quietly on a 4% on an otherwise lousy day while nokia continues to slide. simon, do you use a nokia phone? >> for much of my life, yes. i was a big fan of nokia. >> why did you switch? >> because i came to the united states and cnbc gave me a blackberry. >> you don't have an iphone? >> i don't. i'm not hip enough. brian, thank you. straight ahead on the program, within the last hour, facebook's co founder, edwardo saverin, the ex patriot act to join us live to talk about taxes. first, here are the losing stocks of the day trading overseas. an airline has planes... and people. and the planes can seem the same so, it comes down to the people. because, bad weather the price of oil those are every airlines reality. and solutions won't come from 500 tons of metal and a paint job. they'll come from people. delta people. who made us one of the biggest airlines in the world. and then decided that wasn't enough. to provide a better benefits package... oahhh! [ male announcer ] it made a big splash with the employees. [ duck yelling ] [ male announcer ] find out more at... [ duck ] aflac! [ male announcer ] ...forbusiness.com. ♪ ha ha! tdd# 1-800-345-2550 checking the charts. tdd# 1-800-345-2550 looking for support, tdd# 1-800-345-2550 resistance, breakouts, tdd# 1-800-345-2550 a few other tricks that i'll keep to myself. tdd# 1-800-345-2550 that's how i trade. tdd# 1-800-345-2550 and i do it all with charles schwab, tdd# 1-800-345-2550 because their streetsmart edge platform tdd# 1-800-345-2550 helps me trade quickly, intuitively. tdd# 1-800-345-2550 staying on top of the market is key! tdd# 1-800-345-2550 and the momentum tool, tdd# 1-800-345-2550 it lets me do it at a glance, tdd# 1-800-345-2550 so when things shift, i'm ready. tdd# 1-800-345-2550 then to track the stocks i have my eye on, tdd# 1-800-345-2550 i turn to schwab's high/low ticker. tdd# 1-800-345-2550 so i can spot a potential breakout tdd# 1-800-345-2550 before it breaks out. tdd# 1-800-345-2550 and get this...i can even trade, tdd# 1-800-345-2550 change my orders or check out my positions tdd# 1-800-345-2550 right on my chart. tdd# 1-800-345-2550 my system works for me. tdd# 1-800-345-2550 does yours work for you? tdd# 1-800-345-2550 get streetsmart edge tdd# 1-800-345-2550 from charles schwab for $8.95 a trade. tdd# 1-800-345-2550 open an account and trade up tdd# 1-800-345-2550 to 6 months commission-free. tdd# 1-800-345-2550 call 1-877-586-5928 tdd# 1-800-345-2550 and get started today. of how a shipping giant can befriend a forest may seem like the stuff of fairy tales. but if you take away the faces on the trees... take away the pixie dust. take away the singing animals, and the storybook narrator... [ man ] you're left with more electric trucks. more recycled shipping materials... and a growing number of lower emissions planes... which still makes for a pretty enchanted tale. ♪ la la la [ man ] whoops, forgot one... [ male announcer ] sustainable solutions. fedex. solutions that matter. ♪ ♪ american woman stay away from me ♪ welcome back. as we count down to the facebook ipo venture capital, bill gurly guest hosts, he has an inside view on all things social. plus, we're outlining the risks to the biggest tech ipo in history and who will win the race to monetize mobile? a top analyst names names. melissa, see you in a few. >> we look forward to it. thank you very much. the company's co founder, edwardo saverin is getting attention from lawmakers on capitol hill. saverin renouncing his u.s. citizenship in september, allowing him to dodge taxes on profits he is expected to collect when facebook goes public. in response to that, senators schumer and casey laid out a plan to crack down on such behavior. here first on cnbc is pennsylvania senator robert casey. senator, pleasure to speak with you. >> good to be with you. >> it sounds like it makes sense. this move could allow him to duck up to $67 million in taxes. at the same time, this gentleman has lived in singapore since 2009, and first filed to renounce citizenship in january of 2011. it seems like there are valid reasons why he would renounce his citizenship, and so therefore, why go after him? >> well, i think it's very clear that he has renounced his citizenship to avoid paying taxes. and at a time when middle-income family as cross pennsylvania and across the country are struggling just to make ends meet, they have to pay their taxes and here's a person who benefited tremendously from the bounty of america from our educational system, and he makes this move to avoid paying taxes. it doesn't make any sense not to hold him accountable. and remember, this is a determination that will be made by the irs. if he has left the country to avoid a substantial -- or for a substantial tax purpose, then the 30% tax would apply. so there's -- there's a determination that has to be made about why he did this. and i think that -- that's very fair, especially in light of what a lot of families are going through right now when they have to pay their taxes, even if they don't enjoy doing that. >> okay, so senator, what would your bill do? >> well it basically says that if someone ex patriots or leaves the country for that reason, for a substantial tax purpose, as determined by the irs, a 30% tax would apply to any future investment gains. so in essence, capital gains would be taxed. it makes all -- go ahead. >> so that's actually very similar to the way in which you tax foreigners at the moment. i'm a resident here. if i come in -- when i exit the united states, 30% of any money, any capital gain that i have made in that time is payable on top of all other taxes. and effectively, you're trying to mirror that for citizens of the united states. >> that's correct. and this would add -- this would add the capital gains to that, for someone who ex patriots or leaves the country. >> there may be many people watching now who say actually we've lost the wood from the trees here. the point is, to create a tax structure that gets people from the rest of the world to come here and launch their businesses here in whatever field they may operate. and that is america's future. what would you say to them? that it's not about higher taxes. it's got to be about lower taxes. >> well, i would say that we want people to come to this country, and benefit from what the united states offers, and a lot of them do and a lot of them make a lot of money. all we're saying is that you've got to pay your taxes. and to play by the same set of rules that everyone else plays by. so i don't -- if someone is going to make an argument that somehow this is a disincentive, i don't buy it. most -- and this -- remember, this only applies now to a couple thousand americans. this isn't -- you know, this isn't the typical taxpayer, the typical person or citizen who makes money here. >> sure. but senator, i think to simon's point, the point is that we would hope that somebody like an edwardo saverin, who co founded facebook, would actually want to stay in the united states. and so therefore, why have a punitive tax policy that encourages people to want the to leave as opposed to having a tax policy that encourages them to stay? >> well, he -- he made the decision to leave. and if the irs were to determine that he left for a substantial tax purpose, then the tax applies. so i think it's -- i think it's very fair, and i think it's one way to hold people accountable when they're trying to avoid taxes by leaving. >> i guess the question was, senator, if the irs actually determined he left because of taxes, then we do have a tax policy that does not encourage people to stay, like an edwardo saverin. the exact kind of people we want to have in this country to develop the next generation of companies. >> well, what we want in this country are people who are going to pay their taxes. and i think this is one -- most people in his situation don't try this. they're more honest about it. i mean, when someone does this, they're spitting in the eye of the american people. the moment they do that -- if they leave for another reason, that's fine. but to leave for that reason, i the american people and you o ought to have a penalty for that. >> all right. senator casey, thanks for your time. we appreciate it. >> thank you. spitting in the eye of the american -- that's interesting, given he did help co found facebook, which is a huge employer in this country and one of the biggest ipos. >> a $100 billion business in six or seven years. that's what they call a rain-maker, i believe. >> okay. coming up next, what the biggest ipo of the year means for the nasdaq's bottom line. we have the facts and figures straight ahead. dow down 63, 64 points, counting you down to facebook's ipo tomorrow. big news for the nasdaq, a platform that could rake in hundreds of millions of dollars. let's get to bertha coons for the latest. >> certainly longer-term, simon. very concerning. what's interesting is that having the facebook listing, psychologically very important. it cements nasdaq's stronghold on big tech company, actually. analysts from sandler o 'neill, which looks at the exchanges saying not getting it would really have been a big problem for nasdaq's brand. when it comes to trading volumes and trading revenues, it's going to be a good friend to nasdaq. facebook will be friendly for all of the exchanges, in fact. let's do a little wall to wall action from the nasdaq wall to the cnbc wall. about 2.7 billion shares is going to be the float. that's what it's going to be outstanding. based on calculations the folks did over at sandler o 'neill. the normal, they trade 2% of the float on a daily basis. that will average about 55 million shares for facebook, they calculate, over the first year. a little more than what microsoft's average is this month. the total pie of trading revenues amounts to just over 5 million in annual revenues. now, nasdaq is going to get the biggest share of that volume, about 35% of trading volume, according to sandler and neil, which will amount to the $9.7 million. add to that the listing fees, and that's more than 2 million. take a look. nyc is likely to see a nice amount, as well. 30%. and because their listing fees are higher, they'll see 1.9 million, the rest goes to places like bats and some other liquid pools which will see just as much as nasdaq is. so they're not exclusive friends, but the listing certainly makes you a friend with benefits, if you will. back to you. >> bertha coombs, thanks so much. we want to take a check on the markets here. the s&p and the dow pretty much remain stable, but we are seeing a decline in the nasdaq here. down by more than a percent, nor worth noting apple shares. remember yesterday, at the conference in new york city, people are short apple, can't see people standing in line for the iphone 87, but apple feeling pressure in today's session, along with semiconductors. mean time, don't forget to send us your tweets, facebook is holding an all-night brainstorming session they call a hack-a-thon at the company's offices in men low park to come up with new ideas. so what do you think will be the next big idea that will come from tonight's hack-a-thon? our handle is @cnbcsquawk. we have some of your responses after this. after this. the hyundai genesis. in a new, faster-acting formula. s tio-y siin lxtes zemethan a porsche panamera s. the 429 horsepower genesis r-spec. from hyundai. we love theme parks but with four kids, it can just be too expensive. yeah, so to save money we just made our own. oh no! what could be worse than ninety-foot swells?! typhoon! first prize! it's a cheese grater. wooooo... this isn't scary. are you kidding me? look at that picture of your mom's hair from the '80s. there's an easier way to save. wooohooo... geico. fifteen minutes could save you fifteen percent or more on car insurance. and i thought "i can't do this, it's just too hard." then there was a moment. when i decided to find a way to keep going. go for olympic gold and go to college too. [ male announcer ] every day we help students earn their bachelor's or master's degree for tomorrow's careers. this is your moment. let nothing stand in your way. devry university, proud to support the education of our u.s. olympic team. in that time there've been some good days. and some difficult ones. but, through it all, we've persevered, supporting some of the biggest ideas in modern history. so why should our anniversary matter to you? because for 200 years, we've been helping ideas move from ambition to achievement. and the next great idea could be yours. ♪ let's get to it. time to "squawk on the tweet." facebook wul pulling one last brainstorming hack-a-thon tonight. what's the next big idea you think will come from the hack-a-thon? andre tweets, the dislike and curious button. >> that's a good one. >> mark tweets, the next big idea from the facebook hack-a-thon, better figure out how to monetize mobile and get people to click on more ads. that's a good one. >> so what are they going to do? go right through the programming -- >> all night in their hoodies, presumably. >> and then ring the opening bell at 7:00 a.m. >> it's going to be exciting. >> wow. >> let's get a take-away from rick santelli in chicago. you liked our entire view with the senator, rick, eh? >> i was in an office, and people were applauding both of you. you know, senator casey sees the world like our governor quinn, like california's governor brown, but yet he needs t

Related Keywords

Vietnam ,Republic Of ,Chad ,Wrigley Field ,Illinois ,United States ,Tel Aviv ,Israel ,Brazil ,Madrid ,Spain ,China ,California ,Portugal ,Saint Andrews ,New Brunswick ,Canada ,Washington ,District Of Columbia ,Mexico ,India ,Devry University ,Well See ,Schleswig Holstein ,Germany ,Belgium ,Greece ,Singapore ,Chicago ,New York ,Malaysia ,Philippines ,Iran ,Texas ,Philadelphia ,Pennsylvania ,Boston ,Massachusetts ,London ,City Of ,United Kingdom ,Athens ,Attikír ,Post Or ,Abra ,Paris ,Rhôalpes ,France ,Italy ,Hawaii ,Italian ,Americans ,America ,Canadian ,Greeks ,Mexican ,Greek ,Iranian ,Spanish ,French ,American ,David Einhorn ,Garth Olaf ,Herman Leung ,Bertha Coombs ,Paul Miller ,Mike Duke ,Simon Facebook ,Eddie Lambert ,Bertha Coons ,Sean Connery ,David Goldberg ,Julie Boorstin ,Ron Johnson ,Jamie Dimon ,Daniel Bender ,Carl Quintanilla ,Simon Hobbs ,Facebook Ipo ,Rick Santelli ,Tim Seymour ,Larry King ,Howard Spielberg ,Matt Samuelson ,Phil Lebeau ,Brian Sullivan ,Chuck Schumer ,Jeff Dunlop ,Sharon Epperson ,Josh Brown ,James Connery ,Jim Cramer ,David Bob ,Courtney Reagan ,Sandler O Neill ,Julia Boorstin ,Google Ipo ,Michael Dell ,Robert Casey ,David Faber ,Sheryl Sandberg ,David Berman ,Kimberly Clark ,Porsche Panamera ,Jeremy Siegel ,Melissa Lee ,