Transcripts For CNBC Squawk On The Street 20130219

Word. Im a grateful american for these two gentlemen. Because i pray to god theyll get more traction this time than they did the last time because it will work. And i think its wonderful that theyre extending themselves the way they are for no personal gain but the better of the country. And we need more people like these two people. This is the greatest country on earth. Were going to be fine. Were going to go through some tough times, but were going to be fine. With people like this, we make it to the promise land sooner. I hope they are both listening and i can tell them how grateful they are for what theyre doing. Keep it up, fellas, and the we can do anything to help, give us a call. Thank you so much. Thank you for having us. You get younger by the day. Jose, lets get to the ladies and play some fwofl. Squawk on the street begins right now. Lets do it good tuesday morning. Welcome to squawk on the street. Im Carl Quintanilla with melissa lee. Cramer is back. Welcome, jim. Thank you, partner. Live at the new york stock exchange, faber is off today. Futures are tipping a bit higher here. Weve not had a losing week so far this year. Germany is up on the back of a good zew numbers. Our road map begins with a holiday shortened week. But plenty of earnings and data. Back and raring to go. Oh, is he. And a highlight this week will be earnings from walmart. February sales are a disaster. Could it be because of gas prices which have climbed for 32 days straight . Office max and office depot in advanced merger discussions in an allstock deal that could be announced this week. What could that mean to this years m a trend . And best buy is trying to kill the practice of showrooming by matching the prices of rivals both on and off line. But, of course, we start off with the market futures pointing to a higher open as the s p 500 goes for an eighth straight week of gains. It is the First Time Since 1967 that the s p has opened the year with seven straight weeks of gains. The nasdaq reaching a fresh 12year high. Its highest level, in fact, since november of 2000. The dow transports hitting new alltime highs. And rest of the markets here. You go through the markets, and im amazed. Health care, consumer packaged goods, conagri raises numbers. The takeovers. We talk about two left for dead. Office max, office depot. There is not a sector that i cant Say Something positive about. Its the one thing thats rather amazing, that the charts have whats known as that parabolic move. I mention that at the front because marty zweig passed away. He was always a guy who when everyone else was bullish managed to go bearish. So in his memory, i just say wow, how many parabolic moves can you have at once . But i also know he never wanted to fight the fed. And youre fighting the fed if youre selling stock. A lot of people watching today that video from three days before the 87 crash. Marty calling it almost likely like it was going to happen, jim. Unbelievable. And nadz to him betting the put call ratio. He got a lot of us started. I watch wall street week. I remember watching it in the early 80s. You would listen to him and say, what a calm, smart man who introduced concepts that we all use now that no one heard of before. And he was the first retailer. I will say that he is the first guy that got Retail Investors to buy stocks. If you will be missed, he will be so many great things. And i just think that marty, wow, marty was the essence of retail trying to figure out the stock. How do you overlay the conservativism of marty zweig, his Market Wisdom with where we are right now and the parabolic moves that you say we have seen. Take a look for instance at a stock like google, set to open a new 52week high, that has been a parabolic move. Well, i think its difficult to reconcile a lot of things. I dont know what marty would think about the fact that here is michael dell buying his company, here is Warren Buffett buying heinz, here is elison making a bid bid for a company that had been left for dead. And i think he would be torn because i know that he never wanted people to get hurt. I always feel like he was a doctor of stocks. First do no harm, but i also know that those have been waiting for a pullback have not been able to get in. I missed him. I know its been a long time since i stopped, but he also was one of these people who say, okay, lets take a hard look at whats working and whats not . Our late, great friend mark haines who introduced you to the concept of buying and selling, not just holding. And being sensitive to sentiment. I just when i saw him pass, i said, holy cow. What a tight between him and mark, two giants that weve lost in the last year. Two people who got it. Meanwhile, today, American Consumers coming under pressure. Gas prices on the rise for 32 straight days. The National Average for regular unleaded now 3. 70. Thats a rise of about 40 cents in the past month after an executive and retail giant walmart on friday said the company had the worst sales start to any month in seven years in february. Jim, thats according to some emails that were leaked. The company says, look, dont take internal communication out of context, but it did hurt the markets. Yeah, it took my breath away. In mexico, theres a walmart and you always remember the global reach. But it is still very much a u. S. Based company. We are exporting a lot of gasoline to other countries because, like the mismatch of where the oil is versus the refiners are, theres a tremendous mismatch of where the refiners are versus where both coasts we need refined products. So it is a degree of art fishlty. Its funny because it comes at a time when people are thinking about the keystone pipeline. These are different issues. And the keystone pop line obviously brings oil, not refined product. But when you see all that refined product going overseas that we make, there should be a bit of outrage. You dont know who who to direct it to. The president right now is not a friend of fossil fuels. Today in the journal, arguing that he might say yes to keystone. So that trend could change. But on the consumer, january numbers for retailers in general were pretty good, shortened month, though. Many people dont get their paychecks until the end of the month. Maybe walmart internal email, you know, that certainly is sort of a warning sign for a lot of these from dollar store, lower end retailers potentially. When i was away, i was working on this concept to introduce it on mad money. The rich are not like us. And whats happened, thats north based which is not cheap. Then theres the charts of dollar tree and Dollar General and theres the appeal of walmart. And you begin to say to yourself, wait a second, maybe i should be getting out of stocks that are dealing with Small Business where its weak and then, boom, office depot and office max occur. So you keep getting the facts in the way of the larger story. By the way, i think its gasoline that could be more of a story. Remember, a lot of people dont live close to their jobs. And that gasoline acts as a tax. So youve got two taxes coming on to the group of people who might be the dollar tree person. But its maybe in perceptible to the guy who is buying a very expensive coat at nordstroms. You have the image of throwing clothes in the air. That is great. You think its a long coors short Family Dollar kind of market . I do. Now, im not talking about coors the beer. Thats more like the dollar drink. But do i feel strongly that when you get in the way of high fashion, youd better have a coach, meaning a company that seems to not be doing that well and to make a stand on a Family Dollar. To make stand on a Dollar General to a dollar tree. Youd better have your facts right or youd better hope for lightning to strike by office max and office depot. Where are the kohls and the targets of the world, macys . Are they in no mans land . Macys reported a pretty darn good number, yet theres macys, the same place. Kohls reported a good number. The stock jumped and then its the same place. Those are crossfire stocks. In a crossfire and im not talking about herbalife crossfire. But i am saying that the combination of an office depot and an office max make me feel like before i leave kohls, could kohls be talking to someone . Its a mixed picture retail, depending upon whether youve got a lot of money, you dont feel that payroll tax, you dont feel the gasoline or youre striving and the striving people are looking to washington for help and look away, look away. Lets talk a Little Office depot and office max while were on the subject. Theyre both jumping in premarket trade following news that the two office ply chains are near a merger that could be announced as early as this week. The two companies are set to be working towards a price for the deal. It is expected to be an allstock transaction. Some estimates are that it could be cost savings of 400 million to 500 million on a conservative estimates. The industry in these two companies is particularly badly needs. In 1997, i remember a lot of people thinking this was going to be the great merger. Office max was quietly doing a lot of things. That company came public. Obviously, the Justice Department i think is in no mood to block this, given the facts that its A Cosco Walmart world. These were all play owes Small Business. When youre on that staples Conference Call, they say without Small Business creation, you dont want to you cant expect robust sales. I want to think that office depot, office max are two companies recognizing the future is brighter than the past. Here is something interesting. Office depot has been take a look at the stock. The stock has tripled since august. Office max has doubled since august. Yet here they are getting together. Not unlike virgin media. Then theres ma reason buying them. Again, this conundrum, stocks have gone up. Both office depot and office max were parabolic and now theyre further parabolic. Its funny, we had this discussion on friday, i think, with faber. After dell, after comcast ge, we asked david, we said, are we back . Is m a truly back . His response was, id like to see the follow on deals, the deals made by companies defensively who think they have to find a partner right away. Is this that . I think its a reaction to what david said. I think that what we all have to recognize is the confidence level. It is much higher among executives once the tax reform was done. Obviously, sequester doesnt seem to be on their minds. Theres a lot of Companies Like the rental Car Companies where they recognize theres too much capacity. Cass is going to go up because of that deal. People where he off, amazon cost people a lot of stocks. But is a combination of office max and office depot, will that actually make them disht will make them a stronger competitor, but will that ensure their future in that can they compete at the end of the day against a walmart and an amazon . Well, i think you can take costs on out ask costs out and costs out. Revenue growth . I dont know. When i look at office max, i was surprised how much better they were doing in the stocks. A lot of stocks going back to august last year reflected we were going to go back into a great recession. And i feel that that obviously is not going to happen any more. Goldman sachs, a very important piece this morning talking about, hey, maybe the down side isnt as bad as i thought. And then one last thing, when i was away, heinz got a bid. Goldman sachs had a hell on heinz. Talk about complacency. Maybe theres complacency, a sell on a Great American brand that Warren Buffett is a buyer . Shame on you. A sell . A sell on heinz . If youre goldman, who do you pick . Maybe they were not using heinz. Yet the analysts had a sell on it. Maybe Warren Buffett sits around and listens to that analyst its a indicator. People at office max are saying, hey, you know what . Faber wants to see follow on deals, here they come. Great to have you back, jim. I love being back. Also ahead, google taking aim at 800. How many more record high res left in that internet giant . What a week of earnings weve got. Adelle tonight, walmart this week. Hewlett packard, chesapeake, abercrombie, well run through all of these when we come back. At optionsxpress were all about options trading. We create easytouse, powerful Trading Tools for all. Look at these streaming charts theyre totally customizable and they let you visualize what might happen next. Thats genius we knew you needed a platform that could really help you elevate your trading. So we built it. Chances of making this . Its a lot easier to find out if a trade is potentially profitable. Just use our trade probability calculator and there it is. For all the reasons you trade options from income to Risk Management to diversification youll have the tools to get it done. Strategies. Chains. Positions. We put em all on one screen could we make placing a trade any easier . Mmmm. Could we . Around here, options are everything. Yes mom, ill place a long call to you tomorrow. I promise. Open an account today and get a free 13month eibd™ subscription when you call 18882800154 now. Optionsxpress by charles schwab. Barclays upgrading it to overweight from equal weight stabilizing scales in cost cuts. Also the company is making its online Price Matching policy permanent instead of just matching brick and mortar stores, the retailer will match the advertised prices of 19 major online competitors including amazon. Guys, they tried to do this over the holidays. Theyre going to try to do it from here on out. Well see. They invoke aim polar. Theyre talking about the amy polar ads from the super bowl. There is a big sense among these analysts, uhoh, office depot, office max, staples, maybe theres more money in leveraged buyout webs more money in deals. Who wants to stay short . Best buy. Look, they closed a number of stores and theyre still room for a showroom. So i look at the stock and i think, well, what is going to happen next . Were going to upgrade radio sho shack . I spoke out that these stocks got very oversold. Theyre just bouncing. But in terms of the end of showrooming, can this actually i would imagine this would be a huge weight on margins. They have to actually go out and match the price of an amazon. That could be a significant dent in margins. So at least shortterm are we going to see that in the stock . I think that a lot of a lot of these kinds of upgrades are a sense of you know what . Theyre not going out of business. And thats not enough to buy. You were talking when we left out strauser, when it got to the bottom, he did say, look, that was a better quarter. And thats what people are reacting to. There are product cycles out there that are important. So i want to buy best buy. Do i want to buy office depot . Office max . No. I would like to circle back to other things. Theres a note on peier one thi morning. That is a stock that has gone up on housing play and i like it more thats these others. Calls like this, are they preferable to pinning your hopes on a schultz like figure or in a rim case or a blackberry case for a white knight to come in. Buy them out . Well, i think that staples is an inexpensive stock if you believe Small Business is coming back, office depot, office max. Again, if Small Business comes back, if we start getting that formation of business that mr. Bucey has talked about, then youll see these stocks turning out to be dramatically cheaper. The bump, by the way, in premarket is enormous. The hopes that lbl talks chatter will surround staples once again, it was priced in, what, 10 billion lbo . That is not smart change here. But here we are, more than 15 . Theres money to be had. When you see whats happening with dell, and i know they begin to report tonight, that money on the sidelines from the private equity guys is coming back. By the way, there are earnings in the private equity guys. Keep that in mind. How do you go along at the beginning of a shortened trading week . Cramer will show you the way. Mad dash is coming up next. Thats straight ahead and is much more squawk on the street ahead. [ male announcer ] how do you engineer a true automotive breakthrough . You give it bold new styling, unsurpassed luxury and nearly 1,000 improvements. Introducing the redesigned 2013 glk. See your authorized mercedesbenz dealer for exceptional offers through mercedesbenz financial services. A talking car. But ill tell you what impresses me. A talking train. This ge locomotive can tell you exactly where it is, what its carrying, while using less fuel. Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say . Executor of efficiency. You can spot an amateur from a mile away. While going shoeless and metalfree in seconds. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. Now this. Will work. [ male announcer ] just like you, business pro. Just like you. Go national. Go like a pro. Its been a while since weve had a mad dash. Good to have you back, jim. I dont want to be too habitat for humanity, but i really miss you, buddy. Its tough when youre way. Yeah, i love you. Lets do the pbh. Its one of these conundrums. Vf corp. Had a number. They held a fantastic sale. Credit suisse, it initiates a buy on bph. The Apparel Companies are doing better than the people who sell them. Jcpenney doing the store within a store and macys, think so these guys have taken huge floor space. So it may seem like a difficult thing to recognize, walmart going down, pbh going up, but they have cotton prices going down. Some of the north face figures, even in a warm winter, looked pretty good. I am a huge fan of eric wiseman. Got to spend a lot of on time with him and his family and my daughter at the super bowl. There are ceos in this country who are regular guys who are real indebted and wiseman is one of them. Lets talk about his upgrade of 3m, even at this late stage. This is a funny upgrade. I say that because where were you here . Where were you here . He runs this company and hes going shake things up. Hes going to get rid of underperforming divisions. Now, you talk to him and hes clearly an international guy. Wasnt that keen on the minnesota vikings. I kind of had to explain to him that that is the vikings sort. Hes not exactly a minnesota guy. I talked to my dad about 3m. This is a company that reinvents itself every few years. I can betting with it rather than against it is a real good idea. There was a long period prooirtd this where they have hammered on the price of televisions, right . Oh, yeah, the glass screens. Inga sent me some of the samples of the new products. They are going to take over whole parts of your bathroom, of the new bandads are doing well, the kitchens and office supplies. Dont forget, they are a huge asian company. If youre looking for an asian lay, it is 3m. And this guy, if he gets rid of the divisions that arent doing well, its going to be like j j. Not yaet quarter. Its a levtation. 3m, you could doolt worse than that one. Very nice. When we come back this morning, simpson bowls back in the news, out with a new tax code overall. Will the plan win support in washington . A new trading week is about to get under way after a long weekend. The opening bell is coming um next. I know what youre thinking. Transit fares as in the 37 billion transit fares we help collect each year. No . Oh, right. Ai ctor carentacon xeroxandles r e 900 lln alth insurancelaims process. So, its no surprise to you that companies depend on todayserox for services that simplify how work gets done. Which is. Pretty much what weve always stood for. With xerox, youre ready f real business. [ babies crying ] surprise your house was built on an ancient burial ground. [ ghosts moaning ] surprise your car needs a new transmission. [ coyote howls ] how about no more surprises . Now you can get all the online Trading Tools you need without any surprise fees. Its notocket science. Its just common sense. From td ameritrade. Youre watching squawk on the street. Everybody getting back to business after the long president s day weekend. The opening bell set to ring here in just a few moments. Its going to be a big day for apple, fashion off against einhorn in court. Morgan stanley with a coat talking about a lower price. I see many as a china play. Look, i came away. I had a week off and i said to myself, you know what . This will be a dynamite start to just say with b look, apple, like it, inexpensive, no catalyst. By myself loving my ipad, and i think thats always the problem. Wow, good products, but theres google opening Retail Stores and chrome is a better seller. I think that the whole hoopla over the cash position may not be nearly as important as what they can do with the cash if they would just outline it to us. And im not talking about investments. Im talking about shame. 330 phone will help get ahood foothold in china . Look, i wish i knew what was happening in china, other than charges that theyre spying one. Well talk more about this later on. Theres the bell at the big board. Imperative Asset Management buying the shares celebrating the heritage eye yields, etfs. Over at the nasdaq, comcast, a company we love and bravos top chef season ends finale, ten years. I can remember the first one. Remember. We obviously work for comcast. Again, i dont want to say listen, you should go and buy comcast. Thats not my job. But read the Conference Call. It was outstanding. Possible growth, wow. What can i say . I dont own it, im not allowed to own it, but wow. Case study and vertical integration is what that is. Exactly. Dell tonight, do you want to set the table on dell . What a crazy couple of weeks its been. I think youre going to be caught in a situation where youre going to recognize that this stock would not be anywhere near where it is given the fact that pc growth is not that good and youre all going to need a pc still. My issue with dell is just go get a little extra. If youre so darn confident its 13 whatever, go pay 14 and change and get this thing off the front page and get to work with making the business changes. And i am a huge fan of michael dell personally. I think hes an honest, terrific guy. This makes him sound like hes trying to steal the company and give me a break. Hes never stolen anything. Hes annerble guy and i stick with him. Going back just for a moment, it seems even though we have a couple of bullish notes from analysts today, the stock is moving. I feel like weve reached the point where it doesnt matter what sentiment is, even with positive rhetoric from the street, talking about the iwatch adding 7 billion to 9 billion, we dont even know what the thing looks like. Morgan stanley is coming in with a cheaper iphone, 330 in a market where you can get an iphone for a hundred bucks, she seems to think that that might make china mobile more inclined to form a partnership with apple. These are all good news. We would have been up 2 on a couple of notes like this, but in this apple world, were not moving. But i would have liked to have heard from apple. You know, you think we have too much cash, but there are opportunities out there today that are extraordinary that we want to take advantage of. Now, maybe apple is just so insecretble that theyre not going to give you any sign. And, you know, ill buy the watch. I am an apple like many people, my family is an apple family. We grous about the extra cord and we grous about the i tune and then we say, give me the new device. I did find myself trying to find out what was in the new Samsung Galaxy the other day because i want to know what this competitor is doing. Its true. Its true. Take a look at the managed care providers. All of these are getting slammed. A preliminary 2014 Medicare Advantage benchmark payment rates were announced on friday and they will fall by mid Single Digits which would impact a lot of companies. Its sort of reworking this and its hitting a lot of these stocks, humana, well point, all feeling the declines. My friend cheryl scol in this ck put out a note. Shes so humble. She immediately said, look, i first thought it would be about a 2 cut. Its an 8 cut. Did talk about a dramatic pullback in business. Humana, obviously, a great vantage play. This one took my breath away. I guess we can never take washington off our screen any more, whether it be the keystone pipeline, whether it be the Medicare Advantage, the Medicare Advantage has been terrific for humana. You always have to keep one eye on washington, even if you dont want to. Unless youre a defense stock because in that case, youre at an alltime high. Were days away from a potential sequester kicking in and we are at a new high here. I go back over and i know that raytron had weakness last week. It is remarkable to me that you could basically have companies with lots of people saying the expensive plains, the expensive arm in this must come down and yet the stocks dont want to come down because they represent value. Right. Which i think raises the interesting questions, were weeks away from the sequester. Simpson and bowls will be on our show in just a few minutes. The president speaking at 10 45. Are there enough other things going right to where we dont have the drama this spring that we dont have the last time . I think so. I want to talk about something that is behind the scenes that people dont want to talk about on camera. There are a lot of people who are sequester fans. Fans, yeah. People feel that the military budget is too high. Now, if you believe that china is going to be a factor and we need to have big ships in the Asian Pacific waters, which i dont believe, then i think you might say, well, listen, we shouldnt cut back. You read about the drones, you read about our army, maybe they need more, maybe they dont. I think theres a sense that people feel maybe theres fat in the budget and this is a way to cut it. And there are certain defense stocks that locked in military contracts last year. So theyre going to get paid. The contracts are done. Theyre inked, theyre signed, whatever. Their revenue stream in the near term is that the sequester is believed to be a shortterm problem. It will be fixed. They have the revenue stream in the meantime and then the sequester will lift. I like to find the upsides. I was listen to go ken langone this morning and hes an optimi optimist. Maybe were going to have a much different tax collection this year. Maybe its going to go up more. Maybe the deficits are going to shrink. Were seeing this on the stateside and it takes your breath away. I know my new jersey governor, our new jersey governor, governor christie is talking about perhaps things are better. At a time, i look at all the receipts. I wonder if theyre be more bountiful going back to the sequester. Lets be clear, this health care and social programs, i dont know a soul who wants those. Civilian layoffs in the military, 800,000 people losing their work for some period of time. Im saying the ceos are saying, look, the big issue was the tax code and the ee quester of the Southern Congress will figure out a way to get the money to them, the northern and california congressman will be able to figure out how to restore the money for the social programs. But there is a sense that perhaps our deficit is shrinking even as we talk. But you will know more because youll have simpson and bowles. See what they say. Again, talking to john harwood at the top of the hour. Google, fresh 52week high for google. 797 and change. So we are just a whisper away from 800. Google right now is the highest priced stock in the s p 500. Just by share price, not by any other metrics, but share price. Remember that day in october when they had that miserable mid day release and people fled the stock . Talk about what looked like a selling opportunity that turned into a buying opportunity. That was a very dark day and all thats happened since then is theyve asserted their domina e dominance. But by the way, yoohoo, that creeps up a little bit every day. Netflix, all these levels were getting close to that would put them at multi year highs once again. Doing so many right things. Remember, when you go to best buy, if you do go to best buy and you buy a tv, you look at that little button at the bottom on the clicker and theres netflix. Im running my daughter to buy me i had a list of things i thought she should buy me for any birthday and i was like, forget it, forget it, netflix, im not buying you that. Younger people, netflix is king. What a turn. Lets check in with bob poissonny with more on whats moving this tuesday morning. Happy morning, everybody. The big discussions over the weekend, can the market advance continue . 6. 5 gains in the s p 500. Were off to a great start. Its been essentially straight up. Yes, weve seen more money coming into mutual funds, stock mutual funds. Thats certainly a good sign. And the journal noted people are more comfortable putting money into the market. But there are some sides, were a little stretched technically. I think thats the way to put it. Were not stretched in terms of valuations. 13. 5, 14 times forward earnings, not bad at all. Two things that have been a great concern to the technicians. Number one is where the numbers are in terms of the 50day moving average. Normally stocks move at abo about. 5 . Right now, were near 3. 5 above the 50day moving average. That has been associated in the past with some markets. I think thats a bit of an issue. Other problem is the volatility. I said before the fact that the vix is low doesnt necessarily mean anything any more. Its not a very good indicator. A lot of other people use threemonth indicators rather than the vix, which is a onemonth indicator for vix and the calls. If you look at it further, youll see some real concerns out there. The rates are a little stronger going out three months here. Lets move on and talk about hmos. Theyve had a big drop this morning. Melissa, eyouve mentioned them. Humana was down by a mid single digit percentage. It was a real disappointment there. This is that Higher Health care costs weighing on everybody. So all of the hmos are essentially on the down side today. A lot of notes about walmart and what was going on with them. We had concerns last week about the higher payroll taxes and sending out refunds. Credit suisse the a very interesting note this morning saying that the refunds are picking up and should normalize by early march. That should be a big help to walmart. Now, the guy who is going to the earnings that are going to come out this thursday, were looking for earnings of 9 growth. That is going the be the key. I would note that walmarts numbers, the estimates did not come down over the weekend even though we had those concerns on friday here. Bottom line is, definitely an impact from that payroll tax. Guys, back to you. Walmart hangs in there. Thank you so much, bob. I get to introduce i spoke with my dietitian yesterday and he said dont just say rick im switching to you. My dad is just a huge fan. Rick santelli at the cme, how are you . Pretty good. And ill say hello to pops out there. Thanks for tuning in. You know, if i look at the interday of tenyear note yields and i know we were closed for president s day yesterday. Pretty much not a lot is changing. Remember, we have the fed buying a boat load. We have a boat load of investor and analysts saying that the days of buying are over and maybe principal toppings wont add to the very small relative to history yields. But they certainly dont seem to be selling off progressively and the boom, which was open. Look at a twoday chart. Pretty much the same pattern. A slight drift, actually, towards a lower rate and potentially more buying. Listen, we learned a couple of things. I call this marshmallow tuesday. We learned that the squishy number of zoo confidence, well, it improved. It improved markedly. We all know in the Fourth Quarter germanys gdp shrank 0. 6 . Hard numbers . We learned that auto saelts in europe dropped 8. 7 . To a 23year low and the only thing that made it a 23year low is thats when they started recordkeeping in 1990. Lets see. Hard and fast numbers, germany, huge car exports, theyre the feel good industry. You decide. And if we look at the currencies, whether its the dollar yen or the euro yen, theyve taken a breather. I think g20 gave everybody the pause. After the pause, most lickly tend will deteriorate further. Lets check out the latest. We go to Sharon Epperson at the nymex. Good morning, jim. We are looking at commodities across the board. A little weaker this morning. We have the u. S. Markets back, asia is back after the lunar new year. Theres not a lot of interesting commodity these morning. Particularly not so in copper. Were looking at copper that is the weakest performer in the metals market. Remember that 40 of the worlds copper is consumed by china. Were not seeing a lot of buying interest there. Its part of the reason why were looking at nearly 1. 5 drop in the price of copper. Gold will be closely watched today to see if gold can take above 1600 an ounce. We dipped below that level recently. Its a key psychiatric lomgal level and a close below that level traders say will bring us to 1584 and then we can see perhaps gold prices fall all the way to 1525. So theres a lot of bearish sentiment in the gold market right now. Back to you. Coming up next, an electric journey, phil lebeau is on the road test driving the tesla model s. Phil. Hey, melissa, we are headed on 295 north into wilmington up to milford, connecticut, and then to boston testing out the new model s. This is the same test drive the New York Times did last week. What are we seeing . Well tell you when squawk on the street returns. [ male announcer ] it was designed to escape the ordinary. It feels like it can escape gravity. The 2013 cclass coupe. Starting at 37,800. Did you hear about the latest Office Romance . Its a merger between office depot and office max. Theyre said to be in all stock talks with a deal. It could come as early as this week. Put your clever and Creative Marketing cap on and answer what should the new name of the company be . Tweet this at squawk street. People different realize these were two different companies. Thats the problem. And theres chatter im getting from brad thompson, hes saying the s. E. C. May not go for this. My problem is, i believe costco is such a vish your competitor, youre not going to get a lot of fight on this thing. But i know youre going to hear the s. E. C. Might think its anticompetitive. If theyre the same company, would is worried . Office office. I love dunder lin. My father represented them for years. One week after controversy erupted about the range of a tesla model s, our phil lebeau is taking his own journey in that electric vehicle. About 3 1 2 histories ago, he began in drive from washington, d. C. En route to boston. Right now, phil is on the road. How has the ride been so far . Melissa, we are just pulling into the start of the new jersey turnpike. In fact, we just crossed over to the state line. As we come up here from delaware, as you mentioned, we started in washington, d. C. This morning. 6 00 in the morning. We were live on squawk box. We have now gone what essentially about 1110, 115 miles and we still got to our next destination, which is going to be in milford, connecticut, thats the next recharging station for the tesla model s. Weve got another 185 miles. Part of the reason were doing this, as you mentioned, last week the New York Times did a review of the model in which the battery ran out on the car and they said, listen, this was a disaster. Ceo elaine musk from tesla said wait a minute, you didnt follow the instruction pes. Thats not the way the tesla model s works in terms of charging it and not taking any detours. So we wanted to get a sense of how the model s performance. Frankly, what weve seen so far is that the range has been what weve expected. It has kept us posted. You cant see in front of me is basically a an ipod or an ipad shaped Center Instrument panel. And essentially, as you go through and forgive me here, this is live tv. I have to go through the toll booth here. I know you guys are probably looking at this saying, are you kidding me . Hold on a second. This is live tv. There you go. So you essentially are being posted constantly in terms of what youre seeing with your mileage and how much range you have left, how much battery life you have left. Right now, we have got essentially 245 miles worth of battery life left. Weve got 184 miles to the next destination. So we should be there fine unless something happens unusual. Unless we gun it and we are using a lot more battery than we should. But if we go at Cruise Control of 65 to 70 miles per hour, we should be there on time. As far as the drive and i know a lot of people are wondering about that, guys, is it any different driving an electric car . Certainly. You have the instant torque, its very smooth and the instant acceleration is something you notice immediately as soon as you get in the car. Finally, you also get a lot of rubbernecking, people who drive by particularly on the east coast. They dont see a lot of model ss. So as theyre going by, im getting a lot of people doing this, what is he driving . Well keep you posted and let you know how much mileage were accumulating and is how were doing in terms of battery drive. We cant believe you dont have ez pass, phil. With that delay, its hard to chat back and forth. Great tough. Phil lebeau doing that road test live on squawk on the street. When we come back, Allen Simpson and Erskine Bowles will tell us about how they plan to overall the tax code. Coming up, cramer is kicking it into high gear. His six stocks in 60 seconds will energize all of us. In the next hour of the program, president obama will attempt to pitch the job to firefighters against further raising taxes on the rich. Ers kin and bowls will be here with a solution to the sequester. Well talk about google as it nears 800 a share. And the company that has written detailed reports on how the chinese are hatching american industry. Will join us live in the next hour of squawk on the street. All right. Make your past to post nine. They did it with the offering. This is holding. Freeport did its giant Equity Offering and moves all the way down. Eye a buyer here. Goldman up on gnc. Gnc has been remarkable. This is like herbalife is a supplement company. Sh a retailer people just love and i think it goes higher. Gilliad. When does it quit . The answer is never in an environment where you still get slow growth and theyve got a lot of good stuff in the pipes. Biomarin. This is one of those companies that has been a specialist in or fan drugs. Ive had them on air on mad money. They are a remarkably good cup. Arco. Are they in apple, are they out of apple . I think theyre in apple in the next again ragz. And cypress. Wow, this stock has been horrendous, but remember, rodgers is the biggest man behind cypress and hes a buyer. If hes buying, im buying. Tonight on mad sounds like you had some time to develop some new themes. Yes. And i think American Electric power is in the cross hairs of the United States government. We had a new epa head. I really wonder you see Norfolk Southern going much higher and thats because theyre exporting coal. But is this country about to do a major crackdown on fossil fuels . Id like to know. I have to tell you, the president sure dont like them. As he made clear this weekend. Yeah. Jim, well see you tonight. Thank you, carl. When we come back, alan simpson and Erskine Bowles talk to us live. Plus, getting ahead of dell tonight. How do you play it sthp and does the buyout price need to go higher . Back in a minute. [ male announcer ] to hold a patent that has changed the modern world. Would define you as an innovator. To hold more than one patent of this caliber. Would define you as a true leader. To hold over 80,000. Well that would make you. The creators of the 2013 mercedesbenz eclass. Quite possibly the most advanced luxury sedan ever. See your authorized mercedesbenz dealer for exceptional offers through mercedesbenz financial services. Through mercedesbenz today is gonna be an important day for us. You ready . We wanna be our brothers keeper. Whats number two we wanna do . Bring it up to 90 decatherms. How bout ya, joe . Lets go ahead and bring it online. Attention on site, attention on site. Now starting unit nine. Some of the worlds cleanest gas turbines are now powering some of americas biggest cities. Siemens. Answers. We all work remotely so this is a big deal, our first full Team Gathering i wanted to call on a few people. Ashley, ashley marshall. Here. Since were often all on the move, ashley suggested we use fedex office to hold packages for us. Great job. [ applause ] thank you. And on a protocol note, id like to talk to tim hill about his tendency to use all caps in emails. [ shouting ] oh im sorry guys. Ah sometimes the caps lock gets stuck on my keyboard. Hey do you wanna get a drink later . [ male announcer ] hold packages at any fedex office location. With the you do and the s p 500 hitting new fiveyear highs at this point, we want to mention google crossing a milestone, above 800 a share. 801. 60 is the last number here. It trades at a multiple of about 25. Well talk to a fund manager about google a little later on in the show. Lets check in with diana ol olick with breaking news. Thats right, diana. Home builder confidence took a step backward. The National Association of Home Builders monthly Sentiment Index fell one point to 46 in february. 50 is the line between positive and negative. The Housing Market is higher than it was a year ago. Rich dudson notes this is partly due to ongone uncertainties about job growth and consumer access to mortgage credit. But its a reflection of the fact that builders are now confronting rising costs for Building Materials and in some markets, the three index components. Current sales fell to 1. 51. The only one in the positive. Sales expectations rose by one point to 50 and buyer traffic fell four points to 32. The northeast and west saw gains in builder confidence while the midwest and south declined. Melissa. Thank you very much, diana olick. Half hour into trading day here and a lot of new records being set already. The dow and the s p 500 at fresh fiveyear highs at this point. The russell 2,000 is at alltime highs. Health care, at new alltime highs. Nice gains across the boards for the markets. Lets get to john harwood right now in washington. Melissa, we are joined by alan simpson and Erskine Bowles which recommended deficit reduction of about 4 trillion over ten years. Now you have a new goal which youre laying out today. You want another 2. 4 trillion over ten years after almost 2. 7 so far. That is more than you initially recommended. Why the new goal . Where did that number come from . A couple of ways. One, weve added about 1 trillion worth of new debt to the Balance Sheet every year for the last two years. In addition, what we tried to do was to take where the two sides were at the end of december when they actually came forward and had agreement. You know, really at areas that really could have made a difference. And what we tried to do was expand that into something that would really reduce the debt down to less than 70 of gdp and actually keep it on a downward path. That takes you about 2. 4 trillion. We broke it down to about 1 trillion in revenue, about a trillion dollars excuse me, about quart kwerer in revenue, one quarter in Health Care Cuts and the rest coming from cuts in defense, nondefense, other mandatory programs and interest in government reforms. Senator, your goal of 2. 54 trillion is more than the president and the congress are saying were going to try to get 1. 5 trillion. Why is the bigger goal more achievable than the one they cant achieve already . Well, we learned the hard way with our commission. The tougher we made it, the more spoiled we got. Either go big or go home. This is pathetic. And youre going to just continue this on into, you know, months and apparently years, but it was very simple when they said, oh, you guys presented something, now well start watering it down. We said, no, were not going to water it down at all. Were going to Start Building and making it tougher. It worked before. We got five dems, five republicans, one independent to vote for it. So we said, let her rip. Your former colleagues on the hill have said no more revenue. We already did that toward the end of the year. You guys say, no, we need another 600 billion in revenue. How are your former republican colleagues on the hill going to swallow that . Well, you just tell them to get the wax out of their ears. Were not talking about a tax increase. Were talking about going into a code, into a system of tax expenditures which are costing us over 1 trillion a year for the past four years. They say theyre going to cut those expenditures but only use them to lower the rates, not for deficit reduction. That was what we suggested. We also suggested some of it go into deficit reduction. But, you know, you dont have to be enthralled to be terrified of a guy that never got elected to anything and probably couldnt and there he is out there and hes if hes using the word tax increase when were talking about going into the code and taking those tax expenditure us down or out, thats fakery. Over the next ten years. It really does strike me as kind of a ludicrous argument. Over the next ten years, theres probably 13 trillion worth of tax expenditures in the tax code. 13 trillion. And were talking about using about 500 billion of that to reduce the deficit and the rest they can use if they want to to reduce rates. I think thats a pretty fair trade. Now, let me ask you one more before i let Carl Quintanilla jump in. You say 600 billion worth of Health Care Entitlement cuts. Thats more than the Administration Says is justified, especially given the downturn in health care costs. Whats your answer to the white house . Look, were going to have to push the white house on health care, were going to have to push the republicans on revenue. What we tried to do is make enough cuts in health care to slow the rate of growth on a per capital ya basis to the rate of growth of the economy. In our opinion, that takes about 600 billion to do over a tenyear period. And it does such things as paying for incentives go to pay for quality rather than quantity. It has real cost sharing in there. It happens has mean testing. It has appropriate saving in there in order to take account of, you know, the aging of the population. Not premium support or vouchers . No. We dont think thats something you have to go to in addition to slow the rate of growth to the rate of growth on the economy on a per capital basis. Simon. I just wonder what you and your guests think about whether the ground is shifting on actually getting a deal, on getting something into law. In 45 minutes time, president obama is going to attempt to pitch the jobs for firefighters over the sequester against further taxing of the rich. He clearly feels that he has greater Political Freedom in his second term. He has this huge organization attempt to go mobilize outside the beltway and the gop seems very divided. Is that dividing line between spending cuts and tax increases shifting with obamas arguable be lidge rans in front of our eyes . You know what i think, simon . I think that when this really stupid, stupid, stupid sequester goes into effect and people have to start standing in lines for three hours to get through security at the airports, were going to visibly feel, you know, how this government has become completely dysfunctional and theyre going to want to push these two sides out of our comfort zone and push them to make the tough decisions we have to make to put our fiscal house in order. Thats going to involve a little bit of revenue and a lot of spending cuts. When do you think that will happen . If the sequester goes into effect next friday, i think people will see it pretty quick and i think they will really get angry with these people in congress and the administration. Senator, do you think that whether its a few days before or a few days after the sequester deadline there, in fact, will be a deal . Or do you think boeing sides are willing to say, okay, its not what we want, but its not that bad and it does cut spending. Well, i used to think that, but i dont any more. I think the democrats think, well, let it go over to see zester because finally theyre going to chisel in the Defense Budget and theres plenty of fat in there. I could describe that in some detail. And the republicans are saying, so, theyre going to deny us spending cuts, are they . Let her rip. Here we go, it will be chaos. It is stupid. Three times he said it. And here we go. And the people wait until they close Yellow Stone Park in the winter. Wait until they do, you know, glacier park in montana. I mean, theyre going to get down its called the Washington Monument syndrome. You know how it works. So you agree with erskine that the public backlash against that will ultimately produce a deal . Oh, i agree with that totally. You betcha. You betcha. And what about the march 27th deadline, the socalled cr, continuing resolution. Is this government to go abogoi shut down or jit yellow stone and we went through a partial shutdown of the government in 1996. It wasnt a very pretty thing. What i find so crazy is, you know, here we are, the largest economy in the world and not only do we not have a long range plan, we dont even have a budget. We havent had a budget for four years and were operating this country on a month to month basis. There is no businessman listening to this broadcast who operates in that kind of manner. Its crazy. Senator, last question. Give me for president obama, for republican leaders, boehner and mcconnell, democrats leaders reid and pelosi on their leadership issue right thou. I taught at harvard. I couldnt have got into harvard if i had picked the lock, but i knew what grade inflagdz was. Give them all a c plus, every one of them, which is a flake. You know, that is the end of the earth. I gave a buy a b plus once and i thought he was going to dive off the edge of the building. No. Everybody is at fault here. And all were doing, were not trying to promote another plan. This is just saying, look, we saw what they were trying to do in december and erskine and i have gathered what they tried to do there and put it back out to see what they do. Everybody will [ expletive ] at it. Well be savage. Melissa, simon, carl, from the land of the c plus in washington, back to you. And white men. Thank you. Thank you. Meanwhile, office depot and office max will be on the verge of a deal. Kayla toucsche has the details. Thank you. The deal was set to be announced on thursday but could be expedited given recent media attention. Im told price and final terms are still being decided, but it is an allstock deal that is currently on the table. Discussions have been under way since late last tall. Office depot hired Morgan Stanley to evaluate alternatives after activist investor starbyrd bought a 15 stake in september. Peter j. Fellman working on the target side. Jpmorgan working with office max. Office depot up better than 30 . Thats because office max, the larger company, is expected to issue shares to pay for the deal and also because office depot is likely to sell a 50 stake in its mexican unit valued around 700 million for nearly as much as the whole company is worth. The deal would combine the nations number two and three Office Suppliers in combined 18 billion in revenues. Staples previously attempted to buy office depot in are t97 bu regulators turned it down. This time around, its a different world, they say. Not to mention the tough times that have generally be fallen these companies as consumers move their buying online. Private equity firms, no deal there has emerged. Back to you. Kayla, is there any chance that they could do a deal with staples . Its been 16 years since they said no, but as you mentioned, the environment has changed since then. Im not sure that you could do such a configuration. It would be nearly an impossible feat here, given the fact that the market share of the number two and three are smaller. It is seen as a life saving deal. Staples, unclear what its fate will be in this whole situation. But i think as far as the threecompany deal, we havent seen anything like that ever. I was thinking maybe staples and one of the others, not necessarily all three together. Oh, okay. Well have to wait and see at this point. Kayla, thank you very much. Lets send it over to josh on the market thrash, the Search Company not having a good day. Carl, google keeps trucking higher. As you guys have mentioned, hitting a new alltime high today. The russian google, a different store. Check out the yendex this morning taking a dive. The yandex says Fourth Quarter profits jumped to as it grew ad revenues but that missed expectations. Yandex, which is ahead of google in the russian market, investors unhappy with this report. The stock down now some 10 . Simon, over to you. Just moments ago, google broke through 800 a share for the first time. A text fund manager with google is one of its Top Two Holdings will join us next to tell us how high he thinks it could go from here. [ male announcer ] ok, heres the way the system works. Lets say you pay your guy around 2 to manage your money. Thats not much you think. Except its 2 every year. Does that make a difference . Search cost of Financial Advisors ouch. Over time it really adds up. Then go to etrade and find out how much our advice costs. Spoiler alert its low. Really . Yes, really. Etrade offers Investment Advice and guidance from dedicated, professional financial consultants. Its guidance on your terms, not ours. Thats how our system works. Etrade. Less for us. More for you. It is a historic day for google. Look at that. 803. 34. Kevin landis is the founder and chief Investment Officer for first hand funds, manager of the tech fund for google and apple as two top holdings. Kevin, welcome back. Fascinating to watch this move. Comes on a day where reportedly, at least, googles Retail Stores are not going to happen this summer. Eric schmidt is selling shares over the next year. Feels like a trap. Is it . Kevin, i thought they would have a few extra seconds to fix your mike. They have not done that yet. Well try to get to you in just a few minutes if they do fix that problem. Historic day, and we were talking during the break when apple hit 700 last year. It was a much bigger deal. Your response to me was that was also the biggest Market Cap Company of all times. Zlit became the biggest Market Cap Company. And the move was much more symbolic. The move went from 5 4u7b to 700 in a matter of months. It was a sharper, more prizing level to overtake. But google here, 800, thats a and google pass part of the popular culture. You know, that was the great investing bet of so many people. It had performed so well for so long. You know, it was startling. It was based over time. What is amazing was to take a look at the p e ratios. The share price base was at a historic high. It was trading out of 40. So even though its reaching this historic level, the pe has not caught up. So that will be about. Do we want to try kevin again . Kevin landis once again from san jose. Kevin, apologize for that. What do you make of it at these levels . Well, you know, its interesting to watch and any time a stock makes new highs, you know, theres good feelings and all that. But, really, you want to ask yourself, what has google done in the last few years to make itself work more . And to me, thats all about android and how the mobile hand set business has come down to a twohorse race, basically apple and is android. At the same time, kevin, that may be the exciting part of google, but that is not where google is making money. Its not monetizing android to the fullest. Is it a potential of possibly et being able to capture a revenue stream, significant Revenue Streams from android . Yes. Thats exactly right. If you look back at google three, five, seven years ago, it was this amazing cash cow from the search and then all these other experiments. Google earth, google mail, everything else. And they knew that they had the luxury of trying lots of things to see whats going to work. At this point, its android and apple, android and ios and Everybody Knows at some point theyre going to be able to make some money here. You cant calculate it, you cant weigh it just yet. But i think its coke and pepsi now and its a question of how much and when, not if. And like with coke and pepsi, we sometimes see one trade with the other in terms of the lead. Are we at a stage where google does take the lead, even if its by a nose over apple . Right now, they own a great deal of thanks to samsung because, you know, htc stumbled, but samsung has taken off and theyre the standard there for android right now. And samsung is making great phones and giving apple a run for their money. Kevin, what do you think of this idea in the journal today that they will have Retail Stores all be it perhaps delayed. Do they need to do that to further unlock value in android . There would be sony and samsung phones in those stores. Is that kind of a did i say desperate offering to the market or do you think it would unlock value . Right. So should we spend a few minutes talking about what an amazing out of the box gambit start ago retail store is . Probably not. Following somebody elses good idea that demonstrated that it works, theres nothing wrong with doing that. But if it turns out that Google Stores are a dud, thats not the end of the world, either. But, you know, it worked for appearing, so why not try it . Why is it a far gone conclusion that this will monetize android . Right now, it really is ad revenues that investors should care about. With google at 8el 00, its all about ads right now and the prospect of monetizing android, thats sort of off in the future in terms of it being significant to earnings. Thats right. And if you dont think they can monetize android, what are you doing paying this much for this stock . Its a very high multiple and youre probably overpaying. Now you can go back and say, eric schmidt might be taking the other side of my trade. But this is the lesson from technology over and over again through the decades the the once youve got a presence and market share, theres a lot of ways you can monetize it. Look at facebook. Once you get the audience, once you have the market share, there are many, many ways to do it. Apple has made a fair amount of money off of their market share, so i think google can find a way to make a buck there. Kevin, you glossed over the schmidt sale. But 42 of your stake, thats not trim ago position. Does that not give you any pause at all . Absolutely. And i dont mean to gloss over it. Thats big. Somebody smarter than me that knows a lot more than i do and hes a huge seller, yeah, that should get your attention. But remember, do you recall when peter was dumping his shares in facebook . I had that same feeling. Its in the low 20s and hes dumping. Sometimes they have other reasons for selling it. Lets hope thats the case here with google. Certainly hes not going to tell us. Youve got that right. Kevin, thank you so much. Thank you. The question here is will gold continue sliding . Well chart the road ahead for the pressure metal. That is next. [ male announcer ] how do you engineer a true automotive breakthrough . You give it bold new styling, unsurpassed luxury and nearly 1,000 improvements. Introducing the redesigned 2013 glk. See your authorized mercedesbenz dealer for exceptional offers through mercedesbenz financial services. There. I said it. They dont have pictures of my kids. They dont have my yoga mat. And still, i feel at home. Could it be the flat screen tv . The not so mini fridge . The different free dinner almost every weeknight . Or maybe, its all of the above. And all the rest. Am i home . Nope. But it almost feels that way. Homewood suites by hilton. Be at home. A talking car. But ill tell you what impresses me. A talking train. This ge locomotive can tell you exactly where it is, what its carrying, while using less fuel. Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say . [ indistinct shouting ] [ male announcer ] time and sales data. Splitsecond stats. [ indistinct shouting ] its so close to the options floor. [ indistinct shouting, bell dinging ]. Youll bust your brain box. All on thinkorswim from td ameritrade. Transit fares as in the 37 billion transit fares we help collect each year. No . Oh, right. Youre thinking of the 1. 6 million daily Customer Care interactions xerox handles. Or the 900 Million Health insurance claims we process. So, its no surprise to you that companies depend on todays xerox for services that simplify how work gets done. Which is. Pretty much what weve always stood for. With xerox, youre ready for real business. Lets take a look at the technical picture and see where its slightly ahead to move forward. Katie, from mkm partners. Good morning. How bad was last weeks breakdown in a technical sense . It was a big deal for me. The support was around 1640 an ounce. That breaks down targets about 15. 25 to 15. 40 based on the lower boundary of a longterm trading range. So, really, over the last year or so, gold has been trading largely sideways on neutral longterm momentum. Within that trading range, weve obviously seen negative short and intermediate term momentum since gold peaked last october. So that was an important reversal for gold and i do think that well see down side follow through upon this breakdown, especially for the fact that we saw the gap down on tri, which was a big deal for it. And how strong would the support be at 1540 in your view . Its a very strong support level. And in that sense, it was also broken, that would be a very massive breakdown for gold. And it would target something in the 1280 range. So im not calling for that kind of breakdown, because already gold is oversold in here. But certainly i dont want to get interested in buying it until we see some stable ziegz in momentum terms around that 15. 25 level. At the same time, there will be people who said, look, gold has done great things over very long period of time. What is the longterm pitch . Frank holmes was here on friday from u. S. Global invest everies, still saying you should have 5 of your portfolio in gold. Well, 5 is one thing. Thats not, you know, an overweight exposure, i would say. And longer term if you look back many, many years, gold has trended higher and there will be times when the u. S. Equity market cracks and we see rotation back into gold as a safe haven. So certainly with it trading or shortterm oriented perspective, you can have long positions at different times. My thought is the equity market correct in sort of of the march to april time horizon. And thats where you might see a relief rally in gold. That might be an opportunity to add short exposure if you think it will break that support level. Katie, in terms of the other metals, do you see the same sorts of charts for them, as well, most notably the silver . Is this a dollardriven chart thatter would seeing in gold . The industrial metal res far more compelling from a technical standpoint. Weve seen reversals in areas like paladi in, copper, aluminum, nickel. So all of those commodities tend to have undergone those nice turn arounds longer term and is i think that makes a nice comment on the u. S. Economy. Katie, have a good week. Thank you. When we come back, inside the report that the Chinese Military might be behind the sophisticated hacking of u. S. Computers. Well talk to the ceo of the company that gathered that data. And later, it has been four years since this happened. This is america. How many of you people want to pay for your neighbors mortgage that has an extra bathroom and cant pay their bills . Raise their hand. President obama, are you listening . Four years since Rick Santelli started the tea party for all intents and purposes. Well find out what he thinks now when squawk on the street continues. [ male announcer ] we began with the rx. Then we turned the page, creating the rx hybrid. Now weve turned the page again with the rx f sport. This is the next chapter for the rx and the next chapter for lexus. This is the pursuit of perfection. With fidelitys new options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades en you open an account. But i am your rmarket data. I know what youre looking for. Im not chained to your desk anymore. Im faster and smarter now. And so much less expensive. I am your market data. And if i do say so myself, i have never looked better. Superderivatives introduces dgx. Data done differently. Some of the stories were watching, 7 31 on the west coast, 10 30 on wall street. Broad slides across the board for many of the Health Care Firm today. Humana, cigna all suffering from Medicare Advantage plan in 2014. Goldmans hassi is backing away from his previous worry about ae investigation this year saying Congressional Republican ves given up on using the idea of the debt ceiling as a way to force spending cuts. And the s p is at its highest level sings october 08. Morgan stanley is one of the high names. A unit of chinas army tucked away in a nondescript Office Building is behind a huge proportion of hacking attacks on u. S. Websites. A u. S. Firm says a group attached to the Peoples Liberation of army have stolen data from 141 companies, including 115 u. S. Companies over a sevenyear period. The report is featured on the cover of tts New York Times. Kevin mandia is the founder of the group. Its a pleasure to have you with us. Thank you for having me. Since the report was released to the New York Times and since that article was published, we have a response from china, knot who says Cyber Attacks are anonymous and transnational. It is hard to trace the origin of the attacks. That has been the problem with the tracing, where Cyber Attacks come from. Theyre often hidden. They can be disguised. How do you actually know that these attacks originate from this Office Building in shanghai . Thats a great question. First, thats the same response we always again from the Chinese Government. Mandian is not the First Company to make these accusations nor about it be the last. We tracked the origins of union 61398. When you look at the area of operations of that unit and you look at the mission of that unit and the required expertise and then the scale of the attacks, everything points to and the totality of this circumstances point to that the apt group is, in fact, that unit in shanghai. So just to put it in personal terms, because i think a lot of people out there dont understand a lot of the terminology. What is it about the attacks that make you so certain that it is coming from this unit of the Peoples Liberation army . Well, we brought it back to the front door. Whenever you investigate Cyber Security attacks, you basically go through what we call hop. Every time the investigation got back to what we perceive is the last step, 98 of the time that last step was ip addresses in shanghai and that the character sets of the attackers were set to mainland chinese character sets. Is it possible that another group made it look like the attacks are coming from the Peoples Liberation army . Ite just wondering because obviously these are highly sophisticated attacks. If you have the capability to stage these attacks, you might have the ability to disguise it. I think one thing is possible, but one thick should be made clear. China has a controlled internet access. Everything people do on the internet is monitored there. We have seen thousands of attacks in just the last few years alone. So its hard to believe to think that the Chinese Government does not notice thousands of attacks coming from a neighborhood that happens to be collocated with unit 61398. Its hard to believe they dont know this. Why are they doing it. What are they seeking to do . Im not a mind reader, but when ive investigated all these intrusions, one of the things weve learned is its theft of intellectual property theyre after. Ite not credit card data. It appears to be copying sensitive documents. So what when a should because it seems essentially that youve got an asa mettical relationship. Its not on the same scale as you describe. What should the response be of the American Government . Do they try and put a shield around america and around these businesses . Or do you have a Nuclear Style response where you get in and youre capable of doing the same to them and you react potentially further down the line and it is the threat of your action that stops them . Well, i think that the response cant just be technical. And that is just a fact. Youre not going to be able to prevent all these intrusions. Theres going to have to be technical and diplomatic based Counter Measures to these attacks. And thats one of the drivers as to why mandaint did this report. Its time to say that the attacks werent just coming out of china, but, in fact, theres ties to the Chinese Government in these attacks. But there is no clear single answer. Theres a lot of complexities here and well we trying to solve this problem for a long time. Its funny, kevin, because we use the term attack in relationship to these cyber preacher that are being staged by hackers. At the same time, we dont go as far as saying this is an act of war and that seems to be the reason why we dont escalate it beyond diplomates saying, you know what . You guys shouldnt be doing this. At what point do we say too much intellectual property is being stole sxn too much proprietary information is being stolen such as the attacks on some of the Oil Companies that got basically their plans for oil fields a few years back . Well, i think that the status quo, it depends who you ask, but the status quo is intolerable. The Board Members of these victim companies, theyre devastated by the invasion of privacy and the loss of this property. So if you ask them, theyre going to see its already intolerable. We need to do something now. If you ask others, they may have a different opinion. But it is a complex issue and quite frankly, based on the response we heard from the Chinese Government, its not going to stop. And the problem is also that theres sort of a finger pointing in that a lot of private Companies May be outraged by the level of Cyber Attacks, intellectual property stolen. At the same time, nobody wants to be the one having to spend the money if the u. S. Government says, you know what . We have to increase Cyber Security measures, private sector, you do it, the private sector is saying, you know what, government . This is your problem. Well, its a very complex issue. Most of the folks i speak to in the private sector dont want additional standards, regulations to burden them with additional safeguards. But we have seen the traction with information shares and the movement. The president himself said lets find a way to share information so that everybody gets smarter from east breach. So were all as smart as the victim that occurred yesterday. Because of tnk we will see improved security but were a long way from solving the problem. All right. Kevin, some great speaking with you. Thanks for your time. Thank you. Kevin mandian. Meanwhile, a source saying loeb began unloading shares of herbalife. Hey, scott. Yeah, carl, theres twist and turns seemingly every day to this story. It was just back in early january that loebs herbalife position became public. In a letter to investors back then, loeb called the company a compelling longterm investment for third point and called out an unnamed ackman for his view na herbalife is a pyramid scheme. But im told from a source that over the past few weeks, loeb has been trimming his position. Im also told loeb still has a position in the stock but the selling of at least part of it does sell the stage to go toe to toe on herbalife. On friday, in my exclusive interview with mr. Icahn, he made it clear his investment is more business than personal. The fact that i dont like ackman, you could say maybe is the strawberry, you know, on top of the ice cream. But what i am saying to you that this is not done to squeeze ackman or squeeze anybody. However, it must be understood, when somebody goes out and shorts 20 of the stock and makes that very public, ive said this before, in my opinion, thats a huge, huge risk. Well, the story grows more compelling this event when herbalife reports this evening. No comment from loebs camp when reached over the weekend. Carl, this is unique in that its going to play out over the next couple of days between the earnings tonight and what i said would be probably the more interesting part of all this, the Conference Call tomorrow. Yeah. And whatever else you might dick dig up in the meantime. You never know. Scott wapner, back at hq. We have a morer here in the casual dining space. Hey, carl, Red Robin Gourmet Burgers surging higher here. Fourth quarter earnings doubled. More customers dining at the burger chain and theyre paying more for their meals. Average guest check, increasing 1. 1 . Samestore sales expected to rise 2. 5 to 3 versus 1. 1 for 2012. Bulls on this one say theres room for expansion. Also in our note, business generally comes from households with income of more than 65,000. So perhaps a bit better protected than some against a weak economy. The stock right here, up some 19 . Simon, over to you. Thank you very much, josh. Still ahead on the program, president obama is getting ready to address the nation sxem pitch the jobs of firefighters against higher taxes for the rich as we count down the sequester. Well bring you the president live on cnbc. And what to watch for ahead of earnings tonight and take a deeper dive into the dell buyout news as we have it. And later, remember when this happened four years ago . This is america. How many of you people want to pay for your neighbors mortgage that has an extra bathroom and cant pay their bills . Raise their hand. President obama, are you listening . Find out what Rick Santelli thinks now. Hes after the break. Mine was earned in djibouti, africa, 2004. The battle of bataan, 1942. [ all ] fort benning, georgia, in 1999. [ male announcer ] usaa Auto Insurance is often handed down from generation to generation because it offers a superior level of protection and because usaas commitment to serve the military, veterans, and their families is without equal. Begin your legacy. Get an autoinsurance quote. Usaa. We know what it means to serve. Look, if you have copd like me, you know it can be hard to breathe, and how that feels. Copd includes chronic bronchitis and emphysema. Spiriva helps control my copd symptoms by keeping my airways open for 24 hours. Plus, it reduces copd flareups. Spiriva is the only oncedaily inhaled copd maintenance treatment that does both. Spiriva handihaler tiotropium bromide inhalation powder does not replace fastacting inhalers for sudden symptoms. Tell your doctor if you have kidney problems, glaucoma, trouble urinating, or an enlarged prostate. 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Get a Synthetic Blend Oil change, tire rotation and much more, 29. 95 after 10. 00 rebate. If you take care of your car your car will take care of you. Here is a live shot of the white house. President obama is expected to speak at any moment now on the upcome potential sequester. Well bring you his comments live as soon as they begin. In the meantime, Rick Santelli, we played some of the sound. Can you believe its been four years . I cant believe its been four years. You know, one of my expressions on that morning was, you know, the government is promoting bad behavior. Well, i think now its more like an ocean view. Were promoting sand behavior. I think the central bankers of the world are trying to build a sand castle economy and unlike ways that usually knock down sand castles, the waves of liquidity are at the epicenter of sand castles. A lot has happened in these four years. We havent had a budget, at least passed by both houses. We havent seen a deficit that didnt include 12 zeros and bigger than anything, a lot of broken promises along the way. Weve had promises of cutting the deficit in half. Whats the prognosis . Central banks are enabling a form of behavior. Look at we had Bowles Simpson on today. In 2010, they had their grand deal that everybody likes. In 2011 we had an almost grand bargain. I believe we need a lot of luck. But, you know, it only counts in horseshoes isnt the mentality. So we had a panel. Nobody would listen. Thats 2010. 2011, we have some type of an agreement that i never had a chance to read, but it doesnt matter. Whether its a memory or an almost, its brought up all the time. Lets look at the facts about this economy, the central bankers are building on sand. We basically see that the Global Economy why do we watch ism manufacturing . Manufacturing small part of the u. S. Economy in particular, its the service sector. Manufacturing is a sentinel part of our economy that gives us guidance down the road. What do i see when i look at those type of numbers globally . I see auto sales in europe down to 23year lows. I see the good things in the economy are what businesses are doing to some extent. Maybe private equity, maybe lbos, but at the epicenter of this are clean corporate Balance Sheets. Certainly theyve gotten clean. Theyve had the liquidity to scrub a dub dub all they want. What are we going to look for down the road in the future . I see things like t Tea Party Express moving across the country and you dont read about them much in the media because they know the media is not going to give them gat coverage. Theyve go the gone statewide, states, gornors, thats the road theyve taken. They might not be in themedia, but look at some of tse mor sconrviv statend inabt il lebu, dvi across country in a vehicle with a 7,500 tax credit making phone calls to see if its too cold, make sure he can hit a charging station. Thats our future. 7,500 natural gas credit could put a filling station in every garage and really help the economy. But nat gat gas gets a lot of lip service, doesnt get any part of the energy plan. Thats a good place to start, carl. Maybe four years from now well be talking about that. Coming from a man who has literally converted cartoon gas on live tv. We are tracking lebeaus electric journey. Phil has his hands on the steering wheel. A lot more from phil in just a moment. Right now, heading north of the jersey turnpike and a couple of things that stand out. The big one being what happens if you take the wrong turn and youre going to have a farther journey than you have Battery Capacity . Well, we took a wrong turn already on this trip. Fortunately, weve got enough battery to make it to the next destination. Coming up next hour, well explain what happens when you do take the wrong turn in a model s. Thats coming up on squawk on the street. announcer scottrade knows our clients trade and invest their own way. With scottrades smart text, i can quickly understand my charts, and spend more time trading. Their quick trade bar lets my account follow me online so i can react in realtime. Plus, my local scottrade office is there to help. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Voted best Investment Services company. Here is the president about to speak, part of an effort to get the sequester avoided. Last week. Thats why its so troubling that just ten days from now Congress Might allow a series of automatic severe budget cuts that will do the exact opposite. It wont help the economy, wont create job. It will visit hardship on a whole lot of people. Over the last few years, both parties have worked to reduce our deficit by more than 2. 5 trillion. More than two chirds of that was through pretty tough spending cuts. The rest of it was by raising rates on the wealthiest american. When you take the spending cuts and spending cuts on the top 1 , it takes us halfway toward the goal of 4 trillion in deficit reduction that economists say we need to stabilize our finances. Congress back in 2011 also passed a law saying that if both parties couldnt agree on a plan to reach that 4 trillion goal, about 1 trillion of additional arbitrary budget cuts would take effect this year. The design was to headache them so unattractive and unappealing that democrats and republicans would get together and find a good compromise of sensible cuts, as well as closing tax loopholes and so forth and so this was all designed to say we cant do these bad cuts, lets do something smarter. That was the point of the sequestration. Unfortunately congress hasnt come together and done their jobs. As a consequences we have the brutal spending cuts that are poised to happen next friday. If Congress Allows this meat cleaver approach to take place, it will jeopardize our military readiness, it wont consider whether were cutting some bloated program that has outlived its usefulness or a Vital Service that americans depend on every single day. It doesnt make those distinctions. Emergency responders, like the ones who are here today, their ability to help communities respond to and recover from disasters will be degraded. Border patrol agents will see their hours reduced. Fbi agents will be furloughed. Federal prosecutors will have to close cases and let criminals go. Air Traffic Controllers and Airport Security will see cutbacks, which means more delays at airports across the country. Thousands of teachers and educators will be laid off. Tens of thousands of parents will have to scramble to find child care for their kids. Hundreds of thousands of americans will lose access to primary care and Preventive Care like flu vaccinations and cancer screenings. Already the cut has forced the navy to delay an Aircraft Carrier that was to deploy to the persian gulf. Changes like this, not well thought through, not phased in properly, changes like this affect our ability to respond to threats in unstable parts of the world. So these cuts are not smart, they are not fair, they will hurt our economy, they will add hundreds of thousands of americans to the unemployment rolls. This is not an abstraction. People will lose their jobs. The Unemployment Rate might tick up again. And thats why democrats, republicans, Business Leaders and economists, theyve already said that these cuts known here in washington has sequestration are a bad idea. Theyre not good for our economy. Theyre not how we should run our government. And heres the thing, they dont have to happen. There is a smarter way to do this, to reduce our deficits without harming our economy. But congress has to act in order for that to happen. Now, for two years ive offered a balanced approach to deficit reduction that would prevent these harmful cuts. I outlined it again last week at the state of the union. I am willing to cut more spending that we dont need, get rid of programs that arent working. Ive laid out specific reforms to our entitlement programs that can achieve the at the same time amount of Health Care Savings by the beginning of the next decade as the reforms proposed by the bipartisan Simpson Bowles commission. Im willing to save hundreds of millions by enacting comprehensive tax reform that gets rid of tax loopholes and deductions for the well off and well connected without raising tax rates. I believe such a balanced approach that combines tax reform with some additional spending reforms done in a smart, thoughtful way is the best way to finish the job of deficit reduction and avoid these cuts once and for all that could hurt our economy, slow our recovery, put people out of work. And most americans agree with me. Now, the house and the senate are working on budgets that i hope reflect this approach but if they cant get such a budget agreement done by next friday, the day these harmful cuts begin to take effect, then at men mum congress should pass a smaller package of spending cuts and tax reforms that would prevent these harmful cuts, not to kick the can down the road but to give them time to Work Together on plan that evfinishes the job of Debt Reduction in a sensible way. Democrats in the house and senate have proposed such a plan, a balanced plan, one that makes sure that billionaires cant pay a lower tax rate than their secretaries. And i know that republicans have proposed some ideas, too. I have to say, though, that so far at least the ideas that the republicans have proposed asks nothing of the wealthiest americans or biggest corporations. So the burden is all on First Responders or seniors or middle class families. They doubled down, in fact, on the harsh, harmful cuts ive outlined, so far what theyve expressed is a preference where theyd rather have these cuts go into effect than close a single tax loophole for the wealthiest americans. Not one. Well, thats not balanced. That would be like democrats saying we have to close our deficits without any spending cuts whatsoever. Its all taxes. Thats not the position democrats have taken. Thats certainly not the position ive taken. Its wrong to ask the middle class to bare the full burden of deficit reduction. Thats why i will not sign a plan that harms the middle class. So now republicans in Congress Face a simple choice. Are they willing to compromise to protect vital investments in education and health care and National Security and all the jobs that depend on them, or would they rather put hundreds of thousands of jobs and our entire economy at risk just to protect a few special interest tax loopholes that benefit only the wealthiest americans and biggest corporations . Thats the choice. Are you willing to see a bunch of First Responders lose their job because you want to protect some special interest tax loophole . Are you willing to have teachers laid off or kids not have access to head start or deeper cuts in student loan programs just because you want to protect a special tax interest loophole that the vast majority of americans dont benefit from. Thats the choice. Thats the question. And this is not an abstraction. There are people whose livelihoods are at stake. There are communities that are going to be impacted in a negative way. I know that sometimes all this squabbling in washington seems very abstract. In the abstract people like the idea there must be some spending we can cut, there must be some waste out there. There absolutely is but this isnt the right way to do it. So my door is open. Ive put tough cuts and reforms on the table. I am willing to work with anybody to get this job done. None of us will get 100 of what we want, but nobody should want these cuts to go through because the last thing our families can unnecessarily by partisan mposed recklessness and ideological rigidity here in washington. As i said in the state of the union, the American People have worked too hard, too long rebuilding from one crisis to see their elected officials cause yet another one. And it seems like every three months around here theres some manufactured crisis. Weve got more work to do than to try to dig ourselves out of these selfinflicted wounds. While a plan to reduce our deficit has to be part of our agenda, we also have to remember deficit reduction alone is not an economic plan. We learned in the 1990s when bill clinton was president nothing shrinking the deficit faster than a growing economy that creates good, middle class jobs. That should be our driving focus, making america a magnet for good jobs, equipping our people with the skills required to fill those jobs, making sure their hard work leads to a decent living. Those are the things we should be pushing our sefs to think about and work on every single day. Thats what the American People expect. Thats what im going to work on every single day to help deliver. So i need everybody who is watching today to understand you got a few days, congress can do the right thing, we can avert just one more washington manufactured problem that slows our recovery and bring down our deficits in a balanced, responsible way. Thats my goal, thats what would do right by these First Responders, thats what would do right byamericas middle class. Thats what im going to be working on and fighting for, not just over the next few weeks but over the next few years. Thanks very much, everybody. Thank you guys for your service. And that is the president trying to put some pressure on Congressional Republicans using the sequester as a tool, something he called a meat cleaver that would result in hardship for a whole lot of people, First Responders, like the ones behind him, fbi agents, Airport Security, civilians in the military and said it could result in the Unemployment Rate ticking up once again. John is in washington watching that, as well as his earlier conversation with simpson and bowles. The president is following the strategy hes observed, that is using public communication to try to put pressure on congress. The outside game being more important in the view of the white house than the inside game. What im hearing from republicans is the president is not engaging with us, hes campaigning. Thats what Mitch Mcconnell said a few minutes ago. The people who advised Speaker Boehner saying the president is not serious, he hasnt put out a plan, hasnt gotten anything with harry reid that can pass in the senate. He said im going to put it on congress to try to come up with plan, what he calls a balanced plan for more revenue as well as additional spending cuts. And from that conversation earlier that i had with alan simpson and Erskine Bowles, i heard from them both sides need to have pressure applied on them, the white house thinks we dont need as many cuts as simpson and bowles do and the president is saying no more revenue, and simpson and bowles saying, no, we need more revenue. Today they even set a bar higher than they had in their Commission Report for additional deficit reduction. I asked them how can you ask for more when we havent even gotten what you originally recommended. Heres how they responded. Well, we learned the hard way with our commission. The tougher we made it, the more support we got. Either go big or go only home. Were going to have to push the white house on health care, were going to have to push the republicans on revenue. Go big or go home, thats their mantra. Well see whether congress or the administration can go big because at the moment theyre going home. How long can the president make this claim that the republicans arent compromising when a lot of them argued we just finished compromising at the end of last year. And, b, how long can he work around the idea he had nothing to do with the sequester when clearly he did sign it as well. Of course he did. Both sides are responsible for the sequester. Whoevers idea it was initially, the republicans says it was president obamas. It doesnt make any difference. The two sides agreed on it, they passed it, voted for it and he signed it into law. In terms of republicans compromising, hes able to say that so long as the republicans refuse additional revenue. Now, if they agree to revenue and then the president does not agree to significant entitlement reforms, then the republicans have a stronger case. John, good insight. We continue to watch this debate fire up once again. Back to some potential m a news today, home depot with a possible merge they are week. It would be the culmination of years of speculation in this industry. They have suffered greatly since 1997. In the 1997 rulings ftc found that office depot was raising prices on file folders to 4. 17 apiece in areas with no other competitors while those same folders were going for less than 2 where there was more than one Office Supply retailer. The attorney who wrote that opinion on a Staples Office depot merger, which was upheld by a federal court of appeals. Now they are counting on counting walmart, amazon and costco to additional competitors. Those new retailers have been driving prices lower. Would a deal be good for investors now . One large office max shareholder has been supportive in terms of a deal. Benjamin nahum. Neuberger said in our view this would facilitate a fair deal. We know, garl, that investors have been vocal about deals they are not in favor of, especially where dell is concerned. It will be interested to see who comes out of the woodwork for this one. It is an historic day for google. Shares up sharply, rising above the 800 level for, oh, the first time in its history. The 800 level an alltime high for the stock, up more than 800 since google ipod in august of 2004. Oral arguments set to begin in the legal case between apple and einhorn. Kate kelly has more on that. Reporter were here outid of federal court. The manager of green light has accused the tech giant of hoarding 137 billion in cash reserves on his Balance Sheet as part what he calls a depression era mentality that reminds him of his own grandmother to pinch pennies and suggests apple issue a perpetual preferred share to develop more income for all shareholders but certainly him. Its part of a related but separate of the to block what he considers to be an objectionable proposal in apples proxy statement that seeks among other things to remove the tech companiess ability to remove preferred shares. Einhorn doesnt like that theyre bundled to the to begin with, even though hes in support of certain elements and hes seeking an injunction to kill the entire proposal. Were unlikely to see einhorn toda today. Representatives for cook, who has dismissed green lights contentions as a silly side show will likely seek to preserve the language as it is in the current proxy and go forward with their current plans. Interesting chapter in this activist investor error were in. Still ahead, putting the s to the test. Well see how phil lebeau is doing on this East Coast Road trip. Plus, we have the president and ceo of charge point. Well talk about how a boom in electric car sales could impact his business. First, though, Rick Santelli is working on something for the next hour of squawk on the street. In about 15 minutes were going to be talking to edward pinto, a resident fellow at the American Enterprise institute and an executive at fannie until the late 80s. What are we going to ask him about . The housing correction, the Housing Market. Has it turned . Whats the prognosis . Hes going to tell us everything behind has a lot of years of experience there. So of course come back in 15 minutes. [ male announcer ] staples makes it easier to get everything your business needs. Even custom banners. And now get 50 off banners and posters. Staples. That was easy. Phil lebeau is test driving a tesla in realtime on television all day long today. We saw him depart washington, d. C. Around 6 a. M. This morning. We checked with him in newark, delaware. Now hes at a fill station. Hows the drive so far . We are halfway on our journey from washington, d. C. Up to boston test driving the tesla model s. Why are we doing this . It was just a week ago the New York Times did a test drive see how long the super charger network, the place us recharge as youre going along the east coast, how it works and at that time the New York Times said, listen, our tesla ran out of juice, our battery went dead we shall had to have it towed. The ceo said thats not what happens when youre following the instructions and charging the vehicle to its full load. So we have been testing the model s to see if its performing as it is advertised. And so far it has been. As we have been going along, two things weve noticed. First of all, there is a bit of range anxiety when youre first getting into this vehicle. I know right now ive got 148 miles of battery life left. Were about 94 miles to our destination, which is milford, connecticut. As youre ticking down, you have to have faith youre going to have enough battery life to make it to the next destination where youre recharging. The second thing is as you accelerate and go considerably faster, its instant because you have the electric drive so theres no torque there. Its instantaneous response. As a result, its very quick to get a lead foot when youre driving this car. So far it is performing as we expected it to. Weve been keeping it on Cruise Control between 65 and 65, mainly around 69 miles per hour. More than once weve had a few people go by and go what is that . Were going to be checking in throughout the day as we get closer to boston. Going through a few toll booths in the meantime. Thanks, phil lebeau. One industry set to increase from a demand in electric cars, manufacturers of the charge stations themselves. I want to bring in pat, the ceo of charge point. Good morning to you. Good morning. So much attention being paid to this debate i guess youd call it between musk and the times. Do you come down on one side or the other . Well, you know, i think i think the test the model s test drive was trying to test the super charger network, which is a network that tesla has put in for long haul driving. In practice that tesla would have never had a chance to run out of juice if they were stopping along the way and every time they had stopped for either a hotel stay or a meal in a restaurant had plugged into a charger, for example, on the charge Point Network and topped off. Its really a topoff model for electric vehicles. So while a super charger test, you know, it is what it is as the reporter reported it, it really isnt the way that youd be driving an e. V. In the future. 11,000 stations as we mentioned in the u. S. , mostly commercial and public as opposed to residential. But you saiy the infrastructure is coming. How quickly and geographically how widespread . Well, its coming its coming at a very, very rapid pace. The 11,000 ports on our network have basically been installed mostly overs last year and thats growing at an exponential pace. The geographic disposition of the chargers is roughly half on the west coast, thats commensurate with where cars are. You see large pockets of infrastructure where cars are down in the texas region and then as you go into the northeast theres a tremendous amount of infrastructure. In fact, in new york player bloomberg is commissioning 20 of Parking Spaces or up to 10,000 over the next seven years to be enabled with e. V. Charging and Governor Cuomo has recently proposed 50 million in infrastructure spending. Bloomberg made a big push in the state of the city. This discussion thats going on is happening of course in the wintertime where its very cold in the northeast. I wonder if you think people are there expectations for the performance of these batteries in the wintertime, do they need to be reined in . Are they not as efficient as we hoped they would be in the gold . The battery will be i think the discussion in the media has been far overblown. The technology is absolutely ready for primetime. People are enjoying their e. V. S that drive them all over the company. They become used to the charge i dont ever model where they find charge stations and plug in. The ones that are out there the most are gasoline hybrids. So its i think a lot of overspin in the media. One last question, you yourself drive an e. V. But not a tesla. Can i ask what you drive . I is a fisker karma. Very nice. That wouldnt be too shabby either. Pat romano of charge point, thank you very much. When we come back, after the bell. And could i iwatch add up to 9 billion in revenue for apples bottom line . We have the analyst who says that is possible still ahead. S. S. Step seven point two one two. Verify and lock. Command is locked. Five seconds. Three, two, one. Standing by for capture. The most Innovative Software on the planet. Dragon is captured. Is connecting todays leading companies to places beyond it. Siemens. Answers. music throughout why turbo . Trust us. Its just better to be in front. The sonata turbo. From hyundai. There. I said it. They dont have pictures of my kids. They dont have my yoga mat. And still, i feel at home. Could it be the flat screen tv . The not so mini fridge . The different free dinner almost every weeknight . Or maybe, its all of the above. And all the rest. Am i home . Nope. But it almost feels that way. Homewood suites by hilton. Be at home. Omnipotent of opportunity. You know how to mix business. With business. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above. And still pay the midsize price. I could get used to this. [ male announcer ] yes, you could business pro. Yes, you could. Go national. Go like a pro. [ cows moo ] [ sizzling ] more rain. [ thunder rumbles ] [ male announcer ] when the world moves. Futures move first. Learn futures from experienced pros with dedicated chats and daily live webinars. And trade with papermoney to testdrive the market. All on thinkorswim. From td ameritrade. Take a look at google here this morning. If youve been long google for a while, youve waited for this days for about five years since it was at 700, now over 800 for the first time ever. There was a very dramatic rampup at the open and has managed to hold those numbers for the most part. Theres a lot of hopes for the monetizization. Big losses for unh, significant in a and some others. They are among the worst performers today on the s p. When we come back, the bells are about to sound across europe. Well get the close. And well walk through some decent Economic Sentiment in germany when we come right back. Some Brokerage Firms are. But way too many arent. Why . Because selling their funds makes them more money. Which makes you wonder isnt that a conflict . Search proprietary mutual funds. Yikes then go to etrade. Weve got over 8,000 mutual funds, and not one of them has our name on it. Were in the business of finding the right investments for you. Etrade. Less for us. More for you. The funds prospectus contains its investment objectives, risks, charges, expenses, and other Important Information and should be read and considered carefully before investing. For a current prospectus, visit etrade. Cotualfunds. Is moving backward. [ engine turns over, tires squeal ] and youll find advanced Safety Technology like an available headsup display on the 2013 lexus gs. Theres no going back. We got some movers in the solar space. Josh lipton is going to walk us through that. Solar stacks ripping forward today. There has been talk solar forms could receipt reits to create taxfree income from their solar power. Sun power addressed the issue last week. This a heavily shorted sector so any potential headline making good news sends the shorts running for cover. As a whole, skeptics say too much capacity relative to demand but interest has some of these names bouncing way higher this morning. Lets get ready for the european close here in a moment with simon. The data today people feel good about the economy in german but nobodys buying cars. The ford indicators are good, the german Investment Sentiment is high. The slight problem we have of course is that the italian election is looming. Were in the blackout now for opinion polls. The vote is sunday and monday. A slight problem, we had hoped those two would form a coalition after. This is the latest that woo have. Thats berlusconi. The next guy youll see is the center left leader we home mario would form a stable coalition with after the election. Thats very much up in the air at the moment. In the meantime of course youve had underperformance on both spanish and italian debt. You see the yields rising slightly there. Spain managed to auction another 4 billion of euros today. Very much at the short end well get debt figures out from spand clearly that political crisis ungufling the ruling party in spain. And we have this bad automotive data that came out today from across europe. Essentially the least cars were sold there in january since records began. I have for you the januarytojanuary moves that youve seen and ford has led the decline. Sales down a quarter, 25 from where they were on january 2012, despite the discounting. Ford is looking at a 2 billion euro loss and gms doubled to 1. 8 billion last year. A big degree to how much theyll have to cut supply going forward. Daimler and bmw are up. In broad terms we seen the contraction in the sales of automotives. These are passenger automotives. Today france suggesting the economic level that it may not meet its targets for the year overall. The present picture is poor. Backwards looking picture is poor but the german investors are optimistic. The european markets are closing now. That is why you see so much green on the screen. Check out the gains in france, 1. 9 , germany 1. 5 to the rally. They move nowhere. In the absence of u. S. Markets yesterday, european markets were relatively directionless but, boy, have they got some wind to them today. Nice to see a little green. Lets check on energy and commodities. Gasoline continues to be the story. Were looking at a bit of a pullback in the futures market for oil and gasoline. Its misleading because gasoline futures are up 3 from where they were a year ago. In fact, theyre up 11 in the past month and that has caused considerable pain at the pump. Were talking about 33 days straight of higher retail gasoline prices and right now that pain at the pump getting pretty severe, a 45 cent jump in gasoline Retail Prices in just the last month. The National Average now is 3. 75 a gallon, 3. 60 a week ago, 3. 30 a month ago. Elsewhere in the energy space were looking at a spike in natural gas futures, natural ast getting a bit of a lift. The fact remains were still in a range for national gas, getting a bit of a bump in this session. Rick santelli is with the exchange. We have ed pinto, former executive of fannie and American Enterprise resident fellow currently. Welcome, edward. Pleasure, rick. Well, listen, you know, i think that the biggest discussion i hear outside of things like facebook and their taxes and the sequester is the spending tester is weve turned the corner on housing, the inflexion point was sometime in 2012. Just as a simple statement, do you agree with that . I generally agree weve turned the corner and things are looking up, but its a very juiced market. The federal government is really driving this market. Okay. I look at Interest Rates and, you know, if we put up a 20year chart of tenyear rates, we can see very plainly weve been a lot higher in the past. To me whether its the economy or housing, one could say that the interests of printing and perhaps have kept the training wheels on. To me how has it taken housing so long at these very low Interest Rates and should they normalize, what would that do to housing . Or is that the issue, that we cant let rates normalize . Well, rick, its taken so long because we really dug a very deep hole for ourselves with the loosest lending i think the modern world has ever seen in the United States. We basically had a policy to loosen lending standards across the board. It was a government policy and it led to disaster. Its taken years to try to claw our way back, notwithstanding all the efforts by the government to keep things going. One of the problems was they didnt let the market bottom, which, as you know, is something you need to do. We keep kicking the can down the road. Were now at a point where the market appears to be recovering, however, again you cant call this a normal market when you have the lowest Interest Rates in a hundred years and half of all borrowers are still putting basically zero down. That is not a normal market. So i think the government should be figuring out how to normalize this market. You cant have Interest Rates go up given that were so reliant on getting people into homes that they still cant really afford at normal Interest Rates. You know, a big topic a couple years ago was how many people in the country were upside down in their mortgages. Now that weve quote unquote hit the fulcrum of turning things around, it still seems theres a decent amount of activity, though around the edges. I think the activity is around the edges. You have places like phoenix, markets that cleared quickly and had you a lot of investors buying rental properties. Renal properties in singlefamily neighborhoods is not normal. The percentage of loans or property sales that are going to rental owners today is the same as the peak in 06. Thats not a healthy sign. Those buyers are what i call hot money. In two or three years they could all turn on a dime and decide this isnt the asset class we really thought it was and then they sell and that could set us up for that problem. Of course, if that happens right at the time that Interest Rates happen to go up, then i think were into a really tough situation. And of course then youve got the fha, which is not prepared for any kind of problem. They are running on fumes. They have negative fumes and they have no ability to withstand any type of hit in the Housing Market. Edward, its been a pleasure. Thank you for being our guest today. Carl, back to you and keep your fingers crossed. Thanks, Rick Santelli. We watch the do you get ever and ever closer to alltime highs. At that point were going to do it fairly quickly. I call it a positive feedback loop. People believe right now at least for the moment stocks are the place to be and they believe, number two, that the United States is the best play for stocks to be. Thats whats creating this positive feedback look. Theres no reason for the s p futures and emini futures to pop up. All of a sudden out of nowhere you get a whole bunch of buying, call biography in the s p and all of a sudden the market moves up. Why . Because theres a positive feedback loop. I know thats annoying to hear theres no particular fundamental reason. But thats what goes on in the market, people keep getting into until it doesnt particularly work. Look at the historic highs on the down jones transport, the russell 2,000 and the midcap index as well. Ill show what you a positive feedback loop looks like. Look at Exchange Traded fund, okay . What you want to look at, this is three months of van guard total bond and total stock. Very simple, its the whole stock market in the United States, thats the last three months since we bottomed in november. Heres the total bond market in the United States in the last three months. Up and down basically. Thats a positive feedback loop. And until that breaks, people are going to still play that particular game. Take a look at one little sector i want to show you today. Those are the mousing stocks. A little bit of a tough time here. We had data on housing Sentiment Index. I think it was a little below expectations. Traffic i believe has been pretty good, excellent. Theres not enough supply. But it was a little bit below peoples expectations. I dont have a reason for you but most Home Builders are moving to the down side today. And armstrong world industry, a big Building Materials company, they came out with very cautious comments for 2013. They were talking about at best 2 gdp growth. Thats going to weigh on them. 120, 130 points away from an historic tie hai. 127 by my count, less than 1 . The Major Health Insurers seeing broad declines across the boortd on board on reduced medicare rates. Theyre just proposed for the moment. It would cut Medicare Advantage rates more than analysts and insurers expected. This is for medicaid advantage, the private insurance people buy on their own. Cms is assuming a negative growth rate, effectively kugt rate by more than 2 . Thats 2 more than people were anticipating. But the the agency put a cap on premium increases of 30 per member. This on top of reimbursement rate cuts already anticipated under the Affordable Care act when it begins next year and a new tax that also starts in 2014. Medicare advantage rates could be down as much as 5 to 6 or 6 to 10 if you add in sequestration. Smaller plans may not be able to take the hit. The final rules are due on april 1st. The head of the insurers lobby says washington cannot tax and cut Medicare Advantage this month and not expect seniors to be harmed. She says this will really disrupt coverage. Again, those rules not finalized until april 1st. Can you expect theres going to be an awful lot of talking about this on the hill. There is today, ill tell you that. Thank you so much. Take a look at apple here before we go to break. Htc launches its newartpho. And were getting ahead of the dell curve tonight. And plus why the apple iwatch could add up to 9 billion to the bottom line. Were back in a minute. But we can still help you see your big picture. 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Stocks are up along with optimism. But are investors setting themselves up for a fall . And who will come out on top when haushl reports earnings after the bell tonight. And with rising gas prices, will walmart get punched . You have a lot to work with today, thanks. Dell is out with four quarter numbers after the bell. Hey, john. This is one of those cases where we should expect a goldielocks quarter, not too good, not too bad. The top line number is probably whats most at risk because pc sales over the holidays werent so hot. Dell has been clear its not willing to play in the unprofitable low end of the market just to gain share. Theyll have to large on enterprising government to deliver this quarter. Cisco showed state and local Government Spending perking up a bit, which is dells sweet spot. On the enterprising side, dell will need help from its storage group. Whats the appropriate vibe when the founder is trying to take you private . If youre too gloomy, investors will accuse you of trying to bring up the stock. Its going to be fascinating to watch. Thank, jon. Want to get more insight on what to expect tonight from david katz. David, good to see you. Thank you. You think a deal does get down but maybe not at this price . Thats correct. We think michael dell is the best buyer but we think hes got to up the price. Youve gotten a lot of shareholder resistance. A 20plus value, we dont think that is going to get paid for. We think you probably have to get the price up to 14 1 2, 14 3 4 to get the majority of Share Holders to buy into this. For that sweetener you credit whom . Southeastern and some of the large value shareholders who are putting pressure that this price is much, much too low has emb e emboldened others to step up. They are paying six times earnings if you adjust to cash. Its the cheapest 25 stocks in the s p 500. To take a company private, you should be paying a little bit more for that. I assume youve done a decent study into cash flow in this business and declining era of p. C. Sales. How confident are you that that gets turned around, even once in the protection of being private . We think dell is going to be a successful business. We think the company has made Great Strides to become a server and enterprise and Software Business and theyre not getting any credit for that. We think thats one of the reasons michael dell is very frustrated, think hes can turn it and, do the finishing touches under the radar and go healthy at a good price. We are confident this is going to be a good deal for silver lake and dell. Its going to be a longterm growth business. Youre getting it at such a discounted valuation, theyre going to do pretty well. Theyre not going to be operating in a complete vacuum of competition. Hewlett put out their own statement saying come on in, we dare you. How will dell respond to a competitor who even with l own troubles is going to have heightened competitiveness . We think dell will respond rationally. We think Hewlett Packard does have significant problems. They do have to answer to their public shareholders. We think its going to be a little bit easier as a private company to fix the business, make the investments that you need to make and uf dont have to answer to analysts and Portfolio Managers on a quarterly basis who are concerned that you miss a number by 50 million on the revenue side or a penny or two on the bottom line earning side. Just a couple outside of dell. This m a trend, how confident are you that it continues money without sort of the big player that dell is playing in this case . Are you seeing followon deals with rivals will start engaging in m a because they have to out defensiveness . We think 2013 will be a significant pickup in deal activity. Youve started to see it not so much in technology but throughout the market, a lot of industries. Interest rates are low, Business Confidence is on the rise, there is a lot of liquidity out there. If you look at strategic deals, theyre accretive almost from day one. Were expecting strategic acquisition, private equity acquisitions. It should give the market a little bit of up side from here. When the private businesses and Larger Companies are age to pay a 30 premium, it means the stock market is overall pretty expensive. Maybe the premiums wont be as sweet because we are at lofty levels. Now, in the heinz deal and we own some heinz in our dividend accounts, we think that they paid a fair price, its about 20. 5 times earnings and heinz was at 50d last summer. We think its a good deal for everybody. David, well see what dell says tonight. Always good to get your insight. When we come back, could the iwatch bring the material opportunity that am so desperately needs . One Analyst Thinks so. It could very well add 9 billion to their bottom line when were back in two minutes. Look at these streaming charts theyre totally customizable and they let you visualize what might happen next. Thats genius strategies, chains, positions. We put em all on one screen could we make placing a trade any easier . Mmmm. Could we . Open an account today and get a free3month e ibd™ subscription when you call 18882800149 now. Optionsxpress by charles schwab. Apples iwatch may be the next product in the pipeline. While many are trying to figure out what features the watch could have, some say it could add up to 9 billion in revenue for that company. Amit, good morning to you. Good morning. Youve had a few days to think of this. 40 million units. This would have to be like in terms of an idevice for sales. Its an annual nails and its based to an attach rate for iphone sales. We think the attach rates are very doable and we think those numbers at 200, 225 asp, it could add 8 billion to 9 billion over the next 12 months post this products launch. A couple dollars in eps, that will get peoples attention. Can you walk us through some of the methodology youve taken to get to these numbers . Absolutely. Its an accessory device. At the end of the day its something you probably will buy along with your iphone, to tap more into the apple ecosystem. We figure using about a 35 attach rate to annual iphone unit sales, which is how we get to the 40 million unit number, in terms of the pricing, if you look at comparable products that are out there today, they tend to go around 140, 150 asp. Apple sells a at 20 premium, which is where we get the 200 price from. Its around 200 for one of these. You look at what these could possibly do in terms of function. You think getting closer to your device it unlocks your pass code, right . You lose your ipad it, helps you find a lost device. What else could it do . Something like that, in case you leave your iphone at a bar, your watch could beep and remind you to go back and get it. And if you are walking out into the snow, you could get a beep and see a message you have and not take your phone out. Payment processing, that would be a big value add for the product. Your price target is not excessive in terms of where the street, is do you have an outperform. Why are you not a little more bullish in terms of your price target . 600 is a nice appreciation from the current 450, 460 the stock is currently at. The nearterm option would be a more favorable Capital Allocation from the Board Meeting this month and beyond that people will focus on what comes out in june in terms of the new product launches. Once we get these events out of the way, people will have a better comfort around not just Revenue Growth but also the margin profile, which seems to be a big investors concern. On the list of things that could put a fire under the stock, itv, china mobile and a cheap iphone out there, a bigger dividend, the watch. What would be your first choice . You know, the nearest catalyst you have is clearly a more favorable, no shareholder friendly Capital Allocation, if you may. The Board Meeting on february 27th, we should get an update on that. That would be kind of step one. I think beyond that a china mobile deal with a larger and cheaper iphone for emerging markets would be very attract of for the stock. Thanks for your time. [ male announcer ] every car we build must make adrenaline pump and pulses quicken. To help you not just to stay alive. But feel alive. The new cclass is no exception. Its a mercedesbenz through and through. 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