Transcripts For CNBC Squawk On The Street 20130228

Stock of the day, groupon, the company posting a loss. Just heard jim cramer talking about it the company reveal it had began to take a smaller cut of the revenues on daily deals during the holidays. It sacrificed revenue and profit to attract and keep merchants. All right. We will show you what just one quick thing, what these guys in the back do when they have Nothing Better to do. They put me they put leaseman into my hair. If anybodyist th if anybody thinks leaseman should get hair dont you think . I like people the way they are. Dont change. Dont change. Stay golden, ponyboy. Do not do the ron insana. Keep it off. Make sure you join us tomorrow. Squawk on the street is next. That was an image could i do without. Im carl quintanilla, melissa lee, jim cramer, david faber. We begin 89 points from the alltime closing high. Just this side of positive and chicago pmi on the way. Europe has gains this morning. Tokyo rebounded along with the rest of asia. China pmi is out tonight. Our road map this morning starts with what could be a recordsetting day. As carl mentioned, the dow just 89 points away from its alltime high, sit a day away from the potential sequester cuts kicking n the bleeding continues at jc penney. Sales down a whopping 28 from the Holiday Quarter. How much time does ron johnson have to turn things around in the stock down 40 since they took over . Speak of bloodbaths, group reason shares taking a dive on its much, much wider quarterly loss. Analysts not betting on the company being able to outage zohn amazon on its new strat joif selling goods. We begin with the dow taking aim at record territory after a second consecutive triple digit gape. The blue chips now less than 20 points from their alltime closing high setback on october 9, 2007. The dows intraday record high reached two days later, hitting 14,198. Jim, it could be a very important day for the dow but a lot of people will say whats going on with the s p 500, nasdaq and russell 2,000 . The dow hitting higher highs, the s p, nasdaq and russell not following that same pattern. The dow lagged last year, up 16 . I think that the s p is doing fine, not going to say is doing fabulously. Same time, the market is shrugging off these negatives. I think that the market is the overall market still acts terrifically. I keep expect program selling. The old dateses, we get to the milestones what would happen is the futures would burst out. Ys milestones what would happen is the futures would burst out. I think the market is stronger than anybody thinks. The week that has been, jim, and whether or not this is one giant crystallized by the dip example. Is that what we are in . I said last time, this market is rebutting all the presumptions of negativitnegati where were the buyers monday, supposed to be freaking aboutitily . Felt like that was program selling and we get a series of good numbers and you get buyers come bang, selling in that last hour, im now deeming phony. Futures, no buy backs, markets collapsed. Turned out to be wrong, it collapsed. Here an accommodative monetary policy, reasonable valuations, i guess, you would argue . Yes, i would argue that. Activists making things happen. Even though theity tall yap situation is going on, he indicated he might be open to more easing, stimulus that would put a backstop on the european markets, at least for a now, despite the uncertaintitily. We have the southwester starting. What is that . That has become a footnote to all of this. Trouble going to sleep tonight, think about the sequester. That is the wrong word. Just too hard. If you polled people, say, at a knicks game, sequester what do they think that is . Like a fuel five thing, baseball. Just too hard for people to get criminal Justice System gripeds to a halt, you will never fly again, the National Parks are closed and not going to be able to deter terrorists, otherwise the thunder birds, air force pilot, jet he is. Im going to spam. Spam i think spam inspected 23 years ago, the cans. Hormel alltime high yesterday. What a stock that is. Spices, jelly and spam. Hormel, smucker and mccormick. Definitely inspected those things within our lifetime. What you want for the bunker. At alltime highs. The bunker trade. The defense stocks at an all time high. So bad for defense, why did Huntington Ingalls have a great quarter . New port news. A disconnect. We keep trying to figure out why doesnt the sequester hurt bristolmyers, why isnt bristolmyers going down . Mkm looks at all the hikes of the week, the home depots, the texans, the well points, home depot, i mentioned. Why would you hike a dividend if you are worried about cash flow going into this period, supposed to be so bad. Dominos innish tate yaits a 20cent dividend. Nordstrom announces a buy back. I do want to joint macropeople who come on the network. What was the growth of the economy . I will give put disfunction of the u. S. Government is planning our demise over the long term unless we can get it together. Doesnt mean you shouldnt by the s and p noufrm you probably should. Thank you for not saying because of the 2040 problem withed me care i will go out there now and short the naz damage. Other than apple, you think you can get away with shorting things. Am, did you see the release ex1 billion itunes, i got it because im men of itunes. I tunes content tops am. Why doesnt this get the stock out of the rut . There we go. A good day to talk retailers. We said earlier, another setback for jc penney. You call that a setback . Sorry. Ceo ron johnson, efforts to traps form the company, the Department Store chain down sharply in the premarket on news of a much wider than expected Fourth Quarter loss. Samestore sales down in the third period. Margins weakened. Last night on the earnings webcast, johnson acknowledged making big mistakes and says he is overhauling the no discounts Pricing Strategy unveiled more than a year ago. We have brought back sales. We have brought back coupons for our rewards members. Although we still call them gifts. And we will offer sales each and every week as we move forward. But we will do it differently than we did in the past. We dont need to artificially mark up prices to create the illusion of savings. The pileon here is almost too easy. Web business down 34 . The post today on how they have enlisted sergio zileman, the architect of new coke, to help run marketing oh, thats great. He has been called delusional. Ought to do zileman, they got to rename the company. New jc penney . Got come up with something . Completely abandoned their to old customer who doesnt recognize them anymore. Should go back to call themselves jcp, go back to jc penney, signalling a return. What was interesting, they did a surveys have took 600 samples, 67 of the feedback was negative because people indicated that they grew up with jc penney, had a lifelong relationship, jc penney abandoned them, gave up the coupons, promotion, customers dont know what to make of the new store. Johnsons may ya cull parks 4. 3 billion in sales, how much was lost under johnson since he took over, 4. 3 billion. How long can this man keep thinks job . People losing their jobs, 31 down how long . What do you have to do to lose your job in this country . I give him another four months, 27 days. You are going to give him the 27 extra days . You are a forgiving man. I think my favorite lines is i just want to comment, theres a rumor today about jc penney, incredible layoffs coming two weeks ago, 300 people. Valentines day, this or that. He is combatting the negativity u he is. Certainly resetting the bar. I would think if he is around Fourth Quarter easier conversation, right . I was on that show. You go in, did he say that carters is doing better. The feet pajama people. He did say jewelry was doing joe fresh r on the site. Joe fresh. Yes. Im following give him the benefit of the doubt. Home department goes from 20 down to 10 . . Sarcasm, correct . Completely and utterly. By the way, sears what do you do with jc penney . Short the heck of it . Already 40 short. Some things are im running it. Thinking what to do if im running it. Sitting back at j jchljj crad co . Look on the credit side. Go against the preferred. Shocked how long the guy has been there keeps making mistake after mistake. If i was running jc penney, find which of the stores are working, like sears has done, put money in those stores and close the ones underperforming. Sears is putting money in stores . Sears had a good quarter. Why do you laugh . Because everythings been put into a different relief through the prism of jcp, right . Jcp would make anybody look good, right . Kohls, you name it. American motors look good if they were this is gimballs and littss. Bradlees, really bad comparison. You think we are doing badly . Look at bradlees . Ej corvette. 11 david, in terms of the cash, they missed the target and payables went up. Yes, they did. Pushing out what they owe to the Current Quarter as opposed to paying it the Fourth Quarter, it artificially inflates cash. Do have two large shareholders, needed to done equity offer of some kind, some sort of an offering to raise money could they conceivably do it . Offset any concern at all on the part of vendors, those who finance those vendors in. Think carl eye can comes in and announces a 13 short. We can call carl icahn. He is probably not up. You have the icahn nailed. Had it for a little bit. Havent spoken to him a while. A lot of other discussion today about kohls, despite the weak guidance, looking for very little or no growth in the quarter or the year. Morgan stanley cutting saks to underweight, looking the cross creek and volatile macrosetup. Kohls, they have tremendous value but did say the last couple of week he is of the quarter were hideous. They fell on their sword. You go to kohls as you know i often do. I buy slacks there kohls has great slashing sonoma. Get a half a pant for 6. I forgot park i buy trouser there not slacks. You guys laugh at me. I go to kohls, i have a good one on route 22 in new jersey, you would be surprised, tremendous, just they dont have the good credited card penetration, jc penney, not very good this shut problem with pennys, jc penney has sephora, i dont need to go to sephora, pbh, i can go theres nothingtodistinguishing. If you said to me, jim, where did you get a suit, i said jc penney, would you say uh. Its the name. Like no one feels like and theres no distinguishing why im amazed run gren is able to distinguish macys, argue jc penneys, a loft home turn around on Martha Stewart. What happens if Martha Stewart loses that court case . Just another thing johnson did wrong . Had how long he lasts, is there a point which investors say im not going into a Holiday Season again with this guy. Right . Right. I think it is time to goes to grants, to go to s klein. Honestly, i do want to go in with this guy . Conference call starts off like the groupon Conference Call with all the positives, everything these are all the things. Alternative reality. I know. Hello. Peter pan. Neverland. Neverland syndrome, david. Yeah. Is that what we are dealing with . Neverland syndrome what they call it. Make that up or i just came up with that now. Pretty good, wasnt it . Better than your daughters play . No nothing could be better than that. Aw. Circle back to these names in a bit. When we come back, debate willing twitters value. Is the social networking firm really worth 10 billion . First, the groupon skid. How low can the daily deals website go as it loses a quarter of its market value last night . Take one more look at pa market features is. Is today the day we hit the alltime. Squawk on the street live from post nine when we come back. [ construction sounds ] [ watch ticking ] [ engine revs ] come in. Got the coffee. That was fast. Were outta here. [ engine revs ] groupon said it took a smaller cut of the daily deals on the holidays to keep merchants. Jim, speaking of neverland, that groupon call was like andrew mason, are you in touch with reality . He was saying its hard to believe that just a year ago, we were just a daily deals website. Its hard to believe that your stock is down 70 since its ipo price, not including todays tumble. I thought that was the most unrealistic Conference Call i have been on in multiple years. I have thinking about that retain world, a retailer by the name of two guys from harrison, ron johnson and andrew mason, two guys from fantasy land. An extraordinarily bad Conference Call. Al leiter. Food pitcher for the mets. They are here to ring the opening bell. Snoop at this pi is here. Snoopy . Snoopy doesnt have snoop dog. In jc penney, everyone else gets a little, right . The mason call was just honestly, the groupon call was it was one of those calls, Herb Greenberg spends his whole life trying to find something this bad. To just there it s. Then as well as, albeit late to the party, down grades, saying they are no longer a platform for merchant bus more of a discount inventory retailer which puts them right in amazons crosshairs. I have known that, i never took advantage of that brazilian thing brazilian wax . Miss the days when you bring that up. Go back to august 19, 2010. This shook the world did a gap. 25 off of a 50 purchase at gap. This is what got everybody going. And that was it. It flamed out. It was a onehit wonder. You wonder whether there was a real Business Model there plenty of people who threw their hands up at the time, looked at the road show, you can view on the internet. Pilgrimage to chicago. Figure it out. Understand it who was in charge . You look back now at groupon saying a lot of questions if they are a sustainable business. Linkedin was the survivor and now the deliver. Linkedin is a great site. Great piece in the times this morning. Journal. Linkedin, they would come on tv, they had a very definitive look at what was gonna be good. Linkedin rallies. I was very suspicious initially. What a wrong call by me. They have it going. Jc penney lost a snowball, linkedin rallies, caesars cash in, another one, david, you love. One one page of the wall street journal, everything you need to know. They will be glad hear you say that. Why not . Nice, good paper. I used to work there when we come back, two Straight Days of triple digit gapes what is the best way to ride the bullish momentum . Take a ride with cramer, his mad dash next. A little indecision creeping in here, a heck of a session no matter what happens. Squawk on the street from the nyse straight ahead. 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 when you open an account. Humans sometimes life trips us up. And sometimes we trip ourselves up. But thats okay. At Liberty Mutual insurance, we can untrip you as you go through your life with personalized policies and discounts when you need them most. Just call. And speak with a licensed representative about saving on your policy when you get married. Move into a new house. [ crash ] or add a car to your policy. Dont forget to ask about saving up to 10 when you combine your auto and Home Insurance with Liberty Mutual. Security, coverage, and savings all the things humans need to make our beautifully imperfect world a little less imperfect. Call. And lock in your rate for 12 months. Liberty mutual insurance. Responsibility. Whats your policy . Lets get the mad dash, a few minutes before the bell. We mentioned sears, margins up not down. Exactly. Really terrific ceo retired, and he left the company in great shape. I want to point out the fact that you have domestic Comparable Sales Stores at sears up. Okay. Heres what im thinking is happening. This Housing Trend is so strong that its a rising tide lifting all boats. Like david fish a and i were talking off camera, runt skeptical about sears . Im not sceptical about housing. If youre not sceptical about housing, you can build a case for sears. Inventory, a large part of this, yes . Yes. Look at the same time, making progress, but unlike ron johnson, eddie lamp the says our focus continues to be on our core customers but theres more work to do not like he is oblivious. I do like their internet, doing well, versus jc penneys internet, faltering beyond believe. Most posting 30 comps up, not down. On the jc penney website, frankly, its fine, just not exciting. How about monster . Monster beverage an unbelievable story, i like to have a little monster before i come on the show every morning. Cant tell. Jpmorgan says sales trends decelerating throughout the quarter. Here is what matters. Internationals doing great. Taking shares from red bull. This is one of the things people felt there would be health issues, go over a cup of coffee versus monster and how a cup of coffee has more caffeine. I think this story is done going as well on monster. 52. Remember that. When we come back, will we have a recordbreaking dine wall street in the dow taking aim at new alltime highs, the opening bell with snoopy is just in a moment. Recognize me. But i am your market 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. 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 . [ male announcer ] it was designed to escape the ordinary. It feels like it can escape gravity. The 2013 cclass coupe. Starting at 37,800. [ 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 not rocket science. Its just common sense. From td ameritrade. Watching cnbc, squawk on the street, live from the Financial Capital of the world. Recovered 291 points on the dow in two days, of course, erasing that nasty 216point drop on monday. We are positive for the week after bernanke and pretty good cap x data and priceline and dollar tree and richmond fed and howing, jim, little to suggest that flows in the stocks would reverse. I keep waiting for someone to say with all this good micronews, when is bernanke going to recognize things are better . He is winning when it comes to the top down news. He covers by top down even when the bottoms up impresses. Shops at pennes, maybe and feels he has to keep rates low. The plethora of good data. The feds, you mentioned that seeing good things. We get keystone pipeline, put people to work. I think you will see real momentum building, just went sequester is supposed to cool the momentum. And we still got chicago pmi in about 20 minutes or so. Of course, china pmi tonight. The land mines, if you want to consider them, are there. Opening bell is here. Lets get to the exchange. Met life and major league baseball. [ opening bell ] celebrating the 2013 tournament starting march 1st. Man, they are loud. Over it nasdaq, First Internet Bancorp celebrating the recent ipo and 14th anniversary. Look out for hearing loss here today. These guys are revved up. People love baseball. I love al leiter on the mlb network, on the yes network, i think the most informed baseball commentator. Really . I think he is fabulous. I dont know i have heard al very long. Really good. Lots to watch today. Bipartisan and noble is one, 1. 9 , out with its earnings, a surprise fiscal Third Quarter loss. Across the board, the sales were weak, digital revenues down 26 . Wasnt this supposed to be the savior of the company, digital revenues down 26 . College book stores, bright spot, if you can call it that only 1 plus percent. Online sales funny, the book stores themselves are the bright spot of the business. Of course, Leonard Ridge yo not made a formal proposal to acquire them in terms of the price. Publicly disclosed. But the stock did move up on that possibility. There was a time it looked like the nook was going to capture a great deal of market share and you are be one of the platforms going to succeed along perhaps with the ipad and the kindle but you have so much competition in that area, it has been a very difficult year, bill lynch brought in to run that company, really focusing on the digital side of it. You know, we will see. I always come back to liberty and malone and muff fay and that position they have in barnes noble and what may transpire there. Thats 17 roughly 17 ownership position they have. Someone who has written some books, writers here, you know that barns and nobody is the keystone, trying to get in front of people. I dont think we lamented it enough. A secular temple of learning. I have spent any number of countless hours at barnes noble. You spent countless hours but how much did you spend per hour . Nothing . Like nothing . Thats the problem. If they charged a mission, they would probably make more money. They should. But libraries i love the library, too. Library is another place they dont spend that much money in. Dont have to buy a book there either, almost like a library, nicer with a starbucks inside. Netflix for my movies, i dont buy the box sets anymore. Apple should buy netflix, reiterate that again. You must say that once every other day. Im trying to help them. Amazon. cause amazon spending all the money that netflix why bob olsteen said netflix probably the most dangerous stock running today. Amazon, there was great investors, peter lynch, ran the magellan furngd buy you what what you know. Talk to younger people about apple zohn and netflix, there is no price they wouldnt pay. It is most loved of our time, more than itunes. Girnt s p limited, retail story conditions there is crm and gap tonight. Jim, do you play along on this trade as it is happening . Crm, along mad money, i believe they he the stock is at the right level. Red had upgraded today. Low ball guidance, people get excited about it i think gap is doing terrifically well. I like murphy, stock acting terribly, mystify why that stock doesnt move. Brought back a lot of stock. Im believer in the longterm turn, not going to let the stock i could be wrong about that i would do it in calls, perhaps, mystified how poor lit stock act versus how i think the company is doing. Just dont get it. But then again, groupon stock came in with a real head of steam into that quarter. Thats true. Just last week, upgraded by piper. Talk about stepping out in front of a train. Wow. Timing was not regood. Groupon shares down by 25 . Losing a quarter of its market share, market cap, just single session here. Yeah. Incredible. A deal, right . A daily deal for you. See if anybody steps in and buys that is it like the brazilian wax of stocks here . Manny pedi groupon. A manny pedi, get a groupon. Best buy shares, the company will report earnings tomorrow, up another 1 . Today is the deadline for Richard Schulze to make his or do something if, in fact, he chooses to do something. What do you do . Ridge yo, schulze. Do they refuse to face facts or not recognize value we cant see because they are vision stealers in. Reports of him trying to make a larger minority investment, seems very odd to me. Who . Schulze. Why would you do that . Make the bid, try buy the company. The move up in the best buy from the 12 range to the 16, 17 range, as difficult as it was to imagine he would have been able to pull it off even at 12, much more so here. To imagine that there is a way to raise the necessary financing for a leverage buyout of this company, even with him rolling in all his equity. Why you go down a minority investment road is not completely clear to me. I think for his, he gets two board seats, takes them, figure out a way to exercise a little bit more control on management if its possible, while he tries safeguard his own fortune there is a place for best buy, i think, a place to go buy something. Take your kid to college, believe me, still end up going to best buy. Take a look at what this kids got a radio. Just go to walmart, you buy everything, including groceries, one stop. Amazon. Dont have to carry anything to college. You end up going to 24 hours, you take your kid to college, you go to the barns and noble, college book store. Because you dont know your address yet. Exactly. You dont know the roommate you what the room how big a tv do you need . Depends how big your wall is david, you dont know that until you get your dorm. No tvs in dorm rooms. Sure there are. Oh, come on. By the way, probably are people are watching on their phone. Watching our show. Surprised the penetration our show has in college rooms. Yes, i would be. I would be. He caesar castically. Check in with bob pisani. Hello, everybody. Happy thursday. Last day of the month, buck the trend again if s p 500 up 1. 3 . February is supposed to be the weak link in the best six months series, november to april, best six months, february, historically, statistically, a down month the last 50 year bus we are up so far, at least going in today. Japan up huge. See it up 2. 7 overnight. Shinzo abe getting his guy, kuroda into the bank of japan, a lot more easing down the road, weak today here. People asking me will we hit a sustained bull market we hit new highs today or any zmat key thing here is the bears have had very good arguments here, sub 2 gd st. A problem for the stock market and anemic top line growth is a problem. However there are two things why the bulls have been right. Number one, of course, mr. Bernanke, he reiterated rates will stay low. If you focus on the Economic Data and recognize a lot of this weakness is government driven, i think you can make an argument that we are at least holding up here in the high range. I think thats very good point to make. Let me move on to the retailers. The key point about the retailers is the string of cautious guidance that weve given it. So look today, we have got kohls below expectationses on 2013. Limit bead low expectation. Joining home depot, abercrombie, nordstrom, dollar tree just off tonight of my head. All those guys guided below expectation, i think is that little bit concerning, housing, despite the fact retailers seem uncomfortable retailers are going to be able to keep spending, a key concern for the economy. By the way, jc penney reopened, just down 17 , right behind me. Their loss is going to be a real problem for retailer earnings and the s p 500 earnings. 11. 7 gain for retailers on their profits so far, put in jc penney, only 8 gain and some concerns as well for the s p 500. I will get that you number later. Guys, back to you. Thank you, bob. Important to point out, bob was mentioning, industrials joining global again. This is a story where mike souther land is calling you the bottom. You may think it is jerry valet. As opposed to a carnival let. Some exstent, watching treasuries is like kissing a cousin, yes, we see movement, stocks go up, pushing yields up, the link badge on every couple of days or couple of weeks gets delinked back at different levels. Case in point, what happened to italy and the postelections. We linked back from the 180s versus 2 . Look at an intraday 10, intraday 30. Slight reaction, hardly noticeable after the 830. Big drop in claims is big news, doesnt give us huge clues, the whole point of the exercise. The euro versus the dollar. Yeartodate, definitely see the left side, right side or somewhat in balance. This is perceived to be support. The low on this trade around 13020 on the 26. Now look at the euro versus the yen, the twoday chart is insightful. See yesterday, it traded below a very key level, 120. Interday, 119 and a quarter. You open the chart up, based on closes. On this chart, clearly see, technicians used close only charts, holding the 120. Now lets look at a twoday versus the pound dollar. It has been moving higher but wow, you really want to get perspective on this trade, tough go back to july 2010. Barely a bounce. Jim, back to you. Thank you, rick. Lots of news about natural gas in the papers today. Check out the latest news in energy and the metals. Bertha coombs and the nymex. Bertha . Natural gas has certainly been an outperformer the last three days. Flaps ahead of the weekly inventories, expectation is a with drawl of 166 to about 180 billion cubic feet, according to a number of analysts. Although in terms of demand, we are entering that slack season. We are also seeing temperatures for the beginning of march looking a little bit warmer. As far as the energy benchmarks, we are coming off an inventory number, a little bit better than expected oil billed stronger than expected, draw down in gasoline better than expected. Oil prices these days disconnected from a runup in the market. We have seen gasoline, up 6 yeartodate, taking a look at wti and nymex, we are on track for a down month and prices for wti flat for a year. Back to you. Thank you, bertha coombs. Breaking news on midwest manufacturering, wi i manufacturering. [ 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. 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. We got up 1. 2, 56. 8, an 11month high, all in all, a very solid report, rick. We have backtoback monthly gains in the barometer. Not seen that in two years. Also, the threemonth moving average on the barometer is up for the second month in a row. We have not seen that in several months. The threemonth moving average has been going down consistently. Also, big point here, the star was new orders, it was up new orders with up 2. 0 to 60. 2. Thats also an 11month high the big deal here is that since november, the new orders have been up 14. 8. The good news here is that newed orrers is running on pace with production. They are running right neck in neck. And the deal is that if your new orders are strong next month, you are going to have to increase your production and that means you are going to have to employ people. So far, so good. What about the employment index, the most important to me . Since i have the survey now, i can see down 2. 3. Down at 55. 7, still 5. 7 above the expansion contraction line, a little disappointing. Only slightly disappointing, rick, you have to take it in the context of the gain we had last month, up 11. 2. January 23rd, almost out of time. We had benchmark revisions, the last quarter of last year had reads under 50. Those have disappeared. So you know, makes me a little nervous about the benchmark revisions, all said, a solid report, correct . All said, solid report. Back to you. Thanks very much, mr. Santelli. Did want to do an update on a story we talked about this week, cwh, commonwealth, take a look, shares the last three trading days, actually include today that is quite something. The activist from core investigation and partnership with the real estate giant related filed a 13. D owning 9 of the company. But everything has been in rapid order here, perhaps much more rapidly than your typical activist campaign, because the two wanted to try to stop commonwealth from doing a huge Equity Offering that would obviously disdi lutz their 9. 8 position in addition that of other holders. Surprise to some, tried to enjoy it, a flurry of press releases, offered 25 for the company, offer 27 for the company. We believe the underlying vasset, 40 for per share of this reit. Need to you terminate the plan to raise equity you can 19 million a share is what they did wall street loves these reits, issue all the time, jim, many of the firms need to increase their assets. It is a nice sort of gravy train for wall street as well. This is far from over, the sense that i have at this point. You could probably expect that again and the way this moved so rapidly this loo will speed up yet again with related and core investigation as soon as today, saying perhaps we will come after you and your board. We have the opportunity to act by written consent, if we get more than twothirds of the shareholders to agree with us, to replace the entire board. Look for that one wonders whether down the road or almost immediately do a tend we are that solicitation, replace the entire board. Shareholder baseself, jim, probably changed completely the last three days. Congratulate, the stock hit 19, you said, look, i think this is pretty amazing, stock shot to 26 later in the day great opportunity watching the show. Dave stlirkd sounds like a reallife poison pill, they basically enacted their own poison pill. Right . Had an actual poison pill at 10 , went to 98. Do a huge Equity Offering. Company using the proceeds to pay debt. Able to make those decision and they have made their choices. There may be other things they can do as well down the road. But . But stathis is an interesti battle. One of the biggs and best. Amazing that they did this. Talk about what David Einhorn should be after. This is the kind of outrage that i see. Right. Rather than giving us reason 11 of how apple should return its cash. Up 6,000 , apple. These guys what were they down in two days . Fine. Fine. We havent talked about apple at all today. 2 of a percent. The tape yesterday to watch it down 4. In a day where it was really hard pressed to find anything else down. Yes, exactly. Trim inverted xray banks shortage things that i know you use all the time. Always. Speaking of which, jim, the setup today is sort of the one you like to see rather than a strong go up immediately it can percolate. Absolutely right, carl. I just think that what happens is this is what needs to we need to do stair step this should be one of those a step and then we consolidate. That lets people catch their breath and i liked all the data. That was fantastic. Yeah. New orders, 11month highs, backtoback gains the first time in three years. People hiring soon. Go behind what is driving us higher in this march higher toward record highs and its an interesting sort of mix because you have the staples stocks, a whisper away from alltime highs, todays session, hormel, campbell, smuckers, new record nice todays session. Again, the bunker trade, if youre going to buy spam, jelly and spices. Bleach. Soup. Thats trade. Carl icahn, walked away from clorox, hall val out 70, here is the stock at 84. 73. Icahn was right. Incredible. When we come back, speaking of hot valuations is twitter really worth 10 billion . Coming up, a debate over the social media firms valuation. But first coming up, jim cramers on fire. Well, not literally. But his six stocks in 60 second he is are super hot. Feel the heat when squawk on the street returns. Its a phoenix with 4 wheels. Its a hawk with night vision goggles. Its marching to the beat of a different drum. And where beauty meets brains. Its big ideas with smaller footprints. And knowing theres always more in the world to see. Its the allnew lincoln mkz. He thinks this is one of the grateful markets, the veteran, 20 upside. See exactly what he has to say. Check where we are with patient jc penney under ron johnson and check the pulse also of groupon, which appears to get weaker by the day. Back to you. See you soon, simon. Six in 60, you will have can materials, start with jim r 5,000 . Not divided by whatever. A big gainer on the day. It would be huge. Probably one of the best. Vulcan is goldman says like martin marietta. Keep in mind, these are housing place, gravel, i like vulcan. Ubs on whiting. A lot of the Oil Companies spending money bring run the oil. Ubs didnt like it. I feel the opposite. I know is a bad chart, i like this money. Barically, regeneron. The drug you inject it in your eye macular degeneration. And anticholesterol drug. A buy on that and red hat . Tonight i have salesforce. Com and point this out, Jim Whitehurst used to be at delta, a great job, used to be under the weather. I like red hat. Glaxo hold to sell on morgan stan sflinchts no growth and i think no growth far ma has to be avoided even though you had a good yield. Dpz . I have patti doyle on today, initiate dividend, blow away numbers, do everything right. This is yuck be in stocks, this is how you make money. Like the pizza, which i do very much, i love the delivery, i love the app, buy the stock. Recipe change was a good thing. Wasnt it good . Have you ever tried it with no cheese . No. Try the nocheese option, like tomato pie. Okay. All right. Whats coming up tonight . Okay, we have got patti doyle, dont know what it is tonight but i like t and then, look, this is i call it popeyes, cheryl batch hardly. Did you know that pat doyle and joe number one and number two in this period . I love the craw phish they have, some people call it crawfish. A show, jim. Thank you very much. Tonight at 6 and 11. See you later. The dow as we said, within striking distance of the alltime high. Laz blow lowe ber reinny says the market has room to run. He is next. Shares of dupe group reason down big. Account stock ever get back to that 20 ipo price . 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. Stop stop stop come back here humans we are beautifully imperfect creatures living in an imperfect world. Thats why Liberty Mutual insurance has your back with great ideas like our optional better car replacement. If your car is totaled, we give you the money to buy one a model year newer. Call. And ask one of our Insurance Experts about it today. Hello . we believe our customers do their best out there in the world, and we do everything we can to be there for them when they need us. [car alarm blaring] call now and also ask about our 24 7 support and service. Call. And lock in your rate for 12 months today. Liberty mutual insurance. Responsibility. Whats your policy . Otherworldly things. But there are some things ive never seen before. This ge jet engine can understand 5,000 data samples per second. Which is good for business. Because planes use less fuel, spend less time on the ground and more time in the air. Suddenly, faraway places dont seem so. Far away. Welcome back to squawk on the street. Get the road map the next hour. Start with the markets. The dow could make history today. So long washington gridlock, arrivederci italian elections, stocks closer to record highs, laszlo but reinny and his take. The dow within striking distance hitting alltime highs despite fierce out of washington and skepticism from the street. Laszlo birinyi joins us. Great to see you. Thank you. You have been a proponent of the notion that the dow and the markets, in general, will hit new high also but we are going to see them in an irregular sort of pattern what does that mean . Days like earlier this week and might even have a correction but i dont try to call it corrections. My view driving from new york to los angeles ask me when we are going to get there. Take it one step at a time, everything is all go now. What do you make of what has driven us higher . Look at the sock tors that reached new record highs in the markets overall, names like the defense stocks, health care, consumer staples, do these say this is a robust growthdriven sort of market rally or is this a rally built on the flight to sort of safer defensive sector . I think its a stock market rally, where people are looking at stocks. Let me give you one stock i think incapsulates everything, berkshire hathaway. Berkshire hathaway is 15 this year. That tells me that its not just the retail investor, not sure covering, not High Frequency trading, real buyers buying real stocks and i always thought to do better on the bottoms up than top down. I want to lock at stocks, wherever they are. You have two charts you want to look at from the past that illustrate that this is a major bull market. Could you just talk us through what you are saying here . No better guide to the market they market, than history, we compare this to five other protracted bull markets. Right now, a very interesting point relative to these other two. Not suggesting there are going to be par his, saying dont close door the on this idea. Step away, keep your options open. The market, at this point, previous times, has very good news, we talked all about the bad things that could happen. To be clear, 20 upside, mirrors 1982 or 1990, in your view . Yes. Wasnt the world a very different place then. If you go back to the early 80s, solomon brothers, second bull run, founding your own company, wasnt the stock market, as dallas fed president dallas fisher said last night, Company Fundamentals were now, as he said last night, its dosed up on monetary dollops of ritalin . Historical past, the market has worked very well for us the last three years. While theres going to be differences, different stock names, different drivers, again, you look at the psychology historical mom. S one of the traders side me a moment ago as i was waiting to come on the market, rally, i said what do you think . Reaching these levels. We had no High Frequency trading, we had liquidity. A lot of ideas about this market, we say things. For example, one of the things we do is indepth studies, did a study a few years ago on volume. Volume means nothing, right . Not an indicator, volume tells you, active, doesnt tell you what they are going to do tomorrow. Did another study later on in the vix what we found was sometimes the vix goes up, the market goes up, sometimes down. We have so many ideas we have, if you push back, be a little sin knackal, do a little rigorous analysis, find out, yeah it happened then. What is an idea that holds up over time . Sentiment is a very critical idea. Right now, seen at least five newspapers articles the last week and a half 3e78 are negative and some of the fact these use are wrong. No. Oh, come on. An article in the journal, massacre of 1994, the fed raised rates. The stock market went down 9 , no, it didnt, went down 3. 8 . A lot of things articulated individuals who really havent done that much. That chart you showed us of the previous market and our current market, level of confidence those converge or die verge directionally is going which way . I have said 50 55 chance of hitting 1600 this year. I am lomgt december 160 s p calls, just a little bit. Still not going out on a limb on this, right . Basically almost even, right . Things go long. You take it stepbystep and the idea, where we going to be december 31st . I have no idea. Again, i want to get to cleveland before i worry about los angeles. All right. So on the road to los angeles, which sectors are going to bring us higher at this point . Industrials, the cyclicals, light on the defensive stocks, like the consumer staples, utility, so on, so forth. The cyclical and manufacturing, the economy turns back. I think the economy looks better from the bottoms up basis than the top down basis. As long as you say when we get to los angeles we dont have to come back to new york. These all i care b oneway ticket, lass low. What were looking for. We learn how to swim and keep going west. Lass low, thanks. Dow theorists are rejoicing, dow transport an alltime high a few months ago s thissed toer to move us higher . Jim paulson with Wells Capital Management Joins us as well. Jim, good morning to you. Good morning, carl. Some of these internals pretty interesting. Dow theory good. Some say copper doesnt. Whats your thinking right now . I think its a good sign that we are dow transport going to a new high, i think we will see more of that hopefully in the next few weeks. I think the biggest thing that hits me this morning, carl, so much thought this is just a sugar high, liquidity drip from the fed, i think this is a fundamentally driven advance in the stock market, the last year in particular. So much more of this economy is now working that wasnt working. Employment rates coming down, job creation rights rising are, bank rates rising, housing activities going up,s home prices rising, the United States economy has gear it had and so thats why the stock markets advancing to new highs, i think. I think the thing people are missing. Isnt some casual thing that is going to end. I think it is a fundamentally driven advance r given what the minutes said a few days ago. Wouldnt this week look a lot different if bernanke said on the hill this week, you know what we actually are thinking about tapering off, a very active discussion and we are we think we know how we are gonna do it . With would we be looking at anything close to new highs . I think personally, carl, i think that i would like to see the fed start to normalize policy. I think the market, maybe not on the day they announce it, do better than you think. What would be the same you carl, the reports that came out, claim numbers down, housing activity up. Manufacturing reports better, those reports that continue to trail out trumps whatever the fed speak is, i think. I think thats the message today is that we have got fiscal cliffs, we have got fed speak but also an undertow of economic information, Getting Better here in china, in japan, calming down in europe, thats whats driving this market higher. You believe calming down in europe is the appropriate way to characterize what has happened the past, say you 72 hours . Yeah. The bond yields are better than six or nine months ago. Mario draghi of the European Central bank said things are poor enough to keep stimulating and possibly cut Interest Rates again. It is a dplash yall pace of recovery, sequester may hit us, we will hang on in there with our monetary stimulus. You cant have it both ways. We saw how sensitive the market was last week. Sure lit idea about central bank. I disagree with, that the day of the announcement, the headline day i grant you the traders are going to react to that, simon and take the stocks down. The fundamentals ultimately are trumping the fed. If the fundamentals weaken, i think all bets are off and the market could weaken as well. The fed speak is just not going to be as important. This is not a sugar high, manship. A fouryear fundamental improvement from where we were four years ago. Jim, thanks so much, good to talk to you again. Jim paulson joining us from seattle this time. The second consecutive session, the dow hitting a fresh fiveyear high and in keeping with that market momentum, lets send it over to josh lipton for a quick market flash. Hey there simon. History suggests a good year for the bulls, with a few hours to go in february, we are on track to post positive gains in the s and p 500 for both january and february. In a recent note, sam stovall of Standard Poors said this happened 26 times since 1945. In all 26 instances, or 100 of the time, stovall says that the s p went on to record a positive calendar year total return, averaging in advance, including dividends, of 24 and mallsing fullyear results in the Single Digits just twice, 1987 and 2011. The reason, investors, like an ok ok octagenarian willing to skip a nap, believe there may be too much. Another question on our radar this morning, why doesnt the market seem to care about tomorrows automatic Government Spending cuts that kick in the sequester . Our chief washington correspondent, john harwood, joins us now from d. C. Do you have the answer to that john . Think two answers, simon. One is that theres so many good things going on in the economy, i just heard the previous guests say it was about fundamentals in the economy, not a sugar high. That provides some protection from whatever headwinds come from sequestration. The other side of that is republicans in congress, maybe few democrats, believe that southwester is not necessarily going to have the impact that the white house has been warning against. Heres paul ryan, the republican chairman of the house budget committee, had to say on squawk this morning. Believe that the government, which spending 3. 5 trillion this year can do with 85 billion less, yes. Do we believe that a government that spends more than 100 balance year in improper payments, money that shouldnt be spent can go after waste and inefficiency without raising taxes . Yes, we believe in that. That said, both democrats and republicans would like to see cuts made in a different wake the prospect is, if you look at the calendar, we play is ale are rolling discussion that could build toward action at ate lary point. March 1st state the squers takes effect. March 27th is went government would run out of money under the current law, have to pass a new one to prevent a government shutdown. If there were a government shutdown, would you have a crescendo of negotiate eggs and something that would proviews duce a new funding bill, perhaps replace the quester. If that doesnt work, look even beyond march 27th to midmay, which is when the debt limit is going to run out under the terms that congress agreed to earlier this year. So, theres the prospect that if its not settled by tomorrow, which it appears unlikely, it could get settled by march 27th and if not, going to keep talking about this and its going to be a function, simon, of whether public pressure grows to an extent that it forces the two sides to get together, overcome their disagreements. Worth bearing in mind the nbc poll that you were talking about yesterday, the majority of americans, 52 , want the sequester or they want even greater spending cuts. Now the majority of americans on that poll want the cuts, john. That is the sign of the argument obama wants to press. When go beyond the general idea of cutting spending and talk about the specifics, thats where it gets difficult. If you talk about cutting spending on, say, medicare or Social Security, the public says overwhelmingly, absolutely, dont do that. Thats why the sequester cut dont affect the programs in a significant way. Looking at law enforcement, border enenforcement, health care, education, there you have the possibility that the public is going too see impacts from the sequester cuts, layoffs and ultimately squawk in a way, maybe not medicare Social Security level but enough to make congress change. Fly xbrifrs the military as we now learned. John, thank you vet. John harwood in washington. Jc penney seek the biggest sales drop since ron johnson announced that Transformation Plan 13 months ago. Shares down 21 . We have an analyst who has a buy rating on the stock. Whats behind his call . Thats coming up next. Before we go to break, fortune is out with its list of the top 50 most admired companies in 2012. Before we unveil the top five a little bit later on, these are some of the winners from back in 03. Number five, ge, number four, dell. Number three, berkshire hathaway. Southwest airlines and number one, walmart. [ indistinct sho] [ 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. Im up next, but now im singing the heartburn blues. Hold on, prilosec isnt for fast relief. Cue up alkaseltzer. It stops heartburn fast. Oh what a relief it is [ engine turns over ] [ male announcer ] we created the luxury crossover and kept turning the page, writing the next chapter for the rx and lexus. This is the pursuit of perfection. High it hit on october 9, 2007. That day jc penney closed at 67. 02. Today, shares of the retailer are far from that level and falling badly. Jc penny reported last night that sales are down 28 for its Fourth Quarter and yet, we have an analyst with a buy rating on the stock. Brian neagle joins us, Senior Equity Research analyst at oppenheimer and co. Good morning, brian. Good morning. So youre prepared to step in front of this or advise people too do so . Well, look i have an outperform rating here. My call on jc penney, behind all this noise, and theres a lot of noise out there right now, i think there are actually signs this turn around is beginning to work. I think over the longer term, a more profitable, higher return on capital jc penney will emerge. The near term is very difficult to call. I write a lot about this to our clients this is a sentimentdriven story. Frankly, i agree with the market right now. A lot of reasons not buy jc penney. Sharpest drop in sales since announcing transformation 13 months ago, three brokerages cut their price targets today partly because there is 1,000 basis point dees klein in gross margin on the quarter, as they desperately discounted to get rid of the stock that nobody wants to buy. Yeah, so i look at that look, i think thats why i talked about the noise of these numbers, no question, jc penney struggled significantly lately, you luke at that did a negative 31. 7 comp in the Third Quarter. Like you said, 1,000 basis point decline in gross margins, a lot of that reflect the he have fors of jc penney to get rid of old product in order to make room for new product. So, when i think about, yes, very reflective of the ongoing struggles at jc penney but doesnt tell me much about what is the klain likely to look at, what is the ultimate profit potential with the company . Brian, how longterm is long term . If you look at jc penney, for instance, the billion dollar in cash that they had targeted, they missed that target, but on top of missing that target they also moved payables, about 85 million worth into the Current Quarter from the Fourth Quarter. So, theres sort of shifting things i around to make the cash look a little bit better, so, when you say its a longterm story, how much longer do we have because there are some concerns that perhaps this cash well, still there for now, but that there they are putting lipstick on a pig when it comes to their cash pile right now . I will address the cash piece first and talk about the duration of the call. The end of the year, 930 million, i consider that to be about 850 million, given that 85 million shift. But they also have a 1. 9 billion line of credit. I think jc penney at this point has plenty of lick quoted sort of say take care of the cap x needed for this year. Liquidity is fine t will be close but it will be fine. I think we will start to get more positive data points, midway through 2013, a larger number of the stores remodeled, but as i look further out, i dont see the Company Really turning a profit, at least on its income statement, until 2014 this is going to be a longterm turn around. Initial positive data point bus a long time before we can say that jc penney finally turned. Brian, even the things you say are true, doesnt his reversal in strategy or apparent drift in the nature of his strategy suggest that management has little to no cred bit . My comment today, i think they have lost a lot of credibility with investors, in large part because they went out with a very aggressive strategy and in a years time, it changed that. I think that is a negative. Also a positive, too. You said this company is learning. I look at, especially the promotional side, as recently as three or four quarters ago, ron johnson talking about a strict edlp strategy, shifted that now, talking about last night, one price a week. I think thats positive. Really what is going to drive traffic into stores. I think the shifts are making for the better of the company. Yeah. While people continue to lose money though. I mean, they are learning people out of a quarter of their wealth. Yeah. Look, the stock price today, down 2021 , very much reflect the nearterm type concerns. I dont think jc penney getting much credit in the marketplace forth longer term potential in the turn around. A brave call, brian. Thank you for coming on on a difficult day to make it again to repeat it thank you very much. Brian neagle. Thanks for having me, i appreciate it. Jc penney. Retail space, get back to josh lipton for a market flash. Barnes noble in the green, enjoying a pop here. The Company Reported a net loss for the Holiday Quarter impacted by decline in its nook delays can vise and ebooks business. Lower sales book stores. But also have headlines dropping from the Conference Call, barnses and noble confirming discussions between Leonard Ridge yoerks the founder and Strategic Committee of the board. Ridge yo said he would like to buy back the company. Also the ceo saying they are taking steps to significantly reduce their costs and overhead in the Digital Consumer business to operate the nook Media Business at a positive ebidta. You can see barns and nobody. Popping about 2. 6 right now. Back to you guys. All right, thank you, josh lipton. Is twitter really worth 10 billion . We have got a straight streit fight over the social media giants valuation, one that you will not want to miss. Keeping with the rally that just wont quit, look at the dow map as we head to break. [ 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. Tdd 18003452550 playing this and trading. Tdd 18003452550 so im always looking to take em up a notch or two tdd 18003452550 and schwab really helps me step up my trading. Tdd 18003452550 now i can use their most powerful platform, tdd 18003452550 streetsmart edge, on the web. Tdd 1800345255 so i get their most advanced tools on any computer. Tdd 18003452550 ive also got a dedicated team of schwab trading specialists. Tdd 18003452550 all this with no trade minimums. Tdd 18003452550 and only 8. 95 a trade. Tdd 18003452550 after all, im in this to win, right . Tdd 18003452550 open a schwab account and you can earn up to 600 cash tdd 18003452550 and 150 commissionfree online trades. Tdd 18003452550 call 18882843935. But at xerox weve embraced a new role. Working behind the scenes to provide companies with services. Like helping hr departments manage benefits and pensions for over 11 million employees. Reducing document costs by up to 30 . And processing 421 billion dollars in accounts payables each year. Helping thousands of companies simplify how work gets done. Hows that for an encore . With xerox, youre ready for real business. One of the companys top m and n advisers leaving wall street and returning to the law. Cohead of mergers and acquisitions at jp morning, advised on dells agripment to be acquired and now he is heading to a firm where he will be deputy chairman, cochair of the corporate department, joins us here at post nine. A trend or a one off, a successful banker who had been a lawyer going back to the law . What i want to be, david is a very successful leader, an opportunity to lead the oldest and one of the most important law firms in the United States, cad wall ladder, wicker sham and taft. We intend to take it to the center of business and law and regulatory matters. You know, because what youre reporting on, we are in a hinted regulatory phase in this country. And nobody a law firm that has the kind of Regulatory Power and muscle that cad walder has. I did this very intentionally. I love jpmorgan, the people are fantastic, they will be very successful. But i did this intentionally because this is where the puck is headed. I know what clients want what they want is one solution. They want a law firm that can give them this kind of solution. Tell me about the deal and how we can get it done what. Issues r thats really why i have done this. It is a leadership role, you dont get more blue chip than that making a bet on the fact there are going to be more regulatory concerns around business in general and dealmaking not just this year or next year. We are building a regulatory infrastructure. Since the crisis regulatory matters moved up the food chain in terms of their importance to Business People. What people want is somebody who understands business but understands the regulators and can put together together a combined solution. Thats what Business Leaders need, top of their list, what happened cadwalader will do, what we will be about. I want to, just for a second, get bertha cools at the nymex, natural gas inventories. David, saw a drawdown of the 171 billion cubic feet, that was a bit ahead of the expectation for the drawdown. Leaves us with total storage of 2. 23 temp cubic feet. That puts us below the fiveyear average. We continue to move below the fiveyear average, seeing more demand for natural gas for heating in the past couple of weeks with that awful snowstorm in the midwest and the cold on the east coast. Big draw down on the east coast, 109 cubic feet the draw down. We have nat gas, having rallied into the number now, more or less stable on the day. Back over to you. Thanks very much, bertha coombs. Regulatory, why not stay at jpmorgan, help them navigate this increase the presence there with your dealmaking and garner even a bigger market share . I will continue to be a dealmaker, of course. As i said, the jpmorgan experience, working with jamie dimon, jimmy lee, doug bronstein, these guys are the best in the business, but my focus is taking the leadership role, drive the strategy of the entire enterprise, what i will do at cadwalader. It is clearly about leadership, trying to drive the Organization Forward and take the organization where clients r talk about deal making in and of itself. You advised a special committee from your perch at jpmorgan, advising still, i think, on the dell deal from cadwalader. Is this deal gonna get done at 1365 . I think the deal will be very successful but have to defer to jpmorgan. Im representing jpmorgan and jpmorgan needs to be the lead spokesperson on dell. But im going to be working on the matter and we are going to be working hard and look, listening to shareholders and so forth, but 1365 is good. To the extent you were on advising that special committee during this you were one of the helped architect this deal. This special committee seemed to go through a great deal of effort to get silver lake to the price it achieved. I just would love to get a little background to you in terms of the sense is there much left on the table . This is one of the best processes ever conducted. I think when you see the process that this special committee went through, they turned over every rock they looked at every opportunity. Beyond that i am going to defer to jpmorgan. Talk about m and a overall. Dell using cash it has overseas to help fund the buyout itself. A lot of companies under pressure to use the cash, care about apple. Nobody will take out of apple is that more of a factor in activism . Put it together for me. What the activists look at, not just the activists, david, its the sponsors as well. They are going to look at a opportunities to bring cash took facilitate transactions. One of the things we are gonna see is an increase in lb activity, for sure, due to the financing markets in general. The robust nature of the some prices and the cash there the cash, as weve seen, can be a vehicle to unlock value in the context. Paying taxes ton by repatriatin repatriating . Structures available, again, very specific to the company, but structures and opportunities which allow companies in certain circumstances to access that cash and make it available to get shareholders a control premium. I think that is definitely going to be part of the mix. Getting a little carry aid way thinking there is going to be a wave of 20 billion lbos . Dell a specific situation, odd chairman willing to roll in an awful lot of his stock. Yeah look, the lbo increase we are going to see is not going to be about 25 billion deals. That transaction is idiosyncratic. What this is about before this transaction, we had done a lot of 9 billion deal he is. Hadnt done a lot of 10 billion deals. This is about the 9, the 10, the 11, the 12. Thats where the action is gonna be, where the action is you will see more transactions kind of ranging from call it 5 billion both 15 billion that will be a sweet spot, see more activity and by the way you shareholders want it. Shareholders want the transactions to happen. Jim woolery, as always, appreciate your time. Good luck in the new gig. Thank you, david. Look forward to talking to you and continue the dialogue. Jim wool rick, cadwalader, no longer jpmorgan. The dow shy of its alltime record, we sit down with art passion next for his take on what has been a phenomenal rally. Plus, the dow may be closing in on its alltime high but the s and p 500 index still 50 points away. And the nasdaq, not even close. We will take a lacks, importantly, at the technicals in the next part of the program and how that could affect where you should put your money next. [ whirring ] [ creaking ] [ male announcer ] trophies and awards lift you up. But they can also hold you back. Unless you ask, whats next . [ zapping ] [ clang ] this is the next level of performance. The next level of innovation. The next rx. The f sport. This is the pursuit of perfection. How do traders using Technical Analysis streamline their process . At fidelity, we do it by merging two tools into one. Combining your customized charts with leadingedge analysis tools from recognia so you can quickly spot key trends and possible entry and exit points. We like this idea so much that weve applied for a patent. Im colin beck of fidelity investments. Our integrated Technical Analysis is one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. 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 . Dow in negative territory, a fresh fiveyear high. The heat map, a sea of green across the board. We are watch, a number of notable indices hitting record highs, transports for one. New alltime high in todays session. Dow sitting about 100 points away from its alltime high and looming budget cuts a few hours away you is the rally that wont stop in jeopardy . Ubss direct over floor trading, art carbon, joins us here at post nine. Talking about what a plethora of topics we have had to talk about this week. Not able to hold 14,000 though for more than a day or two. A day at a time. Day at a time. Its amazing. I think what the viewers should know most importantly is that the old phrase about a selffulfilling prophecy this was a selfliquidating concept. Everybody and their sibling were waiting to buy the dip. And we got that selloff and they said, oh this is the beginning. Getting really it ready for it the dip began to disappear, everybody had to rush in. My god, my dip is going. The train was leaving the station. I dont note technical term for it but psychologists tell us is a natural function in humans, see a car backing into a space, people tend to dart behind it because that space is closing, doors are closing, people tend to run toward closing opportunities. We end up flat for the week, where does that leave us . Puzzled. I think there are some technical signs that look like you might be developing a slightly broadening top here. At the same time, the bulls can make the case, we are just resting up. So, with the idea that the dip is no longer available, markets will have to take things on their own. Sequestration seems to be a nonevent. Everybody probably is focusing on march 27th and the continuing resolution. Italy would be a far more interesting story but it seems to be moving in slow motion. You know, the feeling was that if the election had taken place later or if you had another quick election, as you did in greece but couldnt hear, that would be my sweep the table, take everything in. That is going to make berlusconi and bersani figure out what their strategy will be. In terms of sequestration, art, may not be a big thing act, least immediately, but the long they are is prolonged, isnt it more of a headwind . I think the consensus seems the consensus in the market, sequestration will, in fact, kick in but congress will reach some sort of a deal to eventually retroactively peel back that sequestration in a short amount of time. But as the days go by and weeks go by you isnt that more of a headwind for the market . Certainly will be. Particularly because this sequestration a blunt instrument. They are taking away childrens vaccine on the one end and leaving car fare to go to conventions on the other. Or syrian rebel aid. What an odd week to mention that. For sure. Things dont look like they are going in the right places. As i said before, made it sound so dire, almost wish the asteroid had him. Things would be different. We will see. Just before we let you go, art, can i take back to the beginning of where you started and painted this ral slick, a rally based on institutional money, retail money, real money n your view thursday is not driven higher by computes . The computers certainly participated, everybody uses that vehicle now. Program traits . Program trading, there is so many algorithms running in here, the programs also know that the other players have been waiting to buy the dip. When they see the dip closing that is kind of front running on their behalf, let get in there these guys are going to have to chase them starks heavy component but a lot of it is psychological and we will see what happened now that weve eliminated the dip. Let us know when Mainstream Media starts calling in ernest so we can our favorite contrarian end care the, thanks, art. The big breakout is quite bullish but too much of an outlier here . The Broader Industries a ways away from their alltime highs, talk the technicals on the breakout move and what it may mean next. Take a look at this fortune magazines naming names with the list of the top 50 most admired companies, the top five here, number five, starbucks, number four, cocacola, three is amazon, number two is google and number one will be revealed right after this. [ 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 its part of what you slove about her. Essing. But your erectile dysfunction you know, that could be a question of blood flow. Cialis tadalafil for daily use helps you be Ready Anytime the moments right. You can be more confident in your ability to be ready. And the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. Tell your doctor about all your medical conditions and medications, and ask if your heart is healthy enough for sexual activity. Do not take cialis if you take nitrates for chest pain, as this may cause an unsafe drop in blood pressure. Do not drink alcohol in excess with cialis. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, seek immediate medical help for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or if you have any allergic reactions such as rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a 30tablet free trial. Promised before the break we would unrate is number one most admired company, four of the five, starbucks, coke, amazon, google, number one, of course, apple. Despite everything that happened to their stock over the past couple of months, melissa. As we mentioned, the s and p and the dow their alltime high from october 2007, but something funny happened on the way to the rally, the s and p 500 is far away from its alltime high in 07, the dow is within striking distance. Time to take a look at the technicals here, mark muteson the chief technician for gray wolf execution partners. Discussing this note i came across this morning put out, signaling the fact that over the past 15 trading sessions, the dow has made higher highs, made the steady march higher toward its record high from october 9, 2007, but the s p 500, the nasdaq and the russell have made lower highs. Yes. Which technically speaking i would imagine is not a good sign. Still a little bit of a concern. You luke it the dow yesterday made highs, the nasdaq and s p did not. Dow 14,000 but dow is under its 2007 highs of 14,200 and also the russell 1,000 and 39,000, not participated as well. All up against levels of high some of these indices have broken out. Continue to be a concern, in regards to what we call intermarket divergence, not all indices hitting the thighs same time. You are counting down to this record on the dow but its a snapshot of 30 companies, not representatively of the broader markets in terms of the s p 500 what are the levels you are watching . The last couple of days, the s p has shown since of peaking out. My thinking is a short term is still a big issue. We could actually pull back to levels 1475 regards to s and cash, 1450 regards to the future, leffs on the downside. Those would still be withined broader uptrend since november a selloff would provide a better buying opportunity in short run, the down side the upside, 1525 to 30 is very important. The s p above 1530, likely to challenge its own 2007 highs, near 1576. Lets be clear here, short term, maybe concern about thesome and p 500, but longer term, do you like this price action . Thats correct. Mostly just shortterm concerns only. A lot in regards to momentum deterioration, last week, broke down in serious volume and bredth, more negative. Regardless of this new dont fight the fed mentality, the rally yesterday did not help us to get back a lot of whats been done. You see this trend line the last month, really was broken last week. We have had a series of lower highs, now up near 1520. Regards to s p futures, a key level in the short term. Momentum is negative on a shortterm base circumstance u intermarket divergence, a huge runup in sentiment the last couple of moments, to be expected. As measured by what . Investors a intelligence, aeii, consensus you can market rain is. Con tearian indicators, more bullish, the more likely you see the markets pull back. Thats correct. They all follow price action. The s p up 12 since last novembers lows, as expected, sentiment gradually followed this move up to new high territory. Now we have a number of different indices all near former highs, the u. S. Is starting to play catch up with whats happening in europe. Europe peaked in late january. Saw china one of the biggest declines in the last few weeks. S p showing signs of deterioration, not all the stocks are following this mark its move to new highs, seen deterioration in technology and materials, those under constant pressure. Transport, health care, staples hitting new highs. A good point, melissa. Market up 7 this year but largely defensively lagged. Consumer staple, health care, a big move in utility, the last week, by and large, a lot of the sectors have made their moves, like financials, up record highs. Important to be selective at this stage. Mark, thanks for coming by post nine. Simon . Yeah, melissa, next owned program, Rick Santelli has one of the most outspoken republicans in the house to talk about whether wall street should be paying more attention to d. C. More attention to d. C. And another contrarian call. We have an analyst well a buy rating. And as the dow takes aim at its alltime high, take a look at some of the dow winners that are pushing it back. Tires squeal ]over, and youll find advanced Safety Technology like an available headsup display on the 2013 lexus gs. Theres no going back. Welcome back. I want to get to cablevision shares. The new yorkbased distributor of programming and broadbrand, numbers that were not really good, even when you take out the costs associated with hurricane sandy. But then the Conference Call began and it is there where people, frankly, who have been on the call and i have not been able to be on the call as a result of being on air, its been scary for them that the call was not going well at all. The man who runs the company not entertaining a number of questions in terms of the suit against viacom that was begun a couple of days ago by cablevision, significant increases in programming costs, in overall expenses, and seeing pressure that is fairly significant pressure. In fact, in q1. What had been as much as 11 coming back a bit now, i wanted to update people again. Not a great quarter to begin with. It seems to have exacerbated the fears for a very, very highleveraged companies. That means it has a lot of debt. Melissa . This has got to be one of the biggest drops for cablevision in a very long time. David, in the meantime, we want to call your attention to vatican city. Pope benedict xvi stepping down after nearly eight years as pontiff after unexpectedly announcing his resignation on february 11th for health reasons. You can see him walking down the hall here. Hes expected to depart vatican city by helicopter heading to Castel Gandolfo where he will take up temporary residence until his New Residence outside of vatican city is complete. Once he steps into the Castel Gandolfo, the doors will closed and it is complete. Thousands of people stormed into st. Peters square to watch this happen. They put big screen televisions inside the vatican grounds for the public to watch what is happening. Its hard to get a Vantage Point of the scale if youve never been there but isnt that just an amazing thing to watch . And historic are, given that we havent seen anything like this in 600 years, right . I wasnt there but obviously you were, david. Eagerly checking the stocks. Yes, i was. Interesting this morning, Cardinal Dolan of new york was asked if he stands a good chance of taking his place. He said, about as good a chance as arod has. Obviously something the entire world is watching as we keep our eye on vatican city. Meantime, one day until the sequester and a day after chairman bernanke spoke to the house. I want to go to Rick Santelli in chicago. Hello, carl. I want to welcome our guest, congressman jordan. Welcome, congressman. Thank you, rick. Listen, i want to talk about three or four things and then cover the market. Am i control that the budget control act was 2011 . It was. I know bob woodward has been taking a bunch of green fans and seems like its was newly nominated jack looi treasury secretary. Yeah. Ive been looking at this in depth and its not easy to do but i notice a section called 265, program exemptions. Are you aware of that exemption . Vaguely. I wasnt there when it passed but go ahead. I know the president has the bully pulpit and he is entitled but it certainly seems like the things hes talking about from child nutrition and Educational Programs and other entitlements that a lot of those seem to be exempt. Am i wrong . They are exempt. Hes trying to scare the American People. Were about toll achieve 85 billion in savings. Thats a good thing. Would i prefer not to hit National Defense the way it does . Certainly. We voted to change that portion of it. But the fact is, were in debt and need to cut spending and achieve a cut in spending and the world is not going to end. The secretary of education was misleading the American People when he said teachers are getting pink slips because of the socalled sequester. Its not happening. It was proved not true and hes out there saying it. I read about that too, congressman. The sunday shows always seems to get a spin that doesnt hold up on monday. Yep. Lets go to the market. Im a market guy. Im at the cme group in chicago. You know, when we listen to ben bernanke yesterday, he made a comment that we may not reach 6, 6. 5 of Unemployment Rate until 2016 and the market rallied. I dont know if i could look at the market to these traders just want to make money. How do you think Market Participants ought to look at the sequester . What are your thoughts and what do you think the Market Movement would mean to politicians in general . Just what i said before. This is a good first step. The president wants to say, the world is going to end. This is only 2. 4 of the entire federal budget. There have been all kinds of families and Business Owners that have had to sequester 2. 4 of their budget. This is a good first step in starting to address the 16 trillion problem we have. My concern with the fed, frankly, is ben bernanke policies are financing Barack Obamas spending because the fed with a cheap federal dollar policy makes it so were only spending money to service that huge debt this year where if Interest Rates think about this, rick. If Interest Rates were where they were before the crisis, back in 2007, wed be spending about 800 billion in Interest Payments to service that kind of debt. Thats what scares me more than anything. Youre preaching to the choir. I understand some of the issues of solvency in europe might push rates down. Final question, real quickly, yes or no, do you think theres going to be a lastminute deal like there was at the end of 2011 and 2012 . No, not at all. If theres an attempt to do that, you will see me and a bunch of other conservatives going strongly against it. I dont think its going to happen. I applaud them for do that. We have to have this happen. Thanks, congressman, for being our guest. Carl, its all yours. Talk to you in a few minutes. Meantime, melissa, what is coming up tonight . Tom lee, strategist at jpmorgan, turned bearish last week. What is he seeing that were not seeing as we march to the record highs. And how to play the Online Gambling aps . Well get the topics from the top analysts. See you guys tonight and you guys later on. If youre just joining squawk on the street, heres what you missed. Announcer welcome to hour three of squawk on the street. Heres whats happening so far. From the financial side, we are in a positive position. Where we do have a problem is the economy, growth rates that are not adequate still. Weve been proposing this for years. The president is going around the country campaigning and not dealing with this. Apple, by the way, did you see the release of a billion itunes content. Why doesnt this get the stock out of the rut . There we go. You know what, jcpenney abandoned them. They dont know what to make of this new store. 4. 3 billion in sales. Thats how much was lost under johnson since they took over. That groupon call was like andrew mason. Are you in touch with reality . He was saying its hard to believe that just a year ago we were just a daily deals website. Its hard to believe that your stock is down 70 since its ipo price. What Business People want is somebody who understands business but also understands the regulators and can put something together thats a combined solution. Thats what Business Leaders need. Good morning. Were live post 9 at the new york stock exchange. The market has been flirting with highs all week and all day long. S p is flat at 1515. Nasdaq hugging the flat line this morning. Monster beverages well a high after reporting a 5 increase. Revenues also up. Pandora, meantime, down sharply after the company says it plans to cap the availability of free music be on mobile. We do want to go back to vatican city where the pope is now boarding a helicopter, which despite his honorary pilots license, he will not pilot himself. Lets take a look. Lets just listen to this. And with that, after eight years, formal Cardinal Joseph rat ratzinger retires as pop. As we continue to see what the conclave will do as we search for his successor as the entire world watches what is happening with him. Got some breaking news out of the new york fed. A hard right turn here to steve liesman. Why does this always happen to me, carl . Hard to follow the pope, my man. Exactly. Let me do my best. The new york fed reporting that total consumer indebtedness rising a scant 3 to 11. 3 trillion. Housing debt was flat. It was a small gain but the first gain weve seen since the First Quarter of 2011, that was thought to be a bit of a statistical anomaly. So maybe this is the first real gain. Let me show you what rose. Auto loans up 15 billion. Credit cards up 5 billion. The perennial Student Loans up 10 billion and they have been rising quite a bit. Delinquencies are quite high. All delinquencies declined except for Student Loans and they were up almost 12 and probably because of a whole bunch of different reasons, carl, they could be twice as high as that. Carl, back to you. Steve, thanks for that. What a week youve had covering Steve Bernanke on the hill and now this. The dow striking alltime highs after touching the fiveyear high this morning. Is Nothing Holding the market back and has the anticipated pullback come and gone already . Michael is joining us here at post 9. A great column and tweet, if you were looking for a dip, was that it . Obviously not enough to do anything with. It was a stutter step, i guess you would call it and i think it ushers in a twoway tape. And to me it seems like theres a little more corrective stuff that has to happen, whether its to the downside or just chopping around. We didnt really reset expectations a lot lower in terms of that bullishness. Hard to say from here but i do think were kind of following the script from the prior two years. Up 6 since valentines day. Up to a new high in april and then it was kind of like your year. Right. So given whats changed and what really has reset vix, copper, some other commodities, what is the tell . What is the tell over the short to medium term . First of all, the treasury market hasnt really given you a green light. It remains stubbornly below 2 . Didnt participate yesterday in the rally on the equity side and the credit sides are the underpinnings of everything. Its the junk bond etfs that are off their highs but still kind of sitting there and not giving you a real warning signal. All those things i think are in play in terms of your real tells and i do really think that the macro data im not surprised that the market is taking second questions can strags okay but sequestration. Everything from richmond to cap ex, which is what a sort of new high thesis have are been built on. Were four years into a bull market. Weve doubled. Were looking for factors that are going to length then this process. I think the fed is lengthening, drawing out the cycle. In the seventh inning but its going to be a 12inning game. What do you think about the bears argument that divergence matters, whether its russell to dow. Copper is not helping, as i said earlier. They matter tactically at this point or at some point they will matter tactically. I dont know that they matter in terms of telling us something important about the trend, in terms of economic trajectory and all that stuff. But right now they absolutely matter. Its basically ben a big cap stock story. The dow leaving is something that people are leading to and usually that can mean that its the index that is a little bit more susceptible to those little emotional moves. What do you think of this idea that youve got to get industrials and financials to lead. We cant continue to ride this train on the backs of smukers and hershey . I do buy that if its smuker and hershey. You cant have the pure defense leading. I think we have an interesting market. The last time the s p was at 1500, 200, 2007, you had these big embedded sector bets. You had tech and financial and housing in 07. Right now seven out of ten sectors are 10 of market cap. Its okay if we trade the lead a little bit here between sectors but i do agree with you, you cant really have the pure defensive yield stocks leading the way if its going to carry you something. My favorite tweet of yours in the past couple of weeks was the idea of old family money. This is after heinz. And you look back at the bancroft of heinz and wrigleys. In 07. Itf the m a thing takes of, its got legs to carry it. Its not reasons to own the market but you should keep an eye out for it. Always good seeing you, michael. Thank you. As you know, shares of jcpenney are down 20 as the Company Reports a decline in traffic and drop of nearly 32 in sales for the Fourth Quarter. Ceo and chief reare source officer and Courtney Reagan joining frus hq as well. Courtney, the pile on began after the bell last night but whats important to know going into the rest of today . It did. I think as we look forward to today, you have to decide if youre an investor how youre looking at jcpenney. I dont think this is the play for you. This is a lodgeterm strategy and the Big Questions remain about ron johnson sitting in the ceo position. 20 days ago he told us the board is still behind him every step of the way. But yesterdays results were a disaster. And what really stood out to me, traffic down 17 that. Bothers me a lot for a Fourth Quarter. Thats the Holiday Quarter. The traffic, the margins, conversion rates, the wet business. Would you be willing to follow him into battle in another holiday . I think its going to be tough going. Yes, be he is getting more instore shops there. Youre going to have the Home Business retrofitted hopefully by the end of may. But share is gone. We saw the results from tjx yesterday. We saw the results from macys. Theres a lot of places where consumers are going and what it will require is a lot of investment spending on the marketing side to attract people back to the store. Weve seen what they are doing with marketing. You look at the new ads, they have spared no expense. Is there the cash there to work with . Dana . They are talking about 3 billion of liquidity. In the near term, there is. Traffic is continuing to wane and its harder to bring that traffic back. Courtney, you interviewed him two weeks ago, maybe three . It was. Yeah. And he would not admit that he made any mistakes or do anything differently which was almost the polar opposite of what he said last night. Yes. I said if you could do things over, would you make any changes . He said for the most part, no. He may have changed things tactically here and there but last night on the call he said, look, we made some mistakes and i take full responsibility for that which i think is is evidence to his return to sales. Before yesterday it was an eventdriven sales. Now he says were probably going to have to do a sale a week. Yes, she does. As ron himself said. If youre looking at an ancillary play, where do you go . I think its tjx and macys. The word of 2013 coming out of earnings is integration. Omnichannel, multichannel, thats where its going to. Guys, what a story it was last night and continues to be today. Thanks so much. Courtney reagan and dana. Groupon plunging after the stock losing nearly 30 . Up nearly 20 of the value. 80 since it went public. Does this company have a chance at is survival . Well talk to an analyst who still says buy. First, Rick Santelli is looking at the exchange for later on. I am. And you know what, carl, we have really top caliber people. Today we had a very famous, very educated technician. Yesterday we covered ben bernanke. But even the best and the brightest say things and sometimes i say, what did he just say . And thats what were going to be covering in about ten minutes on the santelli exchange. Why turbo . Trust us. Its just better to be in front. The sonata turbo. Lets take a look at the dow transports. Good news for the dow, looking for directional clarity, our josh lipman has more. Hey, josh. Carl, the dow transports hitting new alltime highs this morning. What has been driving that move . If you peak under the hood, its four rail roads, one airline, and two freight and logistic companies, names like ups, dell tarks union pacific, and kansas city southern. Carl, back to you. Josh, thanks a lot. The dow hitting its alltime high. Dont p tell groupon, though. Weaker sales growth for the Current Quarter. I want to bring in arvin, research analyst. Good morning to you. Good morning, carl. A lot of discussion about strategically where these guys seem to want to go. Thats an element of some confusion today . A lot of confusion. We recently upgraded the stock based on the production of this company. I think what we saw in last quarter was demand and acceleration which got lost in the noise of the quarter. They clearly missed the profit expectations but i think 25 increase in demand, to me that was a big positive. What we thought was going to happen here is q4 is going to be noisy. It will probably be the trough quarter for them and well see nice profit recovery from here as they go forward. They invested a lot in merchant quality. I think thats a good longterm strategy for them. I think well see some signs of a turn around internationally where they are cutting costs, making things more automated, essentially bringing some of the best practices internationally. Its a longterm turn around story. It might be painful in the near short term but long term we think its a positive potential here. Heres a note from one of your competitors. They say it seems the company is moving away from a Technology Platform for merchants and into an overstock retailer. When you say turnaround, are you saying that they are turning around within the same space or are they trying to migrate . Well, theres several moving parts of this. What im referring to is internationally a lot of stuff is being done manually. There are a lot of salespeople and efficiency and profitability per salesperson is very low. What they have to do is take the u. S. Playbook, as they call it, and take it to the International Markets can, which is not just one market. Europe is big, uk within that is a big market. They have to take a lot of the technology from the u. S. Internationally and as they do that, international should start to turn a profit. It lost money for the Second Quarter in a row in the Fourth Quarter. It was profitable earlier but i think that changed to where its profitability is in the Second Quarter. Trying to draw merchants in and participate, i assume youre sensing some hesitancy by merchants to play. Is that also in the process of turning it around . I think their strategy is to upgrade the merchant quality. So in doing that they are going to find some merchants that havent tried groupon who might be willing to try it. I think groupons strategy is, lets give more merchants a try and some merchants that are maybe more national and with product that had more clout, thats where they are going which, again, long term is good strategy. Finally, does it matter to you in term of your buy rating or your 9 target whether or not andrew mason runs this thing . Well, look, i think as far as im concerned this company has, you know, a pretty good board. I think they will eventually find the right people if andrew is not the right guy. I think andrew issuing some signs here, again, i said demand acceleration was phenomenal. Its not necessarily an important part of my piece at this point. Fundamentally i think the demand is there and profitability has to show up in the coming quarters. Arvind, good to talk to you. Thank you for coming on. Ahead, is twitter really a 10 billion company . Were going to get to the bottom of what some are calling that valuation. The dow has been 10 or 15 points on either side of the flat line today as we continue to watch 14,164, that alltime high. Back in a minute. Revolutionizing an industry can be a tough act to follow, but at xerox weve embraced a new role. Working behind the scenes to provide companies with services. Like helping hr departments manage benefits and pensions for over 11 million employees. Reducing document costs by up to 30 . And processing 421 billion dollars in accounts payables each year. Helping thousands of companies simplify how work gets done. Hows that for an encore . With xerox, youre ready for real business. [ 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. 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. As promised, lets get to the cme to Rick Santelli. Hey, rick. I tell you, i love watching all of our programs. We have the smartest, coolest people on but sometimes they say some extraordinary things, at least in my opinion. I remember walking on to the cme floor two floors ago in the late 70s and i remember getting my first radio shack computer around 1981. They wouldnt let me bring it on the floor because computers were outlawed. As a technician, we did a lost things by hand for a long time but i always loved technicals. People look at traders almanacs. Thats one extreme. Then the other extreme, lance has a great reputation as a technician. I think somewhere in the middle. Id like to play some of the things that he said and address them as a technician. Please play the tape. You might even have a correction but i dont try to call a correction. One of the arguments in terms of highfrequency trading is they provide liquidity. Volume means nothing. Volume is not an indicator. Volume doesnt tell you what they are going to do tomorrow. We did another study later on with the vix and sometime when the vix goes up, the market goes up. Sometimes it goes down. I tell you what, doi totally agree with him on the vix. I think its a great contract that it has. Option volatility, im not sure its a leading indicator as much as a subtle follower. The real point is, he doesnt like volume. He doesnt think its important. So many real technicians would disagree, especially when you pair it up with open interests. Just look at big moves, tops and bottoms. Usually you get a relationship between volume and open interest. As far as fht, boy do i disagree with that. You know what kind of emails i was getting, that in the last second of trading, hft was doing 25 puts and its part of this equation. Real quickly, anybody who doesnt believe that retracements are an integral part of predicting technicals, look up w. D. Gann. He is definitely known for retracements and he did a big hospital stay and during his hospital stay, legend has it he used to let wall street journal know ahead of time what turns in the soybean market is coming. Just one mans opinion. Carl, back to you. I like it, rick. I like the pushback. Rick santelli. As the dow inches closer to record levels, the bells are about to sound across europe. Well get the details on this afternoon session when we come right back. Otherworldly things. But there are some things ive never seen before. This ge jet engine can understand 5,000 data samples per second. Which is good for business. Because planes use less fuel, spend less time on the ground and more time in the air. Suddenly, faraway places dont seem so. Far away. [ 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. See your authorized mercedesbenz dealer for exceptional offers through mercedesbenz financial services. Thats not much, you think. Except its 2 every year. Go to etrade and find out how much our advice and guidance costs. Spoiler alert its low. Its guidance on your terms, not ours. Etrade. Less for more for you. The head of the European Central bank effectively indicating that it going to follow the feds and stay there as it it stands at the moment. Youll notice that we had a rally in europe so far today. Weve added to those gains throughout the session. Mario was in the city of mun nick. He said we need to start thinking about an exit. If anything, mario draghi said inflation is going down and significantly less than the target of 2 . Hes hinting at an Interest Rate cut. The results, as we close out markets for europe, the stock is at 600 despite all of the problems that weve had with italy, it is gaining, as you can see, overall. For the month of february, yes, those top 50 blue chips are in negative territory because a lot of those are banks and they are worried about what might happen in italy but its flat. Now there is a problem obviously with italy and you see a flight to safety from the bond market into the core germany. Youll see a divergence in the yields between the italian bonds. You see the yields rising in italy. Thank you very much. In germany, obviously there is still a great concern there. I want to mention one more thing, carl, and that s. I need to take to you switzerland and show you what looks like a very innocuous news conference. In fact it is not. If you work for a European Bank here in the United States or if you are an american that is posted to europe working for an american bank, there will be caps on bonuses if they get this through. Let me run you through exactly what they are saying. The cap will be able to par with the salary that the bank is offering you and the maximum bonus you can have is twice your salary and with that you have to have a big vote of shareholders. The finance minister will discuss it but if they get it through and the commission agrees, it will be incorporated into the new basel iii rules. Your pay will be capped if you go to work in europe for anyone. Carl, back to you. That is a big thanks for that, simon hobbs. Lets get a check on commodities with bertha coombs. What a big week its been. A big week in particular for natural gas. It was a bit more bullish, down 171 billion cubic feet. That puts the stockpiles for nat gas at about 12 deficit from where it was last year. Still higher than the fiveyear average. It shows you the demand for natural gas with the strong winter that weve had. Cold weather on the east coast and warm weather on the west coast. When you start looking at the oil can complex, though, its a different story. Weve seen a risk off or just kind of flattening. Even as stocks move to new highs, youve got the crude bench marks down for the month. Gasoline futures also under pressure and an interesting thing, as we consider the dow approaching alltime highs. Gasoline prices at the pump since the peak, we are not near the alltime historic highs but we certainly are getting back towards those levels and we have seen prices up nearly 40 cents in the last month. Gold, however, is the real dollar when it comes to commodities. On pace for it its fifth straight monthly decline. Carl, thats a 16year losing streak. Its the worst in 16 years. Right. Five month down since 97. Thanks, bertha coombs. Lets go to bob pisani with a look at what is moving heefr. For people who want to get this done, its slow. Yes, and theres something we havent seen in a while. We got used to higher levels of volatility in the last week. Now were getting back to where it was in january and very large parts of february. Lets take a look at the market leadership and its very interesting. I know it doesnt sound like an exciting day but materials are up. Consumer staples up in health care. This is why the market is so resilient. These are near new highs. Consumer staples you would think were not doing so well. But, no, they are near new highs. You get the strength all across the stock market. In terms of what is moving today, weve noted the transports hitting an historic high. Look at this, this is the year to date. Heres the dow industrial and dow transports. Look at this huge outperformance. Transports are up 13 . Dow up 7 . Its twice as much. For those of you who believe a leading indicator for the global economy, there is a good argument. Downside leader, bertha was talking about gold. Its not just gold, its gold stocks. They have been a horrible mess. Ever since gold topped out. That was october. Heres gold stocks and heres gold. You see this dramatic underperformance. Its not the same thing as owning gold. Bottom line is, there are problems with the gold industry including problems in south africa. Thats why you are getting this big underperformance. Everyone is talking about out of bonds and into stocks. Its not happening yet. Take a look at it here. These are the big bond etfs. So far in the month of january, they were weak in february. All of the bond etfs, highyield groups are all to the upside and if you look at the money flows, these are index, take a look at the numbers year to date. There is money going into stock mutual funds as well as etfs. 70 billion but money is continuing to go into bond funds as well. 48 billion. Thats a nice number but theres no evidence that massive amounts of money are coming out of bobd funds yet. No great rotation as of yeah. Certainly mr. Bernanke calmed things down with his testimony this week. Thats true. Thanks, bob. Bob pisani. Chrysler making a jobs and investment announcement at its transmission plant in indiaen na. Our phil lebeau is live there with details. Good morning, phil. Reporter good morning, carl. This is a bit of a routine for the chrysler ceo. Over my shoulder you see him sitting on the stage as they announce an expansion here at the facilities in and around kokomo, indiana. 1,250 workers will be hired. 374 Million Investment and again it goes into the kokomo transmission plants. Why are they investing in transmissions . It comes down to the eight speed and ninespeed production. They need to increase that to meet demand for the jeep grand cherokee. As a result, chrysler continues to expand here in the u. S. Since fiat took control in the summer of 2009, they have added 8,000 jobs. Chrysler sales last year, we should point out, the only member of the big three to be up 20. 6 . Take a look at shares of fian in the last year, down 6 . Theres a number of other issues when you look at fiat shares, particularly with what is happening in europe. Well hear from sergio, the chrysler ceo. This is beginning to be a bit of a routine for him. Weve followed him from rockford, illinois, to detroit, and now here in kokomo, indiana, as they announce another ex be pangs in auto production. Guys, back to you. Thats a good day to rebound manufacturing in this country. Thank you, phil. Were 12 hours from the massive federal budget cuts known as sequestration and theres no doubt about the dire consequences. Scott cohn has been looking at this. Its a fact check, something he does all too well. We try. In the 3. 8 trillion federal budget, how bad can 85 billion be . This reminds me of when your local school board is saying we need this new tax increase and if we dont get t. Were going to cut the High School Band and Football Team first. We call this the Washington Monument here. There are a bunch of programs exempt, everything from Social Security to pell grants. But the Administration Says that makes the required cuts under sequestration that much more painful. Heres education secretary arnie duncan. So to act like theres some kind of magical thing that i could do or you cant kids are going to get hurt. Kids are going to get hurt. Thats just reality. Duncan says with no action by tomorrow, some 17,000 teachers and teacher aides would be laid off. 17,000 . Lets go through this. Nothing is going to happen tomorrow. This school year is already funded. The number is very rough. It comes from the amount of cuts divided by the average teachers salary at 70,000. It is true that local School Districts will be faced with tough choices very soon. If protecting our kids isnt enough, here is attorney general eric holder. The reality is, there is going to be pain and the American People are going to be less safe. That is just a fundamental reality that people have got to get their heads around. And getting their heads around big cuts in law enforcement, if you believe the Justice Department that says it will handle 15,000 fewer civil cases and 1,000 fewer criminal cases. Thats based on the number of cases handled per attorney last year minus the furloughs that the customers require. That assumes that the sequester says in effect all year and a sevenday furlough would result in cases being dropped altogether. Were trying to get some information from the doj and whether they would in fact drop cases. Thats right. A discussion about whose idea it really was, which is one of the great parlor games of the day. Thanks, scott. Scott cohn. Straight ahead, what is twitter really worth . The numbers say as much as 10 billion but some say its a lot less. Before the break, another look at the markets as we inch closer and we mean inch closer to the alltime highs. Dow up only by five points. Back in a minute. [ man ] ive been out there most of my life. You name it. Ive hooked it. But theres one. One thats always eluded me. Thought i had it in the blizzard of 93. Ha never even came close. Sometimes, i actually think its mocking me. [ engine revs ] what . Quattro Quattro you know it can be hard to lbreathe, and how that feels. E, 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. These may worsen with spiriva. Discuss all medicines you take, even eye drops. Stop taking spiriva and seek immediate medical help if your breathing suddenly worsens, your throat or tongue swells, you get hives, vision changes or eye pain, or problems passing urine. Other side effects include dry mouth and constipation. Nothing can reverse copd. Spiriva helps me breathe better. blowing sound ask your doctor about spiriva. Coming up up on halftime, is the rally based on fundamentals or solely on the fed . And despite the defense cuts, we have the names to buy right now. And tonights earnings, will they keep the rally going for gap . Top of the hour, carl. About 15 minutes away. Scott, sounds good. One question is, is twitter worth 10 billion . Dennis set out to answer that question in a column earlier this week. He said he tried to prove twitter was not worth 10 billion but the facts intervened and in response to that column, here to talk that out, the deputy managing editor. Hi, guys. Good morning. To your credit, even alex says you start out with a pretty good foundation. How would you start this argument . Well, i really was trying to prove why Companies Like twitter doesnt have the valuation that they have but i tried to gather as many facts as i could and there are not a ton of facts out there but i kept saying to myself, you know, the opportunities for twitter to do poorly, for it to fail, those outcomes are relatively few in number. The ways in which you could see scenarios with twitter really has significant net margin, great operating revenue, and a significant trading multiple, its not that hard to see five, six, seven different ways to get to a valuation of 10 billion or above. You tried to look at a number at which its membership with flatten out. You tried to look at a danger of foreign competition. What happens two to three years from now, we cannot say. But we have to remember, particularly internet numbers what they are today, they are looking two or three years in the future. Given the growth rate of twitter which is roughly 40 last year, if we assume that comes down a bit and moves internationally. Lets be careful. I would be careful to say how people value freshly Public Technology companies. Look at the reaction to facebooks ipo. There was nothing hotter in the world and even on the first day of trading, bankers came in and propped it up and then it suffered a precipitous decline. This was the first few weeks of public trading. So we need to think of twitter as not a startup but under normal Market Dynamics and what not. Facebook, of course, if you base it on where the revenues are for 2013, the price earnings multiple is through the roof and remains so if you look at the earnings for 2013 and 2014. Its still trading below its ipo price. The point here is that lateterm private valuations dont reflect how the market will react to it. And thats what were talking about. Well get to the public argument in a minute here. Lets back up, dennis, to revenue assumptions. Sure. Where are we . Upwards of a billion, close to a billion . Carl, these are assumptions and thats a good point that we dont really know what the numbers are inside twitter. The guidance that i was getting, the 800 million revenue estimate for a marketer was probably accurate. But the number for that i was hearing was closer to a billion. If you take the net margins on that, lets call them naturally organically, they can get to 30 margins. Youve got a great business, carl. And i dont know if alex agrees or not, but its an automated business. We give our content for free. Geez. Its it can be a money machine. What do you think, alex . 40 margins sound a bit ridiculous, in your view. Twitter is a very valuable company. It has a staying power. My argument, which is not politely put, we dont have enough real hard information to put a Firm Valuation on it. To quibble about 10 million, 9 billion or 8 billion, its kind of talking to the air. We dont have the facts and figures to get to a firm number. Sorry. Go on, carl. To wrap it up, how do you think the story is going to end if and when they come to the Public Market . Will this be well received . Im optimistic about the company. I rest my case. He agrees with me. Were all doing it on abstract numbers but overall the numbers are good. It is a great debate. I just tweeted, i cc jack. Maybe they are listening, too. Guys, thanks a lot. Thank you. A new way to invest, startup motive investing and doityourself investing. Well talk to the ceo after the break. With the dow near record highs, todays breakthrough offers an alternative way for investors to play the rally. Each one called a motiffe, surrounded around every day ideas, companies that are most liked by facebook users. Joining us at post 9, welcome. Thanks for having me. Lets talk broadly about the concept in general. You talk it jack bogul meets peter lynch. How does that work . What we do is take ideas at your senior daily life, peter lynch, and we turn those stocks into indexes and we call a motif, stocks built around real world ideas, Healthy Foods and you can purchase a motif up to 30 stocks and it costs you 9. 95. No management fees. And you can customize it, tweak it, work with your friends using our social technology. Our clients like to call it a conceptual etf thats customizable. A screen in 3d that you could never do on an interface. So far you have 100 prebuilt motifs. Now youre going live to this tool that allows to you built one out of your own head . Exactly. Were announcing build your own motif. It allows a money manager to turn it into a motif and any time anyone purchases that, you can get a royalty payment if anyone uses your product. This is about build your own kind of financial product, really putting the power of investing into the hands of consumers. So youre going to built one right here, right now . Absolutely. Whats it called . The theme of the day is sequester. We call it it sequester is overrated motif. If you were looking at our catalog, if you type in Something Like defense, you can pull out different ways of playing defense. We already have one built in modern warfare. You can purchase that right now, customize it, if you want to go overweight smartphones, you can do that very easily by putting sliders out. Pretty shoon you will go short a sector and if you like what you see, click buy here and literally two 50 or 100,000. You send it to market and youre done. But suppose you want to actually play the sequester, this is one that i started building right now. You can upload and picture and type in stocks, stocks like harrahs. You get all of these great ideas and now you can turn this in to a segmented weight of stocks and change your exposure. If youre worried about the sequester, you can increase your weight in defense spending or Government Contractors by moving the sliders around. And when youre done, you click next. And very quickly you can publish this motif on to the web so other motif users can find them. You can send it to your friend over email or twitter or facebook and when youre done, you click send. There are infinite numbers of possibilities . There are. Well talk about fees another time and monday ne tie zags. Fascinating idea. Thank you for coming in. Thanks for having us. Still watching the dow. Dont go away. [ male announcer ] whats the point of an epa estimated 42 miles per gallon if the miles arent interesting . The lexus ct hybrid. This is the pursuit of perfection. [ 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. Transit fares