Transcripts For CNBC Squawk On The Street 20130307

Welcome back. Time for the last word. Jim chanos is our guest today. We started out talking about china. Why dont we end up there, too . Avoid anything with the chinese property markets, steel, cement, iron ore. Can you short australia too, jim . Certain parts of australia are going to feel this, not the whole country. This is the bubble is just being blown bigger and bigger and bigger and it is hard to avoid. Three years ago this was somewhat controversial but when a property bubble is visual, you cant miss it. Emerging markets somewhat dependent on china, too . Asia . Depends. Some are. Some less so than others. To be on your radar screen. Should just be careful, anything dependent upon the chinese economic miracle, i would be careful of. Bigger shorts on, stuff we have been talking about for years . Broadening out from china to construction equipment, things like that. Jim, thank you very much for being here in studio. Always a pleasure. Andrew, jeremy siegel, thank you guys so much for everything from new york. You guys did a great job, great guests and jeremy, we are looking forward to seeing you back here in studio again. Andrew, we will see you tomorrow. Its a big day for us. We got jobs friday that does it for us today. Right now, time for squawk on the street. Thursday morning, welcome to squawk on the street. Im melissa lee, Carl Quintanilla and david faber live from the stock exchange. Jim cramer has the morning off. The fourweek moving of a range the loews since march of 08. Take a look at the picture in europe. The bank of england standing pat. The ecb standing pat. The press conference, by the ecb, still going on now. Overnight in asia, 2013 high by the nikkei, the boj didnt do more at its meeting overnight. A road map starts with the markets and the dows hot streak. All right economy stop this in its tracks . The jobs report out tomorrow has barclays cut its gdp estimate because of sequester concerns. Dell shares moving higher after our own david faber broke the news that carl icahn not busy or anything is a major stakeholder and demanding a leveraged recap that could put more money in shareholders pockets. David has the latest. Samestore sales arent the same. The first month macys, targets and kohls stopped issuing report cards. Notable beats from limited and costco today. A few hours away from a media event, expected to unveil a revamped news feed for facebook. That will that keep the stock moving higher . We begin with the markets, one day after the dow hit new alltime closing highs, the second consecutive session, four points high of 12,300. Good news on the labor front initial jobless claims falling to 340,000, driving the average to its lowest level in five years, as wall street braces for fridays jobs report out tomorrow morning. A lot ahead here. Certainly, a nice rally in yesterdays session. We continue to see the breadth of the rally continues strong, xlv, we had highs in health care, financeals, discretionary, staples, transports, you name it hit a new high yesterday. Macro interesting to watch, claims were good, as you said. Barclays does trim its gdp estimate for the coming quarters half a point. Raises their yearend jobless rate prediction, in part because of sequestersome it going to be good or is the sequester going to be like a build that damages us little by little over time . Should we draw anything from the dinner last night between the president and number of senators, which apparently he picked up the bill, too. I dont know if that is a sign of any progress. Corkers on record saying it was sincere is, constructive. I think he has invited paul ryan to the white house for lunch today. Ap has that this morning. The charm offense continues. Corker seemed to suggest that dont expect anything for the next maybe month to six weeks in terms of something. If you were to get some sort of broad agreement, one would imagine that would really be a catalyst. Yeah, that was are the crux of the barclays note this morning when they were trimming the gdp estimates. The progress on the talks just has not been there. And so they are now anticipating that the sequester, while each agency is a little bit more flexibility in terming how they are going to distribute those cuts, how are they going to furloughing the employees, the cuts remain longer than expected that will have the drag effect on the gdp. The dinner yesterday, that was in washington . I believe so. Not at the white house. A restaurant. Jefferson hotel. Federal offices were closed because of the snowstorm but they were still able to make it to dinner . Yesterday, remember factory orders were late. And that, in part was due to some delays because of the weather. Cant hit the return button on the computer because of the snow. We are thankfully still waiting for the promised snow here in new york, perhaps not to come. Major delays at the airports i in this area and other parts of the country. There are some flurries as i was walking in, very light still. Big question then, does the claims tell us anything about the broad economy. The chief economist from shoot toe securities joins us from new york. Welcome back. Thank you. Baby steps, progress . How do you couple this with what is happening with the personal income data, bearish data we have got the past few weeks . I think what youre seeing is a situation where companies have decided its more likely to add a few workers than fire works. That is in the claims data. The net macroimpact is prod doubletivity dropped, labor costs risen, as a result of that Fourth Quarter operator earnings were squeezed more than people anticipated in the backdrop of very, very limited Topline Revenue growth. So, the question really is how long can companies go on trying to get 8 to 10 Earnings Growth for 2013 and do it without cutting back on employees . Im afraid i just dont see that coming through. And that comes through as well from the trade numbers this morning as well, which showed when you take out the deterioration and the balance on pete control yum, look just at the goods component on a nominal basis, there was no realism. Prove. At all. Actually, a slight deterioration in the trade. Exports growth slowed down, import growth picked up a little bit. I think the real story is the macroeconomic dont justify a sustained acceleration in employment and just a question of how long it will take before companies begin to focus on earnings again and pare back on employment. Adp, as we know, was a beat yesterday. Stuff written this morning how they are Getting Better at targeting nonfarm payroll. Are you expecting a beat tomorrow . You know, im 175,000. A little bit stronger than the consensus. Again, im believing that we are going to have more squeeze in corporate profitability in the First Quarter of this year around the First Quarter squeeze on top of the Fourth Quarter squeeze that gets companies to pull back into the Second Quarter of the year. I think we got a few more weeks to go that is not case. Are you essentially looking through the next number anticipating more weakness later on in future months . Thats exactly what we are doing. We believe this number is baked in the cakes, the claims numbers, fourweek moving number show there is no change in the labor market. The jolts data show you no major change in the labor market. None of the other indicators we look at show us there has been any nearterm change in the labor market. We expect it to come in right around average, a little bit better than the consensus, we still, as we look forward in terms of looking it he squeeze on corporate profitability and corporate focus on earnings begin to think we are going to have a Second Quarter dip in employment, into the decline in employment, but a slow down in the pace of employment the Second Quarter, bring it back below 150,000 workers per month. Steve, as an economist that sees weakness in future months in general in the economy, questioning the strength of corporate profits at this point, are you a bit surprised the markets are at record highs . I mean is this our view is the equity market is following what happened in the economy. The economy returned to the precrisis high several quarters ago and got the equity mark threat because the risk concerns came out of the system. We are seeing the equity market a lagging indicator. Equities in the economy highly correlated on a longterm basis. On a quarter over quarter basis, it is not a particularly good Economic Indicator what is happening in the equity market and one of the times the equities are lagging whats happening in the economy. Absolutely. A lot of americans shaking their head at that divergence. Steve, appreciate it. Of course, tomorrows big jobs number means another chance for you to nail the number. Tweet us your predictions for nonfarm payrolls, make a guess any guess. Our handled, at squawk street, hash tag is nail the number h months prize, this limited collection, right, mug, of the post 9 oneyear anniversary at the exchange, autographed by all members of squawk on the street. You will have until one minute before the friday release, 8 30 a. M. Eastern time to submit your predictions and get in on the contest. Good luck. Consensus is what for tomorrow . Had 155 . I think so. I think the mug is limited edition. Might even have serial numbers. Only made a few. Another reason to tweet your prediction, right, david . No doubt. No doubt. I dont even have a mug. Wind up on ebay faster than you can you know if you ever wanted to learn how to forge davids signature. Right there. Feel free. Others have already done it unfortunately. Ecb president mario draghi holding a News Conference now. Simon hobbs is here with the very latest out of thissers were. Simon. Good morning to you, melissa. Mario draghi is being extremely relaxed about the situation in italy. This is the first News Conference we have had since the italian election. He is suggesting the financial conditions in europe are relatively good. No hint at an Interest Rate cut. Yes, they discussed it nor is there a hint they would ease collateral rules, a way of giving countriance easing and keeping germany where it is. The euro is spiking. As far asitically is concerned, a lot of the automatic a lot of the adjustments, Structural Reforms that mario monty put in place will still put through, the net issuance of italian bonds only 30 billion this year, simply rolling over what they already have. The same time, he says if you look at the contagion around europe, there isnt any this time around, very different from last year you should be aware that todays spanish tenyear yields fallen to a twoyear low. No Interest Rates coming from the ecb. No change on the colate ras. They have lowered their growth forecast but they say that was just is about the Fourth Quarter. Inflation forecasts arent coming down. Back to you. Thank you, simon. Get the latest on the dell news. Shares are moving higher in the premarket session on the news that you broke yesterday, david. Thanks, melissa. Early faber report today. We got confirmation report that carl icahn has, in fact, built a significant position in shares in dell, something we told you yesterday and suggesting the company pursue a leveraged recap rather than the 13. 65 a share leveraged buy outcurrently under way by michael dell, the companys ceo and founder around the private Equity Firm Silver Lake n a letter that was released by the special committee of dell this morning, in other words, icahn didnt put the letter out, it was put out by the special committee with the rebuttal of his letter, he details his plans for a leveraged recap and what would be as 9 special dividend. Yesterday, we did tell you he was looking for a 9 dividend. Following finance 5. 25 billion, 2 billion through icahn enterprises, another 3. 25 from carls own pocket. Not many guys that can say i will make you a loan for 3. 25 billion. I want a commercial rate. I will make you a loan. 1381 the stop. I want to talk about that. There is a question there that a number of people are asking, which is simply this a stock trading about 18 a share, moved up to 14 based on 1365 buyout. Now they can pay as 9 dividend and the remaining highly levered company, stub equity, will be worth 1381 does beg some questions. He seems to be using about an eight multiple to the company. Lets not forget it was trading about three times instead of he is saying now it will trade at eight times. Microsoft trading at five times. Ibm, less than eight times. Quite aggressive in getting to 22. 81 is his overall value for the company, says mr. Icahn. He is joined in that view by a number of other significant shareholders. Talked about southeastern, own 8. 4 of the company. They wanted to lever up even more extensively and pay as 12 special dividend. That is southeastern. A lot of questions whether a company that missed seven quarters in a row in a highly competitive business in which the business seems to be eroding, yes, it is generating free cash flow, should be leveling up broadly like this for its shareholder base. Jim chanos has been short the stock, appeared earlier on squawk box. Here is what toad say about the fundamentals. The problem with the dell model is that you get paid up front and thats great model when your business is growing, cause more cash comes in, you know, before the payables. But as your business shrinks, it works the other watch although dell has a lot of cash, most of it offshore, which is a whole separate issue, theres tons of payables here, the networking capital, not net cash, is only a few billion dollars. That being said, another great letter from icahn. Share little bit with you. He goes down a couple of different avenues here. If the board will not promise the proposal in the event dell shareholders vote down the private transaction, you are not vote on a recap, simply voting on the deal, you need to have them undertake receipt cap he is proposing, we intend to run a slate of dlaerkts will implement our proposal. He is threatening a proxy five. He wants them to combine the two votes, have the annual meeting vote so i can conceive isably run the slate. At the same time, you vote up or down on the transaction. My favorite line, you know, if you dont do that we anticipate years of litigation will follow challenging the transaction and the actions of those dlaerkts participated in it. Carl can still write a really mean letter. Scares me a little bit u the way he threatens the litigation, gave us chimp you were careerful yesterday to walk people away from the notion that this go shop period will bring in new players. Does it get extended . How serious is lenovo . Thanks for mentioning that, hp, i learned that last week, i worked on it to the extent that frankly, accident think it was news because there was nothing behind it that i was able to if youre hp why not get a free look at dells books . If youre lenovo, why not . Blackstone is also in there, maybe taking a more serious look at it, but thats private equity firm so they have got to make assumptions. Silver lake has already done a lot of structural work here on taxes, a lot of other things. Blackstone, well, they would be having to accept higher risk, lower return somehow if they would come up with a number that would exceed that of silver lake and michael dell. Interesting, but again, unlikely, i think, that you get anybody making an overbid here. Just quickly, david, in terms of the up or down vote is icahn 6 stake that throw into question whether or not they will get enough votes to actually go through with absolutely. You need 42 of the outstanding. 16 , you take the other 84, split that you get 42. 1 or maybe its even less its a novote you got southeastern at 8. 4. Not sure where carl is, assume a significant stake, 5, 6 , others. The maths tough. Not to mention a lot of people bought stock above the deal price so not going to vote in favor. We will see. Amazing. Headlines on rig today and carl and keeps them coming. Pingers in a lot of honey pots. Without him, i dont know what we would do for news. Thank you, carl. Thauz. Welcome. When we come back, veteran banking analyst dick bove, how do you play the financials here . The stress test results due out tonight, 4 30 p. M. Eastern time. One more look at futures, claims gave us a little support. See where we go. Squawk on the street is back in a minute. [ kitt ] you know whats impressive . 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 . announcer at scottrade, our somecexactly how they want. T with scottrades online banking, i get one view of my bank and brokerage accounts with one login. To easily move my money when i need to. Plus, when i call my local scottrade office, i can talk to someone who knows how i trade. Because i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Awarded fivestars from smartmoney magazine. Chain store sales also on the front burn they are morning. Costco reporting a 6 jump in comp sales for february, beating consensus estimates. Limited beating expectations, 3 increase in samestore sells led by gains at victoria secret. Bring in richard jaffe, analyst at stifel nicolaus. Good to speak with you. Good to be here. Thank you. An interesting month. I know you dont cover the Department Store chain, really, havent gotten any read from the Department Store sector, macys, targets and kohls stopped reporting their monthly sales. Im wondering as an analyst, does it matter, the samestore sales reports fact nor really well or these things merely distractions for most investors is . They are clearly a data point for investors and useful as long as they are kept in perspective. Obviously, they research the weather and holidays such as easter distort the numbers month to month on a yearoveryear basis. Important to keep it in perspective. They were helpful, they are gone and puts premium on our boots on the ground research. Right. Any upside surprises or downside surprises in your sector universe . I think the general trend has been encouraging. Week to week, we saw an acceleration in sales whether improved through the month of february. We knew we were facing a headwind with the absence of tax refunds, the payroll tax increase and its very unseasonable weather following three years of very warm januarys and februarys. It was going to be tough sledding it really was. But seeing momentum improve as the weather improved and less seasonal region, the southeast, southwest, outperforming, suggest that the consumer hasnt gone away, just waiting for the weather to improve. Out of curiosity, richard, may not be in your universe, but when you see the emails leaked out of walmart talking about this horrific february and for reasons we all understand, gas prices and payroll taxes, what goes through your mind . Does that does that fit with what youve seen happen the past four to six weeks . No question, the more moderate income consumer, the walmart consumer, for example is more impacted by the tax issues we just discussed. The more affluent consumer has been able to sail through february pretty much unscathed and we have seen that in the more affluent retail chains, nordstrom, for example. So, not a lot of surprise there is for walmart and obviously, they face the same weather issues we have discussed earlier. Richard, great to speak with you, thanks for your time, richard jaffe. Thanks very much. Art carbon has seen his share. How much of a lift has ski season given the company . [ male announcer ] the lexus command performance sales event has begun. Featuring the powerful gs. Just when you thought you had experienced performance a new ride comes along and changes everything. Get great values on your favorite lexus models during the command performance sales event. 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. 5 1 2 minutes i on the bell, art carbon joins us here at post 9. Great to have you. Morning. You said it felt like a catch up session. The bulls did rally in the end. Yeah. Somewhat disturbing because they kept slip willing as europe was closing, the low was made just around noon. They came back, got a little help from the ten what they call the beige book these days. Only because it was into the a disaster. It was not a great success. It inspired people to put some bids in. The trouble here is the dow has been leading and is having difficulty getting the nasdaq and s p to follow. Nasdaq made that attempt yesterday morning and then really couldnt sustain it through the day. The s p is very close though, art. To your point, it is probably lagging mostly because of technology. Is that sort of the last thing you need to see to be behind this rally 100 . Yeah, you know, the you know, youve got the apple factor, got a couple of other things. We have been talking for two weeks now about that inverted head and shoulders the s p. They broke through the neckline. The count, supposedly in cocktail napkin charting, you can count upward. So the target is up around 1255, 1260. That does not prevent them from needing to take a bit of a rest, however. So we are looking for new money to come n the other thing we have been discussing is okay, you broke out to a new high, has that excited anybody . Is it bringing in new money . So far no and why they are resting. Art, talk to you later on. Art cashin. When we come back, call it the social surge. 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Live from the Financial Capital of the world. The opening bell set to ring in just about 30 seconds. Of course, the big question today, could it be the third consecutive record close for the Dow Jones Industrial average . Right now, the intraday high, 14,320. 65. Of course, still the question that art raised, can the s p 500 follow . Here is the opening bell. [ inaudible ] the sort of data, march of the penguins kind of stuff got the first one, now they are all following. All say product listings and cpcs for mobile, et cetera. Doesnt seem quite as outlandish perhaps penguiny. 1,000 price targets apple did, for whatever reason, maybe in part because they implied close to 1 trillion market value for apple . Not far from it. Yeah. When you think about it, google divide by 10, 83. 20, going to 100, sounds better. We will see. They have disappointed on earnings occasionally. We shall see. Speaking of expensive in dollar terms, stocks, some people say 2013 could be the year of the stock split. Colgate certainly kicked off that party, if its going to be one, a 21 today. 10 div hike. The flow of dividend increases suggests that corporate ceos see cash flows being sustainable through this period of uncertainty and one thing that might have led to some of these record highs the last couple of days. Yeah. For some of these consumer stocks, one thing to keep in mind is with the death of chavez, what sort if any, political instability will there . What will this mean for the kur rehn zi soif venezuela . A lot of these consumer companies, like a colgate palmolive, talked about the currency being a hit to First Quarter earnings, avon is one of them that get a sizable proportion of sales from venezuela. That is something to keep on your radar as we navigate the waters after the venezuelan leaders death. Something to watch. Something else i do like, we focus on the equity markets, buts funny, the debt markets play such an Important Role in the equity markets, in part, because they have helped to Fund Dividend payments or helped to whatever it maybe, fund stock repurchases. Things are getting a bit frothy in debt land, you know, the more people i speak to, the more you get that sense, whether its high yield, double b credits getting incredible rates at 30 years or ten years, worth keeping an eye on we have had the reintroduction of covenant lights, all sorts of Different Things that we saw in 07 and thought we would never see again. We can talk all we want about equities, whether we are seeing highs, but keep an eye on credit. Not saying its bubble territory, but its it happens quickly. True. Happens quickly. Speaking of banks, financeal, dividends, going to get the stress test results tonight, 19 largest banks what they call the comprehensive capital analysis and review. This is sort of the pass fail element, you might expect the next several days discussions from those banks about whether or not they can return capital to Share Holders in ways they have long want today. Those positive on the banks believe they are vastly overcapitalized, an opportunity to return capital to the shareholders, this wont necessarily say you can do so but it will give a blueprint to those who believe that to be the case whether they are correct in those assumptions. A couple of individual stock movers to watch today, shares of hot topic halted on news it is being taken private, a 30 premium to yesterdays close, 600 million deal, sick more partners doing this deal and so those shares, again, halted on this news. Also watching shares of pet smart also in the retail space. Pet smart coming out yesterday the guidance was just dismal for the full year. They are only expecting sales growth, for instance, part of this guidance, 2 to 4 . Street was expecting 5 growth and so that stock down by about 7 on this news. Going to be a big day for boeing. Yep. 11 a. M. Ntsb will issue this interim report on the 787 dreamliner. Phil lebeau, we hope to have with him at the top of the 11 a. M. Hour today. We will see whether this involves the approval of further flight tests, whether or not they zero in on some remedy for a battery, maybe not. Very hard to tell. But a name this is a 52week high, by the way. Almost ignored the issue, as they have kept their production schedule intact, which was, of course, the big concern. We should note the defense index, philadelphia defense index, dfx, a 52week high. The sequester concerns not necessarily being seen in this index. We should note the larger players the big waiters on the particular index but interesting to see as we are living through the sequester, it is not having any impact in terms of investors concern it is will impact earnings at this point. Smithfield is a big mover in the matt sector, up 6 1 2 . Smithfield coming out with a big fiscal Third Quarter beat. Some people say this is a lowquality beat because their tax rate was much lower than expected. Their tax expenses were down 68 on the quarter. Still, people like what they see. Stock was higher. David bianco has an interesting take on ibm, more than anything what matters for the dow. 11 of the dow, only 1 1 2 of the s p but their betsy think 240 target. They recommended equal weight basket of these names, cisco, emc, hewlett, ibm, intel, microsoft, Network Appliance and oracle, all based on the he can expectation of increased business spending. Part of the note also that he was making is that ibm, obviously big waiting in the s p 500, big waiting just in Technology Indices acrosstheboard. Xlk, for instance, also, if we do see incremental flows in and see fleece etfs and funds that track the dow specifically, because of these record highs, ibm will see a disproportionate benefit from those inflows, not only is it getting the s p and nasdaq, xlks of the world but the dow diamond, lets say. That could help ibm. Shares today basically flat. Get to pisani in the middle of a crowd today. Artisan partners, an Asset Management firm. Havent seep a lot of these going public recently. Look investigate good right now price talk was 27 to 29. It priced at 30. Right now, looking somewhere around 35. Again this is going to settle down. We havent got a final price yet. Looking somewhere around 35. Get you the final price there as soon as it opens here. So here is the big story. Draghi spoke, the central bankers win again. Draghi said he will keep the rate steady. Bernanke speaks last week, rates steady. Things are good. Central bankers doing a great job. Big problem in these sort of topics last night . Where is the growth going to come from . So, we have got a problem. None of these guys know where it is going to come from. Angela merkel last week said that was the biggest problem. We know we need more growth, we just dont know how to get it right now. Angela merkel said she doesnt next actually how to do it the economic data, the way i look at it, its still pretty mixed. I think the best you can say, we have got a slow growth, slow grind higher at this point here. So, we need more business investment, we need more exports, we need healthier consumers right now. A lot of the discussions on washington, on the debt negotiations, would go a long way toward helping business confidence, which is why i keep mentioning moving on washington as a big help to the stock market. That would help Capital Investments overall. So, we will see. So, its no doubt the Central Banks are helping suck some money into the equities markets now yesterday, i noticed big inflows. I noted this big inflows into huge stock etfs, big cap, s p 500 etfs, big flows into Real Estate Investment trust, infleece emerging market funds, also outflows from the gold funds and modest outflows as well as from many of the bond funds, not a lot, not an avalanche but noticeable right now. Did you notice the tenyear price on the treasuries slipping now . Not far from a oneyear low. You notice the dollar has been rallying, even as the markets have been moving up that doesnt normally happen unless the economy is grinding a little bit higher, slowly but surely, the u. S. Is the best economy in the world. Dollar acting rashly the slowly, slowly improving economy that is a little bit of good news. One of the there is an we are moving up today. Finally, i just want to note the dividend situation here, a lot of people still very interested. I get a lot of emails how can we keep investing in dividends, not a lot of choices, s p came out a with a very important know. Dividends for the s and p 500 have topped 300 billion the first time in history acres 19 increase above the levels of about four years ago, before the big crash in 2008. So the dividend levels are still grinding higher and theres a lot more room, guys, to increase the dividend. The payout rate is now 36 . Thats very low, historically, its in the mid50s. So, guys, i still anticipate dividend increases later this year, maybe we will hear it from the banks very soon. Back to you. Thank you very much, bob pisani. Check in with seema mody uptown. The data set the tone for the market, higher on the day here at the nasdaq. For large cap tech, take a look at going, another sell site analyst raising his target to 1,000, atlantic equities. We are seeing google higher on the day. But take a look at apple. A different picture, down. 6 of a percent. Yesterday, the nasdaq ended in negative territory. Apple. Other tech movers, sienna, the company reporting earnings, analysts expecting the company to report a loss but they beat expectations, reporting an eps of 12 cent he is. The stock on a tear. Other movers watching, facebook, highly anticipated announcement later today. Keep in mind, went company did report that graph search announcement a couple months ago, we did see the stock sell off. Interesting to see how the market reacts to todays announcement. Speaking of social media, go right up here, pandora expected to report earnings later today. Analysts expecting a quarterly revenue of 123 million on a loss of 5 cents a share. Carl, over to you. Seem marks thanks so much. Lets get to bonds on the dollar. Rick santelli back from a day off at the cme in chicago. We missed you, rick. I tell you what i missed the markets, but i was admiring from afar that adp, hey, we all want jobs, easiest way to kind of cure what ails the country at the very basic level, more workers, more revenues, more taxes, more feelings of happiness when everybody gets a job. It started to move higher, continues to move hire, even though todays data was not very good, the trade deficit, of course, widened a bit but we did see some light drop a very low level on jobless claims, many think the markets reflect the fact there is some excitement west period number about tomorrows jobs report, open the chart up to february 1st we are still not even above 2 . Switch gears like we always do, mr. Draghi speaking and it is certainly i was wrong, thought there would be pep berg inflation moderating, maybe an ease on the table. Accident hear that who cares what i hear. You can tell by the your role look at the twoday chart, up, up and away. If you open the chart up to a couple of months, you can clearly see that it is rebounding after again trading under 130. The next several charts the dollar yen. The dollar start doors hit the horsepower again. We all knew it was only a matter of time before the end was going to move lower, close to the threeyear highs in the yen, going took a comp of may 2010. Time warner there is a name i remember, a bit smaller than they used to be. What are you hearing, david neighborer . Thats right, rick san telly, getting smaller and smaller after, of course, getting larger and larger quite some time. Remiss if we didnt mention time warner late yesterday announcing it will spin off the magazine division, eventually, part of the name derived from one of those titles, that being time but no longer part of time warner, a company that has gotten spun off its Cable Division that is distribution, as in Time Warner Cable, aol and now magazines to follow. There had been a good deal of discussion between time warner and meredith about a reverse trust transaction. Sources close to that tell me they had put a lot down on paper but it was not to be. There was a component of it that would have required time warner to keep a number of the titles inhouse, namely time and fortune amongst them, Sports Illustrated, making perhaps more difficult. Felt they could do better for shareholder buys simply spinning off the entire division that announced yesterday. Time will benefit from the flex ability and focus of being a Standalone Public Company and now attracting more natural stockholder base. Of course this is not the first spin of this type we have seen. We know the split of news corp into fox and its print division different, of course, mostly newspapers there old media, new media. My friend, Mike Nathanson comes out, raises his price target to 57 a share, values time ink at 2. 3 billion, to give you a feel or what this business is now worth. Once the cornerstone of time warn warner, those times have changed a long time ago. 250 a share is what he sees. Time the spin will not materially change the valuation, he says, because time is so small. Its prospects are so uncertain. Put about a 3 share value on it if you value it about six times earnings. Time warner shares, for their part up about 1. 5 . And now, or soon to be, it is a movie studio and a bunch of cable networks. The fact that the deals not done with meredith, does that change merediths strategic outlook in the stock is down sharply this morning on the news that its definitely not gonna happen, i guess . Im glad you mentioned it. They would still like to potentially pursue it something they wanted to do again, it gets complicated, but a reverse trust, where you split the assets from time warner would have been larger than meredith, created new co, combine them, seen as a real positive for meredith that deal now off the table with this full spin. Holes on twitter whether you read more magazines than did you five years ago, at least subscribe to more magazines. No. I dont subscribe anybody hard copy, do you . No. Online, but i said the new yorker around Sports Illustrated on paper read okay. I get two, the new yorker and new york magazine. Thats about it. Everything else online. Yeah. That says it all about time ink. Financial analyst dick bove how to play the banks ahead of the fed stress test results. As we head to break, take a look at this mornings early movers on wall street. Music plays thank you orville and wilbur. Amelia. Neil and buzz for proving theres nowhere we cant go. But, at some point. Giant leaps gave way to baby steps. And with all due respect, youre history. If you taught us anything, its that you cant cling to the past. If you want to create the future. Thats why, instead of looking behind. Delta is looking beyond. Pushing u. S. Aviation to new heights. All 80 thousand of us. Busy investing billions in the industrys boldest moves. Its biggest advances in technology. Bringing our passengers the best, the most spacious fleet in the sky. And earning more awards than any other airline. To show for it. So rather than simply saluting history. Were out there making it. Transit fares as in the 37 billion transit fares we help collect each year. No . Oh, right. Youre thinking of the 1. 6 million daily Customer Care interactions xerox handles. Or the 900 Million Health insurance claims we process. So, its no surprise to you that companies depend on todays xerox for services that simplify how work gets done. Which is. Pretty much what weve always stood for. With xerox, youre ready for real business. Welcome back. Bob pass sanny on the floor of the stock exchange. 27 to 29 was the price talk for artisan. Came in at 30. Opened at 35. 20. Successful opening right now. That stock trading right there 35. 56, part of a new spate of ipos. Secondarys very, very high right now. Give you more on that when we come back in the next hour. Guys, back to you, melissa . Thank you very much, bob pisani. We want to take a check on shares of hot topic opened for trade, halted on news it is being taken private by sick more partners 30 premium to yesterdays close. Not surprisingly, trading just at the deal price, higher by 29. 2 . The Federal Reserve will release stress test results for the largest 18 Financial Institutions at 4 30 p. M. Eastern time today. We have someone who says the tests will be important for investors. Dick bove, Vice President of Equity Research at rafferty capital joins us live. Dick, always a pleasure to speak with you. Thank you, melissa. Which banks results are you looking forward to most closely . Quite frankly, the Banking Industry across the board is doing extraordinarily well at the present time and actually doing extraordinarily well the last few years. If you take a look at the industry and just some of the core statistics, for 14 quarters, which is 3 1 2 years, bank earns have been up yearoveryear in every quarter. In 2012, the industry had a 19 increase in earnings and at 145 billion in net income in 2012, it was the second best year in the history of the Banking Industry in the United States. The First Quarter of 2013, there will be more money than the history of banking. So much capital in the Banking Industry at the present time, tough go back to 1938 to find a year the percentage of capital to assets was as high as it is at the present time. You know, investors understand it yesterday, jpmorgan and citigroup made new 52week highs but also, pete corps and regions financial two very troubled banks in the last few years made new 52week highs. The argument against banks they have their assets overstated on the books has now been turned upside down because its becoming very evidence that their assets are understated. Companies like suntrust, bb and t, and a large number of others are selling this real estate they foreclosed on the past few years at a big profit. The stress test is only going to certify the fact that American Banking is in very strong condition and, you know, the stress test is really a twopart situation. Part number one is you know, what is the abilityf these companies to withstand stress . Part number two, which will come out next thursday, will be which ones are gonna pay the bigger increases in dividends. If youre chase the second part, who do you go with first . Who is likely to pay out more and who is likely to pay out at all . All going to show increases in dividends. The percentage increases would be very big in some cases but dividend will be still meaningless. In other words, bank of america increases its dividend payout by 100 , its only paying 8 cents a share. So who cares, right . So the net effect is what youre looking for in Companies Like bank of america and citigroup is just some increase in the dividend to certify that the fed is not unhappy with them. What you expect is to see in regional banks, Companies Like we will say u. S. Bank corps that wants to pay outing . On the order of 60 to 80 of its net income as a dividend, you might see a nice increase in the dividend. Wells fargo is another company, like to get to a 60 payout ratio. They could have a nice increase in the dividend. These companies are going to go you can substantially higher, essentially, banks sell at 2 to 2 1 2 times book in real good times. Most of these banks are selling at discounts to book value. Le opportunities at banks across the board is what you are seeing in the market every day. These stocks are up double the s p 500 this year. The stocks beat the s and p 500 last year and its happening because these companies are earning huge amounts of money. Right. Obviously, youre a bull when it comes to the overall sector, which stocks in particular to your point, we have seen so many stocks make their own fresh 52week highs f you had to choose one shook had the most upside from here, which one would that be . Bank of america. Without a doubt . Without a doubt. Im still of the belief that bank of america will reach 30 a share in in price, may take two or three years get there the fact of the matter is the litigation issues at some point will float away, what will be left is a company which has over 1 trillion in deposits, 900 billion in loans outstanding, which has a very dominant place in the American Financial system which will be earning at some point, not this year, not next year, some point, 2. 75 a share. However, you know, key corps is a good start to buy, regions financial is good, u. S. Bancorp is good. Theres so many banks that are good buys its incredible. We got it, dick. Thanks so much for your time. Appreciate it. Dick bove of rafferty capital. Why the socalled fear gauge may not be measuring fear at all. The financial digest on why he think also the vix leaves a lot to be desired as a market timing indicator. ,eywhat are you up to . Oh, just diagramming this accident with my state farm pocket agent app. You can also get a quote and pay your premium with this thing. I thought state farm didnt have all those apps . Where did you hear that . The internet. And you believed it . Yeah. They cant put anything on the internet that isnt true. Where did you hear that . [ both ] the internet. Oh look. Here comes my date. I met him on the internet. Hes a french model. Uh, bonjour. [ male announcer ] state farm. More mobile than ever. Get to a better state. 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. Good morning. Analyst gene munster thinks you can make 40 on facebook if you invest now he will join us on the next hour of the program. Also, we will pick our way through the retails winners and losers this thursday. Profiting from snow the ceo of vail resorts, exclusively on cnbc after this break. Zap technology. Arrival. With hertz gold plus rewards, you skip the counters, the lines, and the paperwork. Zap. Its our fastest and easiest way to get you into your car. Its just another way youll be traveling at the speed of hertz. Welcome back to squawk on the street. The road map for the next hour, we will start with the markets. Another record close in the books. Another alltime high this morning on the dow for the Third Straight day. With the blue chips in fullon rally mode will the numbers stop the run there its tracks . A shakeup for samestore sales, macys, target and kohls, giving the axe. We will run through the hits and misses in a moment. The final countdown, three hours time, facebook will host its media event it is expected to unveil a revamped news feed. All right showcase be enough to propel shares even higher . Right into retail now. February Chain Store Sales up 3. 8 , excluding drug stores and the gap, according to thompson reuters. 13 retailers reporting february sales this week, we should note, nice beats from limited and costco. What is the overall trend we are seeing here in these numbers, dana . Overall, the business improved as the month went on, certainly into the month of march also. The weather was an impact. Delay in tax refunds was an impact. Fortunately, february is the smallest month of the First Quarter. So theres no sort of indication whether theres momentum going into march . It got better in the month of march did. It pick up dramatically . No, it didnt pick up dramatically. We need to see the consumer, there is momentum that needs to be gained. We are not there yet. Seeing any sort of an impact . There was thinking that in january, the consumer didnt see the full impact of tax payroll tax increases. Wondering if that is still a concern on your part. Everything we are hearing and seeing from companies, First Quarter earnings and Fourth Quarter earnings, they are making people pause and we need traffic to pick up. You need an increase in traffic given new spring merchandise is in the stores. We need the weather to cooperate to drive business. What is going on with the teen retailers, buchholz, zblummys, if you are younger, might have less discretionary income. Does text that plain every . Doesnt explain everything. I think there is a change of pattern going on. You look at colors, so big last year, samestore sales accelerated the result of it you need the next new thing. And the next new thing essentially could be some of the patterns and prints that we are seeing in some of the tops but with spring break coming that could be a help to some of the teen retailers. Yeah always a tough play. We had a discussion this morning of all the big retail mothers longer do months, walmart, target, macys, kohls, wet seal. Your view as all these retailers continue to unplug themselves from that grid r think overall, the reason why companies are doing it, is it is so hard with the calendar shift so hard with the weather. Frankly, their promotional calendars cant be dictated when they report a number. We have a bunch of people we have employed at our Company Channel checking and we go out there looking at inventory levels and traffic. Our take is that we are still going to be able to get a sense of whats change and right now, we need traffic to pick up. Mall traffic is the weak link. Dana, a stupid question from a middleaged man who doesnt understand fashion. Comer did it last year. Can white do it this year . I see people wearing what we wore in the 80s, all white. Sure lit kids will run out and buy that, wont they . Of course, theres always changes, lets not forget about denim blue. Denim blue is as basic as you get it is coming back. Dana, i hear you say, i have talked to a couple of the mall operators lately, ones who run some of the big ones, they say the same thing you are saying, traffic is down, certainly yearoveryear. Give me your prognostication in terms of the impacts. Is this going to be something that lasts or we will move past it . We will move past t consumers adjust, just like they adjust to rising gas prices, i think what its gonna take, it is going to take time. Going to have the next three to six months, the first half of 2013 is challenging for samestore seams gains, low Single Digits at best is what it is going to be all b dana, i do want to ask you about coors and coach, i dont think we have spoken to you since Michael Kohrs here. Is coach a value play . So low at this point it is worth getting in there and rotating . It is a value play. A lot of Value Investors in it, 8 in cash, Balance Sheet strong, potential for china to accelerate, helps to offset the weakness and changes going on in north america. You cant ignore the momentum of coors as they keep taking more space in Department Stores, expanding their categories, we are continuing to see great seals increase bus there is value at coach. Dana, great to speak with you. Thank you. Dana telsey, telsey advisory. Corporate news here, time warner confirming this morning it will spin off its magazine division, time ink, as an independent publicly traded Company Later this year. The media giant ending talks to sell several magazine titles to meredith. Cnbcs julia boston has more on some familiar names. Julia . Thats right, simon. By spinning off time warners publishing assets, the ce so completing his transformation of the company into a pure television and movie company. The transformation he began back in 2009 when he spun off Time Warner Cable as well as aol. The stock moving higher on the news and it has been moving higher over the past month after he hinted at the possibility of this type of spinoff in an interview here on cnbc. So, theres tremendous resilience in the National Magazine Publishing Business but advertising demand is secularly not so strong it is down a bit. And the question of whether we ought to put that into a different frame is one we have been asking. We are not, at this point have not decided to do Something Like that but we will keep investigating that. That was bewkes almost exactly one month ago. Magazines are a small piece of the pie. Without the Publishing Business, time warn letter rely less on advertising and grow faster. Barclays analyst is raising his price target 2 to 54s on the news because he believe was the remaining assets will trade at a multiple nearly three times as high as the magazine assets. Declemente predict the magazine spinoff will be worth about 3. 5 billion. In a memo to time ink employees yesterday, bewkes reported to the success of time cable and aol since their respective spinoffs. Aol up 60 and Time Warner Cable shares 250 according to thompson reuters. Time ink spinoff is, of course, a loss for meredith, which was in talks to buy some of those titles. Take a look at his shares there now. Time warners decision to spin off publishing assets follows on the heels of news corp, which is on track to spin off its publishing assets some time this summer. Simon, guys, it seems like wall street likes this move to spin off publishing. Back over to you. Interesting. Thank you, julia. One retail grocer in the green here, send it back to josh lipton at headquarters for a market flash. Josh . Hey there melissa. Kroger is in the green, hit august 52week high today. The Grocery Store operator swinging to a Fourth Quarter profit, samestore seams roughly in line with expectation. As for the outlook, kroger expecting per share earnings between 271 and 279, higher than what the street was looking for. Analyst saysing that kroger has made prices more reasonable the past few years. That, they say, came at a penalty to gross margin but also made their Product Offerings more resilient. Kroger up some 26 the past 12 months. Carl, back to you. Josh, welcome back. Good to see you again. Thanks. When we come back, facebook set to make an announcement at 1 p. M. Eastern today. Set to announce big changes, part of its main staples, the news feed reports today that says that facebooks redesign could render it closer to going until look and feel. Bring us to this mornings squawk on the tweet. Facebook wants to be more like going approximately it should do what . Tweet us at squawk streets. We will get your responses a little bit later on in the morning. It has been, of course, an historic week on the stock exchange. Find out which stocks, apart from facebook, could lift your portfolio higher still. Plus, a winter storm with a mix of snow, wind and rain now bearing down on the east coast, knocking out power across virginia and pennsylvania. We will have a live update on the storms path next. And how do you profit from snow . We will hear from the west coast from vail resorts chairman and ceo reporting results that are up 30 on last year. Thats next on cnbc. [ construction sounds ] [ watch ticking ] [ engine revs ] come in. Got the coffee. That was fast. Were outta here. [ engine revs ] 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. When i take a picture of this check, it goes straight to the bank. Oh. Oh look the lion is out no mommy no dont worry honey, it only works on checks. Deposit checks from your smartphone with chase quickdeposit. Just snap a picture, hit send and done. Take a step forward and chase what matters. I want to bring in the weather channels eric fisher in scituate, massachusetts. Good morning to you. Good morning, carl, good morning, everybody else. Snow is a big story for a lot of folks throughout the course of this storm here into new england and coastal flooding is going to be the Biggest Issue. Got a high tide earlier on this morning. You can see some of the junk, some of the piece of wood the ocean brought in today that tide is going out. The problem is a longduration storm is here in new england, which is one of the worst things you can have system, a storm stall out and keep winds, 30 to 50 Miles Per Hour in our face in the same direction over a long time. Look out toward the ocean itself, we are on the harbor. If you see the lighthouse in the distance and some of the white capping all around that, thats the open ocean, waves will come up to 30 feet by the time we get toward tonight and tomorrow morning. Theres a road right oceanside there and those are the types of communities that are most affected. Police stay is too dangerous for us to set up. A lot of the rocks you see behind me were thrown up into the road this morning, a lot of flooding into the basement, some damage to the homes and we expect that tonights high tide, wheel is water a little bit higher around then tomorrow mornings high tide, thats where it will be at its highest here across eastern new england n scituate, the National Guard is in town, they have evacuated some residents. We have seen spotty Power Outages and and beach erosion, by the time we get to saturday morning, a lot of the coastline will take a wallop from the storm. Something we have had some experience with so far this year. Thanks, eric, eric fisher at the weather channel. Two sorts of people that give snow unconditional love, small children wrapped up warm and Business People running ski resorts. From colorado, rob katz joins us exclusively after reporting a 30 jump in Second Quarter earnings on last year. Rob, welcome to the program. Thank you for joining us. Its really, i believe, all about the fact that the snow came early before christmas, a new year for you. Think somewhat. Theres no question that to operate well, our Company Needs some snow on the ground. I think when you look at our results this year, what you are seeing guest spend. We are seeing Consumer Confidence and the attractiveness of our resorts really helping to drive our business. As long as we have some snow on the ground, we are really able to make big gains in our profitability. Now, your stock has sail through the fact that you actually missed by about five cents on the earnings per share. Why did you miss . Was that because of increased labor costs, i believe thats your biggest input . I think that was more of a spreading issue between the first half of our season and the second half of our season and i think when we told the street that we feel good about the original guidance we gave early in january, i think people felt like, you know, they had confidence in our ability to hit our numbers. What are people spending money on . What is making the difference for you at the moment . Ski lessons . Yeah, we are seeing big gains in ski lessons, big gains in dining, big gains in rental and lodging, so we are seeing doubledigit increases across the board. I think an incredibly high guest demographic because of the investments we make in our resorts. Each and every year, we put money back in our resorts to make sure we improve the experience. And boy, do you love to spend money. 130 to 140 million this year . What is that about . Getting people there in the summer or about making snow, artificial snow in case the weather doesnt oblige . You know exits both it is creating more capacity on the mountains by adding new lifts and adding new restaurant bus absolutely, it is about the summer it is one of our best opportunities as we look over the next three to five years starting to put summer activities on our mountains and driv revenue is starting to smooth out the profitability picture of our company. Im curious, is really good snow enough to offset the impact of a consumer that might feel a little more pinch because of an increase in payroll taxes. Im just wondering, today we got a read on the Retail Sector around what analysts are telling us just broadly connecting the dots out of the data points, that sector, the consumer is improving but really helped by tax refunds. If theres some concern about the consumers willingness to spend in the next couple of months as those refunds get spent and still feeling the pinch from the tax increase . At the end of the day, snow cant overcome that for our guests, which is a little bit higher income demographic and really coming around the world, not as affected in their vacation spend as those decision. This season, we are not seeing it. People are opening their wallets and spending freely when they are on the mountain. Going to ask you whether or not International Business has been hampered because of the economic difficulties in europe or still bolstered by currency effects. Are we hearing hearing lot of german at the bottom of the lines . We are. It has come down and stayed down. Hasnt rebounded yet. We are seeing big gains in canada. [ kitt ] you know whats impressive . 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 . Watch this alakazam [ male announcer ] staples has always made Getting Office supplies easy. Another laptop . Dont ask. Disappear abracadabra alakazam [ male announcer ] and now were making it easier to get everything for your business. And for my greatest trick enough [ male announcer ] because whatever you need, well have it or find it, and get it to you fast. Staples. That was easy. Shares calling for as 9 special dividend and saying it would be about 2281. In other words, the proforma stuff that being a highly levered company with a lot of debt on its Balance Sheet, an uncertain industry, nonetheless would be right around where it is currently being valued, even after they pay the 9 a share dividend. Would like somebody to do math for me, if you can, simon, if you add up 426 and 426 and 1. 73, so 4. 26, 4. 26 and 1. 73, because in carls second paragraph of his letter, he says that adds up to 9. What was that again . 10. 25. 10. 25. Apparently, mr. Icahns math was of off. Talk to the model guys. Talk to the model guys. Doing you doing so like the Third Generation copy. Terrible copy. Interesting to note in all seriousness that 4. 26, 4. 26 plus 1. 73, what he is saying would add up to the 9 div send 10. 25, not sure if he is saying pay 10. 25 dividend or if he just got something wrong there on the math. As for new news that i can share with you at this point, people close to the Committee Say there was an expectation on the part of the special committee that mr. Icahn might come forward with a qualified proposal under the go shop, under which he would buy a lot or have a proposal to buy a great deal of dell shares leaving out the socalled stub but nonetheless, actually do that n so doing, giving the special committee leverage to go back to silver lake and michael dell and get more money. The special committee here trying to act the best interest of shareholders and many say, listen, hey, theveone the right thing this would be a seminal event if we do see this deal stopped as a result of shareholders saying, hey, we dont want you to lever up and take this thing private for your own benefit. We want you to lever up and keep it public for our benefit. We are happy to operate with all that debt on the Balance Sheet in an uncertain market for a company thats missed seven quarters in a role the battle, of course, still to come. We dont even have a vote scheduled. It will be months down the road. Youre gonna get another Quarterly Earnings report from dell. But it is interesting. No doubt about it. Warned us if there are future tests. You did great. I know. Only because i was able to check it by melissa. I was flying blind. I check it had again p it is right. It is right. Good job, simon. Didnt check it over there. You know. He is also using an eight multiple it would seem for that stub, which is very high. Close to where ibms trading story was interesting before, just doubled down. Keeps getting more interesting and we got a lot more drama, one hopes to come between now and whenever that meeting is. Of course, he may run a proxy fight, the vote on the deal and threatens years of litigation. Thanks, david. Lets get back to the markets here on the heels of the dow hitting new alltime highs, check in with a market veteran seen the market at its highs and lows. Robert stovall is the managing director, global strategist for wood Asset Management. Bob, welcome back. Thanks, carl. Your point has been we could keep climbing if the macrodata continues to be good. If the jobs number, for instance is good tomorrow, we are going to hear conversations about the fedex sitting even earlier what are we hoping for . No new surprises, no bad news is what we are trying to get, so far, doing pretty well if we come out that theres a big change in the unemployment numbers, we will true have to try to cope with that and see what the explanation is. The market expects that the fed will keep Interest Rates at the current level, which is close to zero, through the next two years and thats very important, also the employment figures are being helped somewhat by a pickup in building. So, i think that with chances pretty good, we can keep creeping ahead. What do you think has led us to this point . Had i just wonder, i was asked this question last night at an event. And i thought maybe the acceleration of div hikes, pain of just being in cash, maybe something buffet said earlier in the week what pushed us over the edge earlier to get this record . Its been the market has been rising for quite a long time now with very little participation from the individual public investors, particular, the younger people, who havent been in the market, dont believe in it and have to be shown. I think the success after the success we are getting close to a target in some peoples scoreboards of the s p 500 of 1555 and we are not there yet, we are close. And i would be a little bit i wouldnt be surprised to see it broached. As long as we dont have any big negatives, internationally or locally, i think we will keep creeping ahead. We will be health yes, i believe if we have a pullback of 3 to 5 to sort of readjust our thinking we will move on from there after a digestion of some of the gains. I was fascinated maybe i misheard what you said now. If the employment figures strong, we will just have to cope with that. I understand there is a fed element is it true markets are higher at the moment because companies are taking a greater proportion of National Income in america precisely because the labor market is so weak . Thats part of it. The labor market, people are hungry for jobs and the labor market has not been stroke. But anything anything that gives us a sign that the labor numbers may get better, such as continued revival of Home Building and construction in general that would be good for employment, but as far as the feds are concerned, i have an intuitive feeling they are locked into their current strategy another year or two. Bob, stay with us, bob, we just want to check on bertha cools at the nymex. Bertha . We got a strongerthanexpected withdrawal for natural gas already. Prices for natural gas moving above the recent highs, highs at the session coming in, need to watch area of 360, an area of resistan resistance, a draw down of 160 billion cubic feet, well above what the average has been with all of these late winter storms and storage now at about 2. 08 trillion cubic feet is more than 10 below what we were seeing for this time last year. So, seeing a little bit of a bullish rally. Just want to touch on the rest of the Energy Complex with that strength in the euro. That is giving a boost to oil and products overall with brent now even moving in a positive direction. Back to you. All right, bertha, thanks for that bertha coombs. Bob, wrap things up with you, what do you like here at this point . Do i chase some of the thing that have done well so far or rev up on cyclicals and tech, things that have lagged . Looking at the data that has come through and expectations we have, we are beginning to shift a bit into cyclicals. We think the economy will gain strength gradually. As i said before, a slight pull back would probably be therapeutic, but we are moving our positions somewhat into cyclicals and also into Consumer Staples at the same time. Someone pointed out today to hit 15,000, bob, by year end, would mean a 14 gain. We havent done numbers like that on the dow since the o59 rebound that sound a little aggressive to you . Is a little aggressive thats right. You have got a case around the world if we can avoid bad news in a big way, a major way, we can do that bob, great to see you again. Likewise. Best of luck. Facebook has decided facebook has risen more than 44 the past six months. Could todays big event propel the shares even higher . Gene munster of Piper Jaffray says there is 40 upside from here on facebook. Plus the volatility index, what does it really tell us . Does it tell us when its time to head for the hills and leave the party on the street . Taking a look at the not so contrarian indicator, next. [ male announcer ] what . investors could lose tens of thousands of dollars in hidden fees on their 401 k s . go to etrade and roll over your old 401 k s to a new etrade retirement account. None of them charge annual fees and all of them offer low cost investments. Etra less for us. More for you. Departure. Hertz gold plus rewards also offers ereturn our fastest way to return your car. Just note your mileage and zap youre outta there well email your receipt in a flash, too. Its just another way youll be traveling at the speed of hertz. 7 35 on the west coast, 10 35 here on the east coast. Colgate, the Company Announcing a 2 for 1 stock split and 10 dividend increase. Hot topics agreeing to be acquired by private equity firm sycamore for 14 a share, 600 million. Freddie mack says the average rate on a 30year fixed mortgage edged higher to 3. 52 . The vix is used to measure volatility in the market, some call it the fear gauge. Is the index the true indicator when to exit the market . The senior columnist at market watch joins us again from durham. Good to see you, mark. Welcome back. Thank you. Is the vix well understood, in your view . I dont think so the fact that people refer to it as a fear gauge, it may be misnamed. The way thats the calculated, it reflects expected volatility and upside and downside volatility equal figure into it equally. I think it perhaps is not even a theoretical level understood by investors what it measures. Of course, my data suggest it is not the contrarian indicate theyre people think it is. So, when we see it spike, tell me how the data explains why that is not necessarily, depending on your point of view, bullish or bearish, where does it lead . Let me the report data, turns out on average, the last 20some years the vix has been reported, the stock market has performed better, on average, went vix is low than when the vix is high. So, just the exact opposite of what the contrarian story is about the vix. Why is that the case, when the market starts falling, vix will rise. So went vix finally does hit a peak that usually is at a bottom, thats true. But what the contrarians have a hard time understanding is that by the time that it has gone all the way to that peak, the market is already down quite a bit. The market has lost already a lot of money during that time when the vix has been spiking. Only in retrospect is it obvious when that peak is. For example, prior to 2008, the high level for the vix was in the 40s, everyone in 2008, october, you may recall when the vix hit the 40 level, they said thats it, that must be the bottom, the vix didnt stop rising, the market didnt stop falling until it got to over 80, nearly 90 people ended up losing on that false signal. And i guess that is why you might have an incorrect impression of the vix because of the last few years in weve lived through, which was so dramatic for markets, so existential whether we could hold things together t did usually kind of indicate that there could be a large fall in the market. Well, thats right. Even if you took out 2008 from the mix, aid still find the same result that i found that on of a range the stock market has done better went vix is low than when its been high, which is and thats an average number. Of course, one can find exceptions, these on average, just exactly the opposite of the contrarian argument when it comes to the vix. The other day, mark, you know, we were wondering whether or not some of these intraday you record highs would hold intraday, people were i remember one trader saying, well, the vix the s ps the dows at a high vix not yet at a low, we dont expect the high to be maintained. Is that ridiculous . Well, im not gonna go so far as to say its ridiculous, of course, i would have to look at the numbers there are so many individual and idiosyncratic ways that trade letters use the vix. Maybe some of them have come up with something far more sophisticated than had the rather simplistic approach to it that im reporting here. In general, i guess i would have to say yes, im skeptical. Mark, you always have a way of turning expectations and views upside down. Great stuff. Thank you. Welcome. Mark hulbert. We are up another 44 points on the dow. Lets get a market check back at hq with josh. Josh . Hey there, simon. Well, Smithfield Foods is ripping higher here. The largest u. S. Hog producer reporting Third Quarter results that beat the street, higher sales of packaged meat products, all that bacon and sausage. The company saying it saw volume growth in nine of its 12 core brands, solid contributions from international operations, especially eastern europe. Smithfield also saying its drugfree meat is also paying off. China, remember, requires pork be free of growthpromoting drugs. The stock up 9 on solid volume. Melissa, back to you. Drugfree meat. Mr. Mm. Josh lipton. Thank you. Banks outperforming the Broader Markets in 2013, could result in todays stress test rerail this bank rally . Why the business of senior care giving is booming. Our own jane wells joins us live to talk about the resurgence of the granny nananny. You wont want to miss that. [ male announcer ] when it comes to the financial obstacles military families face, we understand. Our Financial Advice is geared specifically to current and former military members and their families. Life brings obstacles. Usaa brings retirement advice. [ male announcer ] this is karen and jeremiah. 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Get advice from the people who share your values. For our free usaa retirement guide, call 877242usaa. Facebook fans eagerly awaiting the announcement 1 p. M. Eastern time. The social network expected to show off a revamped news feed and imagebased ads. Bring in a Research Analyst with Piper Jaffray, gene munster. Good to sing. An overweight ratinging on the stock, 38 price target. The stock is trading higher in anticipation of this. They came out with mobile ads more ads, more types of ads, which down the record that does move the needle, because i think thats investors still nagging question, how do they monetize this massive engagement that they have . Based on tweaks in the news field, you think that they will be able to further monetize mobile . What are you looking to hear . Yeah. The mobile side is really important. Probably spend 80 of today talking about this the timeline on desktop and probably 20 on mobile it should be flipflopped. The end of the day, where engagement is coming, about 60 of facebook users engage through mobile that number is only going up. So, they have to get creative how they are monetizing that interesting to see what they will say about how they will take this new revamped news feed and improve mobile mon tizization. Gene, your price target is 38, almost 40 upside on facebook from here. Is it a better investment than google at this stage . If you look at the near term it is. The next year, face book a better opportunity because they are adding new ad units like we were talking become the news feed today. I think over the long term, the next five to ten years, googles much more reliable place. So, it depends if youre looking for more aggressive money, i go face book. The safer money goes google. Safer money, you mentioned the long term, in terms of the stock upside the next years period, gene, a lot of investors are looking at them and saying, you know what able to monetize google, not paying the valuation you are paying for facebook. They should trade at a multiple because they are growing faster. Google called it a 20 growth. Face book 30 plus. The numbers are working in facebooks favor here, the large numbers working against google. In terms of a stock, a lot of opportunity for facebook to prove some of their critics wrong, where google doesnt have as many critics to prove wrong. I think that psychological factor going to play into Facebook Stock the next year. Whats your price target, gene, on google . Im asking because today we got yet another 1,000 price target out there, just wondering if it makes nervous that so many more analysts are gravitating to that big figure. You know, is something that gets us nervous. That takes away the nearterm upside you 91 a, not at that 1,000 mark. Jeep, greet see you. Gene munster, Piper Jaffray. Next on the program, americaning from , rick san tell loin fannie and freddie, housing you with the rickster after the break. Im a conservative investor. But that doesnt mean i dont want to make money. I love making money. I try to be smart with my investments. I also try to keep my costs down. Whats your plan . Ishares. Low cost and tax efficient. Find out why nine out of ten large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. Try running four. Ning a restaurant is hard, fortunately weve got ink. It gives us 5x the rewards on our internet, phone charges and cable, plus at Office Supply stores. Rewards we put right back into our business. This is the only thing weve ever wanted to do and ink helps us do it. Make your mark with ink from chase. Welcome back to squawk on the street. Im Mary Thompson with breaking news about Goldman Sachs. According to an internal memo, the company is going to move to selecting its class of managing directors. Every two years. That will start in 2013. So it will name a new class of managing directors this year and then well move to a biannual Selection Process. This was something that goldman said in the memo that it intended to do when it first started naming managing directors in 1996. Right now the company has about 450 managing directors. Its total employment basis over 32,000 people. The company in the memo saying the Selection Development of leaders at Goldman Sachs remains at the heart of the culture. And basically a biannual process will allow to invest more in the Selection Process so it igorous exercise. Disciplined once again, Goldman Sachs, as of 2013, going to be selecting its managing directors every two years instead of every one year. Back to you. Not sure how that why thats pushing the stock up, mary, but at 156, almost 157, thats touching levels it hasnt gotten to in a little while. Thanks a lot. I guess it suppresses your wage cost nexyear, more promotion. Could make an argument, i guess. Lets get to the cme with the santelli exchange. Hey, rick. Hi, carl. 2008 basically the feds take i dont ever of the gse government sponsored enterprises. Government sponsored zombies and going into our fifth year, there are finally some rumblings, finally, of maybe trying to address this problem thats racking up tens if not hundreds of billions of liabilities for taxpayers. Although, to be fair, even though it is our fifth year that they basically have been under the thumb of the government and under the wallet of taxpayers, theyre actually generating a little bit of profit that is a good thing. We are big fans of ed demarco, a lot of my circle. The head of the regulator for the gses has been put under pressure to just, you know, its easy. Make that the crony capital warehouse and just do it. But we need privatization. We need truly risk based pricing in the mortgage market. You know, we had a dictator die in the form of hugo chavez and ill tell you what, crony, the word crony has come up a lot. We need to get rid of the crony stuff that came up after the Community Reinvestment act under the clinton watch. Some of the ideas cut both ways. One of the ideas on the table over the last several days is merge them into one operation and get ready for a privatization, put private money into the mix and try to jump start securitization. I kind of like the idea, but with many asterisks, because combining things in a government that postpones everything from the details of health care to the details of dodd frank, to the fifth year of the zombies really have to be careful at making it more efficient doesnt mean just a tighter crony capitalist label. Something else. Of course, this morning, ecb met, i thought that the behavior of the euro the last couple of days or last couple of weeks was telling us something. But as you see the chart today, it is telling you something. Markets always smarter than anybody trying to describe it. What it tells me with the big runup is that probably an ease isnt in the cards sooner rather than later. And the other thing, you know, ive had one question all day today, we have the Coolest Visitor Center ever, looks like the Starship Enterprise at the cme, and yes, contrary to other Visitor Centers of visits that may be closed, the cme is still open. Carl, back to you. Thanks so much. Rick santelli. Need a job . Perhaps you should jump into the business of caring for the elderly. Its booming and jane wells will tell us why. Thats next. Ive seen incred. 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. So we created the extraordinarily comfortable sleep number experience. A collection of innovations designed around a bed with dualair technology that allows you to adjust to the support your body needs each of your bodies. Youll only find sleep number at one of our over 400 stores nationwide. Where queen mattresses start at just 699. And right now enjoy the lowest prices of the season on our most popular bed sets. Sleep number. Comfort individualized. Welcome back to squawk on the street, im jane wells. Look, were all living longer, the senior Care Industry has grown 40 in five years. And more seniors can afford to age in their own homes paying for help because medicare wont. Prospects are luring newcomers like former reality tv producer sidney kaplan, aka, the granny nanny. Im a girl friday, a rent a daughter or a granny nanny for seniors and their families. Kaplan started independent livi livi living concierge. Thats six times the National Average for this sort of work. Right now, the Biggest Issue is theres simply not enough workers. Most senior home care agencies hire from three to six professional care givers and certified nursing aides a week. A lot of seniors have dignity issues where they dont want to be seen with a care giver. They want to be seen with someone thats a professional and that looks like a member of the family. We go shopping together and we go to the movies and we go to lunch. And i enjoy sidney so much. She does more than my relatives do for me because theyre so busy. Now, those in the business say to succeed you need to like seniors. And my favorite part. I asked kaplan who used to work at a senior facility before going out on her own, what is the craziest part . They like to talk about sex. Why . Because theyre not having it and they hope you are. Some people are having it. And they like to talk about it. And it gets pretty gruesome. Gruesome, perhaps, but guys, also somehow comforting. Back to you. Its a great story, jane. Yeah. Great piece. Thanks so much, jane wells. I want to draw your attention to shares of gap which is halted for news pending. Yeah on a day where it is doing extraordinarily well. Take a look at that rise at the open. It jumped 4 . So this should be some pretty interesting developments, especially i dont want to link the two together, but there was a go private deal on hot topic, much smaller, of course, 600 million for the total size of the deal on hot, but interesting to see this halted here. Were going to watch that. Yes. Meanwhile, whats coming up tonight . Were going to talk about the Bank Stress Test especially as the officials enter bull market territory. Well get the latest trade on facebook after the results. Got mark mahaney tonight. Weve got factory orders in germany and a lot more. If youre just joining us, heres what youve already missed. Welcome to hour three of squawk on the street. Heres whats happening so far. When everybodys waiting for that market pullback, it is not going to happen. Because everyones going to jump in, you know, a 20point decline, a 30point decline and thats really what weve seen in this market. Theres always money on the sidelines, always money in savings accounts and money market funds there for liquidity purposes and that money never comes in. I think youve got to be a little careful with that argument. We believe this number is pretty much already baked in the cake, the claims numbers, the fourweek moving average number shows you that theres really no change in the labor market. Were looking for new money to come in. The other thing weve been discussing is, okay, you broke out to a new high, has that excited anybody . Is it bringing in new money . So far, no, and thats why theyre kind of resting here. Take a look at the top of your screen. The argument against banks that they have their assets overstated on the books has now been turned upsidedown because its becoming very evident that their assets are understated. For our guests, which is a higher income demographic, theyre not as affected in their vacation spend by some of those decisions. And so far, this season were not seeing it. People are really opening their wallets and theyre spending pretty freely when theyre on the mountain. Good morning, were live at post 9 at the new york stock exchange. Get a check of the markets. Dow hitting another alltime high. Three days in a row, were up almost 49 points. 14,344. S p trying to catch up at 1,543. Nasdaq in the green, as well, not by as much. Check out gap, it has halted for news pending, we will have the latest for you as we get it. Same store Sales Numbers, which Courtney Reagan tells us is are expected tonight after the bell. Theres a shot of the post here. And you were looking at post 8 on the floor of the nyse. A lot traders as the cameras zoom out. When the news comes, well get it to you as soon as possible. In the meantime, lets get the road map, the rally doesnt stop. The dow setting a record high for three days. Find out how much momentum is left and where you should be putting your money. Plus, the banks riding the rally, as well, sector officially entering bull market territory. But those stress test results are out this afternoon. Could that change everything . Then facebooks news feed reportedly getting, well, a facelift. The company set to announce the changes in a couple of hours. Well go live to headquarters with the latest on what the social network will be revealing. And the smart data startup thats personalizing the internet. Cater to its users and with nearly 30 million in vc funding from firms that back twitter, drop box and yelp, its taken the industry by storm. The cofounder and ceo will join us live. Also, a big day for boeing. The ntsb releasing a report on the investigation into the safety of the batteries used in the 787. Phil lebeau is working on that. Were waiting for that report. Were expecting it any minute now. And this report coming two months a of the Japan Airlines battery fire on the runway at the logan airport. We do not expect to see any major revelations in this report. We believe ntsb regulators will be detailing what theyve been doing over the last month, but we will not be seeing them say here is a root cause of that battery fire. Well pass itong to you as soon as we have the report. Take a look at shares of boeing, up over 81 a share, up more than 3 . Carl, back to you. Phil, and as far as we know, production schedules have remained unchanged through all of this, right . They are the same and, in fact, earlier this week, ray conner, was at an Investor Conference in new york and said they are making plans to move up to seven dream liners per month. Once they get their approval for the fixes they have put forth in the faa and they believe thatll come within the next couple of days. Once that happens, they will be moving very quickly to fix those dream liners that have already been built and obviously increase production. By the way, carl, any minute we expect that report from the ntsb. We may come back to you on that. The market does continue to climb higher this morning, wall street looking to see how high we can go before we see a correction of any magnitude. Is the path of least resistance still up . Bob pavloc joins us. Guys, good to see both of you today. Morning. Good to see you, carl. Bob, everyone weve had on and maybe you too say weve got to correct here, itd be great to correct a little bit. The last dip we had was bought in a matter of hours, really. How likely is some sort of discount . How imminent is that . You know, its hard to say. Whos to know when a correction is going to be coming. Everybody seems to be calling for it. And i think a lot of people calling for it are the folks that are either short the market or have underperformed or underinvested and looking for opportunities to get in. I think earlier this week on tuesday, you saw the market break the new highs or at least the dow break the new highs because people just sort of got fed up. Now is the time to start putting money back to work. If it corrects a little bit, ill put more money back to work. The last two corrections we had, the stock market had lasted two weeks. The one prior to that lasted a month. So trying to time this correction for Retail Investor at home really doesnt make a heck of a lot of sense. You take a look at the big picture and if the economy looks like its improving to you, then you start to invest and you worry a lot less about the shortterm corrections. What would buffett do . Buffett wouldnt care about any shortterm correction. As he said so earlier in the week. Jerry, i mean, bob points out some of the macro. We continue to get fed this sort of decent diet every day. Claims today, ism, chicago, confidence. Do you see that changing tomorrow with jobs . No, and i think bobs right if were investors, if our job is to invest over a long period of time, tomorrows jobs number, next weeks claims numbers, these arent relevant. The relevant point is the market is still pricing in an enormous amount of risk. Were at the same valuation levels weve been at for the last three or four years now and yet all of these bad things we worry about seem to be one by one falling away. If you had the fed convinced theyve got to continue to add liquidity on the fallback of worldwide growth, thats thats a combination that you rarely see. And if you go back maybe five other times in the last 30 years, weve never been in such a unique position. And its more particular to other competing assets. Why would you buy bonds at 2 yields when you can get stocks that can grow at 12 yields . These are powerful drivers. Jerry makes a great point. I think jerry makes a great point. The fed, everybody seems to be saying, oh, the feds behind this rally, the fed is the one thats supporting all this. In some degree, thats true, but the fed who has pushed so much money into the money supply and kept liquidity out there is not going to sort of pull this all back and have all that for not. No this fed is going to be there for at least another year. And look at the sectors that you can touch today. The Banking Sector. You talk about risk. The risk in the Banking Sector is almost the whole industry which has been restructured, balance seems in great shape. We have the whole United States industrial economy in a renaissance from a cost standpoint that we havent seen maybe since the 50s or 60s. And throw on top of that some of the other sectors, you can go piece by piece on this thing and you can see every part of a diversified portfolio in an attractive position. So, bob, is the natural play here getting out of heinz and going into i dont know, intel, right . Is it about getting out staples in discretionary and going cyclical tech . You know, its funny because staples and health care have done really well this year. And i think its because some people are still very concerned about whats going to happen Going Forward. But if you can picture the you know, the sideways economy on an s type pattern, you try to determine where you are on that pattern. How high is that cycle going to go . No one really knows. You know, we swung from one end of the pendulum to the other and now were somewhere in the middle. But i think what you have to do is determine what are going to be the beneficiaries. That would be the early cyclicals. Materials, energy, consumer discretionary, financials, and technology. Technologys underperformed this year. I think it catches up and we like tech Going Forward. Yep, thats a call we hear again and again. Its a fascinating week. Thanks, guys. Thank you. See you later on. In less than two hours, facebooks going to hold a media event in menlo park, california. Set to unveil a newly redesigned news feed. Jul Julia Boorstin with a preview. Reporter well, we expect the news feed to be cleaner with bigger emphasis on photos and video. This is all part of facebooks plan to draw in users and keep them hooked on the site and give advertisers better ways to reach those consumers as it looks to ramp up ad revenue. During facebooks last earnings call, Mark Zuckerberg hinted at a growing interest in growing the number of videos on the page. This is facebook faces reports its losing its cool factor. Now, though we dont expect any specific news on ads today, since ads flow directly into the news feed, this means bigger formats for advertisers and video ads generally draw higher prices, which would be a good thing for facebook. Todays presentation comes on the heels of last nights appointment of a new board member to facebooks board. The chancellor of uc San Francisco and former president of Product Development at genentech. The latest in a series of moves to help grow facebooks ad business. Last week, facebook bought a company to help measure ads more effectively and presumably, carl, todays announcement will help make the ads more effective. Well be watching to see what the announcement is and what that newsfeed looks like in power lunch. That so much, julia. Do want to take one more look at gap here, which has still halted for news pending. A lot of discussion today about this website you might know called seeking alpha which has on its website right now a transcript of a prerecorded Conference Call with the Vice President of Investor Relations in which they go through february comps. Well see if that has anything to do with the fact it was halted. Maybe there was some sort of leak, we dont know, but well get a lot more on that story as it develops. Gap still halted for news pending. The banks outperforming the Broader Market so far this year, but the results of the stress test this afternoon could change that. Well find out how you should play the big banks ahead of tonight. And Rick Santelli getting ready for a Little Something later on, rick. I am. You know, i always like ecb meetings because, you know, the slowdown in europe is huge, especially for multinationals. But he was definitely a bit dovish and down played, my opinion, some of the weak growth. How are we going to talk about this and get deeper into it . Were going to get yra, ira harris at the bottom of the hour. For access to one of the top Wealth Management firms in the country. For a team of Financial Professionals who provide customized solutions. For all of your Wealth Management and retirement goals, discover how pnc Wealth Management can help you achieve. Visit pnc. Com wealthsolutions to find out more. And his new boss told him two things cook what you love, and save your money. Joe doesnt know it yet, but hell work his way up from busser to waiter to chef before opening a restaurant specializing in fish and game from the great northwest. Hell start investing early, hell find some good people to help guide him, and hell set money aside from his first day of work to his last, which isnt rocket science. Its just common sense. From td ameritrade. Take a look at a sector sort here. Financials in focus today, after the bell tonight, the fed will be releasing the results amidst annual stress tests, a little more than a dozen banks. Among the banks that will be closely watched, bank of america, citi and goldman, having an especially good day today. Almost to 158, thats a gain of 1. 75 . Definitely a sector to watch. Jeff hart with sandler oneal. Jeff, some people say these results are so staged and so orchestrated and yet last year we did get a couple of odd surprises. What do you expect tonight . Yeah, i think from a quantitative standpoint, there shouldnt be a lot of surprises tonight. We know who pass last year and since then capital levels are better, credit qualitys better. You could always get surprises on the quantitative side where the numbers look good but somebody doesnt pass. But im not expecting a lot of surprises tonight, which could kind of set the stage for some surprises. But i think the real news will be a week from now when the ccar results come out and thats where they say how much capital they want to return. Tonights kind of do you pass the fed standard assumptions. And i would expect all the companies to pass tonight. Yeah. So todd, what explains the action today other than, i dont know, some sort of a broad macro view that the economys improving . Well, right, carl, you have a couple of different dynamics happening. Obviously, we continue to see incrementally improving economic data. By the same tone, you continue to see a little anticipation in terms of tonights Early Release. As jeff mentioned, i think the numbers tonight are going to be okay. Really no surprises expected at all. But certainly trading into this strength, incremental improvement in the economic data. The group will continue to trade higher from here in my opinion. Todd, walk me through some of your favorites. Do you go Big Money Center . Regionals in terms of i guess depending on what sort of play. Is this a dividend chase . Right. In terms of tonight and you look forward to next week, certainly, you know, going in tonight, i want to be, you know, very you know very much long the kind of the strong names, you know, jpmorgan, wells fargo, u. S. Bancorp, these are companies that have returned a fair amount of capital in the past. Theyre going to continue to return a fair amount of capital Going Forward. So by the same tone as you mentioned before, names like bank of america, citigroup, suntrust, these are the names, the real focal point. Not only in terms of tonights numbers, if you will, but the anticipation going into next thursday and really what is going to be announced in terms of the capital return after a number of years of kind of status quo rebuilding capital if you will. Yeah. That will be interesting to watch again 4 30 eastern time is when were expecting some of those numbers. Thank you, guys, appreciate it very much. I want to get some more on the gap story here. Of course, the stock still halted for news pending. I want to bring in rw baird on the news line. Discussing whether or not it could have something to do with the Early Release of this prerecorded Conference Call. Is that it . I do believe it is. That was supposed to go out after the close. Have you been able to take a look at the transcript . I have. And they reported a comp increase of 3 . That is in line with consensus, but i think there was a decent amount of investor skepticism. The gap would be able to comp the more difficult comparisons that they had last year and also theres been, you know, some general speculation around february and early indications are that february was a pretty mixed month for the group with obviously some weakness in the teen retailers. How about lets break it down, banana, old navy, anything . I guess my question is, are you seeing any outliers in the transcript that would that would result in the stock being halted . Or do you think its just the Early Release of some Material Information . I think its the Early Release of some Material Information. I mean, if anything, i was most surprised that Banana Republic was weaker than we had previewed. Although they did have a difficult comparison. They did an 11 comp last february. They noted there that Colder Weather impacted their february performance. They thought the customer felt like the assortment was too spring forward. Good to know. That definitely brings some clarity to the situation which threw us through a loop about 20 minutes ago. Erica, thank you very much. Appreciate it. No problem. I want to get over to the post. Post 8 in this case where bob pisani is watching it too, bob. Yeah, and it was holding for news pending. I think your analyst is right. This comment was posted on the website right at 9 30. And the number, that theyre reporting, 3 accomplished store sales was above the estimate of 2. 4 and thats modest, but the stock started moving up. Nobody noticed that immediately, the stock started moving up. And, of course, people started asking what happened because they didnt report the numbers. There were no numbers that reported. They reported after. We dont have any indications right now. They dont do that. So i think thats the important thing here. I would note that Banana Republic global here, negative 5 comp versus 11 last year. Carl, 1. 9 , thats what were expecting the numbers are for retail sales so far. Easter is in march. Remember that. Thatll help. Back to you. Calendar issues always important, thanks, bob. Courtney reagan at the news desk with a lot more on this too. I wasnt able to hear everything everyone said but i just spoke to gap and basically said what we have been saying the correct. Before gap always reported the samestore sales before the bell. Theyve decided to change the reporting to after the bell. However, a vendor erroneously posted the information prematurely on a public website. They went ahead, decided to move up that sales release, i believe its crossing the wires right now and it is that same store sales up 3 . That is why, in fact, that shares are halted. I actually expected a bit more. I didnt necessarily think that was enough to halt the shares. But that seems to be what gap is saying the reason was, carl . Okay. Courtney, good to know. Courtney reagan on at hq. Dana, lets walk through whether or not i mean, as we see these numbers, 3 is i guess not only lets set aside the fact that its halted, but it was up 4 prior to that. What do you make of these numbers . I think theyre good numbers. When you look at everyone else who is coming out from the month of february and everyones talking about the storms and the impact it had, you had a couple of things going on. You have the gap brand with a positive 2 comp talking about the success of their president s day weekend event. It drove traffic. When you look at old navy, the biggest business delivering a 6 comp. And thats up against a 5 last year. Its a good number. And they talked about the two things that worked. The womens business being strong and wovens and denim. Women is always your bigger business and when you get denim working, thats a plus. Youre going to see the return of denim for the spring. Everyone in go on. I was just going to say, its a little bit it is stunning to hear you talk about it in the previous hour and then here it shows up in the transcript as its leaked. So is there a general sense that gap relative to other retailers is truly able to swim upstream here . Its doing better. The products more right, the prices are good, and the ads are back. Theyve been able to get back in the groove of things and thats encouraging. Everyone in march wont have Easter Sunday because dont forget easters on that sunday, april may look a touch better than march. And leads you to the question that everybody sort of automatically asks. The degree to which theyre benefitting from continued erosion in jcp, is that a dynamic here . Of course it is. You dont lose billions of dollars of sales in a gap, macys, tjx doesnt benefit. Definitely gap is one of the beneficiaries, the clothing is more in sync and on trend helps. Why wouldnt we see that show up in everyones case, though . I think one of the things thats happened is gap has been broken for longer and the fact that gap is coming back now, it shows up more. Its a better directional trend. Where does gap where does gap reside in terms of your list of favorites . Its been one of my favorites for 2013. We picked it at the beginning of january and were sticking with it. We had an amazing year last year, right . I mean, i wonder how early you went positive on gps. Weve been poz fif for a while. What i see Going Forward for 2013, strength in margins, the fact that you have the creative advisers there, the acquisition is more important than people think. It allows them to have the insight into whats happening on the fashion side to interpret it for the mass businesses of gap and banana. I think its encouraging. Separate from the results themselves, dan tha, we went through this with google a few quarters ago, but the Early Release of Material Information, how concerning is that for you . Just regarding the overall legitimacy of management and their control of news flow . This is the first month in which theyre changing the timing of the release to after 4 00. Im pretty sure that youre not going to see this happening again. You have a very careful Management Team at gap. Something went awry with this change in time. I think as they get back in order, this wont happen again. Yeah. Any idea why they decided to go to a post close release . The fact they were getting so many calls after the release, there were so many details to explain, they were putting it out in a prerecorded call which they hadnt been doing before allowing people to digest it. You know what people might be saying, dana, and its unfortunate. Heres another data point that for whatever reason their fault or not was not perfectly handled. Whats the motivation going to be to give monthly comps. I think youre going to see more and more go away. And wee weve seen that trend already. And its perfectly fine. If you do the diligence feet on the street, you get to know how the sales are. When they talk about easter for march, pisani walked us through some of the calendar issues, is that going to be an easy excuse once we get next months comps . Its going to be one of the excuses, there should be no excuse, spring break is here. New products out there. They should be shopping and we should get the delay tax refund dollars back in everyones wallets. Are they no longer breaking out international . Is that a change . Im looking through some of the transcript here, dana. Very perceptive, carl, youre exactly right. They are now doing it each brand, each region, each channel is bundled up into one. Its just gap, whether its online or region, its all in one. Thanks to stacy for helping draw that attention to me, at least, Courtney Reagan continues to be with us. Courtney . It does look like shares are open again for trading for gap. Up more than 3 . We were up even higher than that before the shares were halted. So it does, in fact, look like it was this Early Release of the same store sales. Thats what gap was telling me. They moved it up. Technology kind of an amazing thing. Accidentally moving markets as it were here today. But we know that gap has been sort of steady as she goes over the last couple of months. A really stealth rally building in the stock. Glen murphy last week sounded very positive Going Forward, definitely taking initiative in international and online ecommerce. It seems like right now, a lot of strong wall street support for the stock Going Forward. And courtney, i assume you heard dana talking about the jc penney effect. But you cant ignore that at this stage of the game knowing where gap is and knowing where jc penney is. I think thats exactly right. And i think many had expected kohls to take some of that market share or sears, but it hasnt actually showed up in that way yet. And i think if anyone it is coming into gap. The customers that are leaving jc penney are going into gap, maybe it makes more sense than a kohls because theyre often in the same malls that jc penneys are and youd have to leave a jc penney perhaps even drive somewhere to get to a kohls, so maybe that doesnt make as much sense as we initially thought. So it does seem like gap is benefitting from either what theyre doing or what others are not doing at this point. Finally, you know, everyone in retail, so fragmented in terms of narrative, everybody wants to know whats working across the board. They do single out as dana said, womens and denim and i wonder if youre hearing that from analysts when it comes to other retailers, especially in specialty. Yeah, and it seems to be something working for gap that others have struggled in, womens apparel. We know that color really helped them early. Were going into spring. I think everyones ready to see more colors, change up that wardrobe, and if gap can deliver on that merchandise, theyre going to continue to win. Thats a trend theyve been r e riding for a while. Thanks for being there on this one. We continue to see the stock up 3 off the highs but trading once again after being halted for news pending. Thanks to courtney and dana, as well. Another dose of breaking news, this time on boeing. Hey, phil. And carl, i now have the report from the ntsb, this is an interim factual report regarding the 787 investigation of the battery fire for the Japan Airlines flight in boston. We wont get into too much detail here because this is a very detailed report. But the conclusion and the executive summary says because the investigation is continuing, no conclusions or recommendations made at this time. The ntsb giving us its latest update in terms of data but not issuing any final conclusions at this point. Carl, back to you. Phil, thank you for that. Well come back to you later on. For more, well follow the gap story, as well. News from the Conference Call supposed to be after the bell tonight was leaked a little early. Of course, now the comps are out. Be back in a minute. But we can still help you see your big picture. With the fidelity guided portfolio summary, you choose which accounts to track and use fidelitys analytics to spot trends, gain insights, and figure out what you want to do next. All in one place. Im Meredith Stoddard and i helped create the fidelity guided portfolio summary. Its 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 . Word across europe is unchanged whether its Interest Rates or the markets, simon, despite what that map looks like. Green on the screen, theyve continued to make gains, perhaps struggling a little. The focus isnt really on the stock market today, its on the Foreign Exchange markets. Take a look at how the euro attempted to make a major break after indicated well, no great indication they were about to cut Interest Rates. We put a floor on 1. 30, suggesting 1. 38 possibly by the end of the year because the ecb is the only central bank now not engaged in currency wars. Let me take you to frankfort where mario dragi gave his News Conference. He said immediately after that ballot, the markets had reverted essentially to where they were before. Listen to how relaxed he was on italy. Much of the fiscal adjustment italy went through will continue going on on automatic pilot. And so also if you consider the net supply of government bonds is considerably less than last years. If we look at contagion, youve seen certainly that it could lead contagion to other countries has been muted. This time, contrary to what might have happened about a year and a half ago. And this is another positive sign. And to this point, take a look at where we are on the tenyear spanish bond market at the moment. Today they had an auction at the five and tenyear. Were back to twoyear lows on both of those major pieces of paper. The cutting edge of thought within europe is not really about the periphery at the moment. Its about the core countries and the fact that some of them are beginning to diverge. The netherlands and france. The economies getting worse today. French unemployment rose to 10. 6 . Just so strange, we live through that one day of italian election turmoil when its like it never happened. But the power of a central bank that can still command confidence through its threats like the ecb rather than the fed which is buying 85 billion of paper every month and seems to have its heart crashing on the floor. A lot of people say draghis the best thing that ever happened to that part of the world. Thanks, simon. Lets get to Rick Santelli in chicago. More reaction to draghi and the ecb. Interested to know what you think, rick. Yeah, ill tell you what, well hear what the man has to think. My own impression was that if yesterday youd have told me that headlines would describe Mario Draghis conference, the euro would be at 1. 2850, but somehow to his brilliance, not necessarily as a central banker, but almost as a mediator to find that crack in the door where he didnt really talk about higher inflation or lower inflation, talked about balance and got the rally. Amazing, its like hollywood back lots now considered reality, but whats your opinion . You know, rick, as we go along here and when he was on, that was a beautiful hour that joe kernan had the other morning. A central bankers job is to buy time. Well, a good central banker is buying time. And he doesnt have to do it with money. He does it by talking. And people were thinking, well, there might be a rate cut with euro. You know what . He played it beautifully. Hes not looking to do anything aggressive because he does not want to raise do you think there were pressures put forth from the germans who were, of course, the inflation hawks inflation hawk. He does not want to do it. If he doesnt have to. He has never fired a shot on the outright monetary transactions. Never, all weve heard is talk. And what is the end result, the japanese are carrying to water, the u. S. Is carrying to water. The bank of england is carrying water. And he has not had to upset the german hard money group. And you know what . And he doesnt want to because dont forget, come september theres a major election. If we see a constant slow and steady deterioration of the economic power of europe, no matter how good a salesman, isnt his clock time going to run out . Listen, he survived the lunacy of the italian election even at this point. Will he be able to how long. He knows, again, but hes paying for time. And time is on his side. Were out of time but were not going to stop right now. You tell the world. This is a birthday present. Were going to get this book for his birthday. Hes one of the greatest. Id like to marinate some ice cubes with him one time. Happy birthday, art. Another 50 or 60 years minimum, please. He would love to hear that, guys. Bobby vans is right across the street. Lets get more on post9 whats moving. Having settled the gap issue a few minutes ago. Boy, if you were wondering what happened to gap, we covered it pretty well, folks. But take a look here. There was an inadvertent release of their numbers. Theyre now reporting after the close. Their samestore Sales Numbers 3 , expectation was 2. 4 . Then it came out, and still sideways from there. The good news about retail sales, it wasnt a great month for retail sales overall, but march is easter and its all going to be in easter. I think youll get a little bit of a boost compared to last years comp store sales. Elsewhere, were moving up again today. These are the risk on sectors. The last two weeks, Financial Energy materials, theyre always up there in the major movers on the bottom here, this is the downside, Consumer Staples and utilities. Defensive side generally weak, Aggressive Growth side generally stronger. And thats because today, at least, mr. Draghis out. The Draghi Bernanke put, whatever you want to call it, folks, put it up, its simple to understand. One of the reasons i like it so much is its simple. Draghi confirming hes going to keep rates low and bernanke reiterating that hes going to keep rates low. Theres the Bernanke Draghi put. Its simple to understand. Heres what were worried about, theres a lack of growth. Nobody can figure out how to get growth. Even Angela Merkel said last week, we dont know how to get growth here. The worry is that low gdp growth may prompt ceos to cut jobs again. In the second half of the year if we dont get that kind of growth. Theres a serious game going on here. We dont want job cuts just to get growth and bottom line growth in earnings. That would be a disaster overall. This is a group that does Asset Management, 27 to 30 was the price talk, opens at 30, 27 to 29. Prices of 30, opens at 35, holding up throughout the day. This is one of several ipos, havent had a lot of them, but this one did very well. I wanted to point out that the secondary market has been very, very strong this year. Why . Cheap money. Very simple. 148, thats beating last years numbers, 19 ipos so far this year. Cheap money, looking to yield bonds, pushing it out and secondary offerings. One every other day, incredible. Thank you, bob and thank you for the help during gap. Lets get a check of energies. Weve got nat gas surging today after more bullish than expected eia inventory, drawdown of 640 cubic feet. The big bulls were in that range everybody else was around 134 billion cubic feet drawdown. At least that Natural Gas Storage levels, 15 below where we were last year, still above the fiveyear average, nonetheless, weve seen a real sort of mix of pulling back on production, more demand because of this late winter surge in storms, thats what tim evans says. He sees rally possible to about 373. 80. We have to get to 360 first. Take a look at brent, started the day lower, the brent pipeline reopened but it has moved higher. Part of that is that mario draghi effect. Its pulled up wti in particular today, carl, were looking at 89. 50, today were at 91. 50. Talk to you soon. The Facebook News feed getting a facelift. Is it trying to look more like google plus as the market waits for the social yenetworks announcement. Try running four. Ning a restaurant is hard, fortunately weve got ink. It gives us 5x the rewards on our internet, phone charges and cable, plus at Office Supply stores. Rewards we put right back into our business. This is the only thing weve ever wanted to do and ink helps us do it. Make your mark with ink from chase. Transit fares as in the 37 billion transit fares we help collect each year. No . Oh, right. Youre thinking of the 1. 6 million daily Customer Care interactions xerox handles. Or the 900 Million Health insurance claims we process. So, its no surprise to you that companies depend on todays xerox for services that simplify how work gets done. Which is. Pretty much what weve always stood for. With xerox, youre ready for real business. Which is. Pretty much what weve always stood for. We replaced people with a machine. R, what . Customers didnt like it. So why do banks do it . Hello . Hello . if your bank doesnt let you talk to a real person 24 7, you need an ally. Hello . Ally bank. Your money needs an ally. Facebook is set to make the first major change to the newsfeed since 2006. Speculation anywhere from multiple newsfeeds to imagebased ads. Which rumors could hold weight ahead of the announcement. Joining us from San Francisco, jason, welcome back. Thanks for having me. You know, every time they say theyre going to do something, theres like a collective groan among users everywhere, is that deserved this time . Probably not. I mean you know, im sure that theres going to be all sorts of protests and people writing long posts begging people to stop reposting their tweets and all these things. Any time they change at all, its an intimate product that any time theres any change, theres this kind of shock. Im sure theyll blow over like they always do. Your point is obviously mobiles changed everything. And it changes the way they have to present their news flow. What do you think its going to be . You talk about possible lessons from instagram. Yeah, some of the rumors, there are going to be multiple feeds, one of them will be a photo feed and itll incorporate all the photos as the own separate feed and that way you foe facebook can kind of eat instagram and facebook will be the lens you view everything through. Thats one example. You know, really what insta gram found is people dont necessarily want to communicate via text, they want to communicate via images and want to have ways to manipulate the images. It wouldnt work, you know, obviously as well on laptops or Desk Top Computers but with mobile devices, thats a natural way for people to communicate. Id expect facebook to incorporate some of those lessons. How about some of these al algorithms. Yeah, there have been a lot of protests about how facebook manages the news feed. It wants to make sure that the information you see and read is relevant to you. On the other hand, they want to make sure when you post an update, your friends can actually read it. There are these two different pressures on them. And at times, it seems theyve erred on the side of limiting too much information that gets out there. A lot of people complain they post things on facebook and their friends cant see it because its filtered out. Its similar to what google went through with the ranking mechanism. Any time that google changed the algorithm, a bunch of companies complained they were the number two result and now theyre the number three result. As facebook tries to make itself a launch pad for businesses, its going to come under scrutiny for those kinds of decisions, as well. As we get closer to the announcement which is a little more than an hour away, volumes picking up, stocks picking up here. I just wondered, jason, do you think in changes are going to be material to earnings . I know its not quite your thing. Im sure you must have thoughts on it. How are they doing in terms of the balance between looking at the needs of the advertiser and looking at the needs of the user. I do think it could have impact on earnings. The whole idea is to make this both more attractive. Facebooks goal is a win win. Theres more attractive content for users to look at and that basically advertisers can provide more attractive content that users will want to see. Thats what they want to see. They want to see all boats rising. And if they can figure out a format that will present, you know, sponsored content in an appealing way that users want to see, i think thats what theyre trying to do with this news feed and potentially there could be a lot of upside for them. Yeah, going to be interesting to watch, to see what menlo park says in a little bit. Thank you so much. Thank you. Jason tanz from wired. Social media might be the latest fad in startups, but email still big business. Company just received 19 million in funding from the same vc firm that backed twitter, drop box and yelp. Ceo and cofounder will join us after this break. Post 9 just celebrated its first anniversary. And we want to share the celebration. How would you like to win a special post 9 mug . Signed by the entire squawk on the street gang. All you have to do is guess fridays nonfarm jobs number. And dont forget the hash tag nail the number. You have to be at least 18 years of age to enter. Sorry, kid. For all the official rules and details go to cnbc. Com. You have until 8 29 a. M. Eastern friday morning. You may not have heard of squawk breakthrough just yesterday. Yet. Used data to build personalized user experiences for web visitors. Including business insider, aol, newsweek, and fab. Com. Sailthru tracks the purchases of you and your interests. When a page like aol loads on your computer, it calls in the recommendations in realtime based off of sailthrus profile of you. The ceo and cofounder of sailthru joins us here at post 9. Everybody wonders if i click on newyorktimes. Com its showing me Something Different than it shows a 65yearold woman. Thats where you come in, right . Thats where we come in. Were giving recommendations to our customers, the fortune 500s of the world. Were giving them recommendations of what to put in front of that user at that time. Its about personalized experiences for all users to really extend the brand loyalty. And what you really mean is coming back a second time, making a second purchase, right . Exactly. We want that user to come back and enjoy the experience and, you know, look to the brand for always exciting opportunity and coming back. Walk me through some of the metrics that you can use to show how effective youve been for an aol. Yeah, so well look at customer lifetime value is obviously the big edict or the business of trying to extend that. So we will extend that by eight times, nine times through our publishers for ecommerce somewhere between nine and ten, all depends on the publisher and the brand. But what were doing is enabling that creative brand loyalty that hasnt existed before. You said big data as a concept is not well understood but gets talked about all the time. What are people missing . Well, big data has become this term that covers so many Different Things. And really, it is actually what it says. It is a big data set. The problem is that people really have not been able to operationalize that data. And really what were talking about is smart data which is actually making the realtime decisions to give the best experience to that consumer. And so, actually, operationalizing that data, making a recommendation for that user at a time youre seeing them, knowing when not to send an email, when you should put the right content in front of them. Knowing about that user. And big data has really just been the case of just consuming data, looking at it in a report and having the human make the decision. Right. Why isnt this something that an ibm or another corporate could do. Well, there are others that do ancillary services of what we do, as well. But no one is doing the full view of the user base. Ibm is talking about what they do in certain areas, but were really operationalizing that data today for our customers. Series b financing, which i think we mentioned in january. Congratulations. Thank you very much. 90 employees. What is the playbook now . Well, weve been growing at 12 month over month and were going to continue that growth. Weve doubled were more than doubled, 270 increase from last year to this year in revenues. Were looking to more than double our revenues this year and again next year. So a lot of growth for us. Were investing in Product Development, Marketing Sales across the board. We have a product that the industry wants and now its about getting it out there and taking the industry by storm. Are the sweet spots for growth moving in to different areas of ecommerce or is it geographical. Is it regarding price points and so forth . Were focusing very much on the fortune 500, but its international. Were going to europe right now. Well be going into other countries soon after. Its really about mass growth across the globe really. And, of course, we always ask startups if you can if i can call you that about the plants. Their notion of going public, being public, there seems to be this creeping sense that people wouldnt mind being private for a little while longer than they used to. We are continuing to grow this company and were going to continue to keep that growth rate up so that we can get to a point where we can make that decision in the future. And i think our growth has shown so far were on track to do that. Right. Keep our eyes on you. Thank you very much. Neil capel joining us from sailthru. Facebook expected to make big changes to the newsfeed, but the redesign could make it Something Like a google plus. If facebook wants to be more like google, it should blank. Your answers in a moment. Im a conservative investor. But that doesnt mean i dont want to make money. I love making money. I try to be smart with my investments. I also try to keep my costs down. Whats your plan . Ishares. Low cost and tax efficient. Find out why nine out of ten large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. Only hertz gives you a carfirmation. Hey, this is challenger. Ill be waiting for you in stall 5. It confirms your reservation and the location your car is in, the moment you land. 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