Transcripts For CNBC Squawk On The Street 20130312

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. Its just another way youll be traveling at the speed of hertz. Lets get back to our guest hosts. We have 20 seconds. The last word is goodbye. What can you say beyond that . Things are performing exactly as they should. Dont give up hope. Jerry . Politics arent irrelevant. Theyre an opportunity. Look for companies that will make money in an environment thats not exactly what any of us would have wanted from a policy point of view. Thats tantalize. Well have to have you back to talk about it. Thank you very much. Well see you tomorrow. And well see you tomorrow. Right now its time for squawk on the street. Welcome back, david bowie. Today marx the u. S. Release of his first album in nearly a decade. Its called next day. Welcome to squawk on the street im Carl Quintanilla with melissa lee and david faber. And nfib is curious today and not a lot of directional action and a long way to go, still. The big story is the conclave which begins in rome today in the vatican. Well keep an eye on that. We might get a vote later on this afternoon and in asia, shanghai down four straight and mostly red arrows across the continent and within a stones throw of the alltime high. The dow going for eight straight games. Thats the longest streak in more than two years. Everybody seemed ready for a selloff so where is it it . Yet another target price cut for apple and a 25 chance of a miss on guidance. Its a big week for samsung and blackberry. Those membership fees continue to provide stability against walmart and target. And are yums troubles in china starting to stabilize . February shows signs of progress there. We will begin with the markets. The dow coming off of a fifth consecutive day of new alltime closing highs while the s p is within ten points of its own record closing high. Both indices are on winning streaks. So far futures, as you saw, moving a tad to the down side. Jim, the action on the s p, i looked back, it closed at its highs of the day for the past four or five sessions. Very new pattern. I do mad money at night. We always try to hold the top until the end, and one of the reasons why we do is im so used to the selloff at the end. We write it and say, of course, if you look at the way the day went. This is a new pattern like so many new patterns where we overlook bad and you get a Dicks Sporting Goods and everyone comes back and says its good today. This is an upon further review market where we spend the whole day thinking, gee, europe, not that great. China, not that great. Were great. Despite the fact that i think a lot of the economists come on and they are concerned there is what i regard as a target market. I mentioned target because that was one of the worst numbers and yet all weve had is up and target represents i think more than any other retailer in the country. Are we getting signs to i dont want to say exhaustion, but maybe this run is getting a little bit tired here . Yesterday the volume was very light on the session, and granted we closed at a high, but some were light and weve been around these levels in 2000 and 2007 and now again in 2013 and that could be troubling here with the vix at a fiveyear low. Here we have merck announcing a vytorin. This is anticholesterol. The important stock on the dow is a couple and with the costco reports. Its good, and 50 of cabellas is hunting. We know gun sales, david, are incredibly strong in this country, but i just keep coming back to the facts of the individual Companies Just donta ad up to the triple top. They dont add up to exhaustion. They print their numbers really, really early. We get up early and i was, like, wow, thats better than i thought. Does a rising multiple give you any i hate multiple expansion. Thats what were getting that the point. I dont see a lot of numbers coming up at this point from the analysts from the second half of the year or guidance. I think people feel to raise guidance in the face of sequester. I keep coming back to mark zandi and saying maybe Housing Starts are better, autos and what are you smoking . What im smoking is a sell to hold sherwinwilliams at Credit Suisse and value added since the stock was at 80 not that long ago, but i just keep finding out. This morning wyland gets an upgrade. Who cares about the housing cycle and boom, you get good news. Chevron, i love the product numbers and the midquarter update and why arent they understanding the script and the script is supposed to be down right now. Chevron today on closing bell later today. Only 18 of firms see poor sales as their number one problem. That is a new low for the recovery so far and theyre having trouble filling jobs because some are thinking maybe it has more to do with Labor Mobility or skill mismatch not because they dont want to add workers. This is gtls is the symbol and they are desperate to find workers. Why . Wrong places. No skills to be able to weld in this country anymore and they are saying please. When these ceos come on your show and they say we need workers, its a different tone from what you would have heard four years ago. I know the bankers dont need workers, but the Industrial Companies do. No. The banks are fully staffed. Your point say good one. When they say they need workers, they say there are plenty of people who want jobs, but theyre not the people that can take the jobs that we have even to your point about welding which on the face of it you would think thats a pretty straightforward profession that involves a good deal of math skills. And we stopped a long time ago when bethlehem steel closed its shipbuilding business that shifted to korea. What needs to be done here is a highly technical form of welding so that makes it that natural gas that are in trains and lng for long haul trucks. We just dont have the people that know how to do it. Thats depressing. Why is that a good thing . Well get them. Natural gas too cheap in this country. Opecs new forecast today, raising their forecasts for nonopec production and their own market share slipping for 2014. Well be doing 7 Million Barrels a day in this country and theres a lot of stuff and chatter about how canada wants to send 4 Million Barrels a day to the United States. We only need 8 Million Barrels and where is this stuff going to go . Canadian oil sells for 60 and change whereas brent is so high and of course, our gasoline is priced up at brent because of the mismatch of the nonfederal policy on energy and everywhere we dont need it. We dont have keystone yet and we cant get the refiners and they used to have the right oil and theyre all for heavy oil. You mentioned two problems that require the federal government to have a response. An Energy Policy and an immigration policy. Neither of which yet exists. No. 6 30 dinner is sacrosanct at the white house, and we know when we have Congress People on they seem to want to spitball each other and throw mud. I dont see the consensus developing. Everyone thinks the market can take care of itself. You cant. The cng, compressed natural gas, so the Companies Want gas, but they want the you cant do whats uponed without the federal government. Not subsidies, but just law. Lets switch gears here and talk about apple. Jefferies is cutting its price target from 420 a share from 500 while maintaining a hold on it. Asia channel checks have led him to cut revenues to the low end of Current Quarter guidance and he sees iphone 5s and iphone launches and he sees that apple is trying to compensate. He will join us to discuss this call on apple in about an hour from now. Meanwhile, black berry is still rising. Today is the day at t is kicking off presales of the blackberry z10 in the United States. Apple shares premarket are only down a few bucks. Some might argue this finally, maybe its reached this point where it can absorb bad news and not go down substantially. We still dont have anyone just saying im going to put a sell on it. She had a 130 price target through the cash. Look, this is the kind of thing you get. Im holding up the jefferies piece. Yes. Cutting the price target to, as you mentioned. To 420 and this is a piece that should have been a sell. And you shouldnt have a hold on it when you cut the price. You are now in a situation where apple is expected to miss. When everyone expects a company to miss and it misses it tends to stabilize or go higher. Those are frightening terms when you talk about apple because it has become the ultimate Butcher Block of falling knives when everyone buys it, but this is so negative that they have to recall the iphone 5s new model in order to miss numbers like this. The risk is to the downside in terms of meeting the lowered guidance because of the lowcost phone and the iphone 5s. To your point, why rate a stock a hold if you see downside to where its trading now in 12 months. In 12 months its going to be according to this price target 17 from where it is. When numbers come down, multiple Means Nothing if the estimates continue to drip downward, and i think that were still dealing with the residue of the 1,000 price target where everybodys still got to come in. Remember when everyone was running the street high for apple . Now jefferies goes street low so you have to imagine the other analysts are running low. As long as others are doing that, but best buy, moment it turns does this actually have any bearing on what that stock he has not been effusive about apple throughout the decline. Hes had a hold for a while. Look, it shouldnt have impact and doesnt have impact. The stock has that terminal feel and is it shouldnt. Maybe on sentiment . Yesterday someone came out and said they might turn cash. We all know theyll return cash. Until they return cash, the focus is on the miss. The earnings miss. We should say its a big week for blackberry. Right. The preorders go live for the 10, the z10 and samsung is rolling out the new galaxy. There are photos leaking on the web. The air is kind of getting sucked out of the room in the short term. This blackberry and there is a story in a french newspaper. When you see these different newspapers saying theres about to be a bid and you should hold your ears for the buying siren, right . David has been a reliable source in the past for your m a information. You know im always, as you know im fluent and thank you for mentioning that. Lenovo why would lenovo look, black berry is one of those stocks thats going 12, 15, twef12, 15. I am sure tomorrow well hear initial sales are bad because day one. Hour one. The first hour. Unless theyre lined up around the block as they will be for samsung because samsung is now the king, samsung. So apple subsidizes samsung with the use of their chips. Korea not skipping a beat. They ended the armistice yesterday in korea. 2500 decide the division from our guys to doing 28,000 over there. Theyre doing some sort of maneuvers. In the meantime, samsung wow seems to not interestingly, it was mentioned in the jefferies note the samsung launch will suck a little bit of the oxygen out of the room and therefore hes anticipating a weak quarter because of the s4 and the acknowledgement that maybe competition can be a threat to apple sales. These channel checks that everybody does, what do they really do . Channel checks were good to the upside, too. Thats my point. Whatever direction the stock goes. If the stock were to go up five tomorrow you see what you want to see. These guys with the wind, theyve been blown with the wind. The answer, my friend, is blow it. Im still thinking about the korean peninsula. Go with my window. And whats going to happen there. Korea was the future of apple. Dennis rodman probably holds the key to the next level of samsung. The guy was declaring world peace. Who knew . Not metta world peace. He should change his name, right . Also. Remember laurel b. Remember him . Lord freeh. How about the 66 points he scored last night. 63. 63. Im sorry. I forgot. Very excited because the sixers won a game. After taking a hit after a food safety scare, yum brands experience a rebound in china. Coming up, is it finally over . Live from dubai saying were on the cusp of a new golden age of Luxury Travel and well find out how the Company Plans to capitalize on that. Some midweek action here and eight straight gains of the dow on the street. Much more squawk on the street when we return. Investor. Yeah, im a serious investor but im a busy guy. It used to be easier but now there are more choices than ever. I want to know exactly what i am investing in. I want to know exactly how much im paying. I want to use the same stuff the big guys use. 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. Shares of yum brands up sharply amid signs it is bouncing back from a food safety scare in china. Com sales rising 2 as business received a boost from Chinese New Year. The parent of kfc, pizza hut and taco bell experienced sales for the first two months of the year and that was the smallest decline than the previous 25 . Can we believe this number or is there too much impact from the Chinese New Year to make sure thats a solid comp. The analysts were skeptical, david novak, the ceo, i think, is has money in the bank. He said this would happen. Hes ahead of his own schedule and he said it would be the second half. I believe in the stock. I think the analysts can be dragged kicking and screaming. David novak promised me hell deliver. David novak lived in his car and i lived in my car. We were neighbors. We may have been neighbors at any given time. This guy is underestimated on wall street and people do not understand what a fighter this guy and how competitive he is. I think yum is done going down and i think this is the beginning of a good streak of numbers. We look at kfc specifically in the month of february and that was flat. So we with think that the chicken scare affected kfc the most and the sales are finally flat and thats a positive sign and the Management Team in china, excellent. The head of Greater China of a yum is a veteran and regarded as the god father of fast food in china and hes been there for a long time. Born there and educated here and hes getting a lot of credit for the china growth story for yum and surpassing mcdonalds in china. Novak gave him a lot more to work with. Millions of dollars to be able to rebuild the brand. This is when 60 minutes comes after you. It was the equivalent of 60 minutes saying you cant eat at kfc and theyre reversing that very quickly. Im very encouraged here. The analysts are not. There are very few analysts saying this is the beginning of the end, but these were the people for the most part, not everybody who when it was first reported they say ignore it and they remind mcdonalds when they said it was the end of mcdonalds and it does appear to be a lesson in how to manage expectations and they clearly beat that, but you couple that sort of metric management with, say, i dont know, a jc penney and what someone else has done. In their is underpromising. What a great example. Youre absolutely right. Ron johnson comes in and basically says were going to take over the world. David novak comes in and says the world fell on our shoulders and we were not ready. We were not red for this and we didnt understand the gravity of it, but well come back some time in q4. This guy, there are some managers that really know how to handle wall street and their business. Ron johnson, i dont know if he knows how to handle wall street or his business. Wow dont give me that well said. Im not going to add to it because i thought you said it all. How can you add to that . You gave me that pixiest thing you do that basically says, yeah, sure, cramer. Its called subtlety and i dont have it. When we come back, last night on mad money he called it sellers remorse. Can we turn a mix opened into record highs. Came cramer will help you get ready. A lot more squawk on the street treat New York Stock Exchange separate ahead. Revolutionizing an industry can be a tough act to follow, but at xerox weve embraced a new role. Working behind the scenes to provide companies with services. Like helping hr departments manage benefits and pensions for over 11 million employees. Reducing document costs by up to 30 . And processing 421 billion dollars in accounts payables each year. Helping thousands of companies simplify how work gets done. Hows that for an encore . With xerox, youre ready for real business. All stations come over to mithis is for real this time. Step seven point two one two. Verify and lock. Command is locked. Five seconds. Three, two, one. Standing by for capture. The most Innovative Software on the planet. Dragon is captured. Is connecting todays leading companies to places beyond it. Siemens. Answers. And were a few minutes before the bell on a tuesday. Lets get jims mad dash. Med tech. According to one of my sources we come in today and hear dana her, and thermofisher and they could make a bid for life technologies. Do you know they have 75,000 customers . Their products are to be able to map genes and research genes. This is literally the arms dealer for all those Biotech Companies that would be a really good fit for thermofisher. I think it goes. I think it goes. Thats a nicelooking chart there. It is a goodlooking chart. Costco, a lot of discussion about the membership fees which went up i think late 2011 and were still feeling it. Nobody apparently said no to costco. They just raised the fees. Carl, you know this culture very well. This is more than just a store. Yeah. Its a lifestyle. Its a cult, some say. The bearish argument is that the growth really happens at the margin and it is an annuity because of the fees. Is that a knock on the stock or not . I dont think so. I think senegal set up a situation with multiyear growth. They still dont have that many stores and i still find my summit new jersey jammed and i got caught up at the dollar tree buying more candy this weekend and was not able to get to costco, but i have to tell you, i think this is emblematic of what i think is great about america. They pay their workers better. The turnover is the lowest which then leads to great profit margins. Yeah, 5 comps with fuel than without it. Gas prices should be more of a tailwind with them. So this could be another retailer like walmart and target where people say wait a second, how bad can things really be . I keep coming back to the answer that theyre not bad at all. When we come back, will the bulls have more reasons to snort with delight. The dow taking a look at the sixth consecutive record day of record high. Opening bell is coming up next. 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. Otherworldly things. But there are some things ive never seen before. This ge jet engine can understand 5,000 data samples per second. Which is good for business. Because planes use less fuel, spend less time on the ground and more time in the air. Suddenly, faraway places dont seem so. Far away. [ male announcer ] this is karen and jeremiah. They dont know it yet, but theyre gonna fall in love, get married, have a couple of kids, [ children laughing ] move to the country, and live a long, happy life together where they almost never fight about money. [ dog barks ] because right after they get married, theyll find some retirement people who are paid on salary, not commission. Theyll get straightforward guidance and be able to focus on other things, like each other, which isnt rocket science. Its just common sense. From td ameritrade. Youre watching cnbc live from the Financial Capital of the world. The opening bell set to ring in one minutes time. Of course, the big question is will the s p 500 make that nine points and get to the record closing high level in todays session . The futures didnt indicate that, but of course, that is something we will watch. Europe is something were watching, too. We did not mention uk industrial production. I mentioned that because it was dismal and it set the pound to a two and a half year low against the dollar. This is a country thats in recession. The italian election, that was about growth, okay . United kingdom, where is the growth . I am just amazed at how these countries do not seem to have any economies, nothing. Uk industrial production. Another miss and people are beginning to wonder how long a big trading partner of the u. S. Can be [ bell ] china, so important to get europe going. The cnbc real time exchange. Theyre celebrating and tase err international doing the honors. We havent talked about that in a very long time. The best was if they lost the bet they had to be tasered. Why would he take that bet . Hes not as bad as you, being tasered. I dont care to know. Listen, i lost a bet and im going to be tasered on monday. I dont know. I dont want to be tasered. Some tv anchors have died on air. We are not willing to do that. It was not as bad as a root canal. Listen, you lost a bet and ill perform a root canal on you. Taser. Thats the new thing. You lose a bet and you get tasered. Anyway if only analysts lived by that rule. You get it wrong we will taser that analyst. Look, if you get it wrong like the guy who upgraded sherwinwilliams today, taser, right . How about the upgraded goldman . Taser. Taser. Do you remember the first hangover movie . Thats what im thinking. Yes. Bradley cooper, philadelphia. No taser. Radioshack, goldman has been very busy today, by the way. Radioshack is one of them cutting a sell from a neutral. They say the Business Model is challenged and they see minimal equity value and you literally have to wonder, jim, where they have that. At the same time they recommend best buy and one of the things you want to see if youre best buy and last man standing is you want the shack to go. They talk about the shack not having good wireless sales and last time you went to shack didnt you just buy a connector. Yes. The coaxial cable. When you plug in your car and you have the battery thing, its not exactly a 787 battery, and the little device that makes the three into two . Yes. Hes just humoring you, by the way. Youre doing that rye thing. I want it to be rye. I went to a radioshack in boston and there was a woman at the counter and she said why are you shopping here . New angle in term of customer service. Why are you shopping here . It was the 52week low of i do have to wonder suddenly all of these analysts behind the stock of 12 to over 20 in a relatively short amount of time. Its called momentum, david. Goldman looking for what . Theyre talking about a ten multiple. Almost like an apple mobile. I dont know. Well, what do you think . And costcutting seems to be the central part of their theme. Weve heard that a lot. Free cash flow is better because they meet their alreadylowered guidance for cash flow in the last quarter. I have one word for this upgrade is . Taser. Take a look at shares of marathon and this is a big mover in todays session. Todd bergeron and this after the stock missed 24 excuse me, 43 in the latest quarter. This morning jefferies saying this is positive because the board acknowledges there is a problem here in terms of execution and susquehanna is upgrading the stock that a positive. It is up by 25 and they said they will seek a techfocused ceo from the outside. Meanwhile, chairman mitch mcgan makes a comeback. Many people may remember lucent ceo rich mcginn from the greatest days that company ever saw. You know what this is . Eyes wide open . Raised eyebrows. I havent heard from rich mcginn in a long time. And also at at t, correct . Yeah, but lucent ceo when it was the most widely held stock, i believe, for a period of time in the 1990s and largest market cap. Theres a company that should have acquired into different businesses when it had the opportunity. Right. Before everything fell apart. I want to hear what finerman says. She had covered the short prior. Really . Shes got that, too. Yeah. She covered the short. Speak of departing ceos, the journal has a list of five tech ceos who should or may be on their way out after we lost mason at groupon and kennedy at pandora. They include pincus at zynga, ballmer, meg and michael dell, those are the five. Wow ballmer . Ballmer. How does that make you feel. He was your classmate. He was the Business Manager at the harvard crimson when i was president. Is that really going to step up and create change at the company . I just dont know. Hes been there for a very long time. Yes, he has been and all i can say in his defense and thats not been such a great sector the pc center. I still believe in skype and theres a lot of platform talk and ea. The facts are the facts. When it comes to michael dell is if, in fact, shareholders reject the leveraged buyout does michael go back to work or does he say see you . We dont know the answer. Sold it you, carl icahn. Not sold to anybody. I cant acquire the company. Do i still want to be ceo . And the mets . Wow the mets . You had it coming. Sorry. Oh, you are just nasty. Its on now. Its on. Yes, it is. It is on it is on with you your phillies are going to be great this year. Just great. Mike schmitt. Jeter is citing mike schmitt in the papers today. Schmitt, i remember he had three home runs and he struck out in the fourth and they booed him like he was the bum. He could not wait to get out of philadelphia and just moved to florida. Nice man, though. Lets get to bob pisani who is on the floor. Good morning, bob. Tax increases, its incredible. Were just talking about what the next leg of this particular rally is going to be. I was off yesterday, but my email was full of optimistic statements from the bulls saying bob, well go higher. The reason well go higher in the next few weeks is that some budget deal is going to be announced. A budget deal imminent . I dont know why anybody seems to think this, but you know what will happen here. General hope is the sequester will stay in place and some kind of deal will stay in place to fund the government for the rest of the year. We know what it will look like. We know about the idea changes and modest medicare savings and a few spending cuts and closing few loopholes and i dont see anybody thats moving in that direction. I see paul ryan and hell intries a bill that will have no tax increases in spending cuts and i see the president plan to introduce all kinds of budgets in april and i dont see any imminent deals so im puzzled why everyone seems to be optimistic that were going to get a deal and that will be why we have the next leg up in this particular rally. Excuse me for being a little bit pessimistic about that, but we have been up seven days in a row and were up today. I see gold stocks up. I see crude oil up, and i see the euro up a little bit. The important thing is its fairly rare to be up eight days in a row, but its even rarer to see the s p and the dow stretch beyond the 200moving average. They pointed out to me, a few weeks ago we were talking about this. When the s p gets 8 or 9 beyond the 200day moving average, in the past historically its had a hard time moving forward. You dont go far beyond the 2 hunday moving average. When this happened in the past it happened in march of last year and september of last year where we got 9 and more above the 200day moving average and the s p consolidated. It doesnt happen that often. Right now were 9 pertz boofr the 200day moving average and in the last seven day weise have again, skyrocketed past that 200day moving average. So, guys, the thing that i would do and i know a lot of people dont like technicals, but this is a pretty good particular nickal indicator. When we have too far ahead, weve had two months except in the month of february where were rallied and then we fluttered when they went up 2 and now weve taken off again for the last seven or eight treading days. Keep an eye on that and maybe well get a budget deal some time soon. Thats really high in terms of the moving average. I know were not technicians, but that is something that is alarming. Lets shift to the bonds in chicago at the cme group in chicago. Go, rick. Thanks, jim. We dont have a lot of proactive data like we did last week and that will start in earnest tomorrow with retail sales so there is the relinking with the equities and with all of the metrics and the fundamentals of the economy of Interest Rates and a bit lower rate. The twoyear chart really shows that. We didnt quite trade above yesterdays high yield. Were below yesterdays low yield and it looks like well be hovering back at that 2 yield with yields slightly lower and open it up to april and you can see what i mean. Yes, the rates are higher and the pace is certainly not a roller coaster. Lets switch gears and talk about the currencies. It blasted off this morning to some extent and really whats important here, 130 is just key and it will play at these levels quite a bit and lets continue at this theme of key levels and if we look at the pound versus the dollar, there is a key level there as well 150 except that you have to look up to see that key level and dollar yen, 96. We want to make sure we watch that carefully and many are looking for much more explosive dollar rallies and pound rallies, euro rallies against the yen and we want to monitor inflation data out of germany and their budget, unlike ours, boy, with record employment the revenues keep coming on in. Another reason yet euro might have popped just a bit. Jim cramer, back to you. Ive been marveling at germany, employment good. The governments stable. The budget good and its everything we want in the United States. Time now for a check on commodities and lets go to Sharon Epperson at the nymex. We are looking at commodities bouncing off the lows overnight. Brent, wti, definitely doing that as well and we talked about the opec report showing the nonopec supply, the forecast there, theyve raised that and their own demand for their own oil will be down in 2013. Keep in mind as we look at other commodities, metals are higher across the board. Gold, silver and copper all making gains, but natural gas was a gainer that actually reached a threemonth high earlier this morning. Cold Weather Forecast for the northern and central part of the country later this week and a good reason at why weir looking at natural gas that did hit a threemonth high after backing off a little bit saying money flows in the oversold territory is a big reason for that and take a look at what has happened overall to commodities year to date with the strength weve seen in equities. For a long time we see equities and commodities in tandem and a lot of Pension Funds listening to their oliveria pointing that out this morning to keep an eye on the commodities. Back to you guys. Sharon epperson and one that is representative in many ways of something that has been the fuel behind the rally that weve seen. I use to put other things in context. Via com announced theyll issue 550 million worth of debt. I understand that. 300 million, tenyear notes. What do they get . What do they pay . 3. 25 . This is not a a accredit. I mean, its fine. Aftertax, by the way, Interest Rates are tax deductible. Your actual cost of money here is incredibly low. 30yore money, yeah, 30year money is 30. 75 . Thats unbelievable and its the story of Corporate America and theable not just to repair Balance Sheets which went on in the last few years, but the ability now to go and say okay, well refinance, but well also buy back stock and thats what via com tells us whats going to use and using proceeds not just for indebtedness and also to repurchase shares. When your cost to capital is that low and you can pay a dividend, it can be accretive to cash flow. Yes. Yes. Y think we have a chart for you. You know records in terms of u. S. Corporations are buying back for their stocks and this pts it in some perspective and we continue to see this in the late innings and youre starting to see companies, lets hit it before we change a bit and it is one of the stories and one of the key stories driving continuing to drive this market. Not a big story for via comal though in media especially, weve seen enormous repurchase. News corp. May start up in a more serious way once the split takes place and whether its news corp. , via com, cbs, time warner. These are floors. These are big enough to put a floor under a stock. Yeah. Easy money. Jefferies, we mentioned slashes apple to one of the lowest price targets on the street. The analyst will join us to discuss his call and later on, deals and squeals. Meet a ceo of the company that partners directly with Movie Theaters to help them fill their empty seats. As we head to break, take a look at the early movers on wall street. [ male announcer ] this is betsy. Her long day of pick ups and drop offs begins with arthritis pain. And a choice. Take up to 6 tylenol in a day or just 2 aleve for all day relief. All aboard. Omnipotent of opportunity. You know how to mix business. With business. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above. And still pay the midsize price. I could get used to this. [ male announcer ] yes, you could business pro. Yes, you could. Go national. Go like a pro. Its lots of things. All waking up. Connecting to the global phenomenon we call the internet of everything. Its going to be amazing. And exciting. And maybe, most remarkably, not that far away. Were going to wake the world up. And watch, with eyes wide, as it gets to work. Cisco. Tomorrow starts here. Therell be the usual presentations on research. And development. Some new members of the team will be introduced. The chairman emeritus will distribute his usual wisdom. And you . Well, youre the chief life officer. You just need the right professional to help you take charge. I wanted to bring you exciting news about the squawk on the street colleagues gary cam insky. Hell be joining as vice chairman. Gary has brought us key insight and interviews including this comment from jeff dunlop on apple. Tell us what you think of that stock right now. I deeply believe that apple is headed to 425 a share not because im a bond guy or a stock guy, but because im a market guy. What a great call back in january. Gary will join us in the 11 00 a. M. Eastern hour with more on his new job. Hell be staying on as a cnbc contributor and well continue to see him here on squawk on the street although probably not as much as we would like. Hell be missed as a fulltimer. The vast number of people that come on our air. I started to talking to gary in 1987 and i got him on the other end of the phone and i thought i was at cowan and i thought i was talking to some 50yearold guy. Hey, what do you want . Im getting a blur. I am getting a blur. Sorry. Hes a great guy. Energy, smarts, he brings it all. Viewers saying theyll miss his nononsense approach to news. And he really say news hound even though hes a banker for most of his life. Whenever you get with Hedge Fund Guys and they say, look, kaminsky gets it. Kaminsky gets it because hes so tied in which is terrific and what you want. Theyre getting internal pushback over her hiring practice and meyer reviewing every candidate personally and a move that credits say is costing the company top engineering talent. What would you say in a Job Interview to win over marisa mayer. Well share your responses throughout the morning. Please hire me. Thats good. I dont know what i would say. When we come back, new moves in the skies, but coming up how frequent Flier Programs are changing and what it means for you, passengers who want to redeem their miles, but first coming up, how many stocks can you talk about and how fast can you do it . See if you can do it better than cramer. Six stocks in 60 seconds when squawk on the street returns. This is for real this time. Step seven point two one two. Verify and lock. Command is locked. Five seconds. Three, two, one. Standing by for capture. The most Innovative Software on the planet. Dragon is captured. Is connecting todays leading companies to places beyond it. Siemens. Answers. Recognize me. But i am your market data. I know what youre looking for. Im not chained to your desk anymore. Im faster and smarter now. And so much less expensive. I am your market data. And if i do say so myself, i have never looked better. Superderivatives introduces dgx. Data done differently. Simon is here to tell us whats coming up in a few minutes. We actually have a very interesting hour. Peter will be here from jefferies. He thinks the blackberry is a much better investment at the moment than apple and hell explain why. Well have the ceo of a soda company on the program who supports the bloomberg ban and get this, the ceo of Starwood Hotels and resorts will join us live from dubai. No expense spared today, carl in the second hour of squawk on the street. You better get on the road if youll make it there in time. Lets get six in 60. More downgrades today, jim. This is a crowd play. Thats a mistake and it got it going. Urban was amiss. No one seems to care. Anthropology, good housing play. Smithfield, this is a company in play and i find it hard to bring up the values, but people like it. Downgrade for pbh. Theyre upset about the warnaco, can they do it right . The answer is they can. Oppenheimer says google might miss. This is one we should have talked about. There are a lot of guys raising the price target to infinite. Heckman. This is the us filter guy and he made a fortune. This is going to change his name and i cannot wait to speak to them and this is the environmental waste anti they clean up fracing. I dont know why it is so necessary to clean it up, but the water that needs to be recycled, theyll be on tonight. Bestperforming name since the lows of march 09. Thank you for pointing that out. Isnt that something . I know simon has a thing about the hotels, and i would see him and raise him for Stephen Holmes buyback and dividend, plus a great guy as is fritz. Hey, i mentioned all of the downgrades today and i wonder if you think is that tempering enthusiasm which means the rally is more sustainable . You cant make people any madder on twitter than mentioning how bad theyre doing. Theyre very old school meaning we cant keep going up because theyre trapped in the mindset of the 2000s which have been terrible. A lot of these guys are saying look, were paying more and more for the earnings and theyre being rigorous and i keep going back to disney and what melissa said. You have these longterm bases that stocks are taking off from, so i think people will be paying more for stocks than they have and maybe thats okay because the multiples have not been that high throughout this period. Its turning out to be a very interesting year here, jim. Isnt it . Did you think . A lot of people are kind of shocked. They keep waiting. The sell in may crowd, theyre, like, when will we get to may already . Tomorrow retail sales, well see if the payroll tax affected spinning which it doesnt appear that it does. See you tonight, jim. Thank you. 6 00 and 11 00. When we come back, Russ Koestrich finds where he should put mono pep squawk on the street will be right back. announcer at scottrade, our clients trade and invest exactly how they want. 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. 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. Amelia. Neil and buzz for teaching us that you cant create the future. By clinging to the past. And with that youre history. Instead of looking behind. Delta is looking beyond. 80 thousand of us investing billions. In everything from the best experiences below. To the finest comforts above. Were not simply saluting history. Were making it. Lets get the lowdown for the next hour. The s p flirting quite seriously with the alltime intraday high of 376. The dow hitting the alltime high for the sixth day and how long can the resilience stick around. Apple gets yet another price target cut courtesy of jefferies taking it down to 420 a share. One of the lowest on the street. We have the analyst behind that call in a few minutes. Nice beat from costco, strong samestore sales and growing membership fees and is costco a bet bet among walmart. We are on the verge of a new golden age for Luxury Travel find out how when he joins us live, but first, we want to tell you about the key levels that we are watching on the s p 500, the s p alltime intraday high, 1576 and the alltime closing high, 1565 and were, of course, within striking distance of both of those records and well keeping an eye on both of those numbers. Today is the day that at t customers can stop putting their orders to put out blackberrys longawaited phone. Cnbcs john fort is live outside the at t store in san jose where at 7 00 in the morning, john, i imagine there are not huge cues. You dont have to remind me what time it is, simon. Im here in palo alto outside an at t store. At t can only hope that people will start loading up the website with preorders for the z10 blackberries. This one is extremely important to prove that that company can stick around in its current incarnation providing hardware and software and doing service also on the back end. This phone will sell for 199 with a twoyear contract, just like the iphone 5. Verizon and tmobile also expected to pick up the z10. They basically said they will, but at t is first out of the gate with preorders and theyll start selling them in these stores in about ten days and taking a look at market share and it has been a rough go for blackberry for quite a while now. Shipments were down 43 and blackberry market share dropped to 3. 2 from 8 a year earlier according to idc and android had 70 of the Global Market and the ios, the iphone, had 21 , but interestingly enough in the u. S. And particularly with at t, the iphone absolutely rules. Used iphones are being passed around and activated more than blackberries are, but i tell you, overall, iphone and android largely seem to have this margin locked up so black behr withy has its work cut out for it. For instance today there is a new app coming out called automatic that links your car to your smartphone and it is only coming out on ios and android and not even thinking about blackberry and its got to get back in the game. That said, john, there is subsidy and carrier support for the z10 coming through and its my secular moment from jefferies. Hes suggesting that at t may be paying blackberry 600 per phone in order to get it on the shelves. Why is that happening, in your view . Reporter that number might be a little high. I mean, thats just shy of what at t pays apple for an iphone so i would be surprised if theyre getting quite that price, maybe at the very high end. What at t would like as any company would like is to have a diversity of devices selling right now. The iphone is dominant in smartphones. At t is very happy to tout their iphone number, but theyd like to rely not so much on apple. All right. Well let you get breakfast. Outside an at t store at 7 00 in the morning. Hes not feeling the same love for apple and peter is lowering the price target to apple from 420 a share to 500. We should note that 4. 20 on apple is one of the price targets. Peter, always good to speak with you. Thanks for having me. You have a hold rating on the stock still, but why would you have a hold rating when you see the stock going lower from where it closed yesterday over the next 12 months . Simply because our hold ratings are within a 10 to 15 range and were trying to indicate to folks that we see Downside Risk here. Additionally, if it wasnt for the capital return, we think it would go lower and we wanted to reflect that with the target and estimate cuts. There is one line in your note, peter that is getting a lot of buzz on the street and youre making a comparison that you may or may not be making to black berry is it can turn on a dime when it comes to the handset market and it can turn very quickly and sharply and negatively. What do you mean by that, specifically . We dont think apple has the right phone for the market right now. The high end of the market is four and a half to 5. 5 inch, and i dont think theyll have a product in that market until the middle of next year. Its in no way relation to the blackberry other than we saw what happened to blackberry and we saw what happened to nokia and the motorola razor, and its anecdotal right now, but 15 to 25yearolds are buying samsungs and the galaxy s series. Which we should note has doubled in value over the last six months so if you keep your eye on these things you can make serious money. The target that you have is 19. 50. Thats almost 30 upside. On blackberry, you believe from where we are now. Why, in your view, does it pay americans to try and see blackberry through the eyes of the rest of the world . Well, a couple of things here. There are calls actually not based on the new z10. Its based on the software and sers business so if blackberry were to shut down the handset business tomorrow theyd be making 2 per share. The handset business is losing money and how theyre doing is theyre now managing iphones and managing iphones and the one that we think the market is missing is that at t said their Enterprise Sales force which is tens of thousands of people is going to be selling blackberry, Enterprise Service 10 to manage iphones and devices for their corporate customers. We think thats a really big deal and we think thats where the future cash flow and lenovo and other manufacturers buys their handset business. Do you think we saw that action in the stock yesterday and the huge spike. Do you think thats realistic . If you buy the handset business theres no regulatory or government issues and the reason is blackberry would still be operating a software and theyd still be operating a service and the Government Data that flows over the network would still be run boy an american and Canadian Company . In your view, its probable. Meaning, its realist being and then it is probable. We think its probable that they exited handset business within the next 12 months. Can i ask you why youre ignoring the z10 launch where they had a strong showing in the uk. It could move the needle in a shorter term and say its a massive success and they get 5 to 7 market share which would be almost a doubling. It still makes the handset business worth only 2 to 4 a share. The cash flow and competition is just so fierce and the labels are so det imental to margins in the market. We just have a hard time seeing how theyll make money, at least a lot of money. We dont deny that this has been a very successful device. Sold out in the east and sold out in asia and doing very well in europe. Surprising a lot of critics and we dont expect the same response in the u. S. And overall, a better than expected launch and the cash flows are not as big as they are for the corporate side. One last question. I know youre a fundamental analyst, but the sentiment has blade a large role in how apple has traded recently. Apple is down by only a half a percent. On the way up we had all of these analysts come out and not even acknowledging the fact that there could be competition on the horizon and raising the price target, and now weve got all of these analysts including yourself on the way down lowering the price target. Do you think perhaps that its sort of turned the corner where it is taking in bad news and not really react too significantly to it and thats a good sign for the stock. Thats a great point. Weve spoken to 50 Institutional Investors today and thats the consensus view that a lot of this bad news is baked in. We missed the issues it would cost and we would argue that we were the first to take the price target down and we still dont feel great about it and we should have told people to sell in september. The good news is we think were saving people money now and we think the consensus view that all of the bad news is baked in isnt reality and the reason is if apple were to miss the march guide and we dont think there is a huge probability of it, but there is a chance, there is a really strong chance they missed the june numbers, if i told you they would miss by 30 to 40 their june numbers, i would argue that Retail Investors would head for the hills. Peter, well leave it there. Thanks for your time. Thank you. Peter misek of jefferies. When we come back, mayor bloombergs controversial soda ban getting struck down the day before it was to take effect in new york city as bloomberg vows to appeal while movie restaurants and restaurants are up in arms over the ban. One soda company is looking to make money from the prohibition and well hear from them next. Next, from connecticut to dubai. How far would you have to prove your business is global. His team starts week two of the monthlong relocation to the middle east. Work. 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. 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. Punch burger came out with a new 128ounce option. Most people call it a gallon, but they call it the regular. Then there is a horrifying 512ounce version that they call child size. How is this a childsize soda . Well, its roughly the size of a 2yearold child if the child were liquefieliquefied. Its a real bargain at 1. 59. That was quite the fitting clip from this weeks parks and recreation. A judge has blocked mayor bloombergs controversial ban on large, sugary drinks that was due to take effect this morning. Cnbcs jackie deangeles is live on the street. What are people saying, jackie . Reporter good morning, simon. Rest assured you can still get your supersized coffee and put as much sugar as you want in it. Its interesting in terms of the reaction that were seeing from the New York State Supreme Court judge invalidating the ban on soda. There are many businesses and many people on the street this morning that are very happy about it. Think its ridiculous. People are just going to spend more money on buying two or three. I think its a slap in the face, really. I think if people want to drink sugary beverages that are larger than that size they should have the freedom to do so. Its not just the consumers and its also the businesses, as well. Theyre implementing the changes and theyve started doing it already and they said it is onerous and the ban would impact the bottom line and theyre concerned that sales would be going elsewhere potentially and the judge called this regulation arbitrary and capricious after the 61 billion soda industry teamed up with business groups and challenged the law. One of the factors that the judge considered was the idea that this kind of a ban would impact restaurants, fast food chains, theaters and delis and at the same time it wouldnt impact convenience stores, drugstores and thats why were standing in this location. We have one that would be impact next to a 7eleven that wouldnt. Mayor bloomberg digging in his heels and he is not ashamed of the reputation the state is getting as a nanny state and hes saying the state would repeal this as soon as possible. They have the mayor dressed up as mary poppins just to get the point across. The mayor was on last night defending the soda ban. I think it is incumbent on government to tell people what theyre doing to themselves and let them make the decisions and the ban on bigger cup sizes was a ways to remind you if you wanted 32 ounces and youd have to take two cups whereas you would only have one and people have the right to make products and people have the right to buy them. I dont know which comes first. Zevia is an allnatural soda company that uses stevia instead of sugar. Good morning to you. Good morning. Why would you be in favor of this ban . I think regardless of what we think about the ban, we can all agree it was wellintentioned. The mayor was starting a dialogue about Healthy Options and what we find as consumers looking for healthier options, the obstacles are availability anding ones. Weve come part of the way toward a solution. The wellintentioned part, i think most people understand. The way the mayor did it by trying to circumvent the city countsil and going straight to the board of health that he appoints is one big issue that the judge had a problem with. Does that make sense to you . Absolutely. I think there is a legitimate argument that the process was faulty, but at the end of the day government always makes choices on behalf of consumers and in many cases those are choices to point us toward healthier options that makes sense. If i go to a baseball game i cant buy a mixed drink with 151 rum and i cant drink after the seventh inning and while that may be restricting my personal freedom, its wellintentioned and serves a Public Health need. Does your company stand to gain if there were a ban in place . I think to the extent that consumers are aware that there are healthier options and alternatives to sugary sodas, certainly that benefits us. I spent the last 20 years promoting Healthy Products and alternatives to less healthy mainstream products that exist in our country. Why would you why would you promote and launch a soda brand at the moment where water Water Bottles are the main growth area in america at the moment. Isnt that more interesting from a profit standpoint . I think thats a great question. Soda, frankly, is a category thats in crisis, not just from a Public Health perspective and from a business perspective, as well. 90 of the households buy soda. We saw a real opportunity in that consumers of the soda brands were searching for an alternative and we provide familiar flavors and the only difference is we used a sweetener that people are trying to avoid. The performance of soda stocks sends it is board of health past that ban. Coke up 17 and pepsi up 17 . Coke, actually is up about 5 . I just wonder if you think if the judge had approved this, would it be material to the sector at large . Clearly, it would have been material to you, right . Well, i think what were seeing with the big Soda Companies they have an amazing business and they have an amazing global business, and if you look at the areas of growth within their businesses its emerging markets. Its markets where the consumer hasnt decided that theyll avoid the ingredients in conventional soda. In u. S. Global impact on these huge brand, but it certainly has a local impact and what were seeing is our company has doubled in the last three years because people are looking for an alternative in the u. S. And other developed countries. People who have tasted soda here havent tasted soda in mexico where its like drinking pure sugar. Thank you. Thank you for having me. After the break, what city in the middle east could be the next frontier for Starwood Hotels . Find out when starwood ceo joins us live from half way around the world and. How do you rack up the frequent flier miles in 2013 . One airline is making major changes to the frequent Flier Program which could make it tougher to achieve certain status level. Well have that after this. E. 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 . To prove to you that aleve is the better choice for him, hes agreed to give it up. Thats today . [ male announcer ] well be with him all day as he goes back to taking tylenol. I was okay, but after lunch my knee started to hurt again. And now ive got to take more pills. Yup. Another pill stop. Can i get my aleve back yet . For my pain, i want my aleve. [ male announcer ] look for the easyopen red arthritis cap. 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. Frequent flyer miles may be the next frontier for airlines looking to bring more money and more profits out of fewer seats in the sky. Phil lebeau joins us with more. The rules are getting tighter, phil. They are getting tighter, simon and it is the new frontier. This is where the airlines are trying to make sure theyre not give away seats if they dont have to. That means fewer frequent flier seats are available and it comes down to the fact that theyve stripped out so much capacity that the frequent Flier Programs have become more restricted and it means there are fewer award seats that will be awarded by the airlines. You add in the fact that you have mergers and partnerships increasing the number of frequent flyers in a particular program it means those programs have to become more slackive about what it takes to achieve certain levels of status. Delta is a perfect example. Heres the way it is currently and its based on how many miles you fly. 25,000, 50,000, et cetera and you attain a certain level of status. While starting in 2014, not only will you have to fly that many miles, its also going to be looking at how much youre actually spending and the net ticket price, by the way. Not the final price, but the net ticket price which is much smaller. How much of that depends on whether or not you get certain levels of status . Bottom line, the rules will be changing in this industry. No matter where you are in the sky has been a frequent flier and gone will be the days when youre measured by how many miles you fly. Hello to the days oneyear measured by how much money you spend. Thats already the change were seeing with southwest airlines. It is one of the first mainstream carriers, if you will, to make this change and delta expecting the others to follow and look at the move weve seen in southwest air, guys. This is what were seeing for all of the airlines and this is a reflection of the fact that theyre now running these businesses to make a profit and for a long time, people were saying theyre not making the profit and not running the airline the right way and now they are and part of that is making sure theyre more selective about giving up those award seats. All of the Loyalty Programs and even the hotels thank you for that. The latest on airlines. Starwood hotels announcing it signed up 50 new hotels to bear brand names which will run for independent owners across the middle east and africa. Frits Van Paasschen joins us for an exclusive brew from dubai where theyve relocated their headquarters from connecticut. Good evening to you. Thank you for being on cnbc. What brands in the starwood brand of the new hotels will bear . What numbers is it . The biggest brand in our pipeline both in the middle east and africa and frankly, everywhere around the world is sheraton followed by four points by sheraton. The other thing people dont realize is the w, st. Regis and the collection have doubled their footprint around the world and theyre set to grow another 50 in the next five years. It must be quite costly to relocate 200 executives from stanford to dubai for a monthlong immersion which is what youre doing. Is that because its important to appear locally to be ingrained with whats going on . To understand middle east hotels in order for you to run them for local operations . Thats exactly right. So getting closer to the market, whether its here or whether its what we did in china two years ago by moving the headquarters there. Getting close to the market and listening to hotel owners and listening to operators to make sure they can market bet abouter and, some of the highest satisfaction score is here in the middle east. We want to learn from our operators here and take those earnings around the rest of the company. Frits, i know before you went to dubai for this immersion you were at the Hotel Investment conference in berlin and you were aware that at that conference there was stinging criticism of the value of hotel brands at the moment, specifically a major hotel owner questioned in a world in which people book through Online Travel agencies whether you can drive revenues and again, he questioned whether the Big Hotel Brands are really good in practiced at running the holts that they do. How do you respond to that criticism . Well, there are a few things. Last year we seened their 121 agreements and most are owners of hotels that we already have. When we take a hotel in the system because there were no reservation system, and because of the revenue managementment ises. We see increase of 10 , 20 in revenue for those hotels. Were a great bargain for hotel owners. Frits, we were talking about the changes being made to airline Loyalty Programs. Usa today has an article about the hotel industry. It says less value for money and certainly for people by way of marriott and hilton. They say that when it comes to the part cash, part points mix, its actually getting more expensive. A category 4 hotel, for instance, will now cost 5,000 points and 75 in cash up from 4,000 points and 60. Are you giving your customers a worse deal on their Loyalty Program . Well, i believe people vote with their feet and with their decisions and what were seeing each year is an increase in the Loyalty Program penetration. Right now over half of the beds that we fill on any given night on any given property are through our Loyalty Program. The other thing is our Loyalty Program isnt just about free stays which by the way, you do at more luxurious destinations than any other Loyalty Program. Its about knowing which of our guests just need an extra special way because their business is so vol able to us. The top two of the u. S. Is the profitability of the system. We know who these people are and its Good Business for us. There were three more weeks left for the immersion in dubai. Do you get loyalty points for staying there and where does the ceo of starwood go on holiday and spend his loyalty points . Well, i have a few hotels to stay in in our system that i stay both for business and on vacation. I dont get point, but im a loyal starwood customer, nonetheless. I have to tell you whats great about a stay like this is staying in our properties for a few weeks and really getting to know the teams there, what theyre thinking about and what theyre up against. We have hotels here that have 40, 50 nationalities resident in one property and they offer in a trick way as a team and its hard part of our brand. Its an interesting gesture. Frits Van Paasschen there, the president and ceo of Starwood Hotels live and exclusive from dubai. One company on the move this hour. Lets send it back to headquarter and bertha coombs. Merck says the safety board has cleared its trial of vytorin to continue. This lifts the cloud on whether the drug is safe. Effectiveness is still in question. The improvement drill, it works better than zocor alone in reducing the chance of stroke and heart attacks. Meantime, merck today is the best performer in the dow, carl, and its adding 12 points to the upside and thats whats bringing us to a new high. Bertha, for that. Were awaiting paul ryan in his Budget Proposal. Dont go away. Come on, nowadays lots of people go by themselves. No they dont. Hey son. Have fun tonight. Back against the wall aint nothin to me aint nothin to me [ crowd murmurs ] hey [ howls ] i want to take you to paul ryan addressing the nation on his new Budget Proposal. Lets listen in. Historically, weve paid less than onefifth of our income to the federal government, but the government says we spent a lot more. We match revenues with expenditures owe sour budget matches the spending with our income just like every family and business must do throughout america. In fact, we bring our deficits down right away. This shows you how our deficit path goes down precipitously to begin with to the point where we end up with a surplus in 2023. In the 1990s, democratic president worked with a republican in congress to balance the budget. This is a goal that both parties been able to achieve consensus on,a chiefing in the past. We think its something that we ought to do again. Number three, this is the picture that should scare everybody. This is the picture that shows you the path we are on today. We know without a shred of doubt, we are con signing the next generation to an inferior standard of living. We know just like in europe we are facing a debt crisis in this country and the debt crisis hurts everybody, but the people who the debt crisis hurts the most are the poor, the elderly, the people who need government the worst and theyre the ones who get hurt the most. So what were doing you have the red line shows you the path that this country is on right now. The green line shows you, the Debt Reduction that you have when you pay off our debts and we give our children a debtfree nation and with one of the we and means. Please know that by balancing the budget woe grow the economy. By including progrowth reforms like tax reform were making it easier for plans to invest in jobs and to be competitive. We want more job, higher wages and families getting out of poverty into the middle class and thats one of the cornerstone policies we have here is tax reform and let me turn it over to diane black to explain what were doing. Paul ryan unveiling his Budget Proposal for the gop and indeed, addressing the nation. It would cut the deficit by 5 trillion through changes of retitlements and appeal for obama. Lets bring in ceo john harwood. Democrats would say, isnt this exactly what you proposed going into the election and ufrp the gops Vice President ial nominee and you lost the election and still youre talking about changing it for those 54 and you understand. It wont fly. Its not going to happen and its pointless in many senses. Its not going fly, but that doesnt necessarily mean its pointless. This is a manifesto by house republicans. Yes, we won the president ial election and we lost the majority. They have the republican blueprint for what to do about the budget for ten years. The cheer an will lay out hers tomorrow, and it will have tax increases, but this been in not, the democratic budget is not likely to become law and neither is the republican budget, but there is a i possibility as long as we will get outreach to come out of the res is. I dont know yet. Weve been disappointed in the past. To reiterate the main points of paul ryans tenyear budget cuts over ten years. It preserves the obama tax increases and thats critical to his succeeding on his pledge to exlimb na exlimb nate the deficit and it limits voucher program, but only for people under 55 years old right now and it converts medicaid that would save 700 billion, and that has the potential, at least especially if you listen to democrat des of reducing benefits not only to the poor and middle class elderly for whom medicare pays nursing home benefits and thats an Important Program under medica medicaid. Again, beginning of a process and not the end of it, that we will get something out of it, but were not sure yet. Not with the voucher proposal. No. Obama care will not be repealed, but its possible that should changes to made carry will watch the is are is thes until she gets better. Some people just bring in harry clark. Great to speak with you. Thank you, melissa. That sounds overly bullish almost. Can you give us more Details Behind that reasoning . The reason is the fed is flooding the markets with money and it has no place to go and the economy cant sop it up and it will go into speculation. You never fight the fed or the tape. Theyre doing their job right now to push the market higher. That does not mean well have corrections along the way. We have a target this year of 1625 in the s p which is a 14 gain for the year. Its a nice gain for the first president ial election year. We have a top of 1700 in midsummer and then declined to 1625. For now, weve had a good dwns from november to now, it is anying to an end issue the left couple of and proby well haves a small driver and a couple of more weeks before it resumes again. If we get an italy or european situation or iran or korea, it may push it down to 1450, but i doubt it. There are excellent buying opportunities there. Harry, ive got to ask you because a lot of investors have been sitting on the side lines and theyve largely missed this rally and im not just talking about Retail Investors and also institutions and hedge funds may have missed this rally. And you are convinced that we are going to have a correction. What do you make of this theory, this tactic that you can wait for a correction, wait for this pullback to happen because people have been waiting and waiting and waiting and every day theres a record high. You know, most of the markets are almost 48 months out even to this day every 48 months and were about five months from now. So we have had correction along the way every five months. So if you wait for a correction is proven youve been right so far in this entire bull market, all 48 months of it. I would wait, if you have a lot of money you can miss some. Buy partial positions and wait for the troeft ask watch situations for the mark, because you will have a correction. No down about it . The for the mole, can move on a years time. Are people okay in bonds for the ti time being . I think the bull market is over, and it ended in the tenyear treasury. Thats a big rise or big drop in prices on the tenyear treasury. People in longterm bond funds have got to be careful. If rates go up, the bond fund will drop and drop a lot so youve got to be careful to keep your duration short. I guess, watch what you own. I would not go buying bonds here except for possibly a high yield where you get some return for your money and high els have done well and things have dropped and theyre a stock in a Bond Clothing and when the market looks good, high yields look good so were a proponent of highyield bonds if youre going to be in bonds at all. Harry, well leave it there. Good to see you. Harry clark upon clark capital. Deborah wines wing takes her fake on costco. With gas prices heading lower, it is the retail as a hoe will be buying in the spring. Back in a few minutes. Today is gonna be an important day for us. You ready . We wanna be our brothers keeper. Whats number two we wanna do . Bring it up to 90 decatherms. How bout ya, joe . Lets go ahead and bring it online. Attention on site, attention on site. Now starting unit nine. Some of the worlds cleanest gas turbines are now powering some of americas biggest cities. Siemens. Answers. Anbe a name and not a number . Tor scottrade. Ron im never alone with scottrade. I can always call or stop by my local office. Theyre nearby and ready to help. So when i have questions, i can talk to someone who knows exactly how i trade. Because i dont trade like everybody. I trade like me. Thats why im with scottrade. Announcer scottrade proud to be ranked best overall client experience. I want to bring you back to retail here. Costco profits up 39 in the quarter helped by increasing sales and membership fees. Samestore sales were up 5 and deborah has a neutral rating on the stock with a price target of 100. Deb, welcome back. Good to talk to you. Thank so much. Steady as she goes, it looks leak. These fees, i mean, its not the most exciting story in the world, but it is stable, right . Absolutely. What were starting to see here is the company is starting to break out in terms of not only membership fee and club growth outside of the United States which is a higher margin for them. How impressed are you by the fact that there doesnt seem to have been any erosion after the last fee increase . I mean, not only is that impressive, but they continue to see very strong traffic and also very strong ticket, and, you know, as you mentioned, you know, gas prices going lower that will continue to help them in terms i mean, they really are a retailer for every kind of environment which has worked so well for them. Youre looking for some hair on the quarter. Gross margin was a little bit below your estimate. Inventory is up here. 9 year over year. Areas of concern or not . I mean, you always like to see them expand growth margins. The majority of what they sell are consumables, you know. What Everyone Wants to hear is that new club number is intact. If you think about it a year ago they basically opened and almost half of what theyre committing to for this year. So that is probably the most important number that we want to hear confirmed on this call is the new clubs number is going get done. If we hear that, that is key and were starting to open more new clubs in the u. S. This which is proving a much higher number for them and theyre really on track to deliver higher numbers Going Forward because of their new growth domestically and internationally, theyre knocking the cover off the ball for that. Deborah, what sort of extrap leggs can one make from costcos results to other retailers. Were still continuing to see strong traffic despite the fact that they are doing more online and i think that thats very critical because theres been the big fear factor over amazon. Com, and i think that that has been very nail biting for everyone with the factor, so i think thats number one. Gas prices were higher in the quarter . So they have started to pull back, but, you know, were obviously still seeing slow traffic despite that. Thirdly, there is the delay in the tax refunds and that didnt seem to hurt them that much so i think that was the third positive collapse in the quarter. Finally, deb, a quick question on jcp. More rumors today,a parentally unfounded about ron johnsons demise, and do you believe it and stocks popping on those rumors, would his departure do something material for the companys future in the stock . I mean, i actually think that its critical. Hes the one who put in place the current strategy and so, you know, do you need maybe a stronger vice chairman or maybe somebody else at the top . I do think that the strategy and the everyday fair price strategy, i think those are good strategies. So do you need someone else maybe there to, you know, obviously so much that theyre changing. Do you need someone else there at the top . I really do think that ron has a very strong vision and i do think that its really different from anything that weve ever seen in retail, that weve ever seen in retail. But i think to make any changes at this point in the game, you know, to that vision, you know, you might need a third hand for him. But i do think its critical to keep him at the top at this point in the game. By the way, cnbc has reached out to the company, and they have denied any of the rumors that are circulating around about his departure. High frequency trading . Rick santelli will talk about that. He has new surprising data on new frequency data. Thanks next in the program. And Gary Kaminsky. He has brought us many key insights and interviews. One clim that stood out to us is powerful coverage of hurricane sandy. The take a listen. Reporter this is not afghanistan or iraq. This is the village of old westbury, one of the wealthiest neighborhoods in the entire United States. These wires have been down on the ground for two weeks. Residents have been waiting for this day for the utility crews to come and repower and reenergize the neighborhood. And Gary Kaminsky will join us in the next hour with more on his new venture. [ 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 . Welcome back to squawk on the street today is tuesday. Todays rendition of santelli exchange. A Research Paper was brought to my attention, and i found it fascinating. It was about High Frequency trading. Im going to start at the beginning. The flash crash was in may of 2010. And at that point many really didnt understand High Frequency trading. Harvards adam scott joseph embarked on writing a paper about exploratory trading. And his definition is a form of manipulation designed to test the markets reaction to a trade. Kind of like sonar. Checking things out. Today another entity out of illinois here, they synthesized what was in the paper, and the conclusions they have drawn are very fascinating. Exploratory trading. Do you think that hft generically adds or removes liquidity . And i caution, this is just one Research Paper, but its a good one. According to this, the answer would be that it removes liquidity. And remember, the whole thing with hft, one of their big pluses, according to me, is it promotes liquidity, narrows spreads and lowers trading costs. And according to this paper and the way it was synthesized, none of that appeared to be true. They took a day in 2010 after the flash crash and studied the data with harvards complicated algorit ggorithm algorithms. And they took the top 30 hike frequency trading entities, identified them, and said they participated in just under 40 of the volume. And in total, this group has been making roughly in the time in 2010 they studied, making 1. 5 million per day. And out of this they took a subset. They took the top eight of the 30 and said that they participated in just shy of 60 of the volume. They made about 794,000 per day. But the issue is, according to the study, by this exploratory sonar. Testing where exactly a trade would make a difference and it creates a trade reaction. According to this paper it makes things happen at sub volume out, versus putting volume in. I urge everybody to read this paper, either the synthesized version of the complete version that has a link in the study that was put out today. We really need to get to the bottom of hft. Thanks so much, rick. Well talk to you soon. Got some breaking news here on hacking. The u. S. Secret service is confirming to me its investigating an apparent hacking attack against first Lady Michelle obama. It is investigating but they will not confirm any further details on this, including whether or not the information that is posted now apparently on a russian website is actually Michelle Obamas accurate information. But i looked at the site, and i can tell you what is up there reports to be bank statements, credit card statements, more began information, student loan record for the first lady, all of which contains identifying personal information, including a Social Security number, previous phone numbers, and other information for the first lady. Also involved in the hacking attack were a range of government officials including joe biden, attorney general eric holder. Fbi director Robert Mueller and secretary of state hillary clinton. With those officials as well, we cannot confirm whether or not this information is accurate. But the secret service says it is investigating. The fbi also tells me they are aware of the website in question. Ill take it. Thank you very much. We will get an Investment Strategy straight ahead. The American Dream is of a better future, a confident retirement. Those dreams have taken a beating lately. But no way were going to let them die. Ameriprise advisors can help keep your dreams alive like they helped millions of others. By listening. Planning. Working one on one. Thats what Ameriprise Financial does. And thats what they can do with you. Thats how ameriprise puts more within reach. Im up next, but now im singing the heartburn blues. Hold on, prilosec isnt for fast relief. Cue up alkaseltzer. It stops heartburn fast. Oh what a relief it is all right. S p is negative. Whats going on . Frederick tomczyk will join us. We are naming stocks. If you missed out and want to know how hedge funds are playing, anthony will join us to name sectors and stock funds right now. And hes never shy. Thats right. See you tonight. Heres what you missed if youre just tuning in. Welcome to hour three of squawk on the street. Heres whats happening so far. Were going to present a budget today. Im prude to do so with chairman ryan and other members of the Budget Committee that will ambulance in the tenyear period of time. Thats something to celebrate. We also need to deal with the other priorities weve got. Investment in our kids in the future and meeting with our seniors. Because they take such a lopsided approach here, they dont do that. I just come coming back to the facts that the individual companies dont add up to exhaustion. They print their numbers really, really early. We get up early. Its like, wow. Thats better than i i thought. Im sure this time tomorrow were going to hear initial sales are bad. Day one. Hour one. Unless theyre lined up around the block, as they will be for samsung. Samsung is now the king. Samsung. We dont think apple has the right phone for the high end of the market right now. We think the high end is 4. 5 to 5. 5 inch screen devices. Apple is losing significant share in that market. As it state your names out now some of the highest Guest Satisfaction scores askrosz the system are in the middle east. We want to learn for our operators here and take those earnings around the rest of the company. Good tuesday morning. We are live here post night of the New York Stock Exchange. Lets check on the the markets. The dow hitting an all time high again. Thats six in a row. Were waiting to see if it closes higher. Thats eight straight sessions up. Weve not had that long a streak since february of 2011. Cabela is striking 10 higher. They are projecting samestore sales to increase in the high teens percentage. Lets get a road map. The market setting records once again. The dow with a time high. And what he sees in the markets for the coming weeks and how we should play the rally now. Then the blackberry z10 available on preorders today. Does it have enough cool factor to compete with the iphones of the world . And the price line for movie tickets. At a discount of 60 to 70 . Well find out how the Company Plans to make money and expand when the ceo joins us live. First up, at t announcing preorders for the blackberry 10 start today and will be ready for purchase and in Retail Stores online on march 22nd. John, good morning to you. Good morning. I know you remember this. You were with me at the z10 launch back in january in new york. An important day for at t and preorders start today. Its important for blackberry. If its going to survive in the current incarnation as a company that does the hardware, the software and the services on the back end, it really needs this device on the q10, which is coming in another few weeks, to be successful. This is going to be 19 on sale in ten days. Verizon and tmobile also expected to carry this device. Sprint will be supporting blackberry device but not the z10 specifically. We are right now in a post smart phone era. Not that smart phones are not important. Blackberry market share dropped to 3. 4 from 8 in 2011 just a year earlier. Thats a big drop for the android. They really have a hold on the market. The eco systems make it tougher to peel way. The next appears to be devices that connect to phones. And the link is a little device that plugs into your car, communicates with your smart phone. It tells you when you brake hard. When you accelerate. What kind of mileage youre getting. They are backed by other big names in the valley and this sort of device and service, the new thing cropping up. Not so much just in smart phones anymore. Its the stuff being build on top of them. Carl . Finally some of the concerns involve the number of apps that are available or at least custom built for the 10. And enterprise. All the Big Companies around the world want to go for it. Are those legitimate concerns, as far as you are concerned . Those are really legitimate. On the app side blackberry has worked hard to make it easier to get android apps to the blackberry platform. Thats simple. Theyre still behind on the enterprise side. The Service Revenue isnt going to be there finish blackberry 10. Well see how the orders shape up. John joining us from an at t store. Bringing it back to the markets. The dow is trying to stay positive here. Want to bring in Russ Koestrich. Well talk about whether or not the rally can be sustained. Welcome back. Sfwh thank you for having me. You say some of these indicators are starting to flash yellow, though, right . I think the concern right now are not the fundamentals. The fundamentals are sound. The concern is that the advance is moving faster than the economy is improving, and a lot of that shows up in the form of multiple expansion. Stocks are still cheap, but the evaluations are climbing. Volatility is very low. Thats a bit of a warning sign. So i think though equities can move higher, investors want to think about the portion where is the pricing is not so aggressive. Yeah, youre point is to look at the mega caps and not so much the small caps. You say it may become time to take money off the table. I would be looking to reallocate a bit here. Small cap benefitted from a few things. Principally small caps do very well when the policy the the most accommodating. If we get into a point in the back half of the year where the fed is closer to taking their foot of the accelerator, who benefits . Who gets hurt . Small caps are more vulnerable because theyre much more expensive in the large and megacap sections of the market. You do say though that the jobs report did confirm the rally as we know it right now. You say a lot of money on the sidelines is still coming out. Not from bonds but from money market funds. Yes. Do you get the sense that people are going to start the chase as they put the money to work . Its possible. Particularly when you didnt get the headlines. Again, this can keep the market going higher because there is a lot of dry pattern out there. I think the concern is less again about evaluations. Its more about what reaction do we get further into the spring . You start to get evidence of how the sequester is affecting the economy. Thats probably the next speed bump for the market as we get into april and may time frame. Which coincides which is seasonably a good couple of months and then followed by a sag in the middle of the year. I wonder if you think the seasonality trends will hold up as they usually do . Im a little more skeptical of the seasonal trends. Some of them do hold up. The strength in january. The weakness in december. So my basic view is i wouldnt worry much about the basic landscape. Ty data is strong, but not too strong. If that changes either because the economy weakens or we see further improvement, which suggests accommodation, that is when the market starts to run into that headwind. Yeah. I dont know about you, russ. In terms of sentiment, theres no better way to irritate people than to show them how well the market has done this queer. Whether or not they missed it, i dont know. Its not a great rally. Its been a stelth rally. Not a bunch of 200 or 300 point days on the move. We woke up and suddenly the dow is up a percent. It took everybody by surprise. Rusz, always good to talk to you. Well see you soon. We have news about the airline this is morning. The d. O. T. Releasing the Airline Travel Consumer Report for march. This is all the lost luggage data, flight delays. A few of those have been working through that for the details. The numbers are for the month of january. And what were seeing is generally speaking you saw both relatively mild weather. The airlines did a good job overall. You look at the the highest on time arrival rates. Look at Virgin America. The poorest performing airlines in terms of on time arrival performance is frontier, american eagle. By the way, the industry average 81 of the time having a plane arrive on team. There were two flights that were conically delayed or on the tarmac for more than three hours. When it comes to handling baggage, the dot says the industry mishandled 3. 401 bags. Thats a bit higher than recent months. We talked about Virgin America having the best on time arrival rate for the month of january. Virgin america had just one canceled flight for the entire month of january. Thats pretty remarkable. People love Virgin America. I got to tell you that. A lot of positive Consumer Sentiment around it. Is it fair to compare the ontime stuff . Well, for the overall rates its not going to this be a huge impact on the overall rate. For that airline, you may say listen, frontier is in denver. They got whacked hard last month. Therefore they may be down. You want to see how it averages over the course of the year. Hawaiian is always there along with air tran. They tend to be near the top. Very nice. Phil, thanks for that. Talk to you in a bit. You bet. When we come back, is the z10 just what blackberry needs to turn things around . First, though, Gary Kaminskys final Capital Market oped. Well find out what advice he is giving you today that the clients will pay good money for in a few days. Were back after a quick break. Morgan stanley is making executive changes. The firm is adding our own Gary Kaminsky as vice chair of Wealth Management starting next month. Gary usually joins us in this hour for his Capital Markets oped. Today he is joining us for an exit interview. Its great to have you. Congratulatio congratulations. Thank you very much. Why now . You sit with me and watch the pms and the Wealth Management executives and when we go off the camera, when were not on camera, you know, i miss the ability to really speak to these guys about what theyre doing with their clients. I miss the interaction in terms of working with investment ideas. Its been an amazing times. Ive been involved with cnbc for 20 years now. And it just felt like this was the time, the opportunity that i had. What was also happening at Morgan Stanley made me excited about rejoining the atmosphere again. The vision that james has laid out publicly in terms of Wealth Management and the overall firm is something i found extremely attractive right now. And again its about people at cnbc. And youre lucky in life when you can work with people that you want to. You have people you want to thank. I do. In addition to the whole staff, everybody back there, you, the rest of the team. A shoutout to a couple of people. Do not play the music back there. I just want to shout out to max and marry and todd and ben and lisa, brenda, sally, maria, joanna. Katie k. Lacey, and definitely that secret trainer who gave us great calls. That reminds me. His name is larry. I made a list of all the things brought to your attention. Utilities during sandy. Mcclellan on apple. Painting the tape in general. Not to mention the photos of you fishing. Owe really brought a sense of passion to the show that were going to miss. Im still going to be a contributor to cnbc. You and i will continue to speak. When i have something important to let you know, you know i will let you know. And you bring up the apple thing. Its important in terms of investing. Youll always hear one directional things. I was most pleased with the fact that at a time when everybody was coming on air, very positive on apple, we were not trying to say we had the answers. But it was so important to give people another opinion. And we did that with Tom Mcclellan and jeffrey. And im happy that were able to do that. Thats what good investing is. I would not be in the new role if it wasnt for one of my great mentors. Thank you very much. Zbr and we couldnt say goodbye without its not goodbye. But without one man. And there he is. Here i am. Waiting around for you. Its a cake. It says good luck, bro. Anybody who knows gary is bro. Good luck, bro. We really do like each other. We really do. This goes back a long way. A very long way. It was jro when we started the talk. Gary was a very early portfolio manager. There was no internet. There was no twitter. There was no facebook. The only letters out there was the wall street letter. And you had to get it in the mail. So you would basically wait every week to open your mail and get the wall street letter. Thats how information ha we are able to bring realtime here is disseminating. Its amazing. I cant wait to hear what bob has to say. But theres plenty of Financial Advisers out there. It is still there. People still need the advice. Youll be helping a lot on that front. And youre not done. And youre going to talk rates in a few moments. Very important stuff about Interest Rates. Some things never change. Im not sure what the thing are. Well also share a few highlights from your time at squawk on the street. A lot more when we come back. Will the blackberry 10 be able to prostride the cool factor the company is looking for . Well talk about that new smart phone. First santelli working on something later on. Tell him hello. Heres the deal. Everybody wants to talk about the fed. And most of the time its about exit strategy. Im going to talk about this in more depth. He doesnt think after january 14th ben bernanke will be the claire man of the federal reserve. Economist and cnn group about everything fed and exit. [ male announcer ] when it comes to the financial obstacles military families face, we understand. 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[ male announcer ] our usaa retirement guide provides advice for current and former military members and their families. Get advice from the people who share your values. For our free usaa retirement guide, call 877242usaa. Preorders start today for the blackberry 10. Can the Company Formerly known as rim expect to up its cool factor with the phone . Roger chang, executive editor ot cnet. Dennis, you were with us at the launch. I remember that. I would say you were negative then. I wonder if you feel the same now. I was thinking about how things have changed between now and then, and the answer is they havent. The device looks good. Its a solid device. Nice and good isnt good enough these days. When we see the Samsung Galaxy launch come out shortly here were going to see what true marketing power, true global brand means. I think the blackberry is going to have a hard time of it. It is the big event thursday night from samsung. And they have some fire power. Is there any way it manages to do a david and goliath . Theres always a chance. Im a bit pessimistic on the prospects. The problem i have with it is the great operating system. But its still lacking the apps. They have a great start. They have 70,000 apps off the bat. But the apps that i want to use every day, they just dont have yet. A lot of them certainly not custom built for the phone. Very little support tr the likes of the facebook. If thats true, why such great stock action in the past few days. Why wont this rumor go away . Its because of the takeover rumor. It was trading below the value of the patents. Now it seems a little too high. It makes sense as another buyer from asia who has more capital and will to use the blackberry brand name. I dont see anything for the takeover chatter. Theres a note from jeffrey on ap ls. Hes not comparing apple to a blackberry. He says when people turn on a device. He cites razr. He cites atf. I wonder if you would throw blackberry into that pool. Yeah, i think theres a number in that company. Its extremely difficult for those who have fallen on hard times to make a comeback. There are very few companies in the tech world that have pulled off a comeback like this. And we mentioned samsung a moment ago. Samsung is really making an interesting push into the enterprising. We saw them on the super bowl. Touk about getting the devices. You bring it into your company, and the company sort of works with you on the samsung device. Thats a bigger threat for blackberry than apple is. And thats samsung right now. They have shied away from it and squandered the opportunity. I talked to samsung, and their executives tell me the enterprise is really the growth area for them. The Broader Market is starting to slow down a little bit. They are really targeting the enterprises a lot harder. I knew during the super bowl their ads, you know, enterprise is an issue when in the Super Bowl Ad theres a moment when a character references security, right . Which is what happens this the ad. She says it has such and such security measures. Thats a shot across the bat, which for a long time had been blackberrys bread and butter, right . Definitely. The security that an it manager would want to maintain. They are really more voeal about it. During the oscars they had six enterprise focus commercials. And thats something you definitely want to see from samsung back in the day. So for you it sounds like a short term ceiling on the block. I think until they prove something, its going to be hard to get that stock moving. For novelty sake or for the sbe l intellectual sake, paint a picture of what it will look like. The mission shrinks, it goes for a very secure conscious customer, the government user if the same way that motorolla tried to do it for a while. Really competing headtohead against samsung and apple is just a tough problem sigs. There are pockets if washington, for instance where there is still a cult following. Does president obama have one still . I think he does. I think so. Well see what happens. We have news pending. Bertha coombs has more on that. Yeah, the stock traded down heavily this morning ahead of the halt. Delek just hit an alltime high yesterday. Last week reported better than expected earningings. This is involved in refining and whole sailing of gasoline. They gave them more access to them through pipelines. They hope to have improved pipeline access to increase their ability to get to the midland oil. So well see what happens. News pending. Well bring you updates as soon as theyre available. Thank you for that. Straight ahead. Details of paul ryans Budget Proposal and what it would mean for health care, defense and your money. [ indistinct shouting ] [ indistinct shouting ] [ male announcer ] time and sales data. Splitsecond stats. [ indistinct shouting ] its so close to the options floor. [ indistinct shouting, bell dinging ]. Youll bust your brain box. All on thinkorswim from td ameritrade. Amelia. Neil and buzz for teaching us that you cant create the future. By clinging to the past. And with that youre history. Instead of looking behind. Delta is looking beyond. 80 thousand of us investing billions. In everything from the best experiences below. To the finest comforts above. Were not simply saluting history. Were making it. Markets pulling back after hitting new highs. Normally we do with europe, obviously daylights savings time working on a different schedule. Europe is flat today. We want to show you a couple of things. First, we are fairly flat. Its a little bit more of the risk on. The energy and the materials are flat here. It can and industrials are to the downside. Largely on the flat side. Two things i want to point out to you today. The stang relationship between value and Growth Stocks and the big move up in secondaries that weve been seeing. The ibe is the s p value and the ibw is the s p growth. So value, which is this white one, has outperformed all year. Growth has underperformed. Why are value stocks outperforming . Value stocks traditionally Slower Growth and earnings. Thats the definition of value by and large. But there are strange people sitting in the value space. General electric . A value stock . Chevron, exxon mobil, value stocks . Jp morgan . You they of colgate, proctor and gunm gamble. Bank is to bes are slow earnings growth. Heres a learning surprise with two Energy Stocks and general electric. What . Well, google is no surprise. Apple is no surprise. But Phillip Morris . A growth stock. Cocacola, merck and pfizer . Would you put those in a growth category . I dont think so. So theres a little bit of a toptop syturvy thing going on. Stocks are switch around in the last year or so. We can see the value outperforming growth. Another thing i want to mention is the secondary offerings. I know we pay a lot of tangs to the ipo business. What is really filing is secondary offerings. We have 142 secondaries, including seven last night. Seven last night. Valued at 42 billion. This same period. 136 valued at 48 billion. The point is, companies are taking advantage to put a lot of stock into the market. Sometimes this has effects on the market. Two stocks went today with secondary offerings here. They only have 45 million outstanding. They added 25 to it. Heres sun communities. This is a Real Estate Investment trust. Theyre putting out 48. 5 million. Thats 15 more on the market. You can see it down 2 . They do have some influence. Obviously you put more shares out on the market. Big, big year for secondaries. No we. It seems like there is one every day. Lets get a check on energy here. Sharon epperson has an interesting forecast from opec. Hey, sharon. Very interesting forecast from opec. Their forecast there is rising, be but the demand for their own oil is coming down. And last week in houston. A lot of companies focused on the growth in oil supplies, particularly from shale here in the u. S. That is happening as the Global Benchmark brent that differential narrows quite a bit. That is giving some weight, some upside potential to the wti complex. In terms of gasoline futures, they are lower right now. Were seeing lower prices as the pump as well. Down four cents from where we were a week ago. We have seen gasoline prices at the pump coming down. They may not last for long. A lot of traders focus on the ethanol mandate that costs a great deal for refiners. That could work its way into gasoline futures and prices at the pump. Back to you. Lets get to Rick Santelli with a very special guest. Good morning. Chief economist for citigroup who worked for the fed for 18 months in the late 70s. Mr. Volcker was president. Will he stay or will he go . Thats a good song. Ben bernanke. Term ends in january of 2014 . Im assuming he will retire from the fed. You know, well see what he decides . All right. Now that that is out of the way . We just learned for 2012 fiscal year government, 223 billion Interest Rate experience. What are your thoughts on what may affect that . In four years the economy continues to grow. So with the inflation rate at 2 , it might be higher. The funds should be two and a half or three or a little higher. So, you know, Interest Rate experience, thats 1. 4 of gdp. Almost essentially in five years. So a half trillion to twothirds of a trillion . After trillion Interest Rate expense at the same time they will raise the fed funds rate, exiting their strategy. Youre making me nervous already . Well, you know, theres like 16 trillion of debt. 5 is owned by government trust, medicare, whatever. So trillion the federal reserves two trillion portfolio is 20 of what you would consider in the tradeable market. That tradeable market is not active. So the fed really is the bulk of the market. Real quickly. Were out of time. Do you think the fed will be voluntary . Do you think outside forces will force it to be a lot more hurry up and not necessarily as planned as many would like to be it . Hurry up and wait, wait, wait, who wants to sell assets to a fragile recovery when the dealt is rising . Theyre going to delay, delay, delay. Its not a good scene. I would agree with everything he just said. Time will tell. That means im wrong. I dont think so. Back to you. Thanks a lot. Rick santelli. House budget chairman paul ryan unveiling his budget in the last hour and the white house has released a statement rejecting it. John harwood joins us from washington with details. Good morning, john . Good morning. The white house is rejecting this statement, which is no surprise. It follows the contours of the last two budgets that paul ryan prepared since republicans have taken over the congress. But he meets a ten year target to eliminate the deficit and balance the budget, but interesting how he does it. He calls for the repeal of all the the benefits on obama care. He keeps the medicare cuts and he also keeps the obama tax increases that paul ryan opposed. Heres how he justified that. Were not going to revisit the past. Thats behind us. With the fiscal cliff and all the other things that occurred in the path, which spending is going down this as well, that makes it easier to balance the bung. Were say iing lets replace th special written loop code tax code with a program that helps families and businesses. Thats a convenient reasoning for paul ryan. Lets recap the high points of his budget. Over ten year it cuts 4. 6 trillion. It achieves balance at the end of the enyears. It changes medicare to a premium support system. And it changes medicaid, which serves the poor but also middle class and elderly in nursing homes. It converts that to a block grant. And democrats are going to release their budget tomorrow. And the hope is this the beginning of a negotiation that could achieve that elusive grand bargain which we tried and failed so often. And this week theyre writing about a potential thaw. Sh that what you see from where you are . I think its possible. I wouldnt bet money on it, but its possible from the signals that we have seen, paul ryan made a statement over the the weekend about looking for ways in which both sides could find progress forward without compromising their principles. That indicates an opening. The president will try to take that. Well talk to you soon. Paul ryan will join kudlow tonight on the kudlow report, 7 00 p. M. Eastern time here on cnbc. Its a proud day for the squawk breakthrough series. Pulse, a popular news reading app that was featured in february is willing acquired by linkedin. In terms of where we can go, i think theres still a huge market, a huge potential for polls to really become the window for peoples content. And we have a very strong thesis in terms of how that should look and feel. It should stay away from the web, kind of banter ads and takeovers that really destroyed the experience. Its price line for movie tickets. They are filling the auditoriums and helping customers get tickets for 6 0 off. Here we are, me and you on the road and we know that it goes on and on [ female announcer ] youre the boss of your life. In charge of making memories and keeping promises. Ask your financial professional how lincoln financial can help you take charge of your future. Oh, oh, all the way oh, oh there. I said it. They dont have pictures of my kids. They dont have my yoga mat. And still, i feel at home. Could it be the flat screen tv . The not so mini fridge . The different free dinner almost every weeknight . Or maybe, its all of the above. And all the rest. Am i home . Nope. But it almost feels that way. Homewood suites by hilton. Be at home. Executor of efficiency. You can spot an amateur from a mile away. While going shoeless and metalfree in seconds. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. Now this. Will work. [ male announcer ] just like you, business pro. Just like you. Go national. Go like a pro. Coming up on the half, as investors remain on s p, a list of stocks that may lead the next leg of the rally. And the dean of evaluation on whether the stocks are still cheap at the levels. Two traders, one stock, and yes, one heated debate at the top of the hour. All right, scott. See you in a few minutes. Todays squawk breakthrough compares itself to a deal for Movie Theaters. Dealflix are helping them feel their seats by offering discounted prices on tickets an concessions. They launched the first iphone app last week, currently available in over 100 metro locations. Sean wyclef is the cofounder and ceo. Sean, good morning to you. Good morning. Great to see you. The model makes perfect sense. Especially when you consider the size. Is it a 40 billion business . Yeah, right now over 40 million are spent on Movie Theaters and soda. You got the ideas for this while watching the kings speech . Absolutely. I saw it a few days after it came out. The movie was great, but the theater was empty, and so i had the idea. And so far you have deals with smaller chains. Havent landed the big one at amc or regal. How is your chinese . You may need it. Well, a couple of my other found irs from korea, so that works. That will help. Whats in it for them . Walk us through how the model and pricing works. And i assume this is all in realtime. Right now 88 of Movie Theaters are empty. Currently were letting the Movie Theater set the pricing. Tickets an concessions can be up to 60 off. Sometimes theyre 30 off. They pick the show times and movies. Sometimes we get weekends, weekdays, opening weekends as well. Youre obviously collecting data on users, the types of movies they are interested in. Is there any room for a partnership or deal with the studios themselves, a disney, a warner, a comcast, Something Like that . Absolutely. The last weekend i was at south by southwest and spent a good majority talking with execs from warner brothers. They are very interested in the kind of data that we have. People talk about home grown businesses all the time. But this is really home grown. You raised an initial 65,000 from friends and family. A little bit later on. How did that grow into what you have right now . Absolutely. So we started with our friends and family. Me and my two all of our parent are invested. We got into a program called 500 startups. They gave us 50,000 and put us on the spotlight in Silicon Valley over here. Youre adding how many theaters are even individual theaters are you adding per day or per week . Currently were adding about one to two theater locations per day. We just came out with an iphone app a few days ago. Its south by southwest where we launched it. We had a chance to meet a lot of people. Yeah. Well, i would assume that the apple platform is going to change your life in ways maybe you dont expect. Sean, well keep a close eye on you. Thanks for coming on the show. Thanks so much. Straight ahead, gary kominskys final cap of the markets oped and most memorable homes on squawk on the street if we can get him to put down the daily news. 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. Different special guest call. Come on in here. I want to make sure i behave myself. By mo my mother is going to make sure i do this the right way. Listen up. Soul train. Watch you dance. Yeah, yeah, yeah. Thanks. See you in a bit. Oh, my. Wearing the same tie. Mom, mom, im wearing the same tie. Before we do this the glasses are on. Of course i did that sally field shoutout, academy awards. Of course claudine and susan crackhour the love of my cnbc life. I did not say it loud enough. You are the best. Thank you very much but you are here for one final oped. I am. You want to watch rates . When i think of the career that i had certain days stand out. Anybody who is a professional, broker, wealth manager, adviser knows that the elimination of fits Commission One one of those days that everyone will remember if you were in the business at that time. A lot of people think about 2008, it was the tech bubble bursting that had a dramatic impact on the way Wealth Advisers dealt with clients. That was the first time where people started to really say, what is happening and thinking about things . When i think about whats ahead ear i think about sbre rates. Youve had this 30year directional move in Interest Rates. People come on this air every day saying, im telling you the bond bubble is here. Theyve been saying it for years. I dont know whats going to happen with Interest Rates. Nobody knows. What i do know is that were not going to have another 30 years where rates are going down. As investors, advisers, fro fegsales, thats what im most excited about, trying to figure out what are the strategies for people and what is going to inevitably be a rising Interest Rate environment eventually. Youre going in at an interesting time where its going to be huge chapter change in how people address rates, address equities, right, address currencies . Everything. Thats why im there. Change is good. It means youre alive. Ive lived my life that way. Thats why im taking the change now. Thats just the way i am. And i cant wait to as bart scott said one time, cant wait to get there. On behalf of the network, gary, thank you. Thank you all very much. I will still be as a family. We cant wait for your next time on. Dont forget to tweet us, what would you say to Job Interview to win over Marissa Mayer . Its not what you think. Its a phoenix with 4 wheels. Its a hawk with night vision goggles. Its marching to the beat of a different drum. And where beauty meets brains. Its big ideas with smaller footprints. And knowing theres always more in the world to see. Its the allnew lincoln mkz. Otherworldly things. But there are some things ive never seen before. This ge jet engine can understand