Transcripts For CNBC Squawk On The Street 20130422

such as southeastern on dell, for example, or some of the opposition to the pcs-t-mobile deal. activism has been bigger than ever and so we are focused today on a number of dint guests who will join u and barry rosenstein from janna amongst others and we'll have news as well very shortly. >> wherever you are, david, there generally is news whether people want to know about it or not so we'll talk to you soon. >> in the meantime, we're coming off a turbulent week and saw volatile markets and all of the developments over the marathon bombing in boston one week ago today. >> the tacit approval over japan's monetary easing policy and no one will mess with the boj and they got green arrows on the continent at least in the early going. our road map begins like this. the markets and futures pointing to a higher open even with mixed earnings from caterpillar as they attempt to recover from the worst weekly performance in months. >> shares of caterpillar turning off pre-market after selling off earlier. the company missing earnings and revenue estimates and cutting guidance. however, the ceo cites signs of stability. apple, just a day after it's set to report results. reports swirling about a possible iphone 5s delay if production. did your flight get delayed this weekend? maybe you should blame it on the furloughs. headlines from the sequester continuing to bite business travellers and airlines alike. >> the markets coming off their worst week in five months and it wasn't that long ago we were on the verge of hitting s&p 1600. what do investors expect going forward? tobias levkovich joans us at post 9. welcome. always good to see you. >> good to be here. >> coming on a day when you have "barron's" over theec wooend and their poll and we laughed about it a little bit. dow 16,000 by the middle of next year. they're talking s&p 1682 and people want to read that this morning as a danger sign. >> i would be a little bit careful. if you look at how they've been with the market they've been somewhat cautious and very u.s. oriented. even cyclicals like retailers will be u.s. oriented and not the global cyclicals. i don't think people have bought into this. we see cash positions above what we saw a year ago on average, with assets under management. they're skeptical and worried about margins and all of these things coming up and even some of the proprietary sentiments. >> we are far from frothy? >> we are very neutral. the majority of the managers said the number one thing they're looking for is strength in corporate earnings. do you feel like we're there because you're pointing on that and a lot of people are saying they're underwhelmed with this season. >> we went into the earnings season, we'll start with that, with very negative cause and things we hadn't seen since 2009. we saw the people start the year with 2%, 3% year-over-year growth and it's down from expectations and they're beating these lowered expectations and i tend to be scent beingickeptica of the talk, and one of the things that's pretty interesting is even today you've had announcements on friday about european week. we've had europe stabilizing and europe will be worse in the second half given where credit card issues are and credit conditions have improved and that's a nine-month leader for business activity and that's the most critical thing to get earnings. >> that is critically where we're failing, isn't it? it is on the revenues that are coming through at the moment. i mean, ibm, ge, caterpillar, it just goes on and on. can you sustain the market at these levels if global growth is clearly slowing and we learned from china that would be the case and europe contracts. i don't disagree that we have to be careful for the global place. europe is something i worry a lot more than china about right now because of credit conditions. >> it's not what did companies report last quarter and necessarily what they see in the future because it was fairly limited. the mining business where you have two, three years and for the most part, these credit conditions lead s&p 500 revenues by a full 12 months. this told us, for example, when we had september, october, 2011 on credit, particularly emana emanating out of europe, and that became a worldwide event and 12 months later the third quarter of 2012, we saw u.s. revenues slip. >> that's a very different comparison. that was -- that was when draghi when to step in. >> you're missing my point. credit conditions lead by 12 months and right now credit conditions are pretty good in the u.s. and they started turning if you like the fourth quarter of 2012 into the first quarter of 2013 and that supports the second half of this year's revenue increase. >> if you want to be cautious on the global story, do you remain u.s. centric? we can't all buy verizon and general mills forever. >> i saw an article saying the u.s. is an emerging market. things like housing coming back, and the energy sector, productivity through technology and mobility and what that really means and lastly, what we're seeing in terms of manufacturing efficiencies in america being competitive globally today. all of this gives you more impetus here than you would think. that's so 2003. that was the story we should have been talking about ten years ago when the stocks are reflective. >> when they're playing consumer stocks, are they looking at it wrong? >> i think some of the consumer discretionary stocks are stretched and not that we have a worry about the consumer and tax refunds will start coming now. credit conditions support employment and certainly consumer staples look very expensive. >> what about utilities up 19% so far this year? utilities are up 16% and health care up 19%. is your money safe in there? will they continue to hold up? >> we've been overweight utilities so i'm not going to be too uncomfortable with that and that's improvement with natural gas prices and in health care it's been very much about dividends and that we saw reimbursement rates that were supposed to be cut recallier this year, and i think it's too late to be on the healthcare bandwagon. >> sectors like materials which have not been with the rally and do you think some of the underperforming sectors will catch up? >> we are worried about materials still and we have to be careful in the u.s., chemicals are 20% metals and mining and look at the s&p 500 materials sector. europe is a big problem for chemical companies and even though they have shale gas as a feed stock, the problem is 20%, 25% of their business is probably going to be disappointing. >> even if your long-term view is bullish which is fair to say yours is. are you bracing for a quick 10% down here? we actually think markets can rally 100 points with the s&p and we see some of the negatives associated with europe with potentially qe easing back and fiscal battles causing more of a bump. >> we said don't sell in may, but worry about july jitters and august angst, and that's pretty good. the market will feels weary and some of the buys and the dips we saw post-cyprus was energietec in the past week, would you agree with that? >> that does not suggest sentiment's frothy. that's generally, when others are fearful. those are the kinds of times that you should be buying and they're worried about growth and margins and not to mention a heightened sense of insecurity given what happened tragically last week. >> tobias, thank you. interesting insight. tobias levkovich joining us from citi. we want to go to david with breaking news on microsoft. >> good thing we're here at active passive summit. we'll share some of it with you right now. one of the larger activist focused funds that are $12 billion with assets under management will announce it's take a $2 billion position in most making it one of its largest shareholders. value act 10icly owns shares in the companies that it targets for a long period of time and often comes in as a fundamental investor trying to unlock value or look for value in a way most investors do and that does appears to be the case at this point. jeff upton has refused my request to come on and do an interview talking about the rationale behind the investment, and however, heel be pressenting later today and will make that fundamental case behind me if not one of the largest investments and 2 billion may go up from there from what i understand and it is interesting, of course, because we know microsoft has been under pressure from investors whether it is a succession plan at some point or simply the reliance of windows and showing the clear path of growth not relying on pc sales. those are some of the pressures that have been brought to bear on the management team and value act in those shares for perhaps some period of time, well, if things go well they don't say very much, but if things don't go well they do typically engage with the board and sometimes end up on the board with the likes of adoby on check for example, mr. upton is a board member. so an important investment here that will be discussed later in the day in terms of the fundamental case behind it, but twhoon does have a tinge of activism there as well and there is a shareholder base, given the stock's relative underperformance over a long period of time and not to mention that 80 billion in cash that investors wonder what could be done, and there will actually be some news, carl. back to you. >> david thsh, this is kayla. i have a question about the thesis. we saw david einhorn very vocally trying to oust the ceo of the company. as we know now that has been unsuccessful and i was wondering what you thought about what the thesis was and what we could see unfold over the coming months. >> my experience of following company which typically does not engage that often with the media and does not have as big a respect tagz of the likes of a pershing or relational is that they take positions that can last for a long period of time. you're trite ask that question about succession and it's interesting to bring up mr. einhorn. that will be some part of a conversation to tack place down the line particularly if the stock is not doing well. that being said, i'm not expected to hear that today. i think the fundamental cases where they're going to be focussed in terms of what the company can do and how it can harvest so maybe the other businesses it has away from business so it will let it contribute a great deal of cash flow for the company. >> all right, david. thanks so much. shares of caterpillar rising threat-market, below wall street's forecast. revenue missing consensus estimates as well. caterpillar is lowering its full-year guidance and earlier on squawk box, caterpillar's ceo explains why he's feeling more confident now about the future. >> stability is the word right now and while nobody likes that feeling we're in, certainly it's better than it's been the last couple of years and that give meese a little bit better confidence going forward than i've had since 2011 or early 2011. >> to be clear, there are two areas they're warning about. one is obviously china and the mining experience is in the headlines there and also in the united states and they were worried about coming into the year and the reason why he's feeling more confident is because of the sustained housing recovery. >> inventories come way down, we know that and i think people have wondered with apple tomorrow night, can you discount in a miss? everybody in the world thinks apple will miss tomorrow and you can actually do that. the stock is down 19% year to date and this is a bad quarter and it's a bad miss and stocks not reacting violently to the down side. >> i know we have the j.p. morgan analyst, john, next hour and everyone expected them to miss and perhaps the miss wasn't that bad as expected. that being said, 24% sales in asia pacific and that is a steep drop for a company that has made a big bet on that area. >> you see the move down in the charts and the man who has a huge amount of respect is able to say to the market today, we've taken action to align production costs and capital expenditures in line with our reduced output so the faith is still there, that it's well run in a bad macro economic environment which comes back to mcdonald's which you have a note out today from sus can dehanna which says it is executing across the world and it is stable in its market share or gaining and it is against it. that seems to be the major theme. >> another theme that's sort of emerged in these big companies, citigroup, as well is the strength of the latin american consumer and the latin american corporation. caterpillar noting that lshg, even though china continues to be weak and there seems to be a shift from asia pacific to latin america coming from these multinationals. >> resuming the buyback does not hurt by the end of the year. it had approved for a while in '07. >> and that might be taking some of the sting out of this today. >> when we come back, yet another price target cut for apple ahead of its earnings and this time from bmo. colin gilles over at bgc is upgrading the stock this morning. which one is right? we'll hear from both analysts this morning. the dow coming off its worst week since june last year. we'll see if it can keep april positive for the month. looking at a 25-point open to the upside. back in a minute. with fidelity's new options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens and i helped create fidelity's options platform. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. the suspect in last week's boston marathon bombings is responding to investigators questions, marking a dramatic turn for law enforcement officials trying to piece together what was behind that attack. our scott cohn is in boston and has the latest on the investigation. scott, good morning. >> reporter: good morning, carl. it's hard to believe it's been one week since those horrible bombings at the end of the boston marathon. later today at 2:50 local time, the precise time of those bombings one week ago, there will be a moment of silence in boston and church bells will toll throughout the city. dzhokhar tsarnaev, the 19-year-old bombing suspect remains in serious condition where he is recovering from his wound, but apparently he is alert enough to begin responding to some of the investigators' questions. many of those responses in writing because he has gunshot wound possibly, self-inflicted to the throat, but amazingly, he and his brother for some three days managed to hide in plain sight. dzhokhar at umass dartmouth where he was a student, he worked out in the gym, even talked to friends about the bombing. imagine how chilling that was for his classmates. >> i'm in diss belief, like, i can't believe that's him. >> i don't want to believe it. >> i really don't. >> we saw his image and we don't want to believe it was him. >> it totally looked like him. we thought it was a mistake or, like, a joke or something. >> reporter: well, all of it changed, of course, on thursday, late afternoon when authorities released the pictures of the two brothers and a grisly manhunt began that resulted in the deaths of an m.i.t. campus police officer and serious injury to a boston transit cop and the death of tamerlan tsarnaev, the brother. it all ended in a backyard on friday evening. the infrared images from a police helicopter showed dzhokhar hiding in a boat. he was covered with blood. they managed to capture him alive where he is now in the hospital and still, one week later, carl, more questions than answers. back to you. >> scott, any word on timing regarding federal or state charges today? >> we expect there will be federal charges, carl and they could happen any time now. there was thinking it could happen yesterday, but now it looks like it will be some time today and it is interesting they are taking their time in putting together this complaint. it suggests that what we're going to see is a fairly detailed complaint and we understand that it will include some -- at least a description of some of the video that they have allegedly of dzhokhar placing the backpack with the bomb at the site of the second explosion at the boston marathon. >> we'll keep an eye out for that, scott, 2:50 p.m. today, a moment of silence across the state. scott, thank you for that. >> after a volatile week for stocks, what can investors expect now. >> art cashin will share market wisdom to kick off monday morning and moderate gains here. europe looking pretty good. we'll get it all kicked off at the opening bell in nine minutes. change makes people 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[ male announcer ] so come trade at the place that's all about options and futures. optionsxpress. open an account today and get a $150 amazon.com gift card when you call 1-888-280-0154 now. optionsxpress by charles schwab. a few minutes until we start trading at the nyse and we expect a bounce at the open there of 35 points after the dow, had its worst week in five months down 2.1%. art cash enjoins us, director for operations for bs. usa today says do you buy the dip or do you protect the profits? >> well, we're getting a big boost out of a couple of areas this morning. europe, particularly because of what happened in italy that the president's been asked to stay on so that means some likelihood of trying to form a government rather than calling for a fast election which might have had mr. grillo sweep, and of course, the g-20 communique which was very bland and which we liked and a big rally in the nikkei and the sell-off in the end approaching 100. so for now they're ready. i'm going to hold the judgment, i think, simon for the next three days or so mainly because we did some technical damage last week and we'll see if they can repair it and if they do -- >> didn't we rally up to that support on friday in the s&p? >> so if they punch through that will raise things and the s&p will look at things like 15, 61, 63 with some resistance and then if they can really get the rally moving 1570. >> we are just about six point away from that key point that you just mentioned and last week, 2.1% to the negative, worst week of the year so far, but you noted volume was down sharply because everyone was watching every move if boston. do you think that was an anomaly? >> well, i think, you have to take it with an as terrific, to some degree. everyone was obsessed, rightly so with what was going on in boston and there are very large money managers up in boston and with the city in lockdown they didn't all have full staff. so that's beside the point. and one other thing, now we have taken into custody one of the main suspects and that was a sigh of relief. so all of those things are combining to give us an early boost. the real question is can they maintain it. so we have three days to carefully look at it. >> we will see. >> thank you, have a great week. art cashinthere. microsoft shares moving higher in the pre-market on news faber just broke. ? value act taking a $2 billion stake in that company. david will have more from the investing conference in new york coming up. >> stocks are poised to open the week higher. can they maintain the momentum and the opening bell is just a few moments away. ♪ [ male announcer ] this is karen and jeremiah. they don't know it yet, but they're 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, they'll find some retirement people who are paid on salary, not commission. they'll get straightforward guidance and be able to focus on other things, like each other, which isn't rocket science. it's just common sense. from td ameritrade. you're watching cnbc "squawk on the street" from the financial capital of the world. busy, packed week ahead. we have a third of dow reported before friday. 170 s&p companies, everything from apple to united tech and exxon, boeing and southwest airlines, qualcomm, whirlpool and not to mention data and q1 gdps coming friday and that will be a key number and that will tell us a lot about how this year is shaping up. s&p 500 at the top of the screen. brookfield property partners celebrating its recent listing and over thea the nasdaq, via com celebrating its annual via commune the day and the company wide day of employee service. >> a couple of big stories shaping up this morning. cat, we talked about in the a block managing to held on to the green despite missing and warning and everyone will want to talk apple for the next 36 hours as we get closer to the earnings coming tonight. >> lots of angles coming to the fore, i took a quick look at analysts and 14 analysts downgrading apple in the last month. even though we've had back and forth in the recent days about people upgrading and revising targets it still seems the brought base of analiysts is moving. >> look past the disappointments that we'll get, buy from the product cycle. that's a very interesting call. i was just looking for what the price target was. >> i think it was 500, right? >> they lowered it to 500 from 550. that's coming down. j.p. morgan has a price target of 725 and one of the lone bulls still out there. >> the reporting continues around the edges and reuters today saying that they may push back their release date for the next iphone 5 due to some design issues. reuters is calling it regarding a fingerprint sensor which in and of itself races some eyebrows meaning what they're up to in terms of innovation. >> the forbes article. >> yes. insiders push for example cook to leave. i have no idea how their sourcing is? it's a bit thin on the detail, isn't it? the top line suggesting they might be looking for a successor to tim cook though that's not really what the board is discussing yet, but obviously, it will grab headlines today. >> you think about what an insider is. an insider could be anyone from an employee to his deputy to a board member. >> i think until we get real details, the board is discussing this at his every meeting based on the performance of the company. i'm hesitant to take this at face value, but maybe i'm alone in that. >> halliburton and hasbro leading the s&p this morning and that's a big 4.5%, 3% gain and both coming out with earnings and halliburton did beat by ten cents and 67 cents has a ten-cent beat and netflix, of course, it was a resumption of some of the names that have done wella all year. netflix, jc penney. we had earnings from six flags, posting a smaller loss than expected which in the pre-market had been a boon for sea world, up 24% in its opening day and up just 1.5% of 1% and six flags entertainment now up nearly 4% after the open. >> should we mention microsoft which continues to gain and it's leading the dow up 9% partly as a result of what david faber had been reporting from his conference and there was an activist state going in and let the's bring in david faber for more details on the story he's broken this morning. hello, david. >> simon, interesting to see the reaction in microsoft shares after the news we told you of value act, a large, activist-related hedge fund taking a $2 billion position and it may be more than that when they are done perhaps purchasing the stock, we'll see, but it still only amounts to 1% of the overall and would amount to 1% of the overall value of the company. we've seen situations in the past, though, where the reputation of the activist investor is such that they are able to galvanize shareholders behind them who would grieve with their position and bring more econommite economic might table. for example, we know that procter & gamble responded quite aggressively when pershing square took a significant position. ralph whitworth had been successful in the past in taking what are big economic stakes and small percentage stakes in very large companies. that all being said the focus would be on the fundamentals and at least in the initial stages of this investment and we'll hear more about it from jeff, who runs the firm who will be presenting on the microsoft investment later in the day, and again, i am told it is going to focus on the fundamentals and the perception of value, and that is at microsoft. it has been in its share of fights for the year and it has been a track record in simply unearthing value. why microsoft though, is an interesting question given's lot of people who have taken a lot at that one, either from a value perspective, or there would be an interesting return of capital only to be disappointed. you've had it in place of microsoft for a very, very long period of time at the very top, at least. >> in fairness, david, we should poernt out this stock did very well on friday in the wake of the results which according to the analysts showed in -- perhaps we were under play and was in terms of whatever activism you might have. >> friday given all of the other events and so many things that we didn't get to including those microsoft numbers and of course, very poor numbers from ibm and we watched that stock down sharply on the day, but your point's a good one. microsoft had a relatively good quarter, at least versus expectations, simon. that doesn't mean you aren't going to hear more about that conversation about the direction of the company, return of capital and perhaps issues of succession into the future, but that doesn't appear to be the central case being made at this point by value. >> all right, david. a lot of information, clearly going to come from where you are today given what's happened in the first half hour of the show. come back to you soon. david faber in new york. meantime, pisani is on the floor. >> happy monday. energy, tech stocks and some of the health care stocks moving on the upside and sort of a mixed picture and slightly upside bias and the only thing that traders were talking about was whether or not we'll have a spring swoon or not and that's the current cute phrase everybody is using and everybody is concerned about the march economic data and early economic data, philly fed, weaker than expected and what that's all going to many. this is the fourth year in a row this has happened and there's some kind of pattern that's occurring here and i would like to see more research on why it's happening, but the big thing is we've only seen 2.5% market correction from the s&p and from its highs and that was about what we saw in february and that's not much of a correction and the question is whether it will get worse. my personal feeling is a lot of the issues that were around in the last two or three years is not there. housing will get better, number one. europe is more stable, number two, and number three the federal reserve has made it pretty clear that they are on real time watch meaning that if things take a turn south all of a sudden, they'll be back with more aggressive programs or will continue their current quaint tative easing somehow. so my sense is there's more stability going in the markets. you saw what happened on friday with the italian president being reelected and there was hope we could have a stable government in italy and a coalition of center right and very left. italy is very strong. japan is at a five-year high and bank of japan will be talking about their inflation target and the bottom line is the g-20 gave them the go ahead and keep up whatever you're daiing and the bond buying program and they said that was okay with them. bottom line is things are okay, at least right now, overseas. the big week for earnings, this is t folks. the thing i'm watching are the big industrial and the big thins and ingersoll-rand and illinois tool works and united technologies all tomorrow. that will be the biggest day for me because they're the big indicators of how the global economy is doing overall. speaking of the global economy, caterpillar if this was clearly a disappointment and the guidance was disappointment and they telegraphed it a little and the stock's been up and the dow this morning and the two things here, number one, he's coming on and talking about stability and that's the key word on our air on cnbc and a lot of people have noted the drop in mining. mining was down 25%. sales in the mining division, second most important was down 25%. i think a lot of people have got that already set up. remember, this is heavily shorted stock and it was $100 two months ago and it's $80 today and a lot of people anticipated what's going on. let me mention apple very quickly. the hope here is for a special dividend, increase the dividend to over a 3% yield and start with the big buyback. that's the big hope there. nobody's expecting them to blow the cover off of any of these numbers and all of them have been coming down. >> guys, back to you. >> watching microsoft continue to gain now up 4.5% and let's head over to the nasdaq which partly is a result of that is outperforming, sema moti and it's back above the 52-day moving average. investors are slightly on edge ahead of the the tech earnings and all eyes on apple as bob was mentioning. a lot of conflicting calls from analysts ahead of its earnings report tomorrow. analysts focused on sales of its iphone and any clarity around its capital allocation strategy. bbc partners this morning upgrading the stock to buy. communication players also reporting this week. isi group reporting that broadcom, xilinx and lacked the right combination of favorable setup and strong, foreign ministerial support to expect event-driven upside and netflix on tap tonight. analysts focusing on two main factors, ref now and subscriber growth. it's up about 80% year to date. carl, back to you. >> seema mody. let's get to the bond pits this morning. rick santelli at the cme group in chicago. >> it's good to have you back and it's good not having a bucket in one hand and trying to pray with the other. flooding is no fun, people. they're definitely not moving much, they're floating right along under 170 now, but if you look at the charts for two week and this is an important chart, and you can see for the last week the back half of that chart is going nowhere quickly. we are hovering around 170 level and we seem to be comfortable here in the wake of just the general slowness even though friday we may see a surprise gdp for our first quarter and if we open up the chart innetly and some of the funding and moderating, there still might be uncertain owe the economic future, but you're not going see it here. look at the chart over the italian ten-year. we closed under 4%, but as you can see on this chart we are getting ever so close to the exact level. foreign exchange whether it's the euro versus the dollar going back a bit, both those currencies did find some strength. they steam now have lost it. technicians call that leg up, maybe a wave and maybe a second wave and we'll have to monitor that. specifically for a dollar yen on a 24-hour chart and another swing at 100. haven't had a settlement above 100 since i believe april of 2009, we'll watch this level very closely. david faber in the big apple, it's all yours. >> all right, thank you very much, mr. santelli and in fact, we are here in midtown manhattan at the active/passive summit. activism, you'd be right if there was a lot of it, because there's been more of it this year than we've seen in the number of filings and in the size of the positions taken by activists and not to mention activism is being practiced by some shareholders who tonight typically venture into that field. for example, the dell situation, one we mentioned so many times to oppose the deal that it's currently structured from 1365 from silver lake without another story we got to on friday and the participation of blackstone any longer and the potential bid for that company, but that's just one of the many ways that act vicactivism rears its head. in fact, corporate america is more aware of the possibility of activism than there ever has been in the past and even when we don't see headlines whether it from an activist or from a company itself oftentimes there are conversations that take place behind the scenes as you take a look at the number of filings this year and the size of those filings overall by the activists. whether it's an icahn or a peltz recently or an ackman or an einhorn or a couple of my guests today, in fact, we'll talk with jeff smith from starboard value and their ownership of office depot. not to mention barry rosenstein which lost a vitriolic fight with agrium and janna being one of the larger names in activism and we'll also be checking in withy on key meister and something we followed here on cnbc for a couple of months now. we'll be checking with all of those activists any don't forget that activism often is the prelude to activity, whether it be merger and accession activity or recapitalization or significant repurchases of stock and that is oftentimes the path these things take. so perhaps not as much m & a, a lot of the investment banks, lower out there. we are back with jeff smith, it willy, very, very shortly. back to you, simon. >> let's check where we are with commodities, energy, gold is significantly higher. sharon epperson is watching it all at the nymex. good morning. >> good morning, simon. it's hard to believe where we were a week ago today, where gold had its biggest one-day dollar decline on record. today we're looking at gold prices around 14.25 an ounce and we're up a hundred bucks from last week's low and we're looking at prices that have continued to gain over the last three sessions and we're looking at the big of the gain that we've seen and the winning streak we've seen all year long and this is the longest winning streak since july 2012, but we are lookinga the prices that are still reeling somewhat from what happened last week. a lot of traders trying to figure out what actually went on and they're looking not only at the price action of the last week and they're only looking at the etf action and gold etfs and particularly the largest gold exchange-traded fund and they actually saw a net outflow of over $2 billion. the holdings there in that particular etf now at the lowest levels we've seen since may 2010 and that's a big factor in the sell-off, but what was interesting was money managers and hedge fund managers didn't anticipation, this decline. they raised their bets and their long positions grew in the last week up until tuesday april 16th and finally, carl, taking a look elsewhere in the commodity sector and we do have gold slightly higher, gold slightly lower and they're continuing to watch the global story. >> i can't get over what you said, sharon. it's only been a week since the collapse in gold and that feels like a million years ago. >> i know. >> it's been quite a ride for one theme park operator. is business going heat up along with the weather? we'll talk to the ceo when we come back. this friday a global exclusive interview you won't want to miss. mcdonald's ceo don thompson will sit down with carl quintanilla in a global exclusive interview. you want it, need it, you've got have the taste of "squawk on the street," we'll be right back. yeah, i'm married. does it matter? you'd do that for me? really? yeah, i'd like that. who are you talking to? uh, it's jake from state farm. sounds like a really good deal. jake from state farm at three in the morning. who is this? it's jake from state farm. what are you wearing, jake from state farm? 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[ male announcer ] another reason more people stay with state farm. get to a better state. ♪ bny mellon combines investment management & investment servicing, giving us unique insights which help us attract the industry's brightest minds who create powerful strategies for a country's investments which are used to build new schools to build more bright minds. invested in the world. bny mellon. it is not it is not easy to get a 2% move in a stock as big as ge, but j.p. morgan helping to make that happen and cutting to neutral a price target of 22 saying that the safety theme in the stock is now getting harder and harder to defend. in their words dead money near-term, and best case of 70 basis point margin improvement later this year. ge, of course, which had has rallied and had a pretty good year so far down 44 cents and that is almost down 2%. david? >> thank you very much, carl. as we've said a number of times this morning we are at the active passive summit. joining us smith is a very active activist. you created news in a position you had, 14.8% of office depot, but you embark on a consent to replace a lot of the board members. why? >> well, david. >> thanks for having me, first of all. >> you're welcome. >> so, yes, we own 14.8% of office depot and we think that there's a lot of value. the company is valued at around three and a half times ebitda. >> with officemax which is a deal in process. >> right. >> we believe that the company could be valued in less than one and a half times ebitda. so there's a lot of change that can happen to the company that can improve value. >> the challenge here is we've been trying to talk to the company and having actually some pretty good dialogue with some of the board members, but we haven't been able to work with them to improve the board. we believe the board can be substantially improved. the company is in a pending merger with max as we said before, but that deal has a long timeline. it seems a strange situation in that you wouldn't often see activists trying to replace board members on a board that's currently composed that's about to potentially merge with another company creating an entirely different board. >> and to be clear, we're in favor of the merger which makes it even more strange. we're in favor of the merger. what we are looking to do and it's not a majority of the board. we're looking to replace four board members and actually we announced this morning that one of the board members that we would look to replace is the d.c. partners board member and d.c. partners owns a preferred and the preferred has contract all rights. one of which is that even if their board members get replaced they get added back. so after taking effect for adding back the board member it would be four out of 11 board members. to be clear, we think it's frustrating and we don't know why we even need to do this. we've offered to the company that we would just add four members to the board. we just think that the board needs to be strengthened. >> particularly in the case the deal doesn't go through because there is an anti-trust risk here, there'sa i vote on both sides and depot and max and there's a long timeline and so if the deal doesn't go through, we want to make sure that the company has the best possible people in the boardroom to be able to oversee and operate the business. the majority of the board today does not have retail experience. it doesn't make sense to us. we've proposed high quality candidates with significant retail experience. management, the ceo doesn't r retail experience and they're been operating with the ceo which is a very nice person, but does not have any retail experience and when he was chosen four years ago to run the company and he was chosen from among the board. so the board members ran a sear search, right and chose neil, their chairman to be their ceo. >> this is one of the stranger cases and this deal itself when it was announced had this bizarre thing when they weren't make anything decisions on a name or i remember, headquarters and i haven't seen anything quite like that. >> so, look, you know, they've been criticized for not making decisions as it relates to how the merger will go through and on the one hand it would be better if they had decided ahead of time who would be the ongoing board and what the name of the company might be and who the ceo would be. on the other hand there's opportunity for us to be able to get involved and maybe be able to come up with a better answer as it relates to who the board will be and who the ceo will be. so that strangeness, actually creates some opportunity here for us to be able to improve the company, but you're right, both companies will be contributing five board members to the combined company board. we believe that if we strengthen the board today, if we add four new high quality board members to the board today then there will be better board members from which to choose those five which will be in the best interest of depot and shareholders. we just think this makes sense. >> we are very tight on time at this time of the morning. we have to leave it there, but thank you for giving us your insights. >> star board has been very active and a part of activism that you don't see as much headlines on and that being the small to medium cap active and successful. we'll send it back to you. >> david, thanks so much. >> billionaires looking to buy into newspapers and we're not talking about warren buffett. we'll get to that story coming up. in three minutes' time we'll have existing home sales and colin guinness will be here to tell us why you should buy apple now with $100 upside. we're back in a moment. 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of companies simplify how work gets done. how's that for an encore? with xerox, you're ready for real business. welcome back to "squawk on the street," i'm diana olick with breaking news. existing home sales in march down, 0.6% to a seasonally adjusted 4.9 million units and that's from a downwardly revised figure and that is a miss. the street was looking for about 1%. 4.92 million units and not hitting that 9 million mark that the street was looking for. realtors saying we are stuck for the past five months. >> 184,300. that is up 11.8% year over year, but again, this is a mix of homes issue. we have to keep in mind that your home price is not up 12% year over year. this is the fact that sales of homes priced under 100,000 are down 16%. sales of homes priced over 500k are up 25% and that is shifting the median mark. inventories and that's what we're watching, up 1.6%, but still down 17% year over year. usually in march you see an increase of about 100,000 homes coming on to the market. we only saw 30,000 coming on. that is the problem in the market right now. very tight inventories and just a 4.7 month supply. the realtors are looking to april hoping they'll get 200 to 300,000 more homes on the market. going regionally, the northeast unchanged month to month. midwest one to eight and midwest was the south. stuck at 4.9 million unit according to the realtors. back to you, carl. >> thank you, diana. not the first housing point that has disappointed lately. the market doesn't like it either. we had a modest rally for the first three or four minutes of the station, but have been negative. caterpillar went negative, as well. the s&p down 2.5 points and the nasdaq holding on to a green arrow. >> we'll start with the markets on this monday after last week's wild ride, trying to recover from the dow's worst weekly performance in months. will earnings be enough to propel us higher. >> apple is on tap to report earnings tomorrow night and the street has been ratcheting down expect aegzs for some time. why is one firm going in the other direction and now upgrading apple shares to buy? we'll get the analyst behind that call ahead. >> also the sequester effect on travel. >> faa employee furloughs and our major airport delays and all in the future and former department of transportation inspector mary shafo live. another monday morning, david, in which you've propelled a major dow component, microsoft up over 4% on the news that an activist shareholder is buying a $2 billion stake. so i think by my calculations you've created on that report about $2.5 billion of value so far this monday morning. >> simon, it's the value being created by the news itself, not the fact that i've reported it and we've been able to tell people that value act, large activist fund that often does take large positions in companies and actually doesn't get active if things go their way have taken a $2 billion position. on a relative bases it's 1% or less than 1% overall is what it would amount to of the outstanding shares of microsoft. that being said, valueact does have a history of holding stakes for quite some period of time, monitoring those companies and their managements and then getting active if, in fact, it doesn't feel that they're doing the right thing. jeff upman who runs valueact and has been on a number of boards in the past who is currently on the adobe board and has motorola, as well. in this case, it's a significant investment for them, no doubt given it's an $11 billion, $12 billion, given a significant amount and we'll hear at the active passive summit from mr. upton and i am told it will be focused on the fundamental value at microsoft. simon, earlier, you mentioned we got earnings from microsoft last week that were better than many had anticipated and so the stock did, in fact, rally on an otherwise lackluster days. pc sales seemed to be falling off a cliff and not to mention the -- not particularly great reception for that product, but there's a lot of other value there in the view of valueact that can be focused on and used as a pathway to future growth from microsoft that doesn't involve windows. we'll get more on that, but certainly a significant development for a company that has had its share of shareholders trying to raise a ruckus, but at the end saying it's not worth it and we're not going get anywhere and there isn't necessarily that much we can do and we have seen active investors with significant positions nonetheless in very large companies that have had very big reputations who are able to galvanize a shareholder base and we'll see if that happens here and valueact for its part perhaps not as well known as a like of a pershing or relational or nelson peltz. >> back to you, guys. >> a standout stock that has done more with david faber throughout the day with his conference. the dow down 41 points and s&p in negative territory and after last week, we had our worst losses in five months and a loss of 2.1% in the dow. brian belski is the chief of the havement strategist at bmo capital markets. good morning. >> good morning. >> good morning, simon, how are you? >> i'm concerned about the markets. what do you think we'll trade here? >> what's the timeframe? >> today? tomorrow, next few months? >> who is interviewing who? >> never follow a question with a question. we've been steadfastly bullish for a while and one of the good things about being bullish is you can make shorter term calls for caution and the last week in march we became quite cautious because of portfolio management and activity and questions we were seeing and what we perceived as poor positioning and we think that has led to the pullback in stocks and we've seen. >> what is the positioning mean? >> we were inundated with questions that were clearly underperforming the market and they were asking us how do they garner performance in their portfolio and when you hear those types of conversations have those with clients you know that they were strength and discipline. when you stray from your discipline, and all of a sudden you try to change your swing on the course. never take a liss own on the course, you just play your name. you're an income portfolio manager, weiren undated with questions seaing i need buy that moment up and when you hear that type of anecdotal questions and when they stray, bad things happen and the markets roll over and that's exactly what's going on. >> is that the same as saying that they were forced to buy the rally? >> they were forced to buy the rally because they were forced to participate. they were chasing performance. >> what happens now? >> the market, the problem with the market is that we have this short-term muscle memory, i like to say, right? whether or not selling may go away or whatever, that is clearly the trend and until that trend is broken, once, twice, three times a lady and it looks like it will happen again this year. >> if you look to the beginning of march, half of the trading days from march 1 tovt now have been in the red. there's some fear that we might have the fourth annual dip in the middle of the year and do you see that as a risk here? >> there is a clear risk especially given the fact away from the performance of the market and now let's talk about the fundamentals in the economy and clearly housing and numbers have slowed and employment numbers have slowed and guidance, company guidance was excessively negative coming into the quarter. corporate america is becoming conservative. if you bid up these stocks and you're worried about valuations and growth no wonder the market is rolling over on a near-term basis and we think this is a near-term phenomenon. we are still big believers in a second-half recovery and we're comfortable with the 1575 target which has been in place all year long and we'll see how we get there in the second half of the year and we still have near-term weakness in the market. >> walk us through how you think stocks and the dollar are correlated now. >> this is very important. >> think about this, prior cycle leadership is never the new leadership. emerging markets, commodities and being on the weak dollar trade, right? >> that trade has worn itself out and currencies are linked with the economy. as currencies have bottomed so has the dollar sxaz the economy goes up so, too, will the dollar. >> you say the average cycle for that is eight years and we've been in this strong dollar upcycle for one year. do you see the dollar strong for another seven years? >> we think this could be a very long trade. the last dollar cycle trade was nine years. weak dollar trade is about six years, okay? we could have an even longer stronger dollar trade this time around. >> if we're up so far with 15% against the yen and everybody trying to export to japan, does that stronger dollar and the translation effect automatically reduce the earnings that these companies will report here on wall street? >> that's a great question. we seem to forget that we hedged in the '90s, right? and we hedged on the weak currency and that's how companies will make up for it. >> it won't matter, then? >> it will not matter. >> have a great week. >> understated. let's goat shares of katrina this mo caterpillar, trading slightly higher and fourth quarter earnings miss. erler this this morning on squawk said he is still optimistic. >> construction equipment around the world is better. in fact, our overall backlog including mining and construction and all of our businesses actually went up in the first quarter slightly which is a piece of really good news because it's been dropping for the last year or so. >> we want to get more insight from one of the deans of the industry, managing director of j.p. morgan has a neutral rating on cat. welcome back. >> good morning. >> i heard this miss called horrific by some this morning although the comments seem to suggest his comments are rising and not falling. what do you make of it? >> here's a stock that's been down 10% year to date and was the most heavily shorted name in the last few weeks. the expectations coming in today were very low. the key question for long-term investors right now is -- is this the time that long-term investors step in and buy caterpillar or do we have to concern ourselveses with the mining, calex cycle and that 2013 is the multi-year decline. >> some like to say that cat's economic forecasting team is traditionally conservative, resuming the buyback. i mean, a couple of those things would make you think maybe we're fishing along the bottom here. >> i would say in general caterpillar is more glass is half full and so that's where the discussion will come out today is are we at the bottom of the mining capital equipment cycle this year as doug suggested earlier in the show or do we have another couple of years of stepped down. if you look, historically, mining cycles have been very long cycles and historically and seven-year cycles and not at one year cycles and that's what long-term investors will have to wrestle with today. >> and i know one indicator that you are looking pretty squarely at is head count and whether caterpillar has more right sizing ahead and what are you expecting to hear from the conference call about any direction there. >> great question. >> caterpillar cut about 8,000 employees net this past quarter and what we would like to know is how many of those were layoffs and how many of those were permanent head count reductions and that gives us some insight into what management is thinking about the cycle. you know, if they're permanent head count reductions, that means caterpillar does not anticipate levels that they were in 2012. if they were simply layoffs then that to me suggests that management's a little bit more bullish that this pullback in spending is temporary, rather than permanent. we'd like to know where they are in that cycle and that's a key insight for investors. >> and i would really like to know where you are in your judgment of -- because you keep posing rhetorical questions and you say management seems to be relatively more bullish than might be warranted if you believe in a multi-year downturn in mining? do you believe in a multiyear contraction in meaneding and it peaked at 2012 at $136 billion and we have a falling again next year. so we're going with history in saying, look, these cycles are long in nature. they're seven-year cycles mining capex picks up after mining companies start to make money. we'd be more on the cautious side than caterpillar with the few. >> all right, ann, thank you for that. ann joining us on cat, neutral rating on a stock that's getting a lot of attention today. >> let's send it over to josh lipton for a market flash. >> check out google who is in the red this morning. also, it looks like the stock may have suffered a mini flash crash. analysts said google traded down to 7.75 in one second at 9:37 a.m. this was not just one bad tick here. beri, in i saying this could have been a fat finger. we'll see if they get canceled later. back to you. >> some out there, josh issue want to tie it somehow to the news that faber break at the first part of the show. valueact taking a $2 billion stake in microsoft. is that abet against google, but that's beenet onnised today. >> one firm goes ahead the grain and we'll talk to an analyst who upgraded an telea buy when you come back. >> if you're an online shocker you could get an internet sales tax and we'll go back to d.c. when we come back. the ocean gets warmer. the peruvian anchovy harvest suffers. it raises the price of fishmeal, cattle feed and beef. bny mellon turns insights like these into powerful investment strategies. for a university endowment. it funds a marine biologist... who studies the peruvian anchovy. invested in the world. bny mellon. a a big contrarian call today. apple getting know upgrade from buy to hold saying apple's recent weakness is a buying opportunity. of course, the company's set to report earnings tomorrow after the bell. colin gilles, the analyst behind that, and the haiku poet. >> if you can sum it up the entire call in a few words. jump in the fire as any apple good news could boost up the stock. >> any apple good news. >> we have not had any apple good news in 2013, we are bound to get some at some point. let's talk about the march quarter. did they negatively pre-announce. >> >> no. >> it's got to be somewhere in the guidance range. >> we hope. >> it's likely to be, otherwise the company would have negatively preannounced. >> you say one positive momentum for the company is they haven't had to preannounce a bad quarter yet. they're not that bad. >> correct. you know -- >> how did you arrive at that? >> the june quarter, everyone says okay, put march quarter aside, raise your hand if you don't know that the june quarter is likely to be weak. we all get it now. there is a problem that only 15 of the 40 analysts have lowered their analysts for the june quarter. >> i could be wrong in that regard and maybe not everyone has baked in the product refresh, but you do have the product refresh coming and you have the developer conference in june and you'll see the new version of ios 7 that johnny, he's the designer, has taken control of the software and he shh should get a nice, fresh look. the last time ye had gross remembering ma ins was december 2010 and there's ample room for them to get extra blips on the gross margin and helped drive eps and all of that cash sitting there. >> you don't expect any announcement on cash. >> i expected at some point in conjunction with earnings and i think it would be a separate eve event, but -- but it's overdue. >> what's your track record. when did you go to neutral? >> october sfan, 2011. since then the stock is lower than when we downgraded it and it's a decline of 5% compared to the s&p and increasing about 16% and it was a wild ride and the call turned out to be a decent call. >> do you believe you have your arms around channel inventory here? >> you know, so i talk about channel inventory in the note as another area where we can be wrong because people want to look at the verizon numbers and say hey, that will be 36 million units and we just got done worrying about cirrus last night. >> of course, we know that there's weakness out there. i'm modeling 34.5 million iphone which is is below concensus and here i am upgrading the stock, but i think the portfolio managers out there understand this current weakness and people are willing to put their toe back in the water. >> so why have you reduced your price target from 550 to 500 if you're upbeat. there are serious structural problems that will negatively impact apple and declining asps is a real thing and you'll see that in the ipad numbers, right? just the fact that the smartphone market itself is showing signs of maturation. and this is why we upgraded ahead of earnings. there is a 7% move baked in. >> if i'm wrong. to the downside or the upside. >> if we are wrong we're down to 360 and if we're right it's up to 420 and i don't want to be the guy that's upgrading it at that level because there's only more juice left. >> it will never get back above 700 in your view? >> i don't think so. >> why? >> why? because when it was at those levels i kept pointing out the fact that in history, markets have only stayed there from a range of 2 months to 12 months. it is possible, but you have to have the double innovation driver of the ipad and the iphone and i don't see that coming out of apple. >> i know it is a positive which tim cook is suggesting ---y think he's a fantastic coo. >> he's ceo, isn't he? >> he was coo. >> he is a fantastic coo and let's see what they will do to judge how he does as a ceo. >> how much time do you think he has left to prove that point. >> through the end of the year. >> wow! >> that's not -- i mean, i would argue more than that. that seems like a short leash, but i guess it depends what the stock does in the second half, right? >> correct. >> thanks for bringing the heat today. >> my pleasure. >> colin mcginnis. >> still ahead, it's been quite a wild ride for one theme park operator. shares of six flags back booking gains of 45%. plus the senate getting set to vote on a key internet sales tax. you have to look at what it could mean for all of the online retailers and that's coming up next. ♪ [ male announcer ] every car we build must make adrenaline pump and pulses quicken. ♪ to help you not just stay alive... but feel alive. the c-class is no exception. it's a mercedes-benz, through and through. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services. through mercedes-benz and you wouldn't have it any other way.e. but your erectile dysfunction - you know, that could be a question of blood flow. cialis tadalafil for daily use helps you be ready anytime the moment's 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new options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens and i helped create fidelity's options platform. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. a key vote in the senate on the internet sales tax bill is expected this week. the bill would let states collect tax on online purchases and it's caused inearning vittably drama among the online retailers. we talked last week to, bay's ceo john donoghue about it. he is a very outspoken opponent of the bill. a lot of ebay sellers are small businesses that are not -- they're two people, they're four people working out of their garage or working out of a small warehouse and the burden of collecting sales tax from 9600 tax jurisdictions on interstate transactions we think will be cumbersome and ultimately hurt them. we don't think they'll be material to the ecosystem and the results, but we are concerned and we're speaking out on behalf of small business. >> eamon javers joins us from washington. eamon, i see over the weekend and donohoe was emailing 40 million ebay users trying to get them revved up about it and obviously there's a lot of political heat around this potential vote. >> any time you can deliver grassroots mobile situation it helps here in washington and simon, you know a lot of stuff, but i guess there's one thing that you don't know and that is when you buy something on ebay or amazon or any one of these online retailers, you're supposed to pay the sales tax on it and you're supposed to keep track of it yourself and figure out what it is and pay it at the end of the year. most folks don't know that and most taxpayers don't pay that tax and retailers for years have been extraordinairily upset and this gives folks an unfair advantage. now they have a vote in the senate and what this bill would do is they would allow states to force retailers to collect those sales taxes even if the sales tax -- even if the sales were done online and they'll vote on this at 5:30 this afternoon and a culture vote in the senate and that's a procedural vote tomorrow and one of the things that's interesting about this debate is they've gotten new opponents here in the form of a financial industry. take a look at this statement that came out today that came out today from the securities industry association and it could be passed on to consumers of financial services including sales taxes on services or state-level stock transaction services and we continue to oppose any kind of transaction tax as they're essentially a sales tax on investors. the financial industry is worried that this could be a back door financial transaction tax. >> there are a lot of taxes moving in washington, that's for sure. >> thanks a lot, eamon javers. when we come back the sequester effect on travel. faa employee furloughs began yesterday so should we all get ready for a lot more airport delays all around the country? we'll talk to the department of transportation inspector general mary shaf ov when we come back. we went out and asked people a simple question: how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed: the official retirement age. ♪ the question is how do you make sure you have the money you need to enjoy all of these years. ♪ about about an hour into trading and some of the stories we're squawking about. existing home sales fell in march by .6% according to the national association of realtors. the forecast did call for a sales increase. halliburton among the big gainers of the s&p among 3%. the oilfield services company posting better than expected first quarter earnings. toy maker's quarterly profit beat consensus helped by sales growth to brands like my little boney and play-doh. >> we turn to the boston marathon bombings. they are of chechen ethnicity raised in dagestan as well as during stan before emigrateing to the u.s. let's bring in cnbc's chief correspondent, michelle caruso-cabrera. >> chechnya is a region in the southern part of russia that has radical terrorist groups trying to overturn russian rule. we know that tamerlan tsarnaev traveled there and spent time in nearby dagestan next to chechnya which is also home to rebel movements. what did he do there is now the key question. it was a question even before he left. the fbi put out a statement this weekend saying they interviewed tamerlan tsarnaev in early 2011 at the request of a foreign government. nbc news has learned that government was russia. according to the fbi statement the russians were concerned that tamerlan had become a follower of radical islam and he'd changed dramatically in 20 tenas he prepared to travel to their country to join, quote, unspecified underground groups. the fbi did as requested and they checked phone records and interviewed tamerlan and his family and, quote, the fbi did not find any terrorism activity, domestic or foreign and those results were provided to the foreign government in the summer of 2011. fbi says they didn't get any follow-up requests for info from russia. the media remembera of the russian rebel movement mujahadin put out a stoiment in the boston marathon bombings. they claim this is a russian plot to make them look bad and more closely align russia and the u.s. on security issues ahead of the o lympics in soji. >> thank you very much. obviously, a big story. airline passengers are trying to feel the impact of the faa furloughs as they start to kick in in some of the major airports across the country. we'll have to get more insight on just how big a problem this could become for travelers on the cnbc news line. mary schiavo, mary, welcome to the program. >> thank you. good to be with you. >> i thought in advance of the sequester kicking in, there were voices on cnbc and yours may have been one of them that suggested that this would not happen, that actually they were not allowed to do this to passengers, am i wrong? >> well, they're allowed to do the sequester. what they cannot do is simply close the towers and not provide any services to airports that are in the national airspace system plan. so what they have done here is simply do the very simple thing. they have done lack of a total lack of management. there are 137,000 flights per day that use faa air traffic control services and they were two or three times that that do not and so by them saying 6,000 to 7,000 flights were expected and that was a mathematical calculation instead of putting the resources where they need to be they've just done an across the board 5% estimate on delays and it's a total lack of management. by the way, the tower closings which would have saved money, they've now backed away from them and they have not done that and we have staff with less than one flight per hour. >> stay with us. my colleague here kayla tausche was traveling across the weekend. you encountered this. >> i got an email saturday afternoon and my flight was on sunday and it said due to recent sequestration budget cuts there would be delays in my flight. it was american airlines from minneapolis to new york's laguardia and they couldn't provide more details on what would lead to the delays and they had just been informed by the faa of the potential delays at the airline level. we've had these budget cuts in place since the beginning of march and why wasn't there any communication between march and the middle of april as to what had happened here. has there been a failure of communication, too? >> yes, there have. and it's the fault of the federal aviation administration. they have known about they is quest are not since march and this was last september when they were told it was coming. >> their budget which an increase in personnel. they had fallen 26.4% and they were one-fourth less work yet every year they've increased their personnel and increased their budget and they asked congress for even more personnel in 2014 and they just don't get it and they refuse to manage and they need to manage to take care of people. >> at laguardia, was there an average delay of 74 minutes and my flight in particular was held in allentown, pennsylvania, for about an hour when waiting for clearance to land and what was the potential danger that the plane didn't have enough gas and that it runs into some issues because it cannot land. >> well, that is one danger, but tight pilots are trained for that and you have to have reserves and the airlines had to budget for that. what it would do is cost airlines money and that's what the faa is banking on and airlines are threatening to sue them and that will fail because this is a governmental function and they're allowed to use that discretion by delaying the planes on the ground, that actually will increase your safety and increase the savings of the fuel to the airline. you don't want them stacked and holding over new york city. so the controllers themes and their operations, they're doing the right thing by holding the planes on the ground and not having you stack ten levels high in new york. what will be an interesting mix is what do you do on the two-hour on tarmac delays and you can't keep them on planes two hours without feeding them or three hours and you have to let them off and it will be interesting how those two mix and it all comes down to a total lack of management at the faa and i think they're intentionally trying to have the maximum impact and again, they have asked for more money from next year. it makes no sense. >> it's funny you mentioned that and we all remember the jetblue flight that resulted in the policy of not keeping people stranded in the plane and it's the collision of policies that have come along at different times for different reasons. that's amazing. ? that's right. >> and it all falls down to lack of management and planning. they knew this was coming since october. by the way, the department of transportation continues to announce multimillion, in some cases billions of dollars of grants and they did manage their budget in such a way to provide seamless service to the traveling public and that's a failure of management. it's not the fault of the towers. it's more than that, if you listen to the court cases that have been filed by the industry, they believe that the faa has the discretion to spare the controllers through the furloughs and it's deliberately decided not to, which is the point you were hinting at earlier. >> yes, oh, that's true. the department has the ability to change their money, not just throughout the faa, but through the entire department. all they have to do is advise congress. you can't shift money from one division to another that ilvoo eights the law and all you have to do is advise your committee and you can do that. >> for example last week, they announced millionses of dollars of spending grants for, you know, neighborhood projects, for example, but not for this, so i do think that it's intentional, but certainly not the controllers on the ground so to speak, but by management in washington. >> mary, it's always good to talk to you. thank you for sparing the time. mary schiavo, inspector general, have a great week. >> when we come back, another heavy hitter in the activism world sits down, founder and managing partner barry rosenstein joins us live. we'll look at what targets his radar now. this friday a global exclusive interview you won't want to miss. mcdonald's ceo don thompson will sit down with carl quintanilla in a global exclusive interview. you want it, need it, you've got have the taste of "squawk on the street." we'll be right back. ♪ [ agent smith ] i've found software that intrigues me. it appears it's an agent of good. ge has wired their medical hardware with innovative software to be in many places at the same time. using data to connect patients to software, to nurses to the right people and machines. ♪ helping hospitals treat people even better, while dramatically reducing waiting time. now a waiting room is just a room. [ telephone ringing ] [ static warbles ] [ beeping ] red or blue? ♪ let's get back to david faber in new york with a special guest. hey, david. >> hey, carl. we are, as we've said at the active/passive summit and i am joined by barry rosenstein of barrett partners. >> good to be with you. >> nice to have you after a contentious fight withing a ram, and it has concluded aft least for now. janna has not embarked on many proxy fightis and think this was the first one, right? >> you are 0 for 1. you lost your first attempt and why go with the proxy fight and why did you lose? >> okay. well, it's interesting. we've done, for 12 years, 50 campaigns and we've never had a fight. we've never had one go to a proxy so the question is why this one? and you know, i really can't come up with any other reason other than ego. this is a company and a management team that was unable to accept criticism or acknowledge that any of our ideas had any merit not withstanding that they implemented many of the ideas that we suggested and they increased their dividend and they implemented a large buyback. they increased disclosure in the retail business and they added directorses and who they claim head distribution experience after they said that they didn't need that. so, you know, this was a company that was more interested in who got credit for, you know, the ideas rather than what was the best means to improve this company and at the end of the day we felt there were a number of other issues that needed to be addressed including costs, capital allocation, corporate structure, and management incentives and they couldn't come to an understanding. >> and if you lose a proxy fight. does it make you less of a threat in the future? >> i don't think so. not even close. >> you know, in this instance, we had an interesting dynamic. on friday afternoon at the end of the voting period, we won. monday morning i wake up and i found out we lost. you put a press release out on friday and you found out you had two directors based on previous elections and percentages and what happened? this was a company that on a friday afternoon of a holiday weekend after the close moved their voting date up a month to try to cut off the number of votes that would vote for us and to cut off the debate and then when after the voting period closed and they saw we had enough votes to win they lobed shareholders and they got one of the larger canadian institutions to revothe shares. >> they say this is nothing out of the ordinary. >> this is just a question of ethics, but this is a company that, you know, took a win at all cost attitude. most egregiously, they bribed brokers and paid 25 cents a share for votes which was -- and never disclosed it. >> isn't that practice for something along those lines. >> first of all, it's prohibited in the united states and canada. it's not clear. it's primarily been used for merger approval and not for contested elections and it's always disclosed and it's pretty low-bar if, you know, a company can claim that it can do something just because it hasn't been outlawed yet, but you know, the global candidate is the largest newspaper that said agrium's feast to brokers don't pass the smell test and i think everybody, but the company can pretty much agree. >> what i would love to know is what happens now. at this meeting you stood up and said some things, the likes of which i've rarely seen. you are still the largest shareholder of agrium. >> if you played dirty enough and violate all preseps with democracy you can still lose the campaign, but then barely manufacture a victory after the voting is supposed to be over. >> you went on from there and said other choice things. >> that was just the beginning. >> that was just the start. >> you would have no relationship with this company that you're the largest investor in. >> we are still the largest investor and they still have to deal with us and the truth is we shined a very bright spotlight on the company and the company has to perform. they have to do the right things for shareholders because if they don't, you know, they were able it barely steal this election to us at this time. >> two of five. let's be fair. you weren't going get all five directors. >> two of five would have been fine. if they don't perform this year they have to worry about what happens. >> are you going stay there at janna? >> right now we'll see. we are still there and haven't sold a share. >> what's the strategy of being so hostile and vitriolic. >> it wasn't our choice, okay? we were reacting to the circumstances. this is a company that did everything they possibly could ethical or otherwise to win at all costs, and so, you know, i don't regret anything i said becae i told it like it was. there wasn't one thing inaccurate in that statement. >> i want to quickly move on to some situations that are currently developing for janna including one announced for ashland. you guys own 7.5% of the company. they have valvoline and other businesses. what is management like there in terms of are they more receptive? >> i didn't contrast to agrium. they've done a great job in repositioning the company, and i think there's a lot of value and they recognize that the company's undervalued. they've got two very valuable businesses. valvoline and ashland specialty ingredients and those comprise of ebidta and if you have those two businesses alone you have the high of the growth and highest ebitda margins in the industry and you have the lowest valuation. the question is how to isolate that valuation and realize upon it? i think they'll do the right thing. >> which is what? splitting the company? >> there are a number of ways to achieve it, but you know, they have to figure out how to isolate those two businesses, at least. >> and the threat of a proxy fight is still there, i guess, though? >> there's always a threat of proxy fight. i just don't think it will be necessary here. i think we've had very productive conversations with the management team as we have in 49 out of 50 cases, david and we've been able to come to common ground and our reputation is one of collaborations, and agrium is a unique situation. >> and it's still out there. >> barry, as always, appreciate your time and i look forward to talking to you in the future. to barry rosenstein from janna partners. >> fascinating interview. >> david faber, thank you very much. straight ahead in the program. he lost power and almost lost a car. rick santelli's personal account of the flooding in the midwest plus why he's already focused on friday's data. that's ahead on "squawk on the street." ♪ ♪ here we are, me and you ♪ on the road ♪ and we know that it goes on and on ♪ [ female announcer ] you're 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 welcome back welcome back to "squawk on the street." and the first santelli exchange of the week. i always want the economy to perform better. i want us to be able to measure a bigger economy around, of cou, have that translate into the major area that all of the funnel of economic measurements flow towards, in my opinion, and that is the creation of new jobs and, hence, the creation of new taxpayers, new revenue base. that's the way it's supposed to work. now, i'm also a big fan of new technology. if we can do things better, we should. now we are at a cross roads where i have to admit i have some misgivings but, hey, technology aside, we're improving. there's going to be some significant changes to the way we calculate gdp starting in july which means the number we get about three months from today when we get our first look at second quarter gdp may be significantly bigger. now, i'd like to quote, and it's on cnbc.com today as well as in the financial times, something that was written by robin harding quoting one of the gentleman who sat the bur oh of economic analysis, brent moulton. here is what he said. we are carrying these major changes all of the way back in time, which for us means to 1929, so we are essentially rewriting economic history. now, you can see why i'm scratching my head a little bit. i guess, you know, when the government or any employee is going to tell us they're rewriting history, my issue is, is that it's tough to get your gps, first of all, and it comes at a time when we already don't have a gps. let's go quickly as to what some of the major changes are. many are saying that means we're going to see a 3% bigger gdps. we'll have to wait and see. they're adding research and development, which i think is a good thing. the example in this article is you're not only going to include an ipod you're going to code all of the activity to help generate at the research and development. carry that to hollywood and tv and movies and the r&d on the creative worksite. here's the one that i like a lot. they're going to include underfunded pension lilktabilit. i hope it's not seing a table by maya cope a in municipalities and states. many are looking for it to be 3% or maybe higher. that will not include those changes. a lot of this is based on income consumption inventories. we'll have to wait and see. carl, back to you. >> rick, can't wait to talk to you in the next hour about some of the experiences you've had at home in the past few days. we'll save that for a few minutes from now. rick santelli, thanks a lot. the billionaire is making a move into territory. bill marry koch is making the papers. the company has been on the block since it emerged from the bankruptcy at the end of last year. move raising a few eyebrows because the koch brothers have done little in the media space in the past. koch industries saying, as an entrepreneurialial company with 60,000 employees around the world, we are constantly exploring profitable opportunities in many industries and sectors so it's natural that our name would come up with this rumor. we respect the independence of the journalistic institutions referenced in the news stories but it is our long-standing policy to not comment on deals or rumors of deals we may or may not be exploring. >> tribune is now essentially a tv company. the paper worth about $600 million. they've been looking to spin those off of sell them. since february, new ceo. i'm told warren buffett is looking at one of the papers in fact portfolio. company wants to sell them as a package deal but you've got to imagine a lot of billionaires want to play here. >> buffett has tried to explain what makes local papers appealing in the most recent shareholder letter. >> you mentioned buffett and the koch brothers are coming at it from different angles. >> you would have to think. might meet in the middle. >> potentially bloomberg, too, could be in there. >> thanks. always great having you here. if you're just joining us, here's what you missed. >> welcome to hour three of "squawk on the street." here's what's happening so far. despite what interest rates may be tell you about negative real returns there's going to be a significant asset allocation to fixed income and it's going to remain because of the need for safety as a result of 2008. >> we just think we're looking at close to a floor here and i don't think it can get -- it could always get worse but i'm thinking we're bumping the bottom in mining. >> we talked win vesters are skeptical. worried about margins. all these kind of things keep coming up. even some of proprietary metrics show this. >> we're far from frothy. >> we're neutral. >> one of the larger activists focused funds that are roughly $12 billion in asset under management, will announce it's taking a 2 billion position in microsoft making it one of the largest shareholders. >> opening bell. >> we believe that if we strengthen the board today, if we add for new high quality board members to the board today there will better board members from which to choose those five, best interest of depot and shareholders. it's just makes sense. >> it is a fantastic coo. let's see what he does to judge how he doess a a ceo. >> how much time do you think he has left to prove that point? >> until the end of the year. >> how. >> end of the year. >> good monday morning. we're live at "post 9" at the new york stock exchange. the dow after the worst week since june last week, adding to the losses today. down 62 points. a lot of that coming as a result of a couple of big industrial names. ge a big leerz today. s&p is down almost three. snz barely hanging on to a gain of two points at 32.07. microsoft spiking higher after david faber reports that valueact will engage the microsoft board over time only if it's unhappy. airline stocks, some of the big losers as furloughs begin for air traffic controllers around the country. the furloughs are part of sequestration and blamed for large numbers of flight delays around the united states. road map today, apple trading higher finally. a day before it reports quarterly results. we're going to talk to an analyst who cut his price target on the stock for a second time in less than one week. find out why he's worried. six flags beating the street thanks largely to spring break. the chairman and ceo will join us live. co-owner of the boston celtics joins us for an exclusive interview a week after the marathon bombings. he will tell us how they have impacted him. bmo cutting price targets on apple. this time to 440 based on earnings screen from verizon. firm cut am's price target last wednesday from 460 to 580. keith bachmann joins us this morning on the news line. good morning to you. >> good morning, carl. >> we make a big deal of two times in one week. you're taking more of a scalpel to these numbers than a bludgeon. what's behind the cuts? >> two things. if you aggregate the cuts that we made over the last week and change, number one, we had the chance to visit with a number of carriers around the world 5and get a sense of the market. we think that the market is moving to lower price points, if you will, and we think apple will participate in that. so we cut our forecast not only due to lower unit volumes because we think the market is forcing greater competition with samsung in particular but also many lower end asian carriers and, secondly, as i said, we think apple will move into what we call a more mid-priced phone later this year and so we also lowered our asps if you will for the average phone that we think that apple will sell over the next into fy14. those are the two reasons why primarily why we cut our forecast for a. >> we mentioned basing some of these on verizon. wasn't -- i mean, weren't iphone activations above consensus for verizon and wasn't there a higher mix of smartphones verse us a year ago? >> there was. it was about in line to slightly less than the forecast. the greater issue relative to our forecast and i think to market expectations were if you really look at the -- really look at the numbers they sold about 50% of what we call lower end iphones and 50 percent of iphone 5. and that's a trend that's negative for apple. i don't think that's captured by street estimates and certainly wasn't captured by ours. just to give you an example. for the balance of the year we assumed that apple would sell 70% higher. verizon's mix of 50/50 was a negative indication for apple. and that's in fact why we cut -- primarily why we cut our flum bers this morning. interestingly enough, i think that -- ironically enough, i should say, in europe, penetration and sales of iphone 5 will end up being higher than what we're experiencing here in the states. >> that is -- that is a curiosity given how our economies have differentiated between u.s. and europe. i mean, the car market says a lot to that. >> yes. >> let me ask you this. when you talk about the low end, how low are we talking? how cheap wdoes the phone have o be to capture that market? >> the way we think about it is, i got to be a little bit careful because when we think about apple i should say mid-price phone. we're thinking in our model we think that this mid-price phone will be $350 to $400. yes used a weighted average of $375. we think that's the price point with which apple will come into the market the second half of the calendar year. and it's really a mid price phone. we don't see apple going below $300. that's a different market segment which would be very tough for a to compete in that segment. >> you think this is a third quarter launch? does it happen after next gen 5s? >> we do. we don't pretend to have greater intelligence. >> finally someone admits that. >> i'm free to admit it. i think apple will first come out with a 5s phone. and when that is, we think in the third quarter, broadly speaking. i'm not sure that's going to be a huge catalyst for the stock or momentum because i think it's going to be more tweaks than it is extraordinary changes. and then we think whatever the mid price phone is called, we think is probably closer to the end of the year on a calendar year basis when that, in fact, hits the market. as part of that we think an important segment will be working with china mobile which is a carrier that apple doesn't currently work with. >> the day they announce china mobile, keith, that's a day the stock will probably go up. who knows by how much, but people have been waiting for that for a long time. >> i would agree with that. >> thank you so much for your time, keith. interesting analysis. >> okay, carl. cheers. i want to move on to netflix. the stock up sharply ahead of earnings this afternoon. jul jul jul julia boorstin is live. wonder the house of cards was worth it? >> that's right, carl. it's up ahead of the earnings report due out after the bell this afternoon. perhaps the most important number to watch is is it in netflix' streaming subscriber numbers. they expected the net additions to be slightly more than the 1.7 million subscribe weers it added in the year ago quarter. that could prove an indication of whether netflix '100 million investment in "house of cards" pays off. the first quarter's big push in original content with another original series launching last weekend and "arrested development" out next month. investors are eager to see if the new strategy is working. today eric wald upgraded the stock to neutral and increased the price target and national alliance capital upgraded the stock to accumulate and upped the price target as well. netflix shares have pulled back over the past month a bit but the stock is still up about 82% year to date. analysts expect the company to report 17% higher revenue than a year ago while earnings per share are expected to grow to 19 cents, swinging from a loss of 8 cents a share in the year ago quarter. we'll also be watching in the earnings report and also the conference call today of the company's international results. netflix saying it expects losses in the international area to continue to decline. we're also awaiting news of which international markets the company will expand into in the second half of the year. carl? >> interesting, julia. the stock, we all know, had doubled for the year to date. so far now, up 83%. not terrible but not as good as it was. julia boorstin in los angeles today on netflix. i want to get the latest in the boston marathon bombing case. the wounded suspect responding to questions while still in serious condition at a boston hospital. our scott cone is live in boston with the latest. scott, good morning once again. >> good morning, carl. at this hour one of the victims of last monday's bombings is being laid to rest. krystle campbell is one of the three people killed. funeral is now under way here in boston. meanti meantime, dozens of injured victims are still recovering in area hospitals including beth israel methodist center where someone else is recovering, dzhokhar tsarnaev who was wounded following that police chase. he could face criminal charges as soon as today. and as you said, he is reportedly responding to some questions, at least in writing. although officially he is in serious condition and we now know that both he and his older brother for some three days hid in plain sight. in fact, dzhokhar tsarnaev, a student at u mass at dartmouth, was reportedly working out at the gym, partying, talking to his friends about how unfortunate the bombings were. and then, of course, they went into this police chase on thursday after the pictures of him and his brother were released. and there are now questions about whether all of this could have been prevented. tamerlan tsarnaev, of course, we now know, was interviewed by fbi at the request of russian authorities in 2011. he went back to his native russia last year. came back and there was no follow-up. and now authorities are asking for some answers. mike mccall, the chairman of the house homeland security committee and peter king of new york, the chairman of the anti-terrorism subcommittee, sending a letter to authorities in the administration saying that this appears to be the fifth time that a suspect has been -- has tried to carry out a terrorism -- terrorist attack since 9/11. and saying that they want any information about interaction with tamerlan tsarnaev up until april 15th, 2013, the date of the bombings. they want that by the end of this week. this is a bipartisan issue though. here's democratic senator chuck schumer of new york. >> this man was pointed out by a foreign government to be dangerous. he was interviewed by the fbi once. what did they find out? what did they miss? then he went to russia and to chechnya. why wasn't he interviewed when he came back? >> the questions now beginning as boston tries to heal. at 2:50 today local time one week exactly since the bombings, there will be a moment of silence and church bells throughout the city. carl? >> i believe the mayor just recently, scott, said he will be in the neighborhood of martin richard at 2:50 as that moment of silence. scott, thank you so much. here's a question, did your flight get delayed this weekend? if it did, you can probably blame sequestration. faa furloughs wreaking havoc on travelers and airlines starting this weekend. we'll tell you what you might expect the next time you fly. rick santelli looking at the markets today and talking about what it's like to see flooding like you saw in the past week, rick. >> oh, yeah. we will show some pictures. it's not about necessarily your house flooding, it's about all the arteries to get away from your house that may flood. we're also going to talk about have we flooded the economy with growth? we're looking for 3% gdp friday. we're going to talk about that, changes to gdp with dan the manual coming up in about ten minutes. tune in. welcome back to "squawk on the street." i'm josh lipton. ralph lauren edging lower this morning. the company agreed to pay some $1.6 million to settle a criminal and civil investigation, allegations that one of its subsidiaries bribd government officials in argenti argentina. the department of justice saying ralph lauren will pay $882,000. the se krerks saying it skournlged 700,000 in profits. that stock is down right now. carl, back to you. >> interesting. not a lot of money, per se, josh, but the stock gets your attention today. thanks a lot. when we come back, how spring breakers helped six flags beat the street and break some records. the chairman and ceo will join us live for the first reaction in the quarter in just a little bit. back after a break. air travelers brace for delays today after thousands of faa workers were hit with furloughs this weekend. hampton pearson is live at reagan national airport outside of d.c. with more on that. hampt hampton, good morning. >> here at reagan national we've got a handful of flights delayed, anywhere from 30 minutes to an hour. however, the number of flights being delayed have, in fact, increased. there's bigger problems with the new york airports, newark, we're told, 45 minute delays on flights leaving the airport and longer delays on inbound flights at jfk and laguardia. we're not exactly sure the specific time on that. this, of course, the first full day of the faa and the airlines telling travelers that basically from now until the end of the september, furloughs tied to the sequester could produce those kinds of delays. we had an faa statement release toefrd weekend reading in part, the faa will be working with the airlines and using a comprehensive set of air traffic management tools to minimize the delay impacts of lower staffing as we move into the busy summer travel season. now, we've got a counter view from the global visit travel association. they're saying, quote, our nation's xhid and businesses will pay a very steep price that significantly outstrips the goals produced savings through those furloughs. business and leisure travellers we talked to earlier today agree. >> traveling is stressful enough and when you don't know how long it's going to take you to get through the line, you have to add extra time that you wish you didn't have to to get from point a to point b. >> that will impact not only the stockholders, the employees, but also all of our customers. >> now, for the record, the faa will be furloughing 15,000 controllers. they have to take at least one day off every other week from now through the end of september. in our next update on "power lun lunch" we're going to talk to a spokesman for the airline freight association. they, in fact, are suing the faa over the furlough policy. >> this is about to get nasty, you can tell, hampton. thanks so much. hampton pearson at reagan in washington. let's get to rick santelli in chicago on what to expect from the big gdp number coming friday. rick? >> absolutely, carl. it's always a biggie. gdp, retail sales top the list as jobs top of my guest list is dan. dan the man, all right, i see a lot of calls for 3% or higher. i see some 3.7%. now, i understand two things. this new way we're going to calculate data for gdp doesn't start this time. >> right. >> and the numbers have turned a lot more southward the last several weeks. >> correct. >> especially retail sales. your thoughts? >> i don't think there's a chance we're going to see 3%. i'd love to see 3% because it means we're growing. but just based on the fourth quarter we had, it was terrible. is it all going to come back in the fourth quarter? doesn't look good. we had soft numbers. i don't like to use one months as my gauge. i'd like to use a few months. >> yeah, and i do see some friends on cnbc on the analytical side specifically honing in on the personal income and spending numbers we had on the 29th of march. there has been some decent consumption out there. but i think we also have to look at some of the companies' earnings as you pointed out. >> earnings, again, has been beating expectations but the guidance has become soft. it went from 52% to 45% positive. that's starting to bother people's psyche. the confidence level is way down right now. that's not going to help going forward. >> sell in maine, go a way. we're kind of in the zone right before that. it will be fascinating. quickly now, on energy, i don't know about you but i've noticed that the climate change crowd, and i think that they carry this stuff way overboard. i like our planet, too, but the really anti-fracking that's really going big time, i think this is a time we should have a better energy plan. your thoughts? >> we should have. one of the problems we've had oil come down quite a bit in price so the urgency doesn't seem to be there. but this is our pathological path to the future. we've got to figure out a way of doing it. green energy is fine and dandy but we can't do it now. we need a bridge. national gas is there. the people that promote it and do the fracking need to do a better job of explaining how it's not going to destroy the environment. >> so you brought up a great point. whether it's the sequester or whether it's fracking, here's my assessment of bad leadership on a number of fronts. we should be saying things like, when it comes to fracking, let the u.s. set the standard. let's bring the energy companys, let's bring government people from around the globe and do it in the best way we can. if we don't do it here, again, does that mean we're not going to do it anywhere? >> we've got to capitalize on it. >> to me it just shows that the anti-fossil fuel crowd is missing the point on several fronts. plugging cars use grids. a lot of things use grids like coal. if you really love the planet, it's a close system, folks, whether it's canada, whether it's china, whether it's places around the globe. if we can't set the standard, lower standards are going to be set and energy is going to come out. >> natural gas is far cleaner than the diesel we use in our trucks and the gasoline. we're helping the environment. there have been studies where our emissions have gone down. hard partly because of the slowdown and partly because year starting to use natural gas. >> i think he would be a great acquisition to your team. >> i'm ready. >> carl, back to you. >> before you go, i know you've got some pictures to share with us. a lot of people may not realize just what kind of weather the midwest got over the past week. >> i'll tell you what, the first two pictures, folks, the santellis at 5:30 in the morning, my wife and i made it through the first two pictures. we call it dead man's curve. it's right down the street from my house. see the problem is, certain suburbs had five inches, other suburbs had eight inches between wednesday and thursday. many suburbs had over ten inches of rain. and the problem in my uncorporated area of having 35 miles west of the city, very rural, wasn't my house. we planned. you know, we had backups. i have sump pumps that can probably empty lake michigan in an hour, okay? the problem is it's the arteries to go places. couldn't go anywhere. and even though our suv made it through two big puddles, when it's dark and the barricades are not up, the third puddle did it in. so we didn't make it. >> you do worry about safety, rick. are the cars okay? i mean, you got some gorgeous cars. >> you know, my extra garage in the homestead really didn't take it bad. it was pretty much the other areas. the car that the family drives to and fro, if i didn't have a friend that pulled the car out half hour after we got stuck, the water hadn't crested, the car would have been under water 40 minutes more, i went home, put the car on the lift, dried out all the parts and it is now running! so i beat nature at least a little bit. >> very nice, rick. we missed you for a couple of days but glad to have you back. rick santelli, bringing us up to speed in chicago. >> thank you. the bell is about to sound in jueurope. 2:30 away. don't go away. the european markets are closing now. >> more often than not you can look at that map and basically tell how we're trading here in the u.s. simon, not so much today. >> no, for the first time much of europe has been -- remains in positive territory when u.s. markets have fallen. incidentally, it chaos over germany today. canceling over 17,000 flights. but the bigger deal coming out of europe over the weekend, this is why you see italy and spain and ireland and other weaker nations doing well is that they've decided to re-elect their 87-year-old president for an unprecedented second term. it's important because this has signaled the political paralysis may be at an end. this is him, napalitano talking today. they will attempt to form a grand coalition under him therefore we won't get elections near term and we'll debate whether or not they can push through the sort of economic measures they need to. at the moment, the italian banks have led the rally in italy. you can see that kind of there. you've also seen, and this is why the peripheral bond market rally again today, pushing yields down in italy and spain to 2 1/2-year lows. 4.06% on the italian ten-years. come back slightly from that. other banks around europe have also risen in simply arguably be called there has been some selling into that. they are doing well. kbc in gbelgium is doing higher. the attention turns to spain more but let's save that for another day. >> we have plenty of time to worry about it. that's for sure. let's get a check on energy and commodities as well. sharon epperson had a crazy week of her own. >> we are looking at gold prices after the crazy week of last week and a decline. we saw last week which was the biggest on record in dollar terms perp now seeing gold at $26. many traders here asking are these gains really going to last? we have seen gold come off of the highs of the session, 14.38 was the high. we are still 100 bucks from last week's low. that happened last tuesday at $13.21 an ounce. keep in mind, part of what we're seeing here in terms of what's helping to support gold prices is physical demand. we're seeing demand for gold coins, gold bars, gold jewelry. here in the u.s. as well as in asia and, in fact, there are some reports from china that we are seeing from the chinese gold and silver exchange that they've almost run out of physical gold according to some reports. there's been such a strong demand there. meanwhile, when you look at where gold has gone over the last 6 1/2 months, down about 20% or so, technically some traders say now it looks like perhaps we're near a bottom. others say, no, we have further to go and barclays looking for a downside target between 1275 and 1300 an ounce for gold. in the oil prices, somewhat mixed. the june is now the front month contract. we will continue to watch what happens with the price action there, particularly whether brent can hold above the $100 a barrel mark. we cover that territory. the good news, carl, is that we are seeing some declines in commodity. people love to see decline, gasoline. gasoline futures are down 11% this month and that means that month to day we're seeing decline in prices at the pump as well. we're at $3.52 a gallon for the national average. back to you. >> you're right about the gas price, a tax cut for everyone. >> that's right. pisani is here at post 9. >> the good news is we're seeing some buying interest t in the beaten up materials and industrial names. look at what's going on. i encouraged by the fact we're not seeing any big declines right now. energy and material, tech as well. that got beaten up last week. health care, consumer staples, stable. there are a little bit of warning signs. by the way, all 20 stocks in the transports are down. that's a little strange when you've got materials and tech to the upside. let's move on and show you some of the multi-industry names. tomorrow is going to be a big day. we're going get ingersoll rand and india tool works. textron is getting hit again today. ge had a disappointing report. it's getting hit again today. you want to keep an eye on these companies because they do all the big, big international work. they make all the stuff bed hind the walls, pumps and tools and engine parts. keep an eye on what's going on here. so far, it's been very micked with some of the big names have been off a little bit. i'm not terribly happy with the numbers this morning on existing home sales. i'm not raising a flag of warning yet but we've had some disappointing trends recently. you see here the toll brothers, these are all the big names this this group, to the downside. here's the question. it's not just march economic numbers in general that's had some slowdown. even housing numbers. we're in an up trend in housing overall. right now we're seeing march existing home sales disappoint. we've got april build a sentiment. that's been the lowest since october. march single family sales down 5%. i don't know. i'm a little bit concerned about this. i'm not raising the red flag yet. there is good news. existing home sales year over year are up nicely. they're up about 10%. supply of homes is down year over year. the median prices are up. that's still good news. what you want to look at here, and bring me up here because i want to show you here the chart of ten-year home sales and the important thing is the trend line is still up. we were up at 7 million homes a long time ago. 7 million a long time ago. ten-year home sales. the trend is still up. we've been stuck here for a little while here. we were way up here in 2005. now we're still moving up but it slowed down. we've got to get over 5 million but we're stuck. remember, we dropped almost $250 last week in gold. we're coming back. look at that. there's your $250 drop. $100 above where we were last week. story here is we've regained 40% of a losses that we've had. and some of the gold stocks are also starting to come back. i know nobody is sort of watching that but slowly but surely, 40% of the losses have been regained the last few days. >> elevator down, stairs up? >> yes. i think mostly indians. the indian women of the world has seen, reports they're out buying very heavily. >> huge buyer as we know. thanks, bob. bob pisani. six flags reaching an all-time high after first quarter earnings beat estimates. revenue growth rose 32% over the prior year. attendance up 41% in the quarter. some schools scheduled spring break in march versus april. joining us for first on cnbc interview is james reid-anderson, chairman and ceo of six flags who is in chicago today. good to have you. >> it's great to be here, carl. thank you. >> that is a torrid number on growth in terms of attendance. even if you strip out the spring brachieak calendar stuff, how sg was the first quarter? >> it was a very strongongquart. we've seen incredibly strong momentum over the last couple of years as a result of our focused strategy on creating news in every park for our ges and trying to get the message across to them that six flags is back and big. >> we know howl howe well the stock has done this year. obviously it's been an interesting strategic play to watch for a while. now people want to know how q2 is going to go, how the summer is shaping up. everybody wants to focus in on this we the fered revenue metric of a sign of, okay,are people buying more season passes. what does that look like? >> i think that it's a very interesting metric. we, carl, don't provide any short-term guidance. we only provide long-term guidance. our guidance is we will achieve $500 million ebitda by 2015 and currently running at about $425 million. we're well on the path doubling our ebitda from where we were a couple years ago. with regard to the deferred revenue our season pass sales have been very strong. you know, very strong, double digit gains in every single part. and the reason that's important is it lets you know what's to come. it suggests that the future is very positive because we'll be having more guests attending our parks and across every single park in our network. >> we just got done hearing from our correspondent at the nymex talking about gasoline futures which continue to come in. i mean, typically, you know, we worry about the summer driving season and the impact on businesses like yours, james, but those dynamics don't seem to be shaping up this year. are you worried about that, or not? >> you know, we always keep an eye on everything. we keep an eye on the economy, on gas prices, but we found that it has very little effect. when gatt prices hit $5 we saw little effect. i think the beauty of this industry is that we're very stable, even in a tough economy. there are high barriers to entry. i think there's high recurring revenue, carl. when you look at our performance and the fact that we've grown, you know, last 12 months another te attendance is up 8%, with we doubled our profitability in less than three years. we now have cash earnings per share of $4.50 per share. we pay a dividend of 60 over a 5 hrs yield. this is a good company to invest in. and especially so, i think, in a tough economy. >> yeah. a lot of the analysts have price targets that you're already exceeding. i want to get to one last question on roller coasters. you've got the full throttle, fastest and tallest looping coaster, 0 to 70. you've got the iron rattler which is an inverted barrel roll on a hybrid wooden -- are we reaching the limits of physics in terms of what roller coasters can give us? >> you know what, we're always looking to innovate, carl. and i think we have found the formula to innovate at a really reasonable cost. we invest about 9% of our revenue in new technology and new rides and new exciting activities for our guests. but, no, we will always look at ways that we can continue to excite our guests. i do have to let you know, though, that it's not just about roller coasters. we have 800 different rides for all of our guests. we also have the largest safari outside of africa. you know, we have other animal facili facilities. and we have several beautiful water parks. in my opinion, the most beautiful water parks in the world. we have shows. tremendous amount. it's not just about roller coaster. >> it's just my own personal fascination. but i assume you must have a cast iron stomach if you have to give test rides on any of these. >> i do. and i go on all of them. and i have many favorites but i tell you what, full throttle coming at magic mountain, that's going to be special. so will the iron rattler. you know, which will be a first in many ways, and so i'm hoping, carl, that we can get you and i to go on one of these together. what do you think? >> sold, sold, james. >> it's a deal. >> we'll get our camera men on board, too, hopefully. thank you for your time. >> it's a pleasure. thank you for inviting me. when we come back, the co-owner of the boston celtics speaks out as the city tries to get back to normal. steve pagliuca gives us a live cnbc exclusive after the break. moment of truth. what will the busiest week of earnings season mean for stocks? we're going have the trader it is it's time to get bullish. apple's big day is tomorrow. can it report a turn around and turn around the beaten down tech sector and the big money is betting on gold. should you be, too? our traders are going to weigh in at the top of the hour, carl. >> welcome back, scott wapner back at hq. boston sports teams have been showing their support in the wake of the marathon bombing. celtics put together multiple initiatives to assist the marathon victims. celtics shamrock foundation is committed to raising $200,000 to support the one fund boston which will provide for the families effected by the tragedy. we're joined this morning by steve pagliuca, co-owner of the celtics and imagine director at bain capital. bain pledged $1 million to the one fund. good to have you back. welcome. >> great to be here, carl. >> i don't need to tell you we've all been thinking about you and your city. your office is right there on boylestown street. what happened? >> we heard the explosions the first people thought it was fireworks. then we got the calls coming in that it was explosions. so everyone, you know, went to the windows and we called our security folks, our security folkses found out where all the people were but it was the most unbelievable thing was looking down the window and seeing citizens and first responders run towards the blasts, not away. and rescue so many people. it was an amazing effort by the first responders and citizens to help other citizens. it was really incredible to see. >> and in a way, you also were running to the scene of need in this one fund initiative. what's the intent and how can average americans help? what's the easiest way? >> the easiest is probably to go to onefundboston.org. the major and governor rapidly got together as soon as the crisis happened knowing there would be so many victims, 170 people injured. it's been terrible for those folks. so they came together, put to the this one fund, as you said before, bain capital is one of the cornerstones of that. the partners of bain capital quickly met and are donating a million dollars to it. several other firms are doing that. the sports community as well. the red sox, the patriots, the bruins, and the celtics with different events are probably going to raise over a million dollars as well. it's been extraordinary how the whole town of boston has come together to n. this disaster and try and help the people who were so victimized. >> yes. and we all know the victims here come first. people are interested in making sure that they've their needs are met. in general, steve, do you see the town changing? do you want to see broad changes in security? i'm just wondering what happens from here on out. >> well, i think they'll learn from this disaster. i'm not a security expert and what we're po focusing on the boston business community and sports community is really to get a large fund to help these victims. i think the fund is probably over $10 million at this point and the mayor and the governor and police chief have done a fantastic job. so i think they will review everything that happened here. the amazing thing we saw was thousands of police on the streets systemic search, people working 24 by 7, the mayor had broken his leg last week and was in the hospital and got a pass to come out of the hospital to be on site. the governor was there as well. in boston, we really love our elected official here. the governor has been here a long time. the mayor has been here 20 years. we took solis in the fact that they were out there trying to catch these terrorists and did ultimately catch them so rapidly with an organized effort. it's almost like this pro sports here is almost like a college town. so celtics fans, bruins fans, red sox fans, patriots fans and all the clubs have pitched in and are really supporting the victims and the mayor. boston has really come together. i think the one fund is a great name for it because boston has come together as one and you will see that as the sporting events goes on. >> on a slightly lighter note, steve, as we let you go, you got carmelo and paul pierce together on the floor, the yankees playing "sweet caroline." i wonder if you think the boston/new york rivalry is in any danger of going away completely? >> i think it's in no danger of going away but certainly everyone in boston is so appreciative of the outreach from new york. the nba, all the clubs calling in and giving money to the fund to up support us, it really makes you proud of the whole country and proud of the community that we live in. so i think boston is going to recover. this disaster is going to hurt these victims for a long time. that's why i think we need this money to help those people who will really have a long road to come back but they will come back as the president said, they will come back and i think we'll have a great marathon next year. boston will recover. and it's just a resilient, great town to be in and just wonderful to see all the people come together. >> steve, thanks so much for talking to us. see you soon. steve pagliuca joining us from boston today. to netflix, tackling all the names you need to know so you fit.t.he a profit. re at optionsxpress, our clients really seem to appreciate our powerful, easy-to-use platform. another one? traders love our trading patterns, now with options patterns. what's not to love? they see what others are trading -- like the day's top 10 options trades by volume -- and get ideas! yea i have an idea: how about trading that in for a salad? [ male announcer ] so come trade at the place that's all about options and futures. optionsxpress. open an account today and get a $150 amazon.com gift card when you call 1-888-280-0154 now. optionsxpress by charles schwab. when ybut i am your-280-0154 rmarket data. i know what you're looking for. i'm not chained to your desk anymore. i'm 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. welcome back. welcome back. i'm melissa lee along with herb greenberg and kate kelly. first offer, let's get to the scorecard here with 21% of companies reporting so far. 67% beat their targets, 8% met estimates, 24% have come in below forecasts. but it is a different story when we take a look at the revenue picture. only 44% of s&p companies have beat their revenue estimates this quarter. that is way below the long-term average. we've seen some pretty notable misses. ibm, for instance, came in 5% below consensus. google came in 2.4% below consensus and axp as well, down 2% from consensus. >> that revenue number on missing -- i don't like the game. but it is out there. brian sullivan mentioned something about this earlier on "squawk on the street." 6:00 this morning, i said to him, brian, you can't cut your way to prosperity. it's an old cliche. but when you start seeing it, you're watching the beat the street on the low end on eps because they -- that's what the street wants to watch. >> because of engineering or buybacks. that's going to play a major role. right now, multiples, you are paying for growth. if it's not there, that is a reason -- for instance, ibm, look at the carnage we saw on friday. >> investors hate this. ibm was single-handedly dragging down the dow on friday night because people were unpleasantly surprised by the results. >> got to talk about caterpillar. caterpillar came in below expectations. the company calling a bottom on the mining industry here. a lot of great headlines from the ceo here. >> absolutely. we had doug on "squawk box" this morning. he had a lot of interesting color about mining and his business in generally. a couple of things that caught my eye, he said, we think we're looking at close to a floor here, i think we're bumping along the bottom in mining. and then he said, i don't want to be overly optimistic here but it certainly feels a little bit better than the last two springs. >> you have to wonder when you see forecasts on the street come down four metals, base metals and precious metals alike, most notably gold with goldman sachs slashing their forecasts and raising concerns about the creditworth t wourt creditwort creditworthiness about these companies, there's a whole ripple effect here. >> the caterpillar ceo said he thinks about $1,400, gold is a decent price for the miners. street expectations think gold could be in the $1,200s for the next few years. this year will be fairly weak in terms of orders and manufacturing. but the lead time for manufacturing has shrunk, what it's going to look like in '14 and '15. >> herb, you like clean streets. >> i do. >> but it looks like there are fewer of them around these days. >> tenet makes streetsweepers. sluggish sales of cleaning equipment in all geographies tells you a ton about what's going on in the municipality spending market. >> that is the earnings squad for this morning. to join the conversation, tweet us. we'll be back with more during "street signs." coming up next on "squawk on the street," the immigration debate heats up in the senate and things get fiery. we'll show you what happened right after this. ♪ ♪ [ male announcer ] help brazil reduce its overall reliance on foreign imports with the launch of the country's largest petrochemical operation. ♪ when emerson takes up the challenge, "it's never been done before" simply becomes consider it solved. emerson. ♪ let's vote on it. let's vote on it. i say that particularly to those who are pointing to what happened, the terrible tragedy in boston, as a -- i would say excuse for not doing a bill or delaying it many months or years. >> i never said that. >> i didn't say you did. >> never said that. >> i didn't say you did, sir. i don't mean you, mr. gras.

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