we're bouncing off demand, you have to be nor fleet foot, if you want to trade names aggressively. we've been underweight the xle since 28th of february and underweight stance we prefer an exxon or chevron or a cash return play. the next move obviously would be to think about going overweight when we believe in oil prices and sustainability and we'll go long beta. for now we look for cash return defense and exxon's the name. we're not making it a big exciting oil call here in terms of being bullish on the equities. i will say, brent is holding high levels and with the opening of pipelines in the u.s., you could see a nice rally in wti. so i think we're looking for the opportunity to go a bit longer than we've been. but for now, we remain underweight and long cash return napes. for us it was originally conoco, now we've rotated into exxon, because of the rising dividend that we perceive to be coming. >> some focus on what is happening with iran and the prospect maybe there could be a deal over the summer and the degree to which the price of oil might fall, and you hear people talk 15 or 20 bucks. that clearly isn't where you are. >> i think that the premium in oil was as high as 15 or 20 when people were panicking about the straits of hormuz hoile has held at 20 brent, you're at a point where iran is in negotiations, clearly the risk premium has come out, and i think it's replaced by the fact that we still have rising demand for oil here, we still have a growing economy, but we're $120 a barrel. that's very bullish. i think the fundamentals have overtaken the geopolitical to hold the price up where it's been held. and as a result of that, i don't see $15 premium any longer. additionally, i don't see the risk coming out of the middle east anytime soon, i'm afraid to say. arguments that maybe more inspections in iran will bring the risk out of oil fail really to see the bigger picture, as much about middle east demand growth as it about middle east risk. >> interesting. one note, exxon is the first dow component to miss so far this year. weave had 19 -- we've had 19, 18 -- mcdonald's did match. they break the no-hitter, so to speak. thanks for your time. paul sanky. >> brian sullivan for a quick market flash. >> just a quick check on monster worldwide, this is the best performer in the s&p 500 right now. company coming in ahead of expectations. also bookings rose more than expected the first quarter. guys, this plays off the initial jobless claim. this is a job search company, monster.com, there you go, monster worldwide up 8.5%. also, i'm digging on pcs, metro pcs, the worst performer in the s&p. not a lot of news. trying to find out why. when i get it, i will bring it to you you in a flash. >> thank you. we'll talk about u.p.s. u.s. is fascinating on the one hand, doing well here in the united states on volumes, but trouble with air freight in asia. we'll have an analyst on what you should do with the stock now, after the break. if you're one of the 64 million member of costco, you may know it sells from cashews, lawn chairs to diamond rings. the number one product is toilet paper. and a new cnbc documentary, which premieres tonighting costco's made a habit of banking on essential items. >> feel it, crunch it together like this. bring it forward into your hand like you're going to bunch it up so you feel the bulk but also feeling the different softness. feel a difference? >> i think so? >> takes a lot of training. >> reporter: it's that obsessiveness makes you laugh, well, costco's laughing, too, all the way to the bank. doing the little things right over and over again, has made costco's found somewhere recently retired ceo, jim sinegal, a very wealthy man. >> i wonder what middle america would think if they knew there were complicated benchmarks for something as simple as this. >> i think, so most stories there's more behind the curtains that you expect. generally speaking, all we're trying to do is sell stuff cheerp than anybody else but there's more work that goes into it. i'm sure most people would say, really, somebody thinks about this stuff? but we do. >> costco tonight, the doc 9:00 p.m. eastern on cnbc. they test for how white it is, how strong it is -- >> white is an important quality. >> very important. guess how many rolls they sell in a year, take a wild get. >> 52 million. >> 52 million rolls? >> i think more. 100 million? >> try a billion rolls a year. it's enough to wrap around the world 1200 times. >> 1200 times. >> that's a lot of paper. >> what is the margin on something like this in. >> all margins are 14%. >> really. >> except private label, which is 15%. nothing goes above that. if they could charge more, they will find a way, instead, to cut the price. >> do they not have things like this is a lost lead. >> they do not have lost leaders. it's hard to verify independently but milk, any of the traditional lost leadered in retail they do not sell at a loss, because profits come from the fees, which are renewed at 90% rate. >> they raised their fee? >> yes. >> the stock -- stock is in a stair step pattern. once fees go up, you know it's going to be there for a while. tonight, 9:00, we hope to see you here on cnbc. >> u.p.s. is trading lower after first quarter profit trailed analyst estimates. it's down 3%, as you can see. let's bring in donald browton. thank you for joining us. where are you on what u.p.s. had to say, donald? >> well, throughout what they said they had loss of yield. they had gains on volume but they had lot of yield, and certainly looks like they're starting to use prices as a weapon to defend the market share loss they've been creeding fedex for years. >> asia's a stand out, they have difficulty in passing on higher prices. talk me through what is happening there. >> it's much more for, i think, although u.p.s. pointed to asia, remember that u.p.s. as a international company is more euro centric, one of the two dominant players in europe. it's a european issue than an asian issue. >> we just want to alert people to the headline that we showed at bottom of the screen, the s.e.c. launched an informal inquiry into chesapeake's equity participation program, the program which mcclendon borrowed money and borrowed against his assets in a well. the stock is coming off from its 1.5% gain earlier in the session. but that is something we are monitoring. we'll bring you more developments as we have them. >> back to our discussion in we were having about u.p.s. and you mentioned europe and it was a euro centric play. of course you have the purchase of tnt, the dutch package operator coming through, $6.8 billion. where does that leave you on the stock? onnistic or does it raise flags. >> i'm pessimistic. they're trying, whenever they can to grow, and the t&t act significan acquisition expands their position in asia. that's trying to grow move. obviously a big acquisition for them. and it may help them but in the short term integration risk swon the base of the business, as they reported currently, they're using price as a weapon, whether they want to say it or not. >> there is a gain here in the united states, though, a 6% gain, on earnings here. north america is going well. >> well, north america, they saw, for the first quarter in ten years they grew volume on a nominal basis on the ground, as much as fedex did. fedex steadily raiding praise on the ground, more than they have and stealing market share. their strategy was obviously clear, that we're going to stop losing market share, even if we have to use price as a weapon. >> $76.90 where we are at the moment. where do you think it will trade to? >> i see continued weakness. look at this and get frustrated, this stock is oscillated up and down but it's essentially where it came public at in 1999. there's been no shareholder wealth creation, despite 12-plus years of being public. >> you don't feel that's likely to change? >> i don't see any reason why in the short to intermediate year to change. >> you like fedex? >> i do. they're playing offense instead of defense. they are focused on yield management. bottom line, would i rather get paid more or do more work? let's see. i'd rather get paid more. >> donald, thank you for joining us. thank you. >> thank you. >> still to come, breaking news on national gas inventories and we'll talk to the ceos of xilinx and lsi on the back of both companies' earnings reports. stick around. back in a couple of minutes. ♪ news around chesapeake energy continues to grow. more bizarre. we had headlines moments ago the s.e.c. opening an informal investigation into chesapeake's handling of the mortgages that its ceo put on its wells. you know that news now. the news got stickier today when the board came out and said it was not aware of these loans, which contradicts what the company said last week, regarding aubrey mcclendon's financial interest in some of the companies' owned wells. now a battle between the board and also between the company itself. the headlines moments ago s.e.c., according to reuters, opening up informal investigation which, by the way, informal means they can't compel documents to be released. we'll see if that gets upgraded. >> thank you, brian sullivan. the euro hitting three-week high against the u.s. dollar. moments ago a surge, despite lingering concerns about europe's debt crisis. what's behind the move? is a bigger breakout coming? todd gordon joins us now. good to see you. >> you, too. >> fundamental basis, interesting, it seems like there are a couple of -- there's a push-pull on the euro, what's go on in the united states, woi would be good for the euro and what's goingen in europe which is bad for the euro. >> the euro's landlocked here. on one side of the equation, euro in serious budget concerns. a nice move from european budget 2002, euro area deficit down from 6.2%, down around 4.1% last year, which is good. but the problem it was in countries that could afford it. ubs did a nice piece and showed that the countries that need to reduce budget deficits are troubled countries. the other side of the equation, the fed yesterday, which was upbeat on growth, as well as employment, but obviously, bernanke stepped up and beat the drum on further quantitative easing. we got push-pull. the euro in one of the tightest ranges since 2007. which way do we go? i think right now the trade, despite this spike that we've seen up to 132.50 is a sell at the upper end of the range that we've been playing for five years how to. what i want to do is short that, sell the upper end of the range around 132.50, trading about now, but stop at 133.50, take profit around 1.32. >> more currency trades, tomorrow 5:30 p.m. eastern time. if you want more education of currencies, go to currency class at motion in motion. breaking news on natural gas breaking news on natural gas inventories after the break. ♪ ( whirring and crackling sounds ) man: assembly lines that fix themselves. the most innovative companies are doing things they never could before, by building on the cisco intelligent network. welcome to the world leader in derivatives. welcome to superderivatives. i'm sharon epperson with breaking news on natural gas supplies. natural gas supply levels increased 47 billion feet, 47 billion cubic feet in line with expectations. also the same as what we've seen for the five-year average. we're looking at more than 2.5 trillion cubic feet of supply of natural gas. there's a question of whether there's enough storage capacity. looking at prices that have come off of it from their highs of the session. also about a ten cent difference between what we're seeing in the may contract which expires today, and the june contract, the june contract trading around $2.22 right now. so that is something that traders are paying close attention to as well as, carl, the fact the next 6 to 10 days we are expecting warmer weather that could give a bit to natural gas. a short covering rally that has taken prices up 10%. >> thanks so much, sharon epperson. stories we're squawking about, 10:31 on wall street, mastercard hitting new record highs. the stock, which surpassed the 450 mark up 62% in the past 12 months. pending homes, up 4.1 in march to their highest level in two years, according to the national association of realtors. and freddie mac says the average rate on the 30-year fix has fall tonight 3.88, a tick above all-time lows set in february. >> earnings to work our way through. aetna, the stock in negative territory, they dint raise guidance. extra cash to spare. the stock trades at 44.25. overall, despite the fact for the first time a dow component, namely, exxon, disappointed in results, still we add to the gained. two days of gains, a big jump over last two days, 163 points on the dow. we continue to advance through earnings season. two-thirds of the dow are higher. let's have a look at the volume. it's evenly spaced, certainly here at the nysep nasdaq, talking chips, semiconductors, evenly spaced. >> speaking of the nasdaq, let's head over there. good morning. >> good morning. since it was the apple ecosystem that powered the rally in tech yesterday, let's take a look how those stock are trading today. apple is taking abreather after the sharp run-up yesterday. now on communications one of the suppliers of apple, speculated to be behind the siris. based on financial data, it expects second quarter nongap revenues come in between $416 billion and $418 billion, higher than what the street was expect. that's why the stock is outperforming. also sales topped estimates but the company did say that gross margins will come down by one to two points to support investment and greater traffic. that's one of the losers in the trade. the nasdaq isn't just tech. take a look at biotech movers. celgene, regeneron, beating the street. gilead, that company is developing a hepatitis c treatment. on the earnings call, the company expected to provide clarity on its most current test data. >> let's get to the ceos of two chipmakers out witherni erer ea after the bell. xilinx, unveiled its new product that says is for the next decade of all programmable devices. provided strong guidance. the stock up 6%. the company's president and ceo, he joins us for a cnbc exclusive interview. great to see you. >> great to be here. >> a lot of the analysts on the street this morning are applauding the turnaround that we've seen in communications infrastructure. what is that being driven bip? when we think about that and a billout we think of the 4g devices, android devices, what is the plamain catalyst? >> you're right, there's a growing need for insatiable intelligent bandwith driven by smartphones and those becoming prevalent, the deficit in terms of the bandwith in the system is becoming more and more prevalent throughout and so there needs to be an upgrade of the system on a worldwide basis, that is starting to happen now, as you move from 3g to lte and then there's an upgrade cycle and that's happening. it's being driven initially out of the u.s. by companies like at&t and verizon and our biggest companies are providing systems to those companies. >> we think -- when we think about of the build-out, what inning are we? during what inning are most of the orders to your company placed? when will we see the peak in terms of the revenues that come from that build-out to xilinx? >> well, mike expectation that is this will continue for several years. one of our biggest customers claims it will be 50 billion connected devices by the year 2020. in other words, for every man, woman, child in the world, there will be seven devices on average which are connected. and the amount of bandwith, especially when you move to cloud computing and information needs to come down to the cloud from the cloud to these devices, it's just going to be significant. so this isn't something which has a -- which is a one or two-year cycle. expectation is it's an ongoing cycle and driven by this trend towards smartphones, as an example, and that's a trend that will continue for a long time. it does have ebbs and flows and it happens in different geographies. different points in time. but it is an gone going trend. it's a trend we're benefitting from. >> apple has reported and increasingly the view is that the fortunes of the company, long term, are going to pivot around china, but not all of the guidance coming out of china is positive. how much do you think depend on what happens in that country? >> basically there's client na is one element but this expansion is a worldwide expansion, so you know, china went through a huge growth spurt, expectation is over the next two years they need to reinvest in a new pro-ptocol because smartphones are having issues in china and the demand for smartphones is skyrocketing, so my expectation is there will be a recovery, regardless of the chinese economy. it's a social trend as opposed to economic trend which is driving that. this is not only about china, it's a worldwide trend. it's happening in north america, happen. ing in europe, in emerging economies, latin america there's a big investment. it even happening in africa and india. so they ebb and flow at different times and there's a lot of focus on china, china's a huge part of it. but you know, it's maybe 15% to 20% of the poe tengtential. >> we've got to leave it there. moshe, thanks for your time. let's go to another power player within the semiconductor industry, lsimaker of chips used in service and hard drives. it is an apple supplier. the company out with better than expected first quarter results last night. this year lsi up over 40% against the semiconductor index, which, as you can see, has underperformed. interesting, lsi up 36%, interesting there. here, first on cnbc, it's the ceo and president of lsi. good morning to you. >> good morning. >> of course you are very big in the chips that control hard drives and, therefore, this quarter is very much about recovery, i imagine, from the flooding that we had out of thailand and the implications that came from that? >> yeah. i think that's a piece of it although we have a number of other growth drivers. we're associated with data growth and network traffic and addressing the challenges that that presents. we're participating in hard drives, we're participating in solid state drives. we're also benefitting from the huge build-out that we discussed in the last segment, in terms of wireless infrastructure to support smartphones. >> i imagine that you are a man for all seasons, it's important to paint yourself as that. specifically on this bounceback, as a result of the thailand disruption that we had, when does that peak? when does that acceleration move in a different direction? >> i think we're still catching up to demand, right? you know, the industry produced 143 million drives in q 1 probably produce 160 million drives in q2, still under shipping demand q3 we start seeing inventory replenishment in the second half. we've got a ways to go here. that played a big part of the tremendous growth that we had quarter to quarter of almost 20%. >> where are you on the acquisition now? >> we're well into execution. sanforce acquisition closed in january. it was one of our drivers of our outperformance in q1, as well as guiding above expectations for q2. we expect to be leaders in the market this year in ssd drives or controllers for ssd drives. >> how will you be impacted by this release of the ultrabooks, which so many people are banking on? >> it's a positive for us. ultrabooks clearly will leverage flash technology and lsi will benefit. we're in some ultrabooks today in terms of flash solutions and as more ultrabooks come to market we'll see a great benefit from that as well. >> what keeps you up at night? >> what keeps me up is understanding what moves the stock. we had a blowout q1, great guidance 70% of sell side analysts calling a buy. yet stock's under pressure this morning, because of what i'm hearing from shareholders, one sell side analyst has a flawed analysis. so you know i guess that's a great buying opportunity. >> what is he saying? that you disagree with? >> talking about shipping well ahead of our customers, but it's absolutely not the case. we've got an inventory hub system, so we know exactly what we're shipping. we have four, five other drivers of the growth that we've achieved. on on tof thtop of that the tam increasing. incredibly flawed, from a sell side analyst not too engaged with the company. it's a great opportunity for buyers. weave got an authorization as well that 's available to us in term of stock repurchase. >> lucky you're on the television, to put it right. >> thank you. >> thank you. we've got to send it over to brian sullivan for a quick market flash. >> ubs out defending walmart, though the analyst has a knew federal rating on the name and $59 target, the analyst, bob carol, thinks that the sell-off regarding that of course bribery aelt allegation in mexico is overdone, does not believe it will have day-to-day impact on stores here about or in mexico but thinks the walmart -- the stock above where it was back in february, pre this news, want to point that out. >> trending in new york the hashtag thoughts at walmart, tells you what people think about when they think about shopping at walmart, on twitter now. ray monday james out with second quarter earnings. we'll break down the numbers, investment banking opportunities investment banking opportunities with the ceo after this break. h. laces? reay? raymond james financial, shares up on the news now that the bulk of the banks have reported earnings, is what next for the banking sector? what are the headwinds they're facing? will dodd frank bank profits goi going forward? lloyd blankfein weighed in on that yesterday. >> because we had a big shock, big trauma, people feel the way along the pendulum goes too far, has to go the other way, we definite -- the markets are always evolving and regulation has to evolve with it. we expect a lurch now and a big focus on it. i'd say we're kind of -- i don't like everything, everything proposed, i don't like every regulation but the idea we have to have a reform, you couldn't deny that. >> and joining us this morning in a first on cnbc interview, paul reilly, ceo of raymond james. good morning to you. thanks for being with us. >> great to be here, carl. >> talking about broad topic. blankfein's view, it's like hammering out a sword, right? we'll hammer this out until it's flat and splooth. that is the process you think is under way? >> i think so. the regulation that was proposed is so complex, and i think that's the challenge people are having, is we don't know what all of the rules are. and even the interpretation is so broad and we've seen drafts and they keep changing that i think they're trying to find their way to get the balance. >> investment banking in particular, though in terms of growth engine, we hear different stories. on the one hand, blank fine's view, the way emerging economies are opening up, that is a huge, new universe for investment banking, meantime stories in the journal pop up head count going down and the impact of those divisions becoming lessened. which do you think it is? >> probably both. two tales there. one is the global markets are becoming more important. certainly are an opportunity for expansion for everyone. but on the other hand, you know the markets are off. people are worried about the growth in europe, the slowing down in asia, and you know concern here. so people have cut workforce -- we haven't, we've been a growth company -- but they're trimming workforces for the current marketplace though they're optimistic long term. >> deutsche bank talks about conditions worsening in april, risk appetite, markedly lower, invest rors weary after the mart turmoil last year. what do you see on the horizon that could potentially change that. >> i think there's a lack of confidence in investors. last month we had net movement into equity from our clients, which is against the trend. it was small. but i think that investors are just worried and cautious. the biggest impact, especially here in the u.s., will be the elections. people want certainty into a direction, certainty how we're going to solve long-term financial crisis, certainly over regulation, and it seems like in the last two years we get more and more questions. it hard to be confident, it's hard to cross the street when cars are coming from both sides at you quickly. investor want to unstand the landscape wf th cape before the it. >> when you take a look at the volume, say, on the new york stock exchange, the nasdaq, do you get concerned, or are there measures that you find better benchmarks for investor activity. >> there's a shift in trading so it's hard to use statistics but certainly volumes are off, melissa. and they're going to continue to be for a while in a soft market. our business is driven more by the private client group and we had a very, very good quart, and commissions are actually up. market volumes are off and are impacting private banking. >> paul reilly, joining us raymond james. >> straight ahead on cnbc, the nfl draft getting ready to kick off later today here in manhattan. live to the scene of the 2012 draft to talk top picks. rick santelli, a housewife's choice in chicago. >> hi. well, i tell you, simon, we are going to talk about spain specifically, and what the implications for the biggest bank in spain's assets and how their biggest bank in spain's assets and how their profits move lower. what that tells us about the u.k. who is now once again in a recession. and maybe last but not least, what does the european issue really mean for the u.s. should it deteriorate? it is about flows that are small or is it about capital flows? top of the hour! our! you know, because you been, you know, this is what you had been doing. you know, working, working, working, working, working, working. and now you're talking about, well you know, i won't be, and i get the chance to spend more time with my wife and my kids. it's my world. that's my world. ♪ first round of the 2012 nfl draft kicks off tonight. let's head over live to radio city music hall where darren has the latest. hello, darren. >> reporter: the draft taking place toenight, the first round at least. the new orleans saints have taken the mystery out of it. they will take andrew luck. we asked about the marketability in the draft. how marketable will he be? will he be as marketable as his predecessor, pay -- payton manning. and again, we asked him about his marketing potential. >> i want to earn it as a player before i guess you reap all the benefits. try to do things that fit your personality, do things that are obviously in good taste as well, but it's a fun part of being an athlete, i guess, is that you can have endorsement deals. >> luck is actually represented by his uncle, will wilson, who recently signed as an agent with the watson media group. robert griffin iii is expected to be taken second by the washington redskins. is not doing the whole wait and see approach. he has signed deals to be the cover athlete of ua's ncaa football game, and he has deals with castor motor oil and subway. earlier this week, subway made a bust -- probably not the right word for a draft pick -- of rg iii made out of its sandwiches. the n they have told the nfl network and espn not to show the players or where they've been picked so as not to take suspense away from those watching last year. 220,000 viewers watched the nfl draft over the three days. >> i wonder how many inch 6-inc 12-inch subs it took to make that bust? i couldn't think of anything better. market flash. brian? >> i can bring you this, melissa. johnson & johnson dividend up by 7%. it's going to 61 cents from 56 cents a share. the j and j stock is up by a few percent. if you're looking to buy a pack of 60 rolls of toilet paper or perhaps a 5-gallon water storage unit that comes in a pack of 20, you will find it at costco. as we mentioned tonight, cnbc is taking you inside the cultural icon and the warehouse giant. this morning we're asking you to think beyond products and complete this sentence: i wish blank was sold in bulk because blank. >> for example, i wish melissa lee was sold in bulk, then i could stock up while she was on vacation. >> that's so creepy. >> really? >> woody actually writes, i wish my memory was sold in bulk because at my age i forget why. rick writes, i wish gas credits were sold it in bulk to stop getting ripped off by speculators, and yinyang said, i wish gigabyte data was sold in bulk at costco because my new high speed ipad would be more affordable. >> that's pretty good. we're talking about the company's earnings and its latest relationship with lufthansa and whether that's affecting the stock trading. >> they just celebrated their tenth year anniversary as a public company. our first question to them earlier was has the pilot who went rogue on the flight had any impact, and now that they have quarter out, it will be interesting to see how much they disclose about the impact on bookings and the impact on pricing. >> exactly. we will ask them all of that and much more tonight. >> brian told us about the j and j pike. i think coke, 2 for 1 split. we've seen a lot of big shareholder return moves by the giants of american business this quarter. i think it's really been interesting. >> and it's really important to sift out the reasons behind the return of capital to shareholder. we have, for instance, today at sun mobil deciding it's going to increase its dividends. the stock won't be there, but it's the dividends he recommends. >> it's that race for return, it's the direct effect of what the fed has been doing. it's forcing people into those assets, into stocks in order to achieve the dividends and he's basically just reflecting that. >> it's also a function of the amount of cash these companies have, and you're looking at markets, asia, europe, where growth is not that easy to come by, so they're going to have to find uses for that cash in order to keep investors interested, and this is one way to do it. one of the big arguments against these kind of things is, look, i'm investing you as a company. if you're giving me the money back, you're rung oning out of ideas. >> nothing to do with that money, and that's the big question for investors who are buying for that reason. chrysler says it's unlikely to complete its ipo this year. >> i imagine they would like to keep their hands on it for the time being. >> did you see what the earnings did this morning? >> i saw they were very good. >> four times what they were. >> complete reversal from brchlt. >> the highest net income for chrysler in 30 years, which says something. as william weldon leaves, there's alex gorsky. >> whatever else they may have up their sleeve for the year to come, maria will that have. closing bell begins at 3:00 p.m. eastern time right here on cnbc. see you guys later. see you tonight. welcome home. grad to ha glad to have you back. here's what you might have missed if you're just tuning in. >> welcome to our three of "squawk on the street." here's what's happening so far. >> if you build a company, you generally have a gold mine that's financial. you're trying to create something of value, and i want to show the country the difference between the two of us and the choice we're offering the country this november of two they had to choose from. >> jobless claims. 388,000. that is kind of a lateral move. >> we think that there is a lot of value in the data that people share among each other, and so, you know, we already are offering business tools to 750,000 businesses out there. >> i'd like to know your exposure. i'm with ppg, i'm with alcoa. let's pull the jobs out of there. obviously you don't want jobs lost anywhere, but the companies that have moved with alacrity are the better ones. >> they have a very nice program here at cnbc headquarters. so it's nice. there's jonathan and emily. they're not miked up, which is probably a good thing. >> this company has been a colossal joke played on our joe. it's like, here it is, we're going public. >> it's on scale and the difficulty of growing in this very challenging environment, so the thing that makes oil prices so high is the same thing that makes life really challenging for these companies. >> good thursday morning. welcome to the third hour of "squawk on the street." let's get a check on the markets this fine day. the dow looking to hold a gain here of just about 30 points or so despite some of the big misses we got on the earnings front today. s&p barely up a third of a point, nasdaq which obviously hl a great day yesterday, still holding at 3,033. polte, lamar and d.r. horton doing well. let's get to the road map today. coffee giant starbuck's set to report results this afternoon. we'll get a preview and see if the world's largest coffee chain can actually brew up some big earnings. plus, linkedin just debuted its first app for ipads and tablets. we're less than half an hour away from the european close. overseas market getting way dei down by some data. we'll see how that affects money here at home. and the feds say they will support world market growth. that and more in the next hour. we'll start with starbuck's. the coffee giant is up about 30% this year, nearly tripling the s&p performance. will the new venture into wine and beer slow the stock's climb? our jane wells is live outside a starbuck's in burbank. jane, promise me you haven't been drinking, not this early. >> not this early, but you got caffeine in the morning, maybe a little alcohol at night. the street is looking for double digit growth on the top and bottom line. about a billion in revenues. the estimate is 8.1% for the americas, 18% for china, both actually down from the previous quarter and 2% for the rest of the planet. lots to talk about moving to india this year, a new espresso machine coming out, and the opening of a new evolution fresh store in the juice category. you think coffee is expensive at starbuck's? an 8-ounce juice will cost $8. i want to talk about two other things. one big, one small. first the big. coffee prices. coffee markets predict it's going to go down considerably, up 23% to 2.35 next year and a buck 79. they say if that happens, that will add 47 cents to earnings over the next three years. the company has started offering beer, wine, cheese and some stores in the pacific northwest plans to open a few more in california, atlanta and chicago. good idea? >> starbuck's is looking to expand. how much more can they charge for a cup of coffee? we already know the prices of that. so now they want to expand into something else to make more profit. >> there's something about keeping people interested at night. >> once you add beer and wine, it adds a different clientele. >> anybody who wants to sell me cheese can do that. >> i'm with her. this company says that they have seen an increase in nighttime traffic in sales where they have started this initiative, but they emphasize, carl, this is not a major growth driver. back to you. >> jane, appreciate that. jane wells on the starbuck's story. will the companies push to diversify its offerings in cups and profits? keith, good morning to you. >> thanks for having me. >> jane obviously laid out a bunch of the potential growth opportunities, but whether it's juice or alcohol or single cup, can any of those things compete with the impact on pricing and cost that jane just laid out for us? >> no, i think it absolutely can. what you're talking about here that makes this a high quality growth name so unique is the constant inflow of completely new verticals. think of what we learned even since last quarter. we learned about starbuck's refreshers, which you didn't mention. there's going to be an entire new push around tea in the evening. these are legitimate new growth verticals that haven't been in the models and still totally aren't in the models, and by the way, there's no cap x for these, and that's what makes it exciting. >> why is there no cap x? i assume there's some r and d in there? >> let's talk about breezemore, the espresso coming for the holiday. they have someone who will manufacture the machine and manufacture the pod. all you really need to do is source and roast and distribute the coffee, and the rest of it is taken care of by krueger. >> do you think it will catch the cafe business? >> i don't know if it will catch the cafe business, but it's a good business. the evolution refresh that you mentioned earlier, it's not really about the retail store opportunity, it's about taking the existing products in retail, vertically integrating so they own the profit stream, and guess what, they can roll that out to the distribution network. it's another way of making more money by leveraging their brands into cap x light growth verticals. >> an investor might look at the growth chart and say it's been a good stock. how rich is too rich, at least for your blood? >> this is a really tough question right now. with all the quality growth, and we cover a bunch in restaurants, i think the question we constantly ask investors is, if you're going to sell this, what are you going to replace it with? what else gives you 20 to 25% eps growth with very light capital requirements, and by the way, getting into fiscal 13 and fiscal 14, you're talking about probably two good years of tail wind by low coffee costs. it's on top of these other initiatives. it's hard to replace, even if you take it out at this valuation. >> finally, when we start talking about china, their growth targets in asia are stunning. you don't see these kinds of predictions and targets very often. are they overestimating the strength of the chinese consumer? because not all company's guidance out of china lately has been picture perfect. >> you could look at one of the largest competitors in their sector, young brands, and see how they're doing, and i think it's easy to get excited. starbuck's is talking about going from 500 to 1500 units from 2010 to 2015. we're not talking about really massive numbers. these are numbers that are impressive in terms of regular growth rates, but this could go on for 10 or 15 years. i think for at least the foreseeable investment horizon, these are very doable numbers. >> and schultz will be the first to admit that china is more of a tea culture, not a coffee culture. do they need to change china, or can china change starbuck's? >> they've got all the ca caffeinated beverages covered, including tea. but it's more of a sit and stay, have a meeting, visit with friends. it's still more of the third place, so i think as they get more into coffee over time, it will transition to look more like the u.s., but for now it can be a sit and stay place. >> keith, appreciate your time. really good stuff. >> joining us on starbuck's at credit suisse. gary, people still talking about the interview you brought to us this time yesterday. >> thanks, carl. it was definitely interesting stuff and got the attention of many people. i do want to talk about the carlisca carlyle deal. the leverage buyout shop is going to go public. they're looking at a prices deal on wednesday night to trade on thursday. this could be a game changer and let's talk about why. the history of these companies coming to the public markets has not been a good one. in fact, i think we could call it a disaster. obviously, blackstone, we have to point out the long-term history. they did come public in 2007 right before the financial crisis began. you take a look at oak tree which priced last week, a couple weeks ago, and i'm told a lot of hedge funds participated in this transaction, and that is why it immediately broke the pricing. if you take a look at apollo, not necessarily great timing. came public right before the european crisis in march of last year. carlyle will be pricing this deal, and this is something that may be a bit of a sleeper. again, some of it may have to do, in fact, with timing. i'm told from people who have attended the roadshow, who have met with these companies one on one, this is the message they've told potential investors. let's take a look at the reasons why this transaction is going to be different. it really starts out with the fact that they have created very good demand in the yield-buying community, because on a pro form a basis, this company would have generated about an 8 to 9% distribution last year, but i'm told asian investors like this. they're putting in very sizeable orders here. carlyle owns 200 companies. a lot of their competitors have a much slower growth, much more narrow focused portfolio. they've taken 20 of these companies in the last year public, they've brought them to the market and they've monetized for their clients. case in point, dunkin' donuts, nielsen. the insiders are not selling. they're going to stay locked up for three years. they have a lot to prove. they're hoping, carl, that this will be a game changer for the history of investing in private equity in the public markets. it's one of those things going back, putting on my investor hat, i like companies who have a lot to prove. they're telling investors we're going to prove this is a different experience here. >> do you think they're trying to underpromise, overdeliver? >> absolutely, and again, they have a nice story to tell. some of it is a little luck in terms of timing, but if you are bullish on the equity markets here, you believe in that emerging growth market story, this may be a very interesting leverage way to play it. and interesting, too, retail will be able to participate in this transaction. it's not going to be one of these super hot tech ideas, so you can buy into it if you have a piece of the market. >> that will be a welcome change. come grab a seat when you can. >> i'll be right over. >> in the meantime, we'll go to rick santelli with the third edition of the santelli exchange. good morning, rick. >> good morning, carl. the big term is globalization. in my opinion, globalization will live to fight another day, but since we're in the positives of the globalization in the o's, all of a sudden, kmocommentator think they can disengage. if we look at the biggest assets in spain, it's banco santa banco santan dare, and probably i didn't spell it right, but if you look, their earnings came out. if you look quarter over quarter or year over year, they were down a net profit by 24%. if you look at the first quarter this year, they had 1.6 billion, okay? if you look at -- and that's ur ow owes. what was the reason for that 40% drop? do you think they know their own stuff? i would say yes. the quarter over quarter, year over year operations in the u.k., they were off 40%, which leads us to the u.k. what have we learned about the u.k.? they've had two quarters of negative growth. they're officially in recession. q4 of last year was minus .3. what we learned this year, it was off by .2. they were technically in recession. what are really the risks to the u.s.? many say it's exports, and even though i was surprised by how china bolstered apple's earnings even though traditional data says exports to anywhere in the world are just a small factor of our economy, indeed, we are a consumption economy, it's growing. but the real issue is, and it's very hard to talk about or quantify, contagion and capital flows, just like we've seen the relationship between the u.k. and spain. this is what the u.s. needs to pay attention to. carl, back to you. >> really good stuff, rick, especially given those numbers we've gotten this weekend and even today. when we come back, the man responsible for linkedin's brand new app. we'll see what he has to say about the new app, the future of the company and a lot more. back in just a couple minutes. a bit of a sector check here this morning. telecom, consumer staples, the top sectors today. materials doing the worst. even given the exxon myth today, hanging on to a relative green arrow. there's a look at how s&p is doing overall on the heat map. link linkedin unveiling its brand new app this week. john has arrived. no tie, thank goodness, with a special interview this morning. >> i want to bring in deep nishar who i just saw a couple weeks ago. good to see you this morning, deep. >> good to see you, too, john, and it's good we matched our ties this morning. >> yes. you're sitting in my chair there in silicon valley. i like that. i've been playing with this app all morning. linkedin, 15% now of your web traffic is coming from mobile devices. how important is this ipad app to accelerating that even more? >> small correction, 22% are now coming from the mobile devices, which is fantastic. it was just 15% a quarter ago at q 4, so it's growing very nicely and very robustly, as you can see. >> is this ipad app going to accelerate that? what are some of the features you built in to try to do that? >> what i find is that this is really a europe-wide professional, and i'll go out on a limb and say that in public because i've been in mobile for about ten years, and every year someone would say this is the year of the mobile, but we're seeing more and more of that happen. a few weeks ago, i was on a flight from new york to san francisco, and in the front of the plane, about 90% of people had their iphones out, in the back, about 40%. what we find is linkedin usage on the ipad, it's really bidirectional usage. in the morning over coffee between 7:00 and 9:00 a.m., and in the evening when people are back home from dinner between 7:00 and 9:00 p.m. are people's most use on the ipad. >> we heard apple earnings say more than 90% of fortune 500 companies are deploying ipads. the ceo thinks in three years smartphones and tablets are going to be the primary computers that his customers are using, not pcs. do you agree with that? >> i do believe that as the anecdote i was sharing, more and more people are using ipads and tablets. the interesting thing about linkedin is we are very diagnostic. it could work on any platform, and i believe that we are at the beginning of the tablet evolution, not the beginning or the end. phenomenal in the workplace, more and more folks bringing in their personal devices, which happens to be the ipad and many tablet computers right now. >> one question real quick. branchout. a threat to you or not? >> we keep focusing on our user and the professional user, and what we find is our members really want to segregate their professional life from their personal life. that's why we are seeing such a robust growth in our membership. we have over 150 million members. at linkedin, we're growing at the rate of 2 every second. and more than 50% of our members come from outside the u.s. >> deep, thanks a lot for taking the time. >> thank you, john. >> interesting, too, that mobile allows companies to learn more about their users than they would if they were at a desktop. right, john? >> they have 2 million pages on linkedin. it's really interesting. from 15% to 22% in the first quarter. straight ahead, we're going to count you down to the close in europe. about 8 minutes to go. back in a moment. and now i build them. i am a bigger is better kind of guy. i absolutely love building locomotives. i knew i wanted to design locomotives from when i was very young. 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[ charlie ] well, it's one thing seeing them built, but then to see them out here, pulling freight across america, it makes us proud. ♪ that could adapt to changing road conditions. one that continually monitors and corrects for wheel slip. we imagined a vehicle that can increase emergency braking power when you need it most. and we imagined it looking like nothing else on the road today. then...we built it. the 2012 glk. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services. but not how we get there. because in this business, there are no straight lines. only the twists and turns of an unpredictable industry. so the eighty-thousand employees at delta... must anticipate the unexpected. and never let the rules overrule common sense. this is how we tame the unwieldiness of air travel, until it's not just lines you see... it's the world. the story around chesapeake energy, an inquiry into chesapeake's dealings and the ceo taking a financial interest in wells. there is an increasing back and forth between the ceo and the board, the board putting out a statement clarifying a previous statement. it seems clear to me and also herb greenberg that there is a conflict going on between the ceo and chesapeake's board, which is not a good thing for investors. it's lost 50% of its values in just eight months, and we're staying all over the chesapeake story. back to you. >> we talked about it a few days ago. >> i said this is the worst board in america. i think after today's actions, this is the worst board in the world because this is only covering their own back about possible litigation. >> which i'm sure is on the way. you saw a graphic a while ago. don't miss brian on the cnbc track. we'll get that european close after the break. the teacher that comes to mind for me is my high school math teacher, dr. gilmore. i mean he could teach. he was there for us, even if we needed him in college. you could call him, you had his phone number. he was just focused on making sure we were gonna be successful. he would never give up on any of us. euro's own confidence down, u.k. confidence up. really interesting numbers. meanwhile, the german two-note falling to a record low. simon hobbs with how the trading will end there. >> you're on the head of a pin from one survey to the next. they're increasing those concerns, and you're beginning to hear it in the earlier statements. a lot of europe has retired today. you can see that's clear of the germans there, however, others, including spain, continues to fall, and that's a lot about the corporate grinding that's going on. at the base of the spanish market, you still have those big construction companies. we'll come back to that. let's have a look at where we are on the map of europe as we close out. >> the european markets are closing now. >> royal dutch shell, the market is higher and the market is lower. spain on the bottom fell quite badly. you've got these big construction companies, acs -- you might not know the company -- it is a big construction company in spain. you can see where it tracked during the course of a year. basically, it's selling out deb debts which are diminishing in value. toll roads in spain are being sold. let's have a look at some of the companies reported. i mentioned shell and unilever. at the top of the action, astrazeneca. they sell computers. lodge i tech, dassault, volkswagen, a big one for them in terms of sales and they're saying the marriage is going according to plan. remember luciens? sales are not where they're toe supposed to be. alcatel lower in terms of chrysler, and they say they've seen a deterioration in volumes since april and it is unclear where they're going with not just trading but with the asset markets. and the last thing i should mention to you is there is a growing discussion about a growth strategy, a new growth strategy in europe after what the head of the bbc said yesterday, politicians beginning to run for that. the question is will it be a supply site growth strategy loosening up the labor market or more money which europe would like or maybe the european commission would like because they can hand over big construction projects. >> whatever they're doing isn't working so well. the forecast they had in december, they're probably going to do half of that. >> remember the difficulties they had in europe. they didn't have the time that the united states has in order to make changes. look at the united kingdom. outside the eurozone, they had to end with a bang really rapidly, now in the middle of a recession. those are tough decisions they're making where arguably the currency could be lagging. >> you might want to talk about some of the banc san dantere. >> there was a growth conference and there was a real message. i empathize with those who are trying to figure out every day, does europe matter, does it not matter? it was an underlying message. tim o'neal joined us at 10:00 yesterday, and he made the point, you have to step away from the europe. the growth markets are creating so much additional demand that even if europe sucks it out, the growth markets will have fewer growth. that seems to be the message that investors who are trying to stay very long on the markets are trying to get their hands around, which is, yes, we're not going to get anything positive out of europe for the rest of the year, but let's try to forget about it and think about other things, the growth in china, the growth in india. >> that would be great if only caterpillar and ups and fedex didn't have bad things to say about growth in china. >> as you know, i've brought on some people here who came back from china many times who say, forget the numbers, they're laying off people and the real estate bubble is going to collapse and china will be in disbeli disbelief. i asked if the china numbers were real, and there is a school of thought that the china numbers are very real. that's a debate that certainly is not going to be solved. >> maybe bob can help. he joins us here -- >> bob, are the numbers in china real? >> they're getting more real. i think their reliability is getting higher. five or six years ago, they said, can we rely on the bank side numbers and everybody kept saying, i don't know if we can rely on the united states bank stock numbers, for heaven's sake, let alone china. the answer is, i think they're getting better. >> we are having a very strange day. we should be down 150 points today. we should be down because the comments out of europe indicate sluggishness, we saw a weak ur r -- euro coming out. this is the first day of earnings. we've seen high earnings out of the other. second week in a row. we should beat dow. why is the market up? i think this is the underlying influence of ben bernanke again. love or hit him, most of us hate qe3, ben bernanke said yesterday the feds are prepared to do more. he said that! >> i heard the exact same thing, as did rick. these men contend bernanke said there will be no chance of any qe yesterday. you heard what i heard and what rick heard, right? >> and another disappointment on claims, that whatever ben -- >> he said yesterday, i have more qe if we need it. here's what's unusual. we've got financials up, energy up, tech up. here's what's strange. commodities are up today, commodities, but commodity stocks are not. here's the concern about the global slowdown. we did get a little good news. pending home sales in march for contracts did a little better than expected, and home sales are better. rye land says home sales are up 50%. poulte says sales are up 50%. they said this is the first quarter in years that fundamental demand came up better than expected. i want to point out they are taking a bigger share of the pie overall, that's why their stats are coming in better than expected, and that's why, overall, you should pay attention to the homebuilder commentary. i just want to say here's something that worries me. look at what the bond market is doing, okay? look at the yields moving down on the bond market. prices moving up, okay? that's where mr. bernanke is getting called out, i think, today, and that's the thing that guys who are really watching this carefully are talking about. >> thanks a lot, bob. see you later, bob cosani. rick santelli is in chicago with a little more. rick? >> i have a guest today, and there's a lot of talk about speculation and speculators being the bad guys. i'm sorry, it doesn't hold water. bill has some examples of why we should look at it more from a factual standpoint. give us a little history. >> i had a college roommate of mine who is a cfo comment. i'm sure a bunch of traders got together and unanimously started the exchange to the benefit of farmers. that's cannotexactly how it got started. prices were low and then we'd run out of crops and prices would skyrocket. this enabled farmers to plant for the end users as well. it really was for the farmer and the end user. >> let's switch gears and go to the financial side of the street. can you give me an idea how financials make a difference in our lives, but we never hear about this. give me an example. >> it struck me how i could pay $200,000 and pay someone to trade it for me. i trader will move money for $625. >> what do they get for that $625? >> risk. they get risk. the person who wants the 1.5 mortgage, they can lock in that mortgage because the banks and the lenders can then hedge the risk. >> the banks can abuse this, but what you're really saying is these refis are down to a science, and you can get 60, 90-day locks. impossible without that pitch, right? >> right, versus someone that has 5% in one town and 3% in another town. >> all the whining of these traders, speculators, is there any example in the history of civilization where price controls in any arena have proven to be so good that they've built a monument to it? >> there's none, because what happens is when you take out the profit motive, the capital goes elsewhere. when you try to control gas, we'll get money out of gas. >> or in argentina, you get huge corruption in the government as they try to take over these businesses. another example i hear is, oh, my god, look at the size of these positions now. let me go to an analogy. let's say i sold a piece of art at auction. would i get a discovery if there were 500 people in the audience or 5,000 people in the audience? >> i can't go into it here, it's too long, but there's a few markets where the markets are five wide. >> if we want to get the price of oil down, let's really get down to it. switch gears, chief economist with georgia bank ald vizers. josh, good morning to you. >> good morning. how are you? >> i guess i would be better if the planes were a little bit better. we've seen shepherd bring his farm number down to 100. are you seeing more in the jobs market? >> we saw this before where things got a little brighter, people get optimistic and then we get a little low. i suppose we're getting that again. we had very strong job data for a few months, probably too strong given the pace of the economy. now i think we'll have a little more of a lull. it is kind of two steps forward, one step back? so i think we're making progress, but it really is coming in fits and starts. >> help us resolve this question yesterday about bernanke. i'm surprised there's even a question at all. did he or did he not say qe is on the table as soon as he wants to push it there? >> yes, but i think the hurdle is things have to get worse in the economy. if the economy continues to do what it's been doing, i don't think the fed is doing qe. if things get worse, they will. so the people kind of hoping for qe, be a little careful with what you wish for, because you're only going to get it if the economy is showing signs of faltering. >> durables, obviously disappointing. we'll get a gop number tomorrow, a lot of numbers maybe hinting that numbers are week. do you think qe1 will be weak? >> qe will come in at the 2 to 3% zone. obvious when you will put the u.s. juxtaposed in europe, when you look at how we need to make things grow due to the losses of recession, we still have a long climb back. >> we struggle this morning because we get a number like durables and we have to compare it to boeing. we get number and we have to compare it to what kb home is doing. do you compare them to the degree they differ? >> you have to look at everything and put it together. we are getting a lot of mixed signals, it's true. that's not atypical. i think the pace of the economy is littling. sometimes it looks a little better, sometimes a little worse. we've had a very mild winter, we may get payback on the down side for that. there are cross currents in the data, but i think when you kind of sift through the haze, the economy is getting better, it is improving, but as i said, it kind of is this one step forward, two steps back. and we need to do better for a lot longer to repair the damage that was done. >> josh, appreciate that. have a great day. >> you, too. straight ahead, sir lawrence, larry kudlow, making his triumphant return. first, the winning and losing stocks in the euro. 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[ male announcer ] good choice business pro. good choice. go national. go like a pro. coming up in just a few on the half time report, apple soars on its outlook. is syria behind the surgery? amazon's highly anticipated earnings report. plus, we're taking positions on starbuck's, coinstar and more with the nagerian brothers. it's a market worth earning, and we're on top of it at the top of the hour. >> our good friend larry kudlow wants to talk a little bernanke, more importantly, a little tim geithner. he said the economy, in his words, looking more resilient, larry, and the strength a little more broad based. >> geithner, you mean. >> yes. >> i'm okay with that and i thought john howard's interview was great. here's what troubled me. tim geithner, unlike all secretaries of the treasury, is getting very political. i was disturbed by this last night, and i say this -- i am an acquaintance of his, i have good personal relationships with tim geithner, i may disagree with his policies but i basically like the guy. however, he called hubbard, bush's former economist, he called hubbard a hack, all right, republican economist, for something he wrote in the newspaper. that's wrong. he has criticized paul ryan, he has criticized mitt romney directly on their policies. that is extremely unusual and extremely partisan. most of the time a position like the treasury, which has to work with both sides of the aisle to get key financial legislation through, doesn't go out on the campaign trail. and what i thought i heard from tim geithner, and i've heard this before, is he is on the campaign trail, and i'm asking him to cease and desist. i think it's unseamly if you go back in history. even chief baker, when baker became treasury secretary, he put aside the politics because he had to work with both sides of the alon tisle on tax reform. i think tim geithner is going too far. >> do you think his outlook of 2, 2.5% is wrong? >> no, that's not my criticism. i actually agree with that. but i don't agree that the treasury secretary becomes a political campaigner. >> given the fact that he will be leaving even if obama is reelected, geithner will not be there, isn't he even going to get more political as a result of this in the next several months? >> i'm going to say one thing. he may stay through the debt ceiling and the tax cliff come november and december. there's earnings to that effect. fine, i'm okay with that. i'm not totally anti-geithner. what i'm saying is he's got to pass the debt ceiling, he better quit being partisan. because he's going to have to reach across the aisle for votes. if he wants to get a worry about extending the tax cuts, he's going to have to reach across the aisle. you can't be too political when you're in the state department, the defense department, the treasury. do you see what i'm saying? these are not little weenie political jobs, he needs to pull back. i'm asking him, pull back, timothy geithner, or you'll get in trouble. >> do you think the economy's failure will extend tax cuts? >> i do not. the fed is very loose and he's and i all that, but interestingly in the news conference, i want to note this. bernanke made a statement that hasn't gotten a lot of attention. it was in the "new york times," it should go elsewhere. he said if you deliberately inflate to get the unemployment rate down a little more, that would be reckless. that would be reckless. and that's him saying, don't expect a lot of stimulus from us, we're not going to go there. i think that rules out qe3. but he's saying there is no inflation unemployment tradeoff, and i think people should pay some attention to that, and you know what? i applaud bernanke on that, because there is no inflation unemployment tradeoff and he got that right. >> we'll see you tonight. larry kudlow. of course, "the kudlow report" tonight on cnbc. when we come back, the biggest retailer in the u.s. we'll go inside costco after the break. guys. come here, come here. [ telephone ringing ] i'm calling my old dealership. [ man ] may ford. hi, yeah. do you guys have any crossovers that offer better highway fuel economy than the chevy equinox? no, sorry, sir. we don't. oh, well, that's too bad. [ man ] kyle, is that you? [ laughs ] [ man ] still here, kyle. [ male announcer ] visit your local chevy dealer today. right now, very well qualified lessees can get a 2012 equinox ls for around $229 a month. it sounds like a dream job, playing with toys, picking out the best ones, but choosing the toy category is a serious business. we visited toy buyer. the costco deem who was working for us as finally arrived. ken forton will have just five days to whittle down 1200 toys to about 150 to be sold over the holiday season. just getting in the room is a victory of sorts. >> absolutely, absolutely. >> it's like getting no, ma'am nal -- nominated. >> you could say that. we say no much more than we say yes. >> let's play with the engine. >> so it may look like child's play, but this is actually serious and stressful business. tune in tonight, 9:00 p.m. eastern time for the costco craze to see what toys actually made it to the finish line. 9:00 p.m. eastern time right here on cnbc. competitive category. a lot of people hear costco say people don't come to us for toys, it's an impulse purchase. they're impressed by the price and they walk out with it. let's see how much they can grow this business over time. >> it's an amazing story. as i told you before, that bmw documentary, i learned so much. i can't wait to see it. i know i'm going to learn a lot about the costco success tonight. >> something about seattle, doing business in seattle. >> my final thought today is i want to know from you, having been out there, what is it about seattle that gets these great growth companies and they get so many entrepreneurial spirits behind them? >> yeah, we'll talk about that in a minute. we're talking about what costco sells. you say, i wish blank was sold in bulk because blank. we'll talk about that after the break. tdd# 1-800-345-2550 checking the charts. tdd# 1-800-345-2550 looking for support, tdd# 1-800-345-2550 resistance, breakouts, tdd# 1-800-345-2550 a few other tricks that i'll keep to myself. tdd# 1-800-345-2550 that's how i trade. tdd# 1-800-345-2550 and i do it all with charles schwab, tdd# 1-800-345-2550 because their streetsmart edge platform tdd# 1-800-345-2550 helps me trade quickly, intuitively. tdd# 1-800-345-2550 staying on top of the market is key! tdd# 1-800-345-2550 and the momentum tool, tdd# 1-800-345-2550 it lets me do it at a glance, tdd# 1-800-345-2550 so when things shift, i'm ready. tdd# 1-800-345-2550 then to track the stocks i have my eye on, tdd# 1-800-345-2550 i turn to schwab's high/low ticker. tdd# 1-800-345-2550 so i can spot a potential breakout tdd# 1-800-345-2550 before it breaks out. tdd# 1-800-345-2550 and get this...i can even trade, tdd# 1-800-345-2550 change my orders or check out my positions tdd# 1-800-345-2550 right on my chart. tdd# 1-800-345-2550 my system works for me. tdd# 1-800-345-2550 does yours work for you? tdd# 1-800-345-2550 get streetsmart edge tdd# 1-800-345-2550 from charles schwab for $8.95 a trade. tdd# 1-800-345-2550 open an account and trade up tdd# 1-800-345-2550 to 6 months commission-free. tdd# 1-800-345-2550 call 1-877-586-5928 tdd# 1-800-345-2550 and get started today. [ male announcer ] while others are content to imitate, we'll continue to innovate. the lexus rx. why settle for a copy when you can own the original? see your lexus dealer. as we mentioned, tonight's cnbc taking you inside costco, and if you've ever been inside one, you know they sell everything in bulk. so complete the following sentence: i wish blank was sold in blank because blank. i wish they sold vacations in bulk but sometimes you never know when or where you want to get away. johnny writes, i wish time was sold in bulk because i like to linger for a while. and kristin writes, i wish politicians were sold in bulk because then i would have 60 days to return them if they don't work properly. guys, thanks for the good responses today. rick santelli for a take-away, and i know you're going to talk about a little san dantere, mark. >> this area is very significant, even over a 20-year horizon. listen. the contagion, capital flows, money knows no borders. we have to quit thinking about the risk to the u.s. only being in the export areas. we don't export that much, especially to those countries that have issues. it doesn't mean that's going to boomerang here, and i continue to say it reminds me a lot of the credit crisis. they under estimated some of the contagion issues, and even though they have 1700 pages to address it, they haven't even come close. >> rick, we'll talk to you tomorrow. gary, as we say goodbye, we were talking about doing business. what is it about seattle? >> my best advice today is to go long on your documentary. you've got expediters, you've got costco, you've got amazon, starbuck's, microsoft. what is it about the pacific northwest, seattle especially, that creates that great spirit? >> interesting. it was actually more in california. what they found, though, were groceries were relatively overpriced in the pacific northwest, so they were able to go in there and undercut and get the kind ling to

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