Transcripts For CNBC Squawk On The Street 20130308

Welcome back, everybody. Just a reminder for you. Sunday at 2 00 a. M. , that marks the start of daylight savings time. Spring forward, lose an hour of sleep. So youre going to be even more tired when you come in on monday morning. Happy friday. Lets get back to our guest host. That just depresses me. Leave us with you know what, its been such a good news day and i dont want to screw it up, but is there anything youre worried about at all . Ten seconds here. I think one bad thing about getting bad news, if we keep getting it, people will start to obsess about the end of qe. I think its too early for that. I think its goldilocks right now. The analysts are still too negative. Stocks go higher. Thank you very much for joining us today, alec. Have a wonderful weekend. Join us on monday. Squawk on the street starts right now. 236,000, that is the jobs number for february. The jobless rate, 7. 7 . Thats the lowest since december of 2008. Good morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer and david faber. Melissa is off. Futures looking at a sharply higher open. Well see if we get past s ps record closing high of 1565. Take a quick look at europe as well. And overnight in asia. Our road map begins with the best jobless rate in four years. The best jump in construction, hiring in six years. Whats behind the number . Can it last and is the fed now behind the curve . Look at me. All right. Mcdonalds samestore sales, decent february, despite the worries about chicken . China. Big day for the banks. Everybody but ally passes the stress test. Which ones are most likely to deploy capital to shareholders . Pandora is up 26 on better than expected fourthquarter earnings. Impressive mobile growth. Joe kennedy is leaving. Hes going to run the worlds biggest personalized radio service. We we gin with a much stronger than expected job numbers. Well above forecasts of 160,000. The Unemployment Rate fell by. 2 to 7. 7 , the lowest since december of 08. The dow is poised to set another alltime high. That would be the fourth day in a row. Theres a saying thats working its way across the market, bulls win, and bears won. This is annoying. I think that one of the things that must be very frustrating for the people in washington is to recognize, they get off the front page. We start hiring. This is postfiscal cliff. I wonder whether it makes the president and congress say, look what we can do we stop fighting, because this is a truly impressive number. Joe kernen said, oh, now we know why weve been up for so many days. Im not going to disagree with that. 48,000 construction. Wow. Manufacturing, 14,000. Retail 23,000. This is all happening in the context of a sequestration, right, of a payroll tax, gasoline inflation. And we got revised up the month previous. Im not going to look through it. I know immediately, you start hearing, okay, the fed is too easy. But were still a way from 6. 5 . Kind of interesting numbers were only 1. 2 , were not that far. Were not that far. We were at 5. 5 in september of 2007. Yes, we were. Why cant we get back to that. I know. But you just heard the last guest on squawk talking about it. If we get another number similar for march, you are going to hear more and more talk about, all right, qe, what are we going to do, how are they going to get out of it. The Unemployment Rate drops, lets say by just one percentage point. 1 of 1 percentage point, i should say. If the fed has to stop the highquality maybe our country has been off life support. Life support is bad. People living on a fixed income may actually be able to get an income from the fixed. Is that bad . No. Thank you. This market has been built to a certain extent on incredibly low rates and borrowing. Many people refinance. We see companies theres a lot of people who have accomplished what they should. The only people i think are going to be crushed is the ones that thought it was safe to own those funds that they bought. A lot of discussion about the number of upside macrosurprises since the last jobs number. Chicago pmi, ism, confidence, cap x. Now this. I mean, do you believe that the economy is shifting into another gear here . I think that housing is incredibly important, and the bottom in housing is underestimated by everybody. Because there isnt anything like feeling that that asset that you bought has stopped going down. Because suddenly you feel like you can move. Suddenly you realize theres a twoway market in the housing. I think we hear Michael Jackson came on and how strong automobiles are strong. Automobiles, spending at the store, and housing are the u. S. Economy. Thats what we do. Its good. It is good. I continue to come back to washington. If you were to actually get real progress, the dinner that they had the other night resulted in some sort of broad agreement. Could you imagine . And then you start actually seeing legislation, whether it be immigration, or energy policy, i mean how Many Companies what would that add to gdp . How Many Companies come out every day and say, were thinking about using the ge locomotive, the chemical countries that come out, the pcb companies piping, if we could get Medicare Part b up a little and change some of the configurations and in 2030, we change social security, i dont know, i think china would begin to think, you know what, the United States i use that as an example because everybody feels china is beating us everywhere we beat everybody we need to do the grand bargain. They hate each other down there. The s p record, thats going to be maybe the story of the morning at least. Yes. 1565 is the closing high. Theres interday, 1576. And as far as the dow goes, jim, 14,414, which is 85 points away, would put us in doubledigit gains for the year. Is that too much too soon . No. Because i think the market has great faith in bernanke, more than the pundits. I think the market says, you know what, they can figure out what to do in washington in the interim. Weve got a tremendous pentup demand. Why do people weve had people on air who say, we may build as many as 1 million houses. We built 1. 6 million houses for years. How many people have to get hired. You talk about the immigration policy. If you get a normalized immigration policy, when we shut down immigration, that was bad for housing. You get people back in a credentialed way, they buy houses, we can go to 1. 6 million houses. We can do it. We can go to 17 million cars built. These are very important. Without creating a bubble. Without creating a bubble. I think you have to have a little more faith in bernanke. Why should you have more faith in bernanke . Because he saved the world. He did . I still remember i know it was a long time ago but you were pretty upset with him. Hey, listen, the guy hes most improved. He made fun of me in the fed minutes, and that was a bummer. But then he got religion. Geithner said, youre right. But bernanke got religion. People can change. You think pem cant change. Youve always said that about me. Thats true,ive do. Yeah. And cutting out coffee. I think bernanke changed. I want to have faith in bernanke. I refuse to think hes a buffoon and mouth talking. I think hell get us out a jam, and i like being the minority in that. Now that you heard the jobs report, we asked you to tweet us the predictions for the february nonfarm payrolls. Our staff combing through those many entries right now. They are searching for that winner. Who is going to receive a post 9 First Anniversary mug. That was autographed by the squawk on the street gang. Yes, all of us. Well announce the winner of the contest later in the show. Good luck, buddy. I was 5,000 off. Really . My guess was 241. But i think im ineligible. I was 199. I wanted it badly, though. Go back for a second. This energy boom is really big. Maybe because like we live in new york, were not allowed to frac here. People are fracking all over the place. Theres a lot of fracking going on. When you speak to companies, all they ever do is say, energy is a gigantic part of making aluminum, steel, plastic. I completely agree with you. And you have also been on this issue for years now. Yes, i have. And i was wrong for a very long time. But people perhaps not realizing just how what a game changer this can be. Youve said it many, many times. We are going to be these numbers are quite wrong and very conservative about how much oil well produce in the next two years. Go back to north dakota, north dakota two years ago, the state predicted they would do this. The figures, the National Figures show they do far less. If we had pipes from north dakota, which by the way, 60,000 per person who, thats the average salary for somebody who builds pipes, we would be shocked, the energy selfsufficient in the continent in two years. Two years. No doubt. A way of life throughout the midwest. It has. And it is a technology story. We sometimes forget, we talk technology. Everythings Silicon Valley and apple and everything else. This is technology. Absolutely. I was on a rig, continental resources, and i said, what are you doing . He said, were drilling down 5,000 feet and then were going to make a right and drill 5,000 feet. 5,000 feet . It was more like a blizzard with you know, if they had maxed m ms and oreo cookies in the fracking fluid mcdonalds historic higher today. How good is that. Global samestore sales is down. Extra day due to leap year last year. Take that out the comps are actually up in february. China, as david said, decent despite all the chicken stuff. We had weather here in the states. Chatter that maybe the menu, maybe this is a comeback. Don, talk to me about it, hes an innovator, the ceo. Its about finding what people want to eat and you can make at 14,000 places very simply, very quickly. Have you seen the rally in the stock . So many guys downgraded it. That thing is percolating. That had been a laggard in the dow this year. It has become a leader. You talk about technology. Mcdonalds is a Major Research lab for food. Indeed. Absolutely. It is an engineering company, almost more than it is a food company. At 98, i know you liked it at 85. I know you liked it at 90. I think management matters. And i have been so impressed with don thompson. I have to tell you, i think he understands how to have good tasting food and lower calories. I think that is often the secret. He has really figured out kind of a natural bent and hes leaving the other guys behind. I think thats really important. The issue of whether or not they can continue to take share is a big talker today. Yes. For a while there, you will admit it was a little less certain. I think the transition was hard. A new guy comes in. Turns out the new guy is every bit of good. Its like the 27 yankees, theres always someone who steps up and is good as the next guys. Skinner like rivera. Yeah. Like the 2013 yankees. I think there were a lot of guys who whatever. I dont want to make dispersions. I want to say i think its great that thompson has succeeded. When you come in at mcdonalds, the shoes are always so big to fill. Ive got to tell you, i think this company is on a major roll. Weve got your bases covered on todays jobs numbers. 236,000, thats a big number. Well get reaction from a chief economist. Are the numbers a sign of things to come. Well talk pandora. 26 in the premarket on the up side. Even though the ceo is stepping down. What joe kennedy said to Julia Boorstin about leaving the company. David and jim will talk about the banks stress test last night. Winners and losers today. One more look at futures. Look at that. Squawk on the street is back in just a moment. announcer scottrade knows our clients trade and invest their own way. With scottrades smart text, i can quickly understand my charts, and spend more time trading. Their quick trade bar lets my account follow me online so i can react in realtime. Plus, my local scottrade office is there to help. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Voted best Investment Services company. I dont have to leave my desk and get up and go to the post office anymore. [ male announcer ] with stamps. Com you can print real u. S. Postage for all your letters and packages. I have exactly the amount of postage i need, the instant i need it. Can you print only stamps . No. First class. Priority mail. Certified. International. And the mail man picks it up. I dont leave the shop anymore. [ male announcer ] get a 4 week trial plus 100 in extras including postage and a digital scale. Go to stamps. Com tv and never go to the post office again. A look at futures. Looks like 100 point open to the upside, which is going to be another record high for the dow. Keep your eye on the s p today. Thats going to be one of the keys. 20 points or so to the closing high on that index. Lets talk stress tests a bit. 17 of 18 banks have passed the Federal Reserves socalled stress test, meaning the banks are sufficiently capitalized under a bad scenario. Firms came in near the bottom of key capital ratios. Its all about capital. We know that. And in fact, our Banking System may never be better capitalized than it currently is. A lot of investors have been focus the on these tests because theyre giving you a scorecard, at least, of what you might be able to expect in terms of capital return. In terms of how overcapitalized these banks are, and therefore, what they can expect in terms of repurchases and other ways to return dividends capital. They just work. Theyre additive. Yes. For citi, 1. 2 billion that can come in. Citi, remember, is down 9 from and citi is the star in a sense, perhaps because it was coming from not as good a place as some of the other places were from the other stress test. I think thats important. A recognized stock. We talked earlier the market keeps going higher. Go back to the stocks and citis done nothing. Done nothing. It seems back to the split adjusted. Thats right. Youve been a fan of key. Wow. A lot of people just they kept looking at this net interest margin, its not so hot. I think you have to open your horizons and recognize if we get lending again, thats what provides the growth. You can cut your way, hope to be able to arbitrage your holdings. What really matters is lending. And you have enough capital, you feel emboldened to lend. You see the employment numbers for people who do want loans. Jpmorgan has hired a lot of people to lend, we know that. But the rest of the country is cutting back. Lets take a listen to what you said about this subject last night on mad money. After we get the stress test results on thursday of next week, i think investors are going to jump all over sun trust as the company redeems itself by passing with flying colors, boosting the dividends dramatically. Thats why i want you in this Regional Bank before that happens. Sti represents the best buying opportunity in one of my favorite sectors for 2013. They had failed. Remember, twopart stress test, as you know. Next week we get more information. Sun trust used to be when i was at Goldman Sachs, this is what jpmorgan was. We thought this was the greatest. This is the finest, most pristine lender. They really stumbled. And when they fell, it was breathtaking. I think they can succeed now. You talked about the notion of the bad going to better and how thats actually a stronger investment call than the good staying good. This is one of the worst going to one of the best. I think thats really important. Something that had fueled the stocks rise in the past is always the idea of consolidation. And i dont see that as a real possibility on the horizon. I dont either. Because of the concentration in the banks is crazy. If youre jpmorgan or any of those, the idea that youre going to be able to go out and buy another bank is not something that you can entertain. For those at home, you would rather have a sun trust cnp than a goldman, morgan, jpmorgan. I think goldmans book is clean. I think its going to surprise people. Im such a bull in m a this year. I think youre getting converted to that. When you talk about a vodafone deal thats on speed dial, i think its important that these banks were all trapped in this i like to talk about the four walls of the canvas. The analysts only think about net interest margin. We had schiller on. The atlanta housing values up 10 . So suddenly it makes sense to go buy a house and not rent. You might want to move out of your motherinlaws place. You might want to do these things. You might. You might. It does happen. Goldman, lessen, about 10 . Thats called return on equity. Yes. It is. Thats an important barometer of progress. I believe other than the fact that lloyds got the beard, which he got rid of it. Did he . He didnt have it at the super bowl. But you get m a, you get agency business. I mean, they put up their own capital. Thats a Good Business, too. I like this hoop so much. As you can see, cramer is on the job ready to help you make some money. Youll hear him next in the mad dash. The jobs number up 236,000, gives us a boost. The jobless rate 7. 7 , the lowest since december of 2008. But we can still help you see your big picture. 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Its our fastest and easiest way to get you into your car. Its just another way youll be traveling at the speed of hertz. A few minutes before the bell. Looking at pretty good action on a friday as we got a jobs number well above expectations. Looking at a tripledigit opening if things hold for the next six minutes or so. Lets get cramers mad dash ahead of the open. Another star. A new ceo. Looks like the turn is happening faster. Now you say, another win for carl icahn. A lot of people said, has he lost his edge here . This companys in trouble. Not only is it not in trouble, it looks like the rotten past because they had engine problems behind them. A lot of shorts in the name. Goes much higher. It does not stop here. Somebody told me this week that class 8s for february, normally down in the past few years. Not this year. Looking north of 22,000. Theres a sense, by the way, that that group, which had been very bad, because of china, is coming back. And a lot of the United States, you remember you use trucks for fracking, i think the truck market is much bigger than people realize for American Manufacturing purposes. And navistar is back. And cummins is the king. Candy favorite. You know, theres like a group of stocks that people like zag, which is the cover to your i dont want to mention that stock. Because, wow, world of hurt. But its a woh. The big cap stock. The analysts still loved it. Piper downgraded it. Raymond james downgraded it. What were they recommending it for . This is ear buds for heavens sakes. A lot of costs due to international expansion, lost a Major Customer in the quarter. Inventories up. I mean, this company is textbook this is like, lets break out the jcpenney textbook and follow it to the letter. I know david uses the jcpenney textbook. This is like the son of jcpenney. Is that unbelievable . Not in a good way. Not in a good way. Inventories are high. They need ron johnson to step in there and clean up the mess, r. J. The dow going for four Straight Records in a row. Well get help from that jobs number, of course, better than expected. Well run you through the numbers when we come right back. Hello . The words are going this waytheres no way. Oh, the lights came on. Isnt technology supposed to make life easier . At chase were pioneering innovations that make banking simple. Deposit a check with a photo. Pay someone with an email. And bank seamlessly with our awardwinning mobile app. Take a step forward. And chase what matters. Otherworldly things. But there are some things ive never seen before. This ge jet engine can understand 5,000 data samples per second. Which is good for business. Because planes use less fuel, spend less time on the ground and more time in the air. Suddenly, faraway places dont seem so. Far away. [ male announcer ] this is karen and jeremiah. They dont know it yet, but theyre gonna fall in love, get married, have a couple of kids, [ children laughing ] move to the country, and live a long, happy life together where they almost never fight about money. [ dog barks ] because right after they get married, theyll find some retirement people who are paid on salary, not commission. Theyll get straightforward guidance and be able to focus on other things, like each other, which isnt rocket science. Its just common sense. From td ameritrade. You are watching cnbc squawk on the street live from the Financial Capital of the world. Opening bell set to ring in just about a minute. Weve had three record highs on the dow this week. 85 points puts us up 10 for the year. Its come a long way in a very short period of time, jim. But the data has backed it up. Yes. I think thats really whats going on, whether it be the pmi, Federal Reserve Regional Banks, whether it be the sense from the Housing Starts, this is real, okay . Its not based on chinese imports. Its real. Right. Which, by the way, were down overnight. Lets get the opening bell here. One of our favorites, Rebecca Jarvis helping ring the bell as we look at the top of your screen. At the big board, International Womens day. The nyse hosting a Panel Discussion called changing the conversation. At the nasdaq, the offbroadway musical, forever dusty, for dusty springfield. I saw that. Very nice. How about the fact that she rocked at the academy awards. Was that the highlight . Very nice. Shes unbelievable. Wow. Were looking at a gainer to loser ratio today. I wonder look, at a certain point, someones got to come in and take hold here. Its taken people by surprise. Were gaining adherence. The adherence tends to be in the j js. This is not speculative stuff thats being bought. Its just household stuff. And i think people are buying these because they say, listen, i cant be in bonds anymore. I want to be in blue chips. I know thats a dangerous term blue chip after what weve been through, but its a blue chip rally. My daughter calls me, okay, she goes, dad, ive heard of a lot of these companies that are doing well. How many years was it before we were led by mosaic and potash. It was for a while. Colgate, right . And then, of course, yesterday we crossed the threshold of the 300 billion dividend threshold. According to berini. If youre looking for yield, not special dividends like we saw in december, but significant dip hikes matter. There are two funnels into doors that may not be big enough. Theres the fed to get out of the position, and then theres the how much stock did they really buy back. And if you go in a Goldman Sachs right now and say to them, i need an offering on 1 million shares of clorox. They might say, listen, thats too dangerous. I dont want to offer a million shares. Theres some of these stocks, disney, disney feels thin to me, meaning there doesnt seem to be a lot of supply. People used to say, listen, we used to have the five, tenyear base es, and were going to honeywell in levels we havent seen before. But the stocks arent really expensive. Now the kol gates are, but the industrials are not. Google is not. I know that sounds weird. But its not a google rally anymore. That is now the mostheld stock i see merck going higher. I see more comfortable when the market is being led by Companies Like mcdonalds. That makes me feel good. Because that means people arent speculating. Mcdonalds seems like a good stock. I havent seen a list of com po nents, but i imagine mcdonalds and citi is close to the top. While the rest of the Banking Group not doing much at all, goldman, Morgan Stanley, jpmorgan all down, but citi is the best performer among those big banks. I looked at the regionals that scored at the top of the stress test. How about retail. How about walmart, which everyone said was not that good. Target, which allegedly missed the numbers. Again, i shop at target. Lets buy tar get. Were in one of those peter lynch moments where they say i shop at kroger. Wow. Kroger, theres a stock. Its at 30. Thats my supermarket. Are you telling people to go with the Peter Lynch Style of investing now . No, thats what im saying thats what people are doing. They go, i should buy some stocks and call their broker and say, i was at mcdonalds, that seemed good. I went to panera there is a sale on tiffany today, for example. They report in a couple of weeks, they say its not going to be pretty. How did that stock get to 70 . That was the mystery. Its how it got up to this level. Im just thinking about the Magellan Fund. Remember when we used to care about the Magellan Fund . Finick went on to extraordinarily Successful Hedge Fund career. I regard this as a moment of, people arent buying, lets use ebay as an example. Its not an ebay rally, okay . Its a clorox rally. Cloroxs valuation is 19 times earnings. People say, i use clorox, i use bleach, ill buy it. Thats a high multiple. Not sure i would want to but the techs. Supported very good mid quarter. I thought emc was supposed to have a weak quarter. People are buying things traders are buying tech. The investors are still buying household names. I wanted to talk about Smithfield Foods briefly. Sfd, the symbol there. That stock is up this morning. Continental grain, one of the largest shareholders, about 9 shareholder, comes out with its going active on them. Its not threatening a proxy fight or anything, but writes a detailed memo to management saying, youve underperformed greatly. You paid yourself a lot of money and its putting the company into three productions. The food shares are up on that activist play there by continental. Theyre not threatening a board fight at this point, but were the wall street journal did not credit becky quick for breaking the natural engine story with warren buffett. Theyre suggesting a spinoff. There was a time i would say spend something. Dizzy. My head is spinning, like a whirlpool. It never ends . How is whirlpool . Up almost 2. Household name. Household name. Get a good employment number. I think thats the gainers, i mean, h r block, whirlpool as you mentioned, citi, norfolk southern, it is a crosssection of the yes. Go to sherwin williams, the samestore sales are up. Home depot. Another one. Now, lowes had a disappointing quarter. This is a marvelous moment. Is it too hot . All i can say is that if theres a lot of people who missed out and theyre coming in. And maybe this is maybe they should wait for a pause. But they look at bank of america and citi, they looked at their statement you open their statement and it was yielding 5. These are people who are encouraged. Theyre encouraged. Yeah. Its sort of reflective, youve got the Household Net Worth from the fed. Wasnt that great . Up 20 from the low. We know how bad it was. Later on this hour, youll listen to mark haines call the s p bottom almost perfectly, almost four years ago this sunday. And he does it with that pixie well hear that sound in a few minutes. Pisani is on the floor on a friday. Good morning, everybody. Happy friday. What a jobs report, huh . Interesting, the futures only moved a little bit on this. This is a string of stronger news. Consumer confidence, ism manufacturing, chicago numbers were all generally better than expected. Alec had a great comment this morning talking about the goldilocks scenario, Strong Enough to get the attention of the markets. Not Strong Enough for the fed to actually act, either by lowering their purchases or raising Interest Rates. The big story this morning thats being passed around was the reuters story about the fed actively considering allowing their bond portfolio to simply mature. Of course, mr. Greenspan is excuse me, mr. Bernanke mentioned this before. It got a lot of attention. Not dumping bonds would put less pressure on bond yields. Thats gotten a lot of attention overall. Dollar rallied huge this morning. I mean, shot up at 8 30. The euro dropped dramatically on the nonform payrolls. Did you see the Global Markets . This was before the nonfarm payrolls came out. Big week for global stock markets. Japan revised its q 4 gdp. Its positive now, sitting at the highest level, nikkei, since september of 2008. A big week in europe as well, all the european markets were up. Germany sitting at a fiveyear high right now. As for the stress test, jim, i agree with your point here, that the regionals are big winners this morning. We see sun trust up about 3 . Key corp up 1 . All could raise dividends here. I think the big question is, why no dividend for citigroup . Why just 1. 2 billion buyback . I called around and asked for opinions. A lot of people felt increasing the dividend suppose they increase it to 24 cents a year. With a 45 stock, a lot of people i talked to said, that wouldnt make a lot of difference. It would only get an 0. 6 dividend yield at this point, that it did make more sense to do a buyback, roughly 1 of total market cap for the company. By the way, capital one, right now only pays 20 cents. Ive seen estimates they could start paying 1 now. Remember something about all these companies, they paid much higher dividends. Capital one, they were paying 1. 50 a share in 2008. Now theyre paying 20 cents. Even if they go to 1, its still below where they were. Bookings rebounding, backlogging as well. More in the next hour. Guys, back to you. Thank you, bob. People say, jpmorgan, not doing well. Its nine times earnings. Im not worried about jpmorgan. Morgan stanley, not that perfect. Remember, if we get lending, these stocks are inexpensive. If we dont get lending, theyre expensive. Rick santelli is in chicago. Go ahead, rick. Thanks, jim. Of course, we have a better than expected data line, with regard to employment. When these things occur, especially in tight chronological order, the markets think everythings the way it should be. And you get to really see whats going to mover, should the strength continue. Of course, you always have to go back to the fed. Especially with Interest Rates. For the moment theyre doing what you would expect. Theyre moving higher. Interday chart of tenyear note race, you can clearly see it pop. If you look at the same chart of tenyear boon rates, its the same. Everything global. If you open this chart of comps up to april, we have 11month fresh high yields on the tenyesh, on the 30year. Time for the currency moment. If we look at interday charts, you can see why the dollar index is a moon shot today, as bob pisani pointed out. Look at the dollar yen, the pound versus the yen, the dollar index, dollar index now making fresh sevenmonth highs going back to early august. This really is an impressive move by the markets. Keep in mind, to put a throttle on this, if you looked at job average monthly gains from 1992 to 2000 per jim bianco, that was 252,000 to put perspective here. Jim, back to you. Thank you, rick. Lets check out the moves with commodities. Weve been watching the dollar and euro, too, here, the pullback in the euro has sort of taken the bottom out of brent and moving much lower. Although weve recovered when it comes to wti nymex. The focus is the economy improving. Goldman sachs had lifted its outlook on commodities over the next three months. Particularly in copper. They say they despite the fact that last night we got some bad numbers on february demand out of china, they see china demand for copper improving over the next six months. And with copper having come down so far, they think its attractive, at least on a threemonth basis. The next few months near term. David, back to you. Thanks very much, Bertha Coombs. One name we havent mentioned thus far this morning, news corporation. Yesterday we were talking about time warn es decision to spin off its magazine and Publishing Business in the form of a new time inkwell. Newscorp beat that company to the punch with the announcement of the split of the two businesses. Weve been waiting for the proxy of the split. Getting a little more detail on what the two companies will look like. Now, a lot of that has dribbled out over time. Proxy did come out this morning, as you might imagine, fairly voluminous. What can i tell you that we didnt know well . A lot of it has to do with cash in the Balance Sheet. We assumed there wasnt going to be much of any debt on the new news corporation. That will include the likes of dow jones. And all the australian newspapers. And by the way, Australian Broadcasting assets. A bit of a faster grow than a poor publishing company. It will have about 2. 6 billion in cash. A good deal of cash on its Balance Sheet. Of course, one question, will it then go out and try to do Something Like buy the l. A. Tribune, times, you know, owned by tribune. Well see. But that murdoch discount certainly has been coming out of newscorp shares. Have you seen them lately at over 30 a share . The stock trading at about 15 times 2014 numbers. So its getting up there in multiples, to jims point earlier about where we are in terms of multiple. This is not bad. A lot of the group has traded up to that level. Once we do get the split, a fox group, of course, which will be the broadcasting assets, much faster grower. And the new newscorp. This is an expectation that both will buy back shares, particularly the fox group at a more rapid rate. News corp. Had a huge Share Repurchase going on. You can tell, because actually on the australian law, they need to file it. Theyve been down about 300,000 shares a today. They could get as much as 5 billion, to perhaps as much as three times. That is part of the bold case scenario. When you look at the move this stock has had, trading at 15 times, you know, hard to know that theres going to be that much value. The new newscorp may be worth between 2 to 4. Thats a big range. What about the Sports Network to compete against espn. Wont that give the fox network a higher valuation . It could. Because its been so lucrative. It could. If they could get 5 bucks a household, yeah. When we talk about that kind of Sports Program getting those kinds of numbers, you do start to think about the bundle, and whether or not Sports Programming is going to eventually blow that bundle apart, because it will be so expensive. Pay a lot of money and dont care. Maybe one day you do care. Ratings make it worth it. Isnt it incredible. Especially having to watch live. When we come back this morning, New York Times columnist on this whole macys versus jcpenney issue. Hes written a lot about Martha Stewart in his book. The judge in the case ordering both retailers into mediation. What are the chances theyll settle . And what would that mean for marthas brand . As we go to break, man, we came within four points on the dow for 10 gains for the year. It came off of that. Jim said there would be some profittaking. There has been a little. Back in a minute. Selling that open a little bit here. Just up 32 points on the dow. Of course, near some record breaking levels today. Weve come a long way since the financial crisis. You may remember a very important comment made on this program four years ago, this sunday. However, im going to step out on a limb here, i a big hold on. I think were at the bottom. I really do. That was march 10th, four years ago. At the time, the s p, guys, we were looking at where it closed. Closed at 719. Opened at 679. Im guessing obviously it was closer to the open. So he came within eight or nine points of calling the absolute interday bottom of the s p. It was amazing. He used a lot of the school he used a lot of technicals in the sense that the up down volume was at a high level. The kchretierescendo sale. I know mark always carried himself so lightly. But he did a huge amount of work on trying to call these things. And the best call iver seen. Its hard to beat. Theres a picture of mark which hangs on the staircase between our set and our office space. We literally walk by his picture ten times a day. Yeah. And its a good reminder of what financial journalism should be about. Yeah. What individual Investor Protection should be about. And no free passes to those people who come on air during 98, 99, 2000. Cost people a fortune. He didnt show them. He was tough. Everybody else was excited. What do we think hed be saying about where we are now . I think hed like the leadership. Really . I think he would say, listen, guys, the greedy guys have to come in and take something off here. I think he would like the fact that people he cared about leadership, and the leaderships there. We need the banks. I know he always said the financials. Are the banks flagging, that matters, too. He loved leadership. We used to joke about it. Remember, he used to say, whats the key to this market. I said, its yahoo . He would go, ah but when i said pfizer, he loved that. Cramer from the church of whats working now, isnt that what it was . Yes, indeed. So much fun. We miss him. We know you do, too. Six in sixty coming up next. A. A. I try to be smart with my investments. I also try to keep my costs down. Whats your plan . Ishares. Low cost and tax efficient. Find out why nine out of ten large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. Lets get six in sixty with jim. We begin with gec. Stunned that paulson group, down 26 , this is an average, very good company. This is only down 10 for the year. Hot topic. This is, again, i talk about the stealth bull market to take over. This company is going private. Wow. Alcoa. Youre starting to this is typically not a strong quarter. Dont get excited. Kkr. Doing a lot of Important Oil and oil service. People dont recognize theyve got a lot of good oil assets. Icahn, busy. Herbalife. He didnt say whether he would buy in the 40. They need to clarify this. Bernstein says demand strong. Boeing has just been a horse. They dont quit. Whats tonight . People are excited about the idea that there might be an engine that runs on natural gas. These are the guys who have the intellectual property for it. They also do the truck engines. I do want to point out the stock reported last night, better on quarter. This is a good day to take profits in the hold market. I think a lot of the short sellers covered it at the opening. Theyre done. A good day to take a little profit. I would take profit if youve made a lot of money here. See you tonight. Have a great weekend. You, too. What a week its been. 6 00 and 11 00 eastern time. Simon . A big jobs number. You deserve big guests. Weve got them in the next hour of the program. Goldman sachss chief economist will break down the numbers in detail. And david faber will have an exclusive interview with john burbank. Find out where he is investing after making so much money in the housing crisis. Stay with us. This is cnbc on a very big day. [ kitt ] you know whats impressive . A talking car. But ill tell you what impresses me. A talking train. This ge locomotive can tell you exactly where it is, what its carrying, while using less fuel. Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say . Departure. Hertz gold plus rewards also offers ereturn our fastest way to return your car. Just note your mileage and zap youre outta there well email your receipt in a flash, too. Its just another way youll be traveling at the speed of hertz. Welcome back to squawk on the street. January wholesale inventories up 1. 2 . Thats about four times what we were expecting. Now, if you flip it and look at the sales, month over month, they were down. 8 of 1 . Something the feds want to Pay Attention to. Building inventories is a gdp booster, not selling them, is it. Well continue to monitor. We are well above 2 in a tenyear. And should yields close at current levels, we would have fresh 11month highs on the Interest Rate complex. Were right now at fresh sevenmonth highs on the dollar index. Back to you, carl. Thanks a lot, rick. Lets get Market Reaction to the number, both that number and, of course, the jobs numbers, 236,000 that came out at 8 30 this morning. The employment rate 7. 7 . Cramer just said a lot of the shorts covering in the early session, pulled back a bit. Now just up 14. In cramers words, take your profits and go home. Well see where we close. Lets get more on the data and the very, very good jobs number. Lets bring in steve liesman. Steve, take it away. Im looking at the wholesale number, which rick is exactly right, four times better than expected. And thats good number. Its either going to go people will buy it or it will go on the shelves. We count all of it as we count gross domestic product. They use words like solid, better than expected for a big upside surprise this morning. But some still warning the strength is not the trend here. Lets take a look at the numbers. Nonfarm payrolls 236. Economists were expecting only 160,000. So almost 100,000, or 76,000 more. Unemployment rates, 7. 7 . Forecast at 7. 9 . Average annual earnings okay at plus 0. 2 . Here are the details. Construction 48,000. Weve been waiting for a pop in that, given that weve had Home Construction increase. Manufacturing do be better. Health care, perennial job better. Retail was a question mark because we were concerned about the payroll tax taking away from retail. Maybe thats a sign that the retailers are doing better than we think. Temporary help is a leading edge of unemployment. Thats good. Government decline, is more at the state and local level. Because of the sequester, expected more to come from the federal level in the months ahead. Economists are still warning of trouble ahead when it comes to the jobs market, towit, saying the labor market was in decent shape before the sequester began and impact of the january 1 payroll tax hike. But that does not mean these two factors which equal a tightening of 1. 5 of gdp will not reduce payroll growth in the months ahead. Thats Ian Shepherdson from pantheon. The Participation Rate is down again. Thats something the fed will take very, very much into account when it looks at the decline in the Unemployment Rate. If people are dropping out, it means theres still a lot of slack. And then the last thing i want to talk to you you about, guys, is the fed, 7. 7 , our numbers are Something Like 7 is what we expect for when the fed will stop quantitative easing. But again, theyre going to look qualitatively at all this stuff. Can i quickly in the celebration, it will continue, a great figure obviously. Can i just kick the tires on it, steve. I think i did a lot of tire kicking there, simon, if im not mistaken. 271,000 for february last year. It turned out maybe there was a problem with the adjustments. Certainly we gave it back over the coming months. Have they changed the way they calculated it this time around or could it be overinflated because of the ways they attempt to count for the season . No doubt theres a lot of seasonality, a lot of strength in the winter that look like its coming from some problem with the seasonals. The expectation now, simon, is the seasonals have caught up to it, and that its taking that into account this time. But you dont know. Well see if we have another swoon because of the seasonality of the numbers. Okay. All right. Certainly its boosted the stock market. Steve, thank you very much. Senior economic correspondent there. Lets bring in our guest. It validates our belief that the u. S. Private sector is doing very well. The private sector has been driven by cheap energy, improvement in manufacturing, innovation and productivity. Theres a really good headwind behind the private sector. Job creation particularly in small and midsized businesses which is really the hope for job creation going forward. So good numbers for business. And its indicating really that the market has fundamentally based rather than just based on monetary policy. Thats what i was going to ask you. Obviously we now inevitably through the day, people will say what will the response be there, what will happen to Interest Rates if the economy is strengthening. How long can this sweet spot be for investors where, yes, its a fundamental recovery, and the stock market holds . It could run through this year and into next year very easily. There are things that could derail it in government policy. But i do think that government policy perhaps fortuitously is going in a direction at a moment. The deficit is too high. We saw the job data, with the reduction in the jobs at the state and local level. Sequestration may be crude and awkward, but its actually probably a policy in the right direction at that stage. The white house today trying to throw a little cold water on it. The numbers saying, the data is from a presequestration period. Dont i dont know if theyre saying dont expect numbers like this next month or not. I wonder what you think. You may get a bigger negative number from government next month. But i dont think that necessarily hurts the stock market, or the private sector, or indeed the productivity of the economy. A little bit of tightening on the governments side is not necessarily bad for the market. Even though the headline number will be reduced. Next month youve got to look at the private sector number as well as looking at the aggreg e aggregate. I like to get to the credit side of the picture. Tenyear yields going up this morning. Jim, what are your thoughts when it comes to duration, when it comes to credit risk, a little bit high yield perhaps scaring people in terms of some things we saw back in 07. But given that, given the fed, qe potentially coming out. Yeah. I think that the most likely environment for the rest of the year is a firm equity market, and also firm rates. I think rates will carry on rising. And absent the negative tail risk in the economy, youre going to see rates on the tenyear comfortably above 2. 5 , 2 and heading to 2. 5 . The credit side is okay as long as the economy keeps growing. The spreads can stay quite narrow. I would be in bond portfolios. There are plenty of successful bond funds out there that have done it by going long duration. Be very wary of those funds. You would agree one of the big stories of the year is going to be the reversal of the negative correlation between bond yields and stocks . Yeah. I mean, i think bond yields and stocks should both go up in this environment. Were at that stage of a recovery. That is actually the natural behavior. Before we let you go, 10 up side on the market this year . About that, i think. What part of the market should people place themselves . I like the u. S. Domestic economy. We havent talked about International Economies in this segment. But i do worry about europe. I actually think commodities are going to be under pressure. Goldman today suggesting the selloff is overdone and they might rebound over the next three months. They would say that, wouldnt they, theyre trying to drum up business. But i think you need to look for the next year or two, the supply demand picture. And my view in commodities is really driven by excess supply. High prices are brought on more supply. If you add that all up, you dont want to be in the International Markets to the same extent as the u. S. I kind of like small caps and midcaps selectively, because they are domestic. I like u. S. Manufacturing, including technology. Anything that you can get on the back of the tremendous productivity performance in the u. S. Economy. U. S. Commercial real estate. Thank you very much. Thank you. Have a good weekend. News on paypal this morning. Jon fortt has details on that. Ebay has been driving that companys growth. It hopes to fend off scrappy competitors. First theyre releasing tools that should make itasier to use paypal within an app on your phone either by tapping on a button or scanning your credit card with a camera. Theyre testing new apis. David marcus trying to make a developerfriendly website so people can figure out how to work with paypal. The painful truth is that pain pal has earned a Bad Reputation with developers in recent years for being hard to work with. At the top of the release, announcing the changes, they actually say our tools havent kept up with leading edge innovation the industry expects. That has a lot of competitors like brain tree and stripe to get a foothold in the new apps and services in the space. This is part of what david marcus has been trying to do since he took over at paypal a year ago. Make the unit nimbler for the mobile era. Paypal has to mend its reputation with startups if its momentum is going to continue because mobile commerce is taking off faster than most everyone expected. This announcement coming out of south by southwest, the eclectic Arts Festival down in texas. Were going to hear a lot more about that next week. Ill tell you that. Everybody wishes they were there. Thanks, jon. Take a look at facebook. Obviously weve seen some decent market action. A selloff here. Facebooks not had a good morning at all. After the relaunch of news feed yesterday. I dont know if you guys were able to see any of the presentation by mark zuckerberg. A bit of a run into that. Closed on the highs yesterday. But giving some back today. Along with a bunch of other the s p 500s just turned negative in what was a great jobs number. A lot of discussion still to come on that. Well also be examining the big banks, finding out if financials are ready to lead the market higher after what was the latest round of stress tests and todays strong job numbers. Could Interest Rates go up sooner than expected. One of the Top Hedge Fund managers, find out where john burbank thinks things are headed next. [ female announcer ] youre the boss of your life. In charge of long weekends and longer retirements. Ask your financial professional how lincoln financial can help you take charge of your future. Pandora rallying, tremendously strongly at the open. Joseph kennedy stepping down after the Company Reported those upbeat results last night. Cnbcs Julia Boorstin joins us with more of her exclusive interview with mr. Kennedy. Good morning. Good morning, simon. Joe kennedy leaving the company on a high note. Better than expected results and projections for the year sending the stock flying higher after hours and holding on to those gains today. Kennedy telling me that the company is well positioned to profit from growing mobile use. My vision was to create an enduring great company. Part of that is you build a great foundation, a great fabric, it endures transitions. Its hard to tell people, i announced it to the company today, but i think everyone understands this is all part of a path to an enduring great company. Now, kennedy wouldnt give me any details about why he told the board tuesday night that hes leaving pandora, after nine years. This is the right time for me, and i believe because its the right time for me to go off and recharge my batteries, that thats right for the company as well. Jpmorgans doug anmoth overweight on pandora said hes leaving the company, quote, well positioned with market share as well as new integration with radio add at buying systems. Theres been some media speculation that karmazon could fill pandoras hole. Kennedy said he would be surprised if his replacement did not have experience at a consumer oriented company. Well have more on who kennedy thinks should run the company in the next hour of squawk on the street. David, over to you. Thanks very much, Julia Boorstin. Back to the financials, 17 out of 18 banks passing the feds stress test. We got far better than expected jobs numbers, of course. So how does all this impact the financials . Lets bring in anthony, the bank analyst and managing director of raymond james. Anthony, first give me your take on the comprehensive capital analysis review, to use the proper context that we got yesterday for the big banks. Yeah, these results were obviously a positive for the industry. If there was a positive surprise, i think it was citigroup. Their capital ratio came in higher than expected. I dont think 2013 is going to be the big year for return of excess capital. I think thats in 2014, 2015. But clearly, the industry has made tremendous progress in building Balance Sheet strength over the last couple of years. Im looking at some of the stocks. I mean, notable Goldman Sachs and Morgan Stanley down 2 . Any particular reason in your mind why they would be reacting somewhat negatively . The big brokers, so to speak, jpmorgan included, had perhaps lower than expected stress capital ratios, primarily due to the feds positioning on what trading losses might be in a worse case scenario. Keep in mind we have the whale from jpmorgan in regulators minds at this point in time. And there could have been some overly conservative adjustments made there. So when goldman makes the front page of the Financial Times for its weakness, that is in general terms for investors a concern because its the ultimate stressed environment in which they dont perform so badly . Exactly. Another way to look at it, they passed with flying colors, but there may be some reduction in the amount of return investors were expecting this year. Well have to wait and see next week. Anthony, if its not a 13 story, how much confident are you that its a 14 story or 15 stor sni. Citi is a top pick right now. When you look at their number, their return of capital was telegraphically less than expected. Their capital ratio was 8. 3 , fully stressed. So for citi, its just a question of when, not if. For the rest of the industry, we have to go company by company, but i think the recurrence will be there. I think the feds posturing at this point in the recovery is still ultra conservative. Anything we can expect to get next week, the 14th, when we get the final results and the nonobjection to the capital actions . Or do we know all the news that will move these stocks . I think with todays release, that theres going to be you know, the bloom is off the rose, so to speak, a bit. And i think we may have a slightly higher, or slightly lower return of capital. But the key point here, especially for the guys getting their firsttime approval, is that its a vote of confidence for the regulators. So we still look for the banks that are, you know, more in recovery mode, the sun trusts, the regions, the bank of americas, the citis, these are the banks that had the most benefit from this round of testing. All right. Anthony, thanks for joining us. Appreciate it. Anthony polini, raymond james. John hatzius, talking about the jobs numbers later on. Back in a minute. I know what youre thinking. Transit fares as in the 37 billion transit fares we help collect each year. No . Oh, right. Youre thinking of the 1. 6 million daily Customer Care interactions xerox handles. Or the 900 Million Health insurance claims we process. So, its no surprise to you that companies depend on todays xerox for services that simplify how work gets done. Which is. Pretty much what weve always stood for. With xerox, youre ready for real business. Investor. Yeah,ty much whaibut im a busy guy. Oror. It used to be easier but now there are more choices than ever. I want to know exactly what i am investing in. I want to know exactly how much im paying. I want to use the same stuff the big guys use. Find out why nine out of ten large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. With fidelitys new options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Welcome back to squawk on the street. Im josh lipton. The hedge fund maker getting drilled this morning, saying it expects a loss in the current quarter, higher expenses. The loss of a Major Customer. Skullcandy said theyre losing share to dr. Drakes beats and seem to have reached full distribution in the u. S. The street reacting. Piper jaffray and and Merrill Lynch responding. Down on strong volume. Carl, back to you. Thanks a lot, josh. On the heels of todays positive job numbers, online work is boosting Job Opportunities for professionals who can find a job without ever setting foot in an office. In 2012, 35 million hours were worked through the Largest Online marketplace, o desk. Giving them the chance to hire an employee who is really located anywhere in the world. Gary schwartz is the ceo and joins us this morning. Gary, good morning. Good morning, carl. People say this is going to be, what, a 5 billion business in a few years, right . Yes. Staffing Industry Analysts say 5 billion in five years. What kind of work does this technology lend itself to . Were seeing all kinds of work that can be done in front of a computer, while most of the work is technical in nature, were getting pulled aggressively into marketing, data, even managerial jobs. Four categories accounted for 90 of the work on our platform in 2007. Thats more like 35 categories today. So massive expansion. Im guessing, obviously in any kind of scenario of job growth, its going to be fed by smaller businesses. Im guessing this is exactly whats going on, Small Businesses, you need a web designer but maybe cant find one that they can like or afford in the neighborhood theyre in . Thats exactly right. We have 550,000 clients. Its a lot of Small Businesses that cant find talent or cant compete for talent in their local geography. You started up in 06, funded by benchmark capital, global span and others. How quickly are you guys growing, and walk us through some of the montization on the Business Model. Weve seen an eightfold increase in hours worked since 2009. And the way the Business Model works is, we take a 10 cut of every hour worked. So Companies Post their requirements, manage and pay the workers online and we get 10 of every hour billed. Would this have been possible without the cloud . Im trying to think what technology what progress in technology has led to the Tipping Point that allows you to grow so fast . You know, we do think that technology plays a big role, obviously. Its not only the bandwidth available today, but the tools and Technology Available on the web. Other factors in the growth include the economy. The fact that companies are trying to get more work done, and workers want freedom and flexibility. And globalization as well. Three mega trends fueling the growth of the online work market. What is the International Outlook like . For a long time, anything that you could digitize, any function, you could send to india, and how is this story over the last 20 years. Do you see this as an antidote of the offshoring, or do you think it is something that will accelerate it . We think it will accelerate it. The reason why is the companies can bring the work to the worker instead of the worker to the work. Some interesting statistics. In 2007, you know, 90 of the work on odesk originated in the u. S. Today its less than 60 . Its really a global platform, where companies from all over the world want access to the best talent regardless of where it lives. 30 of the work done by americans today originates offshore. So it originates outside of the u. S. So do you see yourself as a major disrupter to the temporary employment industry . Because i can imagine, if you can match people in this way, if the technology can be taken up by other people, thats hugely disruptive, isnt it . We do. We think this is a very disruptive business. Its not dissimilar from ecommerce. Ecommerce is about getting the right good and delivering that good and paying for that good. Online work is about the same thing, all via the internet. We think its quite disruptive to traditional ways of getting work done. But the market is huge. As evidenced by the report today. I think were just getting started. Before we let you go, Marissa Meyer sparked a huge debate about yahoo . Do you think that could grow . I think marisa mayer is wrong. Were seeing the most innovative and Forwardthinking Companies move in the other direction. The war for talent is full on. I think Flexible Work policies are table staged for businesses that want to compete in this environment. Gary, thanks for your time. Good day to have you on. Thanks, carl, thanks for having me. After the break, a deeper dive into todays jobs numbers with jan hatzius. 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Hell start investing early, hell find some good people to help guide him, and hell set money aside from his first day of work to his last, which isnt rocket science. Its just common sense. From td ameritrade. Otherworldly things. But there are some things ive never seen before. This ge jet engine can understand 5,000 data samples per second. Which is good for business. Because planes use less fuel, spend less time on the ground and more time in the air. Suddenly, faraway places dont seem so. Far away. Lots of moves in the metals and energy markets. On the back of the jobs market. Lets check in with Bertha Coombs at the nymex. Goldman sachs saying at least for the next three months, today were sort of seeing a mixed reaction across the energy patch at least, weve got nymex crude almost flat on the day. Its come well off of the lows. Weve got gasoline looking like a Short Covering rally. Since reacting to the strong jobs numbers in the face of a strong dollar. And then when you take a look at whats happened this week, brent crude, which has been so much stronger earlier in the week, now looking to end the week on a down note, after we had the pipeline reopening in the north sea. And on top of that, the euro, which was so strong yesterday, making a huge pullback today after the jobs number. Nat gas, well, the fact that it is snowing pretty heavily here in the northeast, just tells us that this has been a strong winter. We had a strong drawdown yesterday. And nat gas poised to be up 9 for the year. Right up there with the move in the Dow Jones Industrial average. As far as metals, weve seen a little bit of a move up. Gold has been higher about this time of morning for much of the week, to fade into the close. On track for the fifth week of decline. Weve seen big withdrawals from the gold etfs, but the other Precious Metals have seen influx. Thanks, bertha. 7. 7 , that is the best jobless rate in about four years. The nonfarm payroll number coming in far above estimates. Jan hatzius joins us this morning from new york. Good morning, jan. Good morning. How are you . Good. Pretty good number. A little better than you were expecting. Although Labor Force Participation might have had something to do with that rate. Whats going on there . I think on the Household Survey, its a bit more mixed than the headline would suggest, because of the drop in Labor Force Participation, which was surprising, because it had looked over the prior six months Labor Force Participation might be stabilizing. Its a pretty strong Household Survey and clearly strong Establishment Survey with the nonfarm payroll number, clearly printing. Printing strong in the underlying details in terms of the composition of jobs, also looking quite encouraging, especially on construction. Yeah, a lot of discussion today about whats called the big five. Weve got payrolls, the rate, earnings, the work week, all of those things moderate to decent upside surprises. Does this mark a new chapter for the labor market or not . I mean, it certainly holds out that hope that we are shifting to a stronger pace of payroll gains. Its a little puzzling, i think, if you compare whats going on in the job numbers, where, you know, generally the news has been strong, as you said. And you look at other measures of activity, you know, the gdp tracking certainly Fourth Quarter pretty weak. First quarter is going to be better, but its not stellar. Some of the other indicators not being quite so strong. So, you know, either that means very weak productivity growth or it means that one of the two sides of the coin is sending the wrong signal. Maybe what were going to be seeing is that the labor market sends a more accurate signal than some of the other indicators. But i think there are open questions here. Yeah. Obviously sequestration will have ostensibly some effect on government hiring. I just wonder whether or not can we sustain 200plus in march and april or not . Its not all forecast. We would expect slower job growth. But thats partly also because we think that, you know, the job market numbers and the real activity numbers should converge to a greater grieve. So it wouldnt be our forecast. But it does hold out the hope that things are getting better. For sure. We should clarify that the payrolls gain is in fact 236,000 despite the graphic that we just put on air. Jan, importantly, that is below 250, which is the rate at which we probably need to add jobs generally speaking, to bring down unemployment. Does that, therefore, mean since its below 250, that we dont need to worry for the moment about any more conversations on shifting the fed towards being less accommodative . I dont think so. If were adding jobs at the current pace, then we will be bringing down the Unemployment Rate. Of course, we would be bringing it down more quickly if the payroll number and unemployment trend was higher. But at 236, that is a you know, thats a pretty sizeable gain and it should bring down the Unemployment Rate over time. Now, i think do you think it could shift the fed at this level . If its maintained here, i think so. The question is, how many months do you have to see that youre convinced that is the underlying trend of job growth. If you had a very long period, at this kind of pace, of course they would make some changes. And they would decide that a substantial labor market improvement was taking place. So thats really the question. Not so much, is this number good enough. Its a very good number on the Establishment Survey, but really how sustainable is it and how are we going to be looking at this three or six months down the road. So is that why the yellens and the bernankes of the world havent quite moved off that perch . Absolutely. Absolutely. I think what they would want to see is sustained strength. Something that you know, weve had accelerations in payroll growth before in this recovery, and theyve been proven to be shortlived in a couple of cases. So they want to see sustained growth in payrolls. They also want to see, you know, broader signs of improvement, Household Employment growing perhaps a little more strongly than it has. I think they want to see an increase in the hiring rate. Janet yellen went through some of the indicators to look at in her speech on monday. So i think its the broad picture that matters. Yeah. Finally, jan, just curious, of all the data points weve gotten in the past couple of weeks, cap x, new orders on the pmi, is there one where you said, wow, that is truly, truly impressive . Ill be conventional here and say the payroll gain is the most important of all of those. Its the highest value economic indicator. And its clearly a strong reading. But again, the question is, how sustainable is it going to be. Well have to see about that. Always good seeing you, jan. Wish you were down here. But thanks for coming to the camera. Thank you. Jan hatzius at goldman. Hollywood saved us. Hooray for hollywood. Now that youve heard the jobs report, did you nail the number . This week we asked you to tweet us the predictions with the nonfarm payrolls. Our staff is rampantly combing through all the entries in search of the winner. Rampantly . Im not sure thats the right word there. I didnt write that. Who will receive this is what you get, a post 9 anniversary mug. The whole gang. Were going to announce the winner of our contest later in the show. Soon. There it is. A look. Jims the only one who writes booyah on it. Ive got nothing. I just signed my name, thats it. Anyway, its beautiful. Congratulations in advance for whoever won. After the break, one hedge fund giant raked in big bucks, shorting subprime. The last time the dow was hitting new highs. Wheres he putting his money to work. Two words, fish mcbites. Mcdonalds samestore sales coming in lower than expected, after bringing in some new customers. Accelerrental. At a Hertz Expressrent kiosk, you can rent a car without a reservation. And without a line. Now thats a fast car. Its just another way youll be traveling at the speed of hertz. announcer at scottrade, our clto make their money do more. Re ann to help me plan my next move, i take scottrades free, inbranch seminars. Plus, their live webinars. I use daily market commentary to improve my strategy. And my local scottrade Office Guides my learning every step of the way. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Ranked highest in Customer Loyalty for brokerage and investment companies. Our next guest, one of those that made a lot of money shorting subprime debt. Is there a dark horse trade out there . And what about credit versus equity . John burbank, manages about 3. 7 billion. Nice to have you on the east coast. Thank you. Snowstorm. Yeah. We always like to do that for our visitors from the San Francisco area, the bay area. John, you know credit well. And obviously youre also a big player in the equity markets. Ive curious, lets start off with a look at credit. Yields moving up a little bit today. Its been a heck of a bull market for a long time. You made a lot of your money there. Do you still prefer credit to the equity side or not . No, i definitely prefer equity here. Credit has been taken to almost a nirvana level. Allocators correctly were risk averse here, cautious. And all that money that went into credit produced spreads that are now extremely tight. And not appropriate for the actual economic environment. You dont think so . No. You say nirvana level. The spreads havent come in they arent historically the lowest theyve ever been. Theyre close, but not relative to equity they are. Junk bond yields for the First Time Ever is trading tighter than the s p earnings deals. So the junk Bond Companies basically have no revenue growth, and obviously are susceptible to a bad economy. Yeah. A lot of guys buying that credit, expecting things are going to be okay. Credit yash yos arent that bad. But you dont like high yields, i guess. Theres limited upside. Theres no growth in any credit instrument. You only have down side when spreads get really, really tight. So im not predicting with all this constant liquidity that its going to go down. Im just saying the risk reward is net equity. Very few allocators wanted to own equity. But after the new year, and after i think the recognition of central bank easing coming in japan, probably in europe, you know, switzerland and uk have already done incredible things. I think the recognition is the risk reward of credit is turning into more risk. Any kind of inflation in the distance is terrible for credit. And a boost to a lot of equities relatively. Also, in terms of equities, im not a believer that all equities are going to do well. The economic environment is not that good. You know todays jobs report . No, i dont really think so. I think these are generally lower level jobs. Productivity is actually has been declining. And to be honest, another percent and if wages if theres any wage Pricing Power of the employed, margins are going to come down for companies, which is not good for a lot of equities. Youve been negative on the economy perhaps more so than others. I remember our last conversation last year, you were looking for a recession. It didnt happen. And supported by ecris argument that we hit a recession last july. Now, the thing is, people inflate the price of assets with Economic Growth. If the stock markets rising, they presume the economy is doing quite well. Remember, were using governmentsponsored numbers for the cpi, and for what real growth is. I actually believe that we have a recession. And recessionary conditions in a lot of the world. We just added 236 jobs in february. Yeah, but the who we count as job seekers is highly controversial. And the level of overall unemployment is actually quite high. The lowlevel jobs are actually getting added in the emerging markets around the world, other than service jobs here. What i like are the high value added companies, the multinational leading companies. I think their prospects are quite good. They dont have a lot to do, though, with Economic Growth here. All equities are not equal. I believe in high value added companies, market leaders, world leaders. The rest of the world is whos getting richer. Incomes here are not increasing. Theyve been decreasing for quite some time. But in terms of earnings and cash flow yields right now, when you look at credit versus equity, you come down on equity . Yeah, but i come down on equity if theres a great Corporate Governance, alignment with shareholders, using the free cash flows correctly. You know, since i started in 2000, ive seen terrible Corporate Governance for the first eight years. But since the financial crisis, theres been a tremendous change, a sobriety in board rooms and managements. No longer do we hear about ceos gunning, you know, stocks to make their options look bigger. Were getting Capital Allocations that are very, very good. Its not happening around the world. Governance around the world has not improved tremendously. But in the United States it really has. A lot of money getting returned to shareholders. Before we let you go, john, the gold market, youve also been a student of that. We watched paulsons gold fund down a lot more than actually the miners or underlying metal. But gold seems to be diverging in ways than it has in a while. Why . It had been trading more like another financial asset. Now, with the dollar strengthening, more confidence, thats where the liquidity is helping. People positioned them sems for qe3. When it didnt follow through people started selling and putting money in other financial assets. Now gold is down here at 1570, 1580. I like gold. I dont like gold stocks, though. The reason is, Corporate Governance has not yet been met in the gold stock gold miner market. Whats happening is i think investors are realizing now that poor Capital Allocation and basically lying about costs and with a lower gold price is producing a very bad multiple. So multiples have been compressing for gold stocks. Without a change, a sea change in governance, you know, were not going to see a huge rebound, other than if gold rises, it will rise. What we need to see is activism. What paulson should have done, he should have been an activist in gold stocks. But if you dont understand the thing youre dealing with, and if youre a believer in a huge immediate gold price, then i guess you can ignore those things. John, weve got to leave it there. As always, appreciate your time. Okay. Thanks. Carl, back to you. When we come back, Rick Santelli will break down the jobs numbers as only he can. Dont go away. Here we are, me and you on the road and we know that it goes on and on [ female announcer ] youre the boss of your life. In charge of making memories and keeping promises. Ask your financial professional how lincoln financial can help you take charge of your future. Oh, oh, all the way oh, oh welcome back to squawk on the street. And the santelli exchange. We had a jobs number and it was a pretty darn good jobs number. And its always about jobs, jobs, jobs. 236,000 headline, 246,000 when it comes to private sector. Unemployment rate at 7. 7. Thats what splashes on the screen. A couple of issues there. The Participation Rate did move down. It matched the one we saw in august. And that level represented a 30year low. But it was still a pretty good report. One fly in the ointment or not, many are talking about 340,000 multiple job holders, that number is an alltime record. And the only reason that would be a bad thing because, listen, having a lot of jobs to pay the bills is the american way. But if thats a precursor of issues and unintended consequence of obama care that we have to Pay Attention to. Lets go to the before and after. Heres something i was saying yesterday on the before regarding jobs, play the tape. I think anything over 225,000 will give you the same dynamic we had in adp and i think that would give us a close somewhere around 205 to 208 which is a huge but it would still represent a new high close. All right so listen, 225 or higher was not my call. My call was at 144 but it made sense. I thought if the number was 225 or higher wed see some normalization. Stocks, will they continue to go up . They have. Interest rates would go up to those levels. And right now we are at 204. 5, 205. Now lets play the after tape. Its really simple. Bernanke said 6. 5 on the Unemployment Rate. I dont care what bernanke said. All right. Why dont i care what bernanke said . More than anything if you want to understand the way i take this will give you some gateway into that process. I do not like nanny states. What i like is a country that is dynamic. Dynamic is where its at. Thats what separates us from europe. Thats why my grandparents came from europe. Thats why the late used to make fun of france. Because its not about a nanny state. Steven jobs, henry ford, thomas edison. They didnt work for anybody. They werent under the thumb. And listen, ben bernanke, i think he means well, but at some point, truly, you have to stop these programs. You have to let things normalize. Because on a day like today, when the numbers improve, Interest Rates need to go higher. They need to be the throttle valve on the economy. You cant micromanage a 16 trillion economy. Nobody can. Thats the horrible lesson we learned under alan greenspan. Back to you. Rick, great stuff. Just great stuff. Well talk to you soon. Rick santelli in chicago. Italys stock market facing some headwinds. There could be a bubble forming in the ferrari market. Prices already getting this is hard to believe, 10 million for one car. Really . And another big auction this weekend. Were going to look at the possible prices for the newest round of prancing ponies in a moment. [ kitt ] you know whats impressive . A talking car. But ill tell you what impresses me. A talking train. This ge locomotive can tell you exactly where it is, what its carrying, while using less fuel. Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say . But we can still help you see your big picture. With the fidelity guided portfolio summary, you choose which accounts to track and use fidelitys analytics to spot trends, gain insights, and figure out what you want to do next. All in one place. Im Meredith Stoddard and i helped create the fidelity guided portfolio summary. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. We talk about bubbles all the time. Stock bubbles, bond bubbles. Housing bubbles. But a new type of bubble could be forming in ferraris. Robert frank looks at the shift in sales. Good morning, robert. Good morning, carl. We spend a lot of time talking about the dow and s p. But the index thats caught my attention is the ferrari index. This is an index of 25 of the most sought after ferraris over the past three years. This index is up over 70 . The average price for a collector ferrari is 2. 6 million. The broader collectible car market is very strong but its only grown about half as fast. Are we in a ferrari bubble . We may find out this weekend more than a half dozen ferraris will go on sale at the Amelia Island in florida. This a 1952 could fetch 1. 4 million. Theyre also selling a 1965 gtb that could sell for 1. 3 million. Now gooding and company is selling this bright yellow 1966 ferrari 275 long nosed top, 2 million. Now carl the highest price ever paid for a ferrari is 35 million for a gto last year. But one of the worlds top ferrari experts said a billionaire in the u. S. Was recently offered 50 million, thats 50 for his gto and he turned it down. The owner says, quote, he didnt need the money and he loves his car. In other words the price just wasnt high enough. So looks like ferrari prices still have a lot of room to run. As amazing as that seems. Back to you. Small sample, i guess, robert. But interesting index nonetheless. Thanks a lot, robert frank. Well see new about 30. Spanish market absolutely flying up almost 3 . Wow. And david well see you later on. Good weekend to you, carl. Heres what you missed if youre just joining us. Welcome to hour three of squawk on the street. Heres whats happening so far. As long as the Economic Data keeps surprising on the upside, theyre going to take care of themselves and thats keeping a nice bid under this market. Stocks were still climbing the socalled wall of worry. Theyre not anymore. That worry is gone. Up, 236,000. Told you. The Unemployment Rate, 7. 7 . Bulls win and bears whine. And if you are a bear here this is annoying. This is a truly impressive number. Joe kernen, when he went ah, now we know why weve been up for so many days. Im not going to disagree with that. This is one of the worst going to one of the best. I think thats really something that had fueled the stocks rise in the past had always been the idea of consolidation, given its cut. And i dont see that as a real possibility on the horizon. I dont, either. I mean we have january whole sale inventories up 1. 2. Thats about four times what we were expecting. Theres a really good headwind behind the private sector. So good numbers. Good numbers for business, and its indicating, really, that the market has fundamentally based rather than just based on monetary policy. Good morning, live here at post 9 at the New York Stock Exchange lets get a check on the markets on this jobs friday. The dow has not had a week in which it has traded higher all five days since september of 2011. But we might actually do that today. Hanging on to some gains, up 25 after the jobs number this morning. S p has gone negative, now slightly green again and the nasdaq also hanging onto a very sliver of a gain, up about 0. 06 . Pandora one of the gainers. Announcing the current ceo joe kennedy planning to step down once a replacement is found. Well hear from kennedy in an exclusive on cnbc in a few moments. Facebook in the red after just seeing some strong gains yesterday. Thanks to those changes, Ceo Mark Zuckerberg announced to its news feed tool. Our road map for this morning, the big banks tapping the first part of the stress test. Most of it flying colors. In fact nearly 30 of todays new oneyear highs are financials. But next weeks results could be a lot different. Were going to break down everything you need to know. Then is Martha Stewart the biggest problem at Martha Stewart living . New york times columnist jim stewart tells us why the domestic divas multimillion dollar compensation package is the source of some growing controversy. Plus as Tech Companies struggle to find good engineers one startup is trying to train people for those open jobs. Bringing computer coding to everyone from Elementary School kids to baby boomers and getting millions of dollars in funding at the same time. The ceo will join us live right here at post 9. But we will start with the banks. 17 of 18 passed the feds stress test, meaning they are sufficiently capitalized, under a worst case scenario. The only bank not getting a passing grade was ally financial. Our Kayla Tausche joins us with more on what to expect next week and why theres this divergence between the winners and the losers today. Well, carl, its really an interesting story. We have seen in the third annual doddfrank stress test which is a barometer for the capital and the level of depressionlike scenario the bank posting an average of 7. 7 in this tier 1 common capital compared to the 5 required in dodd frank ally financials 1. 5 dragged down by subprime mortgages. Banks also released the results of their internal stress test. The majority showing higher capital levels on their own test i. E. The best test which models several of those depressionlike scenarios was more stringent it appeared that this year the fed put a little bit more scrutiny on trading platforms which is why you see the likes of Morgan Stanley, Goldman Sachs and jpmorgan performing less well than some of the Regional Banks. Still a general positive that most did clear the feds bar meaning the way is paved for them to return capital. Its just unclear whether those returns will be anything spectacular. Goldman sachs and Morgan Stanley did clear the bar by the week so investors are pessimistic about the amounts theyll be able to return. In fact goldmans leverage ratio which determines that exactability just 3. 9 to the feds minimum of 3 . Citigroup yesterday disclosed its request for a 1. 2 billion buyback. A likely indication thats been approved especially since its the only finance ago really of this pack thats in the green today. Wells fargo has merely said it asked the fed for more capital than last year and there are buybacks at bank of america and key corp they would likely benefit the shares the most since theyre trading below book value. As always, im getting excited for the results next thursday. As only you can, kayla. Well see what happens next week. Certainly been an interesting week this time around. Thanks a lot, Kayla Tausche in new york. After a week of record highs, now would be a good time to take a look at some technicals to see what theyre saying about the rally. Dan fitzpatrick is Technical Analyst at Stock Market Mentor dotcom. Good morning good morning, carl. Sounds like youre saying charts mean were going higher. Yeah. Its not, you know, the s p we just had a new high in the dow. S p is right back to where it was a couple times over the last several years. Its not unusual to see a few wiggles in the prices at this point. Ultimately this is a head and shoulder continuation pattern. I think youve got it on one of the charts there, this is a i think this is the minimum. This is the minimum move here, right at 1547, 1550, but the way this is set up, weve really got a lot more upside. Just based strictly on the s p and were not even talking about the other sectors yet. Right. And whats leading you to this, correct me if im wrong, is the lack of any other major sector diverging from that, is that right . Yeah. Thats correct. And, when it looks when the future looks so bright you have to wear shades, as the old song goes, im dating myself, then you start worrying about some kind of top like oh, my gosh, you know, when things look so good they cant get any better, then thats a sign of a top. But were really not there yet. Theres a lot, there are a lot of issues, that economists, that financial guys, and investors have, with the market, and whats going on in the Macro Economic conditions. But thats just all part of the wall of worry. I mean you can take virtually any chart of any indexes, except some of the metals, and just draw a line from the lower left to the upper right and thats really what the trend is. And when it gets right down to it, sometimes its really not any more difficult than that. Yeah. Whats going on then with the nas, why is that such a source of worry for some, especially given the tech has not kept says so far this year. Wouldnt you expect it to play catchup . Yeah, you really would. And i hear that a lot. I hear that from a lot of technicians, just a lot of general market chatter out there about how theres a big red flag because these other indexes keep hitting higher highs, the transports, the industrials, financials, of course, and then the s p. But then you look at the nasdaq, and it still is kind of mired in this congestion. But thats the typical nasdaq 100 cap weighted index. Well, apple has had such a disproportionate share of weighting in that. Back at apples top i think it was about 20 . Thats a huge, massive weight on the nasdaq 100, if thats the way youre looking at it. But if you even the playing field, and look at the nasdaq equal weighted index, youll actually find that that has outperformed everything this year, except the transports. And so i think weve got this real stealth strength in the nasdaq that most folks arent really looking at. And i like that. I really like the way thats setting up. And, by the way, can you imagine how thats going to look once apple does, indeed, find a bottom . Yeah. Good point. Xing out apple has been a k45 edge on the upside and the downside. Bottom line, i know youre trying to be responsible about targets, minimum price target on the s p 1600. Youre putting a date on that . No. Im really not. I dont like to do that, because it makes me look like im trying to predict something and im not trying to carve out a name for myself by predictions. I will just say this, you know, ive talked about gold, the continuation head and shoulder pattern in gold that we saw a couple years ago. That went and outperformed what the measured move was supposed to be, the minimum where is where we are at the s p, by 40 over the next two years. No way im touching that type of projection. Let me just say that on any im just not going to do it. But on an even number basis, 1600 seems like a pretty good magnet to me. All right. Dan, always good stuff. Appreciate it very much. Thanks, carl. Dan fitzpatrick from stockmarketmentor. Com. Straight ahead, the man who says Martha Stewarts multimillion dollar compensation package is one of that companys biggest problems. Jim stewart of the New York Times is up next. Plus hear what the pandora ceo had to say about his decision t step down. Julia boorstin spoke to him exclusively last night. First Rick Santelli taking a look at todays jobs number later on. Absolutely. Were going to discuss how the equities have come off of it, maybe it was priced in, maybe a lot more than thats priced in. Well talk about Interest Rates, can they really get a life of their own, and, of course, lets talk about europe, and the fed exit, and an opinion on a lot of things were going to dig down with him at the bottom of the hour. Tion. Only hertz gives you a carfirmation. Hey, this is challenger. Ill be waiting for you in stall 5. It confirms your reservation and the location your car is in, the moment you land. Its just another way youll be traveling at the speed of hertz. Transit fares as in the 37 billion transit fares we help collect each year. No . Oh, right. Youre thinking of the 1. 6 million daily Customer Care interactions xerox handles. Or the 900 Million Health insurance claims we process. So, its no surprise to you that companies depend on todays xerox for services that simplify how work gets done. Which is. Pretty much what weve always stood for. With xerox, youre ready real business. Barrow island has got rare kangaroos. Chevron has been developing energy here for decades. We need to protect their environment. We have a strict quarantine system to protect the integrity of the environment. Forty years on, its still a classa nature reserve. Its our job to look after them. Its my job to look after it. Dow is up 41. Take a look at the heat map here. One stock thats helping that today is definitely h r block. Carl, hrblock up big this morning on solid volume here. Reporting bigger than expected quarterly loss. But also said its cost cuts were made on track. Said it expects significant earnings and Margin Expansion in fiscal 2013. The stock, of course, has been on a tear up some 70 in just the past 12 months. All right, thanks, josh. Pandoras ceo Joseph Kennedy announcing he will soon leave the company. Kennedy says he will remain ceo until a replacement is found. Our Julia Boorstin sat down with him in an exclusive interview following the announcement last night. Carl, kennedy told me that after nine years running pandora its time for him to go and recharge his batteries. But he told me he doesnt expect to leave too soon, that it could take months and months to find a new ceo. Selection of a ceo is a balancing of different skills and experiences. I dont think it has to come from somewhere from the music industry. I certainly didnt come from the music industry. It would be surprising if that person didnt have experience in the world of consumers, this is so deeply a consumer business. Analysts say kennedy does leave big shoes to fill but jpmorgan says the company is extremely well positioned, and kennedy says hes confident mobile will continue to drive pandoras growth. We can make a Good Business with rates at or near where they are. Because our excellence in motivation is so strong and continues to grow. And thats the cornerstone of making the Business Model work. Now, well be watching to see how the company handles possible competition from apple and youtube streaming music services. Theyre both expected to launch sometime this year and of course, carl, well have to see who the board selects. Back over to you. That is another parlor game going on around the street today for sure. Thanks, julia. Julia boosten in los angeles. Jcpenney announcing it will cut an additional 2200 jobs. The trim costs due to plunging sales and more potential bad news for penney sales, theyve agreed not to sell any Martha Stewart designed home goods until april 8th. The judge overseeing the lawsuit has sent the parties to mediation with an april 8th deadline to reach an agreement. New york times columnist jim stewart has been following the lawsuit and joins us this morning. Good morning. Good to see you. Youve written out about martha extensively in tangled webs. Who is in the right in general on this case . Well, you know, people may be surprised to hear this but i came away from this trial feeling some sympathy for Martha Stewart. Yes, her well known is on ample display. But for me the real story is jcpenney and its chief executive ron johnson. After all theyre the ones that initiated this ridiculous deal which was a pretty obvious breach of a contract with macys. They went to Martha Stewart, when her company was in trouble, he dangled the pbili hundreds of millions of dollars in front of her. This is like putting catnip in front of a cat and saying he would never want to breach her contract there are all these embarrassing emails where hes exhorting people to get her to do exactly that. Really devastating testimony, i think. And of course, martha, i guess, if were going to put some drama into this, was already vulnerable given that she said macys wasnt taking her brand to the next level. Well, thats true. And you know, i dont know the merits of that. Shes rethinking that. There was a phone call yesterday. Terry lundgrens testimony, who is the ceo of macys, was completely fascinating. Ive never read an account where ive seen a ceo so angry as he was when maryland called and said im doing this deal with jcpenney. And he said hed never speak to her again. But yesterday, they got on the phone together, at least an indication there may be some settlement of this. Which, by the way, if you want to look at the mistakes ron johnson made here. Number one, doing this deal in the first place. Number two, writing, you know, sophomoric emails sticking it to terry lundgren, which turned him into a fulltime enemy. And then three, not resolving this thing and letting it go to trial with hundreds of millions of dollars of legal fees and all this embarrassing information. So in my view people want to know why jcpenney is in trouble need look no further than his management skills in this case. I wonder if you think that is hubris that is born in a culture at apple, i guess, where he thought you couldnt lose at all . I think there may be some of that. And some of the retail analysts ive talked to said look, this guys never been a ceo before and this shows inexperience. And i think another important point is, in the testimony you see bill ackman playing a big role in this. He leaves the hedge fund. Its the biggest shareholder of jcpenney. Many people believe hes the puppeteer who pulls the strings of ron johnson, and theres emails in there indicating that this still wouldnt have happened if bill ackman hadnt pushed it. All right. Tell me where how marthas comp plays into all of this. How her compensation . Yes. Well, there was like a side deal in this thing where royalty payments and money was going to go directly to Martha Stewart. Not to Martha Stewart living. Its a terrible example of selfdealing by a ceo in my opinion. Although, as i said, this is not new. The idea that Martha Stewart wants to line her pocket, i dont think any of us can be all that shocked at this point. On the other hand, if youre a shareholder of this company, i would think you would have to think twice about someone who puts their own interests so much ahead of the company. Right. Finally, you know, theres been so much discussion abouts extension of her grants through retailers time and time again, we had koppelman here the other day who said that the kmart divorce wasnt nasty but i remember her being very upset when that deal ended, too. Can she ever have an amicable separation from someone who once distributed her products . Well, we havent seen any evidence of that. Just as a consumer i went into both macys and jcpenney yesterday and looked around, and i think the Martha Stewart stuff looks pretty good. I think theyre pretty highquality products. Its a shame, really, that all this other circuslike atmosphere has prevented it from being developed to the point it could. I know she often compares herself to ralph lauren who is a master at this. Maybe shes her own worst enemy. Its a shame that it hasnt done better. Yep. Certainly the market cap between lauren and Martha Stewart would back you up on that. It speaks volumes. An incredible story. Look forward to seeing you again soon. Thank you. Jim stewart over at the New York Stock Exchange. Straight ahead find out how catholics, lent and fish mcbites are helping drive mcdonalds sales numbers. Not a bad february given all the expectations. Well talk about that when we come right back. The jobs report is out. Up 236,000. Were you able to nail the number . If so, you will be the winner of the special post 9 mug signed by the entire squawk on the street gang. Find out if youre the lucky winner. Later on squawk on the street. 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Change your number. Turn it up. Androgel 1. 62 . Mcdonalds is leading the dow today after better than expected samestore sales for february. Here to break it down, a Senior Research analyst over at piper jaffray. Nicole, always good to have you. Thanks, carl. A lot of discussion about all the headwinds they were facing. One of the toughest comps of the year. Clearly some weather in the states. Health issues, concerns in china. They managed to come in okay. Yeah, a little bit of a relief rally here. Sentiment versus sentimentals i think investors are basically glad it wasnt worse than it was. Is there any sign that this is due to menu . That the pipeline is a little bit fresher than people gave it credit for . I think in part thats fair. Its really hard to say its anyones thing. Domestically theyre facing a loot of competition from their peers, having better looking stores, matching their hours, trying to match their service. So the one thing that they have to be in the forefront of, and they are, is mainly innovation. And i remember we had a discussion a few weeks ago where, i mean it seemed like the other players, particularly the burger kings of the world, were starting to rip a page out of their playbook, innovate a little bit faster, and the whole issue of share gain was really coming into question. Does this put that to bed, do you think . Not at all. In fact, you know, i think its easy, and for mcdonalds to talk about the macro environment kind of like you outlined. But the fact of the matter is theres also a competitive force and i think burger king is at the front of that. In terms of menu, theyll they will work to innovate just like mcdonalds. Lets talk about your price target. 103. Looks pretty good. I mean this certainly not as good as it was, the stock was at 85. But how positive are you on it versus potential gains among its competitors . I would say we still see a healthy level of upside. Probably due, frankly, see more upside and some of the other qsr players, specifically burger king, and the other thing i would mention is this is no longer the only Place Investors have to hide out from a defensive nature. A lot of other stocks are also increasing dividends, or really executing Share Repurchase to grow earnings. Finally, theres always the macro issue, nicole, unemployment leads a lot of people to stop by a mcdonalds, for instance, on their way to work. Breakfast is a nice margin business. If we start to see real, nice, sustained gains in nonfarm payrolls do you think differently . Absolutely. In fact, i think that would help all qsr players. It would help qsr first, and the fastest, and thats right, breakfast is habitual. The great margin, and thats the place that the consumers would go back to the quickest. Last question. Weve been joking on the set about the grilled onion burger, the fish mcbites. Are those material to the month . Again, no one thing is material. But i think that commercial is phenomenal on the mcbites. I had it the other day in the airport. Its a decent product. And again, i mean, they do lead the way in terms of innovation. Thats getting it to taste good and be easily replicated not as easy as some people might think. Nicole, thanks for your time. Bells about to sound across europe here. Well get the close, talk about the spanish yields, and the impact on our session here. Dow is up 40. M works. Lets say you pay your guy around 2 to manage your money. Thats not much you think. Except its 2 every year. Does that make a difference . Search cost of Financial Advisors ouch. Over time it really adds up. Then go to etrade and find out how much our advice costs. Spoiler alert its low. Really . Yes, really. Etrade offers Investment Advice and guidance from dedicated, professional financial consultants. Its guidance on your terms, not ours. Thats how our system works. Etrade. Less for us. More for you. Thats how our system works. Its not what you think. Its a phoenix with 4 wheels. Its a hawk with night vision goggles. Its marching to the beat of a different drum. And where beauty meets brains. Its big ideas with smaller footprints. And knowing theres always more in the world to see. Its the allnew lincoln mkz. A talking car. But ill tell you what impresses me. A talking train. This ge locomotive can tell you exactly where it is, what its carrying, while using less fuel. Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say . We spent most of the morning talking about a jobs number here. The spanish ten year and some of the periphery the big story in europe. Europe is able to really follow through on the coattails of hat is happening here in the United States. Certainly, on the moves, the result of the fed action when arguably the boe wasnt able to come through with more proactive policies. Its a higher close in europe. Particularly a higher close on risk assets in italy and spain. The european markets are closing now. It is green across as you can see but you do see spain down there on the bottom lefthand corner having an excellent day today, the bond market and the equities are rallying there. In general terms, of course, the news that weve had in the United States, and indeed the news that weve had in china overnight with that very strong export figure has meant european equities are able to rise high and the German Market today, which youll be aware, is one of the best performers, because you have the real quality blue chip. Actually cost 8,000 earlier in the session. Settled back down now but it hasnt been at 8,000 since january 2008. I mentioned peripheral bond markets are also rallying. So you had the yields diving because they move in the other direction on both italy, and both spain and notably portugal. Yesterday the s p actually put it to a stable outlook. So big moves there, as you can see. Meanwhile, you get that the junction, if you like, of whats happening in europe, and whats happening here in the United States, with euro dollar. And there you see i very dramatic move higher in the greenback. And as a result, you see the euro falling down. Look at that move down that weve had so far today. Its a big figure move, up 117 thaz you can see. I think a bigger issue moving forward might well be where we are in the uk. Crazy as it may seem overnight the man whos going to take over the euro group, the dutch finance minister, lectured his students in amsterdam where he suggested the big move down on sterling we could have sterling prices moving forward such as the poor state of the uks public finances. Extraordinary, carl, that he would make that statement. But theres a lot of discussion about the uk, and whether, of course, the bank of england is getting even more qe. We were disappointed on that front yesterday but its still in the offing. Theres a lot of push and bull. On the committee. Thats for sure. Have a good weekend. You, too. Get a check on energy, too. Bertha coombs at the nymex today. Im in the gold pit here. And gold today, very interesting. Its basically saying that either side of unchanged and at times slightly positive. Analysts over at kipco say in the face of that jobs number that would be bearish for gold, and anyone looking for a safe haven on a day like today, and the strong dollar, the fact that its hanging in there is actually fairly positive. Well have to watch as it goes towards the close. Gold has been under pressure because a lot of investors have been selling. A lot of their etf holdings and the etf holdings have actually had to sell some of their holdings in gold. Goldman sachs, meantime today, says overall they think commodities could be due for a bounce over the next three months, up maybe 3 . They think copper has been overdone. The downside today, though, its really not playing in this rally. We have a mixed situation when it comes to the energy patch today, as well. Wti moment, like gold hanging in there, just a little bit to the downside. Were seeing selling pressure on brent with that pipeline having come back online full bore. That goldman call something everyone should take a look at today. Getting a lot of chatter. Bob pisani is here at post 9 watching. You know, i think the important thing is, the number on nonfarm payrolls was great. There were whisper numbers that were above 200,000 on the personal growth numbers. So maybe the reaction was a little bit muted because there were high expectations. But take a look at the sectors and all this week weve seen industrials, weve seen materials. All moving to the upside. Again today, you see the same thing, materials, Discretionary Technology on the upside. Just take a look at the bank, some people have been asking me why are the banks not doing better because the stress tests were good, right . Citigroup was particularly good. Everyone was very happy about that. Goldman and Morgan Stanley a little bit of disappointment. There was a little bit better. Morgan, bank of america, regions financial, suntrust, some of the other ones did well. I think part of the problem is there is an expectation they were going to do well and they basically bought into that all week. Take a look at the xlf and this is the main etf associated with financial stocks and look whats been going on here. Were at a fouryear high. Theres been a anticipation for awhile. These stocks have been moving up on this. I think today while the results werent disappointing for almost all of them, maybe goldman and morgan is the exception, i think that its a bit of sell on the news here. One thing i do want to point out to you, and remember weve been waiting for this great rotation out of stocks into bonds, it isnt happening yet. However, big bond funds, etfs, are down six days in a row. This is a onemonth vanguard longterm bonds one of these etfs that buys the longterm treasuries. Blb is the symbol. Six days in a row now. That starts to get aly bit noticeable. I dont see huge redemptions taking money out but price is declining here so going to get peoples attention if that trend continues. Speaking of trends, lets talk about trends in mutual funds, and in the etfs. This is the weekly numbers. We are continuing to get inflows. These are stock mutual funds. And im splitting up between mutual funds and etfs. 3. 17 billion. Fairly healthy. Bond funds, still money coming in. 3. 5 billion. No sign of an outflow from bonds. Take a look at Exchange Traded funds. I break it down two different ways but sometimes we get it differently. Inflows into stocks, etfs, inflows into bond etfs. Everybodys winning at this point. Thats my point. No clear sign of money flowing out of the bond funds yesterday. 85 billion into equities funds all throughout the year. Thats very, very positive overall. Heres the global indices. Carl look at this, everybody is up except china. Germany is at a fiveyear high. Japan is at a multiyear high, as well. Thats a fouryear high for japan. The yen just plummeting. Plummeting this week, down again today, very big. As our number kind of pushed the euro down, down, as well. Yeah. Well see if dow makes it five in a row. Hasnt done that in awhile. Slowly getting close to that historic high on the s p 500. Thanks, bob. Lets get to Rick Santelli in chicago. A little more discussion of the jobs number today, rick. Oh, absolutely. Were going to be talking about it all day and probably into next week. Andrew brenner, welcome. Hows it going, National Alliance securities. Rick, im doing great. How are you doing today . Not bad. You know, there was two words in your writeup after the number that really struck a chord with me because its the common conversation on the floor. Viewers, listeners on radio, job splitting. Andy, tell us what job splitting is. I know its 340,000 and tell me your thoughts about it. Well, here im going to start with todays number. Todays number the headlines were just awesome. I mean this number is a great risk on number. You had payrolls up, nonfarm payrolls up 44 above the expectations to the rate down 0. 2 but the good thing about the number is the continued skepticism as to what breaks up the number. And one of the things that people are talking about is the fact that obama care is causing people to split jobs. In other words, theyll hire people for 20 hours, they may show up twice and someones in the payroll report. So were looking into that. We dont have any real hard data on that right now. But if job splitting is one of the unintended consequences of obama care that could really juice up this number. The good point is that the skepticism keeps the fed on hold and keeps risk assets bid well. All right. Now when you say skepticism keeps the fed on hold, obviously youre speaking with your trader hat on, kind of more as a nontrader type i personally like to see the fed clear the zone but regardless, how do you think all of this will or will not impact europe . Can we actually, you know, give them a helping hand by growing our economy, and maybe exporting a little bit of that dine civil . Well, we can certainly do some of that as well as i think chinas going to do more of that than the u. S. But i think the u. S. Economy is going to be much stronger, and i think the feds going to be really between a rock and a hard place, as to when to start raising rates, or start lessening qe. I mean, bernanke clearly said last week he has no intention of doing it. Then again hes out in ten months. So i think the markets will look at that. I think ten years well be under pressure. 206, 07, we see negative numbers coming in at 215. So i mean we think the treasuries are going to be under pressure and we think the stocks will continue to melt up. As far as it affects europe, as your previous commentator said, everything is doing well in europe, you know, today, italian bonds are good. Spanish bonds are good. Portuguese bonds are good. Greek bonds are good. All the equity markets are okay. You know, europes got a lot of problems. But theyre not at the forefront right now. Theyre on the back burner. So i think the u. S. Is far and away on the front burner. All right im going to give you one last question. Were almost out of time. In a couple of months, when we look at First Quarter gdp and im putting you under the gun here, what do you think, what neighborhood do you think that First Quarter number will be . You know, thats a hard one. Because the sequesters going to have some effect on that. I cant quite determine but i think the real economy is growing 2. 5 to 3 and i think youll see that throughout the year. This is going to be a much better year than what people are anticipating. Andrew, its always a pleasure. Like your forthrightness. Thank you for being a guest. All right, when we come back why a labor shortage in the Housing Market could mean much higher home prices. And later what do the facebook ceo, a professional basketball player and a rock star have in common . Coding. For computers that is. Theres a huge push to teach people to code and code cademy is at the forefront. Tdd 18003452550 seems like etfs are everywhere these days. Tdd 18003452550 but there is one source with a wealth of etf knowledge tdd 18003452550 all in one place. Tdd 18003452550 introducing schwab etf onesource™. Tdd 18003452550 its one source with the most commissionfree etfs. 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With fidelitys new options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Coming up on the half, what does todays jobs report mean for the rally . Too hot for just right . A former ceo of a major retailer tells us how jcpenney can turn things around. But stress tests are in. But you may not want to bet on a wave of dividend increases just yet. Scott, thanks. The jobless rate is at its lowest level in four years but the labor shortage in Home Construction is not improving. Many construction workers left the business during the crisis and few are coming back. That could mean higher prices. Diana olick has more on that. What a story. It is, carl. I mean construction jobs surged in february to the highest level in six years. But those numbers should be even higher, given whats happening with Housing Starts today. Still, there is a lack of workers, because during the housing crash they all left in droves, and as you said, many of them are not coming back. The biggest growth in february construction jobs came in residential specialty trade contractors, up 17,000. Thats your plumbers, painters and electricians. Jobs boosted by big jumps in home remodeling, as well. Still it is not enough. Housing starts were up 24 from a year ago, but construction employment in residential is up barely 3 . Thats according to the u. S. Commerce and labor departments. Now former construction workers headed to better paying jobs, such as trucking, energy, and even highway construction out in texas. Now we were out in las vegas earlier this week where Housing Starts for some builders are up over 100 . They are desperate to find skilled workers. Theyre having to pay them more and raise home prices. But theyre just not seeing them come back as fast as they need. The labor has other options. Other markets are very strong. Like texas and phoenix. Over the last year or two, we lost quite a bit of labor to the oil fields, and to places like wyoming and north dakota where you wouldnt expect it to go. Now as a result it is now taking 15 longer nationwide from start to finish to finish a house. Out west, where the shortage is really bad, its taking 23 longer, and thats not good for the builders. It costs them more, and again, it is raising the prices of new homes. Lots more on the blog realtycheck. Cnbc. Com. If its not material, its labor. Thanks so much, diana. Want to send it over to josh to get a quick market flash. Foot locker is in the red this morning. Analysts covering the stock tell me expectations have been raised for how well the quarter to date comps were going to be. Folks looking for mid singles sure enough, foot locker said low singles. Also, the quarter was decent, analysts say but not great. Expectations were certainly better than reported. Foot locker down some 6 right now. Carl, back to you. All right, thanks josh. Computer coding is not just for nerds anymore. Online startup code cademy is teaching everyone from kindergartners to baby boomers to code. The ceo is going to tell us why coding is so important and how it can help the economy. Try running four. Ning a restaurant is hard, fortunately weve got ink. It gives us 5x the rewards on our internet, phone charges and cable, plus at Office Supply stores. Rewards we put right back into our business. This is the only thing weve ever wanted to do and ink helps us do it. Make your mark with ink from chase. Ask things like whats your favorite color, or how old are you. I wrote a program to play tic tac toe. I first learned how to make a green circle and a red square appear on the screen. You just try to make something, trying to transfer something from your mind to the computer to a tablet, its a its an experience. The whole limit of the system is just that there arent enough people who are trained and have these skills today. Silicon valley standouts like mark zuckerberg, bill gates supporting code. Org. A movement to encourage people to learn how to program. Programming literacy is becoming more important for candidates in the job market. Code cademy offers free coding classes in programming languages ranging from python to jawva script. Jack simms is the ceo and founder and joins us with the breakthrough. Thanks for having me. This is like a revolution. We think so. It seems to be happening on multiple platforms. Walk me through what code cademy is . Its a community of people creating lessons on programming and taking lessons from other people all over the world. So we have millions and millions of people that are learning jawva script, html, css, building things online and learning them from other people. How does that work . How can that work . Right now were really focused on reaching as many people as possible and building a product people are going to use. This person could be needs to be how old, and needs to have what kind of prior education . In theory pretty much anyone can learn to program without very much prior education. We try to make it really simple to get started. Right. I mean, kindergartner, a preschooler . How young can you be . Id say middle school is probably the right age to get started. Obviously theres, im sure, some consternation about Early Childhood education in this country, theres a lot of room for improvement there. Do we as a population have the basis to learn how to do this thing well . Definitely. I think what we want in the 21st century is for programming to become just as important as reading and writing. For people to be able to think in algorithms the same way they learn how to read, they learn how to write, they should learn how to code. Right. How did you get your start in all of this . So i actually didnt know how to code going into college, taught myself a little bit here and there. And we built codecodmy to help me program myself. And your aspiration was to do what . I was to build something that i could learn from. Turns out theres a lot of people like me that are just learning. The you got we saw the involvement from bill gates and zuckerberg. Is that the model . Are you trying to teach people to become entrepreneurs and eventually philanthropists and titans of business . Definitely that would be great. But more importantly its using programming in your everyday life. Every single job now requires a little bit of computer knowledge. If youre a journalist and pulling statistics to look at stories you need to have a program. Pretty much every job now requires a little bit of programming knowledge. I do know people who grew up when computers were really just giant mainframes, and they learned cobol and now theyre hopelessly out of date, convinced theyll never learn any of the new languages. How worrisome is the fact that javascript be replaced by Something Else . You know cobol its not so difficult to pick up javascript. The average Computer Programmer knows a lot of languages. Language being in flux is not lets say we have a parent or someone listening or watching today interested in getting their kid or maybe even themselves involved what do they do . Go to codecademy. Com and you can start typing on the page. Are there metrics, milestones by which you graduate or say i have achieved a certain level, sort of empirical posts . Yes, you work on projects as you go through. Say build websites, create games, and you never really graduate because theres always something new to learn. We talk so much about how apps, for instance, have become sort of the bed of Small Business around the world. All those people have to know how to code. Exactly. Weve seen whole businesses created by people that learned programs at code cademy, selling apps from the app store and make a living. Can i ask how old you are . Im 22. You got an early start. Yeah. Theres a lot more to come, im sure. Hopefully. Zack sims. Up next the moment youve all been waiting for. The jobs report is out. Up, 236,000. Oh, yes. Were you able to nail the number . If so you will be the winner of this special post 9 mug. Signed by the entire squawk on the street gang. Find out if youre the lucky winner next on squawk on the street. Zap technology. Arrival. With hertz gold plus rewards, you skip the counters, the lines, and the paperwork. Zap. Its our fastest and easiest way to get you into your car. 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Welcome back to squawk on the street. Im josh lipton. Tempurpedic well in the green this morning on heavy volume. The mattress maker now saying it received clearance from the ftc for its acquisition of sealy. Tempurpedic up some 44 this year. Carl back to you. That sector has been crazy in the past year or so. Thanks so much, josh. Want to take a quick look at shares of facebook here. The stock under some pressure today after the social network announced those changes to its new speed feature yesterday. Theres no other social service like this at scale. There are a lot of other great social apps that enable you to share one kind of content or with one audience. And i think these apps are great. But i really think that theres a special place in the world for this personalized newspaper that can really span the whole gamut, and make it so you can see all of these types of content in one place. Mark zuckerberg speaking at menlo park yesterday. The shares did finish higher yesterday. They closed on the lows but investors not as impressed, it seems, with some new features today although were in a slightly weaker tape than we were 24 hours ago. We do have a nail the number winner with a winning guess of 241,000. Our winner was within 5,000 of februarys nonfarm payroll number. Quentin schmidt is our winner from lake stevens, washington