Transcripts For CNBC Squawk Box 20100208

good morning, everybody. no double dip. reassuring words to the market from u.s. treasury secretary tim geithner. the world's biggest bond fund says it favors germany over the united states. pimco's latest call. the saints marching to the super bowl championship. new orleans defeating indianapolis 31-17. "squawk box" begins right now. ♪ we are the champions my friends ♪ ♪ and we'll keep on fighting to the end ♪ >> good monday morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick. joe and carl are off today. i'm lucky enough to be joined by steve and russ. welcome to both of you. thanks for being here. >> thank you for having us. >> good to have you guys. >> can we start right away that joe and carl are off together. they come in together. the purple ties together. >> where do you surmise they are? >> it's not a holiday week. they just happened to take off this random week in february. >> the day after the super bowl of course. >> enough said. enough said. >> not as joe would say there's anything wrong with that. >> after all of joe's speculation about who is off when, they deserve this. >> i'm glad to have you here today and most of this week. thank you. appreciate it. >> so much news that's out there. between aig and g-7 and greenspan on the weekend shows and john thain. that may be the story of the day. >> maybe story of the week. >> let's get to top headlines and you'll hear commentary on them. the risk that the u.s. economy will slip back into a recession is lower now than any time over the last year. in an interview this weekend, the treasury secretary suggested that the recovery is slow but he does not see a double dip slump. >> we are beginning the process of healing and we have the capacity as a government to try to make sure we are reinforcing that process and we help guide this economy back to the point where we're not just growing again but we have seen growth translate into jobs and that we're reaching the lives of all americans. >> responding to moody's warning last week, geithner says the united states is not in danger of losing its triple-a bond rating. he said that will never happened to this country because we have plenty of guests who would disagree with that and have seen troubles in the way we've been spending and the way the deficit is racking up. you have to tackle some of those benefits programs like social security. >> there is complete agreement that we have a long-term deficit problem. there's disagreement on the current problems and whether the deficit we're running right now are a huge problem this year and next year. what greenspan is saying is true and why the political establishment can't get there sooner is the question. we'll have to raise taxes and cut benefits. it's the only way out. but both sides have postured in a way to make that kind of compromise undoable right now. >> here's the question. is the deficit matter now? you said one year or two year. is it a matter of five or ten years out and can you deal with it in the next 18 months in terms of trying to spur the economy going to take care of it? that's the issue. >> the issue for the market is they want to see a path toward a sustainable market. the deficit of percentage gdp keeps growing. fourth quarter number is 54%. one of the things greenspan said over the weekend is this cushion. there's always been a cushion. the percentage of american debt has always been lower than our counterpart. that's one of the reasons why we're a reserve currency. the market wants to see and are accepting it which is why yields are low, they are going to get a cushion path. >> there's no cushion if you'll raise taxes right now. >> i'm going to make you guys stop. >> just real quick, there is a belief in the markets right now there will be a political solution otherwise you don't buy a ten-year bond or 30-year bond. >> it's easier in these auctions to sell the 2, 5, 7 years than the 10s and 30s. >> i don't know it's a bad deal right now. we're looking better. i'm supposed to read the prompter. the g-7 finance ministers meeting in canada this weekend. they argue the euro zone's debt crisis is under control and promise to make sure greece sticks to budget cutting plan. the finance leaders promise to make them repay funds. >> also, pimco's ceo says that he prefers german government bonds to u.s. treasuries. back to the same point we were just talking about. he's calling greece a massive wake-up call warning that its debt crisis threatens to infect other nations. he argues that german bonds are likely to outperform the traditional safe haven. if greece and some of the other european nations are in big trouble, isn't it germany that winds up paying the bulk of this if they keep the european union intact? >> that's what i don't understand about that call. hopefully we'll have to ask him. >> cit group hiring john thain as its new chief executive. thain was hired in part for the expertise he gave in restructuring the new york stock exchange. we have to talk about this. in your book he goes in and he basically does a shakedown of bank of america. right? 4 billion in bonuses for a company that less than a week later or earlier depending on whose version of events you read racks up $15 billion in losses. >> there will be a lot of people that will wake up this morning and say there's no justice on wall street. there's no question about that. having said that, a couple interesting notes. the federal reserve and the treasury department actually approved this move. they actually had to go to those departments in advance. i imagine if you asked andrew cuomo i suspect he would have a different view. i think there's an issue here. the good news is some people would say he saved merrill lynch. shareholders of merrill lynch very happy campers. if you're a shareholder in bank of america, you feel not only -- you feel deceived in some ways. there will be issues around it. having said that, he's a humbler guy than he was a year ago and as a leader he may be a better lead eer than a year ago. >> there will be people that remember refurnishing his offices. >> my favorite line of the morning was thain said in "the wall street journal" this morning i plan on keeping whatever office they give me. >> that's a smart first move. >> this drives me nuts. cuomo says until the shareholder meeting of bank of america they knew what would have been -- i don't know if it's 12 billion or 15 billion of losses at that moment before the shareholder meeting. when did they approve those bonuses for merrill? >> they were approved before that. even before that. >> they do it in a way that was never done before. >> the issue is -- >> hold on. they usually do it at the end of the year. >> they did it in advance of the accounting of the losses. >> the question is whether they actually knew about the losses at the time that they gave the bonuses. that's less clear. >> what did they know and when did he know it question. we don't know that. >> it's less clear. he would say he did not know at the time they gave bonuses the losses would be severe as they were. >> this is high huge pet peeve issue. when did losses come from? they magically appear at a time when the market is not trading and there's no justification at all. i have yet to see any investigation. despite your fabulous, fabulous book, i don't mean to take anything away from it. nobody ever said where they came from. >> it's an important issue. i believe that they came frankly from -- i think what happened is they ended up being forced to write down an enormous value of subprime trades. >> the market was not trading. valuations -- i talked to several traders that say there's no justification at the time for those losses. >> in fairness what happened is not a good situation was it was on the other side. at the time they sold the company the stuff was marked way too high. >> all right. maybe that's it. still, my -- we got to go overseas. >> let's get to overseas markets right now. christine tan is standing by in singapore. we'll start things off in london for the latest out of europe. what's happening over there on this very first trading day of the week? >> i was listening with great interest to your little greece discussion there. also just remembering what one of our guests said earlier this morning on "squawk box" in europe about how the figures that we're dealing with out of greece, debt to gdp worries, similar to what we're dealing with in the u.s. we're used to dealing with these types of numbers but it depends on what we pick up on and it depends on the market mood. the other thing worth mentioning is risk. we're not seeing the same effect that we've seen in the past where if emerging markets spiral downwards, all do so. we didn't have sell-off of poland and other emerging xe i g economies so that's worth noting. this morning in europe we're coming back a bit on our markets. trading higher across the board although we have just gone pretty flat right now but we have been led higher by basic resources and big financials as well. let's head out to singapore now. christine, what do you have for us? >> asian markets finishing lower today. debt concerns in europe hurting investor confidence. nikkei sank a two-month closing low. risk aversion sending it higher. this after its president made a public apology on friday and said it would bring in outside experts to review quality controls at toyota. at maker recalled 8 million vehicles around the world has now decided to recall its new prius hybrid in japan. it's also considering a recall of its lexus hybrid which uses the same brake system as the prius. some are looking to the key 19,000 level and they are skeptical about assurances given by european finance ministers to alleviate the debt crisis. in china, shanghai was lower. that's a stock market action from asia this monday. let me send it back to you. >> thank you very much. right now for the latest news and analysis of the markets here in the united states, let's get to our monday morning strategy session. joining us is burt white. and from de davidson and company, we have fred dixon. gentlemen, thank you for being with us. fred, there are people trying to figure out what's been happening with the markets. the markets did on friday manage to pull back out of that slump and ended up closing above 10,000 for the dow. how important is that level? >> i think that was an important turnaround. the 10,000 level has strategic importance in the mind of some investors. the fact that it pulled up and recovered losses and i think that's a good way to start the week and put that together with new orleans super bowl victory and we're off to a good start today. more important, economic conditions probably will come back into play. the news we had last week should overshadow some of the debt problems over in europe and we put together a picture and say that investors should focus on the improvement in economic conditions that we continue to see and measure and have been seen over the last three months and not be terribly focused on isolated debt problems in some of the smaller european countries. i think we're going to be off to a good start. we should see a nice reflex rally off friday's turnaround. >> fred, you brought up a good point. is the new orleans win, does that indicate that we're supposed to see higher markets for this year? i forget what the super bowl indicator old afc versus the nfc. >> new orleans is an nfc team and that should bode well. track record is when an nfc team wins, it points to a year up with 65% track record. we'll put that in our minor bag of indicators. >> we'll take that after the lousy january indicator we got at the end of the month. there are more important things. one of those more important things has to be the jobs number. that's something people were watching closely. we'll get weekly jobless claims. do you think we'll see a turn any time soon? >> i'm fearful. the big issue here is that the baton is being switched from government spending and stimulus led growth to one that is waiting for the next runner. the next runner is business spending. businesses have not committed to this recovery yet. they are still protecting profits by not spending and not rehiring even though they did overcut they are still protecting profits. now, at some point in time they'll shift from protecting profits to protecting market share and by do that they'll invest for future growth. >> it's just a question of how far down the road that time is. >> it's probably in the next quarter or two. i think companies want to wait and see. they are stretching on the sidelines getting ready to run but at the end of the day they haven't committed yet. they have part-time employees and longer overtime hours but what we haven't seen is increases to r & d and increases to exploration and increases to cap ex and rehiring and basically we're protecting profits but at some point in time we'll make that shift and that will be an important one for this market. >> how do you play that change? if there's cash on the sidelines and people will invest it, what is the investor do looking at how companies themselves are going to winvest? do you give credit to those not putting their money to work or those that are? >> credit it those that are putting it to work. i spent the last five weeks on the road visiting all over the west talking to companies of all sizes at my presentations and what i'm picking up is that they are investing in technology infrastructure, software, security software, networking. they're making the investment right now that they deferred a year ago that they have to maintain to keep themselves -- >> the markets on top of that. the market knows that already. that's why tech has done so well. tell me a place where the market hasn't picked up on where companies are going to spend their money. >> it's a couple places. one is within energy. e and p would be a great place to look there. exploration is at ten-year lows. biotech is another. i think again we have to build up that pipeline. and biotech would be another place. i think just general materials and commodities are going to benefit as you begin to see increased to cap ex. cap ex is still 60% off its peak. we're seeing that increase slowly but not as fast as we need to see. the next thing would be to go ahead as you look through earnings report and see companies that are beginning to announce that they're increasing cap ex spending and investing for future and fueling their both because at the end of the day those are the companies that are going to makeshift from protecting profit to protecting market share and they will be market share gainers. >> gentlemen, thank you for joining us today. we appreciate your time. a flash that we're running across the bottom of the screen that we've been talking about cit john thain coming in as new head there and he'll be making an initial salary on an annualized rate of $500,000. that's the word we're getting right now. >> i should tell you it's $5.5 million in stock as well. >> restricted? >> unclear to me right now. i have to go through the numbers. >> i need to get one of my junior economic data reporters to run the data. >> restricted shares. >> i want to run data. when nfc wins but january is negative. what happens? >> i haven't even thought of that until fred brought it up. >> january negative nfc wins. >> if afc wins it's 91% chance it's an up year. >> we'll have to go back. >> fred brought it up. >> if a team from the old afl wins the market will fall. fair enough. >> coming up, "avatar" dethroned at the box office. as we head to break, a look at last week's winners and losers. welcome back. "avatar" losing its top spot at the box office. guess what? the new romantic drama "dear john" unexpectedly took the title making $32.4 million this weekend after in some reviews said they booed during some of these parts. took away the number one spot at the box office. that's good news for distributor sony. it says audiences for the film were 84% female and two-thirds were under the age of 21. "avatar" slipped to number two after a seven-week winning streak. we talked about the super bowl indicator. once again, that's true. if nfc team wins, it means that the market will end up that year and that indicator is right over the last 32 years. two feet of snow dumped on washington, d.c. over the weekend. for today's forecast, let's head to the weather channel and alex wallace. >> a bit of a break from the mess that we had to deal with this there the mid-atlantic. you know what? there's more to come. in the middle of the country our storm system bringing us a bit of snow here through sections of the midwest from iowa down into missouri including kansas city and st. louis this morning. this is all going to be getting to translate toward the east. and because of that, check this out. we have winter storm watches up for a good chunk of pennsylvania all of the way down to our nation's capital. because of what is to come. we're not done yet. here's our system marching to the east bringing us snow. rain farther south is where we'll find heading into the southeast for tuesday. and there's some more of that wintry weather coming back tuesday afternoon we'll start to see that getting back into d.c. baltimore, philadelphia, and by wednesday some of the areas that missed out on this storm will get in on the act for wednesday. boston, snow showers for us. how much? that's the question here for us. looks like it will be coming down in bunchs fes for several areas. an inch for oklahoma city around the next 48 hours. look at this as we head farther east. 6 to 10 for paducah. not what we want to see in d.c. maybe an additional 5 to 8 more inches of snow. those shovels will be working overtime. >> alex, thank you very much. appreciate it. >> let's get back to markets. volatile swings in currency and commodities. we're tracking the latest this morning. let me start here, i guess rumors of the dollar's demise were exaggerated. >> yeah. absolutely. last time i was here two weeks ago i said my 2010 forecast had the dollar going up both if the u.s. economy did well and even if they did poorly. one on risk aversion and other on growth differentials. risk trade has been working well. having said this, the euro has fallen so far so fast that we have seen a bit of a short covering rally this morning in the euro. we saw urrussians on the bid. we can see consolidation. >> i just want to hammer this point home. there were people out there saying that the dollar was done. the united states was done. and the best thing to do would be to get out of the dollar. here they are at a time of crisis once again just as they did during the height of the financial crisis going to the dollar at a time of crisis. what does that tell you about the place of the dollar in the world me? >> it says that we saved reserve currency for a while longer. we have the only uniform complete capital market and governmental structure to be able to absorb risk flows and i think that's the key thing here. i think that's what you see. the euro is very vulnerable to a fragmentation risk. >> how is the rise of the dollar affecting oil and other commodity prices? >> it's been leading to huge risk regurgitation. when the dollar strengthens, you see people getting out and you see people pay attention to things like the fact that we've been talking since last march about stronger stocks mean better economy means stronger demand. guess what? we haven't seen stronger demand in oil at all. not in eight months. and if anything, the demand is getting worse which is actually now starting to be a source of concern. one of the things we saw in 2009 was the stronger stock market in anticipation of a better recovery meant that oil prices were going higher. i think we may have gotten to the point where oil prices got so high that it was acting as a huge tax on consumers and it meant that we didn't have as much money to spend during the holidays and it means that we don't have as much money in our pockets. >> i want to go back if i could to your u.s. versus europe question. we heard this morning that pimco is making a call to buy german buns over u.s. treasuries and we were trying to make sense of that given that we assume if greece has problems that would actually impact germany much more than it would impact us. what's your take? >> greece is in the scheme of things a tiny little factor here. $50 billion that we're talking about. germans could do it in a blink of an eye if they wanted to contribute to the whole situation. they are yielding higher. he's playing the yield story. in that sense it may make sense. on a bigger scale level on a currency level, the dollar stays stronger over the euro because of these reasons and also i think you are seeing the other dynamic hopefully happen which is u.s. growth rates exceed and if that goes further as the year progresses, the dollar will rally on not only bad news but good news as we go forward. >> we got an e-mail who says the same thing you did. these are absolute and relative considerations in terms of the absolute issues contingent claims are small relative to the country's initial convictions. >> i'm glad i'm in agreement with the great mohammad. >> i'm confused by what you're saying. i look at the ten-year. it trades at 1.32. on a yield basis, i want to be in u.s. bonds. >> yes. i guess he does right now. he feels that maybe u.s. treasuries are going to go down further. >> again, the second part of his e-mail that he just sent is relative issues remember that u.s. federal finances will face increasing pressures on account of state finances. >> right. and that brings up a really great point on the second issue which is gold. that's been the sort of big other debate going on in the market here since gold has been so volatile and there's a huge debate as to whether it's going to rally or not. my contention is that if gold does rally will have a move that in some ways thinking hard about what's the best tactical trade of 2010 is if you're going to get long gold, you have to get long gold on the outer scheme. you would buy ratio spreads on the assumption that if gold goes to 1,300 it will go to 1,500. if you're correct, you will make money. the gold trade and that trade is based on the assumption that u.s. fiscal concerns will wain as we go forward and that's a serious risk. does the u.s. join axis of stupid as we go forward. hopefully not but that's the risk. >> all right. thank you very much. >> i don't get it. if you think the yield of the ten-year is going to go down, the principle is going to go up and where you want to be is in u.s. bonds. >> i think we'll have to get mohammad to call into the broadcast. >> he's going to bed right now. he's in australia. he's exhausted at this point. we'll get him on later this week to explain more to us. that was his quick read before he checked into bed. he's traveling in australia. >> fair enough. >> the idea that europe has a better financial situation than the u.s. is also one that confused me and is why the dollar has corrected. people realized that the pain is over and it's all relative. there's no absolute. >> we'll get him on later this week to have him clarify all these things for us. right now he's going bed. go ahead nig good night. he's exhausted. toyota's troubles take a new turn and why the prius could be at the center of the crisis. live television this time around. details when "squawk box" comes right back. hi, may i help you? yes, i hear progressive has lots of discounts on car insurance. can i get in on that? are you a safe driver? yes. discount! do you own a home? yes. discount! are you going to buy online? yes! discount! isn't getting discounts great? yes! there's no discount for agreeing with me. yeah, i got carried away. happens to me all the time. helping you save money -- now, that's progressive. call or click today. ♪ >> good morning, everybody. welcome back to "squawk box." >> we're fighting about this all morning. the who last night. steve is a fan. i'm becky quick. joe and carl are out today. i'm lucky enough to be joined by steve liesman and andrew. we have a lot to talking about. we'll take a trip to the futures pit in chicago for a look at the trading day ahead and john harwood will be joining us with a look at the week ahead in washington and later former fed governor will be joining us for fun on the set as our guest host today. first, let's get you up to speed on this morning's top stories. treasury secretary tim geithner says the economic recovery will be slow but he sees no double dip slump. in an interview this weekend, he responded to moody's warning about u.s. debt levels and worries about the united states losing its triple-a credit rating. >> that will never happen to this country. again, in you step back and look at what's happened throughout this crisis when people were most worried about the stability of the world, they still found safety in treasuries. you still see that every time people reminded about the many challenges you see around the world. >> geithner attended meetings of g-7 finance minute tisters in c this weekend. toyota planning a recall for the prius as early as tomorrow. the automaker is in talks with safety authorities around the world about how to fix a software glitch that delays braking on the hybrid on certain road conditions. did you see those commercials last night? >> i saw them this morning earlier as well on our air some of these things playing to try to get people back in. >> it was a good one they didn't show on the super bowl on "meet the press" yesterday which i thought was -- it was actually touching in a way. the others were much more -- this is what you need to do. >> it was very factual. >> this was sort of almost touching we have made a mistake. we need to rebuild our trust with you. nobody feels it more than we do. it showed workers. >> they run a problem now because this is now going to be at least the third time that they've come back and had to change the story. at first it was, no, it's not a problem. you can fix it with just some shaving off of the brake pedal or the accelerator pedal and no other changes need to be happening and now maybe the prius has a problem, too. i think that will be getting their arms around this. >> why is every book on public relations say admit the problem, act quickly and forcefully and no one does it. >> it's so complicated. "the new york times" points out the toyota had problems if the past and made changes to models without telling people that they made the changes. you don't want to admit that you have a problem of this proportion is what it comes down. >> amazing how often we repeat it and repeat it. >> would you buy a toyota at that today? >> i don't like toyota we own. i guess i would. i guess i would. yeah. >> would you? >> i would. i took a poll last night at a super bowl party and nobody would. >> you have to wait to see what happens and how this plays out. i would like to see they get the problem under control because now it's been out in drips and doesn't feel like they have the whole thing settled. that is my guess. >> if the price was right, i would buy a toyota. >> you'all right. ira is standing by at the cme. good morning. what's going on down there? >> well, steve, we're getting a bit of followthrough but not as much as i thought from the late friday rally. i think the european news is still weighing no matter what the finance ministers said out of canada. i think what people are missing on this greek situation is the concept of that negative feedback. as interest rates are forced higher by the market in greece, the budget situation becomes that much more dire and of course i think that is spain and portug portugal's problem and it's throwing everything out of kilter. >> when you look at the headlines, how does this situation ultimately resolve itself. you have to think that the european union does not let greece go down here. >> this is going to be to me politically resolved. i think the easy fix would be germany will pony up some of their hard earned euros to help bail it out but you can see merkel weighing in here pushing for weber to be the next head of the ecb. you know i think that would give the germans a real comfort zone to help bailout some of these situations because if they had a guy to be head of ecb the good german burgers would feel very good about the money they had the right guy in charge and that might prompt them to be more forthcoming in some of these so-called bailouts. >> i had my nose in the jobs number on friday. the market is down. it comes roaring back. how did it come back and where would you expect, if you do, to see followthrough this morning? >> it came back because there were people talking that some real high level meeting was going on in europe and they would work some situation on that on the greek situation. i think that's where the market turns. it's much more important in the european debt situation. people are comparing this to almost lehman type situation. why? because when you look to see which bank own so much of this debt, i ran those numbers yesterday between the french, swiss and germans, a lot of the private and public debt of greek corporations and sovereign are held by large european banks who are not yet in the best situation to begin with. so any other type of questionable call on the collateral and that's what we're talking about ultimately is collateral situation. >> it's a systemic problem. it starts to cascade through the banking system and the european one and i guess in that sense you can't exclude the u.s. banking system from that contagion. >> even though the u.s. numbers are small on greek debt. we're in a fragile situation. it's not like we're robust. this is not 2004 and 2005. we are in a totally new situation. banks have yet to crawl out of the -->> just real quick, is th reflexive trade still on in terms of higher dollar, sell stocks, lower dollar buy stocks? >> it is but i think we're coming to the -- i think we're probably in the top of the ninth on that one. >> you need a new trade out there. thanks very much. >> my pleasure. >> becky? >> president obama announcing that he will host a half day meeting with democratic and republican lawmakers on february 25th. the white house summit to focus on the health care legislation will be broadcast on television. john harwood is our chief washington correspondent. the government is shut down today but john managed to dig his way out of the snow. good to see you. what's going on with this dual meeting? this bipartisan meeting on both sides? is there something that could get done if they sit down and talk about real solutions for health care? >> almost certainly not. the idea of a bipartisan deal on health care is pretty much a mary had a little lamb fairy tale. the two sides are too far apart. they have wildly divergent political interests and i think what you're going to see instead is the white house, which believes that it tried to reach out to republicans and learn what i just said that they can't come together a year ago is going to try to publicly demonstrate that. >> this is all for show with the public television cameras rolling? >> i think that it is about making plain to the public that the two sides are way far apart. the administration believes that it has a fundamentally centrist approach to health care to make a market in insurance and have everyone mandated to buy coverage and set up exchanges and that the republicans do have solutions. no question about that. but their solutions that the last administration advocated and they didn't get it done and this administration believes they were elected to try something else. i think what they're going to try to do with this is say we tried and laid out our ideas and they'll move forward. to some degree the weeks before this summit at the blair house are breathing space with negotiators within the democratic party to try to cut a deal between house and senate to move forward on a comprehensive bill. >> aren't there a few issues where the two sides agree? could you see a stripped down bill to see proposals that both sides would come to terms with? >> i don't think so for this reason. if you look at the president's goals, expand coverage, bend the cost curve very difficult to do, both of those things, and figure out ways to change health service delivery reform, they are pretty well integrated with one another. it's hard to disentangle them. if you say let's do pre-existing conditions and make the insurance companies take anybody who has a pre-existing condition, the problem with that is that would radically escalate costs. the sickest people would buy health insurance, premiums would go up and it wouldn't be successful for the economy. so i think the administration very much doubts that there is a stripped down version that could actually do any good for the health system. >> john, what's the chance this backfires? they do this televised meeting but the american public doesn't come to defense of democrats. they say we're okay with the just say no approach if that's the way the republicans approach it. >> if the american public doesn't want any action on health care, republicans are in a very good position because that is -- they're trying to stop what the administration is trying to do. the argument the white house is making -- >> they're trying to stop what the white house is trying to do but people on the right would say they have their own proposals they would like to see. >> they do. remember conservatives were in control of the government for eight years pushing those ideas and they didn't get it done. >> you can see the same thing happen this time around. >> absolutely. i think this is a bigger test than just a test for obama. this is really a test for whether our government is responsive enough to act on problems. you had a conservative republican president who had control of the congress for most of his administration. he was thwarted on most major domestic initiatives past the initial tax cuts. social security reform for example. that was a legitimate effort to implement the ideas of the right on social security. democrats stopped it. and nervous republicans stopped it. if the same thing happens on health care reform now, us having had a decisive election in 2008, democrats having major substantial majorities in the congress, it really raises questions about whether our system fundamental can respond to major national problems. that's part of the question on the table. >> was there news over the weekend about a democratic nominee from illinois withdrawing. . >> that was on the state level. >> there's no question about. democratic primary last week. >> i thought julius won that? >> he did. he's a flawed nominee in the view of many democratic strategists. republicans got the nominee they wanted. mark kirk. a moderate republican and in a very good republican year, mark kirk is going to be an extremely competitive candidate in that senate race. this could be a chance for republicans to pick up a seat. >> the governor nominee -- >> the lieutenant governor nominee has a significant amount of baggage and that's problematic for democrats as well. >> just so i know, the current thinking right now is democrats hold onto congress in november? >> look, i think the odds are democrats hold the house of representatives and hold the senate with diminished majorities. this is part of the argument that the white house is making to those nervous democrats to pass health care reform. what they're saying is you're now on the hook for all of the negative things associated with health care reform. the cost, the idea that many average people believe that this may make their health system worse. if you don't pass it now, you won't have the opportunity to really make the counterargue yp counterarguements saying look at what we did for you and repeat the 1994 situation where there was a huge push for health care its collapsed and they won't to voters and people said this doesn't work. we're getting somebody else. they're trying to make a competence argument to the democrats and delivery argument. we've been talking about this for decades. we have a chance to deliver. if we do that, then we can make a forceful counterargument to the republicans who have the wind at their backs. >> definition of a third rail. >> john, thank you very much. great talking to you. >> you got it. >> steve, before you read this, i'll tell you most people agree with me from viewers already. the who stunk last night. >> i didn't think it was great. i'm with the e-mailers. >> comments, questions, about the who, anything you want to talk about, e-mail us at squawk@cnbc.com. news making headlines inside and outside the world of business including an analyst call on home depot coming up when we come right back. i hear you're the clown in charge. so, cirque du soleil becomes... ...cirque du sun life. because soleil means sun.... (gibberish) i'll take that as a yes. (announcer) sooner or later, you'll know our name. sun life financial. right now 1.2 million people are on sprint mobile broadband. 31 are streaming a sales conference from the road. 154 are tracking shipments on a train. 33 are iming on a ferry. and 1300 are secretly checking email on vacation. that's happening now. america's most dependable 3g network. bringing you the first and only wireless 4g network. right now get a free 3g/4g device for your laptop. sprint. the now network. deaf, hard-of-hearing and people with speech disabilities access www.sprintrelay.com. i'm monica novotny at msnbc with headlines. an investigation is being launched into a deadly explosion yesterday at a connecticut power plant. officials say at least five workers were killed when a blast ripped through the still unfinished facility. a dozen workers were reportedly injured. the cause is unknown cruise say it happened as workers were testing a natural gas line. nasa space shuttle endeavour blasted off to install an additional room with one impressive view. the saint are giving new orleans a reason to celebrate after taking the super bowl championship last night. t i'm moon that novotny at msnbc. ♪ ♪ ♪ when it comes to protecting the things you care about... ...leave nothing to chance. travelers. insurance for auto, home, and business. welcome back, everybody. the futures this morning are below fair value. at this point you're talking about the dow futures down by at this point about 34 points below fair value. things stabled out in europe as we got these rumors spreading around that maybe the greece situation would be taken care of. at this point it's all rumors and the market is focused on that. in the headlines, home depot upgraded to overweight from equal weight from morgan stanley. bid/ask is above $278 a share. coming up, a whole other hour of "squawk box." "squawk box" will be right back. make a lot of mistakes that wa .istakes that wa monday morning-quarterbacking the economy. >> into the end zone, touchdown. >> find out if there there are any surprises waiting for investors. >> onside kick to start the second half. the ball bounces off the hands of a colt. and it looks like the saints have it for a second. >> the guest host is inside the bernanke huddle during the financial crisis, former fed governor randy kroszner. a big play here, a big play there, and the bulls may be ready to run. >> picked off. look out. just passed manning and tracy porter taking the ball all the way. touchdown, new orleans! >> "squawk box" begins right now. ♪ ♪ good morning, everybody. welcome back to "squawk box" here on cnbc. i'm becky quick along with steve liesman, carl and joe are out but in studio we also have new york times reporter andrew ross sorkin. our guest host, randy kroszner, a business professor at the booth school of business. great to have you here, randy. >> great to see you. >> we have a lot to talk to you about this morning. let's go to your morning rundown. we have a game plan with howard ward, portfolio manager for gamco investors growth fund. then we'll see if we can diffuse the debt bomb that threatens the global market. it's a small problem we'll try to fix this morning. later we'll be monday morning quarterbacking the super bowl ads. among our top stories this morning, former merrill lynch chief, john thain has been named ceo of citigroup. he'll get $500,000 salary, and restricted stock worth $5.5 million a year. toyota could announce a global recall of prius. first came to light last week. meantime, honda is planning more incentives for u.s. models even though the cfo tells "the wall street journal" that toyota's woes could be a problem for the entire industry. they're celebrating in the streets of new orleans. the saints are the super bowl champs beating the colts in the championship game last night. what does this mean for the markets? we've been trying to figure that out. it seems like any nfc teams f you look at the super bowl indicator, an old nfc team, any one of them that would win would mean an upyear for the markets. it looked like heading into this, no matter who won, well, markets would have a good -- >> steve, you have a different -- >> i did some -- you know, the junior economics reporter who worked for the cnbc team here, we looked at january since 1966 while the super bowl was here. i only have january working 50% of the team. >> that's on the s&p, not the dow. >> if the s&p is up on -- >> on the dow, apparently. >> 32 out of 40. >> i'll go back and do it again. >> some junior economics reporters, you can't get good help. let's bring in our guest host, randy, with all of this stuff going on, exit strategies, you know, greece, all the things, the real question i want to put to you, did you see the halftime show and do you like the who? >> i love the who. couldn't say i love the halftime show. >> we can agree. let's talk about bernanke going to the hill this week. he'll be grilled about the exit strategy. what do you expect him to say? >> i expect him to be very careful to explain that the slow to raise interest rates but looking at the data coming in. and carefully explain what the role on excess reserves can be to allow fed to slowly raise interest rates. i think he'll talk about the winding down of the purchase of the mortgage-backed securities. and i think, you know, very clear derek bas-- basic explana >> we won't get a clear exit strategy? >> you won't get timing. it will be dependent upon the data. we don't know what the data will look like. i think the chairman will be very clear that it will be based on forecasts of inflation trends. it's going to be actual inflation trends and on slack in the economy. it's very hard to know exactly where this is going to go. whenever you're at a turning point, that's the most difficult time to forecast. >> i want to point out, the story "the journal" doesn't give us any new information. the fed has been clear about the tools it's used. we've reported on this show the new benchmark interest rate is going to be the new interest rate on reserves, they'll use term deposits and repos and try to sterilize the trillion of excess reserves. i was talking to a mortgage-backed treateder over the weekend. given that one of the big problems in 2006 was what they called the conundrum. rates did not rise. should the fed in the post -- in the exit strategy world retain the right to buy and sell mortgages in order to influence the long rate of the curve? >> the fed has a lot of flexibility what it puts in the portfolio. >> it can go out and buy mortgages anyway. >> sure. and so that arrow is always in its quiver. i think the key thing is to see if there's any disruption in the markets as they slowly start to explain the exit strategy and as they wind down the purchases of those securities. so far we've seen no disruptions at all. >> because they haven't wound it down and stopped it entirely, right? >> i think it's been pretty clear what the fed is going to do. they've made it pretty clear they're reluck tatant to purcha for securities. the market realizes it's coming. it's soon. >> a mortgage-backed trader was telling me the street is massive backed mortgages. they're betting the rates go up, the fed doesn't continue. what i've heard is that it's a crowded trade right now. and that it may mean -- we had bill gross on one of the shows. he said 30 to 40 basis points is all you're going to get. do you have an explanation for what happens to the mortgage market when the fed stops buying? >> as you said, people realize it's coming. they're anticipating it. there may be some moves but i don't think it's going to be enormous move. >> what would be an enormous move that would make the feds pay attention and say, hold on a second, this is way worse than we expected and this is the point we need to jump back in? >> the key is not going to be a particular number. there's no benchmark if it's 20 or 50 basis points. it's on the availability of credit and the function of the market. >> does the private mortgage market even work anymore? we don't even know that. >> we don't know. >> we won't know. >> right. >> and so we've got to get completion resolution of freddie and fannie? we really need resolution on that. i think it's unfortunate that the president's budget just had one line about freddie and fannie even though there's a lot of promise that there would be resolution. i don't see how it can come back. >> stick around. we have a lot to talk about all morning. you're here until 9:00. let's focus on the markets. the markets finished a negative week with positive momentum late friday as things turned around. joining us is howard ward, senior vice president and portfolio manager for gamco investors growth fund. we're trying to figure out if the moves we've seen recently, this pull back, are going to move the end of the bull market. what do you think is next? >> well, becky, i think the market had become very extended after the big rise that began last march. it was very much due for a correction. and we're getting a correction. so far it's less than a 10% correction. there's been several good catalysts for that, whether it's the chinese applying some monetary brakes or concerns about the credit situation in greece or spain or portugal or ireland for that matter. when all is said and done, those matters are not as important for investors in the united states as our own growth outlook, our own profit outlook, improvement in jobs here and that it stays. and i'd really much have investors be more focused on those bigger issues here at home than, you know, whether or not greece has the willingness and capability to pay their debt. >> well, what about the recovery here at home, do you think that is sustainable? >> well, i think based on the information we have today, you know, because we're very much in a data-driven day to day kind of market environment, i'd say, yes. the evidence is continuing to line up and favor of a continuation of growth. the ism data that has come out on a global basis is encouraging. the employment data last week was consistent with continued growth. i suspect we will be crossing the line into positive job growth this month. and i think that will be very important for the markets. >> you've continued to look at the market and see technology as the thing that will lead us out of this. you think it's a buying opportunity with the pullbacks? >> yes. i would characterize what we've seen in the last week as a correction. we're looking to take advantage of that. oddly enough some technology names haven't come down that much. yes, these companies have the best balance sheets, the best growth prospects. fundamentals are quite strong both here in the united states and abroad. i do think this is the place that patience t investors if th want to invest in leading technology companies, they should have a nice return over the next 12 to 18 months. >> andrew sorkin here. when we started this conversation you mentioned this 10% correction number. we haven't gotten there yet. are you expecting that to be a full correction or we've seen it already? >> it's hard to say, andrew. you know, that level of precision is really beyond what i think i'm capable of. you know, this whole forecasting world, i think, has been very difficult. forecasting in general is a dangerous indoor sport. we need to take all these forecasts with a grain of salt, as you know. but i have to digress for one minute, andrew, because i'm just about finished with your book "too big to fail," and i have to say it is magnificent. anybody who has interest, it is a must read. great job. >> check is? the mail. i appreciate that. >> here here. let's talk about a few stocks you like, apple and cisco are two of your favorites in the technology sector. why's that? >> apple is simply the most innovative company in technology. they're gaining tremendous share in their mac book computer business and ultimately that is one of their biggest drivers. and also, i mean, the iphone has done so spectacularly well it's generating over half their revenues and growing on a global basis as it enters market and growing with new carriers. ultimately here in the u.s., the exclusivity deal with at&t will go away and that will be opened up to additional carriers. the new ipad, that's a young product. that will take a while to gain traction but that will be a nice product for them as well. we just see -- i just see the current generation of teenagers and college-age students gravitating to apple. i've called them the apple generation in the past and i think that's appropriate. the apple software remains the best software for people that have the option to use it. it's clearly the superior, more elegant way to maneuver around a computer. >> you know, i know your least favorite industry is the financials because of any pullback they may see in housing, they'd be the most susceptible to pull backs 37 but visa is a stock you like. why is that? >> visa just reported last week robust earnings, beaten rays, if you will. their business is based on increasing use of plastic, both credit and debit cards on a global basis. they have a bigger share of the debit business than their competitors. the debit business is doing especially well right now. it's a tremendous brand. it's the biggest operator in that field. we see them continuing to grow earnings at a double-digit base for quite some time. cisco, just like visa, reported last week, again surprisingly strong beat and raise. john chambers was on your show talking in a more positive tone than we've heard him in a couple years about the broad base across all geographies and product groups. this is the kind of company -- it's not an expensive stock, 15 times this year's earnings, has a bullet proof balance sheet, covers the globe and feeds into that important growth and building out our internet infrastructure. we've seen how important that is with the growing use of the internet and the problems that some users are having, for example, with the ipod where the carrier needs to invest more in the network. >> howard, thank you very much. it's great talking to you. >> thank you very much, becky. >> comments, questions, anything you see on "squawk," what did you think of the who? >> oh, come on. >> some people are writing in they liked it. >> i've gotten one. >> all right, one. is there anybody out there who didn't like andrew ross sorkin's book? so far it's running 1,000 to none. e-mail us at squawk@cnbc.com. up next, assessing global rick, jim rick ererts talks abo the growing crisis. time for today's aflac trivia question. who was the only regular cast member of the tv show "m.a.s.h." to serve in the army in korea? the answer when "squawk box" continues. benefits at greater cost to your company insurance. this is not how does it fit in my company's budget insurance. this is help protect and care for your employees at no cost to your company insurance. with aflac, your employees pay only for the coverage they want or need. and, the cost to you - nothing at all. if all you know about us is... aflac! ...then you don't know quack. to find out why more businesses provide aflac, visit getquack.com because with national, i roll past the counter... and choose any car in the aisle. choosing your own car? now, that's a good call. go national. go like a pro. now the answer to today's aflac trivia question. who was the only regular cast member of the tv show "m.a.s.h." to actually serve in the army in korea? the andy, jamie farr. welcome back, everybody. we've been watching the futures and they have been under a little pressure. 23 you're checking you'll see the dow futures are down by about 38 points below fair value, but, again, we've seen some things stabilize overnight in europe. there are some thoughts that maybe greece will be helped out. those are rumors that are floating through the markets right now. it's been stabilizing things there. we'll see what happens as the markets open this morning. in headlines, citigroup's efforts to repair its balance sheet are being hurt by the still securitization market. they are reporting citi is trying to sell $3 billion of car loans and the bank is thought to have offered buyers a few years of post-sale financing. a source tells the paper the private he can quit won't bid on anything that requires it to bet the funding markets and securitization will eventually return until that could keep things at a holdup. all those fears of a global debt crisis putting the market on edge. joaning us with his outlook is jim rickerts. jim, good morning. thanks for joining us. >> good morning. >> you've been talking to us for quite a while about these problems and investors are putting full front attention right now what's happening in greece, the thought this could spread throughout europe. how serious of a threat is this? >> it's obviously a serious issue. the message for me is a little more positive. two things struck me. number one, there were two efforts to solve this coming from outside europe, one from china about ten days ago, widely reported, that was rebuffed and basically they told china they didn't want the deal. goldman was brokering that. the other one is the imf, a perfect case for them to come in and solve this. that's been rejected as well. it's very clear the europeans are saying, this is our house. we'll solve this problem in europe. we know how to lend because we have a very good model, which was germany unification 1990. east germany was much more of a basket case than greece and west germany. they redeemed it for consumer account at a 1 to 1 ratio, highly inflationary. it says germany will do -- even though they're a hard money country, they will do inflationary things for political gain. i think we get so caught up in the economics and the market action and the cds, which of course is important, we forget there's a bigger political play here. it's interesting that margaret tlacher were bitterly opposed to german reunification. the quid pro quo is germany had to buy into the euro system to be unified. one of your earlier guests said the next head of the acb. that fits this pattern. germany will bail out greece, they will do whatever they have to do. >> talk about your epic battle you have going on, the epic battle of enforcers of inflation and enforcers of deflation. you think one has to win out. no matter who wins, it's not good news? >> right. there's so much talk about the double dip. i don't think of this as a recession, one recession or double dip. i understand this as more of a depression, began in 2007, will run until 2011 or 2012. within depressions you can have growth, you can have declining unemployment. we saw that between 1933 and 1936. unemployment came down sharply but remains at a very high level. nothing like what we're seeing today. but we've had a lot of depressions in u.s. histories. 1837, 1873, 19920 and 1929. they all have one thing in common, serious deflation. if i'm right about the depression scenario, my question is, where's the deflation? it's been papered over with policy. you have a natural deflation from a depression. policy induced inflation from the fed. what this is like the arm wrestling match the old man and the sea where they sat there for two days and their arms didn't move but enormous stress in both directions. price stability is a good thing. this is like an earthquake building. it's going to break one way or the other. i think what the fed wants is moderate inflation. i think that's the one thing they're not going to get. we'll get -- deflation will take hold or more like hyperinflation. >> randy, is that your take? >> clearly we look at the lessons of the past and we don't want a deflation and we understand the lessons of japan. i'm a bit more optimistic that it has to break one way or the other. i think that the fed has managed this reasonably well to avoid the deflation expectations that came in a year ago. expectations were that we would have decreasing prices, japan levels. now we're back to where the long run average expectations have been over a number of years. i think that's a reasonable place to be. i think with interest on reserves the fed will manage this without having explosive deflation and avoid inflation. >> i agree with that as far as what the fed has cured. and i agree with the inflation, and. but the problem is deflation is a funny thing. it's like a juggernaut. it can't be stopped. the difference between a depression, people think depressions are long recessions. they're different because it involves solvency and asset price declines as opposed to business cycle, credit cycle, inventory cycles. those are the normal drivers of recessions. this is something where until -- until markets clear, until prices hit bottom there will be the strong deflationary pull. you say, where's the evidence for this? we see deflation and residential real estate and commercial real estate. we see -- >> i think you're right about one thing which is what the fed has done is staved off for at least a time a true reckoning of the actual price underlying it. so the question sort of then goes to randy which is, how and -- i understand why they did it. i think it was the right thing to do it. how and when do we get to the right price of the underlying assets without the stimulus and without the fed policy? >> sure. that's exactly part of the exit strategy. a lot of extraordinary actions to buy different types of securities, different markets, but almost all of those have gone down. still much larger balance sheet, holding a lot of the mortgage-backed security and i think they'll be holding those for a long period of time. i think we're sort of gradually getting out of that. and i think we'll be able to -- >> it's stretching out the problem. i mean, you're saying it's over in 2012. >> depending on policy, it could go longer than that. i use the donald trump model. he was a billionaire in the late '80s, broke in the '90s and a billionaire again because the assets came back. things went to 60, you bought them, packaged them, sold them at 70 and made money. today they've gone at 60, buyer's at 40, they could go to 5. that is what happened in the '30s. >> one key thing that happened in the '30s, as you said, when the deflation came in, there was this increasing burden of debt because debt is nominal. but if the price level falls by a third your revenues are coming in at a third lower. by avoiding the deflation during the worst part of our contraction we avoided that sort of debt deflation cycle which is typical of past depressions and recessions. i think we avoided that. i think that's why it won't be quite as bad. >> with when the burden of debt becomes too bad people default. that's liberating then they're relieved of debt. the debt shifts to the creditors. >> thank you very much for coming in today. we appreciate it. randy will be with us for the rest of the program. >> just to let you know, a few people have written in supporting the who. >> yeah. coming up, the big game during the big game. >> going to destroy the earth. >> there's only one thing left to do. and here we go! >> ya! >> bud light had a string of commercials during the super bowl last night. we'll see if the brand came out a winner in the super bowl of advertising. advisor:... ms. davis, this is onstar. i've received a signal you've been in a crash... i'm contacting emergency services... 911 dispatch:...onstar reporting a front end crash... on wakefield road... chevy malibu... fire/ems:...air bags deployed... ...injuries reported... advisor: ma'am, help is on the way...ok. and i'll stay on the line with you until they get there. automatic crash response. built into 15 chevy models. withsun life financialng should be famous.d bad, we're working on it. so you're seriously proposing we change our name to sun life valley? 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[ whirring ] [ female announcer ] the new community. see it. live it. share it. on the human network. cisco. welcome back to "squawk box," everybody. still to come this morning, millions of viewers watched the super bowl last night. but which ads did they like the most? we'll talk to our list of ad winners. we'll have that up a little later in the program. also coming autopsy the top the hour, revolution money chairman ted leonsis -- revolution money got sold off. ted will join us to talk about his new book and the company's deal with american express. and then economists, professor, author jim galbrait will join us on the economy and budget. stick around for that. when we get a check on the markets right now, you'll see the future are under a little pressure. in fact, that pressure is growing through the course of the morning. you're talking down by 50 points below fair value for the dow future. same old concerns that have been out there. what will happen to greece with that debt? will it get picked up by the european union? that's a concern and continue to be a focus this morning. along with that, we have other headlines. toyota's recall may get larger. the company's going to be reportedly announcing a global recall of its third generation prius tomorrow to go ahead and fix a potential braking problem. reports of possible prius recalls first surfaced last week. again, we are expecting an official recall tomorrow. hsbro earned $1.09 a quarter. it was helped by strong sales of games and puzzles and items aimed at boys. you can see that stock is indicated to open higher. closed at30.80 on friday. bid is $31.85 1k3 ask is at $34. amazon kindle users are without new releases by macmill macmillan. they are working on a pricing dispute between new books. merrill's ex-chief tapped to lead troubled leader cit. mary thompson joins us with more. what a story it is. wasn't he disgraced by that? >> one would seem -- you know, or it seems to be, but actually, as things start coming out, he's been in the clear, at least if you look at some investigations that have been going on about the merrill b of a deal. the 58-year-old thain returning to the sweet after being pushed aside by ken lewis. thain now heads the lender to small and medium sized businesses that barely survived the cries. it's a chance to retain his reputation. subsequent revelations of huge losses at merrill and big bonuses paid to employees along with thain's $1.2 million redecorating bill for his office, all dimming the allure of an executive once named as a candidate seemingly every time a top job opened on wall street. while thain ended up paying for the office renovation and investigations into the merrill/b of a deal point to no wrongdoing on his part, some directors were still leary of hiring thain. they called him a well respected financial services director and a proven leader uniquely qualified. cit emerged from bankruptcy last december having filed a month earlier, after the government refused a second round of t.a.r.p. financing. when the largest bankruptcies ever, cit's troubles linked to an expansion of subprime and student lending. while they erased more than $10 billion in debt, the government's $2.3 billion investment in the firm was erased as well. or once head of the new york stock exchange and president of goldman sachs, thain's challenges at cit will include finding cheaper ways to fund businesses and finding replacements for the firm's outgoing ceo and cfo. he's receiving a $500,000 salary and $5.5 million in restricted stock. if things going well, $1.5 million in incentive pay. >> looks like he's off to the races with this. we just received a call that mr. thain arrived at cit's offices. >> he starts today. >> very first day of work before 7:30. >> is this an idea you sell cit? >> he said, actually, in reading some reports, he did some interviews last night, he said that is a possibility. >> what do you expect? >> i imagine you'll eventually have to sell this company. within the next 6 months, 12 months, 18 months, don't know. the question is whether there will be a credibility gap with shareholders given what we saw happen with b of a/merrill. b of a shareholders loved him -- >> and the bonus guys loved him. >> but another issue is obviously there are other people out there that have questions about what did merrill know when and when did they tell b of a and what does that mean for shareholders of cit now? >> if you read -- you read andrew cuomo's -- >> yes. >> if appears thain was telling them the whole times anyway so he was up front about it. >> that's what the cuomo suit says. >> no, he's -- that's the good news for thain. that's what i was saying to you before in the 6:00 hour. i actually think in an odd way the experience of selling merrill to b of a will make him a better leader. a year later -- he's a much humbler guy than he was -- >> i don't understand, as we talked about last hour, where the losses came from from the time they bought the company to december 5th, why this $15 billion, unless merrill was keeping -- was wrongly keeping that stuff on its books, then it was wrong. or if it magically did it in a way and then subsequent wrote up the assets. >> i'm looking to find out what andrew cuomo has to say about this aappointment today. that's the one person we haven't heard from. >> becky's got everybody's e-mail, it appears. >> he'll make hay out of it one way or the other. >> you know what, we call it squawkopedia. >> coming up, your tools of the trade. we have it all as you come back from the super bowl week depend get set for a full week of trading. "squawk's" back will be -- what does -- >> we'll be right back. "s" stands for straightforward. as in up-front, honest... total transparency. straightforward is the way td ameritrade does business. simple, fair pricing. no hidden account fees. no shenanigans. just good value. real help. smart people who are easy to work with. that's what td ameritrade stands for. what does your investment firm stand for? it's time for fresh thinking. it's time for td ameritrade. welcome back to "squawk box." time for the monday morning trading block. joining us, brian dolan, chief strategist at ferex.com. and joe foster, gold strategist at vanek global. joe, is the shine off the gold trade here? >> no, not at all. we're going through a correction now. and i think we're still in the midst of a long-temple bull market. all the fundamentals are in place for gold to move higher. people are still worried about currencies. you know, the fed stimulus is still on so people are still worried about the economy. there are many things driving gold still. >> and, brian, it seems to have been an interesting relationship with the dollar, they've gone into the dollar as a security, but sort of out of gold at the same time. this is new for our financial crisis here. >> that's exactly right. gold is being treated much more as a risk trade. when the risk comes off, when the economic data disappoints, when the news is negative, gold is coming off a long with other commodities. the dollar returns as the safe haven funding currency. >> you disagree with joe on this thing. you don't thing the stars are aligned for gold? >> no. i think the longs out there are quite heavy and i think i'm looking for -- to sell a bounce in this back in the 1080, 1085 area in gold. >> joe, oil's made a nice move to the downside. i say nice because i buy the gasoline, i don't trade it. 73, is there support there at $70? where's the next step down? which way do you think it's going? >> i think we're probably heading lower. you know, we had a nice little overnight bounce here but we've given up the gains on the back of weaker he c eer equities iye. the downtrend to me is firmly to the downside. what the other guest said about the risk trading, oil has benefitted from that to start the year. now that those positions are being unwound i think oil's got nowhere to go but down. >> how far down? >> you know, our next target is about 67.25. if we get through there, i think we'll easily trading below $65. >> i think that's good news for the economy. joe, i was looking at a chart earlier from our friend at cameron hanover. import oil seems to have crashed. what's going on there, the volume of imports? >> i think it's reflecting the lack of demand in the u.s. we have plenty of inventories. inventories have remained above the five-year average despite the seasonality of the cold temperature taking some of that stockpile down. you know, the real key for me is there's really no sign of industrial follow through for oil or refined products. we still have a lot of diffic t distillate. until we start to see industrial follow through that takes down these inventories, i have a hard time believing that oil can sustain higher prices. >> joe, you want to come back and defend gold that it's now a risk trade, not a security trade? >> yes. i think gold is reacting to euro weakness. and inverse of that is dollar strength. if the dollar was strengthening on economic fundamentals and strengthening the u.s. economy, that would be a different story. but the dollar's just responding to weakness in the euro. i think the word dollar strength is an oxymoron, really. i think as soon as this bout of weakness in the euro has run it's course, i think gold will perform quite well. >> and the dollar will weaken? >> yes. >> thanks very much. this is a conversation between them, there's about 42 trades in there. >> there you go. one quick correction for you. in that trivia question we asked earlier, who served in the korean war from the cast of "m.a.s.h.," turns out alli alan also served in the korean war. coming up, randy kroszner and andrew ross sorkin and then -- >> what's your deal, man. >> come on. you've been riding me all day. >> you're playing like betty white out there. >> that's not what your girlfriend said. >> we'll get the pest ads from last night. [ male announcer ] for over 50 years, providing you with safe, reliable, high-quality vehicles has been our first priority. ♪ in recent days, our company hasn't been living up to the standards that you've come to expect from us or that we expect from ourselves. that's why 172,000 toyota and dealership employees are dedicated to making things right we have a fix for our recalls. we stopped production so we could focus on our customers' cars first. and technicians are making repairs. we're working around the clock to ensure we build vehicles of the highest quality... to restore your faith... in our company. for more information visit toyota.com. welcome back. good morning. time for a check on the futures board. let's take a look here. a little less negative than we were earlier. dow's negative. s&p is negative. no follow through from the late friday rally. greece's finance ministers his country will stick to the deficit cutting plan and the first three months of the year will be crucial for regaining investors' confidence. the country aims to reduce its deficit to blow 3% of gdp by 2012. that figure was 12.7% last year. the highest level in the euro zone. let's get more from our guest host today. randy kroszner, former federal reserve board governor, professor at the university of chicago's booth school of business. one of the things we've been talking about this morning is looking at this idea of greece, trying to figure out relatively speaking, where should people be having more confidence? is it in the u.s. dollar? is it in the euro? when you look around the globe there are a lot of pockets of indecision and uncertainty. >> sure. as i tell people,there are a lot of shoes to drop. i think we're old enough to remember imelda marcos. dubai, a couple months ago. a lot of frajties out there. actually, a little bit about what we tarp you can,ing about before, we postponed some pain. we substituted public leverage from private leverage to ease the pain but that's coming home to roost. i think it's going to be a pretty rough ride for grease and some of the other countries within europe. i think that's going to put a lot of pressure on the ecb. it's going to put a lot of pressure on the euro zone. >> randy's going to be with us for the rest of the show. we have a lot of other issues -- >> we have a lot to talk about. >> including a question that andrew -- >> we'll talk about goldman and aig later. given your bullish views i'm actually surprised how bullish -- your bullish views before, i want to talk more about greece. >> not everybody had the capacity. >> i'm part italian. >> don't call them pegs. still to come, we have ted leonsis, owner of the washington capitals and author of a new book. our picks for best and worst super bowl ads are coming. what are you doing...? calling chase sapphire, seeing if we have enough points to stay longer. now? you don't have enough time... and you have to push all those buttons... no buttons, someone answers every time. yeah, right... bet you a massage... yeah, ok. hi, julie... i have a question about my points. hi, what button do i press for a massage? hello? new chase sapphire... you call. we answer. no waiting. just press right here... go to chase.com/sapphire. chase what matters. qqqqqqqqqqqqqqqq whaelt your deal, man? >> come o you've bep riding me all day. >> you're playing like betty white out there. >> that's not what your girlfriend said. >> over 100 million people tune in to watch the super bowl. many of them watch it more for the ads than the football. last night's game was pretty good but right now it's time to recap which ads caught our attention. of all the ads out there, i think the ones that jumped out the most to me was -- first of all, of it a brief ten second one, the letterman ad. >> jay leno! >> take a look at this ad. >> this is the worst super bowl party ever. >> now, dave, be nice. >> he's just saying that because i'm here. >> no, he's just saying that because i'm here. >> all right. that one for me did it because, yeah, these guys actually sat down together after letterman had been taking shots at him for weeks. >> apparently they flew in undercover, leno was wearing a mustache and hooded sweatshirt to film this last tuesday. >> how did that happen? >> bill carter wrote a terrific article about how the ad was created. >> my take. the biggest sellout of all time, the simpsons, i can't believe the whole thing did a coke commercial. budweiser bridge one was the best. my kids loved the doritos one. this is my favorite one. >> okay. so it's 37 $08. paper or plastic. >> plastic. >> that's the magic word. green police. you picked the wrong day to mess with the ecosystem, green boy. >> battery! >> put it down. >> i like to make fun of people who are environmentally, you know, pc and -- i also watched the commercial and i thought the end, oh, it's an audi commercial. hi no idea. >> not bad. >> darren rovell joining us from new york. what did you take away? >> well, as far as commercials go, beck y i loved the google ad. now, are people saying this morning what is that google, i should check it out? probably not. but check this out. ♪ >> what's so cool about this, i think, is obviously there's no actors. they didn't have a huge budget. you'd assume. and it tells a whole story about a guy meeting a french woman and eventually getting married. they have these stories online as well. i think it's a great ad. i'm surprised they did it given that eric schmidt didn't think the super bowl was where you put an ad. i think it was an incredible ad. >> i'm going to get in trouble for saying this. i loved this ad, too. my wife loved it so much she actually started crying-d during the commercial. in fact, everybody at the super bowl party was sort of -- >> you do get chills. you get chills, you know. >> and she was making fun of me because she thought he was starting to tear up. the question is, why do we think that google was doing this? is bing for microsoft such a big deal? eric schmidt said when hell freezes over he would do a super bowl ad. >> i think it is bing. there's some reason you do it and i think that was the reason why. >> it's not just -- >> there's some sort of competition here that they think, let's just make it more top of mind. >> well, not just bing. you have to remember that google's relationship with apple has been fraying recently. more and more positions of competition between them. apple may be teaming up with microsoft for some of its search priorities instead of going ahead and using google. we saw schmidt stepping down off the board of apple. all of a sudden it's a different reality. i think the idea they would pay for an ad that they said they would never, ever put out there -- >> becky, eric schmidt said the super bowl is unaccountable. i think this ad -- well, again, i don't think they're counting hits at doing this will morning, i think this ad was accountable in the fact it got you to connect the brand with this. >> one more point here that in the first half, until somewhere in late in the second quarter there was no car commercial but a hyundai commercial. anybody notice that? >> and toyota. >> toyota was later, in the second half. >> hyundai had the pregame show, too. leading up. >> i thought that was an interesting coming out. what's going on withdrew bre d brees. >> he signed two contingency deals. they sign them before. he did the i'm going to disney world spot and he also got a deal with dove. they announced this at 12:01 midnight eastern time that he's -- i haven't seen the ad but he's going to be singing in the shower, which is kind of interesting and saints fans might remember craig "iron head" haywood. hey, iron head, what's with that -- >> he does this big male soap commercial last night. >> yeah, now soap. >> what about the who? >> i -- i was like the what? you know, i mean, obviously -- obviously the nfl has to make sure there's no wardrobe malfunction so they get older and older and older. a lot of kids were saying -- >> first of all, it should be an s.e.c. investigation. he bared his stomach, right, rather than his breasts? his stomach was flying out there. >> i don't know. it's a questionable -- you know, there's a lot of people that criticized it. a lot of people think it's great. >> everybody was -- everybody was singing along. that's what it seemed like to me from the stadium. >> no, no, that was just your -- you know, they required them to sing along, receive. >> required? coming up, a check on the markets we'll be watching. ted tells us about his new book and his new deal with american express. chloe is 9 months old. she is the greatest thing ever. one little smile, one little laugh. honey bunny. [ babbles ] [ laughs ] we would do anything for her. my name is kim bryant and my husband and i made a will on legalzoom. it was really easy to do. [ spits ] [ both laugh ] [ robert ] we created legal zoom to help you take care of the ones you love. go to legalzoom.com today and complete your will in minutes. at legalzoom.com we put the law on your side. big swings for the economy. chief investment strategist from charles schwab will tell us if now is the right time to be bullish. plus, the risk of a double dip. >> we're beginning the process of healing and we have the capacity as a government to make sure we're reinforcing this prosdz. >> james galbraith will give us the game plan for a recovery. he's in! >> "squawk box" begins right now. ♪ ♪ the saints are coming ♪ the saints are coming zoo. welcome back to "squawk box" here on cnbc. first in business worldwide. i'm becky quick along with steve liesman. carl and joe are out. in studio with us this morning, new york times reporter andrew ross sorkin. also our guest host for the last couple of hours -- for the last hour and this hour, too, former federal reserve board governor randy kroszner, now business professor at the university of chicago's booth school of business. we've got a lot to talk about today. in our headlines this morning, topping stories, cit group hiring former merrill lynch john thain as new executive. they say he was hired in part for the expertise he gained while restructuring the new york stock exchange. also, pimco ceo says he prefers german government bonds to u.s. treasury. warnings greece's debt crisis will push other investors into safe havens. he says german bonds will outperform traditional treasuries because of massive u.s. debt levels. he wrote in earlier saying you could see concerns about greece and what happens there and potentially affecting germany but he thinks relatively speaking it will be a small impact. if you've been watching futures, futures have actually turned around. you're talking about the futures down but only by seven points below fair value. there have been stronger trading in europe earlier as people thought some concerns with greece may be would get taken care of. but again, those have been rumors floating around. that has been a huge focus for trading. >> we were, what, minus 30 before, minus 33 -- >> the super bowl is wearing off, people are waking up. a choppy ride for market of late as the major stock indices reported largest swings in months. thanks for joining us. >> thanks. >> volatility seems back, right? we get some tums and malox and get ready for a tougher ride? >> i'm not quite as optimistic as i was last year. we went through the environment where we hit the wall in the private debt sector. then we saw that crush the economy. we came out, the leader indicators turned. we got the benefit of valuation expansion due that turn in the leading indicators. now i think we're digesting the fact we've just shifted the debt problem from the private sector to public sector. i think what's happening in greece is one muof those aftershocks. i think the fundamentals in terms of the market and economy and valuation and earnings are still pretty decent but i think we'll have a choppier year in light of what we've experienced in the last couple of weeks. >> well, it sounds like you're a little bit -- i mean, not just a little more pessimisttic, it sounds like you would want to take some risks off the table if that's what you're worried about. are you worried. -t goes beyond smaller countries when it comes to the debt problem? >> look i i have no greater ability to judge the magnitude of the problems and the impact on the market. i'd be more pessimistic if i thought we had valuation and economic growth problems here. given the weakness we've seen in the market at the same time we haven't seen xhes rat deterioration in earnings we're back at a valuation level 13 or 14 times earnings. i think we have a pretty decent valuation cushion. i also think that one of the benefits of this weakness is we had gotten to a little frothy sentiment, optimism kicked in. it's remarkable how fast you can pull back and get back into a zone from contrarian perspective has been good for the market. i do have a mixed gut feeling about this environment. very good fundamentals here in terms of traditional fundamentals but obvious problems. >> what's your perspective on the u.s. debt situation? >> look, we've -- you know, we had got ton a point where it was taking nearly $6 of debt to create $1 of growth. we have seen the private sector really just put the brakes on in the fall of 2008. and i think has done a pretty heshg lee yan j herculesen job. i think we're going to need to see significant belt-tightening. i think deflation is the name of the game in the near term when you look at debt crises in the past, that has been for the most part the outcome. i'm not -- i don't have a lot of concern about inflation. but we have a long way to go before we start to feel comfortable about debt. we need, obviously, is economic growth. you know, say what you will about tax increases bringing some revenue in the near term but clearly we need strong economic growth. that's the only way we'll pull ours out of this thing in the long term. >> liz ann, andrew sorkin, i think of you as an optimist so this is difficult. >> i still had am but i think it's going to be choppier. >> do you put money into the market today or do you -- what would you do? >> well, it depends on who you are as an investor. that's one of the mistakes a lot of fellow talking heads make on shows, they have a blanket answer as if that's appropriate for every investor. i think a lot of investors that thought they had a higher risk tolerance learned quickly they didn't have the same tolerance. first, you have to figure out where you sit on the risk spectrum. a lot of investors have been light equity allocation. in other cases a lot of people went hog wild on the fixed income side. i don't think there's a big pocket of cash that ought to be or will come into the market. but i think a lot of investors were misguided in putting so much money into treasuries and don't understand the risk that comes with having money in treasuries in excessive amount in light of what is likely to happen with rates. >> randy, i want your take on the friday jobs report and where we are in terms of creating jobs and how essential it is to create jobs for the economic recovery to continue. >> we have to create jobs. we're getting close. we were lose beiing, 600,000, 70 in 2009. and we're getting close to zero. i think we'll see private sector job growth come back to the positive side. we'll see payroll employment go up because of the hiring -- >> explain from an economics point of view. nobody understands how we end up creating jobs. we're losing jobs, therefore we alleges continue to lose jobs because the job losers are the ones determining the economy. that's not really how it works, is it? >> no. if you look at headlines and scan headlines you would never think the u.s. has created a job. you only hear about job losses because creation tends to be slower, more balanced. so we're creating jobs in a lot of areas and we're seeing temporary employment start to go up. that's a very good leading indicator of job creation. >> liz ann, are you getting optimistic on the jobs front there and has the market priced in the jobs -- the job growth that everybody says is coming or will that be a surprise if that number turns positive? >> i would say yes and no. i am optimistic on the jobs front. randy talked about leading indicators. we seen a bump in the road in terms of initial jobless claims but when you look at the overall decline, it's closing in on a 1983 pace which was a very strong jobs recovery. the thing i think that's going to be different this time is the time span between when you get out of that mass layoff environment to creation. i think that span will be wider. i think it's going to continue to be wider and i think that span is defined by massive amount of uncertainty of the aforementioned issues on uncertainty of tax, health care and regulatory policy. i think when we get there, i think there's enough of a self-reinforcing cycle here in the economy that i think we're going to -- the surprise is going to be a pleasant one when we finally see this thing kick in. >> liz ann sonders is a serious economic student, market student and a serious rock 'n' roll student, right? >> i am. and i thought the who was great. >> okay. okay. >> wow. >> okay. >> yes! you were telling me great rock 'n' roll stories last time. >> he shouldn't have tucked his shirt in but other than that i thought they were great. >> all right. i'm not crazy. >> i love liz ann but that makes me question everything else she said. >> he was talking serious rock 'n' roll last time i saw her. is biotech back? is there still room for more upside? our very own pharmaceutical reporter mike huckman joins us from the bio investment conference with an analyst who says yes. good morning. >> reporter: the bio ceo investor conference is going on for two days. getting under way in new york city this morning. at a time when some are saying this industry is, frankly, in crisis. according to the biotechnology industry organization, there are 100 fewer publicly traded biotechs today than there were just two years ago and more than half of those that have gone away have simply gone out of business. in no small part due to the capital markets crisis. joining me now to talk about them managing director and analyst from deutsche bank. thanks for being here. the bke has been outperforming the broader markets, the nasdaq biotech index. what's up with that? is them emblematic of a rotation? >> 2008, dramatic outperformance in biotech. 2009, underperformance. why? mainly because obama took on health care reform. biotechnology drugs, high priced drugs. those price points looked less and less sustainable. coming into 2010 health care reform doesn't look quite as real. i think what you're seeing are multiples expend on the biotech stocks. >> reporter: so let's whip through some of your top picks. in big caps you like amgen and gichlt gilliad science. you say there is big, big data due out on that drug later, am gechlt n. >> i like amgen for a couple of reasons. they have a pipeline drug which is risky but even without that drug the stock is not terribly expensive. the event that could be massive is in the second half of the year there's a trial on a drug coming out in men with metastatic prostate cancer, cancer that has spread. however, in these patients it has not yet spread to the bone. they're asking the question, can it prevent the spread of the prostate cancer into the bone? if it works, it would be a preventive drug that would prevent the prostate cancer spreading into the bone. that's a big deal. >> reporter: what does it mean for the stock? >> it's a $1 billion to $2 billion opportunity. i think e stock is up. investors are skiddish about this trial. >> reporter: and with gilead they're looking at a four-in-one hiv drug. >> we'll see data in a few weeks. i expect the data to be positive. it's only phase two data. it will be a little gray. then move into phase three. that could be approved in the 2013 time frame. that is the key to reinvesting bgilead. >> reporter: small caps, a very familiar name for biotech investors, dendrian waiting for approval of a prostate cancer treatment. >> there's one catalyst left for them and that's getting fda approval. we have the data, the data was a big surprise last year but the fda has not approved it. some people are nervous about that. i believe the probability for approval is 90%. very, very high. i think that's a reasonable catalyst for the stock to push it up another 20% or so. >> reporter: we expect that may 1st? >> that is my call. >> reporter: finally, a drug for multiple scholar roses and will charge $13,000 a year. >> the other ms drugs on the market run for $30,000 a year. they priced it at $13,000 so lower than other ms drugs out there. the reason i like the drug is i think street estimates are low and they'll beat those numbers. >> reporter: these are all so-called binary events. for investors who don't have the stomach or the wherewithal to withstand that, should they look at an etf? should they avoid this sector? >> biotech is not for the faint of heart. i recommend an etf or actively managed mutual funds. >> reporter: what was your favorite super bowl commercial last night? >> well, actually, i was busy doing biotechnology research, so i didn't see the super bowl but i heard the letterman skit was very funny. >> reporter: it was my favorite, too, for shock value, at least. my favorite spot overall was the google ad and then for bringing the funny it was the trutv troy polamalu commercial where he is like a groundhog. >> that was pretty good. >> it was a good surprise one. >> what do you think of the who? >> yeah, more importantly. that's the daily question. >> i did not watch halftime. i think the who are so posse, i didn't have the slightest interest. >> you're trashing them and you didn't see them. >> i agree with you but i saw them. we'll see you all day long at the bioconference. when we return, they say money can't buy you happiness. our next guest says, he found that out. we're talking about ted leonsis, vice chairman of aig, co-owner of the washington capitals and chairman of revolution money. we'll be talking to him about all these things coming up. the business of happiness next. are you looking at exclusive video of john thain, his first day on the job as new ceo of cit, lender to small and medium sized businesses that was nearly brought down by the crisis business. thain is the former ceo of merrill lynch. he's been, i guess, out of a job, basically, for a little over a year. after he was pushed out by former bank of america ceo ken lewis. this in the wake of bank of aamerica's acquisition of merrill lynch in 2008. thain leaving bank of america after there were revelations of huge losses at merrill lynch as well as huge bonuses paid to merrill lynch employees. today begins the bit of a resuccess sags of john thain's career, which had been tarnished by his association with those losses at merrill. those bonuses at merrill. of course, his own redecorating bill for an office that was in excess of $1 million. john thain starting his first day on the job as new ceo of cit group. >> they land on their feet. >> it depends. we'll see what happens. mary, thank you very much. our next guest says the withhold cliche that says you can't buy happiness is very much true. joining us is ted leonsis, the author of "the business of happiness" new book out today, chairman of revolution money, vi and majority of washington capitals and washington mystics. thanks for joining us. i guess there would be some people who say, yeah, money can't buy you happiness but it sure helps along the way. what would you say to them? >> well, really, the book refutes that. really focuses on how businesses become successful by creating a double bottom line. if they're focused very much on trying to do the right things the right way, and understand that people innately want to be happy, consumers want to be happy and that what you as a leader are trying to do is activate that journey for your consumer, for your employee. so, my book started out as a personal journey book at a very young age i had started a company at 24 years old, i sold it for $60 million. i declared victory. and then i got on the wrong airplane. and so i had a reckoning and this reckoning led me to make a life list. this list of 101 things to do before i die has really become a way that i manage my time, my band width and what i do in my personal life. but i wanted to become a student of happiness to understand what is it that makes people happy and self-actualized? that would be a good lesson to translate into business. with what the research ended up showing was that if you are an active participant in multiple communities of interest, if you can activate high levels of self-expression, and the book steps you through this formula, so i started to use this formula of these six methods, one of them being finding the higher calling in your business pursuits, and i applied them to my sports teams, the washington capitals, the fastest growing team in hockey where the first place team in the entire league, we sell out every game, we've been able to raise prices, you know, year after year. dy it in my movie-making. i created this concept of filmanthropyp revolution money was another example, financial services company that had a higher calling and we were able to sell it to american express after three years in business. and so i put the formula to work. and what the back of the book really shows is the basket of companies that are practicing or even campaigns why the obama campaign worked by following this formula and being able to activate happiness in consumers, a happiness in the employee base. >> ted, andrew sorkin here. congratulations on the book. i know how hard it is to write one of those. did you start with $20 million. you sold the company with $60 million and you took home $20 million. i did read the book this weekend. >> thank you. >> that gave you at least a base to be happy with, though, no? >> it did, although it was interesting because i sold the company and i went to work for a really, really big company. you know, when i had my reckoning -- everyone has a reckoning. every business has a reckoning. in fact, just listening to the john thain introduction, he's had his reckoning. he's had to do his life list. merrill lynch had its reckoning. so what i wanted to do was show that you shouldn't let a crisis go to waste. you should turn that into a positive. you should really try to drill down on what makes you happy, what makes consumers happy. and then go out and try to build companies that can activate these communities of interest. you just look around, you know, you were talking about favorite tv commercials on google. google's model is do no evil. steve jobs took exception to that last week, but, you know, they're not trying to make $20 billion in revenue and generate $6 billion. but i look at my experience in aol, when we were rocking, a great krngs we were focused on doing the right thing, the right way. we managed to main street. we were really, really focused on, you know, our customers and how happy they were. when we became an unhappy company -- >> ted, i just want to ask you -- you're on the path for happiness in ownership of the washington wizards. >> yes. i think that i own 44% of the washington wizards. it's our intention to move very quickly and try to close on that deal. and that would be a great asset to own the basketball team, the hockey team and the building in a top five market. and i'm hoping we can make the fans happy and try to rebuild that team in a similar fashion than we've been with the washington capitals. >> ted, can you clear up everything with revolution money. i remember when we had you on you talked about revolution money, how this was going to put the power back in the hands of some of the merchants so they could push back against higher fees being put on them like american express. american express bought revolution money. will that change awha it means former chants? >> no. part of the platform was to go into the online services business and create this opportunity where consumers can move money back and forth. merchants can plug into it. we can do that at much lower costs. whenever you have industries that are run by monopolies, and paypal in its own way is a monopoly, consumers are alleges looking for a means, what could be cheaper, faster, more efficient. we believe we've created this platform that american express will roll out to its customers, will stay an independent division, will be able to move into new markets for american express. and i've signed on to be ken's digital adviser. hopefully we can help the american express company become a little more relevant to this next generation of consumer. >> ted, we want to thank you very much for joining us. congrats on the book. coming up, a lesson on the economic recovery. university of texas economics professor james galbraith will tell us if a double dip is in the cards. still to come, pimco's bond boss saying he's buying german bonds over u.s. treasuries. we'll get reaction from chicago. toyota's troubles could be taking a new turn. questions about the popular prius when "squawk box" comes back. welcome back to "squawk box" here on cnbc, first in business worldwide. one hour away from the opening bell. the rundown this morning, we'll be check, out the trading buzz with rick santelli. then on to toyota's troubles. taking a couple ads in the super bowl to repair its reputation. phil lebeau will bring us up to speed on what we can expect. also, news of the prius as well. after that, university of texas economic es professor jim galbraith will tell us if the economy is in for a double dip recession. welcome back to "squawk box." i know what joe's laughing about. they're down from where they were. they were about even a little while ago, maybe down seven but as low as minus 23 this morning as we try to figure out how much followthrough we'll have from that late rally yesterday -- on friday. john thain already on the job at cit. we have video of thain arriving at their company headquarters. >> walking by himself, no driver, no car, no entourage. >> smart move. >> cat lands on his feet. unbelievable. ex-merrill chief named cfo of cit. still restructuring their business after briefly going into bankruptcy last year. no nokia claiming it hid product delays from investors two years ago. interesting. the world's largest handset maker says the allegations are without merit and that will defend itself vigorously. let's get more reaction to what's happening in the markets this morning. as we just talked about, the futures a little below fair value right now. rick santelli at the cme group in chicago this morning. rick, we've been talking a little earlier about mohamed el erian, his call that people should be putting money into german bundz into u.s. treasuries. what do you think of that idea? >> well, i think those trades are predicated on the ebbs and flows of the spread between the interest rate differentials. what he might say today is probably different than he'll say in a couple weeks. i know there were many large institutions like that defined by a pimco that when the spread became, you know, 50, 51 basis points they reversed the trade. i think that isn't necessarily a long-term set in stone plan. i think as we monitor how the ecb is member countries will deal with issues like portugal, spain and greece, you'll see these spreads move. i think it depends on what day you call them. >> what's the concern right now in the markets about everything that's happening with greece, with rumors we've been hearing -- that have been circulating about a potential bailout worked out by other eu member states. what's the latest you're hearing? >> i can't tell you the latest. i can tell you that in my world, it feels just like the conversations we were having in '03 and '04 and '05 about credit spreads and credit quality and how loans were being packaged and how derivatives were being created. ultimately these conversations mean something. and from the u.s. standpoint, the folly of any downgrades in the near term or any change in reserve status to our currency is dismissing much of the talk we should be having. these discussions are important. because a couple of years down the road f we don't make -- and have these conversations today, we will be looking at the same fate in some form as time progresses. >> we also have some big treasury auctions this week. what are you expecting? >> i think these 81 billion in treasuries, what we always used refer to as the fed refunding s going to go very well, especially in lieu of the speculation chips in europe. this-f they're buying the bund because they like greece or spanish or portuguese bonds, but that is still in the backfire. take it a step further, these auctions should go pretty well. it's almost sad they're going so well because i think our financial leaders shouldn't be allowed to float so much debt so easily. it isn't sending the long term proper message. >> randy kroszner. i very much agree with that concern you have. so how do you see this playing out over the year? there's been a lot of controversy about the budget that the administration just put out. and whether we are in a sustainable path or not. how do you think this will play out in the markets? >> well, i think that this budget is kind of sad in many ways because of how spending was wrapped up in previous administrations and how spending was whipped up dramatically and changed base lines due to address the credit crisis. i don't know that there's any easy solutions out there. these budgets are going to take away all of our alternatives down the road. there needs to be some pain. i guess there are some odd people like me who hope the ecb leaders will allow some form of failure because i think we failed to do so. you could have regulations on the books all day long, you're not going to prevent these issues from coming out unless failure is deemed something that can occur and it can occur without creating systematic rick, which was never proven systematic risk was proven, like the aig bailout, according to our very own secretary treasu r treasurer. >> thank you very much. anything else we should be watching this week? >> i think it will be very important to watch the spread between ten-years and ten-year bunds. i think that's important. el erian is doing a trade but inherent in that trade is handicapping who's in and out for any period of time. >> thanks. we'll see you tomorrow morning. let's get more from randy kroszner. randy, if you had to make a guess as to -- i mean, here's what i think we know. the language will change first. and then they'll start doing stuff like, with the balance sheet. when does this whole train start leaving the station? >> as i said before, it's going to be depend end on the data and the forecasts based on that data. right now we don't see much inflation pressure, inflation expectations are at the upper end of the range they've been in nor a while but they haven't broken out. there's enormous amount of resource slack. that gives a fair amount of time before the fed has to -- before the fed has to move. but i think you're right. i think this is not going to come out of the blue. i think there will be speeches, i think there will be communication that occurs before the actual change to the language. you get some -- >> you were a colleague of mr. honeyic from the kansas city fed who dissented. what do you make of that? >> he has clear views and always been very consistent in articulating thousand views and internally and externally. i think that he thinks that we -- we would be better off to change the language but not change policy yet. i don't see any pressure to be changing the language. given the fragilities out there with greece and everywhere else, i think it's premature to say it's fine and take away that language. >> does it happen this year? does the fed begin to raise the interest rate on reserve and/or change the language this year? >> again, it's going to depend on the data. it's really difficult to say. i think, you know, that's -- >> we're trying to get to you say, randy. >> even when i was there, even if i were sitting there right now and i wouldn't be able to tell you exactly when. it is really data-dependent. >> in my newspaper, the new york times, this weekend there was a story about goldman sachs' role in the demise, if you will, of aig. i think the undertone or undercurrent was that at some level the strong-arming of goldman -- that goldman sachs had on aig led to its collapse. you were in the room during the crisis more than a year ago. what did you make of that piece? >> well, i think it showed what tough bargainers people are on wall street, particularly people at goldman. i think the kind of tough bargaining going on there was not unusual in the circumstances. i mean, if you have a contract, you're going to try to enforce that and try to get the maximum amount out of that. it didn't seem out of the ordinary what was described there. >> but the undercurrent of the article, andrew, is that essentially goldman caused the crisis. goldman's pressuring of aig caused mortgage -- subprime mortgages to be written down more broadly and that creates this whole cascade and at the end of the day, goldman is the root of all evil. >> right. >> which is great because it's on easy to explain. >> that part i actually don't -- that part -- i didn't write the article. i don't agree with the larger con spirer toal view that somehow goldman is responsible. >> why else is on the front page of the "times"? why does anybody care? >> randy, what do you think? >> i mean, as i said, these guys are tough. they're tough bargainers. there are a lot of other people bargaining pretty tough with aig. and so i think this is just the way things work. if you take too many risks and people realize you're in a difficult situation, they're going to press you. >> let me ask you, while you were at the fed, was there ever a moment where you felt either pressure by somebody either from goldman sachs or formally from goldman sachs that worked inside the government to work do something to help goldman sachs at the expense of anyone else? >> never did. never did. >> i at least asked the question. >> goldman doesn't have to pressure anybody. they have offices inside the government where they just make policy. they don't ask randy to make policy. they have their own offices there. you know that, andrew. >> i don't even know where to go with that. i don't even know where to go with that. >> all right. >> we have to move on here, is that what we're hearing? >> we have to take a break. toyota getting its message outs. for anyone's vehicle subject to recall, you should be know that toyota engineers have developed a rigorously tested a solution. >> next, the automaker doing some image repair work during the super bowl, even as it reportedly prepares for a global recall of its popular prius model. "squawk box" is coming right back. [ male announcer ] for over 50 years, providing you with safe, reliable, high-quality vehicles has been our first priority. ♪ in recent days, our company hasn't been living up to the standards that you've come to expect from us or that we expect from ourselves. that's why 172,000 toyota and dealership employees are dedicated to making things right we have a fix for our recalls. we stopped production so we could focus on our customers' cars first. and technicians are making repairs. we're working around the clock to ensure we build vehicles of the highest quality... to restore your faith... in our company. for more information visit toyota.com. welcome back to "squawk box." dow jones right now, futures down about 22 points. open to the negative. using fair value. and nasdaq almost about even. s&p would be down about two points. making headlines, john thain named ceo of cit. you're looking at video of his arriv arrival. cit emerged from bankruptcy in december. they say thain was hired because of the expertise -- >> what restructuring -- >> that's a cam video. >> it's a real head-shaker this story. >> this story? >> yeah. >> because you think they shouldn't have given him the job? >> i just read your book and i read in paulsen's book and -- and i just read the new york attorney general's lawsuit against lewis, that -- you've got this huge bonuses. isn't there any price to pay for that? he lost a ton of money and they paid themselves a ton of money and the company went down and it helped bring the whole financial system down. >> i'm not disagreeing with any of that. >> and he get a great job and makes $500,000 and $5 million in stock. becky, tell me i'm wrong here. is it fine he got this job? >> i would say you've got to figure out if he learned from his past mistakes. what andrew has said -- >> a lot of people learn from their past mistakes. they're on the unemployment line. >> cit is in a bunch of trouble. john thain knows the markets, who may be able to turn this around, at least get it ready for sale. what i'd hate to see is more troubles in financing because cit loans to a lot of important places, retailers and the factory business. >> if he sells the company in the next 6 or 12 months, makes off with his $5.5 million of restricted stock and the buyer of that company suffers in the future, there will be hell to p pay. for the merrill shareholders he did very, very well. >> and merrill executives. . randy, do you want to pipe in on this? is there any -- it's not morality. it's just money. it's not about the justice aspect of this. >> i mean, no, it's -- a lot of people are in difficult situations. obviously, nothing was perfect with anyone in -- over the last few years. but i think thain did try to pull it through, at least as far as i know. there haven't been any accusations of yong-d doing -- >> that is true. >> by the way, that's key. >> when you look at the andrew cuomo reporter actually says, they are not looking at him. when you look at the fact the treasury department and the federal reserve did sign off on this aappointment, i mean, that's important as well. do you have a series of people who are blessing this, if you will. now, you may say that blessing is not worth -- >> with the hands. >> the hands. >> let's move on. boeing has completed taxi test foss the 787 test freighter. i don't know what that is. the test was the last test. toyota is said to be preparing for a prius recall and trying to get a message out to the masses with a super bowl ad. phil lebeau with the latest. >> becky, what did you think of the spots, effective or kind of what i expected? >> what i expected. there was another ad andrew was bringing up that was more effective. >> where they talk about the history of the company? >> here's all the worker. we care about this very much, too. i thought that probably struck the right chord as well. more importantly, this he have to make sure they've told us about all the problems that are out there. i think that's probably the bigger concern. >> and that gets to the issue with what's happening with the prius. there are reports toyota will announce a former recall for prius in japan and here in the united states. we've been hearing this for several days. in some capacity, whether or not it is a formal recall or if it's a case where the company says, listen, we have a problem, bring your car in, we'll fix, it there will be something done in the next couple of days. although toe on it that keeps denying it's made a decision on recalling the prius. on the 2.3 million other vehicles they have recalled for the sticking accelerator pedals, dealers have started fixing those cars, kicked into full speed over the weekend. they're not only repairing vehicles for the customers as they bring them in, but if they have spare parts they'll start repairing some eight suspended models on the showroom floor they couldn't sell. they'll repair those and then they can start selling those vehicles. finally, reports today out of japan that toyota ended its monthly quality meetings and they did so last year when toyota took over as president of the company. this continues to paint took it's eye off the ball. a lot of these things took over as the company, the grandson of the gentleman who started toyota. they'll have an outside quality control board of which he will ultimately be in charge of. they'll be implementing that. take a look at shares of toyota. a lot of people think it has to get down to the mid-60s before you see buying action. >> phil, i just wonder, is this just the beginning for toyota in terms of its ppr outreach? >> i don't know if it's just the beginning. i think the company would love to get this behind them. that's why you see the spots going out. i don't think that can happen until we fully know everything the company knows. you'll have congressional hearings this week, a couple more after that. if they can definitively say this is everything we know that is wrong, if they can do that, then i think you can say they're starting to put this behind them. but there's no proof yet they have fully told us everything that they know. i think they've told us, we believe this is what is wrong with these vehicles but still a lot of questions out there. they'll have to answer those questions. >> you're the expert, phil, what did you think of the ads? >> about what you would expect. i did think the historical one was better than the other one. i think it reminded people there's a long track reported of quality with this company. yes, this is a serious problem. both what's happened at the gas pedal with the prius, both are very serious but this is a company that, you know, it has a track record of getting things right. >> and working hard to not look like an overseas company pl. all the workers they showed in the ad, american workers, at least a portion of american operations. you know, phil, there's a story in "the new york times" that says toyota has a history of slow responses to safety issues, points out the company has often reacted slowly in the past, sometimes even making design changes without telling customers about the problems with vehicles on the road. how damaging is that, potentially? >> very damaging. you'll see that be the spotligh hearings as well as in a couple more weeks. people are going to say, if you knew that you had these problems, and you knew how serious it can be that an accelerator is sticking, why didn't you raise the red flag and say, hey, folks. we have a problem here. bring your vehicle in. this gets to the issue of what i was talking about earlier. if the company did not fully understand the problem, you don't want to raise the red flag. >> right. >> the worst thing you can do is say we have a problem but we don't know how to fix it. >> right. >> now they claim they know how to fix it. that's the big question that needs to be answered in the next couple weeks. >> phil, thank you very much. we appreciate it. >> good stuff. thanks very much. next, inside the bernanke huddle. that discussion coming up on "squawk box." up next another one of our favorite ads from the super bowl. one we haven't even talked about yet. right now you're seeing those pictures from the white house. the federal government still closed this morning after all that snow was dumped on washington. when we come back we'll be talking about the super bowl. before we head to the break take a quick look at gold prices this morning. gold prices were under pressure last week as the dollar rose. this morning though up by about $11.30 to $1,064 an ounce. our favorite ads, not our favorite ads collectively, but anyway, somebody's favorite ads. yeah. >> a little kiss, mini me, excellent. >> let's pivot from a perfectly logical discussion about a kiss ad to the fact. interest on reserves. all right? becky, help me out. i need a joke here because i don't really have one. let's just move. >> let's just move on. right? >> agreed. >> abruptly segue. so the new thing out there, which we reported several weeks ago, but you actually reported, told us back in november, fed funds rate is not going to be the new kid on the block. it's going to be interest rate on reserves. tell us why. >> one of the key changes the fed has is the power to pay interest on reserves. this is a power almost all central banks had for a long time. the fed just got this about a year and a half ago. that's going to be the key for changing incentives on whether banks are going to b

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