Transcripts For CNBC Squawk Box 20100312

when, why, a shocking new report from a court appointed examiner reveals new details on who might be to blame for the firm's collapse. the u.s. economy for sale, will the american consumer buy the role as economic savior? shopping for the real story on retail as "squawk box" begins right now and as i talk above a den of these people behind me. sorry. sorry. >> good morning, everybody. welcome to "squawk box" right here on cnbc. it is friday and we are raring to go. i'm becky quick along with joe kernen and carl quintanilla. steve liesman is on set with us. we'll have more from him in just a moment. first, though, let's set the agenda for the trading day ahead. the dominating theme is going to be the consumer. two key economic reports. we have february sales coming out at 8:30 eastern time. then the latest read on consumer sentiment at 9:55. many chain stores reported stronger than expected sales for february. but some of the economists that were polled reported the headline number would drop by 0.2%. remember we saw all those winter storms? they're wondering what that all means. we're going to have special coverage all day long. cnbc, the new american consumer, a quicker rebound than the first expected or is it too early to celebrate? our first today includes matthew robell. his company owns names like payless shoes. has a good read on the consumer. marriott international's president will join us at 7:00 eastern. then at 8:00, we have mall owner bill taubman that can tell us what he sees. janet yellen is said to be the replacement choice of president obama for donald cohen. she was banded about as one of several names. >> a source now is confirming to cnbc that yellen is the pick to replace vice chair don cohen when he retires in june. the san francisco fed president is expected to accept the job billing one of three vacancies on the fed's governor of governors in washington. he took office in june of 2004, served on clinton's council of economic advisers as chairman 1997 to 1999. and served as fed governor, 1994 to 1997. yellen is known as a dove supporter, has been a strong upholer of the fed. don kohn is one of the architects of the current monetary policy. while it's clear who will be offered the job, it's not clearly clear what the job will be. the financial reform bill now in congress has various roles for the fed. cnbc learned yesterday that senators dodd .corker were close to an agreement that would house the senate and the bank supervisors would enforce them. an interesting compromise for republicans whorm concerned that the senate agency should be subordinate to safety and sound. so we know what she's going to do, but what the job is more clear. and as becky was saying before the show began, it's created a vacancy in san francisco that will be filled by the san francisco federal reserve bank's board of directors and approved by the washington board of governors. >> so this is a lot of change, though. i mean, to have this many positions open that would need to be filled, we knew this was going to be interesting along the way. >> right. and super impose that on the timing here, right? this is obama likely to point doves at a time when the fed is likely to embark on an exit strategy. >> doves who may be likely to keep lower for a longer time. >> more reluctant to do it. now, at the may meeting, there was one name that -- joe, what did you -- >> let the good times roll, baby. i mean, think about it. let's say steve liesman, let's say you can print money. whew! i would print money. i would be a trillion heir. print it, baby, print it. >> why would you do that? if you were appointed -- >> because the more you spend, the more you've got. >> governor kernen -- you're being sarcastic. >> no, i'm not. not completely. >> if governor kernen has a responsibility for price stability and maximum employment, you would print as much money as -- >> roubini is the guy who said we need to do this through inflation. we need to fix everything through inflation, not deflation. all of our problems will be solved down the road. we'll pay off all the debt we owe at half price, right? >> great. great time to take on debt is when you know inflation is coming. >> i love this story here. we need to tell rosenburg and ruboubini and meredith whitney that consumers have gotten out of debt much quicker than anyone thought. but you know how? they defaulted, which is the scary thing. >> rosenberg has been saying that. >> no, i know, but now they have money again. >> how about the story that -- i reported this story yesterday. you cannot know from the data that is there how much is default. >> are you disagreeing? >> i used to work with marc whitehouse in moscow, by the way. he's a smart guy, great reporter. >> he apparently scooped him on some stories in russia? >> he used to work for santelli. >> how much coffee did you have this morning? >> it's friday. >> no. but if you read the report, right, there is no data inside the report that says how much is defaulted debt paid down and how much is paid down debt? >> but you could look at the numbers and apply, right? >> i would do that if i could, but i agree, a big part of it is going to be default. some of it is paid on. you just don't know how much is what. >> i think we should have all doves, dove, doves, doves. >> i guess the question raises, do we get ourselves back in the same trouble? people are now saying it was because green span allowed easy money for too long and that's how we got into this trouble. >> you're asking the wrong guy. i think this is like an episode of law and order. i think we have the wrong victim in jail. >> you mean green span? >> i don't think it's the fed's policy. i think to me it was more of the global savings glut and figuring out where that money went and china and all this extra money. you said to wall street, i have extra money. i come back to the guy from deutsche bank derivatives risk. he said once the problem with the crisis was we got done lending to everyone who was creditworthy and we have stuff left over. >> but you could say that that comes from easy money. not that the fed is the blame for everything that happened, but they certainly enabled it, right? >> when i think about what the problem was, the problem wasn't that rates are too low. >> now you sound like barberra. >> well, i could be in worse company, right? >> you could. >> the problem was the rates they were charging for higher risk loans was too low, right? >> but when you're getting money for cheap, then you look for more loans to make it because that's a great way to turn it, right? >> you make a decision as the bank lender what rates to charge. >> i agree. but they were enabled to get low cost capital in other places. >> i would be happy to read more on this topic that somehow the fed's lower rate policies in '03, '04 and '05 led to lousy lending in '05, '06 and '07. because the vast majority of what went bad and what we're trying to digest in the system is are the lousy loans lost. lehman brothers, they knew lehman was overleveraged. >> they being lehman? >> lehman. you're talking about the banking system essentially in balance. to me, where with were the regulators? >> i'm not anteriori inarguing those points. i think there's culpability on a lot of people's hands. >> i supposed the fed could have been tighter and that would have changed outcome. but it's not clear to me that the lack of regulation and the low risk premium charge by wall street for loans at whatever it was, you know, you could go out and get a home equity loan at prime minus a half and you could do an interest only, where were the regulator on that? if we didn't have that stuff, i don't think we would be where we are now. >> that is where the fed was completely culpable. >> speaking of lehman's. >> that's an amazing story. >> these are the headlines today. a court appointed examiner says that that company have been insolvent for weeks before filing for bankruptcy back in september 2008. it's a 2200-page report. it details accounting gimmicks that were used by the firm. the findings are a election of more than a year long investigation and who could be to blame for lehman's collapse. and the examiner suggests lehman could have claims against the following people. former ceo duck fuld, ceos chris oh mera, aaron cowen. there's said to be evidence to support a possible claim that the firm's auditor, ernst & young had been negligent. so the examiner says lehman could pursue claims against the firm for professional malpractice. >> this is a very complicated story. there is a idea that they could pursue claims against fuld and the others. but overall, he thinks they used their business sense to try and make some of these judgments. but the big question comes down to this repo 105, this accounting thing they were used to manipulate the books. fuld has a statement out saying he didn't know what repo 10 on 5 was or did or that it was an accounting trick. >> i'd like to know who came up with that. then they put erin kowen in. >> she's hanging out in the hamptons. >> she's totally low key, not doing anything. dating a guy she went to high school with, i believe. >> she's working out in jerry levin's place in san monica giving aroma therapy massages out in san monica. >> but this repo 245 is what everyone is watching. >> it's an incredible report. >> david einhardt used to listen to those calls, ask questions and get no decent answers. >> if you didn't know what this was, you were a lousy executive to not know this was happening underneath your nose. >> and a lot of it was about arch stone, too. a couple of times, he thought he heard outright. >> and he said as much, that they were either avoiding or flat outlying. anyway, this is a story that will get a lot of coverage today. in the meantime, china's deputy bank central governor has a message for the united states and they say don't make an issue out of the yuan. china is trying to balance cooling lending and sustaining growth. maura fogarty is in beijing today. maura, what can you tell us about this? >> reporter: chinese officials really coming out swinging in response to those comments about president obama about the currency regime here in china. willy not just the central bank deputy governor, but several officials say, look, the yuan exchange rate is where it is because of policy. they're saying that the u.s., if it wants to improve its economic situation, look to boost its own imports and not medal at the policies. they're very concerned about the external environment. read between the lines. that means the u.s. economy. and they want to make sure that the local economy still continues trudging along. i know overnight we saw markets around the world twist over further tightening measures coming from china. and again, officials here were coming out trying to sooth markets saying they're not too worried about inflation. they say some of that coming up near the second half of the year. but for now, monetary policy will still remain accommodative. >> thank you, maura. we're watching that extremely closely. s&p, did you guys see that we are now at a 16-month high by 0.1 of a point? >> highest level since -- >> oak october of 2008. but literally, it was -- the s&p was -- i'm trying to think, 1150.25 and the last one was 1150.24. >> yesterday was vaez. the dow floated across the zero% time at 353 highs. >> it will. it was urchb or just a little bit up and down. >> let me guess, the russell up 20 out of 22 and the s&p is up, i think, nine out of ten. >> boy, and it just put everyone asleep. no one has really noticed, but -- >> it's a sneak attack. yeah, it is. i love it when a plan comes together. >> there's crude, which is on track for the second -- >> only 8% or 9%. >> and that 1150 is the level everyone is watching. we had technicians saying if it closes this week above 1150, then you've got serious momentum. >> oil is on track for the second weekly consecutive increase. the 10-year note, we'll keep a close eye after all the supply that came on line this week. 3.731%. the dollar at a one-month low versus the euro as people now start to think maybe the greece fire is being put out. back to 1.377 on euro/dollar. gold, which had comments earlier in the week that thi they may not be being more part of that is due to a softer dollar. we are counting down to the retail sales numbers this morning at 8:30. our task force is here to give us the latest news that will move the markets. michelle gerard is and scott follman are here. good to see you guys. some of the anecdotal stuff from retailers has been good. >> really. >> auto sales are looking good. are we set up for a surprise number? >> i think so. i think that's certainly the risk. the only wild card, really, in february i think is the weather. to what extent did the weather hit some of the categories like restaurants, like building materials. as you said, last week we had chain stores reporting sales figures for february. they were unbelievably surprisingly strong. had it not been for the weather, they would have been even stronger. and so the anecdotal news has been very positive. so to some extent, the setup is don't read too much into a weak february. chances are, it is just a temporary weather. anecdotally, the consumer has shown itself here as we get into february and continue into early march. >> why in general the disconnect between private sector data and the government data? well, just right now, you know, the weather. and we saw that, honestly, like the icfc. they had sales were up 3.3% year on year would have been 4.7% had it not been for the weather. that's really the only wild card in germs of getting a disconnect in january. >> do you think, scott, that this 1150 string board to the promise land is for real? >> i believe a lot of people think it's there, but we're getting there on a lower volume. that's a little concerning because we're not getting confirmation in there. but the internal market indicators have been confirming it. what i think is funny, looking at what is happening in retail, the retailers have been leading the market during this whole rally over the past year. which is relative performance has been there. the xrt set another new high yesterday. so we're seeing people looking at these consumer discretionary stocks and buying those. that is basically saying, hey, there is belief that the consumer is coming back. >> i wonder if that's because if you haven't lost your job by now, there's a good chance you're going to keep it? well, i think you're right. people are feeling more comfortable about their financial situation. in that sense, some of the uncertainty that i think caused consumers not to want to spend on anything for so long through 2008, 2009, now they feel like, okay, the worst is over. they may be somewhat concerned about how much has happened going forward. but they have enough going on so they don't have to worry about that. >> so does that mean that we're not talking about a new normal, necessarily, where we saw people increase their savings rates, now it seems like we're making off some of the worry and as soon as we have a little cash we're going to spend it all and get back to our own ways? >> well, with i think we have to look at the private sector has started to hire again. now, do we get a second leg with the public sector? all the municipalities, the states that are running into big budget deficits, now they're looking at their budgets. what do they do? they can't raise taxes any more in many cases. they have to start trimming down. that could be part of the impact that we see going forward and may make it more of a jumpy or jittery type of recovery as we move it over the next six months or so. >> we just heard from maura in beijing. the last time we got concerned about that, could that happen again? >> it could happen again. the fact is, i think that when we're looking at the different marketplaces and we see china is trying to ramp up getting more oil, they're trying to get their economy ramping up again, i think we have to look at this as a worldwide situation. also, there is the impact of what's happening here. and the fact is, we cause a lot of activity that goes on in china and other places because of our imports. >> is yellen a good choice? >> she's an obvious choice. but i think they need to put an economist in that spot. i think she's very well respected. i think she will be able to move into that job pretty seamlessly. i think if they had picked somebody else without the experience that she had, it would have simply strengthened bernanke's hands. most people would have deferred to what the chairman wants to do. i think yellen will concept in with immediate credibility and will contranscript quite a bit to the policy. >> is it an obvious read that he's going to fill it with doves? >> this is as close as you can get to filling it with doves that the market will let you get away with. a lot of people look at this and say net, net, i'm not sure. change the equation. chances are, whoever the san francisco fed puts in that spot to replace her may be less dovish. but i think if you take an outside -- there's no question the market would sort of restrail strain the president's ability to appoint pure doves. if they say that is a road he is clearly going down -- >> the bond vigilantes are dead. they're gone. where are they? 3.7%? >> you're absolutely right. at this point, nobody is concerned about inflation. they're not concerned about the fed losing their interpretation. >> i'm gelling with yellen. i'm excited. turn them on. let's go. print. print, baby. the more we print, the more money we've got. >> you're not being sore castic. >> no, i am. i am. but -- >> you print money and then we have 10% interest rates. >> oh, you're worry background the future all the time. >> lucky, right sfp. >> let's get this engine started before we worry about flooding. how about that? >> let's get it started before we worry about cutting off -- putting in three gallons and hoping the prius thing works. >> so you want to raise rates with a 9% unemployment rate? >> no. >> it sounds like you're being sarcastic. >> i'm dovish right now. >> we're talking about consumers. gasoline is approaching $3 a gallon. and that could start to choke off the consumer again. and if we turn around and start raising energy costs, that was one of the things that impacted with the whole credit crisis back two years ago. >> what were fed funds? when the prime was 27.5, what were fed funds? is this the time to get tight with your money? >> if you wanted a 30-year mortgage, it was going to cost you. >> we'll turn the spigots off halfway when fed funds get back to 10. >> i love it when you talk about the old days. >> i walked uphill both ways. yeah, i did. i did. >> michelle, thank you. have a great weekend, guys. >> coming up, we will span the globe for other stories lighting up the world markets. among them, one minister says he has the solution for fighting financial crisis. first, though, as we head to break, let's take a look at consumers welcome back, everybody. let's get to the overseas markets right now. in london, we have anna edwards standing by with the layest of what's been happening out of europe. anna, take it away. >> thanks very much, becky. we've seen slightly positive moves. we have financial services stocks and industrial stocks moving higher. the only negative sector we have here is health care. but the gains are not excessive. we're watching with interest the comments that bob diamond made earlier on about m&a in the united states. he was saying it was pure speculation to -- referring to these reports we've seen over recent days that the company is going to go and buy a retail bank in the u.s. but he did also say they were looking to build on their u.s. platform, so not exactly on that one, i should say. we saw saw a press conference at one of the major airlines at the airport. it looks at this stage as if we're going to see a strike taking place before then. when we return, we'll have more of this morning's top stories, including shocking new details on what may have caused the clams of lehman brothers and who could be to blame. plus, the ceo of final brands will be on set. 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. hi, ellen! hi, ellen! hi, ellen! hi, ellen! we're going on a field trip to china! wow. [ chuckles ] when i was a kid, we -- we would just go to the -- the farm. [ cow moos ] [ laughter ] no, seriously, where are you guys going? ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! [ female announcer ] the new classroom. see it. live it. share it. on the human network. cisco. good morning, good morning. welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and carl quintanilla. today's dominating theme is the consumer. honestly, that's wa we were just talking about. two key economic reports for february at 8:30. then the latest read on consumer sentiment at 9:55. then many chain stores sales reported stronger than expected results. polled economists expect today's government retail sales headline number to decline by 0.2%. meantime, sentiment is seen rising slightly from the previous month. we'll have special coverage on cnbc, the american consumer. ready to spend? a quicker rebound than first expected or too early to celebrate. this is not a theme, i guess. >> it is a theme. it is a theme that we'll be talking about all day today. collective brand, which owns payless shoe stores and also stride rite is revamping its nchgsz. ho is the consumer feeling these days? >> it's bifurcated, as we can see. we've got high-end brands, premium brands, and then we have our mainstream brands like payless. i would say the premium consumer is clearly back. so that upper one-third of consumers, their portfolios are recovered. they're not as worried about jobs right now. and so they're back out shopping and when they are in the stores, they're buying. >> how recent of a trend is this? >> really, just starting at christmas. what you go down to the bottom third, though, we have one-third of people employed in this country. a lot of people don't have money in the bank. it's really tough. we have 30,000 people of our country and the vast majority of them work in shows. the turnover rate is hashg. that will be high retail. they're worried about jobs, the turnover. >> what kind of numbers are we talking? >> they're down 30% to 40%. we would like though think that we're a better company, but it has to do with the economy. so that consumer is shopping at the moment. they are not in. when they get out, unlike one year ago when they get in the store, they are converting. so conversion rates are up. but they are not in the store on a dramatic basis. so i think it's a tale of two cities right now in terms of two clear consumers. >> you mentioned that you were at the bank of america conference this week where they are looking at the consumer, too. what was the mood there? >> it was -- you know, people were reborn. you know, if you would have met some of the portfolio managers a year ago, i thought they were coming in with hangman's nooses for themselves and others. and the general confidence from retailers is upbeat. we are seeing better conversion rates and in some sectors, more traffic. but you can find places like sociology california where the his panic womans to 20%. down there, we are three points behind on comps than we were in the rest of the country. so unemployment plays a role. and until we get jobs going in this country, you're not going to see a total rebound from my perspective. you'll find sectorial things. but you're not going to get a rebound. >> do you get the sense that we are going to turn the corner and see more comps or do you think it's a mainstream? >> we've all learned to plate a little bit on best. but when you get up to the higher levels, recruitment, the phones are hinging pen. so people are being recreated. >> well, a lot of companies are trying to do what you have which lead to high preferivety. >> absolutely. and ideal tz other things that are happening, you don't drive it. we're close to some people in the moving goods industry is that people are starting to creep their inventories up slightly. and so, you know, because we are getting a little more demand, and so that is kind of, you know, bringing back some of the transportation sector and things like that, you know, as well. >> matt, thank you very much for coming in today. it's been great talking to you. >> great. good chatting with you, too. >> if you have any comments or questions about anything you see here on squawk, e-mail us. we read them, answer some. quick break now, news making always and inside of bit. including there's a new way to soft your candy problem. >> no. and we asked for a strict. we'll show you what we got eventually this morning. welcome back. equity futures are hire this morning as we finally await some data after a pretty light week. we got jobless claims yesterday. retail sales and sentiment out later this morning as the s&p is up 9 out of 10. and the russell has broken out almost 9% this year. the international energy agency revising oil demand higher. the key catalyst, fuel consumption in asia rising more than expected. and there's therein yarrow international dropping its bid for terra. cf industry's offer was, in fact, superior. >> yara/terra. it's a u.s. company now. we're keeping it in the family. >> yep. >> let's get a check on the nud news outside the world of business this morning. alex witt is here with a roundup of the headlines. good morning to you, alex. >> good morning, becky, carl, the whole gang there. senate majority leader harry reid's wife and daughter were injured in a car accident yesterday. reid's wife suffered a broken back and a broken neck, with as well. their daughter was treated for injuries and released. that truckdriver has been charged with reckless driving. a deal has been reached in the case of the 9/11 workers exposed to harmful dust at the world trade center site after the september 11th terrorist attacks in new york city. about 10,000 responders could receive over $657 million if a judge and the workers themselves approve this deal. and here is what those guys were talking about. it's a way to satisfy that chocolate or caffeine crazy. lewhif. it let's you inhale the chocolate. you will think you had the chocolate without taking in the calories. maybe that works with chocolate. i need my coffee in the morning almost intravenously. >> that may be helpful, though. i assume it's calorie free. >> yeah. it may help with the chocolate thing, but i don't think the caffeine. >> do you need another habit? boy, i really need one of those. yeah, let's go with the -- plus, it looks like one of those little things that you pack with -- you get arrested -- oh, actually, you don't get arrested any more. >> let's like a breath spray. there you go. okay. bye. when we come back this morning, we'll go to chairs. we have some headlines grabbing our attention. it's a conversation fit for a friday. the american american consumer, why shoppers are coming back sooner than some had expected. "squawk box" will be right back. first i find the flight i want. then a great hotel my kids will love. yeah. but wait... here's the really cool part. when i book them at the same time... voila! i can save up to 450 bucks. and we all know that can come in pretty handy. book flight and hotel, and save more. where you book matters, expedia. ♪ dot com >> hiding him in your freezer just like we did with the rca deal. >> wloob i know how much don meant to you. if you need to pass some eye water, i'll go out and get you some tissues. >> no i'm not crying in front of jack welsh. these people are from philadelphia. >> let it go, john! oats over. >> oh, man, that's close to home, though. for those of you that missed it, that's what philadelphia is. but that's amazing to get jack welsh on and to do it on nbc was funny. >> he tweeted about it yesterday, saying he's going to have a party as 30 rock is going to air and hoped he wouldn't have to hide in a room somewhere. >> i liked the slap. and there's no better side man that go than alec baldwin, right? >> yep. >> and jack, i think he's going to be guest hosting here again in a couple of weeks. he has been recuperating and we're excited. i was a little bit miffed when they said he was red for prime time. he's been prime time. >> morning time. >> our prime time. >> and we look forward to having him on. i can't wait. all this health care stuff has been going on when he hasn't been here to talk about it. >> he is fired up and has a lot to talk about. >> i'll bet he's fired up and has a lot to talk about. carl, i want to prepare you for a second. >> should i be scared? >> no, no, but before you immediately dismiss all of this as "wall street journal" op-ed pages, it's from the washington post. it's from two of your polars, patrick cadell and john lashell. >> becky doesn't get it? where is her pollster? >> i get to be in the middle. >> both of them, democratic pollsters, in the washington post. >> yes. >> after massachusetts, remember, i had those discussions with harwood where he looked me straight in the eye and say, no, no, nothing has changed. and i said even evan bahy said, if you can't hear this, if you can't sense what's happening, you're sick. look at what these democratic pollsters say, that if democrats ignore health care polls, midterms will be costly. it starts out with there's a book by barbara tuckman, if we can bring it up and look at it, why do holders of high office so often act contrary against their own self-interests? her assessment of self-assessment acting while not allowing one to be defrequented by the facts the can bes gripping the president and the democratic party. this is part i like here. blind persistence in the face of reality threatens to turn this march of folly into a rout in november. there was a brief moment when the president and democrats seemed to realize the reality of the situation. yet like some seductive siren of greek mythology, it's arisen again. the part at the end, for democrats to begin turning around their political pofortun there has to be a trank acknowledgment the health care initiative is a failure. >> i don't know why you're not celebrating. if this is correct and the democratic pollsters are putting it out, it means the democrats will lose in 2010 and 2012. >> no, to, i believe if a two-party system. i would hate to see the party -- the democrat -- i would hate to see the republicans versus the tea party in the next election. >> what if the republicans took back majority as a result? >> who knows whether that's going to happen or not. but i think it's an interesting -- it's interesting to put it in these terms from cadell appearing in "the washington post." >> i think the point they're missing is that -- and the president has said this already -- democrats don't believe they're doing this to win the midterms in eight months. this is to help premiums come down a decade from now, which nobody is thinking about. and to put this, to frame this in short-term political reality, misses the point -- >> so this is really a strong cost containment bill that you're -- >> i'm just saying, to tie this to -- >> so you know it's going to cost what they say in a decade? it's going to bring down costs? >> do you believe big steps need to be taken to bring down premiums in a time period we have no conception -- >> for 17% of the economy do you what these guys say. you can do this if a bipartisan way that the country will accept. and -- >> that part may make sense. >> why go -- >> to say it's going -- >> why go against -- i mean, did you read -- >> obama's not up for re-election in november. >> the demint comment are ringing in his ears about a waterloo. if you defeat him on this, he'll be broken. he can't be defeated. that's why axelrod prevailed instead of rahm emanuel. >> something needs to be done. something needs to be done on health care. i think something needs to be done on cost. i don't think this legislation does that. >> right. >> but i think what gets lost in this is this idea of -- they paint this that you do this or you do nothing. that's not the reality here. i think what needs to happen is you feed to get people together to ak gree and come up with something that works better -- >> and neither side is willing to break with leadership. >> you paint it as the party of no or the party that will push this through no matter what and jam it down your throat. >> a reasonable person would listen to you saying that. that's where the desperation of having to do this, because they've come so far already, that's what's causing the ramming it through mentality. they're looking at going around parliamentary rules. something was ruled against what -- >> you can't address one side or the other. you need to address cost --. >> speaking of health care in "the onion" they came up -- it's a satirical newspaper and website, it has alternative health care bills percolating on the bill. one is the hoyer/larson bill. all 45 million uninsured americans would be guaranteed medical care all of it provided by dr. tom janicak of houston, texas. the griffith/cantor bills. low income families would be allowed to huddle outside. hutchinson/snowe bill, children would be sured on the cuteness bill. murray/mendez bill, doctors would not be allowed to give birth as a viable alternative -- >> i think that's in this bill. >> that just shows you the level to which it sunk. we're talking about these things and laughing about it. but it's serious stuff. >> it is. again, something needs to happen. we do need to address the costs because it's killing small business, killing large businesses to the point where they will not provide the type of coverage we've seen in the past. you won't be talking about the same social promise where your employer pays for your health care down the road. you need to look at these cost overruns. there are a lot of good ideas, a lot of good plans. unfortunately, i don't think this legislation takes on a enough of the cost -- >> i know you would like to do it in a bipartisan way. you would like to take the best ideas from both party. >> that would be good. >> something this big, that's why it's so hard in a democracy to railroad, to push this through -- >> it's supposed to be like that. we don't want it -- >> it is supposed to be like that but one thing you could get through is -- >> could we? i'm not seeing any moderate republicans breaking with the leadership. >> not on this bill. you know there are five or six things in terms of preexisting condition, insurance exchange -- >> is there large enough consensus between moderate republicans and moderate democrats who would come together on something in the middle? that's the question. has congress changed -- >> is there -- >> i don't know. unless republicans said, you know what, we agree, covering the uninsured is part of lowering costs. nobody is willing to say that. nobody's willing to expand on that. >> that wouldn't be something we'd do. >> exactly. >> immediately to cover an additional 30 or 45 million people. >> that is the problem. i mean, people consider health insurance a public good. public, not private. that's where the -- you always say it comes down to the ideology in the end. >> right. but you don't want -- something that's already going to make -- potentially make us insolvent with these intilgtmentes down the road, you don't want to just, you know, double down on something that's already not going to work without addressing costs first, do you? >> it's been a really series "chairs" segment. >> it has. coming up, more of this morning's top stories. plus, why one of the world's biggest hotel chains says right now is the time to expand in europe. is marriott's business strategy a call on the american surm? we have a top company executive telling us right after this. and then in a new york minute we will take a bite out of the big apple real estate with our guest host bill rudin. >> it's lefrak, isn't it? the return of the american consumer. surprising signs that people are spending again. but is it too much too soon? we're on retail detail with marriott international. a dove ready to land at the fed. the president expected to pick janet yellen as the next chair of the fed. what she brings to the table and how her quiet wisdom could steer the fed out of crosshairs. risky business, global debt and geopolitical concerns. where the biggest risks lie and what you can do to shield your portfolio as the second hour of "squawk box" begins right now. ♪ good morning, good morning and welcome to "squawk box" here on cnbc. i'm joe kernen along with becky quick and carl quintanilla. we're in the final turn of the week. we're rounding third eventually. it's 7:00. we have two hours. tgif. take a look -- you know, i don't like fridays that much. >> it's too close to monday. >> too close to monday. >> did you like the chariots of fire music with the slo mo. >> yes, you're trying to get out of the gates, you think it's a false start, then you're late because you didn't go right away. take a look at the rundown. the new american consumer. we speak to the president and coo of marriott. also a walmart board member. that's in 15 minutes. we'll have the guest host bill rudin will be here. i he'll be joined by a man who made more than $200 billion in real estate deals. i mean, i guess the deals totaled more than $200 billion because if he made more than $200 billion he would be richer than -- >> carlos slim. >> right. later, iraq, israel, and more, we'll go global and talk risks with the president of the urasia group. >> ian bremer. >> we know him well. we don't know if the other -- what's the little girl's name that's going to be on? >> hirmine is here. >> first a look at the top headlines. >> take a look at futures this morning. >> cute. >> no, he probably is, actually. futures looking pretty good after the s&p just barely by a nose at its highest levels since '08. retail sales later on this morning. president obama expected to tap janet yellen as vice chairman of the fed, replacing donald kohn. the opening of the fed has stirred debate. steve liesman will have more in a bit. steep discounts boosting sales at toyota. edmunds.com say sales surged 50% in the eight days of par. retail market share jumped 18%. they launched a series of discounts after that slew of recall problems. and two key economic numbers today. we mentioned retail sales at 8:30 a.m. eastern time. we'll get the latest read on consumer sentiment at 9:55. why don't they make it 10:00? many chain stores reported stronger than expected sales for february but polled economists still think today's retail number could decline 0.2%. meantime, sentiment seen rising slightly from the prior month and yesterday along with jobless claims yesterday, the two big dedata point of the week. marriott international is making a big bet on europe. so, does this mean even a hometown team is losing faith in the american consumer or do they see growth around the globe? joining us right now is arne sorenson, president and coo of marriott international. he's also a board member of walmart. and, mr. sorenson, thank you for joining us this morning. >> good morning. >> this bet you're making on europe is a huge bet. the idea of doubling your properties over the next five years. people have been concerned about europe and what's happening with greece, but what do you see here that maybe others are missing? >> well, europe is is still the biggest lodging market in the world. people from all over the world love to do business in europe in also love to visit europe for great destinations. we celebrated our 35th anniversary of our first international hotel, which was in amsterdam. we have about 40,000 rooms in europe today. we're seeking to double that by 2015. really, just -- it's really just about increasing our share in that great market. >> what about the state of the consumer, both in europe and in the united states? how have travelers been both on the business side and on the consumer side? >> well, it sure felt good early this week. we saw that our same store revenues were up for the first time in a year. and that's -- you know, to be fair, that's based on a really tough comparison to a year ago. obviously, a year ago the markets were at a low and business travelers were stuck in their offices, worried about their jobs, worried about their balance sheets. and those business travelers are back on the road. it doesn't mean from now on it's always going to be up, but it's at least turning a corner and a sign of -- signs of life, i suppose. >> that's good news because some people thought this time around would be different. we'd be facing a new normal and once companies pulled back on that kind of spending, it wouldn't return, at least not any time soon. how strong is that growth and what do you expect to see over the next six months or so? >> again, compared to the way people were traveling last year, the volume is up significantly. so, we're talking about two or three or four full points of increase in the volume. pricing is still weak. as a consequence, we struggle a little bit to drive rate and mixed rate. we're starting to see that folks are climbing out of their holes and getting back to work. it's primarily about business activity, not about the retail customer or the consumer traveler. but the business traveler is getting back to work and saying, we have to see our accounts, we have to hold our meetings. and we're obviously happy to welcome them back to our hotels. >> what does that mean when you say you're focusing on the mixed rate? >> it's all about the percentages of segments that fill our hotels. so, in a weaker time we might offer specials to the american automobile association members. and provide other ways of driving business through value. in stronger times we're trying to move back to that corporate traveler, who tends to be a little higher rate payer, even if they're paying less than last year, they're probably paying more than the aaa consumer is. >> what kind of occupancy rates are you seeing in your chains in the united states? >> well, we're now heading into a good busy business travel season so we're probably in the high 60s or low 70s in most markets. that's not a full-year average but it is a good travel time of year. >> you know, you also mentioned this is mostly the business traveler who's out. you're still seeing hesitancy when it comes to the american consumer? >> we're seeing the consumer perform about the way he or she performed last year. >> which was pretty lousy. >> cautious but still interested in value where it's available. and if the value is there, they tend to jump at those experiences. so, the retail consumer actually for us was stronger last year in volume terms, but they were stronger because the values were so compelling for them. >> arne, i want to ask you about an interview that fred smith at fedex gave to the ft. he said that business investment is not where you would expect it or hope it to be at this point in the cyclical recovery. because of, that that's why we're not seeing the jobs. companies are first hesitant to spend money on new hires or even equipment. do you see that happening where you are? if so, what can clear up the certainty for companies to open their pocketbooks? >> it's a little chicken and egg phenomenon. i think all of us are optimistic about the way the recovery may go. obviously, we're pleased to finally see a positive week, but we need more than just one week before we have any confidence about the way this goes. and so some of the biggest decisions, i think, we'll continue to wait until we see a little more of that confidence build. we're reminding our folks, it's obviously been a tough year, there have been tremendous pressures on costs. let's not lose our discipline. let's make sure we stay focused so that we can grow smartly when this happens. having said all that, i think increasingly folks are doing the things that they canceled a year or two ago. you know, some big professional firms, for example, are holding their global partners meetings and doing other things even though those were canceled in 2009 and maybe 2008 as well. >> but we do need to get to some tipping point where your order books don't necessarily need to be full but you need to see some signs that you hope they are going to be full at some point. >> well, i think that's right. the greater the confidence, the more we're prepared to take the rick. that's human nature. >> arne, earlier this morning we spoke with matt ruble of collective brands who operates payless shoe stores. he says one of the thing they've been doing is not seeing a turnover in the numbers of their employees because people are much happier to hold onto these jobs right now. talked about how that is still indicative of real problems with the job picture. we've had a lot of economists who say you're not going to see a real turn until companies hire again. would you agree with that? >> well, i think we're starting to see signs of life without massive hiring. some is with underemployment. one of the things we wrestle with is how much do we make sure we get enough hours to our associates across the globe. in 2009 when volume was down so significantly, yes, we had associates who lost their jobs. that's disappointing. but we had thousands of employees working less than a 40-hour week. one thing we did for them last year is we essentially waived the minimum hours for those that qualified for health insurance saying, we recognize you're not getting the hours you need from hotels, we'll continue health care coverage. i think the early stage of the rove we'll see those thousands of associates step up their hours worked per week. that's good news for them. that's not irrelevant to the way the economy should work either. the next phase is about hiring some other associates back or new associates into the business. of course, we'll do that. we do that as we open new hotels, for example, which is happening even now. there are jobs being created. but in terms of rehiring in hotels, which were hard hit last year, that's something that will take over the course of this year probably to build. >> arne, for those not paying attention, i want to say congratulations for offering the employees health care benefits. that's a huge step, a bold step. >> thank you. >> it's important to see companies like that doing these things. quickly, as a walmart board member, what can you tell us about the state of consumer as you see it from your perch on the walmart board? >> you'll have to take to the walmart folks directly to make sure you get the data and news from them. it's a real treat for me to be on their board. they've obviously got a growing global platform that is focused on delivering the thing that people need for less so that they can live better lives. it's great to be part of that institution. >> arne, we want to thank you for your time. we hope to see you again and let us know if this continuing -- if it's continuing to see this improvement like you've just talked about over the last week. >> thanks very much. nice to see you. >> nice to see you, too. any comments or questions, we would love to hear from you. our address is queebs. squawk@cnbc.com. the president expected pick janet yellen as vice chairman of the fed. up next s real estate on firm footing? bill rudeen and a man who's made more than $200 billion in real estate deals, matthew lustic joins us with building the american dream and whether or not it's still possible. actor johnny depp lived with what author while researching his role in "fear and loathing in las vegas"? the answer when cnbc "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 now the answer to today's aflac trivia question. actor johnny depp lived with what author researching his role in "fear and loathing in las vegas"? the answer, hunter s. thompson. welcome back, everybody, on this friday morning. take a look at the future. care indicated higher, which is important news for anybody who's bullish out there. right now you're talking about those s&p futures up by just over three point. remember yesterday the s&p closed at its highest level in 16 months. you're talking right at 1150. technicians tell us that's a key important point. if we close above 1150 today next week you could be setting up for big gains. oil is back above $82 a barrel after the international energy agency predicted a surge in asian economies. they see it as 80 billion barrels a day for the rest of the year, nearly a 2 #% increase over 2009. we'll get to our guest host. didn't we say we were going to have sorkin on at some point, andrew ross sorkin? >> i think he's still sleeping. >> nobody knows more about lehman and dick fold and everything else. sorkin, apparently he's -- you know, he's been on "morning joe" a few times. whether he comes on or takes us seriously at this point after his, you know, big best selling -- what's the name of his book? >> "too big to fail". >> sellout? no, so a big new york times, not only a journalist but a best selling -- >> and the movie will be made by -- >> we don't even know where he is. he was scheduled -- i know he was on wake up chuck -- what is it? >> "morning joe". >> maybe he's in hollywood. >> yes, maybe he's in the green room at msnbc right now. we're not sure. >> not that you're bitter. >> bitter table for one, right? that's what you always say. our guest host holds one of new york real estate dynasty, bill rudin of rudin management, the ceo and vice chairman. also joining us is matt lustig, head of real estate, been an adviser on more than $200 billion in real estate transactions. for a while we were saying you made more than $200 billion in real estate, which is -- i think there's a guy on -- that we have on saturday on cnbc that's made $200 billion in real estate. you just have to buy his tapes or something. i want to talk about general growth right out of the box because we've had them on, right? we've had -- and we don't know what's going to happen. you're advising simon on this. >> we're advising simon. >> can you talk about it? >> no. we can speak generally about it, certainly, but -- >> we'll haved toman on. general growth, it looked like possibly the common stock was worthless and now up at -- there's bids at $15 a share for it. how does that work? it was insolvent -- it was illiquid, not insolvent, is that it? >> values have come back dramatically in the public markets over a year ago. last year it wasn't solvent. it was the story of what happens when the capital markets unfreeze and liquidity comes bab. as values came back. worked through the capital. much of the debt was traded. >> trading above par? >> trading above par? >> that's amazing. simon could have bought then, right? >> anyone could have bought. >> but akman did. >> and he's done extraordinarily well with it. >> that's an understatement. with all this great stuff you're telling me, you don't think commercial real estate, if people who believe that is recovering, you think we have to wait a while? >> there's a big difference what's happening in the must be market -- the public markets, the most visible part of the real estate industry and higher quality end have come back more than double in the last year. they've deleveraged and equitized but the vast majority is held private. that piece of the market is highly dysfunctional. credit markets have not come back. major swaths of credit supply are clogged up, including the cmbs market. and the banks are reasonably full with the results of the overlevered binge in the earlier part of the decade. banks aren't able to lend money the way they have in the past. >> do you echo these things? >> we were at a conference in new york city hosted by the real estate roundtable, all the major financiers, goldman, prudential, you name it, owners, institutions. and the general sentiment is that there is -- the public markets are functioning but there is no debt market, or very little debt market. for high quality product you can get some financing. but if you are -- and we're starting to see now in terms of the unfreezing loans going into default, going to special service, they can go in two ways. they can go in a way where the banks work with existing owner. the owner may bring in fresh capital. they restructure the debt. you know, extend the loan. lower the interest rates. or they go into foreclosure, but there are so many layers of debt with mezzanine financing, it's hard to get control of the assets. it's going to take a little while. we have a huge problem over the next several years of loans coming due and we need to r re-equityize. there is capital but for the wrong product. >> there's capital back in the industry but the big issue is the system's clogged with asset values having dropped 30% to 40% in the u.s. a lot of situations where the debt is overleveraged. you have a total debt market of -- call it $3.5 trillion or so and a substantial portion of the debt outstanding is under water. through our writedowns or market reductions and value of the debt and fresh equity coming in, there's a major recapitalization that has to take place. that will take several years. it will work through the banks, through the cmbs markets and we need fresh equity -- >> the same thing happening to american consumers. they' they're paring down debt mostly through default. >> there's a substantial piece of the commercial debt markets that are affected by that as well. >> how much of the government policy actually accelerates that process from a homeowner? i know fannie mae is buying a lot of delinquent mortgages. they're not going to kick me out of my home, i know that, right? >> right. the commercial markets can kick you out of your home. it takes a very long time to do so. the difference between this time around and the last time we had a big problem in the commercial real estate market are that much of the debt today is either securitized or held by multiple lenders. today lenders have an issue with the work out property and they sell the loans. the ability to work it out, you're not sitting across from a portfolio lender where your mutual goal is to maximize the value of the underlying debt. today you have hedge funds, equity funds, distressed buyers to whom that debt is turned over -- >> someone has to eat if? >> who are the dead banks walking? there's a lot of them. >> mostly smaller banks. you have over a trillion dollars of debt in small banks, most against land, development, the hardest hit in the market. >> is that the fdic's problems, they have to come in and shut down more and mour banks? >> it's all of our problems. fdic, some will be allowed to fail and taken over. to the extent the banks have problem assets, they're not lynning, providing fresh credit. it's an issue for the american economy as well if the banks can't provide krilt. >> we're workikin deals. i called up a bank to talk about a loan. they said, we're out of the market for this year because we've got still some bad assets we're trying to work through. other banks will be lending. so, you know, it's -- >> they're loaning to lefrak. i know that. when he says -- >> he's the man. >> apparently he can call and they say, how much do you need? but you're having trouble with -- >> there are some who won't lend but other -- >> the high quality. so that's lefrak. >> is the problem that you're talking about these losses in value of 30% to 40% and you either have to deal with them, a very harsh reality quickly and a lot of pain and banks that go out or you have to find a way to prop up prices like they've done with home prices and spread it out? weight the answer? do we spread out the pain and try to prop up some prices or take our luchs now? >> hard to prop prices. i think the values are fallen. ultimately, the economy, jobs, what's happening at fundamentals in terms of the tenants -- >> bill, you've been seeking help from the government on some of these levels, right? >> the government can help. the talf, which ends this month, but on new issues, still goes through the middle of the year. but just like foreign investment, that's with -- there's a lot of equity around the world, a lot of people want to invest in the united states. we have to make it, i think, a little easier for them to have -- bring that capital here because it's all about capital and recapitalization. and that's -- you know, that's a key to getting us out of these problems. >> so it's not just that, you know, we saw how much lending has fallen off the total amounts and we say, wow, those banks are -- they're tight. they're not giving any. the other side says, no, just no demand for loans. it's a combination of all these things. >> you know, clean unincouple bered assets, the banks can lend money all day long. that's a tiny fraction of the market. the debt that is available addresses a very narrow low-risk piece of the market. the vast majority of the market isn't being addressed. part you can't blame the banks. they're stuck with the residual of years past. until they can move that off their balance sheets they can't -- >> would you argue at least we're not falling further into the hole? >> i think that's right. >> if we're sliding down a cliff, at least weave we've managed to grab onto a rock somewhere? >> we've cleared grabbed onto a rock. the question is how do we fix the provisional capital part of the market to smooth this out? >> doesn't that create growth opportunities. >> absolutely. >> it does? >> i think investing today, the most active part of the market is buying debt in order to convert it to equity as part of the deleveraging and changeover process. >> you're also starting to see assets come to market in new york at least, quality assets that are selling that have no distress. carlton house just sold on madison and 61st street to be converted to a -- it's a hotel/apartment building, converted to condos. they paid $170 billion. more than they initially thought. over 50 or 75 bidders were interested. that was a relatively clean deal. and it was a great location. some other office buildings are coming to market now that have reasonably good cash flow. you'll see cap rates tighten on those assets. but on distressed assets, it's a much different scenario. >> thank you, matt. bill's going to stay with us. i will -- forbes was in yesterday. i'll talk to him about you being left off of that list if you made $200 billion. >> right. >> congratulations. >> all right. it's the deals, not the banker. >> oh, all right. >> thanks for coming in. still to come this morning, the president's pick for vice chair of the fed, janet yellen, we'll talk about that. consumers holding off buying the new car or luxury item, may be willing to open their wallets once again. and then from iran to israel to debt issues in greece, we'll talk about what political ricks around the world could impact the markets. as we head to the break, here's a look at the widely held stocks. "squawk box" on cnbc. with an a+ credit rating in good times and bad, sun life financial should be famous. we're working on it. so you're seriously proposing we change our name to sun life valley? do we still get to go skiing? (announcer) sooner or later, you'll know our name. sun life financial. if if isn't broke, don't fix it. that's been the motto in many households around the country for the last year. holding onto cash and holding off on big purchases until it is absolutely necessary. that state of mind may be changing. hampton pearson joins us with more on that. >> reporter: hi, becky. we know in recent years consumers have been saving money and paying down debt. now across the economy, there are signs of pentd-up demand, large and small items that absolutely have to be replaced. we're hearing from retailers there are signs that consumers are cautiously returning to the marketplace and spending money. >> right now there is pent-up demand for everything across the board. whether it's apparel, electronics, even autos, consumers have not been buying. they've been only focusing on necessity purchases. so if you're a retailer, selling discretionary merchandise, now is a prime opportunity in order to tap into that pent-up demand. >> reporter: among the surprises, u.s. auto sales jumped 13% last month and the edmunds.com shopping website says early march car sales are stronger than they've been in a year. climbing to 12.5 million units on a seasonally adjusted basis. consumer electronics appears to be another winner. flat screen tv prices have plummeted, a revolution in smartphone technology and laptops makes anything more than three years, well, let's face it, almost obsolete. then there's retail where pent-up demand is meeting the right promotions and the right price. no tidal wave of shoppers yet, but they are returning to the stores. >> i think a lot of people have held off on purchases for a long time now. and essentially they're replenishing their closet. they're buying thing again in terms of -- even so far the basics, whether it's, you know, t-shirts, button-downs, those type of things. we're seeing much more encouraged by the fact that people are going out and buying. >> reporter: and two other possible surprises out there, a rebound in i.t. spending and even pockets of the home improvement business are showing signs of life. joe? >> all right, hampton. appreciate that. we have steve liesman here. president obama plans to nominate janet yellen to be the central bank's vice chairman, a well-known policy dove and would replace retiring veteran don kohn. here is steve liesman. is she married to a noble laweb laureate who shared -- >> with schmitz. >> there are so. at this point, right -- >> with high regard. here's a fun fed fact for you. >> a fun fed fact. no one can bring those to us better than you. give it to us. let us be the judge. >> there is no one else. >> let us be -- >> are you worried about janet yellen becoming chairman if she's not vice chairman? >> no, i'm gellen with yellen. >> there are been 18 vice chairman, not one has become chairman. >> always a brides maid -- >> i just went over the whole thing. >> vice president? >> we've had a couple of those. a source confirming to cnbc and other media out youth lets that janet yellen has been tapped by the president to replace don kohn when he retires in june. the san francisco fed president is expected to accept the job. she hasn't accepted it yet. we haven't confirmed cease accepted it yet. she took office in june 14 #, 2004 at the head of the san francisco bank. she was the chairwoman of the council of economic adviser under president clinton, a fed governor from '94 to '97 and a berkeley faculty member since 1980. yellen is known as a policy dove and been a strong supporter of interest rates, including the extraordinary measures taken by the fed during the financial crisis. fundamentally her views are not that much different from don kohn, up with of the arc techs of the fed's current policy. the fear among some hawks is that president obama will appoint three doves to those three vacant spot. yell sn a highly regarded economists but married to george, who shared the noble prize for his work on wages, among other things. >> she doesn't vote right now, right? >> no. >> but of the fed president she's the biggest dove, would you agree, farthest along on the dove scale? >> i think so. but she's also one of the best economists there. >> the only other economist on the fed is bernanke, right? >> i'm trying to think. i think hoenig has a ph.d. in economics. i have to check that. >> she said if rates were brought below zero -- >> she would do that. that's the idea when you reach zero and the economy is worse than needed for a zero interest rate, if you could go negative, you would. >> some people are saying one reason the dollar's down and commodities are higher is because of this leak. >> yeah, i mean, i guess so. the question is, the other two -- i did see ben friedman from harvard speak at the fabe conference and he's also out as a potential nominee for the board. i'm not sure that the governors have so much power as opposed to, say, the presidents if they choose to vote. i guess the hawks are in the district banks, more or less, and not on the board. there's still kevin warsh there. fundamentally you believe bernanke does the right thing at the right time, they've certainly made a lot of noise about xrit strategy, right? >> and hopefully they follow the chairman's lead on these situations? >> bernanke has taken a different path. greenspan talks at the beginning, bernanke talks afterwards. you look at the thing they've done in getting ready for the reversed repos, raising the discount rate, all that add up to when they're ready, they will have the tools to do it. >> and some of her speeches show that she is comfortable with draining liquidity at some point? she hasn't been -- >> she said that. it's hard to know because so much of the time that we've been covering the fed -- that i've been covering the fed here from '01 to 2010 has been a period of time when they've been cutting rates. she was on board when they raised rates. she was on board with greenspan. it was unclear she was any more or less dovish than the rest of the board at that time. >> dp she accepts the nomination, the process goes to senate and they vote on it -- >> president -- president appoints, senate confirms. >> how long of a process do we think it is? >> yeah, you know, becky, right? you've seen what happens. i guess it can be done in a day, right, or two days? there's some procedural stuff but these thins have taken months. a lot of president obama's nominees have been caught up in the senate for a variety of reason. sometime it has nothing to do with the nominee themselves and sometimes they do. i think it will be interesting when yellen comes to the floor of the senate for her hearing, there will be a debate about fed policy and we'll have the discussion about doves versus hawks that we're having right here. >> it is kind of interesting that you can't -- you know, the fed is loathed to be manipulated in a political way. we talk about it with the ron paul stuff. they never answer you sufficiently about how transparency means they can't be -- you know, they can't be manipulated by the people in office, but you look at wapd to president bush, the first one, '41, he blames greenspan. it would be nice to stack the deck. they can kind of stack the deck if they want to. >> do you really want to stack the deck? >> they can do it with the supreme court, too. you can nominate -- >> maybe not with evil intent. >> here's what i understand. geithner's in charge of the process, okay? who is -- worked on the fed. and working for him in that is our friend krueger, alan krueger, who we talked about last friday, who i thought was a potential nominee, and still might be. >> that was your vote -- >> what was that? >> that was your -- >> that was my guess. i guess he ended up in the papers after that or before. he was working on the process for geithner. then he got summers working. summers is a pretty well -- i don't think he's a dove, a well-known policy guy who thinks about the fed in a conventional way. >> is he an economist? >> yes. one of the -- >> a ph.d.? >> one of the most highly regarded in america. it's hard to think of summers and geithner picking people who are unqualified or outside the main stream. >> that's a fair one. >> if you had three appointments, picked all doves, you could stack the deck a bit. listen to my music. we're going to break. >> it's not liner the attorneys general, that's what the bush administration did, right? >> that's the music. >> that's the music. ♪ >> "let the good times roll". >> let them roll. open the spigots, janet. let them roll. >> there's a better song than -- >> no, this is it. this is the one. >> this is the best -- what song are you talking about? >> i can't think about it when i have another song. jerry garcia -- >> oh, it always has to be -- >> i'm going to see the exhibit. >> when we come back this morning, your tools of the trade. we'll talk about oil, gold, equities, get you ready for the weekend when "squawk" continues in two minutes. welcome back. kkr is beginning the process to list on the nyse. the private equity giant making an initial filing with the s.e.c. today. they first filed for an ipo back in july of '07, and as we know that was the peak of the buyout boom. kkr could not pull off a deal as the markets seized up. the firm has been on -- has been publicly traded on euronext since october. that's one sign we have come full circle. >> this is something that people have been speculating about for some point, but the filing with the s.e.c. was filly today. so this is furring this story we read from back february 24th. >> february 24th they said they were getting close. let's get to our trading block ahead of today's open. with us ben liechtenstein and boris slos burg. i know you're seeing headline news. we have to do this really fast. you saw steve liesman, enough said. ben, we're at 1150. do we go above now? have we gotten through? is that an important number? >> i think it's going to depend on the numbers released today. this is one of the busiest days, retail sales, consumer sentiment coming out, in addition, again, we're trying to scream up into some of the highs we've seen. it's been a subdued trading session, light volume as the rollover takes most of the focus away from the futures right now and kind of just spreads it out a little thin. i don't know of any bears that are willing to get in the way of this right now. we're basically looking at like 10 or 11 up days in a row right now. there's an enormous amount of strength associated with that. >> peter, this is probably con founding you as the oil market continues to move higher and higher. do we ever look at natural gas and say this is something -- one of these are out of kilter? >> i think so. but it's interesting, the funds are buying oil and they are selling natural gas. i don't know who it is precisely, but somebody's got a huge spread on where they're actually long the oil and short the natural gas. they're pushing the natural gas abnormally low and pushing the crude oil artificially high. >> and it also has delinked from the dollar to some extent, at least versus the euro, peter. then we'll get to bother ris to find out why. we no longer say the dollar is weak, oil is up. now it's up on, what, asian economies? >> it's now up on the economy here and in asia or on what equities are doing. occasionally we get some fundamental piece of news. this week the d.o.e. came out with numbers bearish for crude and bullish refined products so people are buying the crack. and with have a strong seasonal. >> crack spread. >> this is a family show. i don't know if that's a spitzer -- >> daddy, what's a crack? >> exactly. i'm not even going to say it. i already said it, spitzer. boris, tell me about the dollar. >> it's euro strength today. basically short covering going on. the main reason is a reporter in austrian newspaper saying that the germans and french are coming up with a 5 # 5 billion euro rescue for greece. as long as there's a european solution to some of these problems, that relieves some pressure. i've been warning our clients for a whole week that the euro is vulnerable to a short covering rally. it could take it maybe to 140 on a short covering bays but overall it's pretty much the same thing as far as fundamentals go at this point. >> next time, i promise, we'll -- we'll have more time. i appreciate you understanding today, ben, peter and boris. say hi to natasha. coming up, the global risks facing the markets. what you should be watching and how it could affect your portfolio right after this. sthu the protests against greek austerity measures bringing that nation to a halt. have you seen the video of the protests in the vice president in the middle east, those peace talks breaking down over new israeli settlements. iraq counting the vote from last week's election. joining us with more on global risk, ian bremer. good to see you back. good morning to you. >> glad to be with you. >> it sounds like as far as greece goes, you think all of these claims that it's going to lead to some breakup of the euro zone are overstated, right? >> oh, to question. you know, eve been hearing, in fact your last guest talking about a euro rally on the base of a brad pan-european solution. there's no question papandreou facing the demonstrations in greece right now need to show that they're actually planning a little hard ball with the europeans. can't just roll over. so they have to come to the united states, maybe go to the imf. the germans, french and others need to go back to the greeks and say, we're not just going to hand you this cash. you have to have austerity measures, have your fiscal house in order. all of this is so much gamesmanship. at the end of the day, there will be a bailout, a loan, not ending their problems by a far stretch but no question the euro zone comes out recognizing inter-dependency, sovereignties are too big to fail. >> that's in their blood. europeans have believed in multi-state slugs. the euro zone as a concept is something they're not going to back away from. >> that's right. you'll see we'll have increasingly disparity fiscal policies as well as debt to gdp ratios within these european states. if you're an investor, multinational and you used to look at i have equal risk trout the euro zone, you feed to divorce f diversify that policy. i think we'll look back in five, ten years' time, the last 12 # months will be more notable for passing the lisbon treaty and having a european more than ministry than the grooeb greece problems. >> have you seen this, guys? a piece on greek pensions where you retire at 50, 580 job categories deemed hazardous enough to retire at 50. one of them, radio and tv presenters. who were thought to be a risk from the bacteria on their microphones. >> you know what -- >> did you see that? >> well, i'm already beyond -- >> i know. you'd be retired right now. >> that sounds like what we talked about with california's pensions yesterday. >> a little bit. >> can i ask a question? ian, it's bill rudin. in items of other countries, you know, portugal, spain, the word is that those are the next countries to have these problems in items of their budgets. >> i think that's right. i mean, you know, what you're talking about with pengs is by no means limited to greece right now. your ability to deal with those subsidies, very, very difficult, massive politicalized issue in all of these places especially when they know a european bailout deal is coming, right? so this is the way you're having to balance these problems. after greece gets bailed out, spain is definitely the next big issue looming. it's a much bigger economy and much bigger problem. the exposures the banks have in europe, the pension plans and the rest is very, very large interconnected. clearly, there's going to be a lot of concern about that. >> in austerity measures if a large part of europe, going back to the way we do things, that's the most ridiculous thing i've heard of, bacteria on a microphone and a full retirement at 50. so when they say austerity, throwing rocks and demonstrating, is did getting back to the way we do business without the social safety net? >> it's not going to change very much. and i think what we -- we also need to recognize these done strags in greece aren't going very far either. it's not like they're meaningful opposition that would make things better. the greek government right now is pro-labor, very close, they're not going to be pushed very hard. the one concern you would have is if the communists and an arcs in greece, very small number, but could see violence there, could shut down the economy for a bit. >> does all this mean that the euro is destined to get stronger, not weaker? >> i think in the near term, yeah. you're going to see a response that's going to come to the deal that's going to -- that's going to be put out. i think everyone's been waiting for it and holding their breath. when they find they get comfortable, you'll have many, many billions coming their way, that will -- that will absolutely help the euro. it's just a question of how much is already priced into the market when the final announcement is actually made. another interesting point is when are the thigh niece going to make a comment about the euro being increasingly attractive as alternative reserve currency to the dollar? especially when they're coming after the american saying, don't pressure us on the yawn right n yuan right now. we've seen some statements several months ago. that's a wild card people should think about. >> we had plans to talk about biden and the slap in the face this week but we never got to that. greece is interesting. ian, thanks for your time. see you. >> thanks. still to come on "squawk box," we'll attacked our theme of the day. the resurgence of the american consumer. there are some signs that spending is back, much earlier than predicted. that's your new takt. you go so long you killed the an ma orchestra? >> oh, really? >> yes. >> might have gone back to your time with leisman. >> okay, look at potash. you wonder why yara is fighting over terra. $1.50 to $130. the prior guidance was $70. now $1.30 to $1.50. large rebound in potash demand. >> five second left to read. new american consumer when we come back. hi, may i help you? yes, we're looking to save on car insurance, even if that means we have to shop all day, right, honey? yep, all day. good thing you're starting here. we compare your progressive direct rate to other top companies', so you can save money! look! we saved a lot! and quick, too. and no more holding her purse! it's a european shoulder bag. it was a gift. mm-hmm. shopping less and saving more. now, that's progressive. call or click today. are american consumers ready to spend? luxury, discount, full retail, bill todd will give us a traffic report. breaking news from the mall. >> there's a sale at penny's. >> the government releases its retail sales number. the number at 8:30 a.m. eastern time. and jack welsh ready for prime time. >> mr. welsh, it's good to see you again. >> please, john, call me jack. >> i actually go by jack as well. >> i don't think so. >> "squawk box" begins right now. >> don wanted these people intact and these people are from philadelphia. >> let it go, john! it's over. ♪ welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernen along with becky quick and carl quintanilla. i know you guys, you like the oscars and alec baldwin is a nice guy and everything, but jack told me he was going to appear on that show. i asked him to talk some sense into -- >> you asked him to slap him? >> i asked him to talk some sense into him politically. i didn't know he was going to slap him, but good for you, jack. our guest host, bill rudin, rudin coo and with us for the next hour. checking out the marks, government's retail sales report will be released at 8 #:30 a.m. eastern time. head of the numbers futures are indicating up about 27 points -- i'm sorry. you've got to take off the two points. about 23. as becky as pointed out, we've been talking about all morning, the s&p called up about three and we're at 1150, which is a key level that technicians have been hoping the market could get through. if you want it to go higher, you hope it gets through 1150. that could portend higher price it's a key level. once a resistance level, once you go through it, then maybe it becomes a support level. funny how that works. >> we'll see if that happens. the president has picked to replace fed vice chairman don kohn when he retires in june, janet yellen is the pick and expected to fill the spot. we've talked about yellen and her dovish ways and whether that means he'll stack the deck n your view, joe, of the fed in the days to come? >> yes, it it has to be nonpolitical, but there are ways. and the supreme court, too. a president -- you don't want anyone to die, but you hope for the opportunity to maybe move one thing towards your ideology. >> and it would be hard for any president to withstand the opportunity to get your views presented. supreme court and fefb aderal reserve to get your arms around. >> we can worry about inflation down the road. let's open the spigots. >> you're not that old. >> let's leave them open for the next 40 years, while i'm still hearty. court-appointed examiner says lehman had been insolvent for weeks before filing for bankruptcy in 2008. the 2200-page report details accounting gimmicks used by the firm. the findings are a collection of a year-long investigation into the collapse. the examiner suggests lehman could have claims against former ceo dick fold and other executives for negligence or breach of fid usualary duty. apple's imepad will be on stories. are you going to get it? >> it look s tempting but i'm still a windows-based person. i don't know if i can make the jump. i like the idea and i want a reader where i can flip through stuff electronically. >> my wife wants to get one. >> really? >> yes. >> just up from the kindle. >> this is the most tempting. >> the preorder deadline, half h an hour away. apple has done a nice job keeping consumers coming back for more. now retailers across the country stepping up to fight for every day. jane wells joins us with more on that sfoo. >> appear willing, almost everything in their store is exclusive to their store. that's a strategy more stores are creating, exclusive deals, cutting deals with designers to only be found in their stores, usually at a better price. target has done this for years. now upscale stores like saks are in the game. they plan to expand the percent of merchandise only found in its stores from -- to 20% down from 10%. it was at 10% moving it up to 20%. to break out of the quote, see of sameness in the mall, jcpenney plans to expand in-store exclusives from sep had. o are. a. and exclusive lines can be more lucrative. margins can be relatively high, even if prices are lower. on the other hand f they don't sell well the retailers are usually on the hook for the loss. they can't split the difference with the brand. even walmart has gotten into the game. >> in about a year ago, maybe a year and a half ago, they brought out a deal with better homes and gardens where they have a home line that is their best merchandise with better homes and gardens label on it. frankly, the stuff is beautiful and not what i would have expected to see in walmart, say, five years ago. >> patty edwards says the new american consumer is still very concerned about price, but being cheap isn't everything. value is more important as is the shopping experience. especially at the high end. now, we talked to shoppers at the glenndale galleria yesterday, a massive mall. it is clear we are a lot more thoughtful about shopping, even about why we go to stores versus online. >> in-store shopping, i like to be able to hold the product and see it, unless i've already held it and seen it, then i can just buy it online if it's cheaper. >> i think i like to see what i'm going to purchase as opposed to online because online you can see it and oftentimes it doesn't look the same nor does it fit. >> stores have inventory right away. and they can discount what's right there. online, it's a little more of a tossup. >> what is with these guys out at the mall and talking about, you know, their strategy in shopping? that's the new american consumer. shoppers are thinking a lot more. retailers know it. by offering these exclusives, it also gives consumers a reason to go to that store. patty edwards says if the only place you can get candies is only available at kohl's. >> have i said that? or are you commenting on something you're looking at. >> it's just my fantasy. >> jane, you look marvelous today. we just mentioned that. no, new makeup, what? seriously. >> it's new makeup, a lot of like, about three cups of coffee and, you know, the day's young. >> usually you're on at 6:00. >> you look great. we were talking about you. >> thank you. >> we were. >> thank you. gosh, guys, now i feel better for getting up at 3:00. >> thank you. we appreciate it. >> we do it every day. >> we'll see you soon. jane wells, would you say been telling us about what's happening in malls. if you want to get a real read on the american consumer, you have to look at the shopping mall. the foot traffic and crowded parking malls may be back but what about stocked shelves and full price buying, is that happening? joining success bill toddman, and bill rudin of rudin management, and mr. toddman, we know you operate 26 different malls around the country. what do you see happening with the american consumer right now? >> well, clearly, traffic is up. but more importantly, spending is up. we have good fashion out there. people are very interested in what's out there. you can see the sort of middle range stores are starting to do better and clearly less inventory. they're not skouning the way they were. and the stores look fresh and people are buying. we're not back to where we were in 2007, but where there's been a substantial recovery since the depths of mid last year. we were down about 10% in sales for the first nine months and then up 3.8% for the fourth quarter. and that trend has continued so far this year. >> continuing or even seeing more improvement? you're still talking up three or four percent? >> we don't give specific numbers month by month, but -- >> almost had you. >> but suffice it to say, we have a good trend continuing. it's one month. we only have january sales. we're just getting february sales as we speak. it seems consistent with january based on my read yesterday. but, of course, you know, it's still early and these months are not the most important months of the year. >> is it consistent around the country, or are there some areas where things are performing a little better? >> i don't know if it's area as much as product type. the more luxury-oriented malls were hurt more and therefore they have shown a stronger recovery, as you would expect. >> that's interesting. y y >> you see this with real luxury as we speak. >> your short hills mall? >> yes. >> carl, as you know, you kid me about short hills. >> it's beautiful. >> it is beautiful. it's a luxury mall. but people come from everywhere to the short hills. they come from brooklyn to the short hills mall. quickly, tried to buy some shoes at in ordnordstrom's, they were number 62, we were on number 78. we waited 20 # minutes and left. could not even get a person -- they had no place to sit. it was a zoo. is that just nordstrom or -- >> short hills is having a very good quarter. wall street, obviously bonuses were paid and it's better. nordstrom usually has excellent is service so it's unusual to be number 72 at nordstrom, in my experience, at least. >> there was a sale that didn't happen that day purely based on -- you know, we finally left. >> i understand. i'm sure, you know -- i would do the same thing. but, of course, neiman's is next door and you could have gone to bloomington's, plenty of places to buy shoes within the mall. >> have you started to see, in terms of new leases, what kind of activity for companies coming if? i think that's an indication of the economy, too. we're not as big as a retail player as you are, and i actually use bill and his brother as retail consultant but we just did a deal with a european company called hello pasta, doing a deal with chop. we're seeing companies come back into the marketplace and start leasing space again. >> well, clearly, you know, retailers are very influenced by current sales. clearly, the fourth quarter was much better. margins were better than sales and that's continued through january and february, be as you see in all the comp statistics that have been published. yet, i think there's still this -- there's a sort of cloud out there, in a way. they haven't quite -- there isn't that sense of full self-confidence. people are looking more -- you saw mickey drexler announced he would double the number of new stores he's opening. generally people are increasing in items of new stores. we still have 10% unemployment, roughly speaking, 17% underemployment. though, of course, remember, everyone forgets for the 150,000 and up household, which is a household more important for us, unemployment's more like 2.5%. you know, as you go down -- as you go down the household income scale, unemployment increases a lot. for the mall, which is more focused on the $75,000 and up household, unemployment is not as high. still, unemployment is there. people are still worried about their 401(k). household net worth is improving. we saw that in today's wall street journal, they talked about that. all those are good factors. and i think they will, over time, as they have better sales month by month, it will dissipate the concern. but i don't want anyone to think that suddenly everyone's bullish and they're running out. i think that they're cautiously optimistic. each month that goes by, they get more optimistic. >> retailers have had good margins because they kept their inventories very lean for the holidays, too. is that still the trend? they're not stocking up as much? >> absolutely. in items of people, costs, inventory, they're keeping a tight lid. they're learning how to operate with less in every way. you know, at times -- and particularly at the high end, they're teaching you they're going to run out of merchandise. don't wait for it to go on sale. buy it now while it's fresh -- >> hire more people to sell the stuff. that's why -- that's a prime example. they're trying to cut -- not have anyone in the store and they're losing sales. why not hire someone? >> i think, obviously, at the margin, which you are starting to see, as you will start to see, increase -- as sales recover they'll hire more people in the store. clearly nordstrom will hear you. >> the employers are very nervous. we've had a string of business leaders who have skom on today from marriott international to collective brands ceo who all say that, you know, they're still hesitant. they're not necessarily get back to the point where they're hiring people. marriott international said they'll give more hours to existing sales force people. yet the complaint from everybody is, is things aren't going to improve until there's more hiring. it's this chicken and egg game where everybody's waiting for everybody else to hire first? >> it always happens this way. it will start to evolve slowly. you start to see it evolve now mickey drexler increasing the number of stores. it will happen slowly. no one's going to flip a switch and suddenly you're going to see that, you know, everything's changed. >> what about the competition from online? like gilt.com, you know, where do you see that impacting sales? >> you know, obviously, dotcom is a substantial force but a small force in our business. we're not in commodity-type businesses for the most part. we're in fashion businesses. just as the prior segment suggested, people have to try things on, they like to see them. it's a social experience being in the mall. we do a lot to promote that. i hope you're going to come to the new ice palace this year at shore hills. >> can't wait to go back and have the social experience hi in the shoe department at nordstrom's. >> you have to bring the kids and come to the ice palace. you'll have a great time. >> bill, thank you so much for joining us. we really appreciate your time. >> thank you. the american consumer is front and center all day long today. on cnbc we'll be asking the question through the morning and through the day, is america ready to spend again? and we'll get some evidence from the government's retail sales report coming up in just 16 minutes' time. 8:30 eastern time. stick around for that. when he comes into the igniti ignition, they get the -- they get all the salespeople out there. >> i'm -- >> coming up next -- you can be in the shot. next, what -- mac, ee he's the ground. what killed lehman brothers, the report on the demise of one of wall street's legendary firms. "the new york times" calls it the equivalent to a coroner's report. we open uple files next. a court-appointed examiner says lehman brothers had been insolvent for weeks before filing for bankruptcy. in september of 2008. so, 2200-page report also details accounting gimmicks used by the firm. david faber joins you now with more. you were up late, all 2200 pages? good read? >> good read, good read, yeah. enjoyable. no, it's lucky we have lots of people here who give you the relevant parts, so you keep your reading brief. >> so, if it really was insolvent for weeks, that makes some of the actions of the senior managers there even more suspect, doesn't it? or they really didn't understand? dick folds he doesn't know -- he thought a repo is when they came to get your car. >> he knows what it is. the repo 105 which is referred to several times something you've never heard of, including yours truly. maybe fold hadn't either. something that comes through from this and from so much of what we saw is simply the lack of transparency at all of these firms. granted, in this case, there seems to have been a focus on the part of the examiner on things that lehman was doing to make its balance sheet look better than it was as it was already heading into the abyss. but that being said, let's not forget that we didn't know what a sieve was until -- >> somebody set them up. >> yes, somebody set up the repo 105. >> fuld didn't know. erin callan didn't know. but somebody set it up? >> yes, somebody set it up. >> we dwot that settled. >> did they set it up with ill intent because erns at & young - >> yes, especially in the last days it made the firm's assets look less than they actually were, therefore, made its leverage rare yoe look better than it actually was. i mean, there's a lot in this report to take a look at that you also can question. things we've already known. namely, lehman's unwillingness to sell assets when it had the chance and, therefore, reduce its balance sheet and celek wit when it had the chance and, therefore, increase -- i should say, decrease its leverage ratio. neither one of those things happened. in fact, we find lehman was amping up its balance sheet through 2008, which almost seems impossible to imagine. yet, that was the case. those are things one would imagine the ceo certainly signed off on. but i would, again, go back to this basic idea. we have people coming on all the time telling us, the financials look pretty good right now. when you read something like this, you do wonder, what's still going on out there that we'll ultimately learn about? because we knew so little. it does appears the ceos of these firms, whether stan o'neill at merrill lynch not fully appreciating what was going on in the super cdos, whether chuck prince at citi not appreciating the sieves off-balance sheets were going to do. in this case, fuld says, i didn't know what a repo 105 was. we'll see. one has to wonder, what's going on? a repos is still actively used by all wall street firms. it's a short-term funding mechanism, great to fund short term, long-term assets. the spread is great. less -- certainly less pervasive than it was at the height or before the crisis. >> you have a great book on this. i hate to bring up sorkin's brook but did you see where cramer visited fuld and he closed on this acquisition of a hedge fund that was ramping up ricks at a time when they were trying to keep the firm from imploding? he still insisted, this is good, this is good, what we're doing. adding to risk. i guess playing offense when their stock was plunging. >> that's what they talk about. listen, i -- >> why? >> all of our considerations about hearthstone was a good investment deep into the crisis. >> it's going to work out. >> exactly. >> they're in denial. >> the fact s listen, also, when they went in that september and looked at all of these assets, lehman had them marked at one level and then when everybody -- all the bankers and everybody got in a room at the new york fed and took a look at these things, everybody said, they're worth a lot less than what you're saying. that being said, a lot of assets have come back in value over the last year and a half. >> what the heck does a colorable offense? the colorable offense is what they think, fuld and some cfos were responsible for? something they can be sued for? i don't understand. >> they are calling this the bible for class action lawsuits. so maybe the information we're all seeking still will be coming out in court over the next -- >> yes, amazing 2200 pages, $38 million. when you look at the footnotes you clearly see, in addition to talking to some reporters, he talked to more or less anybody and everybody you might want to speak to. that's the power of the court. certainly worth a read. and raises some disturbing questions, no doubt about it. and new things that we were not fully aware of. >> thanks, david. when we come back, the latest read on the american consumer. government's retail sales number is on the way. and then is toyota going to sell its way out of scandal and public relations nightmare? that story is coming up in the next half hour of "squawk." yes, it is raining in new york city. expect this to continue all weekend long. but that is not stopping the sun from shining this morning on wall street. if you've been watching those futures this morning, they have been indicated higher this morning. even after the markets closed at the highest level we've seen in some 16 months yesterday. keep an eye on what's happening. up next, we'll get more evidence if the u.s. consumer is ready to spend. government's retail sales report is here. bull market or bear, traders are always hungry for ideas. they find them at td ameritrade. trading's all about strategy. and strategy... is all about information. so i start my trading day... with td ameritrade's morning perspective. that's interesting... or, look at this... i can mine their weekly webcast for ideas. this is what i need. of course, ideas are just the start. so now i can drill down. heat mapping... heat mapping shows me where the money's moving. 2,500 stocks... one quick glance. cold... cold. hot! right there. look at this-- pattern matcher... pattern matcher spots technical patterns, automatically. wow, look at that. look at that head and shoulders right there. it's like pattern radar. pattern x-ray vision. plus, this amazing gadget... called the telephone. i can call td ameritrade anytime and talk trades, strategies. anything. that's where the action is. td ameritrade. built by traders for traders. announcer: trade commission free for 30 days plus get $100 cash, when you open an account. breaking mys almost here. this time it is the government's report on retail sales. rick santelli and larry levin of secrets of traders.com are standing by at the cme group in chicago. steve liesman and bill rudin are in studio. again, retail sales numbers. people are looking for a slight decrease. rick has the numbers. >> here we go. up 0.3 on retail sales headline, up 0.8 when you strip out auto, up 0.9 when you strip out autos and gas. the headline revision goes the wrong way from originally reported up 0.5 to up 0.1 but the rest of the revisions aren't bad. shifted 0.1 lower. not a big deal. these are definitely good numbers. exactly the longevity, how it pans out, that's not for me to describe. i heard oos on ahs on ex-autos and ex-gas. we came in with the dollar under pressure but now not as much. we came in with equities, they popped up on us but came back rather quickly. they're firm. interest rates, they've been moving higher. it's just pick your poison with what you want to look at. you want to look at a yield curve in treasuries, yield curve in the financials, corporate supply, treasury supply, muni supply, that's one of the big stories. strong numbers. back to you. >> thanks. let's get more reaction from larry levin, steve liesman and our guest host, bill rudin. you gasped, bill. you said, nice, steve, right? >> yeah. first of all, caveat, these numbers can be revised from plus 0.5 to plus 0.1 and maybe some was discounted in february rather than january. the two together you get a zero, too. what's interesting, it was done with a negative number on motor vehicles being down 2% after being down 0.5%. a modest rise in gas station sales of 0.3. >> and done with snowstorms through most of the country. >> exactly. in light of everything out there. the other thing that's important, rick pointed it out, let me give you the number he was talking about, the ex-autos, gas and building materials. why do we look at that number? it feeds into gdp. it tracks the nonauto consumer number, up 0.9%. i'm guessing what i'm going to see when i get offset here, the economists are going to be upping their sense of how much consumer spending happened in the first quarter. so, that's given everything else that's gone on, we've been in a 2.8% gdp. i'm thinking they may think consumers will do better than 2% in the first quarter, which is good -- >> they didn't break out nordstrom's or shoes or -- >> let me see if i have nordstrom's. >> it was way down. >> i can give you general merchandise department stores, 1.1%. >> i'm telling you -- >> up or down? >> up. >> that's not what joe -- >> no, no, it was so crowded, carl. >> his purchase would have upped that. >> upped that significantly. larry, we were talking about 1150. are we going to 1200 or 1150? >> i think we're going to 1200, no question about it. even if the data is bad, i think we're going to 1200 within the next three to four weeks. the momentum is so much that way. trading at 1150 even that ben talked about last hour, right there now there are good offers but i'm sure i'm going to trade above there as we trade at 9:00 my time, 10:00 your time. 1150, above there for an hour or so. i'm going to be a buyer here. >> steve, i want to ask you, earlier in the week, we know where pickco kopimco is coming. if the retail sales number would surprise up, he says it would be lead imaginative investors to lead with greater conviction than before that the u.s. may experience an old normal style recovery. is this going to convert any bears? >> you know, it's an interesting -- i didn't read that piece. what i was looking at over the weeks were the v-shaped recoveries in manufacturing and the v-shaped recovery in business spending. when you look at the chart of those things, all things being equal, guys, the consumers could come back and employment could eventually come back. i mean, you don't want to get too excited because it's just 0.3%. if it was 0.5, 0.6, if it was stuck, january wasn't revised, but given what becky was talking about, what i was talking about, what the consumer overcame in february, this is a good number. by the way, that number we had this morning, if somebody thinks we're doing autos at 12.5 million rate for march, that is huge. i forget the number, but we were doing nines and tens, down to seven -- >> at the beginning of march toyota saw an increase. it was up 8% or something for the beginning versus down in february. >> hanging in there. i think -- >> kresizzi at pimco said it would be an old norm signal. >> no, lead investors -- >> oh, oh, oh, then he's not on point and he's going to get slapped. >> i think he was trying to get out in front of what may be -- what he thought may be a strong number, saying, don't buy it, right? >> was that earlier this week or last week? >> this week. >> because el erian and gross are going to put a muzzle on him because he is not skewing the company -- >> you can imagine mohamed el erian, who we'll talk to next week. >> yes, we are. we won't talk to krasenzi again. he may go missing. rick, i don't know if you were watching, but how excited i was that yellen, a dove, i want all doves, i want to let the good times roll forever. i want to keep fed funds at zero for the next 20 years. if you can print money, go for it. what do you think? >> i think that what's going on with policy on the very short end of the market is portrayed by the federal reserve, is always just by the very definition of how they categoryize inflation, higher prices, deflation, lower price, who in essence they're working with, which is banks. i don't think the policy changes in any big way over time. and it hasn't changed over time. i look towards the market. and i think that the big issue with regard to interest rates is trying to interpret things that used to be meaningful, like steep kufcurves? what does that mean in the future? i think those are the issues that real free thinkers have to look towards on their own merit as opposed to get look locked up in the old-style textbook definitions that are too rigid. >> did you basically just say they're all doves and doesn't matter who you have in charge, they're all going to -- they're going to have easy money no matter who is on the fed? >> yes, just like, you know, congress, unless you have what i call default term limits, when you always vote out the incumben incumbents, they're always going to be prone to spend. they're always going to be prone to take an easier way out. listen, i'm not casting expergss. it crosses party lines and i think that's the bias of the fed, period. >> i'm just more or less going with reality, carl. if it's going to happen, let's rub it all over ourselves. cash, money, everywhere, print it. >> see, you're not a dove. you're like a peacock or some other kind of bird, right? >> i will always be a pea cokcoi don't care who owns us. >> toucan. >> yeah, toucan. thanks. when we come back, positioning your portfolio for profits. our next guest advises some of the biggest players around the world. find out what she's telling her client about the market right now. some call her the meredith whitney of europe coming up after break. are consumers still checking out toyota showrooms, joe, despite all of the automakers' troubles on the road? can toyota sell its way out of the disaster? that's next on "squawk." it's been one hit after another for toyota. can the giant dodge all of these attacks with sales in the show room? phil lebeau joins us with more. i guess at any -- at a certain price, they're going to sell cars, phil. >> absolutely. absolutely. and zero percent for five years, that's sort of the magic mark. you put that out there, doesn't matter the brand, people will look at that and say, that's free money for five years, i'm interested. you add on top of that that toyota has a well of people who are supporters of the brand, and you're going to see sales do pretty well. here's the latest in where we stand with toyota after what's been a horrific week in terms of the number of cases of runaway cars. toyota s.w.a.t. teams are checking cases whether out in san diego or outside of new york city, the teams will be sharing data they pull from those cars with the national highway traffic administration. toyota is maintaining electronics are not the issue. is it possible it's driver error? we asked a number of people on our blog, behindthewheel.com. listen to what they say. it's time america takes driver's education and learns the bakes of driving. problem solved. another person wrote and said, this is the biggest bunch of bs i've heard in a long time. surely the guy driving that car, referring to the gentleman in california, didn't have any part of a brain. why couldn't he simply shift into neutral and then stop safely? doesn't make any sense to me. well, fact of the matter is, the gentleman in california says it was not a hoax and he was legitimately trying to stop the car. that said, when you look in show rooms there are still people going in and still buying. sales are up 50%, the first eight days of this month, compared to a year ago. the reason the sales are surging? huge incentives. not only zero percent for fife years, a two-year complementary maintenance program. edmunds.com says because of toyotas incentives, industry sales are highest so far since last august. and this is also the reason when you look at shares of toyota, the stock has been holding up relatively well. it's up 2% in the last week. edging a little higher in the last day or two. so, you're looking at a stock, guys, people are saying, you know what, maybe toyota comes through this because they are sell their way out of it. this is the worst we're going to see in terms of these recall issues. still early, but that's sort of the early indication from investors. >> phil, is it your sense -- when people are talking about this 12.5 million annual rate, is that sustainables we go into coming months? >> it's sustainable when you get to perhaps the summer but for the first half this month, 12.5 million, most people think it will cool off the second half of the month, down to 11 million range. >> that's running awfully hot. >> sure. >> good to see you. our next guest advises the biggest players on how to position their portfolios for profits, pippen, from the canterbury group, head of global strategy at ubs and former financial market adviser in the white house from 2001 to 2002 under president bush. it's great to have you on set. welcome. >> thanks. >> i wanted to get you started on how foreigners view american assets. specifically about our treasuries. we've had the chinese give some reassuring comment in recent days that it would be hard to diversify a way from u.s. treasuries. is that the common view? >> you know what i'm hearing from sovereign wealth funds around the world is that they have a strong view the u.s. is going to inflate their way out of the debt problem. and that gets reinforced by things like the janet yellen appointment. why do they have that view? because they think that it's not even going to be in the fed's control. it's going to be a fiscal issue. they see no one on the landscape who's going to tighten up on that side. >> because politics are toxic? >> right, exactly. you get thrown out of office if you go down that road. their view is they would like to buy u.s. assets but they like inflation-protected assets. that means things like infrastructure, property. unfortunately, in this country, the public's a little nervous about having foreigners own things like toll roads, water supply, critical infrastructure, but the foreigners would like to fund that which would help the u.s. growth story. we have an interesting issue there. >> you made this point earlier, that we make it awfully tough for them to bring their capital -- >> there's a law in terms of real estate that if you own more than 49% you get double taxed as opposed if you bought a stock -- a foreigner bought a stock, there's only one tax. these are the type of things that need to be looked at. my trips to europe and the middle east, there seems to be a strong demand for people -- sovereign funds, individual, pension funds, to want to buy real estate in the united states. >> no question. >> they're out there. >> the most popular question i've had in beijing during the last year has been, do you think now is the right time to buy property in man hhattan or lond? partly because they need to diversify and the government is loosening controls so chinese population can invest abroad. they may say, we want to delink a little from the dollar because they're nervous about the imported inflation it brings. you can see, their inflation numbers are jumping up now above the deposit rate, so that's going to encourage a certain kind of investment behavior. so, i think the chinese will continue to buy u.s. -- will continue to object a path to buy u.s. treasuries but i think it's a declining path. more importantly, they're only one of many sovereign wealth funds. overall, i detect a decline in the interest of funding paper financial assets. >> they want hard assets. >> they want the real thing. >> speaking of which, you make the point because banks aren't lending there's been a lot of capacity destruction in commodities. we'll see inflation in commodities. in the end, that will compress corporate margins? >> i think that's right. it's important to remember, you know, most of us are not central bankers, right? we don't have the luxury of waiting until inflation pressures show up in the cpi. we're supposed to catch the price moves, so the commodity rally we have seen over the last 18 months is telling us something about inflation pressures in the system. >> but it's not just about the dollar? >> it's not just about the dollar. it's also about capacity destruction. here in the u.s. you only hear people talk about the excess capacity in autos and steel. but internationally what you can see is anything you extract out of the ground, agriculture, mined assets and energy, in these spaces we see capacity destruction in many, many respects. much higher prices already. front page of the business section of the new york times today, seed prices up dramatically. you know, that is telling us something about what's happening to prices as the marginal additional suppliers go bust. >> one thing in our favor is that we tend not to default, right? >> absolutely. >> we have -- we pull something out of our hat that brings cash flow down the road. that brings some comfort to foreign buyers of our assets, right? >> look, if i'm an investor in fixed income around the world, my big question is, who's going to pay me back? now, with the greeks and they're just the top of a long list of countries that are going to be tested by the marks aets and go to have trouble, the question s what kind of a default might i get? might they ask for a reskijing or moratorium as we saw with dubai? that's a form of default but a more palatable than i'm never going to pay you back. then there's i'm going to pay you back in dollars that are less. that's a different form of default. as a fixed income investor i'm having a hard time finding anybody who will pay me back in the same value currency i gave them. so, this is going to push me into real investing. it's going to force me into equities that can outrun inflation. which is a good thing. that's why we're going to see some positive numbers in equity markets, and why commodity prices will go higher, et cetera. >> that's not the reason, i guess, you would hope stocks go higher but it brings them higher nonetheless, right? >> but it is the point. when central banks and fiscal authorities around the world blow out every known bound boundary of fiscal and monetary, they do is simultaneously, it's like conjuring forth the ghost of inflation. now you've used it to pull you out of the ditch of deflation, now you're face to face, will you kill it? chairman bernanke says, i will kill it. the rest of the world goes, i don't think you will. >> that remains to be seen. great having you. thanks for coming in. interesting insight. coming up, we've got the stock of the day and we set up for the opening bell ahead of the final trading day of the week. welcome back. we're counting down to the opening bell on wall street. joining us is art cashin the director of floor operations at ubs financial services. we get these numbers today for retail sales that were better than anybody expected. we see gains over the last week. is this to the point where the bias is all to the upside? >> well, you know, it's certainly in line with your theme this morning about the consumer coming out of hibernation. i think a little too early to tell but as far as the stock market goes, the bulls already have the champagne in the locker room. they're preparing for a celebration. everybody's taking a run through. 1150 is kind of a given. they're crossing their fingers that that means not only that the recent weakness we've seen was merely a correction in the march rally but that people will recognize that and money will come in from the sidelines. >> if 1150 becomes the new floor, what's the next resistance level, art? >> well, actually up around 1200 but the -- just slightly before that somewhere around 1285 to 88 but the real one is 1200. that'll be the next place they're gunning for so that did it for you, the 7%, art, the correction low is in for you? you feel better? you finally -- you're friendly now? >> i'm talking about standard rule of thumb cocktail napkin charting. if you get back in, you know, carl and i talked two weeks ago about a probable retest of the january highs. if you supplant those january highs what happened in between is not a major change. it has to be chalked up to having been a correction and they're moving back up. i still think stocks are overvalued but you got to go with the flow here. >> great to see you. have a wonderful weekend. >> you, too. all right. we got more time now with our guest host. he is the management ceo and vice chairman of rudin management. great company. you own half of new york. >> all the foreign buyers coming in so we don't own as much as we used to. >> hopefully it won't end up like foreign buyers in pebble beach. but what have you not talked about today that you need to tell viewers? >> well, i think the -- you heard the general theme in terms of the retail sector. we're seeing on the commercial side tenants are coming back into the marketplace, making leases, getting great value. that was the theme. people are buying. they want value. so whether it's a commercial lease or an apartment or, you know, a lease, people are seeing the 20, 30, 40% discounts that were -- that are, you know, in the marketplace right now. we're making deals on our buildings. we're seeing diverse tenants and, you know, then you've got the debt side on the -- in terms of commercial lending which we talked about a little bit that there's still a huge issue out there and how do we solve this problem with these loans coming due? i think there is a pathway to try to come up with, you know, solutions. obviously the economy and job growth and all of those things help and to some degree solve some of the problems but you still have to have some structural change and deal with the government, you know, state issues, budget issues all over the country, not just new york, california we're talking about, california lost 700,000 jobs. chicago lost 180,000 jobs -- or illinois. and new york, knock wood, we haven't lost as many jobs but we have huge budget issues. there has to be a serious discussion in albany and in washington how to solve these problems of state debt. and, you know, no different in europe, the same thing. so we're cautiously optimistic. we're looking for opportunities. and hopefully the economy keeps getting better. >> it's going to be nice when people start removing the cautiously part. >> i don't think that will ever -- >> then you have to start worrying about when it's dropping. >> you also don't want to be over optimistic, which got us into trouble the first time. >> right. >> the exuberance. >> "squawk box" will be right back. it's ellen. hey, mayor white. how you doing? 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[ whirring ] [ female announcer ] the new community. see it. live it. share it. on the human network. cisco. today we found out abof