Transcripts For CNBC Squawk Box 20130220

A judge says David Einhorns hedge fund may succeed in its legal attack against apple. And youve been hacked. Major financial institutions, fast food joints, tech giants, and now car companies. Corporate america facing a flurry of attacks. Its wednesday, february 20, 2013. New fiveyear high yesterday. Squawk box begins right now. Good morning, everybody. And welcome to squawk box here on cnbc. Im becky quick along with joe kernen and andrew ross sorkin. Our guest host is Business Insider ceo henry blogett. From corporate hacking attacks to questions about dells corporate buyout, this is a great day to have him on set. Welcome. Coming up next hour, a squawk ceo summit. Were tackling a question on everyones mind how do we get the economy to grow from here . No one knows better than the leaders of corporate america. Joining on set this morning, 32 adviser ceo robert wolfe. Well have hanes celestial ceo irwin simon. And the kraft Group President , Jonathan Kraft. On the lighter side of things, spring is around the corner. That must meantime for baseball. White sox Vice President ken williams will join us to talk business on and off the diamond coming up at 8 40 eastern time. An interesting mix of topics in rotation today. First, lets get over to andrew with the top headlines. Thanks. Boeing reportedly found a way to fix battery problems with its grounded 787. Heres whats happening. Involves increasing the space between cells in the battery. A source tells reuters the gaps between the cells were why there was overheating. Well talk about that in a bit. In other news on boeing, the companys engineers are split on a contract. The largest professional Group Approved the planemakers latest contract offer. But members of a smaller Technical Union are rejecting it. Both groups authorized the union to call a strike. The groups negotiate together. But the contracts are separate. So talks are set now to resume. And no work stoppage is expected. At least in the near term. Also in the news, the fbi says its now looking into alleged Insider Trading in the options of heinz for its acquisition by Berkshire Hathaway and 3g capital. The sec filed suit against unknown traders who is said used an account in switzerland to trade on per ported purported inside knowledge of the transaction. And negotiators breaking down between res cap and allied financial. Creditors pushing for a larger settle chmt is why the company is resisting. This makes it likely that the company will face litigation. Also, Toyota Motors reportedly ramping up japanese output by 10 in april. The nikkei reporting that the automakers planning an increase due to higher than expected sales and a weaker yen. Joe . Would you if you knew about a deal, is there any way that you would do anything . No, no. With the email trail i dont understand. I dont understand why anybody would try anymore. They have i can follow you in ten seconds. What i find actually crazier about the situation is that the sec is looking into this, the fbi is looking into it. But Goldman Sachs which is where the trades went through hasnt released the names, and im not sure has to. And why that would be. Theres a whole secondary they dont have to . I dont believe we can talk about it. My sung they havent been subpoenaed so they dont have to do it voluntary. Maybe its a death wish or prison wish. Im not going to go into what that could involve. I mean, you have to want to go youre going, right . Its afternoon if you know about the deal and you buy something to benefit from when the deal is announced, youre doing to jail, right . What if you hear about it . The scuttle butt, trading is it you know, heres well talk to him in a second. In other news this morning, bank of america Ceo Brian Moynihan was awarded a 73 pay increase in 2012 to 12. 1 million. And if you do the math, i dont know how youd do. You have to do algebra. That would be 7 million last year. So add 71 on to that and get the 12. Bigger stock grant is how it happened. His base salary for 2013 is also due to rise by more than 55 which is a good number for any of us. Great. Isnt it . It is. If you could get 55 , youd set for that, wouldnt you . Absolutely. Okay. An 11 billionplus sale of Life Technologies is reporting reportedly looking less likely this morning. Potential buyer, thermal fisher scientific. Said to be skeptical about a deal due to a gap in the Price Expectations with the company. Meantime, buyout vaufrs come up short. And a u. S. Judge says that bp recovered 810,000 of barrels of oil from its 2010 gulf of mexico spill site. The judge ruled that this amount should be excluded from certain penalties that the company may face, cutting its maximum fine by as much as 3. 5 billion. A spillrelated civil trial as weve been reporting this week is due to start next week in new orleans. At the top of the show, you said something that made me think of ground hog day. You said markets at a new fiveyear high. I said new i dont like to say fresh. And you really dont need to say new fiveyear high fiveyear high but i see it every. Where i saw we say it every day, too. Seems like weve been in this position. Fiveyear high. Fiveyear high. Were not that far from a new high. A real new high. Hopefully. How many people remember yesterday, how many people said, no, this cant go much weve got to have a correction. And you know, a lot of times thats a lonesome cry after a while about the correction and they capitulate. Well see. So far, so good. It has been stubborn. 12year high for the nasdaq, too. Well take you through the stocks to watch, some big movers. First up, shares of netspend rising after hours. This is the Prepaid Debit Card provider. Its being acquired by payment processor total Systems Services for 16 a share or about 1. 4 billion. It was actually up after hours yesterday. A different foyer for millennia story for millennia media. The revenue missed the market and guns looked weak. All of these starts are wrong. Im not sure why we havent fixed them yet. This stock was down after hours, as well. And demand media shares getting a pop after better than expected earnings in revenues. The company says that its exploring splitting its media and domain businesses. Lazboy beating the street and shares rose after hours on the news. Right here you see 15. 46. And acena earnings beating the street. That stock was up in the after hours. Not down 4. 5 as this chart says. And rambis announcing its signed a patent license agreement with lsi corporation. Rambis offering upbeat revenue guidance. And well get the charts fixed. Weve let the tech people know, and it hasnt been fixed yet. Back to you. The price on the left and the price on the right on the chart were both wrong. They were much higher or lower we told the i. T. People about this last week. Didnt get fixed. Takes time. Well get. It. Lets check on the markets. As we said, another good day yesterday. This morning well see whether we can consolidate gains or head higher. We dont know yet. Those are all treading water moves today between now and 9 30. Well see whether we get more definitive look at where were headed. Oil, to me, it just you add everything up, you have oil this high and other economic numbers which gold . In gold and down another 10 this morning. It doesnt i dont know. It makes already at a low. Were not that far from 8 unemployment. Youve got the payroll tax and sequester coming. And i know rich people only put the money in the bank and dont spend it, but there are significant tax increases, not just the payroll tax, but people at 400 and above, theyre part of the economy. Theyre getting whacked with the obama care and the deal that was arrived at. All of these things austerity is ugly. Getting there. So is oil oils not supposed to go up when the economys slowing. You have the Central Banks that are printing money. You do. Its got to go up. Think about what would happen if they werent. And in all bets off on what happens with the ten year now, too. If were in a slowing environment. Gold suddenliy were immediately going back to 2. 75 or 3 . And the dollars been something to behold in terms of the yen. You dont see that often. And especially when its telegraphed by not the guy with the hair, the guy named after lincoln, right . Abe. Abe . Is it abe . Or abe. I know it. Lincoln is hot. Abe to me. Lincoln is hot. You think its going to win . Theres a movie every day. Theres that and the oreillys killing lincoln and lincoln the vampire hunter. I read the book. But . I did. You had that much time . I office a plane. I tried on a plane. Thats okay. Did they have bathrooms on the plane or bottles . [ flushing ] funny. He knows what youre talking about. I know he. Does memorialized for all time. I dont think the i blame him. We dont need to tell the audience at this point. Look up Business Insider. You were talking about your brothers. Only the boys. It was only the boys of course. Little boys. Trying to drive 12 hours across little boys with little weewees. It would be easy in the bottle. Lets look this squawkward moment has been brought to you by joe kerner. Ha, ha, youre it. The gold board it was her yesterday that blurted that out. Where is gold . Down again. Its down another 10 under 1,600 now. Hit a boump that yesterday was already at its weakest level. The charts, lower lows, lower highs. A bumpy ride on the way to the guaranteed 2,000 which every single gold bug talked about. A death cross. It is new technical chart where people are freaking about. You got me. Where could it go . It could go anywhere. Yellow metal. It was 200. Buffett points out you could fit all the gold in the world on a football field. 40 by 40 square. Then what do you do . Nothing. Give me cattle. Give me pigs. Give me broilers. Give me anything. Give me guns, the to steal the gold. Whatever. Pretty much. All right. Okay. Its also time for the Global Markets report. Well fly over to kelly evans. She may be able to save us a little bit. Standing by in london. Miss evans, good morning to you. Andrew, good morning. Its the bank of england thats moving markets today. The Federal Reserve minutes later today are sure to be the focus of the u. S. Session. Over here, the actions started. The sterling dollar behind me, down. 8 . We did fall below the 154 level. Guys, weve been flirting with 153, below 153 in the last couple of minutes, as well. The first time weve been at these levels since last july. More significantly it comes as the bank of england saw governor king whos leaving outvoted with others on wanting to increase the size of the quantitative easing program. Dont expect that theyre sort of shedding any tears over the strong Market Reaction today when those minutes pass. The bank of england saying the weaker sterling is good for growth. A lot of britains tonight agree as they look at a continuing rob of their discretionary purchasing power. That story is something not just britain is dealing with for the time being. What it is doing, if we can flip over to the Market Reaction for stocks, is helping bolster the ftse. So after hitting the fiveyear highs, now punching above the 6,400 level for the First Time Since 2008. So adding about. 4 today. Fiveyear high is similar story to what were seeing with the s p 500. Its mixed trade for the rest of the markets. But as we head back over to you guys, its going to be an something question now for the Federal Reserve in the u. S. As the bank of england now comes out, weakens the sterling by by almost 1 today, weve got new zealand talking currency down, weve got korea talking its currency down. You mentioned whats been happening in japan. Suddenly the u. S. Dollar starts to look like one of the stronger men by comparison. On that note of currency wars around, what, 25 at this point, back to you. Thank you. In other news, a judge says David Einhorns hedge fund has shown a likelihood of success if his legal attack against apple goes forward. The judge made no immediate ruling to block a shareholder vote on a proxy i need to apologize to becky quick. We were talking about this last night on the show yesterday and by email. I should have read. I didnt no, you were right. In the complaint, the suggestion is not that apple can never issue a preferred share. Its just that it would require a shareholder vote. What does that mean . That strikes me as odd. You would think more shareholder say would be a better thing. Then theres some other some think its a bad thing because it means the board cant unilateral dee it and therefore cant make the decision. And other chershareholders w never vote for a better deal . We can talk to our guest host about it. Weve introduced youve been talking. I dont know if you need an introduction. Henry blodgett, Business Insider ceo and editorinchief. Do you have i think his idea is financial engineering. We had had a back and forth. Hes much more sophisticated about this than most people. He persuasively argues that one plus one might equal a little more than two if you get a big block of referred in there. In terms of complexity, everything else. The thing with the case, though . In terms of what hes asking for . Yeah. I think basically whats going on here is he wants a pulpit. He want to bag his finger at Apple Management and say, look, youve got 140 billion on the Balance Sheet. Start giving it to me. I own you. Do something with it. Do you think hes going to could . I think hes going succeed in forcing apple to do something with the cash. I think issuing a preferred i dont think it makes sense. I think there are plenty of other ways to get the cash back to shareholders. You could use debt if you wanted to, you could increase the dividend. He could exploit the difference where a prefer sudden trading and common is trading. The idea you that could create security and stick it in there without disadvantaging the common stock shareholders doesnt make sense. Right. Youre putting yourself ahead of everybody if the shareholders will vote, theyre never going to vote somebody else having a better position than they have themselves. Thats thats right. A lot of shareholders, they say increase the dividend. Right. Give back although i did read something that the judge in this case had already said. He thinks einhorn might be in a position to win. I dont understand the legal i think thats the technicality of this particular lawsuit which is all around can apple outlaw the issuance of a preferred. It doesnt force them to do that im making it more its not just about whether they can outlaw it. Its whether they can put it as part of the proxy . The proxy. Theyve combined it into a vote that includes other issues. So what hes fighting for is for it to be separated out. So that shareholders would vote for it separately. Were its down weve got to put it in another bill. Right. Lets joe was joking, and you i dont know if you were joking or not, Insider Trading. I understand what hes saying. On this issue of heinz, we have what appears to be some form of trading ahead of the situation with these options. Which by the way there almost always. Is somebody knows why does it happen in this day and age . Were inundated every day with reports of somebody going to jail, getting arrested, doing something for the exact same thing. Is there no deterrent effect . First of all, its good that the sec is acting this quickly. And it just happened in the merger last week that was announced. Why dont they know who they are, by the way . They will. Why shouldnt why shouldnt you know who they are is what youre asking . Yes. It will come out, no question. Look, so its very good. That will deter it. If it happens the next morning, as its happening. Pictures its become obvious to people. Something happens on the trader floor, whats going on, rumor. Wow. Theres this big deal going down. Ill take a play on that. Its different when you hear someone has to light the match to begin no, you can play it. If the rumors going around and you think you got tellery no, the question is how did the rumor emerge . Any trader on the Trading Floor hears scuttlebutt. People hear things all the time. There are lots of companies out there that are prime acquisition targets. Everybodys got on the screen, somebody must know something. A rumor starts. I hear stuff usually from some form of insider. Maybe somebody heard something with regard to a banker, some banker was going that city. Putting two and two together. Making a good bet. Not based on actual knowledge but a bet that a lot of people follow that. They cash in, suddenly theres the huge action in the options. Secs right to look at it. They can put people other oath. People want to testify heres what i saw, what i did. The evidence that people are trading ahead of the deal is not evidence that they knew it was going happen. They figured it out. Let me throw one other piece of news the at the monsanto i used to track plans. You cant do it anymore. Very hard to track plans. Get out on a moped and follow sir larns wiwrence wildman i believe thats legal as long as youre not tapping lines. It eerie. Dell, they had earnings. I dont think new england care good the earnings, they in cared about the earnings, they cared about the buyout. I think its sad and public shareholders take a longer term view is the only reason this company is going private is because michael dell and silverlake think that they can create a huge amount of value by doing that. Theres going to be a big dividend where they pay themselves a huge mont off the top. Whats sad is why cant they do it now with public share orlando. Are public shareholders willing to suffer through whatever the transition period is, does it allow activists and others to try to kick people out from the board . I mean, there is a legitimate argument to be made, doing it in private. Some people would say a legitimate argument, doing private makes it easier. Youre not having to deal with the stock falling when something bad happens. Activists trying to come in to ruin your plan. It makes it easier. Theres no question. But michael dell needs cohones to say this is the right plan for the company. I am going to execute it, its going to take three years. If you want, you dont disagree, sell the stock or try to get me fired. This is what we are going to do. Jeff bethesdas on did that at jeff bezos did that at amazon. People were screaming for seven years, youll never make money, it wont work. You shouldnt be investing so much. Look where it is. Weve got to take a break. Will michael dell be successful three years from now is. I think the deal will be very successful. They will come out very much ahead. I think they will refloat it at the top shareholders will feel bad they let it happen to begin with. Yes. There you go. You know that is a vulgar word crude . Cajones. Its vulgar in spanish. Like testicles here is not vulgar, its cajones is not this squawkward moment is brought to you by joe kernen. Like guts . No. Berthas mother here sings, you know spanish, you know, its if you speak spanish, you would be better to say testicles. Okay. All right. From here on out. Coming up, if you have the caj cajones to do it. Before the bell, Housing Starts and the Producer Price index. This afternoon, minutes from the last rfmc meeting. Well talk expectations and more for the bull market run. Every time i move im in your shot. Sorry. Trying to get out. People like that better probably. For when the bull market run, well see how long it continues. [ male announcer ] any technology not moving forward is moving backward. [ engine turns over, tires squeal ] and youll find advanced Safety Technology like an available headsup display on the 2013 lexus gs. Theres no going back. Welcome back. U. S. Equities futures. Well look at how things are setting up the day. There you have. A mixed picture. Almost across the board i think thats probably the best way to say it. Lets talk about the headlines taking place this morning. Stanford university has set a new record in college fundraising. Its the first school to collect more than 1 billion in a single year. A new survey finds 3,500 u. S. Colleges and universities raised 31 billion in fiscal 2012. Thats 2. 2 mrnt previous year. Becky . Lets get the National Weather forecast from the weather channels eric fisher. Eric, good morning. Good morning to everybody there. Cold weather back on the minds of many here into the northeast. Feels very much like the dead of winter. Windchill of four here in buffalo. In the city, 20 degrees the windchill. Boston, 27. The winds howling, temperatures dropping. Yes, more snow falling out there, especially around the lakes today. South of buffalo, thats where it will be focused and into northern maine. Good news for the skiers. Most of this last storm stayed mostly snow. The slopes are still in good shape. Totals today mostly north of syracuse toward the tughill plateau, 94 staying breezy and dry. Most of the concern over the next couple of days will be the latest winter storm. Moving into the west today, snow overspreading the four corners area. Colorado into new mexico, arizona, utah, all picking up significant snow. This really cranks into the day tomorrow. Well have heavy snow across nebraska, kansas, missouri, into iowa. Big area of sleet and freezing rain here across southern missouri and northern arkansas. Travel is going to be really rough. For some folks with enough freezing rain, we could be talking Power Outages for several days. Especially in northern arkansas. Thats something to watch. And then on friday, the snow moves up toward the great lakes. The icy mix heads toward pittsburgh, and cleveland could be looking at some of that, as well. Winter storm warnings, bulls eye in the middle of the country. Most of the state of kansas and missouri under warnings. Then you see the ice storm just off toward the south. Storm totals could see two feet here in kansas, foot and a half west of omaha. The ice further to the south. Winter not done yet. No, its not. Good. Its february. Im a fan. I see the bands extending into colorado there, eric, my buddy, right . Yeah. I would pick the san juans. If youre a skier, head toward durango, telluride. That will be the spot. All right. Its all okay now. Theyve been getting snow almost every night. A lot of the places. You know, the base still isnt what it could be, but much better than last year. Anybody thats yeah, about 80 of snow pack. Were just a little on the short end. But this should definitely help the situation. Okay. Great. All right. Thanks. We did see the market yesterday after, remember, the threeday weekend. People wondering what happens. And it opened higher. And the stocks hit multiyear highs. Joining us now, mark activivitn managing director and center economist at wells fargo. And then david joy, chief Market Strategist at ameriprize financial. We kept hearing that its a stretch, weve heard it for months. That is that the complicate backdrop doesnt the economic backdrop doesnt justify the changes. Maybe its the fed, maybe its discounting good news into the future. At this point, the market seems to be ahead of itself. Do you believe that or not . I think on a valuation basis, i would say no. I think stocks are okay where they are, sort of fair value. I think its driven primarily by the fed. In other words, if the fed wasnt there doing what theyre doing, stocks would be nowhere near where they are in my opinion. Does it matter why . Does it matter why . Not for the next couple of years. I expect them to continue to do what theyve been doing. So whether its sort of an artificially inflated environment, to me thats okay. You can still make money. So watch what the fed does. And what they say. Those minutes are going to be important today. I do think at the same time were still likely to get a correction in the weeks, maybe the months ahead. I think as you point out, the economic fundamentals matter on some level. And the economys going to be slowing down. The cumulative impact of the payroll tax increase, the income tax increase, higher gasoline prices and sequester cuts is all going to converge and result in a very weak print, i think, for maybe the Second Quarter gdp. I think the market pulls back a little and maybe once we get beyond some of the political uncertainty, the second half looks better. Housings better. The fur or five things you mentioned, do they more than offset the improvement weve seen in the economy . That we have finally seen, that weve waited center. I think they will in the short run. I think they will trump them. And well pull back. But i think the move in housing is sustainable. I mean, just in terms thats a lot. It covers a people feel much better about their job, about everything when they feel like, you know, theyre what is that . You are correct. Im saying, yes. You dont worry youre not that house you got, and by the way, folks, you can find it on what is going on . Remember, its beautiful, though. It is. Incredible. You know, it put two together, right, knocking out walls didnt knock out walls. Well get to mark vittner. Youre an engine of the economy. We need it. Mark, you just heard all that stuff. Do we get above 8 again in unemployment . I think that were probably headed lower in the unemployment rate. Its a bit of a mystery because did t depends on if people come it depends on if people come back in the labor force in large numbers. Im not sure thats going to happen. I think that given how much how much support payments we have, the big rise in disability payments and food stamps, we have a higher reservation wage. A required wage that we need to that jobs need to be producing in order to bring people back in the work force. Were just not there. Well see modest growth. I think well be in the neighborhood of 2 . Im not as worried about the sequester. I think the economys actually on firmer footing than than is widely thought. And that the day when the fed begins to wind down q. E. Is probably closer than people think. Mark, you just said that you think we need a higher wage because people wont work for the wage thats there now, you think. Is that an argument for coming up with higher minimum wage because otherwise people wont go back to work . No. I dont think it justifies the minimum wage. The minimum wage affects people at the least skilled level. And they really the problem with raising the minimum wage is you make it much harder for low skilled workers to gets the first job. Thats where they get the skills to earn a higher income. So weve been preventing a lot of young people from getting jobs. Thats where weve seen the biggest drop in Labor Force Participation has been among the 16 to 24yearold. I think the the increase in the minimum wage we did back in 2008 did a lot of damage to the economy. And i think that were still paying for that. Thats one of the reasons that so many young people are having trouble finding jobs today. But what what but say . I misunderstood that i think in terms of Labor Force Participation and other parts of the economy, theres just not a not a high enough wage being offered in the economy today. Were not creating enough highwage jobs to bring in to bring women back into the work force who said, you know what, its it doesnt make as much sense for me to take a job now when i factor in the cost of childcare. Right. Or someone who lost their job and has unemployment. What youre saying, too, is that, you know, with disability and Unemployment Insurance and everything else, you can make about 29,000 or 30,000. Cant you . Yeah. It it varies by state. And you look at a state like california and the Labor Force Participation right which had been in line with the nation has dropped more than a percentage point below it because californias a highcost state. It takes a lot to entice people back into the work force in california. Right. There the number may number the high 30s. Were just not creating enough of those highpaving jobs to bring people back in the labor force. I think the question joes asking, if im wrong, are we talking about trying to find those jobs and raise and raise incomes, or are we trying to take away the benefits whatever those benefits are. Unemployment has to end. The unemployment some unemployment issues, Unemployment Benefits which are potentially creating a disincentive to work. Well, we really dont have as much control over creating the jobs. That happens in the private sector. But we dpreebl ne we probablyo need to roll back the assistance programs. Were doing that in north carolina. Theres been a big reform to the Unemployment Insurance program that the governor signed that reduces the number of weeks that people can collect unemployment and the maximum manhunt that you can receive. What scares maximum amount that you can receive. What scares subcommittee weve run four, five straight years of a trillion. And were afraid to tax cut 85 billion which were afraid to cut 85 billion which means were at trillion. For the future if we dont get better growth and tax revenues from the structure we have, were stuck were at 915 billion even with the sequester. Thats all we can cut . Yeah. And particularly when we just spent 60 or on sandy 60 billion for sandy. So on net basis, were not having this huge cut in government spending. You dont want to. No, no, neither of you mentioned it, sequester. Week and a half were going to start shopping the thats out of a trillion that theyre chopping the white house came out yesterday and said its going to be disastrous. I know. I think it slows the economy down. I also think that there was this mindset out there that if this is the only way well get cuts right, 85 billion. So continue. And in the long run that might be good for investor settlement. Is it a too ugly way to do it . Boehner called it in the wall street journal this morning, he says its an ugly way to do it. It is. It is. If thats the only way you get it done, do it. Youre okay with that . You would prefer to see it . Im okay because i dont work in the defense industry. I dont work in some of the places that are going to be affected. But i think as a shareholder as somebody watching the markets yeah. I think its a good thing for the markets in the long run. Another big date at the end of march. Government appropriations run out. They could shut the government down. The continuing resolution kicks in. Right. What happens then . My worst Case Scenario is that the sequester languishes into the middle of the summer and then they couple it again with the debt ceiling debate. And we see a repeat of what happened in august of 11. Another you know, traumatic experience for the markets. David joy, thank you, mark vittner, thank you, as well. 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Change your number. Turn it up. Androgel 1. 62 . Get the blood tests. Change your number. Turn it up. All stations come over to mithis is for real this time. Step seven point two one two. Verify and lock. Command is locked. Five seconds. Three, two, one. Standing by for capture. The most Innovative Software on the planet. Dragon is captured. Is connecting todays leading companies to places beyond it. Siemens. Answers. Welcome back. Today the Obama Administration is planning trade actions against countries caught at cyberespionage. Todays announcement comes after a u. S. Cybersecurity firm released details yesterday tying a secret Chinese Military unit to years of cyberattacks against u. S. Companies. Other major u. S. Corporations have reported being the target of hackers. Chrysler said some hacked into the company saying the move was similar to an incident involving burger king on the same day. Meantime, apple says a small number of macs at its offices were infected by malicious software. That attack was apparently similar to one that facebook acknowledged last week. So this is becoming an issue. We talked about the New York Times was hacked about a month ago or two months ago. I dont i hope my the twitter stuff to me seems like its not as much of a big deal. Our guest shoeft Henry Blodgett is Business Insider ceo and editorinchief. The china stuff seems like a big deal. Very serious. Very serious. Its basically an act of war. Yeah. Especially if it is tied to the army and government, its an act of war. Countries and corporations, the assets are now in data bases. They used to be in the ground, on land and so forth. This is the new way to wage war. And the white house responds. Our government response is going to be very important. The white house already president obama i think has tried to appeal directly to the president of china and has gotten nowhere with it. I dont understand how we continue to have normal relations while this is going on in the back. Thats right. And theres still some question as to whether this is in fact happened, some cybersecurity experts saying you cant con cloud that yet. We have to look at other thing. Thats part of the process. I think there has to be a strong stand taken. We cant have this happen to our companies. What would be a strong stand in whats i dont know. Trade is interesting. I dont either. The economies are incredibly entwined. You cant bring military into it. Right. You know, one of the things we havent heard yet is that email being hacked on like a gmail kind of service or hotmail kind of service or yahoo service. Do you believe at that hack vs. Happened and were not being told . One of the things i wonder is if if there was an announcement that some massive email service was actually hacked, would everybody leave . What would happen . Theyve been hacked through the front end. In other words, duping you into giving up your password. Then they go in through your account, change the password, take control. Thats the way some of the famous hacks have happened. On the back end, not that we know. That would scare people. No question if you got into the entire gmail data base. Where do you go . You have a New York Times account. Youve already been hacked. I wonder i assume between gmail, aol, yahoo , they probably own 50, 60, 70 of the email world. Where you do go . I dont know. The same for corporations, though. The data lives a server somewhere. Theres no foolproof way of blocking access to it. Its not like youre protected if you say, im not going to use one of those cloud things. Right. Interesting. And if you want to know more about this and kind of a lighthearted way, see identify brought to you eey thief brought you to by universal studios. Great movie a universal film . I didnt know it was a universal film did. You see it . I did not see it. If you have an interest, visit your check your local listings. By the Parent Company of comcast. I didnt put two and two together there. Its i was trying to more disclosure than anything. All right. Coming up, victor its not hard to do this, is it . Not hard to be a family. Synergistic. Coming up, a visitor blows in from the windy city. Michael gerka joins us on set with a look at what is most likely to drive todays action. [ male announcer ] ive seen incredible things. Otherworldly things. But there are some things ive never seen before. This ge jet engine can understand 5,000 data samples per second. Which is good for business. Because planes use less fuel, spend less time on the ground and more time in the air. Suddenly, faraway places dont seem so. Far away. We all work remotely so this is a big deal, our first full Team Gathering i wanted to call on a few people. Ashley, ashley marshall. Here. Since were often all on the move, ashley suggested we use fedex office to hold packages for us. Great job. [ applause ] thank you. And on a protocol note, id like to talk to tim hill about his tendency to use all caps in emails. [ shouting ] oh im sorry guys. Ah sometimes the caps lock gets stuck on my keyboard. Hey do you wanna get a drink later . [ male announcer ] hold packages at any fedex office location. Transit fares as in the 37 billion transit fares we help collect each year. No . Oh, right. Youre thinking of the 1. 6 million daily Customer Care interactions xerox handles. Or the 900 Million Health insurance claims we process. So, its no surprise to you that companies depend on todays xerox for services that simplify how work gets done. Which is. Pretty much what weve always stood for. With xerox, youre ready for real business. Welcome back, Michael Gerka joins us, managing director at chicagobased spectrum asset management. And periods, michael, in the past where, say, youre not interested in the say you want to diversify. Commodities are always interesting. So at this point, you mention i didnt know this. Both wheat and corn, i remember the historic rallies we saw last year. Theyve pulled back by 2. Through the levels that we rallied wheat and corn both. Yes. Weve retraced back from the levels. A lot of people dont look at Drought Conditions in the winter. But especially in chicago scenarios where we didnt get any snow, over an inch, for 3 0 days. Youre 360 days. Youre looking at the midwest that hurting on the winter wheat scenario. If you look at the forward contracts being july where the anticipation of where the summer crops are going to be, theyre getting ridiculously cheap in the market in a lot of options players looking at upside calls because they think because of those fundamental reasons youll start seeing the grain markets rally back. Why the pullback, though . Thats just it. Why is crude rallying in the face of fundamental reasons that the economy looks like its really slowing down . Thats a real misnomer. For the same reasons that crude makes no sense to be rallying other than a squeeze, were seeing the same scenario. The anticipation was that we started getting precipitation, and it was coming into the market and didnt happen. And more and more of a squeeze started happening. You can either buy futures on wheat and corn or could be fancier and buy, what, july calls . If you like the options markets, those are getting cheaper by the day. Wheat, corn, soybeans have been trading. Wheats been the focus in the market from liquidity reasons is there reason to think that yields arent going to be what people expect this year . Exactly. Exactly. If you kind of go a little step further into the softs market, you started seeing like orange juice and coffee having Drought Conditions or harvesting problems. Those are much more volatile and less liquid markets. Thats why we like talking about them. Okay. The other thing that is on peoples radar in commodities is golds down under 1,600. What, platinum hitting new highs . Going the opposite way. Thats never happened a minor strike in south africa. The demand has been major strike with the miners. Not a minor, a big strike with miners. Yes, in south africa. Then you had the implementation of car and emissions from europe which is now obviously adding to more supply strapped and demand is up. Yes. Platinum almost ready to test 1,700 as gold goes up. Gold was always trading above platinum. Now theyre almost 100 premium to the other. And actual diverging even further as that spread widens. No one trades that as a cross, but its a very good reference that you see sometimes like with the brent versus the wti. You can buy gold and short platinum, you could do a spread or thats been a successful trade to be short one and the other. The problem is, theyre not industrial versus precious metals. Theyre kind of in the same basket. You normally would never see this. So from historic per specktivities, this is some perspectives, this is something new and different. What about gold . Two months ago everyone was sure gold was going to 2,000, then 3,000, 5,000, you couldnt lose. Now its breaking down. Does it go back to 500 . No. Its never going to lose that partisanship because of where we sit with that purpose because wherever we sit with low rates. The idea was that we would have an inflation scenario and everyone would need more of gold as a hedge. Look at the tenyear yield as an example. I mean, inflations not rearing its head. The aspects of maybe it showing up is going to move interest rates. But the inflation scenario has gone out the window. For those reasons, gold is probably still overpriced. Watch silver. Silvers always been the, you know, for me, the precursor. We watched silver first because its its just as liquid, but its got more of a an industrial where is silver . Down under 30 . Its below 30. Theres a correction a lot of people targeted around 27 where you see value come in and players start right now at least lets say theres more fundamental reasons to get long silver on the dip than gold. All than there is gold. Michael, thank you. I want to diversify. You can see im interested in that. Comment, you cant have your eggs allinone basket. Eggs are a commodity. Yes, they are. And they trade. So does milk. When we come back, we get Henry Blodgett, the last story of the hour. Then a squawk summit, three Corporate Leaders with a message to washington and wall street, time to get the economy growing. 32 advisors. At farmers, we make you smarter about insurance. Because what you dont know can hurt you. What if you didnt know that weeping willows have invasive roots . What if you didnt know that a trampoline. Could affect your liability . And what if you didnt know that most cars. Get broken into when the weather warms up . Here, buddy. 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Axiron can transfer to others through direct contact. Women, especially those who are or who may become pregnant, and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. Report these signs and symptoms to your doctor if they occur. Tell your doctor about all medical conditions and medications. Do not use if you have prostate or Breast Cancer. Serious side effects could include increased risk of prostate cancer; worsening prostate symptoms; decreased sperm count; ankle, feet, or body swelling; enlarged or painful breasts; problems breathing while sleeping; and blood clots in the legs. Common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. See your doctor, and for a 30day free trial, go to axiron. Com. announcer at scottrade, our clto make their money do more. Re ann to help me plan my next move, i take scottrades free, inbranch seminars. Plus, their live webinars. I use daily market commentary to improve my strategy. And my local scottrade Office Guides my learning every step of the way. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Ranked highest in Customer Loyalty for brokerage and investment companies. Welcome back everybody. Our guest host this hour is Henry Blodgett. Were trying to figure out the one big story Everyone Needs to Pay Attention to. Sequester is just around the corner and yet the markets keep touching high levels. The next three months the government has the chance to screw everything up. The first is the sequester. The next is end of march, they have to vote for something for the government to operate again. In may, we get the debt ceiling again. Does the market not think the debt ceiling is going to happen or not care. I think the consensus now is it will happen. Then there will be a scramble in the middle of march to look like heroes, increase spend ac little bit, come to a deal and get us through it. Guys say dont fear the sequester. Ceo market soothsayers say dont fear the sequester. I heard other ceos said you should fear it and cuts defense and other ripples. We had others. I guess when youre talking long term versus short term, theres the difference. It will reduce spending in the near term. The economy is weak, wont help. We need a long plan. Keep everything going this year, a couple more outyears things are better, unemployment down, then we start to scale back. Weve been hearing that. What are we going to scale back on. You look at furloughing employees at the faa who will be at the airports, thats nerve racking. Same in defense. Probably cuts no matter where they come. They will happen any way. You have the fringe on both sides. Howard dean thinks its the right way because you will never get defense if you dont do it this way. Then we have to come to some sort of agreement to fund the government. I think they backed off on it at this point. So everythings great . Not everything is great but i think businesses are like so used to this, im not even that is true. The mood definitely is improving. New optimism. Do whatever you have to do. Coming up, we have an executive who says he has a solution for keeping america great, follow the money. The president s favorite banker, robert wolf. Opportunity knocking. The dow s p at nearly 5 1 2 year highs while the nasdaq closes at a 12 year high. Well talk market optimism and where to make money with former c br cbs ceo robert wolf. Good things come in small packages. Why names like car technologies may be worth a look. We kick into high gear. A look at the emy close look at what will drive growth this year and Companies Taking advantage. As our second hour of squawk starts right now. Good morning. Welcome back to squawk box, everybody. Im becky quick along with joe kernen and andrew ross sorkin. Keep a look at futures. Theyre barely bulging. The dow and s p 500 both near 5 1 2 year highs. Nasdaq another 12 year high. Keeping a close eye at whats happening. Lets look at headlines. The dow component is close to a fix for the battery problem that has grounded its 787 dreamliner. Reuters says the solution involves expanding space between battery cells overheating. And the air in the pond airways, 787 recovered an improperly wired battery. You would think it would help the stock but so far trading slowly. David einhorn might be close to winning his battle with apple. A judge has not issued an immediate ruling and he has a proposal to make it more difficult for apple to issue preferred shares. New jerseys newest casino will file for bankruptcy less than a year after it opened. The rebel casino plans to do a prepackaged bankruptcy next month that will cut its debt by twothirds. It has been short of expectations and posted its second worst month in january. Thanks. Sony expected to showcase a new playstation console today in a preemptive strike against microsoft and xbox. The event in new york comes against industry speculation microsoft is set to unveil the successor to the xbox 360. Sony purchased a cloudbased Gaming Company last summer and experts say thats a hint it will pursue a streaming strategy similar to microsoft. I think thats what you have to do to compete. Sony may offer an expanded offer of free games to counter a threat of what theyre calling casual gaming. I dont know. Online stuff that you like zynga . Words with friends. Alec baldwin. He is a hot head. Yesterday, he quit twitter again. Hes like i think they would be out of business if they didnt have an alec baldwin story every week. And this home builder down as stocks down for toll brothers. Net income was 4. 4 million or three cents a share reversing a loss of 2. 8 million or 2 cents a share earlier. The revenue this year rose 31 . Our next guest host for the next two hours is banking on america as source of growth, robert wolf, ceo of 32 advisors and former ceo of ubs america. We want to talk about the business of your new entity, your new company and how its going. Now, youve got clients and you need to tell them what to do. I hear you. So where are we . What do we do . Wheres the economy . Whats likely to happen and what about markets . Let me give the 32nd 32 advisors. We are looking at gaps in this country, exports percent of gdp is 15 and all industrialized countries are north of 25 and 30 and germany at 50. We will help International Trade finance. We brought on kevin barney who was at the export import bank. The second is inbound investment, very similar. Before 2001, foreign voechlt into this country it was 30 of gdp for foreign investment. It is 15 because of investment, l labor when was it . Before sep 11. Now we hired barry jones, select usa dont select other companies, select us. We will help other countries come build, buy and invest. The third stream is austan goolsbees economic intelligence stream where we think the economists today know cpi inflation but dont know the interrogation between Public Policy and economics. We think austin knows that better than any. We actually started his first call last week. Can you talk about his call . Sure. Happy to. I can tell you. Before 32 advisors, we never really paid him or hired him but he gave us a lot of insight over the last two years. And now doing it on private conference calls. He was gloomy when other people werent and he was always right. Two more an im done. We have our restructuring stream by floyd taylor part of the algron group, everything is being restructured today. And communications, helping firms foreign and domestics on press branding and those times of things. Now to austin. Hes gloomier. For a guy whos very peppy and funny, he was awfully gloomy. This was a 90 minute call. You know it went well because not one client got off the call. Its a weekly call we have and like a membership only. You dont wear one of those jackets . No. I used to wear one, had a white one. You wore it when it was cool. In the 70s. Any who wears one now isnt anything except a nerd. I cant even wear my football jacket municipal. Nothing fits. The premise was sequestration is bad. Continue i continuing resolution, bad. Sequestration, all these things are happening and bad. He thinks continuing resolution. The thinks there will be a government shutdown, north of 50 unless something happens in the next 30 days no ones been talking about. Even the minimum wage, he was debating how that can impact employment for the low end. He said it could hurt employment, right . Andrew, if paul krugman tells you a dog is a cat and keeps saying it, no, its a dog and you hear it meowing, do we have to believe him because of his nobel prize . Is that where we are . Saying what . Theres a cat meowing. On anything on minimum raise, raise it to 50 an hour, a great thing. Paul krugman believes we can take on more debt says raising the minimum wage does not hurt. Paul is on the consumer side. Hes saying 70 of the country is consumer driven. Raise the minimum wage, comes back to the economy. On the employment side, austin will say for those people making minimum wage, a d disproportionate amount of our employees in the country, therell be less hiring. Therell be less hiring. In europe, he only spoke the last five minutes, that will be our next call. Youre from new york . From boston. From boston. I will say forget about it, huh . And europe was we have nick on today, i saw him yesterday. He was pretty negative on europe as well. It seems like theres a lot going on. Add it all up then. You know what, it feels to me sub 2 . I think it will be very strange here. I think you will see very strong housing. Housing will drive employment. Because 25 of unemployment was construction driven. I think you will see good employment, unemployment better than we expect because of housing. I think the market will continue to be buoyant because the fed is forcing your hand to get into the market. The other thing that is a little strange because companies arent seeing real organic growth and need it and made their efficiency gains over the five years, they will continue doing acquisitions. You will continue to see a good market. Not encumbereded by a big bank. Just say id. Do these deals make sense to you . They make sense because the organic growth isnt there. When people have all this cash on hand, you have to do something with it. Generally speaking over the last two decades, share buybacks are not a good thing for the stock. Yesterday, saying 99 of all deals are lousy. Hes looking at details. He was saying like home depot, when they put on the supp supplier business, they had to get rid of it and doing much better when they got rid of things bankers make their money proposing deals and investing deals. We have a restructuring group, dont we . We talked about earlier, a nice Housing Market can counteract a multitude of since and you have the wealthy effect from the stock market of the fed. Cramer called it the great gots gatsby market because the rich people are doing well. Are we going to exacerbate the rich economy of the two differences again . It feels that way. It feels that bipartisan stuff we all want to happen is not going anywhere. Also that people that the haves are going to continue to do well. Austin didnt mention the Obamacare Tax or payroll tax or any of that. Those are all headwinds, too. Listen, i think the impasse in washington is just crazy right now. I am absolutely for not having the sequestration. Its just too blunt of an object. But the two sides have not been able to zero. No common room common ground. If you could cut 85 you wanted to cut . In a nanosecond. Do you have 85 you want to cut . Do i know it off the top of my head. I think you need to still hit the revenue side. You need revenues and spending to be that fly differential, you have to get there. You need revenues up by 18 . Do you get that growing or additional taxes . I dont want to use the word taxes and im not trying to i dont think were talking about tax rates here. There are certainly revenue loopholes we could be closing. Were supposed to close those to lower marginal rates. But we didnt. Simpsonbowles we were lowering marginal rates and closing loopholes. Now, we raise annual rates and you close loopholes. Its important we dont have these blunt objects because we will never get to tax reform. Simpsonbowles said 2. 4 trillion, their new plan. I dont know the specifics on it. I need to go back through and take a look at it. Theyre less relevant now than probably i dont know. If they keep coming back, they could pick up traction. They had a chance to be relevant. Lets take a break and we have you for the next two hours. Our special stock summit continues and how executives are planning to keep their businesses successful. Up next, small and midcap stocks. Why you might want to kick the tires of carmax, speed up investment investments of technology. Look for updates on twitter from andrew, joe and the squawk staff squawkcnbc. A to, but at xerox weve embraced a new role. Working behind the scenes to provide companies with services. Like helping hr departments manage benefits and pensions for over 11 million employees. Reducing document costs by up to 30 . And processing 421 billion dollars in accounts payables each year. Helping thousands of companies simplify how work gets done. Hows that for an encore . With xerox, youre ready for real business. Tdd 18003452550 tdd 18003452550 and the streetsmart edge Trading Platform from charles schwab. Tdd 18003452550 gives me tools that help me find opportunities more easily. Tdd 18003452550 i can even access it from the cloud and trade on any computer. Tdd 18003452550 and with schwab mobile, tdd 18003452550 i can focus on trading anyplace, anytime. Tdd 18003452550 until i choose to focus on something else. Tdd 18003452550 all this with no trade minimums. Tdd 18003452550 and only 8. 95 a trade. Tdd 18003452550 open an account with a 50,000 deposit, tdd 18003452550 and get 6 months commissionfree trades. Tdd 18003452550 call 18008368799. Welcome back, everybody. Futures are basically flat lining after the markets closed at new highs yesterday. Near half year highs for the s p 500 and dow. And near 12 year highs for the dow and we will see how things move today. Take a look at shares of garmin. The Fourth Quarter profit came in at 63 cents a share short of 73 cents and expectations came in short as the forecast for 2013. It is working to offset a decline in the personal Device Industry when you have cell phones that can give you gps all over the place. The stock is down 5. 7 . Also, the famed oracle of omaha telling squawk, there is still no better place to invest than in the u. S. America really is doing better than the rest of the world, which is everybody thinks were lagging. I think from what i see, the u. S. Is the strongest part of the world. Along that vein, lets take a look at some domestic small and mid cap names in the tech space that could provide pockets of opportunity. Joining us the Portfolio Manager of a growth fund and of the Needham Aggressive Growth Fund up nearly 3 the past few years. Good morning. Good morning. Lets go through a couple of your picks you think now have a little bit of opportunity. Sure. Al k al a key company for technology, akamai. They move data to consumers and enterprises. These same servers are used for security, a key element relevant to Eastern European and chinese hacking of websites. Where are you . I know apple is on your list of top 10 holdings. Where are you on apple and more specifically on this i hoeihorn issue in the news . Weve been a long term holder of apple, seven years or so. We added to the position over time. We think its a very inexpensive stock at six times enterprise value to earnings. On the eihorn issue, one of the main things we like at this point is their generation of cash and opportunity to return capital to shareholders. Whether it is through David Einhorns initiative or other means, we think they can pay a higher dividend and buyback more stock and a recipe for success. I gather you think they can but will they . The ultimate issue on the table . We think they will. And car max is o list. Car max, we think theyre pockets of strength and a specialist retailer selling Quality Used Cars in a great setting, revolutionizing the way cars are sold. Trades at a single digit multiple earnings of enterprise value to ebitda. They have hundreds of stores around the country and opportunity for growth with a share of that small market. What else do we have . Integra. They are also pockets of strong spending. One is Semiconductor Manufacturing. And they are a maker of integration and control systems used in those next Generation Semiconductor plants, entegris. And double digit growth and traced at multiple digit to ebitda. Weve been talking more broadly about the economy. Im curious how youre viewing the idea of cap x and cap x spending given we have an up market yet the underlying economy doesnt seem to be mo moving. Our view is moderate low single digit of general petradp pockets of strength for Semiconductor Manufacturing and the other enables mobile and ecommerce. We will leave it there. John barr, thank you for joining us this morning. Thank you. Coming up, apple reporting something it hardly ever reports, a detail after the break and our exclusive stock summit. With jonathan craft and david wolf. And Business Expectations will all be covered. Squawk will be right back. Time now for todays aflac trivia question. Which u. S. President was known for his Early Morning skinny dipping sessions in the potomac . The answer when cnbc squawk box continues. Um, i see a duck. Be more specific. I see the aflac duck. I see the aflac duck out of work and not making any money. I see him moving in with his parents and selling bootleg dvds out of the back of a van. Dude, thats your life. Remember, aflac will give him cash to help cover his rent, car payments and keep everything as normal as possible. I see lunch. [ monitor beeping ] lets move on. [ male announcer ] find out what a hospital stay could really cost you at aflac. Com. [ male announcer ] how do you engineer a true automotive breakthrough . You give it bold new styling, unsurpassed luxury and nearly 1,000 improvements. Introducing the redesigned 2013 glk. See your authorized mercedesbenz dealer for exceptional offers through mercedesbenz financial services. [ indistinct shouting ] [ male announcer ] time and sales data. Splitsecond stats. [ indistinct shouting ] its so close to the options floor. [ indistinct shouting, bell dinging ]. Youll bust your brain box. All on thinkorswim from td ameritrade. Clamp. Glitter. [ male announcer ] staples makes it easier to get everything your business needs. Even custom banners. And now get 50 off banners and posters. Staples. That was easy. Now the answer to todays aflac trivia question. Which u. S. President was known for his Early Morning skinny dipping sessions in the potomac . The answer, john quincy adams. Welcome back to squawk. Apple says a small number of its employees computers were hacked but no data exposed. The breach occurred when some employees visited a developer website and exploited a vulnerability in the java browser plugin. It did not specify when the hack occurred. The Company Released a patch for its oxs users that can be installed from a security update. It appears to mirror a similar hack that occurred at facebook. It was very strange. They said some facebook employees had gone to see a developer and brought a couple computers with them and somehow during that meeting it happened. I dont know, you have a meeting, maybe theres people installing stuff on your computers. Kind of creepy. Kind of creepy. If you a commencemet on quess on anything you see on the show, email us. The futures have been barely bulging but coming after big gains yesterday. The dow was up about 53 points. The dow and subpoena subpoe p 5 year highs. Squawk box will be right back. When squawk returns, a special summit with Business Leaders who move markets. The ceo of haines celestial and kraft ceo Jonathan Kraft join guest host robert wolf to talk economy, business and prospects for the country. A special squawk summit only here on cnbc. Profit from it. How do you keep an older car running like new . You ask a ford customer. When they tell you that you need your oil changed you got to bring it in. If your tires need to be rotated, you have to get that done as well. Jackie, tell me why somebody should bring theyre car here to the ford dealership for service instead of any one of those other places out there. They are going to take care of my car because this is where it came from. Price is right no problem, they make you feel like youre a family. Get a Synthetic Blend Oil change, tire rotation and much more, 29. 95 after 10. 00 rebate. If you take care of your car your car will take care of you. Were about an hour away. Following a december decline. Were looking for Housing Starts to drop to annual rate of 925,000 units for january after 954,000 in december. Credit reporting agency transunion says late credit card payments up 9 in the Fourth Quarter compared to a year earlier. The average amount of debt for cardholders was down 1. 6 from a year earlier to just over 5,000. Right now, time for our special squawk summit talking about the growth of the economy from three Different Industries and where these guests see opportunity. Our guest host is robert wolf of 32 advisors and the ceo of haines celestial and president of the kraft group and president of the new England Patriots. Welcome to the set. Great to have you here along with our guest host. Good morning. Why dont we start out broadly and talk about where you see things right now. Irwin, tell us what youre seeing in the economy and where things are shaping up. Our sales are up 25 . I guess eating healthy not a trend, a way of life. You are what you eat. And i was asked about the increase in fuel prices, how that affects you. Listen, consumers will stay home. Were seeing good consumption. I looked at my walmart numbers yesterday from last week. Were still seeing good numbers at walmart. I love cold weather, love when it snows, they drink more tea, love flu season. Love when you guys all had babies and talk about the baby rate being down 7 but still consumption of baby food. Lets talk about walmart numbers. You get your numbers every week. Theres been a huge scare thinking walmart had a terrible month of january or february kicking off, too. I saw numbers last week and our numbers looked good. The consumers are buying food. We saw tea numbers being very strong. We had a lot of storms around, consumers buying products loading up. Its helpful. Let me jump in for a second in the retail world. Office max and office depot, 15. 15. 30 a share and issuing common stock for each outstanding share of officemax. We can see how the stocks are transcending ahead of the news. We can say its official. Interesting they completed the deal yesterday and havent put out a press release, put out an Earnings Release. Odd there. Buried in the Earnings Release . Buried in the Earnings Release. A strange way to announce a transactions. Is it like 2500 stores . 900 plus 1500. How many are left when its all said and done out of 2,000 . You give me a minute, ill get back to you. No. We dont know the answer. Im saying, i figure half. Debt consolidation. Half. Then who noknows, amazon and staples. Com, i dont know. You guys sell anything to those guys. Actually, we do. I was thinking, you might. We sell corrugated boxes to one of those guys as well as staples. Were staples guys. Ron sergeant is the best. Staples is a boston based company. Good or bad for you or doesnt matter . Probably doesnt matter in the scheme of things. I like it because its good for staples and staples is where my heart is in that game. Good from that perspective. Jonathan, how is business overall . Id say its pretty mixed right now. In our industry of corrugated paper, you see a trend and 85 of the guys are up or going down. This is as mixed as we have ever seen it. Really hard to draw specific conclusions other than some guys are hurting and others doing okay. Any way to distinguish who is and is not . Different industries . I was looking yesterday. It is as bvaried as you can believe. We have a lot of food customers and the ones creating new products are growing share in a market i dont think is growing very much. But theyre stealing share and their business is up and other guys are down. Manufacturing, which is something that always moves together is as varied and mixed as weve ever seen it. We have a cutting tool company, they make saw blades basically for the consumer and industry. Theyre taking business back from china. Theyre closing factories and moving back here. Their business is strong. We have a snow plow company that usually is incredibly busy this time of the year and running three days a week. They tell our guys their medium and small contractors, customers usually buying Replacement Parts are trying to figure out how to spend the capital because theyre not confident about the future. Is that weather related because we havent seen snow in many places . It really is. Last year had less snow, business through the roof. Small guys, my taxes going up, too much uncertainty, not going to invest capital dollars. Guys bringing the blades back, why are they doing it . A combination of things. They have figured out first, energy in general, people like this country. They figured out how from a Human Capital perspective to mix Human Capital and hard capital goods to do it more effectively here especially when you take out the transportation costs. Asia here with lower priced goods is now starting to make things less cost competitive over there and thats the reason. Thats a big shift. It is. Gentlemen, wry dont we try and throw our best ideas out. If you were looking at ways to try and spur growth and get ways for help for business around the country, what do you think is the best things . This is a jump ball for anybody who wants to jump in first. Like jonathan said, theres no such thing as the norm out there anymore. Next week, theres a Natural Organic food show. Well introduce 70 new products. Innovation is key. To sit back today and say, hey, how do i get my business growing . We need more distribution. You see so much going on in the retail consolidation. You asked about amazon. Three or four years ago, we did no business with amazon, theyre my top five customers because you sit home and order diapers and baby food. All his stuff shows up in front of my house. And innovation, key customers, how do i gain distribution. We have just gone into europe and we subsequent half a billion dollars going into the uk. How many people told me i was crazy going into the uk, why arent you staying here, carl icahn being a big investor, we wanted to make sure we did the right thing for carl. We have taken those chances. Has it paid off . It has paid off right for carl and we have a great relationship. And was it good when you went to the uk . Absolutely. Theres a lot of legroom and growth. From a. You can sit back and what ive done from the company starting it from scratch, half our sales are in the u. S. , the other half outside the u. S. Thats been the whole thing for myself, how i do 50 50. You will see a lot of consolidation in retail. Theres 33,000 supermarkets out there. Will see costco and whole foods go to 1,000 stores and trader joes and amazon. You have to get behind the players that will grow. Do you compete with herbal life . I do not competed with herbal li li life. There is crazy stuff in here now to get that economy joe, i have to tell you, this is one of the hottest becky asked about that looks like it already the whole thing about drinking juices today, you go back about innovation. What is it . A juice product a cold press. 1, 2, 3 so people see whats going on here. What happened . A lot of consumers are going on a cleanse, which means you want a three, four day cleans, dont eat, zrirng juidrink juic pasteurized, contains kale spinach. This one contains six pounds of fruits and vegetables. You will feel great. You drink six of these a day. I feel like im on pric bridesmaid bridesmaids. Before you came on we were chatting and the economy stalling. You selling organic foods you called say in some ways the fda may be benefitting your type of company. That has the great. Herbal life and for real . Whose side are you on there . Let me come back and answer roberts question. Every product we sell has a label. Its on the uda or fda controll controlled. In this country we had so many food recalls and we really have to. From a regulation standpoint, its tough to do business in this country, it really is. Being a public company, it is tough as a 2 billion company today, what we spend on being a public company, we could hire a lot of people. Not pasteurized stuff, how do you make sure it doesnt make you sick . It goes through a new type of pasturization youre killing bugs and important to us. One thing about pasturization it kills all the nutrients in the juice. Are you going to do this . 1, 2, 3. Andrew, its a lot better than her to thing behind that can i wont mention youre drinking, and drinking that. You should not be drinking soda, andrew. I have to tell you. Stick with the green stuff. It tastes good. I tasted some in back. It looks a little scary. It tastes great. A lot of sugar in it. A good sugar. Good sugar. Since when is there bad sugar. Its leaving your body, andrew, i promise you. It bothers me, robert, when you talk about regulation. We have to take a break. I love this guy but the Affordable Care act is doing more to kill small and medium sized business in this country than anything else. I think virtually everybody agreed health care needed to be reformed but virtually everybody would agree that congress was not the place to write that bill. And to have congressman do you agree, irwin . By the way, irwin would like to have less regulation, too. Becky asked where growth is coming from. Weve been trying to buy small and 3450e7medium sized competitr years. In 09 and 10 they were shellshocked, theyre coming to us today saying, buy my company. We cabinet deal with this. We will take a break and continue after the break. Yahoo chief Melissa Meyer on nbcs today show talking about her ni website and competing for talent. Details of that interview are just ahead. Dont forget you can find squawk box online and on mobile, too. Follow us on twitter at squawk cnbc. Like us on facebook. Visit our show page, squawk box. Cnb box. Cnbc. Com. [ male announcer ] how do you engineer a true automotive breakthrough . You give it bold new styling, unsurpassed luxury and nearly 1,000 improvements. Introducing the redesigned 2013 glk. See your authorized mercedesbenz dealer for exceptional offers through mercedesbenz financial services. Transit fares as in the 37 billion transit fares we help collect each year. No . Oh, right. Youre thinking of the 1. 6 million daily Customer Care interactions xerox handles. Or the 900 Million Health insurance claims we process. So, its no surprise to you that companies depend on todays xerox for services that simplify how work gets done. Which is. Pretty much what weve always stood for. With xerox, youre ready for real business. Welcome back, everybody. Take a look. Futures indicated slower. Dow futures down about 6 1 2 points and s p 500 down 1 1 2 points. The deal is official. Office depot is buying officemax in an all stock deal and each company will have directors on the deal. News was put into the fourth page of Office Depots Earnings Release under the title other matters. This slipped by. We were looking for other matters but they put it in earnings news. Each of the stocks are up better than 10 . Boeing has now found a way to fix battery problems on the boeing 787, increasing the space between the battery cells. Theyre telling reuters that the gaps werent wide enough. And there was criticism they were too close and the cells would overheat. Its only being reported by reuters at the moment and only citing one source. As people consider this news and think about what that means for the stock. Its been a muted reaction by the stock but indicated higher. Understand whats going on there. In other news on boeing, the engineers are split on a contract. The latest professional proof, now members of a small Technical Union rejected it. Both sides authorized the union to call a strike and they negotiated together but contracts are separate. Talks are set to resume and no walk stoppage expected in the near term. Looking into Insider Trading in the options of heinz. They had already filed a suit against an unknown trader who used an account in switzerland to trade off purported inside knowledge. Why is it possible its an unknown trader to them . You would think the fdc could figure it out quickly. Negotiations breaking down between alley financial and rescap. And makes it likely the company will have litigation. And Toyota Motors ramping up 10 in april. They are planning an increased due to higher than expected sales. When we come back, we will get additional thoughts from our special panel on growth. Jonathan kraft, irwin simon, robert wolf. Also an interview you cant afford to miss. Meet the billionaire who sold and apartment in new york and house on a private island in miami opts for the simple life. He specialized buy iing trouble companies and fixing them up. Nicholas bergeron when squawk box comes right back. How do you keep an older car running like new . You ask a ford customer. When they tell you that you need your oil changed you got to bring it in. If your tires need to be rotated, you have to get that done as well. Jackie, tell me why somebody should bring theyre car here to the ford dealership for service instead of any one of those other places out there. They are going to take care of my car because this is where it came from. Price is right no problem, they make you feel like youre a family. Get a Synthetic Blend Oil change, tire rotation and much more, 29. 95 after 10. 00 rebate. If you take care of your car your car will take care of you. Today is gonna be an important day for us. You ready . We wanna be our brothers keeper. Whats number two we wanna do . Bring it up to 90 decatherms. How bout ya, joe . Lets go ahead and bring it online. Attention on site, attention on site. Now starting unit nine. Some of the worlds cleanest gas turbines are now powering some of americas biggest cities. Siemens. Answers. We are meeting with president of the kraft group and president of the new England Patriots as well, next year, jonathan. Definitely. And ceo of hains, ceo robert wolf is here and irwin simon. I dont know if i should take comment comments. Eating healthy is not a fad. There are a lot of opportunities for weight loss and obesity in third world countries and mexico being one of the biggest markets right now, i think theres big opportunity for herbal life. I dont want to get too bogged down. As a ceo, i know you dont. I want to cut you slack. Jonathan seemed to be saying regulation is an issue and obamacare is an issue but youre producing along with your company . You said innovation more important. Youre no longer at a big bank making a payroll as ceo. Suddenly youre worried more about regulation than you seem to be . Im trying to keep under 15 employees somehow. Can innovation do it . Companies need to deal with what the reality is. Thats the reality. We now have more than 5,000 employees around the world. I remember when i said i want to keep under 15, it is what it is. Its a cost we have to deal with. We have done a great job managing our Employee Health plans and it will change a lot. As i sit back next year and see almonds and corn prices and commodities going up. I look at Natural Organic foods should only be 10, 15 higher than conventional foods. Youre not going to pay more, becky is not going to pay more for products. Andrew will, though, for baby food. I like preservatives. One of the big things is how were taking more costs out. In the green room, jonathan and i were talking about, if you did all my boxes for me, how do i make a better box, cheaper and recyclable. A big thing in business, how are we taking costs out of our business. Every year we start on white pages how are we getting 30, 40 million of productivity out of packaging. Every retailer are calling us, how are you shipping more efficiently and taking your conferences off. The thing bob is doing as a client. Is he a client already . He is a client. Youre helping with exports, imports, regulation and what was there was a fourth one. Hopefully he doesnt see the fourth one, restructuring. He doesnt see that one. Irwin is lucky, when youre in a Consumer Product business, you can innovate, you do it. We spend a lot of our time with basic manufacturing where historically in this country you have people that spent their whole life Building Companies that are today 10, 20, 30, 40, 50, 60 million, Small Medium Sized Companies like that, they are so discouraged. I was starting to say before we went to the break. When 09 and 10 happened we thought it was a chance to buy some and they were holding out all hope and those people across all manufacturing industries, theyre getting very discourage and very depressed. Aside from things like the Affordable Care act that kills you in terms of costs and administrative time and regulation, they dont see growth, real growth in the economy the only way in the future they could grow their businesses. Now they look at tax rates going up, they say, i have to invest money in capital to stay competitive, im going to get out. We now have people calling us who wouldnt even take our calls before. Its bad for america because when guys in their 50s, 60s, early 70s who were the heart of what were about are getting discouraged and throwing in the towel we have a real problem. It wont discourage the kids in the dorm room, harvard, mit, andrew was just talking about, will go out and employ entrepreneurs but it will discourage guys and bad for america. Talking about the sequestration and resolution, it really puts tax reform off the table. One of the plans i think the whole Business Community wants if we get Corporate Tax reform a good chance for manufacturing goes to 25 , regular taxes go to 28 . It is really important we get through these ridiculous hurdles over the next 30 days so we can get Corporate Tax reform back on the table. Manufacturing would start what we call it as insourcing, bring a lot back. It gets even more difficult the more you talk about closing additional loopholes, doing things one off piecemeal instead of overhaul of the entire system. Idealistically speaking it would be great to say were at 27 and up and down vote on every damn loophole but thats never happening and you have to break up this pieces because Corporate Tax reform has to be done. Its called a ground game, not a ground game not a passing game . I dont see any grand bargain that will take this wholistically. As jonathan said before, one of the things were seeing, heres a Company Started by two women grew to 25 million. Hit the wall. Couldnt take it to the next level. From a standpoint, you know, could i start an Hains Celestial Group again where i created 5,000 jobs. A lot of Small Entrepreneurial Companies getting bought up. As jonathan said before, were seeing Companies Come to us in the organic industries in big multiples in valuations, theres an opportunity for us to buy them out saying im hitting the 30, 40, 50 million ceiling and there will be a lot of consolidation out there. The same with hain, if we dont become a 4 or 5 billion company we will hit that ceiling, too. Health care cost, how many jobs i can take out. You have to grow. I have to grow because of my costs. No disrespect to langone, were talking acquisitions as a way of growth. I love ken langone and robert. Ken langone is brilliant. Joe, im sorry, i will let you ask your question. To me, unless roberts friend, mr. Obama, decides that he really wants to see job creation in this country, which is going to come from doing the things we talked about, improving the government, its not going to happen. Are you glad the ravens won everything and gronkowski, i think you could have beat them. Next year, we have to go. A great guy. When we come back. Breaking economic news, read on the Housing Market and latest Consumer Price index. Squawk will be right back. He doesnt own a home or car, lives out of hotels and carries only a smartphone. He owns billions. We will talk markets and life on the road when squawk box returns. [ male announcer ] this is not my home. There. I said it. They dont have pictures of my kids. They dont have my yoga mat. And still, i feel at home. Could it be the flat screen tv . The not so mini fridge . The different free dinner almost every weeknight . Or maybe, its all of the above. And all the rest. Am i home . Nope. But it almost feels that way. Homewood suites by hilton. Be at home. A talking car. But ill tell you what impresses me. A talking train. This ge locomotive can tell you exactly where it is, what its carrying, while using less fuel. Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say . [ male announcer ] to hold a patent that has changed the modern world. Would define you as an innovator. To hold more than one patent of this caliber. Would define you as a true leader. To hold over 80,000. Well that would make you. The creators of the 2013 mercedesbenz eclass. Quite possibly the most advanced luxury sedan ever. See your authorized mercedesbenz dealer for exceptional offers financial services. The homeless billion aaire moves from hotel to hotel in his gulf stream meeting with celebrities and big thinkers. He will join us on an cliff interview on the squawk set. Breaking news that could move the markets. Housing starts for january at 8 30 p. M. Eastern. Squawk box spring training. Less than 40 days remaining for Opening Night and we talk to the executive Vice President of the Chicago White sox. A third hour of squawk box begins right now. Welcome back to squawk box here on cnbc, first in business worldwide. Im joe kernen along with becky quick. I thought andrew would be the empty seat after drinking that juice. How are you . Im doing just fine. Becky is in the newsroom. Shes in the newsroom. I thought you were. Hes here after drinking that. Our guest host, robert wolf, ceo of 32 advisors, former chairman of ubs americas. More to come, but first first becky thank you, joe i dont know where you are. Im over here. Have some juice, too. Boeing is reportedly close to finding a solution to the dreamliners battery problems, a source telling reuters the fix involves increasing the space between battery cells to fry and prevent overheating. And Ceo Brian Moynihan was awarded a 72 pay increase to 12. 2 million from 7 million. His base salary from 2013 is due to rise by over 55 . Weve been talking about this, this morning, major indices to rise at five year highs. Everything is about flat lining, after big gains yesterday and a lot of questions about whether the market has really run too fast too far or whether stocks are fairly valued here. Overseas in asia, you did see gains. The hang seng was up about. 7 and nikkei up by. 8 of a percent. You will see early tradeshows things going kind of like they are here. Not too much movement. The biggest mover this is ftse up 25 points. Thanks. Among other stories were following, the deal is official between office depoet a poepoep officemax. Each company will have an equal number of directors on the new board. We should note it was put on the fourth page of Office Depots Earnings Release today under other matters. We struggled to see if the news was crossing the tape this morning. So far, no separate news release. I dont know what to make of that. Yahoo ceo Melissa Meyer announcing a new look for the home page. In an exclusive interview with the today show, they will take advantage of personal habits of news feeds and we will take a look at the new design in a minute with Cnbc Jon Fortt and cnbc has a partisanshnership wi yahoo . Dubbed the homeless billi billionaire, our next guest is an investor and philanthropist and focuses how to make the worlds nations work better, young is now is nicholas, and author for the 21st century. Intelligent governance for the 21st century. Tell us, what is the underlying premise of the book . The idea that governance really counts besides culture, probably the biggest determinant in our lives this is way we are governed, one of those things that has america so successful they had high principles and the question is in a competitive world today, can it continue to adapt and reform. Thats really the question. Other places around the world have similar challenges and some rising, thanks to changes in governance. You look at china, theyve made enormous progress the last 30 years, frankly thanks to a certain mode of governance and the question is the premise of the book, can we in the west learn from practices in the east and viceversa. Are we failing now . Well, it looks like we have become very partisan and that makes change harder. And change is needed. So we are not, lets say, ada adaptiadap adapting the way we should. I know that you remember another frenchman that loved the government here that wrote about it. Are you headed that way or are you headed more towards a more activist government . Well, the government is there to govern. Once you elected any party or leadership, the leadership and the government should be at least for a period of time less can be more, if both sides agree less is more. What unleashed those 200 years of exceptionlism, the government was there to let things happen, right, not to orchestrate the happening of those things. Im just wondering where does your book take us . Does it take us to more activist government or more activist people . I think a balance, in the sense that you need the will of the people has to be the determinant at the end. Government is elected. Once theyre elected, let them do their job. Let them do their job while in office instead of questioning and blocking it every time because if you do, then, you know, you dont have progress and you dont have decisiveness in a world thats become much much more competitive. Nicholas, you travel around the world making investments. We talk about you as a homeless billionaire because you sold your apartment and dont have a place you live i found fascinating to itself. How much these days does the role of government play in your investments . How much do all these issues we talked about whether debt ceiling or sequester or things going on in tax rates affect your decisions making investments these days . I invest very long term. In my mind, i have luckily a different view than short term view. Theres no question that places that encourage investments in long term thinking will, you know, be friendlier to investors than if you look at china or india. Have you made investments in china or india . I have. Theyre both very exciting places. India is a democracy, very vibrant but very difficult to get things done. China is not a democracy, quite opaque. So in that sense, quite scary. On the other hand, you can make long Term Investment s and the environment is much more friendly in terms of being effectiv effective. Go ahead. I had the great time yesterday with nicholas. We were just chatting for a while in his apartment and we aligned on a bunch of things. I thought it was interesting when he was looking at thei u. S he also thought there was a need for revenues and itemized deductions to be changed. Rented apartment. Rented apartment. Sounds like you had an apartment. Its a rented apartment. He doesnt own the apartment. Hes a homeless billionaire. Actually, im in a hotel. Its an apartment. Youre ruining our whole that its like an apartment. Like the size of my house. He also is quite negative on europe. Was interesting when we were speaking today how it seems like the Global Growth is just so slow. Part of getting the deficits down is leaning on taxes. My own feeling is that the u. S. , again, a question of balance. The u. S. Share of gdp actually pays the lowest taxes of any advanced country but the u. S. Has also big deficits. I think its a question of meeting somewhere in the middle. Tax rates for a modern economy in the u. S. Will probably have to rise. On the other hand, the entit entitlements will probably have to be restructured and some what lower and you have to meet somewhere in the middle. Ideologically today theres great resistance. In europe, you have a different issue. A system that has felt rated in the form of currency but doesnt have a Financing Mechanism to finance the currency. Politically, europe is in a position where they can help the whole and therefore cant help the individual economies. Until that gets resolved, meaning there is more federalization of certain common goods like financing mec imis mechanism, until Something Like this gets done or breakup, i think europe will continue to which is a trickier problem . Makes for better investing environment, problems with entitlements and revenue or problems with financing of the euro . The good news is that america historically has been more dynamic. You have positive immigration. You have one government. So at least if you need to make decisions, you have two parties. If you need to make decisions, the two parties come to some consensus, you can make it. In europe, its that multiplied by the number of countries considered. Much harder in europe. Chicken and egg. You look at gdp growth rates in the u. S. Versus europe the last 30 years and weve grown probably 40 faster so our citizens have accrued 40 more wealthy. At the same time, our taxes were a lower percentage of our gdp. Does that mean that the gdp growth was able to grow faster because our taxes were lower as a percentage of gdp or does it mean we need to come up to the same tasks as a percentage of gdp as europe, which has grown typically much slower than us . You see what im saying . Is it good to aspire to higher taxes as a percentage of gdp . I think its a question of social model at the end and societal model. More growth here but more inequality. In europe, i have the opposite. You have an comparitively generous welfare system, so the average actually but they grew 40 slower every year for 30 years. Same in japan, lower growth but very high Quality Standard of living for the average. So in one case you sacrifice standards of living. The whole key. Goes back to what you were saying. You talk about inequality. What is your take on that . You spent a lot of time. Not only have you done very well but spent a lot of time with eric schmidt and other Hedge Fund Managers have done very well. What is the ultimate answer for figuring that out or fixed if that is a problem you think is supposed to be addressed in all of this . You have to give opportunities to as many as possib possible especially if youre a rich society, like the u. S. Or countries in europe, its a question of giving the opportunities. Opportunities arent there, youre going to have continued inequality. A rich society should be able to afford to have much less inequality and be able to this is the difficulty, should be able to adapt and o offer sort of modern jobs, which means very important investments in education and investments in things that are long term. Thats harder in a very politicized environment. They need to invest in education and make sure we get our moneys worth, thats the other thing, too. We need all kinds of we spend a lot and get nothing for it. What was interesting was your advocacy work, folks in california, you can get things done. I thought that was interesting why you thought california was different from most other states. California has the best and maybe the worst in the u. S. Together. Incredible. California is number one in technology, media, actually agricultural, at the same time, has a pretty high unemployment rate. So theres a lot going and a lot not going. The question is why the areas that are not going, how can you help them . California, as a political system, is quite unique, whatever government cannot do, can be reformed by referendums. Thats perverse, but thats one of the reasons why our institute has focused on bipartisan reforms in that state. Nicholas, we have to leave it there. Thank you for coming in. Come back. The book called the intelligent governance for the 21st century. We talked about it when i finished it. Melissa meyer and yahoo s new home page. Housing starts and Producer Price index for january. And spring training and deal making with the executive Vice President of the Chicago White sox. [ cows moo ] [ sizzling ] more rain. [ thunder rumbles ] [ male announcer ] when the world moves. Futures move first. Learn futures from experienced pros with dedicated chats and daily live webinars. And trade with papermoney to testdrive the market. All on thinkorswim. From td ameritrade. All on thinkorswim. How do you keep an older car running like new . You ask a ford customer. When they tell you that you need your oil changed you got to bring it in. If your tires need to be rotated, you have to get that done as well. Jackie, tell me why somebody should bring theyre car here to the ford dealership for service instead of any one of those other places out there. They are going to take care of my car because this is where it came from. Price is right no problem, they make you feel like youre a family. Get a Synthetic Blend Oil change, tire rotation and much more, 29. 95 after 10. 00 rebate. If you take care of your car your car will take care of you. No two people have the same financial goals. Pnc works with you to understand yours and help plan for your retirement. Visit a branch or call now for your personal retirement review. Welcome back to squawk. Yahoo ceo meyer unveiling a new home page show. It is her most important 340e789 since she became ceo yahoo . Its the most highly trafficked page. Listen to how she described the home page this morning. Its more personalized and more dynamic. People said, give me a reason to come back to yahoo today and the content is updated and refreshing and gives you the information you want and a few things that are nice and a bit of surprise. This design takes a few influences from facebook and twitter. Its got a news feed that automatically updates as you scroll down. Nice button in the lower right hand corner you can click to get to the top of the page. This design is heavily influenced by smartphones. There are applications on the right side of the page for weather and finance. Its easy to repurpose that design to the smartphone and tablet design. Flickr looking at things differently than a lot of people we talked to. We have talked to people who said housing is the best place to put it. Hes putting his money into rental properties because he thinks youre in a situation where its never going to be as popular to buy into this. Maybe you buy your own house and not trying to flip houses like you were. I would say sam is possibly right. Credit score is high. Difficult to get a loan. Its up north of 700 to get a loan. Its tough to get housing and refinancing and why people are continuing to rent. Theres a nervousness. I think over the next two to five year period you will see investors come back in and you will see we have had no housing really build in the last three to five years. Supply has diminished dramatically. We will see people say i want to put my money to work on housing, one of the best investments in this country. You look at particular ways to play that out aside from buying your own home, how would you advise investors . The stocks run dramatically, look at poltty, toll brothers, even ones that had to go through a tougher time, visa, all doing extremely well. Thats one way to play in the Home Building sector. Its run quickly. The other way is you will probably have to look hat investments whether collectively with other people buying houses and renting them out or, you know, maybe people look at their own house and decide its time to upscale. Robert, thank you. We will continue this conversation with robert wolf. I like that idea of upscaling. Coming up, investors get key Economic Data points. We will bring you the numbers and Market Reaction. Spring training is under way with just under a month until maj Major League Baseballs Opening Night. We will talk to White Sox Ken Williams executive Vice President and deal making in his office for the season in the back half of the hour. A new role. Working behind the scenes to provide companies with services. Like helping hr departments manage benefits and pensions for over 11 million employees. Reducing document costs by up to 30 . And processing 421 billion dollars in accounts payables each year. Helping thousands of companies simplify how work gets done. Hows that for an encore . With xerox, youre ready for real busine with fidelitys new options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades en you open an account. [ engine revving ] [ male announcer ] every car we build must make adrenaline pump and pulses quicken. To help you not just to stay alive. But feel alive. The new cclass is no exception. Its a mercedesbenz through and through. See your authorized mercedesbenz dealer for exceptional offers through mercedesbenz financial services. Welcome back to squawk box, everyone. Sony is going to be holding an event today in which it is trying to outdo the playstation 4 expected some time between now and june. The playstation will offer the ability to stream games online. When we come back. Economic numbers for Housing Starts and the price index for january. And the futures have been off all morning and s p 500 down just under 1. With the spark cash card from capital one. Boris earns unlimited rewards for his Small Business. Can i get the smith contract, please . Thank you. Thats three new paper shredders. [ boris ] put em on my spark card. [ garth ] boris Small Business earns 2 cash back on every purchase every day. Great businesses deserve unlimited rewards. Read back the chickens testimony, please. Buk, buk, bukka [ male announcer ] get the spark Business Card from capital one and earn unlimited rewards. Choose 2 cash back or double miles on every purchase every day. Told you id get half. Whats in your wallet . Welcome back to squawk box. We are about a minute away from Housing Starts and Producer Price index numbers for january. Rick santelli is standing by at the cme in chicago. Economist Jeffrey Cleveland is joining us wow thats interesting, live all the way from los angeles. Jeff, welcome. Good morning. How are you . Steve liesman is in the studio and, steve, we were just talking to robert about housing. What should we look for . Stepdown in Housing Starts. We had a pretty good month in december and we give it up in january and the question is whether or not it is seen as a trend with the numbers disappointing as well taking a one month drop when reported earlier this week. The other thing is ppi. That quill tick up in the headline with that will tick up in the headline with a lot of economists talking about ticking up of january in the index. Here we go. Housing starts 890,000. That is down 8 1 2 because last month was 954, upgraded to 973, shifted down to 890. If we look at the permit side, last week upgraded and did improve to 925,000 to a neighborhood slightly less than 2 . Producer price index for january up 1 sorry, teasing you, up. 2 of 1 , strip out the all important food and energy, which has horsepower these days, also u up. 2. Some subtle revisions from last months headlines, down. 3. Lets take a big view yearoveryear, up 1. 4, a bit light from last month. We look at core food and energy on yearoveryear basis, up 1. 8, higher than expecting but. 2 cooler than our last look. Lets summarize. Inflation, these numbers never make inflation look like a problem. You could be at the top of the mountain. If you have a reprieve, month over month but close to expectations. Starts, will make some nervous after the National Association of Home Builders Market Sentiment index yesterday, a couple points less than we were expecting. Of course we will continue to monitor this. Topic, housing, you guys were talking about it. Thats all they talk about on this Trading Floor. I will tell you, when interest comes to housing, its location location location. Chicago isnt one of those cities thats burn burning in the Housing Market at the moment. Very quickly, were at a 2. 03 yield. We havent settled at that level, so this could be a new high going back to april. We link up to positives or negatives of equities and seem to recalibrate every couple of days and some what stuck in the zone. Back to you guys. Lets get back to Steve Liesman and jeffrey, economist. Do you have anything about what rick said before we go . Big decline in northeast and midwest, perhaps weather related declines but cooling off from december. The ppi not much inflation going up the chain, in terms of less processed goods but some of that will change in february because the big decline was energy prices, specifically gasoline. I dont think you can make a case from ppi numbers that inflation is a problem. Its pretty good when it comes to profitability and input prices. You saw the housing numbers. Just overall, where are we . Where oil is . Were seeing mixed signals on exactly how strong were going to be this quarter. I think in terms of housing, you have to keep in mind the recovery will progress in a seesaw type manner. Especially winter months, could be volatile, starts are down but doesnt mean renewed weakness, more of a weather related issue. I noticed the permits are up. Permits should tend to lead starts. Thats forwardlooking as a forwardlooking measure, better starting activity as we go into the new year. Were still at pretty depressed levels, in the scheme of things. If were sub 100,000, 1 million at starts at annualized rate. Still more of depressed environment. But if we do see this as a couple months of up and down seesaw type action and we move higher, i hope all my bullish friends get really excited. Housing tends to, at least historically a great long leading indicator and should point toward better Growth Opportunities ahead. I have a long term chart of housing in the back. It shows if you go back to 1950, average annual Housing Starts 1. 4 million. Thats with the population we had throughout that entire period. Obviously, the population has grown. Thats our housing rebound, that little dogleg on the far rate there. Thats what consider to be a housing rebound really quite anemic by itself. Were still below a million. Its a little bit hard to call it a real rebound. Theres a lot of upside, wouldnt there be . I dont know what the right level is. It cant possibly be given the population growth we had in this country, cant possibly be where we are now. I would say its the new normal. Over the last five years, we were running at 300,000 for a period of time. Were now talking about a m million starts. We have come up from the lows progressively and pretty quickly. I think with respect to getting back to 2 million, thats assuming we will have almost 70 of this country own homes again. Most people thought that was a very high number. The question is what is the right number . Is the mid 60s the right number . Low 60s . I think right around a million permits, if you talk to Home Builders, they would be excited. Do we have the Balance Sheet in this country given what happened to doddfrank and qrm, do we have the Balance Sheet to provide loans to create the mortgages needed to make a million or million and a half new homes in this country. Thats the missing ingredient. In the last cycle when we ran up, it was the credit impulse. As far as i can tell from looking at credit metrics, its just not there. I think thats once in a generational type credit boom we saw. I dont anticipate that coming back. I do agree markets work, we just stop building houses and eventually, well need to build more, i dont think thats a boom situation that we get ourselves in, a question how long that takes timewise to get back to that 1. 5 million level on starts. There are three things hurting t hurting the consumer these days. The payroll tax increase, higher gas prices wait a minute, steve, wait a unit . For the last three days. How do you know cause and effect. How do you know its only the 2 payroll increases. Maybe its the tax increases on upper bracket and hiccup after the holidays. Why is that the assumption for everything going wrong. I didnt finish what i was going to say. Three things out there. Payroll tax increases, income tax increases, higher gasoline prices. What i wanted to ask jeff about a fourth thing out there, ubs and the report said the real thing hurting consumers are late refunds. I wonder if you want to weigh in on the walmart memo that has everybody spooked and whats really happening with the consumer right now . I think you could make an argument the payroll taxes is taking a bite. At the end of the day, i think its going to be job growth. You look at employment, the population ratio, you dont see a recovery on that. You see a little bit of recovery on Housing Starts and building permits, but in terms of who is out there that wants and needs a job, that still remains not quite in recovery mode yet. Thats a bigger driver of all sorts of other things we see, spending activity revenues into the federal government. Thats a big movement. We need growth and employment growth. Im reminded, jeff, im hearing from kevin, did you rent being there after your last appearance finally, and watch it and listen to Chauncey Gardner you were channeling about growth . Andrew did not. Did you do that, like you were assigned to do that and realize how funny that sound . Professor joe, i did my homework, i found a ve very found it very funny. How great was it . Peter sellers . Its great movie. Great movie, great actor. I even watched the outtakes. You tell raul do you remember that . Joe, its funny t, your particular humor requires the audience to have seen a given number of movies. What are other ones . Unforgiven. Herbie hermans adventure. None of the new ones. Must see. None of the new ones. Joe, what was my key message that day . The u. S. Economy. Growth gardening you need strong roots. What about the slap shot, joe . Isnt slap shot on the list . Slap shot. Good oldfashioned governmen government. Rick, you had your anniversary yesterday. Youre ready for a new one, i think, right . You know what, were still fighting the old one. Its four years. In another four years, i have a feeling were still discussing the same issues. Well see. You heard from a lot of people about Affordable Care before. When we see what i see i dont want to go back above 8 i really dont. Im hoping thats not in the cards. Who knows. It depends how you deal with people only working 30 hours a week. The market adjusts factor than the government can implement bonehead programs. Thank you for playing along. Andrew did not do it. Thank you, rick and steve. I just saw the shawshank redemption. That, i have seen. Coming up, it is time for squawks spring training. We catch up with Chicago White sox executive Vice President ken williams as he helps his team get ready for the season. How do you keep an older car running like new . You ask a ford customer. When they tell you that you need your oil changed you got to bring it in. If your tires need to be rotated, you have to get that done as well. Jackie, tell me why somebody should bring theyre car here to the ford dealership for service instead of any one of those other places out there. They are going to take care of my car because this is where it came from. Price is right no problem, they make you feel like youre a family. Get a Synthetic Blend Oil change, tire rotation and much more, 29. 95 after 10. 00 rebate. If you take care of your car your car will take care of you. We create easy to use, powerful Trading Tools for all. Look at these streaming charts theyre totally customizable and they let you visualize what might happen next. Thats genius strategies, chains, positions. We put em all on one screen could we make placing a trade any easier . Mmmm. Could we . Open an account today and get a free 13month e ibd™ subscription when you call 18882800149 now. Optionsxpress by charles schwab. Spring training has begun. There are many deals to be made ahead of the baseball season. Joining us is ken williams on t the on the list of the 100 top black leaders. First, gm, you brought a world series to the white sox in 2005. You were a good center field, too, right . You know, defensively, yes. The people that ah me play would probably agree with that. Then, youd have to get into the discussion about the offensive side of the game. We will pass that. Nobody wants to be offensive. A double star at stanford. You could have been a defensive back. Your son is, any way . No. There is an interesting back story with that. I actually signed a professional baseball contract outigh school but then went to stanford and played football at stanford. I played wide receiver, returned kicks and punts. But interestingly enough, before one of my last College Football game, a guy by the name of jack harbaugh, jim harbaugh andon to harbaughs father the dad. Exactly. Came over to me and says, kenny, theyre not using you enough on offense, youre playing defense. The next game. As a matter of fact, youre going to start. I thought he was nuts. By the time he got done talking with me, i not only believed that i could play the cornerback in that game, i believed i was going to make all pac10 and go into the nfl as cornerback. He had that kind of enthusiasm. When i talked to my son, kyle, and asked him how jim what type of personality jim had, he said, dad, the way youre describing the father is the same as the son. Its not hard to see why that team did as well as they did. Brothers. So we need to sequence that genome and maybe we can find a gene for that. Amazing. Last year, i saw what the soxs record was supposed to be and you almost did it in detroit. How will you do it this year . Its too bad. We had a season last year and hired a new manager in robin ventura, a new coaching staff. They did a bangup job motivating the players and getting them to play fundamentally sound baseball. For 118 games during the season, we were in first place. Unfortunately, we couldnt we didnt match up well and didnt play well against some of the teams that ended in the bottom of the standings. Thats where we lost to the division. We dont believe it was someone else won it as much as we lost it towards the end of the season. We hear a lot about the pr prognosticators out there and projections this year, where well finish. We have a tendency to grind it out and focus who we are and where we will be. Usually, were in a competitive situation and not conceding anything. We have good Young Players we brought up last year that hopefully take that next step and make the whole summer exciting for chicago. With ticket sales and everything else, how do you gauge the economy right now . Better than last year . Tough . Where are we . I think in different markets, you know, you will get a different answer depending where you are. Its hard for me to cry. We have a little bit over 100 million payroll. Of course, you have to have the revenues to support that. In oakland and san diego and kansas city, youre looking at revenues half as much. Thats another issue with regards to parity and all of that. Im not going to complain too much. We dont draw as much as id like us to draw, obviously. Weve got a fan base you need to prove that youre going to be an exciting team, you will be in contention and you have world series chance. Otherwise, theyre not going to spend their discretionary dollar. On the other side of the town with the cubs, its a little bit different. We have a fan base, we have to earn it. We start the season with that thought in mind. We work from there. We are aggressively trying to do as much for the fan experience. I think thats the key in sports these days, in any kind of entertainment these days, how are you going enhance the fan experience. Once you start to do that, people will take notice and hopefully attend more games. Hoping for an all midwest world series. The reds and some other team, i guess it could be the white sox. The reds yeah the reds are one of those teams that, you know, they the manageme management you cant say enough about teams that have little resources but their Management Team exceeds those resources, you know, and whatever the sport, exceeds those resources and produces a quality product and the reds with dusty baker are one of those teams. Id like to see an all chicago world series. Okay. Sure. Right. That would 3450emean the cubs a the world series. What are the chances thats all right. Appreciate it. Hope to see you again. I love spring training. It means summer, boys of summer, all that stuff. Appreciate it. Dont forget to check out the rest of the grio 100 list at grio. Com. When we come back, we will talk about stocks to watch ahead of the opening bell. Jim cramer will join us for the New York Stock Exchange. Are you ready for the stock of the day . Its coming up, right here on squawk box. With fidelitys new options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. All stations come over to mission a for a final go. This is for real this time. Step seven point two one two. Verify and lock. Command is locked. Five seconds. Three, two, one. Standing by for capture. The most Innovative Software on the planet. Dragon is captured. Is connecting todays leading companies to places beyond it. Siemens. Answers. Welcome back to squawk box this morning. Lets get down to the New York Stock Exchange where jim cramer joins us this morning. Good morning. Jim. Good morning. We could talk about the Office Office depot and max care. Suggesting they may have a fix for the battery. I think boeing has been underestimated. This is a Great American manufacturer. Repeatedly weve heard it will take months and months. Boeings got one of the best engineering staff in the world and theyll come up with a fix. And it wouldnt shock me if this thing is back in the air in 90 days, maybe less than that. I think thats why boeings not gotten hit. As far as the office depot, office max, i regard it as positive. The two Companies Getting together. When the staples deal was nixed in 1997, this might be a real player versus costco. Weve had a couple of people on today, that, you know, robert is the president s favorite banker and everything. But hes saying we need to close these loopholes and do it not necessarily i guess you want to cut spending, too. You made a point in the past that we havent done enough. There was a piece yesterday by speaker boehner, and i found myself saying, yeah, like no kidding. I mean, how much more can we get . How much more progressive can the tax rates get . I would love to see the carried interest go away. Those people are turning ordinary income into capital gains. You know, its the spending side. How much do people think that we can afford . And i know we all realize that theres fat, in the military theres fat. I see theyre going to cut the lowest end people. Weve got too many generals. But honestly, this is a spending issue. Just for clarity, i am absolutely not for rates going higher. Okay . No, no. You want to do the loopholes. How about the mortgage deduction . I would not get rid of the mortgage deduction. Housing is still no, i would not get rid of mortgage or charitable. I also would absolutely work on entitlement reform. Theres no question that bingo. Making payroll nowadays. Hes more or less now kind of he doesnt like regulations. Ive always said we have to close the gap at about 3 . I liked it when it was 21 and 18, not 24 and 14. Look, yesterday we had could those guys be more rational . Yeah, youre really rational, but youre way out of whack with what were doing. Rationality is one of the lessons. You had the guy from the white sox, he should be running the country. Hes got the payroll down, a chance at the world series. He played for stanford. You should be president. Ive got to break in for one sec, jim, back to office depot and office max. This is crazy. Theyve now taken the press release down, according to people close to the transaction, it was not supposed to go up. The deal has not been reached. What . What . Are you kidding me . Call up these stocks. They were both up more than 10 . It says the deal negotiations are ongoing, according to two people with knowledge of the matter. They were still attempting to finalize the agreement. Several news organizations, including us obviously, quickly reported the terms. They were in the stupid press release. Apparently this press release was put out prematurely, and now were going to be waiting on word whether this transaction has been reached or not. As youre reporting this. Remember when google issued arly and it turned out to be a great buying opportunity . Are you worried about the boeing reports still, too, andrew . That was only a that was one source from reuters. Boeing has a parking problem. The papers are incredible. Anyway, well ill try to figure out more during the commercial break. You cant put the genie back in the bottle. Robert wolf has been our guest host this morning. Well give robert the last word when squawk comes right back. Tomorrow on squawk box, boone pickens. Hell join us for an hour to talk about the recent burst of m a activity and the future for his natural gas plan. Squawk box starts tomorrow at 6 00 a. M. Eastern. How do you keep an older car running like new . You ask a ford customer. When they tell you that you need your oil changed you got to bring it in. If your tires need to be rotated, you have to get that done as well. Jackie, tell me why somebody should bring theyre car here to the ford dealership for service instead of any one of those other places out there. They are going to take care of my car because this is where it came from. Price is right no problem, they make you feel like youre a family. Get a Synthetic Blend Oil change, tire rotation and much more, 29. 95 after 10. 00 rebate. If you take care of your car your car will take care of you. Executor of efficiency. You can spot an amateur from a mile away. While going shoeless and metalfree in seconds. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. Now this. Will work. 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