Transcripts For CNBC Squawk Box 20140214

Crossing the wires. It is official. Joseph a. Bank is acquiring eddie bower for more than 800 million in cash and stocks. Talks will be rooub roumored ea this morning. Joseph a. Bank does have the right to end that agreement if it receives an acquisition bid that et feels would create more shareholder value. Joesest a. Bank and menswearhouse have made bids in the last few months. Andrew, youve had some pretty strong thoughts about this move when it was first rumored that it might be happening. This is the talk to the hand because its nanny, nanny, nanny. Yeah. Craziness. We can talk about that more in just a moment. Weve got some frozennomics to talk about first. The unusually harsh winter will be trimming 0. 3 Percentage Points from gdp this quarter pulling q1s annualized growth rate down to 2. 2 . The weather has closed businesses. Its disrupted transportation supply chains and kept a lot of shoppers at home. Among the other drags on the economy, energy bills as consumers have to pay a lot more to keep warm. The general survey, taking before this weeks latest storms, those polls said the economy should pick up once those moderate. We have a storm coming tonight, joe, and another one to three, apparently. And tuesday . Maybe tuesdays not on. I dont know. You remember when i brought in last week your newspaper . It says the end of snow with i didnt save that. I wanted to actually have that you should see my house. Ive got drifts like this. I wanted to stand in front of it where it says the end of snow. I believe and i dont know this. I thought it was written by a ski editor and it was about the end of snow at some of the great ski resorts. I went back and read it after joe talked about it. It said the end of snow. He didnt specify that this was the end of snow just a there. The end of snow everywhere . He was talking about it from his perspective on that. But i didnt see the framing that was like, basically, the snow has moved. I only read probably the first three or four paragraphs. Ill show you the comments from 2008 where he blamed the end of snow on sarah palins love for big oil. But he said kids in virginia will not snow what snow is very, very soon. Theres a lot of people that said you will not know your kids will grow up not knowing politics aside luckily, you changed it to change. To climate change. Yeah. So now you see, you do need to decide. Ive seen the alarmists. They said no snow means its happening and lots of snow means its happening. Now i guess theyre on the lots of snow means its happening. But you have to make up your mind. The farmers almanac was right this year, really cold, a lot of snow and the farmers almanac is a better model. But i think municipalities and states are gsh municip mus are going to have a rough time. Here on the east coast, theyve run through the snowplow budgets and the salt budgets. There wasnt a road plowed between here and my house this morning. I think people are exhausted from all the plowing. Its really pretty amazing. In our headlines this morning, Procter Gamble is reportedly beginning the search for candidates to succeed the chairman aa. G. Lafley. He was not going to be a long timer. The household productsmaker said considering some of its current and former executives, no normal search process is under way. It would help us if that mohler guy would get it. We like him and just for us as a show, i dont know if it would be good for the company, but we would be able to get the ceo of p g all the time. Go john. Yeah, go john. The 66yearold came out of retirement after his successor was abruptly replaced last year amid prompting from investors. And tesla closed at an alltime high yesterday. Earlier this month in toronto, a model s parked in a garage reportedly caught on fire after it was taken for a drive and was not plugged in. Tesla confirms the fire, but its down playing the incident saying the fire didnt originate in the battery or the charging system or the adapter or the electrical do they have to responds every time this is a question. Does it have to respond every time dallas fire of any sort . Yeah. And when was the last time you heard but this is new technology. The point being that it wasnt any of these things, you still have to respond to it. There still are questions about the technology. So theres going to be one on month i dont know what the average has been. There are fewer model ss on the road. And if 12 of these cars are on fire, i think its a pretty big deal percentagewise after the number they have out there. How many cars do they have out there, do we know . Youre talking about the pretty woman that may have been bought by four seasones. Sorry. The topic from before the show. Its nice, but its kind of old. Back to the model s, i dont know how many there are on the road. I would think the percentage numbers at this point maybe arent a big deal yet, but we are interesting. If you hear about these buyers, you want to hear what happened. Its the fifth place, though, involving a model s in the last five months. Regulators are currently investigating the cars battery safety system. The elon musk says he believes that the nhtsas probe will end. But we have had people say that because the battery is spread out over the entire car that if you hit a pothole those are the guys that must be short the stock, the ones that say stuff like that. But there are people that say its really safe. Even having said all this, id drive one. But because its the entire bottom of the car is yeah. Just to put it on record, there are, according to the l. A. Times, about 23,000 model s cars that were sold, in 2013. But five fires on 23,000 versus the number of fires you have in the United States on every other car versus how many cars are out there what happened to this gm car . 778,000 being recalled of these crappy little cobalts and opponent y pontiac g5. I think oprah gave away a g5. Isnt that what she gave away . She gave away one of those small, crummy looking a g5 . I think, remember she everybody gets a car. When i think of g5, i think are you thinking of a g spot of something . What g you mean you think jet . You do. You think caviar . You think cobalt and i think about the plane. The 1 ier. Caviar. You would like those caviar chips that carl tried the other day. I might. I have a note to have him bring them back. On other auto news this morning, chinas state media slamming aston martin over its slamming of a sports recall. Recalling more than 17,000 cars, what sort of vehicles did it produce in late 2007 . It discovered a chinese subsupplier using counterfeit material in its accelerator pedal arms. But china media says the carmaker invoted a stereotype to mask its own short comings. I love this little battle. Other major corporations such as apple, walmart and yumm brands have all attracted criticism from chinese media, as well. Tech news to get to this morning, as well, Microsofts Windows 8 system has now recorded more than 200 million licenses since 18 months ago. It now lags windows 7 which launched 240 million within its first year. This is the first microsoft to stay public for more than six months. Microsoft Research Reports only 11 of pc users worldwide are using windows 8 or 8. 1. 48 are sticking with windows 7 and 29 are still running windows xp, which is now more than a decade old. Do we have windows xp on our computers, folks . The ones right in front of us are window xp. Buehler. Buehler. I have a High Performance pascale. Did you see pretty woman . Years ago. Thats the beverly wilshire, right . Owned by the four seasons now. Four seasons on putting it out there. Four seasons on dohini. Anyway, number of stocks its all about 1 here. You saw Robert Franks piece. Did you see how we titled that . I dont know what youre talking about. We had with guy on from nicole miller. So we entitled the piece, i think whoever titled it, rich ceo the 1 . Says the recent ceo says poor people just get over. So the Huffington Post picks it up immediately and put it there. And robert frank put dell tails in there. 31 around around the world, china, you being the upper 30th in china. Anyway, a number of stocks are moving in extended trading, kraft reporting a higher quarterly profit, lower costs and high accounts gains. But the food giant says it expects a slow start to the year in part due to the weak u. S. Job market and the recent reduction in federal food stamp benefits. And shares of aig getting a boost after the Insurance Companies earnings and revenues beat the street. Aig raising its Quarterly Dividend by 25 to 13 cents a share. And brocade up in extended trading. You always go straight to the prompter. I never deviate. Betterthanexpected earnings and revenue, were to talk to the companys ceo at 8 30 this morning. But Weight Watchers was a big loser after the bell. I heard about this, also. Oh, my god, i wanted to if i hear if they give me the world again in 20 minutes, because its a 60minute drive. Ive got the world three times and they just keep tossing to people, tossing, tossing, i didnt like it. Shares of the diet company the guy who the anchor in the morning is pretty funny. Hes talking to some lady driving you around out in long island. Oh, its slippery out. It was slippery yesterday. But he definitely adlibs some stuff. You have to listen to the guy. Hes pretty funny. There are some crazy ones. No, but hes actually funny. You can tell hes writing i would rather listen to some jazz. I used to have my radio show on. Thats a big selling point. Shares of the diet company fell sharply after it offered a full year earnings forecast far short of wall street. You know what people are doing . Theyre wearing your stupid things now, your bracelets, and theyre monitoring your own weight and theyre not using Weight Watchers anytime. Thats the competition from diet app and calorie counting gadgets. Im up to speed because of 1010 wyn. Anyway, the company seas its going to finalize plans to reorganize its business. This is the fourth time. This is the fourth time ive had a dose of youre going to be fun by 8 00. Mac, coffee . Do we have oh. Well, i didnt have time because it takes an hour to get in. It takes an hour to get in. 15 minutes to the show. No, its true. I thought i was going to have a wet head still i walked in so late because i was driving 10 Miles Per Hour because its a mess out there. And tomorrow morning and again tonight. But the kids have school today. Did you see what the rokanator said . My man al. Oh, yes. I heard that. He its because de blasio blamed the weather forecasters. And it was like, wait a second, we were on de blasio, i thought that he sort of stood down on this whole thing. Well, they did. They sent kids no, he said i respect al and the whole thing. Al said i have a forecast for de blasio, one term. When i thought was, wow, step out. Willie geist was sending pictures of al tweeting all this stuff. Al is in sochi, right . Yes. Anyway, lets get more details on this joes on he a. Bank deal to buy eddie bauer. Joining us on the squawk news line is gilbert harrison, adviser to joseph a. Bank for a long time. Good morning. Good morning. Is this deal just a way for joesest a. Bank to thumb its nose at mens wearhouse . No way, becky. We were first karr contacted, eddie bauer in february 2012, two years ago, when we were retained to start the acquisition search. This was one of the First Companies we contacted, actually, one of two. And say Golden Gate Bridge owns them, had just bought it recently. They were in the process of turning them down. We talked to them several times during the process and finally a month or so ago they agreed to talk to us. Its a great deal. And you couple this deal with the tender offer, which im sure youve seen it, 65 a share, its a winwin situation for the company and its shareholders. What i dont understand is i could see the mens wearhouse joesest a. Banks deal lining up beautifully in terms of the synergies, in terms of the overlap. Eddie bauer to me is a very different business than jous he a. Banks. What do these companies together look like . These companies have a potential to be a diversified apparel retailer with huge Growth Potential over many years. The mens wearhouse acquisition gave you significant synergies. We thought maybe 75 million of synergies rather than 125. But after two, three years, your category would be filled up and the growth would slow down. With the eddie bauer situation, we have tremendous growth that will continue for a long period of time. They havent saturated the business and the new Management Team thats been put in, including mike ejax who turned around north face and columbia is extremely good. You couple that with bob eldridge and neal black, and you have an unbelievable we think growth story with a diversified business portfolio. Bring us behind the scenes a little bit so we understand what happened. Would have been covering this, i almost feel like for months looking at the mens warehouse and joesest a. Banks deal back and forth. It felt like a little bit of ego got in the way of that transaction. Both sides wanted to ultimately merge, but both sides wanted to run the company. I think it was more than that. We approached mens wearhouse last september. We did it quietly. Talking to doug ebert, the coo. We sent them a letter. We heard silence, silence, silence. We were patient. We happened to do a friendly deal. We talk about the synergies. We offered them a 42 premium over their price the day they sent the letter. A 26 premium over their last high over the last six years. And what happened . They not only leaked it to the press, they came back and they absolutely trashed our company and told us that we didnt know what we were doing. We grew over the last six years 11 11. 6 in sales. They fell. That 12 included the bad year we had last year. So copy autopll of these things together, copy their comments about antitrust and that would be an antitrust situation. And you know that we have gotten now inquiries from the fcc about antitrust. It was a nutty situation. Although, gill, let me ask you this. Is this idea of the mens wearhouse deal completely off the table . Because you have the right to terminate the agreement in order to accept a superior proposal. How likely do you think it is that a mens wearhouse deal would come back . I think its up to mens wear house. We have a fiduciary duty to do whats in the best interest of our shareholders. There is a fiduciary out that we have should mens warehouse come back and offer us something that would make sense. As you know, when we reject the 57 a share, it was so below what our company is worth, another one without the synergies and with the synergies potentially significantly more. Real quick, is there a breakup fee on this transaction if mens wearhouse wanted to jump in . Yes, there is. Whats the price . A little less than 3 . Gill, thank you very much. Its great talking to you. Okay. Thank you. Happy valentines day to all of you. You, too. Thanks. Break up fee. Look at this. A merger and marriage on valentines day. Isnt that a nice thing . Really nice. Really nice. What color is that tie . Youre a real you know what . I had a red tie. I preferred you already had your red. Thats your only red tie of the season . Well, i couldnt find my other red tie. Im almost red. We will come back. Will you be my valentine . More than your valentine. Coming up, a sector literally grounded by the snow and ice. How much is this powerful storm going to impact the Airline Industry right before a big getaway day . And while its snow and cold here in the states, its springlike at the Winter Olympics. Weve got highlights, fresh medal count and a ceo doing big time business in russia. Thats coming up in the next half hour. Were back in a moment. Announcer before you hit the road, here is your travelers check. Winter storms, storm related or not, its always good to know which airline has the best ontime performance. So which one topped the list for 2013 sflp thats next. vo you are a business pro. Seeker of the sublime. 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Lets get a sense of how the Major Airlines are faring during this deep freeze. Good morning to you. Good morning. Help us through this. If we were to sort of list in a one, two, three manner, who is is getting hit the most . And then is there any airline thats not getting hit in all of this . Sure. Its just the weather weve had so far this quarter has probably hit jet blue, given their exposure to the east coast a lot. It has impacted united american given the strong weather in chicago and new york and to a lesser extent southwest. Delta. Probably the least impacted from the carriers that we cover are probably the ones who focus on the west coast, like alaska. As well as spirit has not had as much impact from the weather this season. And what kind of numbers are we talking about . Every year they always lose some money when theres weatherrelated events, but this winter is obviously very different thus far. Yes. Its in a more difficult winter this year. The january storms are already in estimates. A big storm over a Holiday Weekend. If its really bad can have about a 5 impact to earnings. My guess is this weekend is probably going to be a little less than that. But, you know, despite all of this, youre going to see most of the air lines report a profit in the First Quarter of this year. Seasonally the weaks quarter. Historically, going back a few years, it was only a have you few airlines that made profits in the fist quarter. So its a healthy industry and one that can make it through this kind of weather. One thing i never understood, who pays for the deicing and all of the snow removal at airports . The airlines do. And at the end of the day, i mean, those costs get through to passengers and fares. But its not that the port authority, for example, in new york pays jfk for all the snow removal . The expenses get passed through. Got it. Okay. Thank you for joining us this morning. Appreciate it very much. Happy day. Thank you. Coming up, an update from the winter games and the ceo of International Paper is going to drop by our sochi set to talk about i. T. s big business in russia. And its that time of year again. Sis swimsuit issue hitting the stands giving everyone hope that warmer weather will eventual by be coming. As we head to break, lets take a look at yesterdays will they be joining us this morning . No. Winter weather. Well be checking on that when we return. announcer scottrade knows our clients trade and invest their own way. With scottrades smart text, i can quickly understand my charts, and spend more time trading. Their quick trade bar lets my account follow me online so i can react in realtime. Plus, my local scottrade office is there to help. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. Sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Good morning. And welcome back to squawk box here on cnbc. Im joe kernen along with becky quick and andrew ross sorkin. Making headlines this morning, joesest a. Bank is acquiring eddie bauer for more than 800 million in cash and stock. Eddie bauer is owned by Golden Gate Capital. Joesest a. Bank, probably youve heard by now, it does have a right to end the agreement if it receives an acquisition bid that it feels would create more shareholder value. As you may recall, joesest a. Bank and rival mens wearhouse have made bids to acquire each other in recent months. In global news, chinas consumer inflation held steady, the country trying to control living costs as Leaders Launch some ambitious economic reform necessary that country. Back here in the states, a proposal in the California Legislature would make the state the nations first to require warning labels on sodas. And other sugary drinks. The bill would require the warning on the front of the beverage containers which with added sweeteners it would have 75 more calories in every 12 ounces. And i think the label would say, we have something we always can you press that, john . Do you have that red . Warning. Warning. Warning, warning. Im just going to keep doing it until isnt it at your fingertips . Here, ill do it for you. Soda is why youre fat. The label would say drinking beverages contribute to obesity, diabetes and tooth decay. Why do you look at me when you say that . Because you are the on the set, you are the promoter of the nanny state and i figure you would give me a thumbs up or going like this or under the table. Under the table youre stroking my toes. Its valentines day. Yeah. Stocks finishing higher yesterday with the nasdaq ending positive for the sixth straight trading day in a row. Joining us now is drew mattes. Do you feel that . Deputy chief u. S. Economist at ubs and doug kokhae, chief Investment Strategy at ing investment management. Drew, we were back where we had that great quarter, 3 plus. Then everyone said inventories at 1 to 1 . Then we had a good First Quarter number. We were looking for 3 . Now i see its down at 1 and change because of the weather. Where are you . Were just above 2. There is a weather impact. Its very hard to break it out now. Because, for example, january payrolls, the week we actually took that survey, it was a pretty good week in january. It was the one week in january where it wasnt cold and it wasnt snowing. But that doesnt mean people arent looking at the forecast, right . So i think if you to be fair, if you look at everything, theres some hint of slowing in the overall economy. Whats causing that . I dont know. But, you know, i am a big believer that peoples perceptions of the world around them flavor how they act. What that means for me is that if youre a ceo, even if youre in some 20 million home and going on a private jet somewhere, still coming to work in new york right now is miserable. And it affects how youre making your judgment. Button or not buttoned . I know. I was shoveling. Honestly . Yeah. I had to shovel my car out this morning. And so you got a little bit overheated . I got a little overheated. Ive got my boots on, too. So youre just kind of thrown together this morning. Yes. And then i slid across the new jersey turnpike on the way over here. And he brought doughnuts. And you brought i did notice yesterday, wendys, driving down the street yesterday, closed. Taco bell, closed. Whats open . Did you think yunkin donuts. We said how do you do it . At least two employees sleep there. Theyre going to be open. They sleep there. They will sleep sleep in a Dunkin Donuts . I dont know. You can imagine it would be pretty soft on those cream filled doughnuts. So, okay sticky with the glazed doughnuts. Im getting very uncomfortable sitting between you two. You are . Because its valentines day. Tell me again what the base get weather aside, what is our basul sort of gdp growth rate that we can expect this year . Is it 2. 5 or 3 . Id sayite closer to 3. Maybe were trimming some of the upside in the First Quarter. Thats good. Weve got no debt ceiling problems. Europe is getting better. China youve got a recovery nase e et in asset prices. Baby boomers retire. Thats clearing the bottom rung of the economic ladder. This is new stuff youre talking about now, isnt it . I come up with this. Thats what i get paid for to come up with new stuff every week. For you, actually, weve got the kernen file. Dow . What does this mean, doug, in terms of Asset Allocation and, you know, whether you go into the stock market here. Or is 1850 going to be Something Like a ceiling for 2014 on the s p . Yeah. Absolutely not. When youre in the Global Economic expansion, you dont worry about a little snow in new england and the northeast. What is driving chairman yellen has successfully transitioned our or handed the baton back to the markets. And fundamentals are driving the markets now. When the market went up 5 this past week and a half, no longer is that monetary stimulus induced. Were talking about real fundamentals and its global, consumer, manufacturing, housing. My forecast is 2020 for the s p 500. Were at 3 plus on gdp growth. You want to be in the market, you want to be broadly globally diversify. Not just in the s p 500. I think theres a mistake to be so u. S. Sent rick when youre in a Global Economic expansion. So youre up, emerging markets, global bonds, be well diversified. So youre talking about not just u. S. Stocks this is like a global bull market that you think were in in equities . Yes. If you look at it, everyone keeps talking about recovery. We are so past recovery, compared to 2007, the peak rates before the crisis. The Global Economy is 30 bigger from 50 trillion to 70 plus trillion dollars. Im not sure what all the fear and trepidation is about when youre in such an expansion. And sure, theres problems in currency markets in the emerging markets. But they are going to be on the margins the driver of global growth. And thats where u. S. Corporations have their revenue, as you know, is overseas. Theyre selling to the emerging markets. Emerging markets are still very important and theyre a driver of growth. You need to be in this market. Okay. All right. Im supposed to start wrapping it up. Its friday. You know, well give you sort of a you know, you said a lot giving me that . No, im not giving you anything. But you volatility is good. Theres this idea that volatility is bad. Volatility is good. If volatility picks up, the u. S. Economy will pick up with it. All right. Thank you. And it was not a g5, oprah. What was it . A g6. I was close. If you dont know the difference, thats why youre sitting here. Anyway, it was going to be ten years in september that she gave away 276 of those. And they thought one person was going to get it. Reach under, see who gets it. And they opened and it was everybody. Thats your next thats what youve got your eyes on is that next generation composite g5. What was that . Whoa. Coming up, the slip size of frozen economics. This industry, theyve been enjoying a lot of snow and ice. Were going to check in with a lot of on operators. But first, springtime at the winter games. Michelle Caruso Cabrera is, like, were digging out and youre just hanging out. Whats going on in sochi . I know. I dont even have a coat on. Sitting next to me is the ceo of International Paper. I. T. s single largest investment outside the u. S. Is in russia. Were going to talk about that. By the way, hes dealing with frozennomics, as well. All that come up on squawk box right after this break. t know that posting your travel plans online may attract burglars . [woman] off to hawaii what if you didnt know that as the price of gold rises, so should the coverage on your jewelry . [prospector] ahh what if you didnt know that kitty litter can help you out of a slippery situation . The more you know, the better you can plan for whats ahead. Talk to farmers and get smarter about your insurance. We are farmers bum pa dum, bum bum bum bum iwe dont back down. We only know one direction up so were up early. Up late. Thinking up gamechanging ideas, like this dozens of tax free zones across new york state. Move here. Expand here. Or start a new business here. And pay no taxes for 10 years. With new jobs, new opportunities and a new tax free plan. Theres only one way for your business to go. Up. Find out if your business can qualify at startupny. Com this true, is it a three will have day weekend . Yeah. You didnt know this . I kind of did. With the long threeday weekend coming, its the perfect time to check out the latest squawk blog. Get the word, jumble update. Becky has been busy after the show this week so weve only done three and ive won two. So the most you can do is tie. But today, everything is riding on this and were doing this one. And also, watch carl down four shots of vodka, which i dont know if thats legal on air, and the eats some caviar potato chips and some crab flavored potato chips. He didnt really eat them. He tasted them. And then he got out of the shot and i think he might have spit them out. And learn about the end of snow from the New York Times. They went right to a very a science based study. A guy who writes for powder magazine. A guy who says snow is going to end and then we got 16 feet. Go to squawk. Cnbc. Com. It was in the editorial section. I thought it was the travel section. No. It was in the sunday review, editorial section. His point was the places where it used to snow a lot, its not. You get used to it. If youre you know, if youre above virginia i can ski out of my house at this point. Yeah. You need snowshoes to walk out of your house. Im going to read this. In the meantime, lets get straight to the Winter Olympics in sochi. Michelle, back to you. Yes, speaking of the end of snow, snow snow here on the sea level of sochi. Sitting next to me is john faraci, the ceo of International Paper. Great to have you here. Nice to be here, michelle. Youre here because your biggest investment outside the United States is russia. Yes. Great hockey game. And you get to do some olympic games, as well. Tell me about frozennomics. January has been horrendous. February has been horrendous, as well. When i left, i thought it was over. 40 million to 50 million in january. In costs . Costs, lost production, lost sales, higher gas, energy costs and that is through the first couple of days of february. So if weve still got it going, ill have to go back and see where its hitting us. Its really geographic specific. When it gets in the southeast, thats what really mucks things up because they dont have the infrastructure to deal with bad weather. So now to russia. Right. Your single largest investment outside of the u. S. Is here in russia in siberia. Its a massive pulp plant. Why . A third of the mass is in russia and siberia. Russias siberia is right next to the biggest market for just about every paper product in the world, which is china. We saw an opportunity to invest with a partner. Were now in our seventh year. We just completed a 1 billion project for the china market. So you had to come to russia. Give us some content. How does it match up to the United States with soft width . Russia is the biggest soft width basket. Russia is closer to any other part of the world in terms of shipping products into china. Our next closest competitor, shipping products to china, comes from chile. Chile . That cute slip of land way down in south america. This plant that you have produces 4 billion rolls of toilet paper every year. Right. All of that is going to china . 85 , 90 of it is going to china. I assume theres skyrocket g ing demand for paper towels in china. There is skyrocketing demand for paper towels in china. So a machine makes what . Paper towels, bathroom tissue 40 going in there right now and how many are in the United States total . There may be less than a hundred. So theyre installing 50 of new capacity versus whats in the United States . Thats right. Thats right. So theres all this concern about china slowing down. Whats your assessment based on what you see there . I dont think 10 is Sustainable Growth for a 6 trillion economy. Think about it. 7 growth on the kind of economy they are now is going to be a lot more than 10 growth was five, six years ago. Lets think of driving a car at 70 Miles Per Hour and it slows down to 50 , it feels very slow, but its still driving 50 Miles Per Hour. Wouldnt we like 7 growth in the United States . Yes, absolutely. Youre right. Back to russia. All these concerns about corruption, they talk about corruption here in this corruption, they couldnt get the lights turned on because they had to pay bribes, etcetera. How do you deal with that . I assume you deal with it. Well, number one, we have a good partner that weve worked with, that weve been sket successful with over the last seven years. And together, we manage this big project. We had to deal with lots of problems, mainly weather in siberia. We had two winters in construction. Difficult customs, difficult infrastructure, long lead times in supply chains. And, you know, russia is not the its not a perfect market. To place is. But its getting better. But we got through this project with we had some delays, but we managed the business the right way. And it probably cost us a little more to do that, but it was worth it. Mr. Faraci, thank you for joining us on squawk box on cnbc. Guys, back to you and in an hours time i might put on a coat when it gets a little cold. Thank you, michelle, for that interview. We will see you in just a bit. Coming up, adding a key to this winter, the any new season of house of cards making its debut on netflix. Binging the whole thing for the weekend. Downton abby. Are you . Yes. And then we can be looking through this weekend, as well, the si swimsuit cover making its big debut. Is that uncomfortable, andrew . Do you know . Is that uncomfortable . For them or for us watching. For them. I think they look very [ park sounds, sound of spray paint ] we asked people a question, how much money do you think youll need when you retire . 500,000. Maybe halfmillion. Say a million dollars. [ dan ] then we gave each person a ribbon to show how many years that amount might last. I was trying to like pull it a little further. You know, i was trying to stretch it a little bit more. [ woman ] got me to 70 years old. Im going to have to rethink this thing. [ man ] i looked around at everybody else and i was like, are you kidding me . [ dan ] its just human nature to focus on the here and now. So its hard to imagine how much well need for a retirement that could last 30 years or more. So maybe we need to approach things differently, if we want to be ready for a longer retirement. Here in philadelphia you can access a philly cheesesteak anytime, day or night. Just like you can access geico anytime, day or night. There is only one way to celebrate this unique similarity. Witness the cheesesteak shuffle. Cheesesteak, cheesesteak its the cheesesteak shuffle huh every day, all day, cheesesteak, cheesesteak every night, all night cheesesteak, cheesesteak 9 a. M. Cheesesteak 2 p. M. Cheesesteak 4 a. M. Cheesesteak any time ruh geico. Fifteen minutes could save you fifteen percent or more on car insurance. Welcome back, everybody. Netflix unleashing the Second Season of house of cards this morning. The entire season became available at 3 00 a. M. Eastern time, midnight pacific. There was a social campaign on twitter to release it early because of the bad weather notice washington, d. C. Area. Plenty of episodes to view on this long weekend. I think president obama was tweeting no spoilers on house of cards. Its just ripe for spoilers. You get the whole season at one time. Thats crazy. Is the president watching it this weekend . He said no spoilers. I think hes watching talking dead this weekend. There was an article at how he was trying to get the dvds. Walking dead you mean . No. True detective. I was going to be youll be on at 10 00 p. M. Ill be good. There you have it. Great episode. I cant say anything about this episode. Its a great episode. We dont want you to spoil it. Youre going to keep the secret. I have to keep the secret. I signed something. Usually you taunt me every weekend. So much happens. In the First Episode its only rick and carl and michelle. I saw the First Episode. I cant say anything. I cant say whether anyone new shows up. That would imply other people survived from the prison. I cant say anything more. I was going to ask you about true detective. Mcconaughey is a great actor. He is a great actor. I like him early on and i like when hes drinking a beer. Have you watched true detective . Ive only seen the first one so far. First episode. I love where its filmed, down in louisiana, new orleans. Cool shot. I have a lot of watching to catch up on. You like to watch. And talking about liking to watch, we have to talk about another debut that always catches nations attention. People like to watch. Yes, yes. The unveiling of the si annual swimsuit issue. That looks uncomfortable to me. The 50th anniversary making its debut on the jimmy kimmel show. When you say uncomfortable when that happens to me, i do i have to go somewhere where i can be alone and just sort of you know what i mean. No, you dont. You do it on set. Are you talking about the wedgey . Yes. Thats why i wear boxers. Because that can happen is why i wear boxers. I want to suggest this seems like a more risque cover. Do they have tops on . The bottom is risque, too. Three young ladies grace the cover. Nina agdel, Lilly Aldridge and chrissy teigen. Who happens to be married to singer john legend. They rang the closing bell, the magazine hits newsstands on february 18th. There they are. Wow. A lot more clothing there. Coming up, the cost of winter. This latest blast of snow, ice and rain comes with a heavy price tag. Plus, where does this leave the Airline Industry going that a Holiday Weekend . And from squawk master to candidate, Neel Kashkari throwing his hat in the ring to become californias next governor. Well talk to him at 8 00 eastern time. 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You may even save up to 20 on your home owners insurance. Call 800adt9006 now. This special offer ends february 17th. Tdd 18003452550 life inspires your trading. Tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. Tdd 18003452550 at schwab, were here to help tdd 18003452550 turn inspiration into action. Tdd 18003452550 we have intuitive platforms tdd 18003452550 to help you discover whats trending. Tdd 18003452550 and seasoned market experts to help sharpen your instincts. Tdd 18003452550 so you can take charge tdd 18003452550 of your trading. An industry grounded, with much of the nation covered with snow and storms hitting daily, how hard will this affect the Airline Sector . We start to see the Mother Nature effect, blame game for corporate america. And the flip side of frozen economics. While the brutal cold may be keeping some indoors, some are hitting the slopes. We talk about the ski business with a couple of local operators. Squawk box rights now. Let it go let it go i am one with the wind and sky let it go let it go good morning, everybody. Welcome back to squawk box. Im becky quick along with joe kernen and andrew ross sorkin. Weve been watching the futures. They are flat lining. We saw the dow futures down by 20 points below fair value. S p futures are down. The tenyear note is yielding 2. 737 . And in our headlines this morning, clothing retailer joseph a. Bank is buying eddie bauer for 825 million in cash and stock. Eddie bauer is owned by Golden Gate Capital. The deal can be vacated. This morning, joseph a. Bank is up by close to 3 . The trading week, at 8 30 eastern time well be getting january import and export prices. At 9 55, the university of michigans midfebruary consumer sienement index. Mukhortovas windows 8 operating system is not doing quite as well as its predecessor. It sold more than 200 million windows 8 licenses but that trails the success of windows 7. It sold more than 240 million licenses in the first year. The Winter Weather hitting the travel industry hard. Phil lebeau joins us with more on the impact on the Airline Industry. I have to fly tomorrow, florida. I was thinking when they cancel all these, sooner or later they owe these people the ability to get to where theyre going. Should i be optimistic . They have to run the flights tomorrow, dont they. If youve got a ticket and they can get the crew there and they have a flight thats ready to go, youre first priority. Make sure you check in early. Im going to check in. Absolutely. The good news is, take a look at the numbers today, joe, the Ripple Effect of this storm, i know its not good news for the people who will be canceled or bumped from their flight today. They are starting to slow down. Cancellations, more than 1,300. There you see the delays of just over 2,300. Not surprising because were starting to see the storm move away from washington and up towards the d. C. Or the philadelphia and new york area. Washington dulles this morning has three of its runways open. At d. C. Reagan, the main runway is open but were still seeing the residual cancellations there as they try to get up and running. By the way, the worst impact this morning in terms of airported, charlotte. Delays are running more than an hour there. Not surprising given the fact that that ice storm is taxing the equipment down there. Here are the airports feeling the brun, newark liberty, charlotte, philadelphia, reagan and laguardia, youll see some cancellations there as this storm continues to linger in the new york area. Weve been talking about this over the last couple of days. Some people find this hard to believe, the Airline Index is up year to date. Thats because when you look at the fundamentals and the fact is once these storms go by, you have Pricing Power in the industry. Thats what people are focusing on. One question for you, phil. We have watched all of these delays, cancellations. We havent heard numbers for what this means for the airli s airlines. Right. Ive called a couple of airline analysts and they say the same thing, its hard to get their hands over what the impact is going to be. Clearly its going to be tens millions of dollars. Well see an impact in terms of revenue, the cost for the airlines. Theyve mitigated some of that because of the cancellations. We still havent had a chance from any of the analysts we usually talk with on wall street. For them to say this is what we think the impact is for the First Quarter. Stay where you are, phil. Some analysts we should say calling this a 20year winter. Michael boyd, the boyd group chairman. They recoup some of it later. Revenue or profit . Thats just revenue. The point is some of that revenue comes back later to recoup when people fly. A lot of flights, people arent going to fly again. Grandmas funeral is over. Theyre not going. If each plane is worth 20 grand how many planes have been canceled and how many of those planes wont get the money made up later. The second part is hard. Were looking at about 10,000 cancellations as far as we know, the last two months, last month and this month. It could go anywhere between 250 million to 500 million depending upon what theyre really going to recoup and how much its going to hit them. Remember when these cancellations take place, and things like that, crews are in the wrong place, crews can run out of time. We might have cancellations at the end of the month. They might have to cancel additional flights because of that. Do you think the stocks for most of the airlines is fairly priced given whats happened this winter . Id be careful to pass on that because im not into that bit of it. The reality is, i think were looking at a healthy industry Going Forward. This is going to have some impact on the First Quarter. I think Going Forward theres a lot of good things happening in the Airline Industry. Notwithstanding things like pilot issues and other things. I think it will be a strong year for the industry. There are things that the airlines could do that theyre not doing that would help their cause given the weather . One of the things, first of all, they are preemptively cancelling for a lot of reasons, thats good. One of the things is, i love this stuff where the airline grandly allows you to change your flight when theres an event like this. Why allow me to change it . The meeting is over, i missed the meeting, give me my money back. Those are the things that hurt the airlines later on. They have to be more customer oriented when it comes to these kinds of issues. Phil, jump in. Are you seeing true demand destruction in is the corporate traveler, thats the one theyre most concerned about. Is the corporate traveler leaving . Is there any kind of proof that theyre saying terrible weather, therefore, were going to look to travel less because of all of this . I think so. I think there will be deterrence of people traveling to some degree. But remember, consumers have a very short memory. And by next week theyll forget about that and keep on booking again. A lot of that traffic is not going to be recouped simply because the meeting is over, the wedding took place, whatever. We dont know how much will come back. One of the questions i had asked in the last hour, the costs related to weather beyond simply the planes staying on the ground longer than they should, when you think about deicing, the snow removal, all of those other things that happen, who pays for all of that . Well, hopefully it comes out of the airlines some of that will be indirect. Do the costs get passed on immediately . Does an airport charge the airline more during that period . How does it work . Well, how it works, when they deice an airplane you end up paying for the glychol, which is 3 or 4 a gallon. It does add to the ultimate cost. Those things, like i said, crews run out of time. Well see cancellations again at the end of this month probably because airlines dont have crews. The final question goes to whether, when you think about places like atlanta who historically never see snow and dont have any of the equipment traditionally on hand in preparation for it, does this change anything . No. I mean, theyre not going to invest, for example, i had the only deicing truck in san antonio. I used it twice a year. The fact of the matter is, its kind of like jetblue said, sometimes you let the weather win. Unfortunately were letting the weather win. We appreciate your time for being on the program this morning. Thank you. Thank you. Beyond the airlines, the impact of the winter has been felt in everything, from jobs to retail sales. Chuck watson, the directser of research and development at conne connetic. Thats a reasonable number. One of the problems with these ice storms, especially if you compare to a hurricane or tornado, Something Like that is the damage is lighter but very widespread. And just as a comparison, a hurricane will affect maybe 30,000 square miles. This storm affected 250,000, 300,000 square miles, ten times as much of the country was affected by it. Its a lot more defuse impacts. Its hard to pin down the exact numbers. Things like retail sales get shifted around. Your week over week sales may suffer. Youll get it back at some point. The problem comes in particularly for government expenditures. Thats one weve been looking at the last few days. If you look at the state of georgia, this probably cost about 200 million in salaries, extra expenses, that sort of thing. It adds up pretty quick. A lot of the states, not just the states, also the municipalities in terms of what theyve been paying for overtime, making sure that theyre shoveling people out, do you ever make that money back . Or is that a onetime gain, its gone and its out. The great thing about government, you pass it on to the taxpayer. Great news. Yes, you get a double whammy. The other thing to consider is your tax revenues are reduced. State and local governments are particularly dependent on sales taxes. Youre playing salaries for workers that arent going anything, which 90 of your workers are nonessential. Theyre sitting at home. The 10 of your essential workers are getting overtime. Youve got the fact that your revenues are reduced you get hit all around for that. What about the Insurance Industry . You can look at what weve been talking about with business interruption, what the airlines have been suffering. How does the Insurance Industry get affected by this . Thats actually a real interesting one. Ice storms, the damage is very widespread. And so theres a perception issue that seems worse than it is from a damage standpoint. The actual claims generally arent that big of an issue. What is the huge issue as you say, business interruption. Thats when the insurers and reinsurers are nervous about. They plan for these kind of events. What weve seen the last couple years is it seems like the frequency of the extreme has been increasing. Theres a couple reasons for that. One of them is our infrastructure is more vulnerable to these disruptions. We have more stuff that can be affected by it. Also, those in the climatology business looking at it, it does seem theyre more extreme. Blame employment change, look at whether its a normal or cycle. My research and the folks i work with seems to indicate there are human influences on it. That has the Insurance Industry particularly nervous. Once you Start Talking about 50 billion, 100 billion impact, those are the ones that get hit. That hits the broader Capital Market. They are having to pull out of the Capital Market and shift over to paying down to the insurers and ultimately to the consumers. Chuck, thank you for joining us today. Good talking to you. Thanks. Take care. The times of london. Its owned by rupert murdoch. That might explain it. The new york post, did you see this. Also owned by rupert murdoch. This is an article from the times of london. I dont necessarily buy into any of this. Men have larger brains than women it says. A study by scientists at the university of cambridge concluded that the volume of the average male brain was 18 to 13 larger than a womans. Thats funny. Sounds like something you said to me about 20 minutes ago. I want to see you tiptoe around this subject. Do you think it means anything . No. The density of smart stuff in the brain, in mine its folded over. It doesnt really help. I dont think like the jumble record for the last five years that im so far you know, what is it, basically twice as many wins. Probably has nothing to do with this. I would say, right . Probably not. Anyone else want to say anything about this . You are so scared. I wanted to throw it out to you, anything you could be beyond record on this. Im going to pass it to larry summers. Youve been telling me for years that size doesnt matter. I have. Ive been trying to make that case. Good one. Lets leave it there. Next, how the wicked weather will impact earnings. Plus, the snow and ice means more skiing and the industry is enjoying that industry, enjoying the big mess. We may get the pulse of the snow economy from the mountains when we return. When you order the works you want everything. An expert ford technician knows your cars Health Depends on a full, complete checkup. The works. Because when it comes to feeling safe behind the wheel, going the distance and saving at the pump you want it all. Get our multipoint inspection with a a Synthetic Blend Oil change, tire rotation, Brake Inspection and more for 29. 95 or less. Get a complete vehicle checkup. Only at your ford dealer. Do you believe in love do you believe its true do you believe in love youre making me believe it too take a look at the futures this morning. Theyre flat lining. Earlier we saw the dow down by 20 points below fair value. Yesterday the markets were up. Red is for valentines day. 60 40 is not that different than 50 50. Im using my big brain to figure that out. Its only ten points. J. M. Smucker, earnings and revenue missing the mark. The company cites more competitive pricing and currency issues as well. This winter has been a long and difficult one. Particularly with retail sales, basically what you see traditionally is that if something happens thats weather related it dislocates, if it happens in the same quarter youll probably see it come back. More concern would be what the impact would be on the construction trade. Theres seasonality to that already. Its practiced into the industry. Also it get featured into the analyst expectations for it. Weve had rough winters before. How did we do in the quarter that ended in december . Were almost finished with that quarter. You point out up 7. 6 but the equity markets havent gone up. Theres been a disconnect between good earnings and the s p. Its interesting. If you look historically, this is interesting, right . You have almost 8 . I think the Fourth Quarter will end up with 8 . The s p 500 is trading on about 15. 3 times next years earnings. Thats right along the historic average. Ive been waiting years to be able to say that. Were there, okay . Its about 7 . Were better on the last quarter, right . At 15 times earnings. So whats really interesting, what i find interesting is the fact that the u. S. Economys growth is so slow yet youre commanding something that, valuations and Earnings Growth rates that usually coexist with a morrow bust economy. That i find interesting. Then it gets a lot of speculation as to why thats occurring. And . I think it has to be with rebalancing a Global Portfolio for companies. I think whats happening, you usually see this kind of valuation. You expect proportionately it would be skin the. Youre getting credit for half a percent of gdp, not here but coming from the benefits of having the ability to take cost centers overseas, use that for production of goods here and developing new markets. I can think of other reasons why it could be happening from both sides of the aisle that would explain it. Corporations do continue to do better than the Macro Economy because, you know, the casts that their generating and the good profits and the good margins, they seem to be tight fisted with it because theyre more rediscent. The corporations, the ceos are still tight fisted. Unfortunately that makes the overall economy and people in it feel less flush than the stock market and the ceos that manage it. It doesnt feel that great right now. You ask most individuals, they dont think the economy is very good. You look at corporations, theyre doing great. Were talking about this yesterday. I think the only thing id say thats concerning around retail sales, weve had two backtoback weaker retail sales in december and january. You had that Mortgage Application index take a little dip here. After the jobs report, you know, this is going to be ironic. I think your one piece of investors are probably starting to think your one piece of economic bad news away from good news which is that you can probably suspend further takedown of the taper, which will support valuations. All right. So this is good that theyre doing that then . Its perverse, right . Strangely enough what you do, what happens, if you get another bad piece listen, then we took 10 billion out of the monthly spend, right, look what it did. The markets got all dislocated, didnt feel good for a while, a little bit of a stomach ache. You have bad numbers. The market starts come back. They say hold on a second, theyre going to basically not be encouraging aggressive withdrawal of this taper. Some people say theyll pause in june. Do you believe it . I think it could happen sooner. They could pause sooner . Yes. I think one piece of bad Economic News one more piece . Yes. Michael, thank you. Thanks for having me. Are we going to head back to sochi . Well, we are going to head back to sochi where the end of the snow is already happening. For the east coast, theres no end in sight. Even more snow in the forecast. A perfect time to check out the price of natural gas, which has been moving higher since the start of 2014. A lot more squawk box from a snowy east coast. Later, a little bit sochi. Back in a moment. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Cozy or cool meow or woof . Exactly the way you want it. Until boom your mattress a battleground of thwarted desire. Enter the sleep number bed. An innovative design that lets couples sleep together in individualized comfort. Hes the softy his sleep number setting is 35. Youre the rock, at 60. 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Up next, digging out and cleaning up, the most recent storm spanning from atlanta to main. We check in with home depot to find out how its been handling snow and ice and if its helped ice. Well be right back. [ both sigh ] ugh you told me he was good, dude. Yeah he stinks at golf. But he was great at getting my claim paid fast. How fast . Mine got paid in 4 days. Wow. Thats awesome. Is that legal . Big fat no. [ male announcer ] find out how fast aflac can pay you at aflac. Com. Somebody somebody can anybody find me somebody to love welcome back to squawk box. Happy valentines day. We have a lot of valentines day music today. Lets take a look at some of the stocks this morning. Joseph a. Bank buying the eddie bauer brand from Golden Gate Capital for 825 million in cash and stock. It has the right to end the deal. This is the important part, if it gets a takeover bid that it feels creates more shareholder value than this deal. Theres a little bit of a soap opera going on on valentines day. Maybe a third party will emerge and try to have an affair. Im taking that too far. Way too far. Clothingmaker vf corps, take a look at that stock. It was 2 cents short of estimates. 2014 forecast falling short of analysts forecasts. Vf did benefit from higher sales of winter gear. All of us out there in the snow, but did see weakness elsewhere and then fireeye rising in premarket trading. News of cyberattacks becoming more common. Lets get an update on when the snow will stop in the northeast. The weather channels alex wallace joins us with more. We have our own bet here in the office. Were trying to figure out when all the snow they plowed in the back was going to disappear. I took may 6th, i bet. Thats a good bet. It may even be later than that because theres actually more snow on the way. I know you dont want to hear that. This winter storm, bringing us light snow showers, vermont, new hampshire, into maine. That continues to slide to the north and the east. Well be clearing out as the day progresses. Here comes the next weathermaker. Light snow in and around des moines. This will try to sneak its way down to places like st. Louis. Eventually working into places like indianapolis. Then working its way to the coast by tomorrow. Its a pretty quick mover, by tomorrow, just off the coast but then we get a little bit of a disturbance that helps to really energize this thing. Well be talking about it strengthening rapidly. Bigtime winds and the snow will be coming down as well. The current thinking is coastal sections of new england will be getting hit the hardest, possible blizzard conditions in these areas, including in around boston, portland as well, snow showers back from new york to d. C. Yes, the winter that just wont stop. It continues, guys. Back to you. Are we still going to get a storm next tuesday, alex . Looking that far ahead, theres another one coming right down the pike. One thing at a time. Well focus on this one first. All right. Alex, thank you. The end of snow. The city of atlanta iced in for a second time in a month. Joining us now on the squawk news line is chris waits, home depots regional vice president. Before this, could you buy a snow shovel in atlanta. You could have got ice melt and other supplies for sure. In atlanta . Yes, ice melt and generators and things of that nature. Wouldnt that sit around for a while . You dont lake to carry inventory that never moves, do you. Thats right. You do not but you still had some. We had very little ice melt in the market. Very little youre saying. Little before the storm, yes. Is anyone thinking about this could be for next year, are you going to have different inventory . Would you start to do that yet . Or is this a one off do you think . I think its probably premature. I dont make those decisions for the company but typically atlanta doesnt get hit with this many storms, especially so close together. No. Thats true. So as far as the normal business maybe you can speak to the midsouth, but if you were to try to forecast samestore sales for the month of january and february down in atlanta, is it going to be a decline . I really cant comment on that. Well give updates on the storm and impacts in our Earnings Call during the next week or so here. Are there any segments of the stuff you sell thats been booming because of whats happened . Well, the things you would think typically would sell like generators, i mentioned a moment ago, sand, salt, ice melt. In atlanta we didnt have a whole lot of those things other than the san. This time the storm came in the night before and early in the morning before people went to work. Everyone heeded the warnings and werent on the roads. Everybody really stayed in. We actually had to close a number of our stores early on wednesday, which is very rare for us. We got all of our stores back up and running on thursday. Chris, i know you have an advanced supply system that looks ahead and figures out where the storms will be. Did you ship in a lot of things in anticipation of these storms. The way the storms tracked it was hard to pinpoint what was going to happen. We dont want to track inventory into a store before a storm like that. When you get further up the east coast, you know the snow is coming and it will be everywhere. Its easier to spread things into stores and really pinpoint down in the south, its hit or miss. Chris, we appreciate it. Thanks for calling in today. Thank you. See you later. Byebye. Coming up next, all this fresh snow may cause travel trouble but for skiers, it is a pure delight. We speak with the ceo of peak resorts in just a moment. Still to come, banker turned politician, Neel Kashkari on the state of the markets and his run for california governor. Squawk box is back after the break. Thinking up gamechanging ideas, like this dozens of tax free zones across new york state. Move here. Expand here. Or start a new business here. And pay no taxes for 10 years. With new jobs, new opportunities and a new tax free plan. Theres only one way for your business to go. Up. Find out if your business can qualify at startupny. Com or how ornate the halls are. Tall the building is, it doesnt matter if there are granite statues, or big mahogany desks. When working with an investment firm, whats really important is whether the people behind the desks actually stand behind what they say. Introducing the schwab accountability guarantee. If youre not happy with one of our participating Investment Advisory services, well refund your program fee from the previous quarter. 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If you have any sudden decrease or loss in hearing or vision, or if you have any allergic reactions such as rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a 30tablet free trial. Welcome back to squawk box, everybody. The futures are virtually flat at this point. We did see higher markets yesterday. Not a whole lot of movement. You have trulia, the company says its going to start campaigning this year to start a target campaign to Customers Using mobile devices but still that stock is getting pressured, down by 12 . Lets talk about the ski business. While the brutal cold may be keeping some indoors, plenty are hitting the slopes. Tim boyd, founder and ceo of peak resorts. And bill bennian, ceo of mountain resorts. How are people getting to some of the mountains . Well, i mean, thats always a challenge. Thats why in terms of the storms, its a lot better for us if they hit on wednesday, thursday, friday of the week versus hitting on the weekends. That does give everybody a chance to get up to the resorts. Are ticket prices going up . Ticket prices or because of the snow. Either because of the snow . No. Whats the average price at one of your mountains. 65. People are paying full price theyre not looking hard enough. What should the average customer be paying at one of our places . Typically you can get 5 to 7 off. We use a program online, very much like the airline program. Its demand based. If you buy earlier, before conditions are clear you can save. Tim, you in the same place. Pretty much. The prices generally dont change due to the weather. They change during the holiday periods and the weekends versus the weekdays. Is the big money in the tickets themselves or Everything Else around the ticket . I want to understand the economics of how this works. Ill go to you first. Ticket will represent about 75 to 80 of the revenues and then food and beverage, retail, lessons. I always thought it was vegas. The room was one piece of it but it was all the other stuff that was actually what was for a day visit ski area, we have four hotels. Lodging is a piece of it. Admissions drives a big piece. A lot of ski areas like ourselves are driving that presold. Right. Ive been surprised by the snow in this area this year. Has that helped with bringing people out to Mountain Creek . Absolutely, of course. This snowstorm, its still about snow making. Because of the base we can build with, manmade snow, were open all year every year. This insights the interest of the confluence, the snow, president s week, the olympics, its lined up to be a banner week. How much are you up this year over last year . About 15 . One of the things that joe raised over the last week, an article that ran New York Times in the last sunday or the sunday before. Yes. It said the end of snow is coming. Did you see this piece. I havent seen it. I have heard about it. Are you worried about weather patterns . No, not really. The industry has had a huge amount of advancement in our snowmaking technology. Basically weve been able to level the Playing Field considerably with Mother Nature. Right. And most of the time, you know, the snow making is what makes everything tick and is the backbone of our industry. The weather is really not going to have that big of effect on us. Lets play that music again. Well ask you a question again, tim. Are you lets get that going again. Are you worried about the future of snow . Give us the right answer here. You can hear that, cant you . I can sort of hear that. Do you care about it . Is this a big issue. Does it look like we have a problem with snow this year . What year is it coming . We have more co2 than ever. What happened this year . When is it coming . Youre in the snow business. You must have a view on this. Were in the snow business. I hear the music, too. Were not worried. Resorts, tim and i both run what we call urban resorts. 100 of the mountain is covered with latest technology. As long as we get temperatures, well build snow, build a bass. Last year was a great example. Two years ago we had almost no winnerer it. That you had that was good for you guys. You could say to people, but this is not good this year. Thats a great example. Two years ago we filled union square with truck loads of snow. Why . Because we had so much snow on the mountain we could do it. We taught kids to snowboard all day in union square. I want to know about the technology in making all the snow. How expensive is to outfit an entire with this stuff . Its extremely expensive. The biggest investment a resort can make. Youre talks tens of millions of dollars, well worth it. To operate it is not inexpensive either. Will you ever be able to replicate the powder of the west . When we have temperatures like weve had this month, absolutely. Conditions have been stellar. Even with the snowstorm coming were still making snow to line it up, best conditions in two decades, hands down, no question about it because of the skin the cold weather. Thats been the key. Air, water, fan guns, its a little bit of science and art. What would the fan gun do . Electric powered gun with High Pressure water coming through it. Resort operators like to mix and match the technology to meet the conditions where you have temperatures and humidity to get the best snow out anytime you can. Another question, this relates to the olympics. Im just looking at an image of a snowboarder. Whats the breakdown now of the consumer in terms of skiing versus snowboarding versus potentially doing sort of a snow park kind of, almost like a what do you call it . Terrain park. How much of that is the business . Quite a bit. Ill speak for us. In the industry about 30 is snowboard versus ski. A resort like ours which is urban based tends to be more 50 50. Terrain parks have been a big boone to the industry. It brings in a lot of the youth segment. Aspirational. You want to keep going back and learning again and again. Its repeat visit, very tolerant. Its a good density. You can get a lot of guests in a small area. Its about the features, not about the big white slopes. Can you stereotype your user, does the snowboarder spend more than the skier or does the skier spend more than the snowboarder. Generally speaking what we find is the more beginning oriented customer is going to spend more money. Theyre going to be the people that rent the equipment. Theyre going to be the people that take the lessons. I think thats probably true in any recreational sport. The more advanced somebody gets into the sport, generally the less money they tend to spend. Will the rise of the snowboarder, is that going to eventually peak, do you think . Skiing is not going away, obviously. Will it end up at 40 , 30 of the mountain someday . There have been signs of thatha that. You know whats hot now . Skiing is sexy again. Free skiing, twin tips. A lot of the market is turning to that, both young and old. We have a guy 90 years old that skis on twin tip skis. I dont know if he goes backwards or not. Theyre loud, obnoxious. The snowboarders. The knuckle draggers. Yes. Youd rather go to a mountain theyre not allowed. I would. That would be a selling point for me. There are some mountains like that. You hear them coming down. How do you feel about head phones and skiing . I was probably one of the first kids to wear a walkman in the late 70s. Im okay with it. I dont care them myself. I keep the tunes in my head. How about smoking a big joint on the lift in colorado on the way up . Is that smart . I havent been to colorado this year. Ill have to check it out. I saw people doing that when i was there in college. Thank you. Even before it was legal i saw people doing that. Theres me. Thats not bad. Thats much steeper than it looks. I am carving some of the turns. Terminal velocity. Bill, tim, thank you both. When we come back, is under armours suit slowing down speed skaters . Well get that and more buzz from sochi. And squawk master is running for governor in california, Neel Kashkari will join us. Right now, take a look at the futures. Theyve been relatively flat. The futures 20 points below fair value. Squawk box will be right back. When you order the works you want everything. An expert ford technician knows your cars Health Depends on a full, complete checkup. The works. Because when it comes to feeling safe behind the wheel, going the distance and saving at the pump you want it all. Get our multipoint inspection with a a Synthetic Blend Oil change, tire rotation, Brake Inspection and more for 29. 95 or less. Get a complete vehicle checkup. Only at your ford dealer. Cnbcs chief International Correspondent Michelle Carusocabrera is in sochi russia with the highlights. Its hard. I looked at the suits. I cant tell whether youd be slower or faster. Isnt it the slightest little intenization were talking about . This vent at the back. The controversy about the under armour speed skating suit worn by team usa. It starts because of this disastrous finish for shani davis in mens 1,000 meter. He came in eighth though a lot of people thought he would medal. Ditto last night for the women with Heather Richardson and brittany boe finishing 7th and 8th. The wall street journal citing three people familiar with the team, they say they think the vents on the back of the suit designed to allow heat to escape are causing too much drag. Under armour put out a statement, heres part of it, mach 39 is the most tested suit in olympic condition. While a multitude of factors ultimately determine onice success. Many skaters have reported personal best sealevel heat times, split times or race times this week. Were rooting for that to translate into medals over these next couple of days. The official statement is this, the evidence does not suggest that the suits have contributed to the disappointing results to date, however, there are many factors that determine olympic success. And we are constantly making adjustments to improve results. Were working with our athletes, coaches, trainers and under armour to figure out what we can do to produce better results for team usa at these winter olympic games. Stay tuned, guys. Lets get on to good news, the slopestyle skiing event was a team usa sweep. The gold, silver and the bronze. Look at that. This is unbelievable event to watch. I hope you saw it last night. Mens figure skating, american Jeremy Abbott overcame a very tough fall, finished anyway. In his first jump, this is a quad toe loop he missed the landing, hit the ice hard. Slow to get up. The crowd encouraged him. He did. He finished. Take a look at the slow motion video. He lands a half turn short and he hits the ice squarely on his right hip. He finished 15th. Which brings us to tonight, the mens figure skating final, also the mens supercombined gold medal final in alpine skiing. We get to see ted ligety make his debut and bode miller trying for a medal. And womens freestyle skiing aerials. Fun. And curling, team usa and russia. Heres the medal couldnt the. Germany has the most golds, norway with the most medals, 13. Netherlands 12, the u. S. Has 12. Back to you. Were going okay. We have work to do here. Politics and business with former treasury tarp czar, Neel Kashkari. Thats when squawk box returns. Still to come, the Winter Weather wreaking havoc for airlines. We get an update on cancellations and when flights will take off with the ceo of flight aware. I dont want to think about the alternative. I dont even know how to answer that. 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Just a tap away on the geico app. Huh, 15 minutes could save you 15 or more on car insurance. Yup, Everybody Knows that. Well, did you know that some owls arent that wise. Dont forget about im having brunch with meagan tomorrow. Who . Seriously, you met her like three times. Who . Geico. Frozenomics. Wintry weather putting a damper on consumers but not stocks. Plus, the ceo of flight aware. From squawk market master. Former tarp czar and pimco executive Neel Kashkari will join us. And squawk goes back to school. Martin feltstein on business conditions, the economy and the fed. The final hour of squawk box begins right now i dont care if mondays flat, tuesday wednesday thursday never looking back its friday im in love welcome back to squawk box, cnbc, first in business worldwide. Im joe kernen along with becky quick and andrew ross sorkin. The s p, in case youre watching closed at 1829 and change. Its down 20 points from its high. 20 divided by 1850 is fractionally lower than where it closed out the year. Its going to be a long year. Heres the 1850. Are we going to see 2014 with a line underneath or does it get above the close last year . We can only hope. Well get you through some of the headlines. We should also wish you a happy valentines day. We have a valentines day deal this morning. J jos. A. Banks, if they receive a takeover bid it feels will boost shareholder value more than the eddie bauer acquisition. It could spurn and go to mens warehouse if mens warehouse were to be a suter if you will. Ive stretched it too far. The move will create the states largest natural gas producer. Shares rising on that news. And hackers have reportedly drained an entire Bitcoin Wallet belonging to silk road 2, stealing currency worth 2. 7 million. This is a big issue. Hes talked about how safe it is. Now it seems less safe. The hackers are said to use a denial of service attack, the same bug that has hit several bitcoin exchanges such as mt. Gox. The original silk road originally allowed users to buy and sell unlawful goods and services anonymously. Should we say what those services were . Maybe not. After fbi closed down the original site, silk road 2 was launched in october. There are some illicit things going on on silk road. But we wont say what that list might be. This man is best known for helping the country navigate through the financial crisis. Now hes taking a shot at the highest seal in california. Joining us is republican governor hopeful Neel Kashkari. Good to see you. This is the first time were speaking to you since you made this announcement. The state of california, i love the state. Its failing millions of middleclass families. 17 of californians either have no job or are stuck in a parttime job. Our schools here are ranked 46th in america. You put those two things together, we have the number one poverty rate in america at 24 . The current leadership in sacramento, Governor Brown, isnt doing anything about them. Someone has to try to help. So what would you do if you were to be elected . Well, theres so much we can do to create jobs. People dont want welfare. They want to work. They want a chance to work hard and give their kids a good education. If we look at the oil and gas sector, you mentioned oci, california has huge untapped potential. We can absolute develop our natural gas resources, Oil Resources while protecting the environment and that alone could create literally hundreds of thousands of good jobs. Theres a contest among all 50 states, many governors come to california to try to lure our jobs away. Theres a contest but were not competing. Were asleep. California doesnt have to be the cheapest place in the world to do business. We have a lot of advantages. But we do need to be in the hunt and were not in the hunt today. What are a couple things youd do quickly, lowering taxes . Are there other things youd do first. If you had three top initiatives what would they be. Oil and gas is one of them. The regulatory complex, this is like a giant ball of yarn, becky. Every year it gets bigger and bigger. Its crushing Small Businesses in california. We need to streamline our regulatory process so were not punishing businesses, were out there encouraging them, helping them to succeed. We have to compete to try to bring manufacturers back to california so that we have strong job growth here. We can absolutely do this if we wake up and work hard. Im absolutely going to do that. You have been able to raise money quickly for someone who is announcing theyre getting into this race. You raised Something Like 900,000 in the first two weeks. That is outflanking some of the others running for the republican nomination. You are potentially going up against jerry brown who has 17 million in his war chest. What are the odds someone could outseat jerry brown . The Public Employee unions will fund his campaign fully. Well need to work really hard. I believe well be able to raise the resources we need to get out message out. The key is we have the better ideas. The status quo today is horrible for millions of california families. Middle class families are struggling, many families in poverty. I want to be a voice for them. The good news is, progrowth economic policy, give people a good education. Grow the economy so they can work hard. This is how you lift people up. Thats what my campaign is about. Were going to make Governor Brown answer. Once we get our message out and force him to answer, anything is possible. Lets talk about the country on a broader scale. Where do you think we stand right now . We have seen lousy economic numbers. Im nervous. Obviously we enjoyed the stock market going up strongly last year. Thats why californias coffers look like were in a budgetary balance. I think well continue to be in the muddal long scenario. I dont see strong catalyst for the stock market to go up strongly from here. Im not paying a lot of attention closely to the daytoday stock market. It does feel to be much more of a stock pickers market than any broadscale rally over the next 6 to 12 months. You dont think its just the weather . I think the weather has played an effect. Weve had warm weather in california, low rainfall. Were obviously suffering a drought, which is a huge challenge for us here. Different parts of the country are experiencing it more than others. I dont see the big catalyst for robust Economic Growth given whats happening in the Global Economy. It will probably be more muted. Why do you think that is . I think were coming out of the terrible shock from 2007 and 2008. The worst is behind us. Where the big engines for Economic Growth in america . One of the things i want to do, i want to make california a giant economic engine for the whole country. But today to give you that data point, 17 of californians, we have one of the highest unemployment rates in the country. If california is going to grow this slowly, its going to be an anchor for the ref of the country. Neel, one of the issues is that corporations have not been using cap ex, spending as much money, hiring people and bringing them back in. We have this debate constantly on the show. What caused this, is this a chicken and egg . How do you get the companies to feel more comfortable to hire more workers . Our economy is transitioning more towards a knowledge economy. I want to bring that back to california. We need to make sure our workers have the skills they need. You know this. There are a lot of jobs going unfilled because workers dont have the right skills in the right locations. I think globally were seeing a breakdown and the consequences of a failing education system. Too many kids are not getting the skills this he need and businesses are not finding the workers they need. Its not necessarily one or the other. We have to do it all at the same time. My platform, jobs and education, we have to do those both at the same time. We know how to do this. We can do this. We just need to be setting our expectations higher and really go after it. Education is a longterm problem. Its also a pretty expensive problem. It generally means the state will have to spend more money. Thats been part of the problem. California has been keeping up in terms of putting some of that money back, particularly into Higher Education. What would you do differently . Thats a great point, becky. 30 years ago we spent about four times as much on higher ed as we spent on prisons. Today were spending the same amount on higher ed and prisons. Our priorities are all wrong. Theres so much we can do, for example, by adopting technology. If theres a great history professor at uc berkeley, wian is the that professors class available not just to every other uc student, but every other cal state student . We can expand capacity and lowering costs while maintaining standards. Are you suggesting we should be spending less on the prisons and put it toward education . By expanding college availability we can help to bring down that prison population over time. If we do the two things im talking about, put people back to work and give kids a quality education, well have lower drugs. Well have less crime and well have a much stronger budget, because people will not need welfare. Theyll be earning money and paying taxes into the system. That frees up resources to invest in all of these other areas that are important priorities. Thats a great plan but its also a longterm plan, neel. What happens in the near future . If you were to get elected, what would you do in the four years you had . On the jobs front, oil and gas, regulatory reform, improving the States Economic climate so were luring factories back to california. That will also help put people back to work right away. On the education front, california spends more than 40 billion a year on k through 12. The estimates are half of that money is actually making its way into the classroom. I visited some of the best schools in the state and some of the most challenged. Even in the most challenged schools ive met Great Teachers who are frustrated by the rules coming from sacramento and washington, d. C. I want to put the money that were spending back in the hands of teachers and parents and give them the control so they can customize the education environment. We can bring Vocational Training back into the classroom. Were not doing that today but we could be. Neel, do you think gerrymandering is one of the big problems in california . One of the big issues is how divided the statehouse has been. Whats a bigger problem, gerrymandering or jerry brown . Gerrymandering were at least trying to solve. Were trying to take the districts out of the hands of the politicians. Governor brown is an honorable man. Hes just unwilling to do the really hard work to take on the special interests and tacking the status quo. If the status quo was great, hed be the right guy to be governor. The status quo is failing millions of california families. Thats why im running for governor. Neel, thank you for coming. We hope to see you again soon. Great to be here. Thanks for having me. Good luck with it. Neel kashkari, running for governor. Unbelievable. Saving the country in washington, now hes trying to save a state. Id love to have a friend in the california governor. I think hed be good for the state, too. Its very blue, obviously. Its possible. You know who else was governor of california . Who . Oh, arnold. Who . Ronald reagan. You werent born. I was born. He was the first president i remember. I was born, jimmy carter was really oh its vintage you dont appreciate. Well, well. Im going to start wearing my jimmy carter sweater. You have. Its a cardigan. Thats right. Up next, travel delays hitting the airlines. Well get an update on those that have been hit the hardest. An update from the ceo of flight aware. As we head to break, green arrows for now. [ male announcer ] this is karen and jeremiah. They dont know it yet, but theyre gonna fall in love, get married, have a couple of kids, [ children laughing ] move to the country, and live a long, happy life together where they almost never fight about money. [ dog barks ] because right after they get married, theyll find some financial folks who will talk to them about preparing early for retirement and be able to focus on other things, like each other, which isnt rocket science. Its just common sense. From td ameritrade. You want everything. Orksnse. An expert ford technician knows your cars Health Depends on a full, complete checkup. The works. Because when it comes to feeling safe behind the wheel, going the distance and saving at the pump you want it all. Get our multipoint inspection with a a Synthetic Blend Oil change, tire rotation, Brake Inspection and more for 29. 95 or less. Get a complete vehicle checkup. Only at your ford dealer. Welcome back to squawk box, everybody. Again, the market looks like its flat line, at least for now. There was low volume on the new york stock exchange. The dow future is down about 16 points below fair value and the s p futures are off by about 2. 5 points. Vf corporation is falling in premarket trading this morning. Its latest earnings missed estimates and its 2014 forecast fell short of the forecast. The cold weather did benefit the northface brand but that was offset by weakness elsewhere. Eric wiseman will join squawk on the street later this morning. Weight watchers earned 54 cents a share, missing estimates by 7 cents. Its fullyear forecast below consensus as well. Fewer people attending meetings and doing things like monitoring themselves with these wristbands and other things they can do. You can wear them. Theyre great. That is a way of i think part of the appeal of Weight Watchers and nutrisystem is someone will monitor you. Instead of monitoring the calories, theyre sending you stuff. If you dont eat anything else, you can know what your intake is. This doesnt manner it your intake. How many calories youre burning. How many calories youre burning and if you get the scale, they have scales that wifi up. You get on the scale, it tells you your fat content, does the whole thing. Weather and flight, snow continuing to hit a large portion of the country. The airlines cancelling thousands of flight. Joining us now to talk about it is ceo of flight aware, daniel baker. How bad is it . It was a really bad week. Yesterday had more consolations than any other day in 2014. The whole year has been really bad. Weve seen throw or four times as many cancellations yearoveryear, looking at 2013 to 2014. The year is off to a bad start. Whats been interesting is that theres been a lot of storms and a lot of them have hit areas that dont typically get this kind of weather. Were all used to a big storm hitting the northeast, a noreaster comes in, snow comes down, flights are canceled. Thats the playbook that passengers and airlines are used to. We saw certainly in the last week or so, big cancellations at dallas, for example, which doesnt get a lot of Winter Weather and the big story this week and in the past has been atlanta. Atlanta saw 70 of the scheduled Flights Canceled for a couple days. That impacted delta which canceled more than 50 of its flights for days. Thats just not an airport that sees a lot of this weather. Its led to an exceptional year and bad week. Daniel, help us with news you can use. If youre a consumer, use flight aware. Thats one way to do it. How different do you think the flight aware data is from the Airline Website if youre trying to figure out whether i dont you should run to the airport or not . Its a pretty big difference. The Airline Website is taking their schedule and their updates to the schedule that they published to consumers and theyre putting it out there. Flight aware is looking at real time air Traffic Control data. Were looking at data when the airports say were not taking new new arrivals for the next hour. Were looking at Realtime Data from the airplane, maybe the flight coming in to serve your flight. So we tend to have a lot of delay information that we can publish ahead of time. Certainly when we say a Flights Canceled we got that information from the airline. If you have a flight alert we might push it out earlier it you. We can advice a lot more about delays. What is your personal routine . I actually want to know, what do you do . The key is to be proactive. I would have set up a flight alert on flight aware yesterday. Airlines are announcing these delays and cancellations 12 or 18 hours in advance. The key is to be proactive. Keep checking your flight status, particularly if youre flying to or from an area thats seen a lot of bad weather. If you think you might be delayed, reroute yourself. Dont wait for the airline to call you or email you or go to the airport. I dont show up at the airport very early but im watching ply night for 24 hours in advance. What airplane is coming in to serve that flight. Ill track the flight coming in to serve my flight. If that flight is an hour late, your flight is not going to leave on time. Good advice. Thank you, daniel. Stay warm. Lets hope the planes take off the way they should today. Thank you. Happy valentines day. Tomorrow. Youre getting on an plane tomorrow. I might look at that. Coming up, back to the olympics from medal count and the latest from the games. Then the business of brocade. Well have the companys ceo after we come back from a quick break. Execution, we route your order to up to 75 Market Centers to look for the best possible price, maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of fidelity investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Lifes an adventure and it always has been. But your erectile dysfunction it could be a question of blood flow. Cialis tadalafil for daily use helps you be Ready Anytime the moments right. You can be more confident in your ability to be ready. And the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. Tell your doctor about all your medical conditions and medications, and ask if your heart is healthy enough for sexual activity. Do not take cialis if you take nitrates for chest pain, as this may cause an unsafe drop in blood pressure. Do not drink alcohol in excess with cialis. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, seek immediate medical help for an erection lasting more than 4 hours. If you have any sudden decrease or loss in hearing or vision, or if you have any allergic reactions such as rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a 30tablet free trial. Team usa is back on the medal board, thanks to the xgamers competing in sochi. Carl quintanilla joins us live from olympic park with more on that. Great to see you today. Good to see you, becky, happy friday. Thank goodness for the xgame sports. Take a look at the medal board as we stand on this friday. Very close to first place, norway has 13, we have 12 along with the netherlands. That u. S. Medal count guys could not have happened without the sweep. By that we mean mens slopestyle skiing, three americans on one podium. Josh joss christensen. We talked to joss a few minutes ago. He dedicated the medal to his father in passed away in august. He talked about when the moment of that history, that sweep actually set in. I would say when we did the medal ceremony last night, it hit and i realized what happened. Seeing three american flags raised up and we all have the same anthem. It was just something ill never forget. One dramatic moment from last night was the womens short track 500 meter. Take a look at this. Elise christie of Great Britain is disqualified for causing a fall on the final lap of the final. She takes out the italian skater, the creigh wrap skakore. China has won that event, guys, in four consecutive winter games. Finally, probably the single biggest event of the entire olympics is going to be mens hockey tomorrow. U. S. Versus russia. 34 years after the miracle on ice in lake placid, guys, its kind of a tough call as to who may win. Both the u. S. And russia beat their opponents earlier in the week. Russia struggled a little bit more than some people thought they would. That is going to be a huge, huge matchup with a lot of egos and even politics involved, too. Carl, have you seen bob costas there . Ive not seen costas. His hours are a little bit different from ours. Hes doing primetime and Meredith Vieira a few moments ago said shes filling in for costas tonight. I wondered who it would be. I know bob is hoping to get back if not for the weekend then certainly for the beginning of next week. Its a contact thing. Once you get conjunctivitis, it takes a while to get over it. He sounds just like bob. He sounds fine but the light, the bright light, its difficult to read for him. Sensitivity. Ive had it myself before. Its a bear to get rid of once its there. Okay. I travel home tomorrow. So this is our last olympic chat. No way. Oh, wow. One to ten . Brian sullivan will be here next week along with michelle. Look forward to talking to him. Have a safe trip back. When you watch those you just you watch those moves and how high they are up in the ear with skis on their feet. You know how when we get a little air, just the feeling in the pit yes. To get air like that i need to be on the chair lift. Thats the only time my skis are off the snow. And to keep your skis parallel as the wind wants to blow your legs apart, unbelievable. It just is frightening. They practice with swimming pools and those big foam pits. Foam pits. Imagine the first time you have to do it on the actual mountain. That guy was so young. Thats the thing. I never understood how you first get into it. How do you first get into this . You know . The first time you decide youre going to do that . I dont know. Hopefully youre coming back to like 8 feet of snow, carl. I know. Believe me, id love to stay here. Bring your skis. We will see you soon, carl. Okay. Coming up, lets talk about import and export prices for january. That, plus, harvard professor on the economy and the markets. Get the jumble update, watch carl down four shots of vodka and then to top it off, he eats caviar flavored chips. Go to cnbc. Com and keep up with the show over the weekend. Back in just a moment. Requiresr Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Welcome back. We are just a few seconds away from import export prices for january. Rick santelli is standing by at the cme in chicago. Rick, take it away. All right. January import prices, you know, i was betting the ranch that the numbers would be on time today. This is not a good thing. Im sure its weather related. I can sympathize. I have all my spotters here from Foreign Exchange looking for them. Whether its an airplane or a data point well pick it out for you. I guess whats noteworthy without the data coming out at this point is that yields somewhat moderated back into a range but grant its still a bit higher than our low yield for the year which was around 2. 58 on the 3rd of feb. One other thing we should talk about, the supply this week moved pretty well. Maybe the runup caught some flatfooted. Becky and andrew, the data isnt out. It isnt out. Im looking at at bureau of labor statistics websites. They say the next release is coming at 8 30. They put the numbers up hold on. We have it. Import 0. 1, export 0. 2. 0. 1 increase on imports, 0. 2 increase on export prices. Of course, thanks, nick. Nick does a good job helping me look around the floor. These are close to expectations. We were looking for negative numbers on the import month over month. Maybe thats a little bit better news. I think ultimately import prices arent going to divine for us. Everybody will be looking to, of course, see how university of michigan plays out and the 9 15 numbers, production, utilization. Good luck with these. Youre supposed to have the data. Theyre ready to trade on it and the data is not there. Have to live like the rest of humanity now. Right. Its not bad. I wouldnt mind if they did it this way all the time. Because they put it up on the website . The fuel prices they say fell for the third time in the last four months in jarnl. That was part of the drop. Yes. One thing i see interesting, yearoveryear import prices down 1. 5 . Thats in line with expectations. But you know, its a big drop from the 1. 3 we had last time. What were you going to say, becky . I was going to ask you what you thought about where weve been watching the tenyear bond at this point, what the yield has been doing . This is a very unusual year for all the Interest Rate traders out there. I think the normal cast of fundamentals we look at are really taking a back seat on big market moves. Thats all about stocks. I think the first half of this year will continue to be that bonds, treasuries will have kind of a double life. And their double life is, of course, watching things like the data and the economy. But the other part is being the only natural hedge for weakness in equities. Whether you look at the 87 crash. Throughout history, some of the biggest up moves in treasuries are caused by some of the most unforeseen, unexpected biggest down moves in equities. I think we really need to focus on that for the first part of this year. All right. Rick, thank you. Have a great valentines day, okay . You, too. Thank you, becky. Brocade reported better than expected revenue. If were not experts at ip networking can you just explain what drives your business . What do you actually do for a living at brocade . We know you compete with cisco. Its the buildout of internet protocol is the cloud, because its more pervasive. Brocade is the leader in data networking. 90 of the global 1,000 entrust us with their storage data. And so if youre building on a Large Data Center anywhere in the world, china, russia, brazil, chances are youre using our equipment to build that out. We provide the most efficient way to connect your Storage Infrastructure to your compute infrastructure. Yes. I cant work for your company i dont think. Thats the first thing that comes to mind. I dont know. I have trouble turning on the a mac. Weve seen recently with cisco and others, lloyd, is talk from about emerging markets, talk about china, talk about nsa. Was there anything that you had to navigate through recently in the past quarter that was different than what youve done in the past . Well, you know, weve been on this journey for about a year. We set out and told the market what were going to do and executed against that. Our product is technically superior. We kind of can manage through some of these bumps in the road. Were going to deliver an ethernet fabric for your data center. That will reduce your op ex cost by half and reduce cap ex costs by a third. We sell value pop that is different from a brand message. Lloyd, you are showing why we need skilled workers. So the ether net fabric that you provide, you can do it for less money for individuals or for companies that need that . Absolutely. And ease of use. You need less people to connect it, less people to run it. This is gardner says 25 of all data centers will run these fabrics by the end of 2015. The last quarter we grew that business 60 . Its a high margin business for us. We had more million plus customers than ever. We have more new customers than ever in that space. Do you have job openings right now . Absolutely. You cant find people, right . Well, emerging trends are software networking. We opened up maybe 200 in the last month for engineers around sdn. Its not disruption trend in the networking space. Along with that im going to use that, maybe this weekend. What is it again . Software defined networking. Its causing major disruption in the networking space right now. And you know, with that comes an opportunity that were seizing. Sdn is a followon to ethernet fabrics. The best analogy is your cell phone. Think about what your cell phone can do now compared to 20 years ago. The same capability is coming to the data center. Have you seen the blow back and aftermath of Edward Snowden in your industry . I think in the Large Data Center buildouts, there were people who were thinking of Large Data Centers and being able to share that data center across geopolitical borders. Countries are now stepping forward and saying germany doesnt want its citizens data to go to france. Youre seeing a focus more on small Efficient Data Centers. Thats the business were in. Were in the business of building out the most Efficient Data Centers in the world. Youre building out the most Efficient Data Centers in the world and trying to connect them. Youre suggesting these centers ultimately wont be connected for political reasons. Theyll be connected but theyll be cautious and more careful about where and how the data transfers from one data center to the next. Will you train people . Do Higher Education institutions need to change their curriculum . Do we need to do Immigration Reform . What is it wed like if you have jobs that need to be filled, wed like to fill them. What do we need to do . Well, everything you just said. Im an engineer by trade. Enough of our students here in the u. S. Do not migrate to the technical sciences, right . Whether its physics, math or computer science. We need to start at an early age to encourage all our students, whether male, female, to be engaged in the sciences. And then in the next thing is, we need a stop gap and have Immigration Reform. Because we are being outengineered. The chinese are developing five times as where engineers as we do. We need to fix the curriculum and we need Immigration Reform. Its easier said than done to tell kids youre not going to be a communications major. You have to go into electrical engineering. Okay, i will have no social life for four years then. Its hard to do. Youre right. If you want to have a great job and a great future maybe you need to put your nose to the grindstone for four years and then or six years, whatever it is. Lloyd, we appreciate it. Thanks for a beautiful backdrop, beautiful city. I was just there last week. Thanks for having me on. Well see you later. A harvard economics professor and former counsel of economic adviser, chair marty fedstein. Well talk when squawk box returns in just a moment. On the road may not be covered. And what if you didnt know that you could be liable for any accidents on your property . The more you know,the better you can plan for whats ahead. Talk to farmers and get smarter about your insurance. We are farmers bum pa dum, bum bum bum bum how did edward jones get so big . Let me just put this away. Could you teach our kids that trick . [ male announcer ] by not acting that way. Its how edward jones makes sense of investing. Its how edward jones voseeker of the sublime. Ro. You can separate runway ridiculousness. From fashion that flies off the shelves. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. And only national is ranked highest in car rental Customer Satisfaction by j. D. Power. natalie ooooh, i like your style. vo so do we, business pro. So do we. Go national. Go like a pro. You want everything. Orks an expert ford technician knows your cars Health Depends on a full, complete checkup. The works. Because when it comes to feeling safe behind the wheel, going the distance and saving at the pump you want it all. Get our multipoint inspection with a a Synthetic Blend Oil change, tire rotation, Brake Inspection and more for 29. 95 or less. Get a complete vehicle checkup. Only at your ford dealer. Love hurts love wounds any heart love does hurt sometimes on valentines day. Welcome back to squawk box. What happened . Because i saw a red arrow. I thought it was whats happening in your life. No, everything in my life is going just fine. The Dow Jones Industrial average looking like its going to open in the red to match this valentines day. S p 500 off marginally, the nasdaq not cooperating with the valentines day red theme. It is up marginally on the flip side. The italian prime ministers resignation is official. He said yesterday he would be submitting his resignation to italys president today. That just happened in the past hour or so. The president will spend today consulting with political leaders to forge a new government. The italian stock market has been volatile over the past month amid all this political uncertainty. Campbells soup is a stock on the move this morning, the company earning 76 Cents Per Share for its second quarter, beating estimates by 3 cents. Among the factors driving its performance, turnarounds in its soup and snack businesses. Maybe its so cold, everyone is at home, theyre having their soup. We have a new s. E. C. Filing from jana partners. Taking General Motors to 7. 9 million shares, versus 400,000 three months earlier. Its also taking a 50 million 50 million share stake in sirius xm radio as well as a stake in Mondelez International which has been in the news recently. We have to see what theyre up to over there. Lets get to one of our very own squawk market masters, for more on the economy and the feds current course of action, joining us is marty fedstein. I could think of so many things to talk to you about. Starting with looking at some recent musings of yours that we really may be in a period where we cant count on gdp growth we had for the past 40 years. We may have to ratchet is down. Do you have a high degree of confidence in this . We were 2. 1 for the 40 years leading up to the recession. We should do 1. 6 from here on out . The reason for that is the demographics are changing. Were going to have fewer people of working age coming into the labor force. So of course we could experience Faster Technology growth. But unless that happens were going to see a small decrease in the annual rate of growth. As i said in the article that youre talking about, i think that those official numbers understate what is really happening to the standard of living. I wanted to get to that. You said even at 1. 6 , the average 30yearold in the future will have 60 higher real income than a person today. Even with growth at 1. 6 . Somebody born today 30 years from now, if they have average growth, even at that reduced rate, theyre going to have 60 more real income as officially measured than a 30yearold does today. So the people who worry that somehow well have a falling standard of living, no, were going to have a slowly growing one but not a falling one. This plays into a conversation we had earlier this week that generated some buzz. The income inequality in this country with the 1 and the 99 , if you look at it globally, the 99 here are have a much higher standard of living than maybe even the top 10 in many parts of the world. And as growth may be as wealthier have become more wealthy in the last 30 years, the standard of living in this capitalist country we have here is pretty good versus the rest of the world, even for people in the middle class. That is certainly true. Another thing thats come out recently in a National Bureau of Economic Research study is that the increased inequality is being driven by the changing matter changing marriage patterns, that is high skilled people marrying high skilled people. And that has explained almost all of the increase in measured household inequality thats occurred over the last 30 years. So we shouldnt get carried away by some of the scare statistics. There are so many things id like you to weigh in. The cbo, you watch both sides try to, you know, work the numbers when they come out, whether its a positive or a negative. They come out and the republican seize on 2 million fewer jobs because of obamacare and then the democrats are able to find somehow this notion that, well, you know, some people, theres incentives here to help people work a little bit less and enjoy life a little bit more. If you raise tax rates on people, people are going to work less but i wouldnt call that a favorable incentive. I would say that causes economic waste. And there was a great piece written, i think it was talking about the working class, not working hard or less, someone is selling you a bill of goods. Theres no way those were good numbers we got, were they . No. What the cbo said was the disincentives to work were going to take some 2. 5 million fulltime equivalent workers out of the work force over the next few years, well have that much fewer people working. Marty, i want to go back to this. I dont disagree with you on the cbo issue. On the mobility issue, the idea that its strictly about what youre marrying and thats cha changed the game over the last 30 years, i know there are sta tvics that back that up. You dont believe theres a larger issue at play over the last 30 years in terms of mobility in this country . The studies on mobility, so what i talked about was not mobility but what happened to the Income Distribution. And the study about that, which seems pretty solid to me, is that the change in the Income Distribution is driven by the fact that you now have professional men marrying professional women. So you go from a household of two people each earning 100,000, now you have a 200,000 household. You get more concentration of wealth at the top. A different colleague of mine at harvard, in an important nbr study, has looked at the mobility question and they have found over a number of decades theres really been no trend in mobility. That is the chance chance of moving from the bottom quintile to the top quintile just hasnt changed at all. Now, thats not talking about the bottom 1 or the top 1 , but theyre the statistical measure is just not very reliable. And you think thats going to become is there a way to make that argument politically for the Republican Party . No. I think they can point to this kind of Solid Research that says while it appears to people, and its true in some parts of the country, but overall for the country as a whole, the mobility has not really changed over the last several decades. What do you make of the weather over the last month or two in terms of trying to figure out the gdp . I mean, is it its a fools errand almost, isnt it, trying to figure it out . It certainly has to have had some impact on Consumer Spending particularly on autos. We know that you have to go out and buy your groceries, but you dont have to go out and buy a new car, so the auto folks say when you have weather of the kind weve had recently that leads to a pullback in people shopping for cars. Wonderful, professor, thanks. A lot more things to talk to you about. Hopefully well see you soon. When we come back we do have a valentines day lovefest with jim cramer. Stick around. Well be right back. Mechanging, like this dozens of tax free zones across new york state. Move here. Expand here. Or start a new business here. And pay no taxes for 10 years. With new jobs, new opportunities and a new tax free plan. Theres only one way for your business to go. Up. Find out if your business can qualify at startupny. Com dividing the classes. Lets get down to the new york stock exchange, jim cramer joins us now. Jimmie, youre not fat. What . Think about Weight Watchers and meetings, can you imagine going to meetings is it like a ww meeting instead of an aa meeting, right . 12 steps. They had a rough quarter, no . Yeah. Geez, i mean, that was actually one of those where they actually literally said that it was bad. Typically you get these releases and you never know its bad. These guys used the term challenge. Frankly its almost like theyre going away, joe, its almost like theyre going away, terrible, terrible quarter and down 11 . These are and then 2014 they call it a very challenging year. It just started. This should be their best time of the year if you have people in january you figure in there trying to decide theyll lose weight with their new years resolutions, you would guess this would be a big time of the year. Four out of five books on the self help are diet. And the rest are diet and religion. The restaurant numbers are down for the month of january but maybe people are eating better and not eating Weight Watchers. Are there any numbers that came out yesterday in terms of individual stocks that really are in a good or a wad way caught your attention . Do you know what, i think that yesterday you got to go back over whole foods what they said is were doing 5. 4 but were advancing the most recent couple weeks is better and stock got taken to the woodshed. Yesterday was one of those days where the market looked hideous at the opening and came back and left whole foods being the worst in the s p. Maybe thats where the opportunity comes in because the market doesnt seem to want to quit. Do you know whats after february . March. March madness. Who to you think syracuse. Who . The cuse. That looked like destiny, didnt it . Its all cuse. They are so exciting to watch. I dont know, i love college basketball. So do i. So did i. But i was sure the last twopointer was going to do it, was going to bring the upset. I want the shockers to be the only Undefeated Team and i dont know if that will happen. Villanova is a long shot, but i like nova. I know you do from philadelphia. I think Wichita State has to play pittsburgh, pittsburgh looked awfully good against syracuse. They win at home all the time. Big guys. Wichita state because they are in wichita i love that. Its, like, a Football Team thats not in the s. E. C. , who are those guys . All right, well see you in a few minutes. Lete checkup. The works. Because when it comes to feeling safe behind the wheel, going the distance and saving at the pump you want it all. Get our multipoint inspection with a a Synthetic Blend Oil change, tire rotation, Brake Inspection and more for 29. 95 or less. Get a complete vehicle checkup. Only at your ford dealer. Tdtdd 18886282419 n take you in many directions. T spark your curiosity d 18886282419 you read this. Watch that. 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I mean, you dont have to, but its a good one at 9 00 on sunday and you know this comedian jim gaffkin will be on with me with the talking dead which talks about the walking dead. At 10 00 on amc. Which is a competitor, but its fun. I will be watching. I promise i will. And you, too. Happy valentines day. Happy vd, valentines day, more squawk on the street coming up next. Good morning and welcome to squawk on the street. Im david faber with the page six proprietor of brooklyns bar san miguel, that was yesterday, i did mention it. Carl is still in sochi heading back i think this weekend. Well hear from him later in the hour about all the goingson at the winter