Transcripts For CNBC Squawk Box 20140218

Indicators. And friday, existing home sales. As for earnings central, watch for reports today from cocacola, medtronic, more weejance cruise lines and others. Then this afternoon, were going to hear from Companies Like herbalife. Ahead of all that activity, lets take a look. Its a mixed bag, plus or minus the flat line either way. Scott, it is a short week, but it is a busy one. Europes activist is reportedly in advanced talks to acquire forest laboratories. Forest value the it up to 25 billion. That stock is up about 18 . And the deal could be announced as early as today. Mine while, hp executives reportedly knew about autonomys Accounting Practices months before a whistleblower flagged them. Youll remember hp said it was a victim for having paid 11. 1 billion for buying autonomy in 2011. But it was accused of overstating revenues before it was sold. They said a report was provided to hp after it bought the british softwaremaker. Hp shares, mean wile, at the close of trading on friday, down slightly, but will move on that news today. Meanwhile, a firm bought by Hank Greenberg says it will buy a multi plan. The deal is valued at 4. 4 billion. Now back over to you. Thank you. And we have mergers, the whole world good things are happening. After last weeks deal, it feels like we have more things coming up. People want to get stuff done. And we have more deal news this morning, which is that barry sternwick is in early talks about selling is his firm to the public. Starwood Capital Group has 34 billion in asset under management. The firm has stakes in hotels, office buildings, apartment complexes and shopping malls. Speaking of possible public offerings, online Music Streaming Service spotify is now recruiting a u. S. Financial reporting specialist. This news is adding to lots of speculation that the swedish start up is preparing for a share listing. Reports say the firm could be valued as much as 8 billion. Thats more than like warner music. The people create the content. It is. And the last time spotify raised capital was, i believe, about a year ago. Goldman sachs led that investment. So thats quite a hefty premium. Right. But the artists dont make you know the content versus the king versus the content versus the pipes . We might be heading back to pipes. Kick starter is now urging users to change passwords after announcing it has been hacked. User names, passwords, meali i g mailing addresses and emailing addresses have all been compromised. But the good news, if there is good news, is that the credit card information has not been stolen. But, you know, i dont know if anybody has the same problem, but i basically have one password, maybe two, theres sort of a Third Special one. I do, too. How in the world can any one by the way, theres always sorts of software you can get, put your password in he ever else. But if you chaeng one of your passwords, do you have to go and change the other ones . Here is the trick. Do you want this . I was told what youre supposed to do is come up with your password, dont say what it is. Squawk box123. Yeah. And then lets take its a google thing. You could do gsquawk123. And then if you were on apple, you could do asquawk123. Anyway, people say that interesting. But anyway, this is, by the way, the story of the morning if you buy a mile. Could tesla and apple merge . Not a joke. Completely, at least. The San Francisco chronicle now reporting that teslas ceo elon musk met with apples head of mergers and acquisitions last spring as analysts were suggesting apple acquire the electric carmaker. The reports suggest the meeting was a sign that apple was very interested in tesla. Apple looking at the medical devices business, specifically technology that can predict heart attacks. But i have to say, people say that apple needs an out of the box acquisition. That would be out of the box, slightly crazy. Im not we should say in fairness, im not sure this will a real deal on the table as much as potentially a Partnership Around some of the technology that was going to go in the cars. We have very vague details about this. Okay, yes, apple is the head of m a is teslas ceo met last month, but which came first . Did the Analyst Report come out and tim cook said, hey, maybe i should see what the analyst of elon musk is up to . This came out and then they came out saying, hey, they could be i had conversation with this very senior tesla person probably about a year ago. And i said, so, do you think you could ever be bought by ford or gm or Something Like that. And they said, no, we would never be bought by an automobile company. And i said what kind of company would buy you . They said a tech k company. Maybe thats their ahha moment you to to by about that. But i think apple would be kill you deal with all these investors on your show. Dont you think if apple announced tomorrow they were buying tesla, the stock would go down, not up . A car company. In the big picture, what does it really do for apple . Not much, right . I think its easy to partnership, the stock would go up. And if they were using their cash for Something Like that and it was so definitive and it was a permanent use of cash that people have been ruminating what they were going to do with it for so long is that what you want apple to do with its cash . Theres a lot of other things out there that they could do with companies. I want them to buy sprint or tmobile. I want them to own some of these things for a Showcase Network with whats possible on one of they things. Then i want them to wait five to ten years but andrew, its not about what you want. I know. But the Cellular Service is going to get so good, i think this could be their entree into the home. Maybe they could have taken a shot at netflix, maybe twitter could have been had at some point. Did you binge . Its funny, because all weekend people were talking about people spent all of the lock weekend watching house of cards. No, i did that. Its sad. But it is so good. Nine episodes in, so no one spoil it for me. But it is so good. I like the story, too. I hope we talk about this at some point. Writing a story about what hp knew and when it knew it i guess about autonomy before that deal was made, about some of the accounting issues that were there. The ft with a big article there today, detailing exactly what it says hp might have known to a string of emails. A pretty detailed investigative report here which is pretty interesting and has bigger implications, too. I think for the credibility of some of those who have spoken out publicly. Ask questions about, you know, to meg whitman, what did you know . When did you know it and some of the other examinations at hp. Hp has told a very distinct story for the entire time, that it was misled by autonomy regarding some of this accounting and now maybe other things are going to come to slight here. I also want what jim chanos is thinking as this article comes to light. Its interesting. But to what extent to companies consult auditors, past auditors about past audit reports . They dont and thats their problem. Because if auditors knew about this all along and hp was going to buy 1el 2 billion to buy a company a whole host of other companies passed on, wouldnt you do you blame the auditors, do you blame the board . Do you blame the bankers . To a certain extent, i do blame the bankers. Probably all of the above, but the bankers made, what, 50 million in fees off of this . And nobody decides to look under the hood for more than a second . And then got dropped, but after they got paid. After they got paid. Whats going on in vegas . Las vegas sands has brought its websites back online. A hacking attack forced the company to shut its home pages and other online operations last week. Employee email was targeted in that attack. And the company says its working with investigators to identify who defaced its webb pages and exposed sensitive employee information, including Social Security numbers. Now to the latest on bitcoin, major exchange. Users should soon be able to withdraw funds from their accounts. The japanese based site is the second Biggest Exchange in the world. A halt in withdraws last week left customerers unable to transfer their investments into u. S. Dollars. As a result, the price of the Virtual Currency plunged to below 300 on the mtgox exchange. That compares to a figure of around 650. Now, while you can, if you think this is a are you a bitcoin believer or do you think its a farce . I havent taken a side on this one. I thought the rise was spectacular. I did feel wary about the strength of some of these exchanges. But if you have money in there and you cant withdraw it, thats scary. Your point, you wonder if the fall is going to be as spectacular as the rise that you decided, right . Between the regulatory stuff, people are starting to take a bigger and closer look at exactly what it is. A piece that ran, it was awesome in terms of an explanation. It was the first time i ever ever convinced that the thing could be real. Maybe not at 300 a pop. But his Company Owned that, right . I get that. But theres something to be said. For someone as well known and as dignified as him to have taken an interest i like dignified. Thats a nice work. He watches in the morning. He does. We may get an email from mark this morning. He might be on holiday. Thats how kayla rolls, right . Dignified. Capital d. Theres a lot moving in europe throughout the morning. Time for the Global Markets report. Carolin roth is in london to tell us what is happening. What do you think . Were seeing a bit of red, but nothing to get too worried about. What were seeing in the markets is essentially profit taking. Time to take some profits and, today, we are seeing the markets just off the session lows that we hit earlier on in the session. But i want to show you whats these individual markets are looking like. The xetra dax is off by 0. 1 . The ftse 100 now flat, and the ftse mib, which it seems from outperformance earlier on in the session and over the last week on the back of the political changes in italy is now also dropping by around 4 . We have lots of Economic News out this morning. Zew, the index for investor and analyst confidence was a little mixed. We saw this unexpected drop in the headline number, but the Current Conditions number, that came in slightly better than expected. I want to show you the reaction in the currency markets. We saw the euro dollar moving just off the session highs, but it is still up by 0. 2 . Overall, were seeing a little bit of dollar recovery. Especially against the yen. Up by 0. 4 . Now, no surprise, this came after the boj extended the Lending Program for banks and that makes some investors even more optimistic about further aggressive Monetary Policy easing. Sterling dollar, also one to watch. It is now essentially flat on the day. Just about that 1. 67 level. But we got those Inflation Numbers for the month of january, 1. 9 on the year. This is the first time that cbi fell below the boe anticipation target of 2 since 2009. And its the Australian Dollar just above that 90 on handle, but down slightly on the day. Back over to you. Thanks very much. Coming up, delivering alpha, we get a hedge fund report card. Plus, more snow for the northeast. Its true. Oots storm headed this way. Already started this morning. Its awful out there. Yeah. Its only supposed to be a few inches here in the city. More or less. And thank goodness we dont have to shovel for otherwise. Thats one perk of living in an ant farm light that. But in the burbs, not so lucky. Another economic lesson for those stuk, squawk box is back. [ tires screech ] [ car alarm chirps ] [ male announcer ] we dont just certify our preowned vehicles. We inspect, analyze, and recondition each one, until its nothing short of a genuine certified preowned mercedesbenz for the next new owner. [ car alarm chirps ] hurry in to the mercedesbenz certified preowned sales event. Visit today for exceptional offers. More snow is expected in the new york city area today. When are we going to get a break from all of this . Alex wilson joins us now with the national forecast. Alex, please tell us its sometime soon. I cant take it any more. Temperatures are going to warm up later in the week. That could cause some problems for the snow melt, so youll have to keep that in mind if you live in any of on those areas that are flood prone. Just get that snow away from your home so you dont end up with water around your house or in the basement. Today, we are adding more snow to the picture. We have Winter Weather advisories, winter storm warnings because of those deeper blues, massachusetts, New Hampshire and maine. Snow falling in philadelphia this morning has caused some trouble for the commute. As you know, in the new york city area, the snow is coming down. A morning event for places like new york city. We will see the snow into the afternoon for boston. It has not started there yet. Boston, youll begin to see the snow and it will continue through the day today. The heaviest snow focused up into parts of new england, rain, New Hampshire, massachusetts. And tonight, still heavy snow in portland up towards bangor. So this will be where the main event of this system is. But still, we will be watching for some accumulation. New york city itself looking at the 1 to 3 inches range. Those lower end totals towards philadelphia, 3 to 5 for that deeper blue. Just upstate over into parts of connecticut as you see that 5 to 8 inch zone. Really focused over parts of eastern new england, into massachusetts, around worcester, then 8 to 12 inches near the costal sections of maine including around the portland area. As we head towards the second half of the week were woog go see to see temperatures warm into the 40s and even 50s with the rain showers. So a welcome change, but kooep keep in mind its going to let that snow melt quickly. Thank you for that. We are waiting for that with bated breath, i can tell you. Meanwhile, we want to sit and talk about hedge funds. Joining us now on set is michael pelt, Institutional Investors institutional investor. You guys do this every year. Explain to the viewers how the methodology works. Sure. We go out to investors, foundations, endowments, pension funds, larger events, investors and hedge funds and we ask them to rate their managers. Basically, were looking at the 100 largest hedge funds in the world. From those ratings on eight different attributes, we calculate rankings and we actually give letter grades. So among the attributes, their actual returns, their risk tolerance, compliance right. The key three attributes are alpha generation, the ability to create good risk adjustment returns, Risk Management and alignment of interests. So that being the managers who have skin in the game is a key attribute that investors look for. So the big reveal, number one this year, is Silver Point Capital out of greenwich. Largely distressed, started by some Goldman Sachs alums. They were 21 last year. How did a firm like that make such a big leap . The great thing about a firm like silver point is when times are good, often their strategy credit distress, it provides a nice uncorrelated return to what people are getting in the equity markets. Yes, markets were up 30 last year, at least, you know, the u. S. Equity market was. But for Institutional Investors in particular, theyre not looking theyre looking for uncorrelated returns. Theyre looking for, you know, some defense in case the equity markets go down as they did in january this year. What would be the distinction between if you were to rank them just by performance and then your ranking income to it, how different would it ultimately look . It would be very different. Alpha generation is just one factor that managers are investors are looking at. Really, the Risk Management alignment of interest transparency. The ability to know what people are actually doing. But my question every time i look at this list year to year, the firms change a lot. The rankings change a lot. And im not in the top, though. I would have thought they would be more consistent if it really is about all these other things with the exception of the, you know, alpha generation. Its actually fairley consistent. If you look at the three of the top five firms, elliott, citadel, and adage. They were they all got as last year. They were all in the top ten. They all performed, you know, well year in and year out. To andrews point, though, i would think that the investors, at least, who are giving you their input are putting out if a generation even though you have eight different categories with a much higher waiting than the others. Is that fair to say or no . Certainly it is the highest waiting and those three that i talked about, Risk Management, alignment of interest and alpha generation, those are far and is away the most important. Because if an investor has an issue maybe with infrastructure or some of the other, you know, deals, but the fund outperforms the market, you know theyre going to say they love their guy because they generated so much for them. For sure. People are willing to put up with maybe lousy Investor Relations if theyre getting great alpha generation. But its about risk adjustment and returns. One of the things, if you look at the returns from pretty much every hedge fund last year, nobody did 30 . There was very few. And theres a lot of angst has been spilled over that. Meanwhile, the market, as you mentioned, was up 30 . How did that affect investors in the type of survey and the types of things that were important to them . Did you see a lot of investors xlaping . No. Investors are actually id say some a little disappointed. For the most part, if they could get 10 to 15 a year, regardless of what happens with the equity markets, theyre pretty happy. Thats what theyre looking for. If you look at their liabilities, if youre a big pension fund, people do 10 to 15 , that would be great. As we rack up some of the well known names that are not on here, couldnt get their investors to talk or what . Like appleloosa, for example. Had great numbers last year, great returns. They killed it. And theyre down on the list. Were going out, asking them to rate the managers in the top 100. If we didnt get enough investor response, we dont actually give them a rating. I didnt see the bottom of the list. Bridgewater, for example. Thats a firm that people like, traditionally, or they have. Last year they their fund was down 13. 9 , i believe that was the number,. Therefore alpha generation perspective, you cant be a healthy camper. But the flip side is, i would think people would stick with them if all these other issues are upgrading. Bridgewater, the last couple of years have been rather low, the returns for bridgewater. So i think theres been an impact on their ranking. But last year, bridgewater was in the top five. And generally theyve been in the top five in the hedge fund report card. And you think its come down because theyre losing money . Well, definitely the returns are disappointing. In the d category, im seeing some familiar names, Greenlight Capital run by david einhorn, are they doing something wrong this year that you think they can fix for next year . Do you think their fundamental issues with firms that are scoring in that level . Well, one of the things is were putting grades. Its comparative. So if you look, these are the 100 weve rated 47 firms. Still, those are the top 47 firms in the world. But are investors upset about their returns in that regard or are they saying, bill ackman, we dont like you being out there publicly, david einhorn, we dont like what youre saying or we dont like the way youre communicating with us. Look at both to have those, greenlights and perfect square. If you look at personal square, i think the biggest problem there is one of Risk Management. That was where Pershing Square scored poorly. Bill ackman is taking large betts and concentrated betts and, you know, sticking with them. If they pan out, great. But if you look at some of the things he did, jcpenney was one where he lost money and he stuck by it for a long time. And from a Risk Management standpoint, if youre an investor, youre thinking, well, maybe where is the Risk Management . You have a sense as it pertains to activist investors as that trend has certainly picked up. You know, theyve never been more accurate, how that correlates to their end result, if you think that that will play a larger role in the way the methodology plays out in the year or so ahead . That activists will do better than others, worse than others . Well, look at dan loeb. Dan loeb moved up from 18 a year ago to number two. His returns over the last four years has been incredible. It was anywhere between 20 and 40 , you know, three of the four years previously. And there is an activist whos not just an activist, though, hes making just really interesting eclective investments, you know, across the globe. Thank you, mike. Weve got to leave it there. That article on those rankings come out today. Check it out. Im going to check it out. Thank you. Youre welcome. Thats fun. Coming up, were going to talk about some bing viewing, not here, but you werent into the housing if were talking about bing viewing in china. Eunice yoon is talking to the man that is bringing house of cards to beijing. Plus, the other big debut of the holiday weekend, jimmy fallon taking over the tonight show. And he settles a debt with some celebrity nay sayers. First as we head to a break, take a look at last weeks winners and losers. Were back in a moment. We needed 30 new hires for our call center. Im spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast . Go to ziprecruiter. Com and post your job to over 30 of the webs leading job boards with a single click; then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter. Com offer2. You want everything. Orks for tv viewers; 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. Good morning and welcome to squawk box right here on cnbc. Im Andrew Ross Sorkin along with kayla tousche and scott wapner this morning. Theyre in for joe and becky, who will be back tomorrow. We have a number of headlines for you this morning. Europes activist is reportedly now in advanced talk to acquire rival drugmaker forest laboratories. Here is the price tag, 25 billion. This deal could be announced as early as today. We hope we will bring that news to you 80s comes. Chinas central bank draining 7 billion from money markets after unexpectedly drained lick kwity for the first time in eight moss. The central bank is graduate to engineer a gradual upward shift in money. Then as we fly over to japan, the boj there keeping Monetary Policy steady today and maintaining its upbeat assessment of the economy. The decision was expected. The boj has substitute pat so far on launching a strong burst of stimulus last april. The nikkei rallied on the news up 3 . I dont know if you saw the New York Times oped page today weighing in on what mario draghi should be doing. He said were going to have deflation in europe, you have to print money. You never see the times get involved in these economically just when you think the role of the central banker is maybe going to start to fade into the spod light. No, apparently not. All your suspicions are concerned, maybe only here. Thats all right. This week, markets will turn their attention to the feds view of the economy. Minutes from the feds latest policy meeting are due tomorrow. Michelle and dan are joining us here this morning. Great to have you both here. The dow, s p up six of the past seven days. Do you see this continuing as the rest of the world seems to be a little more settled and we appear to be a little more settled about it . I think its all about earnings and actually top line growth is starting to look a little bit more attractive now. Most of the companies that we sample in the small midcap space actually beat on the top line by a reasonable margin. And included very good acceleration on the bottom line. And i think thats an early trend showing that theres an underlying strength in the u. S. Economy is that isnt widely recognized, whether its the weather that is causing it or some of these probably shortterm issues that i think have taken peoples eye off the ball. But the economy is improving. Its a gradual and slow improvement. I dont see hear you voesing concerns about emerging markets or china or the nikkei or things like that. So are we moving beyond that . I think we are. I think the best gain remains in the United States. I think its underappreciated, its not viewed as cool and attractive. Its viewed as slow and lumbering. And i think thats a misperception and thats a missed pricing opportunity that i think investors need to focus on. The data here in the u. S. Has been squarely, at best. Gdp forecast at the end of the last week started to come down. Whats the real story . Whats happening with the economy . Well, i think it is hard to assess the true underlying trend right now because of poor weather conditions. And i feel like ive become almost obsessed, whether not just for our own personal reasons, but the data is impacted by it. So weve seen too weak job numbers which we think can be directly correlated to the cold weather and the snowstorms. Housing data out this week will certainly be affected, retail sales. So its hard to determine the underlying trend. The good news is that we ended last year on a healthy note. We were running at almost 4 for gdp growth in q3. Q4. Weve stalled a bit with the latest tracking. But still, a healthy pace of economic expansion. So there is momentum. We think well get past the slow period and were going to rebound in the spring. Michelle, physically, people cant got to the so buy stuff. They havent been willing to break ground on a newhouse. Thats the fear. But psychologically, do you think anything has changed in terms of views of the overall economy, personal finance, 401 k s, the market, psychologically, is the consumer still in the same place . Thats a very good point. And you can see the divergence when you look at the activity data versus the survey data. The university of Michigan Consumer sentiment held quite fine. You have not seen the s p acceleration in the survey measures of the economy. The hard data, the sales data is where i think its been impacted. So i think with the consumer, theyre looking at their balance sheet, which looks much healthier, large gains in equity markets last year, and increasing home prices. So that coupled with incrementally better labor market activity, i think it does set the stage for healthier consume they are year. Dan, the minutes today, maybe a little more important than normal, just looking for any clues about tapering the taper or what the conversation is in the room . I think were beyond that now. I really do. I think that were trying to micromanage. Bottom line is the commitment here on the part of our fed and central bankers around the world is to stamp out deflation. That remains the biggest fear. Thats the big thats the elephant in the room. Its certainly not inflation. Fears of deflation globally. Did you see this oped . Let me guess. The whole point was they believe europe is actually here it is. Europe flirting with deflation. Policymakers can avoid falling prices by stimulating the economy with lower interest. Would you do that . Do you think its necessary . Could you believe thats coming from europe who still thinks about why republican burning, white marks in the street because it was cheaper than burning wood. Theyve moved to that i think is very, very significant. That they are willing to inflate their way out of these problems. Do whatever it takes, right . Theres a big lawsuit going on in germany right now over what the ecb is doing. Well, theres a big divergence in terms of which country youre talking about. So theres that. And the ecb obviously has to look at the big picture and realize that defacing could spread. So if its in the peripheral, theyre trading partners with Central Europe and it is a real challenge and a big concern, i think. Dan, japan, when you see what the boj is doing to spur lending, do you think it will work . Yeah, well, theres so much accumulated savings there and theyre desperate to get people to use some of that savings up and to just jump start the economy. So i think thats well see. I think time will tell whether those policies are going to work. Guys, good to have you this morning. Thank you. Good to be here. You, too. Coming up, a big weekend for netflix. The Second Season of house of cards rolling out all at once on friday. If youre like me, you knew fairley well exactly what was going to happen once you sat down and watched that. Did you know the show is a big deal in china as well . Eunice yoon will join us with that story next. Right now, the dollar index is at about 80. 125. Stock is back in two. 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. 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 on this Tuesday Morning after a long holiday weekend. Its time for your squawk box planner in earnings central, dow component coke sets the first quarterly reports before the bell. A Conference Call is scheduled for 9 30 eastern. Among the economic reports, the february Empire State Survey is out at 8 30 eastern. The favorite data point of our Rick Santelli will, of course, join us live with the release and instant market analysis. And in washington, president obama will travel to mexico for tomorrows north american leaders summit. Theyll join mexicos president and canadas prime minister. Thats your squawk box planner. Andrew. Thank you, kayla. I also should thank the guys in the control room because they didnt use the awful music. But thats a separate issue. The Second Season of house of cards making its debut on netflix on friday. Eunice yoon caught up with the ceo bringing the show to china. Our morning on, her evening. Eunice. Hey, guys. Viewers in the United States arent the only ones binge on house of cards. After bringing saturday night live as well as the Ellen Degeneres show to china, the ceo of the company decided to bring in u. S. Local thriller house of cards to this country. Now, he said that he is not targeting the masses, but is targeting the growing number of Young Chinese who love american politics. This is what he had to say. The chinese audience watch american tv shows. Although the story is really not about the lives around them. Its about things happening in america in the world. Its not relevant to their lives that they live here. But because of the quality and the sus sense, its universal. Thats why chinese people, you know, they know good things. Thats why they love american movies and the tv shows. Now, the ceo didnt disclose the deal with netflix, but he did say this is a one off deal. He said all of his money in terms of this deal comes from advertising. And he believes this is a very good model to help the u. S. Media Companies Bring their content and finally make money off of it in china in the fight against piracy. Realready fought it and we won. Now its become a trend, become a spender of things. If you put out the website, put out the pirated american content, were going to send a legal letter to them, they immediately take it down. If they dont, probably there will be really worried. I see no hope. But now i am very happy about results. Now, you guys probably know that in the Second Season, theres a big china theme thats ongoing. I actually asked him if he knew about it because its not exactly flattering of the chinese leadership. But he said he didnt know, but so far the government acceptsers havent come in. He hadnt had any signs that, hasnt been blocked. One kwin quick question on this. In terms of hollywood exports, its always the big action film that works, its not always a very american this sa veis a d. C. Show. Is there any anxiety that folks in china arent going to dig this thing . Not much anxiety at all. I mean, right now, he told me that some of the most popular shows that he shows, Big Bang Theory he said is incredibly popular. He said snl and the Ellen Degeneres show have been much more popular than expected. Of course theres a lot of subtit subtitling. But when theres a joke that they think the chinese wont get it, theyll put in pa tren thre an explanation on the box. And actually people are getting the jokes. So there you go. There you go. Eunice, thanks so much. Coming up, a big debut last night. Jimmy fallon taking over as the host of the tonight show and some big time celebrities settle up on a 1 00 bet. As we head to break, check out the future. More squawk is coming up next. 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With investment information, risks, fees and expenses time to take care of business with century links Global Broadband network and cloud infrastructure. We constantly evolve to meet your needs every day of the week. If yand youre talking toevere rheuyour rheumatologistike me, about trying or adding a biologic. This is humira, adalimumab. This is humira working to help relieve my pain. This is humira helping me through the twists and turns. This is humira helping to protect my joints from further damage. Doctors have been prescribing humira for over ten years. Humira works by targeting and helping to block a specific source of inflammation that contributes to ra symptoms. For many adults, humira is proven to help relieve pain and stop further joint damage. Humira can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal events, such as infections, lymphoma, or other types of cancer, have happened. Blood, liver and nervous system problems, serious allergic reactions, and new or worsening Heart Failure have occurred. Before starting humira , your doctor should test you for tb. Ask your doctor if you live in or have been to a region where certain fungal infections are common. Tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. You should not start humira if you have any kind of infection. Ask your doctor if humira can work for you. This is humira at work. Welcome back to squawk box, a live shot of times square there. I cant tell if the snow is still coming down right there from that shot. We should tell you what happened last night. Jimmy fallon made his debut as the host of the tonight show last night. He brought the show back to new york. His first guest was will smith. The musical guest was u2. A parade of celebrities stopped by to settle a bet. To my buddy who said that id never be the host of the tonight show and you know who you are, you owe me 100 bucks, buddy. Thank you. Where is she going to take the money from . Oh, okay. Get a room. And colbert does it in pennies. Thats how i do it. I like that. Oh, the poor soul that had to clean that up, probably. Thats how i would bring pennies. That was good. Nice to see him bring it back to new york, though, for us east coasters. For people who work at nbc. 30 rock has been under such massive construction for the last few months. Our guests that have gone to 30 rock foot sixth floor have seen the furniture being shuffled out. Theres been a lot of renovation and remodeling going on there. If you saw the segment with Brian Williams last night youd know that the color they painted everything pink. Theres the hot tub and the urinal and all that. You dont know the jokes. It wasnt my jokes. They were told by jimmy fallon and Brian Williams who probably should have his own latenight show. I obviously have no business trying to retell the jokes. I will stop now. Thank you very much. Its early. Its early. Coming up, how frozen frozenoonomics. Its frozenomics. It said frozenoonomics. You just read whats there. Last time you threw me under the bus. I did and i apologize for that. You threw me under the prompter bus. Thats how its going to be between us . No, no, theres more to go. Will stocks remain during the holidayshortened week . Barclays barry knapp and jpmorgans tom lee give us their forecast for the mooshgette. Look at these hitters, next on squawk. Tdd 18886486021 there are stocks on the move. Tdd 18886486021 in here, streetsmart edge has tdd 18886486021 chart pattern recognition tdd 18886486021 which shows you which ones are bullish or bearish. Tdd 18886486021 now, earn 300 commissionfree online trades. 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Barclays barry knapp and jpmorgans tom lee are going to give us their forecast, next. And another lesson in frozenomics. How the weather is freezing up the countrys economy. And does you curl up with netflix over the holiday weekend. I dont know whether to be proud or terrified . The Second Season of house of cards making its debut on friday. How should investors measure its success . The second hour of xwb squawk box begins right now. Squawk b begins right now. Good morning. Welcome to squawk box right here on cnbc, little house of cards musical playing. Im Andrew Ross Sorkin along with kayla tauche. Becky and joe will be back tomorrow. Well have congressman paul ryan on the show this morning but nasty weather kept him grounded in his home state of wisconsin. Well reschedule with him in the very near term. Take a look at the futures, see how things are setting themselves up on this Tuesday Morning after this threeday weekend. It still feels like a monday. The dow would open up 7 1 2 points higher. Nasdaq looking down at the moment. Looks hike it would open off close to 2 points. The tenyear as well, were looking at a yield of 2. 732. Thats the number to watch. Lets get you through some of the morning headlines. We have a potential deal that could get announced in the next couple of hours. The multibillion dollar pharmaceutical takeover deal could be imminent. This is it. The wall street journal reporting that irelandbased activist could be buying forest labs for 25 billion. The deal could be announced as soon as today. This could be a huge win for carl icahn who took a stake in forest labs and has a seat on the board. June 2012. They replaced the ceo just a couple months ago. His first assignment is to sell the company. He has a big position, too, 11. 5 . Single largest shareholder in the country. In a conversation we had a month or so again hed been happy with the job that saunders had been doing in the short period of time, the stock had had a nice little move. Right. We will see whether that deal crosses the tape during squawk hours. The other headlines this morning, cocacola, theyre expected to report earnings during squawk hours at the bottom of this hour. Analysts are looking for Fourth Quarter profits of 46 Cents Per Share on revenues of 11. 3 billion. Well have those numbers for the year the instant they are out. The big thing people are watching for there ladies and gentlemen, we have a deal. Maybe we should roll a little news alert. This deal happening, this is the forest labs transaction just crossing the tape as were talking. Give you a sense of it. Thank you for that for rolling that. Im trying to get to all of the numbers on this transaction. Meanwhile, what youre looking at is a oneyear chart, up 142 . Carl icahns been trying to sell this company for some time. The company had been saying that it was worth more than some of the conversations with prior bidders. A lot more value created in the last 12 months. Actavis, its a generics and overthecounter Pharmaceuticals Company is acquiring forest labs for 25 billion in cash and stock. It will be interesting to see how actavis stock responds to this. 86. 94. The arbs have a spread to play there. Well bring you more on that transaction this morning as we take a look at it. Also, you might be driving an apple automobile a few years from now. This is i think this is the big talker of the morning. The San Francisco chronicle reporting that teslas ceo met with apple last year. It doesnt necessarily mean that apple is about to buy tesla any time soon but points to apples strong interest in getting involved in new product areas. For those that are saying tim cook is not thinking out of the box enough, this might shift some of the perceptions. Apple buying a car company would be quite an out of the box thing to do. The thought was they had been talking about a smart watch. They never really went there. They had fun talking about going into the home but then google bought nest. They were talking about social media, but a twitter deal never materialized. Theyre talking about cars and medical devices. I love the idea of them doing this but i think its crazy. Market cap 25 billion. A year ago it was even higher. That would have been barrys here. Would have apple stock dropped precipitously if they would have bought a car company. I kind of think so. Sorry so say. It seems like deworstification. Peter lynch used to talk about deworstification. Tesla stock up 435 in the last year, which is a confidence boost from the market. If they had done this deal a year ago, they probably would have gotten a better deal but you wouldnt have the positive sentiment around tesla, the talk that someone in every single state owns a tesla. This has been rolled out slowly but surely over the last year. Tesla thinks theyre a technology company. Right. Thats my point. As i said to you, i talked to a person last hour about a year ago who said wed sell ourselves to a technology company. I thought that was google by the way. If you were google and you wanted to do driverless cars, thats the company that would do it. I remember a lehman exec telling me in 88 or 89 that we could get bought by yahoo . Wed be their content for their portal. Thats when tech was kind of crazy. And i didnt really follow him. You know . Now were back, same place. The maker of candy crush sega smartphone game is filing fon an ipo of up to 500 million. The londonbased company is king digital entertainment. Candy crush, its saga . I said sega. Sega genesis. Was launched on facebook in april 2012. It has been one of the most frequently downloaded free apps. You can tell im a big gamer and i play candy crush many times. You do more productive things with your time. This just became such a huge i dont want to say fad because people love this game. People. Reporter spending hours upon hours playing candy crush. They couldnt stop playing it. And now apparently the trend has continued and theyre finally using this not so volatile market to finally file for an ipo. Real quickly, before we get to our guests, i want to give you more on this actavis forest labs transaction. The stock price in total is 89. 48 per share. 26. 04 in cash and then 0. 3306 activist shares for each share of forest common stock for those of you playing at home. Should note this is a 25 premium over forest stock an a premium of 31 over forests tenday volume weighted stock price. Thats what the two companies are saying. We should also say if you look through this right now, the companies are claiming it will generate strong Free Cash Flow in excess of 4 billion. Theyre also saying that revenues i think thats all we need to tell everybody right now. Theres a plc for activists that trades on the new york stock exchange. That is up about 7 in the premarket right now. So 6 if you look at that chart as well. Seeing a similar rise over the the last year but for a company thats issuing some stock to pay for this transaction, thats a vote of confidence for the market about the direction this is going. By the way, this is now the second deal that Goldman Sachs has not been a major player on in terms of advisory behind the scenes during the past two weeks. There was a question mark in where they were playing or not playing in the comcast transaction that took place last week. The story of the boutiques, green hill is behind this transaction, jpmorgan is on the other side working for forest. Green hill has a strong form ma practice, the lead adviser on most of roches transactions. Im not surprised to see them. It is a pretty big name to deal there. Stocks logging their best weekly gains of 2014. That happened last week. Lets see what will happen this week. We have a couple folks to talk to us about the shortened trading week. Barry knapp of barclays, tom lee is chief u. S. Equity strategist at jpmorgan. The question this morning is can we continue last weeks gains . Or was that you came on, you were on last week. You talked this market up. Are you going to keep talking it up . Someone had a finger on the up button, like an easy button at staples. What do you think happened last week . I think last week really showed that Institutional Investors had positions squared. So i think they started the year uncomfortably belong. I think more people are comfortable with the idea that some of the soft data may be weather related. And then finally, i think credit has been acting great and stocks usually follow credit. So i think its you know, im constructive. I think its still very constructive . What kind of word is constructive. Bullish. Bullish . Bullish, yes. I think money shou people sho be putting money to work here. Do you look at the high yield index . What are you watching . I think the easiest way to follow what equities should do is look at high yield spreads to treasuries. And whenever those spreads are narrowing orallying, i think it means p e should be expanding. Interested related point about all this, if you look specifically at credit in retailers, theres been a whole bunch of situations where credit has been blowing out and widening. And the discretionary sector in particular was really interesting. I think its a fan femanifestat what tom was talking about, people being uncomfortably belong coming into the year. The number one reason most economists would cite why growth would accelerate is stronger consumption on the back of fading effects of tax hikes. That was an economist forecast. The sector had been the best performer. It was the most expensive by a fair bit of any of the ten economic secretary ares. And analyst estimates were elevated as well. Naturally what happens in the first month of the year is that sector leads the market lower because expectations were outsized. Then we get this whole weather event that exacerbates it. The longer outlook here from an Economic Perspective is favorable which means that any downside, like i think the market will struggle because of the fed normalizing policy. The history around this is compelling. That still doesnt mean its a big downside scenario. Ive almost stopped calling it a correction. Its a pull back that happens. What is your downside scenario right now . How much farther would we have to go . Its basically every Business Cycle since world war ii when the fed stops easing. We wont call it tightening. They normalize policy. You get an 8. 5 correction. Its pretty standard stuff. It lasts for two to three months. The market is stuck in a range and then the uptrend resumes. Our taper is not standard stuff. It doesnt matter. It does matter. The same thing happened when the fed Treasury Court of 1951, they stopped buying bonds, you had a 7. 5 correction. The p e was 7. 5 at that point. Right . Theres been other occasions where theyve raised the reserve requirement, other policies. Basically thats what its done. In the current environment if you think back to 10, 11 and 12, 10 it went down 17 , in 11 it went down 18 . In 12 it went down 10 . Each one there was a program due to end on june 30th but in 12 they extended it. The difference was that 7 to 8 , which is the sames s as history. When will we figure out whether this weather thing is real or not . Whats the cutoff for you . What are you going to look at . I think its a good question. Its tough to know because how much of the economy has been affected by the weather. I just think its going to be for investors, hard to figure out when we get clean data. I think its sort of toward the spring. I think we have a few months where were not sure if this is rebound if its unusually cold. Interesting point, though, if you get this jump on the other side of winter, then we will be able to surmise that there was a pentup demise that weather was real. I cant imagine it isnt real. The only thing that was disturbing to me last week, i think Capital Spending will be better. I think well get a second leg hot housing recovery. In the retail Sales Numbers they revised down november as well. December was hit by weather. But the fact that there was a downward revision in november was disturbing. Because the narrative had been consumer cushioned a tax hike in the first quarter. It slowed in the second and third and picked up in the fourth. Now youve revised a bunch of that away. Its clear or unclear how good a shape the consumers are actually in. Youre sticking around for the rest of the program. You get to enjoy the snow right now, enjoy that weather. Thanks for being with us, appreciate it. The business of hockey in sochi, gary bettman will join michelle from the games. Did you see that game over the weekend. I did not. Im not a hockey fan. The snow has been falling on the new york city area. How much more nasty weather is on the way and what will it do to our economy . There was a lot of Binge Viewing with the release of season two of house of cards. Well check out netflix and whether its a possible takeover target. More squawk, next. 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. As your needs change, you can adjust your sleep number bed, so you can sleep better together. Visit one of our 425 stores for the the largest closeout event of the year with 50 savings on Innovation Limited edition beds. Know better sleep with sleep number. 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. Welcome back. The snow is falling on the new york city area. Just down the road from cnbcs inglewood headquarters, we find Reynolds Wolf in ft. Lee on the jersey side of the washington bridge. How nasty is it out there for commuters this morning. To be honest with you, its been hit or miss. We started off this morning, skies are relatively empty in terms of the snow and then, boom, everything started. It was intense to the point where it was difficult to see the toll plaza and the George Washington bridge from this vantage point, dont panning over. Its hard to see due to the intensity of the snowfall. Lets talk about the snow a b l bill bit. The snow is going to continue. Were going to get 1 to 3 or some parts may get 3 to 5. By the time the afternoon comes around, two things will happen. Drier air is going to come through this is nothing to beep about. Warmer temperatures will occur. When you have the warmup, much of the snow weve got then morning is going to be going, going gone. As we get into the weekend, well warm up even then. Until then we have to deal with what we have for the time being. New york is ready for it. Theyve had a big shipment of salt. The salt has been spread around the five boroughs. You have salt, the roads have been treated here in new jersey. It is going to be slow going for a lot of people. I mean, slow going anyway at this stretch of freeway. This is one of the busiest spots in terms of traffic on the planet. A lot of the kids not going to school today not due to the weather but it happens to be winter break. You have fewer cars on the road. Thats got news. Still, youre going to have major travel disruptions, maybe not just on the roads but the airports already had many cancellations and delays at the big three airports. That should improve as we get to the afternoon. Everything should improve as we get closer to the weekend with the warmer temperatures. Done with winter. Spring cannot get here soon enough. Ill second that, 0 days away. Reynolds wolf out there by the George Washington bridge for us. He has his pocket square and threepiece suit under that jacket. You know its bad when the Weather Channel reporter is ready for the end of it. Coming up, more on frozenomics and the broader impact on restaurants, travel and local governments. Before we do that, lets get to michelle in sochi. Oshie is now a household name in america. Yet the nhl may not come back for the next winter olympics. Why is that . Gary bettman, nhl commissioner, braving the rain. Ease join us right after the break. Well be right back. Peace of mind is important when youre running a business. Century link provides reliable it Services Like multilayered Security Solution to keep your Information Safe secure. Century link. Your link with whats next. 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. Time to take care of business with century links Global Broadband network and cloud infrastructure. We constantly evolve to meet your needs every day of the week. All right. Lets get right now to Michelle Carusocabrera in sochi with a very special guest. Michelle . Hey there, standing here and making me look like a wimp because hes not wearing a coat is gary bettman, the nhl commissioner. It looked colder in ft. Lee with the snow than the rain here. It is, it is. Weve got you on because theres discussions about whether or not the nhl will participate or cooperate in the next olympics in korea. After the exciting game that happened over the weekend, why is this a consideration . Tell us your framework for thinking about it. First of all, whether or not we go to the olympics at all is a decision we make jointly with the players and the players association. So first and foremost, the players have to want to go, represent their countries. The good news is historically were a sport that has a great tradition of international competition. Our players love to represent their countries. The debate, question you ask, is one weve been dealing with for the last 20 years. After each olympics we sit down and evaluate whether or not it makes sense to go. Theres good to being at an olympics and theres some not so good. Its a balancing act. The not so good has to do with obviously disrupting our season which has a disproportionate impact on some of our clubs. We have some nhl teams with ten players here and some with two. There are 550 players who are on vacation. Our teams will come back in a little bit different shape. And depending on where we. Reporter in the world has an impact on how powerful our presence is back in north america. I want to channel my inner nhl commissioner. I see sponsorships for the olympics now going for 200 million, the top sponsorships nearly 1 billion when it comes to broadcasting rights from just one organization. Your guys give them the biggest events they have here. Without the nhl players, you dont have a lot of the big ticket events. I mean, if im the nhl commissioner, id say to myself id hire you as my agent. I deserve a piece of that revenue. We dont do that. Why not . There are incremental expenses that we have that are picked up by the organizing committee, the ioc and the International Ice hockey federation. What youve described is not in the cards. Why not . Theyll be an olympic hockey tournament whether the nhl players are here. The players as i said, like to be here because they love to represent their countries. They give of themselves. Its good for the game worldwide. Whether or not its ultimately good for the nhl in the middle of our season at an important time as i said is a balancing act. We understand the tradeoff is maybe instead you do a hockey world cup. Which is something well probably be doing. We have a history of that as well, canada cups, world cups and we are with that would give you revenue. Its not just about the revenue. Its about building the game and having an impact. One of the things we have to evaluate is being at the olympics, does that help grow the game worldwide . And particularly in north america where our franchises are. Oshie is now an overnight sensation. I would guess this whole thing is marketing gold for you. If you could speak to that and what sort of evidence you saw postvancouver. Actually, we play to about 95 of capacity in the regular season and over 100 of capacity in the play. What kind of impact the olympics have in general in north america will tell you whether or not we get a pop. At the same time, this is the balancing aact, it breaks momentum for us. We lose 17 days of primetime exposure, of getting the type of coverage that we typically get for our games. And when the games are on, for example, at 7 30 in the morning as the russia u. S. Game was on saturday morning, while a lot of people watched, its not quite the same as playing our usual scheduled game. It doesnt mean all good or all bad. Its a balancing act. Do you get a piece, gary, of any of the merchandise that is sold from any nhl player if theyre wearing a usa if someone buys a usa hockey jersey of oshie, do you get a piece of that . Nope. Nope. Not a dime. Were here for the good of the game. And i know a lot of people find that hard to believe but thats the olympic world we live in. The spirit of scotts question, though, oshie, like i said at the beginning, now a household name. Yes. That wouldnt have happened without the olympics. Where else can the nhl get that kind of composure. Do you shut down for 17 days on the possibility, the serendipity that Something Like that happens . Depending on whos in the gold medal game will impact whether or not theres interest in the United States or in canada. Go back to olympics where, you know, when we first went to nagano, halfway around the world and czech played russia in the gold medal game, it doesnt have quite the same impact. Its not all good. Its not all bad. We have to go. We have to hit a commercial break. We need revenue, too. More squawk coming up right after this. Mr. Bettman, thank you so much. Thank you. Good luck to you. Pay my bill. Phone your account is already paid in full. Oh, well in that case, back to vacation mode. Boots and pants and boots and pants and boots and pants and boots and pants and boots and pants. Voiceenabled bill pay. 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. With the stunts and loud explosions and all the muscles. [ as cosby ] i want to see the comedy programming with the children. [ british accent] watch bravo yeah, i want to see the real housewives. Rewind yeah jimmy . Its been hours. We told you the x1 entertainment operating system show me the tonight show starring jimmy fallon. Thats what im talking about right there. [ cheers and applause ] [ female announcer ] control your tv with your voice. The x1 entertainment operating system. Only from xfinity. Welcome back to squawk box. We have headlines for you. We have a big deal on this Tuesday Morning. Irelands actavis is buying forest labs in a 25 billion cash and stock transaction. Forest lab shareholders will get a little over 26 and a share of actavis share for every share they hold. Both companies are noted for their generic drug business. As we said earlier, a good deal for carl icahn who owns about 11 of that company. Hes the second largest shareholder, got involved in 2012, has a board seat as well. Other news you should be watching, spotify may be moving one step closer to an ipo. The swedish swedenbased company is seeking a u. S. Financial reporting specialist. Thats the assignment, increasing in speculation. Seekers say spotify could be valued as much as 8 billion. The last time they valued themselves about 4 billion. We think Goldman Sachs has a small piece of that, maybe even a big piece. Get ready for more powerball fever. The jackpot is up to 400 million, one of the biggest jackpots the multistate lottery offered. The biggest ever, 500 million, won by one player last year. Well abstain from calling you a moron just yet. Thank you. Coke earnings, they get 46 cents ex items. That does look like a match. Revenues appear to be just a hair short of analyst expectations. The stock is trading down by a fraction of 1 in premarket trading. Well dig through this report and get you more details as soon as we can parse through it. Hitting the wires, coke looks like a match on the bottom line. Maybe to the top line a bit, mukthar kent, to that point, the issue with cocacola has been slowdown in growth in emerging markets, bad. Slowdown in developed markets, bad. Fighting it sort of on all fronts. And the Green Mountain deal. And the Green Mountain deal, a good deal but its not going to move the needle. Im laughing. I dont think its interesting. I dont think its transformational. Maybe its transformational for Green Mountain. Potentially. For cocacola, the impact is much more limited. The figure that most people in the market are watching for is the possible decline in carbonated beverages, both pepsi and dr. Pepper did see a decline. Coke outperformed its peers. Theres an expectation that coke could outperform. Theyre seeing a 2 headwind on net revenues from currencies. Thats a 4 hit on operating income. When you see the volatility, youre maybe not hedged against, for a company this big and diverse, that will hurt in a year like the one we saw. I havent seen anything on the dividends. I dont know if the guys in the control room have seen anything on that. We should watch out for news about the derivative being up at cocacola as well. Something they have consistently done for 50 years. Well see. Lets get a check meantime on oil and natural gas prices. Joining us now is john hofmeister. Also is christy tizak. John, ill good to you first. Well start with oil if youd like. Were back at 100 on wti. Where do we go from here and what do you think the impact will be. I think well float around 100 for a while. You know, the supply demand relationship, anything we see out there, i wouldnt say were overly tight but were not overly supplied either. Opec is producing about as much as it can. The good news is, the u. S. Is continuing to increase its production. But thats largely good for the domestic market. Doesnt say much to the global market. We decrease our import slightly. Id say more of the same as weve seen the last few months. Christy, is that the way you see it . I think what were seeing is continued strength in these markets and thats going to persist for a little while. John, i guess more substantially, lately just because weve all been under the deep freeze, especially on the east coast, is the move in natural gas prices. How sustainable do you think that is above 5 bucks . I think were going to see 5 for a good part of this year. The reason is, we have used so much natural gas from our storage that we have to refill that storage to get ready for next year. Were at a tenyear low in storage. And so its going to be a good year for drillers and the supply chain as we refill that whole storage system. If we have a hot summer, and we use a lot of natural gas versus coal for electricity, for air conditioning, its going to be a robust period where i think we could see high 4, low 5 gas for much of this year. Christy, oil is clearly in johns wheelhouse. Ill get to yours, that being the utility system, the grid and how we distribute Energy Around this country. How would you say its fairing in the wake of certainly one of the most extreme winters that many of us have felt in an awfully long time, if ever . Well, i think one of the things we can be encouraged by is although we put this tremendous draw on the natural gas system and we are really pulling down storage, one of the things we are seeing is we are getting the gas there but just barely. We really need to get more infrastructure, particularly into the northeast of the United States where the increase reliance on natural gas is becoming more acute. We need to build more pipelines and get those cited through the regulators and approved. These are the things i think will help keep prices in the 5 range on a persistent basis but we did see spikes as we were challenged to deliver that gas to consumers. John, speaking of pipelines, keystone not mentioned in the state of the union. Your reaction to that and how we should all be thinking about that process Going Forward, say, over the next 6 to 12 months. Well, as many people have said, im not the first, this has become so politicized, so unnecessarily politicized, that now everybodys watching whatever secretary kerry says, whatever president obama says, and this is ridiculous. I mean to put it very bluntly, this is a nobrainer decision in terms of the Overall Economic health and well being of the country. Because pipelines are part of the infrastructure that the president has been pushing for five years. And because this particular pipeline is something that, you know, some of his financial supporters object to, theres a whole lot of people out there that need this pipeline as not only a statement of how we interact with our canadian neighbor to the north and how we supply ourselves 20, 30, 40 years into the future while that pipeline delivers. But its also a statement about how broken the political process is in this country where both houses, the senate and the house of representatives, majority says do it. And the president is all backed off and kerrys all backed off. I think its nuts the way this political process is playing out. I get irritated at the nonsense we see when we could be employing people, we could be building the infrastructure of the country and taking care of our Energy Security needs in decades ahead. That was definitely irritation and excitement. Theres passion. I have one if you like. John, one of the things we heard this year, this is barry knapp from barclays by the way. You were going to get a tremendous amount of oil shut in on the coast much like it did in cushing in 2012, which would create a Huge Positive refining market spread this year and would put pressure on gasoline prices. How do you think thats unfolding . Do you think thats likely to be the case or do you have a different view on that . I think whats happening actually is with the southern half of the keystone xl which the president approved even though he didnt need to, the southern half is now emptying out some of the extra storage at cushing. That oil is being refined. The refiners are able to export the finished products. Were sort of draining off some of that excess capacity at cushing and selling it so the refiners are benefitting from selling it as export production. It would be nice if we could sell it as domestic product by getting rid of some of the nonsense rules in this country, like the jones act. But we have to export it because we cant ship it to the east coast except in jones act ships. We frustrate ourselves once again. I dont think well see the buildup in cushing anytime soon including that pipeline. Guys, have to leave it there, christy and john. Thank you. Another round of snow and ice to washington, d. C. To maine. How will the snow impact this quarter. And netflix taking advantage of its series of qus house of cards. But could it backfire . Binge viewing versus scheduled viewing. Green arrows across the board. The dow looking like it could open up 32 points higher. Back in just a moment. Ron im never alone with scottrade. I can always call or stop by my local office. Theyre nearby and ready to help. So when i have questions, i can talk to someone who knows exactly how i trade. Because i dont trade like everybody. I trade like me. Thats why 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. Welcome back to squawk. The credit card Issuer Capital one recently sent a contract update to card 40e8de eholders. It may contact you in any manner it chooses, calls be emails, texts, faxes or a personal visit to your home or place of employment. Just a lesson not to throw out those direct mailers because they will find you. A credit check. If you dont pay, they think youre a deadbeat theyre coming to your office. Dont they run the commercial with the barbarians . Whats in your wallet or whatever. Either alec baldwin and the barbarians are going to show up at your house or what. Thats a hell of a collection agency. Its unclear whether this is for collection or customer service. A lot of customers will be interested in that. The northeast is getting hit with another winter storm. Its a fast mover. A significant warmup is on the way which could mean major flooding problems. Joining us now to talk about the Economic Impact this winter is having across the country is paul walsh, weather and Business Analyst for the Weather Channel. Good morning to you and thanks for helping us through this long and seemingly neverending winter. The question remains, yes, well get a warmup later this week but how long will it last . And is there still more cold weather even after this blip . I think the warmup were seeing is a head fake from mother nature. It wont last. This pattern that were in is longlasting. Were looking at least a couple more weeks from very, very cold winter which obviously doesnt body well for the balance of q1 and a lot of businesses. We know when the groundhog sees its shadow and goes back in the hole, you get six more weeks of winter. That happened this year. How far will this bring us out . You said a couple more weeks. Is that really a couple weeks or are we looking at the end of march in the northeast . At least for the foreseeable future its going to stay cold. At least the next week to ten days. The next week will be bitter cold. One of the things we should be optimistic about is that spring will come. Pitchers and catchers have reported. Im very confident that when we get closer to the sun, the weather will warm up and i think that will actually be beneficial, particularly for the retail sector. Cabin fever becomes a real issue. From my perspective, im ready to get outside. That translates probably across a third of the u. S. Population. When the weather breaks, and it will, it may not be until the end of march, well have a strong reaction from consumers and i think there will be a significant benefit on the backside of this to the economy in general and retail specifically. When that cabin fever sets in and these consumers can finally break free from their houses do you think theyll be interested in buying the things at the stores . Thats always the question, theres spring apparel out. Theres already spring sporting equipment out. If the weather is Still Holding in this pattern, then how much are they actually going to be purchasing . I think when you look at it from a comp perspective, thats another benefit in terms of the retail industry. Last year was one of the coldest springs on record. It lasted all the way through most of may. This year from a comparative perspective we have pentup demand. By the time we get into march and april, we have a later easter this year, we have an easy comparison to last year. When you put those two things together, were looking at some pretty significant upside for the back half of q1. It might not impact the entire q1 but for the back half of it its really looking positive. We have to get through the next couple of weeks of brutal cold weather and snow. Paul, there are a lot of retailers who hope youre right as do we. We are very interested in having warmer weather. For now, thanks for joining us. Me, too. Coming up next, netflix sees a viewership surge after releasing its latest house of cards. The stock is sitting at an alltime high. Reed hastings has the company hitting on all cylinders. That still to come. Still to come, marc faber, author of the gloom, book doom report is our guest. [ male announcer ] we dont just certify guest. Doom report is our guest. Ition each one, until its nothing short of a genuine certified preowned mercedesbenz for the next new owner. [ car alarm chirps ] hurry in to the mercedesbenz certified preowned sales event. Visit today for exceptional offers. Visit today for exceptional offers. So ally bank has a that wont trap me in a rate. Thats correct. Cause im really nervous about getting trapped. Whys that . Uh, mark . Go get help i have my reasons. Look, you dont have to feel trapped with our raise your rate cd. If our rate on this cd goes up, yours can too. Oh that sounds nice. Dont feel trapped with the ally raise your rate cd. Ally bank. With the stunts and loud explosions and all the muscles. [ as cosby ] i want to see the comedy programming with the children. [ british accent] watch bravo yeah, i want to see the real housewives. Rewind yeah jimmy . Its been hours. We told you the x1 entertainment operating system show me the tonight show starring jimmy fallon. Thats what im talking about right there. [ cheers and applause ] [ female announcer ] control your tv with your voice. The x1 entertainment operating system. Only from xfinity. Welcome back to squawk box. Netflix subscribers showed a lot of love for season two of house of cards on valentines day. Joining us now on the squawk news line, richard greenfield, media and tech analyst at btie. He joins us now. This stock has gone on quite a run. Does it make sense anymore . Look, i think the stock has gotten pretty expensive. When you look at this is now a 26, 27 billion company. Its probably worth, if you were to break apart time warner, twx shares, its probably trading for as much, if not more now than what hbo is valued at, which is pretty incredible. Theres no doubt, look, i love the series house of cards. Im through three episodes after the weekend. But when you look at the consistent quality and the amount of programming that a network like hbo creates, it does make you wonder whether hbo within time warner is substantially undervalued or whether netflix is getting overvalued. Let me ask you a question. Hbo and i should say, im semiconflicted because i made the film with them. Im in with them. They made 1. 8 billion in operating profit 2013. Netflix, 228 million, yet domestically netflix has more subscribers and continues to grow. Will they ever be able to catch up, just looking at those numbers . Remember that netflix has a much higher profit. What youre looking at is substantial investment overseas. Theyre plowing the vast majority of the dollars they make in the u. S. Theyre plowing a substantial amount of profits back into growing yaefr seas. If you like the story, you believe in their longterm Growth Prospects overseas. Obviously the skeptics believe that is tossing money down a drain. This is, from a stock standpoint, think of it in some ways like amazon. In jeff bezos people trust, thats why they allow him to continue to invest and operate at a very low margin. I think netflix is similar. When people are confident in Reed Hastings they allow him to invest and build for the future even though the profitability as you point out correctly is not even close to what a company like hbo generates. Do you buy this, there was a big article New York Times in the over the weekend, jeffrey catsenburg has said the fact that netflix has exploded in success, i think theres a fiction that somehow netflixs gains are hbos losses. Is that right or wrong . There is plenty of room for multiple large svod. When you think of subscription video on demand programmers who are making their own constant. This is not why you subscribe to hbo, most of the people watch when you look at total hours watched on hbo, most of the stuff you watch is the old movies they have access to, similar to netflix. Most of the stuff watched is not house of cards. There are great statistics that everyone will quote from valentines day. What you end up doing, whether its house of cards or true detective its what gets you to watch. The real question that Everyone Needs to be asking is not hbo versus netflix but as hbo as netflix, as showtime, as these channels like amc, fx, as they surge, what happens to broadcast television . Whos watching broadcast television on friday night . 45 of total viewership is broadcast tv. That i think is in serious distress over the next five or six years. To that point, one of the things thats been raised even over the past week, given the comcast transaction with them buying time warner cable, do you see another operator prying to guy content visavis nbc, visavis netflix. Comcast could do this on their own. They started stream picks. Its your parent company. I dont think theres a consumer that walks around and say that was an awesome pic on stream pics. There are certainly as you get to afoot print that reaches 75 of u. S. Internet households, theres certainly no reason why you couldnt begin to market a service far more aggressively and also invest. Does directv try to buy this . Does ecostar try to buy this . The valuation is up to 27 billion. This is no small bite for anyone. The real question is whether somebody who has a large internet infrastructure tries to compete more aggressively. Even amazon isnt competing nearly as aggressively as we would have expected at this point. The studios have hulu which theyre starting to invest more in and create more original programming. Id be surprised if one of the Big Companies that didnt have an Internet Business tried to bite this off. I mean, directv which you mentioned tried to buy hulu. Were talking about a billion dollars. This would be just a largescale acquisition. Got it. I find that very, very hard to faj zblthfathom. How do you feel hastings feels about the stock . I dont really understand why stock splits matter to anyone. I look at google and google seems to be doing just fine with the stock split. People have suggested maybe to make it more accessible that they should split the stock. We had a buy on netflix last year from 170 in april to 300 plus in september. T the rise thats gone on, even when we downgraded it, i dont think the price of the stock is having impact. What people are seeing in netflix is, they are creating great content. People like owning media stock. We have commercials unlike netflix. Thank you for being with us. We appreciate your time. We have marc faber coming up right after the break. Thank you. Tdd 18003452550 trading inspires your life. 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. Im spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast . Go to ziprecruiter. Com and post your job to over 30 of the webs leading job boards with a single click; then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter. Com offer2. You want everything. Orks for tv viewers; 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. Gloom, boom and doom, why marc faber thinks there are better places to be than the stock market. His latest read on the stock market and what he thinks of Janet Yellens stay the course policy. Its been a rough winter for many people, including retailers. Reaction to earnings from cocacola. What the sodamaker is saying about the Global Economy and how it can affect your portfolio. The final hour of squawk box begins right now. Welcome back to squawk box here on cnbc, first in business worldwide. Im scott wapner in for joe kernen. Ok kaelin toush kayla tauche also in for becky quick. My mothers maiden name, my grandfather asked me to use the name when i was an intern at New York Times for my first article, which i thought would be my first and last article. I was there for the summer, that was supposed to be in. Im going to rebrand is barry charles. You can hyphenate if you wanted to. It works. Some people have problems with it. Works for criminals, right . Take take look at futures at this hour. I see how things are setting themselves up this morning for those criminals out there with three names. Dow jones looks like it will open up higher. The s p 500 up getting close to 2 points higher. We have big headlines, including a deal on this Tuesday Morning. Actavis is buying forest labs for 89. 48 per share, represents a 25 premium to forests friday close. Thats a 25 billion transaction. We are back. Looks like we have an m a frenzy on our hands. Carl icahn tweeted a short time ago. Great result for all shareholders. Enjoyed gain in market value of approximately 17 billion. I think he got a board seat in 2012. On this mornings economic agenda, februarys Empire State Survey, coming at 8 30 a. M. Eastern time. At 9 00, december data which tracks the flow of treasuries and Corporate Bonds of equity into and out of the u. S. Housing will come into focus with this Months National association of Home Builders sure way. The corporate buzz story of the morning. A report that tesla ceo elan musk hemet with the head of apples ceo last spring. The report suggesting that the meeting is a sign that apple was very interested in buying tesla. I dont know if they were buying tesla or wanted to partner with tesla. The idea that apple is speaking this far outside of the box, talk about wearable watches, its not wearable. The car wears you, basically. I dont know. I still think they made a better decision. We would have liked to see them buy something. I think a car Company Might be too big to swallow. Chewing off a little bit too much maybe . A cars a lot. 25 billion. If it does work . Youre the next gm . I dont know. The amount of capital required to keep a car Company Going and keep upgrading it. The companies you talk about buying, netflix and tesla, theyre incredible expensive companies. They may have huge potential but they dont trade at eight times earnings. Apple trades sat a low valuat n valuation. Youre using your cash or stock at a low valuation to buy something at an incredibly high valuation. Historically thats these are companies that have argued they are at such high growth in the past theres always a next door. A lot of these things will work over time. Amazon was a Great Company in the late 90s that traded at 300 times earnings. Another company that was great in the 90s, cocacola. Didnt trade at that kind of a valuation, maybe 69 or something during the nifty 50 era. It is liquid. Good one. Look at that. We have something flashing on the screen that says segue. Coke had earnings out this morning matching estimates on the bottom line, slightly shy of estimates on the top line. We want to get more on the numbers with bill schmitz, Equity Analyst at deutsche bank. He joins us on the squawk news line. Thanks for joining us. The takeaway from the quarter doesnt appear to be much to write home about. We saw carbonated drinks value up 1 , flat for q4. I think a lot of people were expecting that to be up slightly. Were you surprised . Not really surprised. It bears the global macro, right . North america had positive volumes. But, yes, the trouble spots are the trouble spots. Not much of a surprise. Plus there was a lot of pricing in the quarter. If you look at cokes guidance for the year, theyre telling us currency alone will have a 7 negative hit to their operating profit. And 10 in the Current Quarter as well. But when you think about these head winds, did coke do something wrong or is this just par for the course . No, i think its par for the korgs. Obviously weather didnt help either. But, no, coke, theyre reinvesting. Its another big restructuring program. Theyre going to find more savings and reinvest more back into the business to try to drive growth. Its just a lousy environment out there. Youre confident that environment wont be too volatile for coke to be able to manage around it . Obviously there are challenges. Were cautiously optimistic. The outlook is not stellar, not terrible. How does weather play into a company like coke . Weve been talking about it all morning with regard to apparel and some of the other retailers. How does it affect coke . It affects coke more than most. The good thing is, this is not a very strong period for soft drink volumes frankly. When you get into the march and june quarters, thats when it starts to matter. And thankfully, the weather comparisons are very, very easy going into 2014. So hopefully we dont have another really frigid spring and early summer. But thats when weather becomes critical. We only have a little bit of time, bill. Someone on twitter said the stock is as flat as an old soda. Do you think Green Mountain was the catalyst it needed or does it need something more. Green mountain, that investment is so small and the duration is so long. Thank you. Im glad somebody said that aloud. Cokes been a great investor, though. You saw they bought that stake at less than 75 bucks. You see where Green Mountain is trading now. They made 400 million on paper already. The whole idea that this will transform the soda drink business forever and that were all going to have these machines in our house. No way, no way. I have a britta in my house but i still drink bottled water on occasion. What do you want to hear from that company on investment today . I want to hear them talk about what theyre seeing market to market. It look like china and yan got better as the year progressed. Brazil is very small, very weak relative to what we were expecting. Just like the walk around the globe, talk to us about what theyre seeing right now, what the outlook is for now. Bill, thanks for joining us on the talk line this morning. Sure. Of course. Thanks, guys. Joining us on the squawk news line is marc faber, publisher of the gloom, boom doom report. Thank you for having me. Size up whats taken place over the last week. Everyone was worried about a correction of some magnitude taking place as a result of worries about emerging markets, perhaps a china slowdown. We have the best week of the year for the stock market. What do we take from all of that . Well, basically miss yellen will continue the policies that have been implemented by mr. Greenspan and mr. Bernanke, and continue to ease. That is the takeaway. So stocks rebounded. But for most indices we havent made any new highs yet. We may still do it at a later point but in the meantime, the gdxj, is up 53 since december 25th. And other markets say vietnam is up 13 this year. There are other markets that, in my opinion, are far more attractive than the s p 500 or the russell 2000. I dont think you could i certainly think you could make the argument that there are other markets around the world where valuations are much more attractive, perhaps, than they are here in the United States by virtue of the 30 gain or so that we had last year. But theres also obviously more risk. Do you think that the concerns we had over emerging markets were overdone . Do you think we should still be fearful of whats taking place in some of the emerging markets or not . Yes. I think you need to be fearful. If you take a view for the next five to ten years, and you look at valuation of u. S. Equities and the valuation in emerging economies, then i think i can make the case that over the next five to ten years i will make more money by buying now in emerging economies than in the u. S. Having said that, i think its still too early to make a major commitment to emerging stock markets, except as i pointed out before, in vietnam or maybe in iraq. But in general, i think its too early to do it. They can still decline. On the other hand, in the u. S. , its probably too late to buy, because on march 6th, 2014, we are in a fiveyear bull market and by the end of march, we will be in the second longest bull market for the last eight years. And usually these long bull markets, they end badly. In a crash like in 87 or in a significant decline like after march 2000. Right. Or after october 2007. So i dont think that its a very opportune time to buy equities. Okay. Mark, thanks for calling in today. Appreciate having you on. Well talk to you soon. My pleasure. Thank you very much. Marc faber. Man, he knows how to make me feel down about things. Coming up, american ice dancers taking gold. Plus, a big moment for the mens bobsled team. Well head to sochi and get an update on what to watch for today at the winter olympics. We head to a break. Check out the squawk box market indicator. 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. 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Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Welcome back to squawk box. Lets head to sochi and get an update on the ak at the 2014 winter olympics. Cnbcs chief International Correspondent Michelle Carusocabrera joins us now with more. Michelle . Hey there andrew, lets start with the medal count. Russia leads with 19. Total medal count, russia and the u. S. Are tied. Theyre also tied in gold. Russia has more silver as well. Norway has 18 total, netherlands 17, canada 16. The u. S. Made history last night when Charlie White and meryl davis won the gold medal in ice dancing. The u. S. Has never come out on top in this event. Davis and white recorded the highest free dance and overall score ever. You can see an interview with the winning pair in the 10 00 a. M. Hour of squawk on the street. Steven holcomb and Steven Langton took a medal in twoman bobsledding, the first since 1952. This is the fourth sliding medal for the u. S. In sochi. Still no medals for the u. S. Speed skating team, even though the long track athletes switched back to their old suits. Under armour is on the defensive save some of the athletes saying the mach 39 created too much drag. We have short track tonight, the womens 3,000 meter relay, the mens half pipe, speed skating, the mens 10,000 meter. Always watch curling on cnbc between 5 00 p. M. And 8 00 p. M. Guys, back to you. Can you tell us, we love kevin plank. What really happened here on the speed skating thing . Didnt they put the suit in a Lockheed Martin wind tunnel and all this stuff . Yes. Rigorously tested for sure. They developed it along with Lockheed Martin. I think some of the concern, i spent a lot of time reading about this, they didnt get the suits until almost before the olympics started maybe they should have had more time in them, et cetera, et cetera. Theres all kinds of theories down here on the ground on why the Speed Skating Team which was expected to medal in many, many events, has come up completely short. Theres two kinds of speed skating, long track and short track. The long track has gone back to the old suit. The short trackers still in the new suit. No medals to be found regardless. Did something happen in training . Should they have been given the suits earlier . Its very controversial. You didnt hear complaints after the prelim heats. It wasnt until after the event were over and we didnt medal that you started hearing some of the complaints. Look, there are those who are saying that its sour grapes. We all want our guys and gals to bring home medals but some people out there are saying sour grapes. Oh, yes, because as under armour has pointed out, by the way, u. S. Speed skating pointed out very good times were put in during the practice sessions. And before the actual medal rounds got under way. And so what happened isnt quite clear. The one coach is quoted as saying they trained at High Altitude and they should have trained at low altitude. At High Altitude the ice is harder. At low altitudes its softer. Everybody has a theory. Under armour, i wear under armour stuff all the time. It doesnt help me. I feel bad raising the issue that it could be sour grapes because all of us want the men and women over there representing the United States to come home with medals. At some point usa today had an yard line today about how under armour from a pr perspective, even with this going wrong has done everything right. The number win thing is not blaming it on the skaters. They have been the last to do that. Next time i have to buy a gym shirt, im going going to buy an under armour shirt. You better check the drag first. You might not be able to get up to 7 on the treadmill. If your last time is a little bit lower than normal. Theres a story about them training at altitude that may have impacted them. The prelim scores were great and they were wearing the suit. How is it possible then that i dont know. I dont know. Just saying. Coming up, a big debut for jimmy fallen in new york. Some highlights are next. Squawk will be right back. [ tires screech ] chewleys finds itself in a sticky situation today after recalling its new gum. [ male announcer ] stick it to the market before you get stuck. Get the most extensive charting wherever you are with the mobile trader app from td ameritrade. Wherever you are with the mobile trader app in a we believe outshining the competition tomorrow quires challenging your 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 to squawk box. Jimmy fallon making his debut as the host of tthe tonight show last night. He brought the show back to new york city roots. First guest is will smith. The parade of celebrities stopped by to settle a long standing bet. To my buddy who said that id never be the host of the tonight show and you know who you are, you owe me 100 bucks, buddy. Were not showing lady gaga image. There she is. Im worried about where shes taking the money from. How did that joke play in the 7 00 hour . Not well. I thought id try again just to see how things went. Robert de niro, kim kardashi kardashian, mariah carey, stephen colbert, lady gaga. This is how id do, 100 in pennies. A lot of good reviews overnight. This is the cover of the new york post, fallen nails is big time as tonight comes home. Heres jimmy on the cover. Nice to have him back in new york and have the tonight show back in new york. Coming up, i dont know how hes going to have a harder time getting guests in given the weather issues. Thankfully its new york city. There are good celebrities here. Getting to the studio, the same issues we have here. Okay. More snow for the northeast, has the wintry weather impacted the bottom line for retailers . We take a closer look at the sector with dana telsey in just a bit. Green arrows across the board, the dow looking like it would open 23 points higher, the s p 5001. 5 poi 500, 1. 5 points higher and the nasdaq up 3 points higher. Back in just a moment. Peace of mind is important when youre running a successful business. So we provide it services you can rely on. With centurylink as your trusted it partner, youll experience reliable uptime for the network and services you depend on. Multilayered Security Solutions keep your Information Safe, and secure. And responsive dedicated support meets your needs, and eases your mind. Centurylink. Your link to whats next. With the stunts and loud explosions and all the muscles. [ as cosby ] i want to see the comedy programming with the children. [ british accent] watch bravo yeah, i want to see the real housewives. Rewind yeah jimmy . Its been hours. We told you the x1 entertainment operating system show me the tonight show starring jimmy fallon. Thats what im talking about right there. [ cheers and applause ] [ female announcer ] control your tv with your voice. The x1 entertainment operating system. Only from xfinity. Welcome back to squawk box this morning. Lets look at some of the stocks moving in premarket trading. Forest labs soaring on news that its being acquired this morning, 25 billion, cash and stock, actavis is the buyer. The acquiring Company Stock often goes down on the announcement of a deal but take a look at this one. That is not the case this time around. Actavis shares are jumping on this transaction. Take a look at shares of tesla, rising after that San Francisco chronicle report weve been talking about all morning that tesla elan musk met with apples m a chief last spring. Waste management did raise its Quarterly Dividend by 2. 7 . I wonder, do they do snow removal . I dont know. I mean, a lot of the big waste guys you know where im going with this. I got you. Okay. I want to know what apple shares are doing this morning. Can we see apple premarket . Weve seen tesla move this morning. If apple did do this, you think the shares will go down. Maybe people think this is good, they are thinking out of the box. At least theyre thinking about doing something with 150 billion. There it is. I dont know. Marginally up. We should also note the market, premarket looks marginally up as well. The nasdaq by the way has been on a pretty darn good run. Up 1. 6 this year, the only index thats in the green for the year. The dow has 420ish points to make up before break even. The nasdaq is doing well. Tech and health care, the two of the s p ten sectors that are trading at a oneyear high. Well see how it all shakes out. Empire state is just out. Rick santelli is at the cme group. Steve liesman is here on set to talk frozenomics. Rick, do you see the numbers . Yes, i do. 4. 48 is the number from a nonrevised 12. 51. That was january, this is february. And how does this number stack up . Well, 4. 48, you know, it kind of fits into the range and 12. 5, one was on the high side of it our last look. As we come in, we can see this number is putting more downward pressure on Interest Rates. So instead of kind of looking at 2. 75, were looking at 271 on our way to 270. The dollar is stronger against the yen. Lately that means carry riskon trade. That has been in a funk on the correlation of the last several days. Well have to wait and see if the fixed income markets were any indication, i would think its going to be an onpressure equity day. Thats my opinion. I want to know if a number like this will take into account weather, to what extent it would . Manufacturing would be upset by the weather. It begs the question, scott. If the economiers think its the numbe weather, why do they keep missing the numbers . Maybe Something Else is going on. I think theres other weakness in the economy thats worth talking about. You had a hit from Interest Rates you had a lot of gdp or growth in the last half of last year. You have some pay back on that. Inventory drawdown. I think theres more than just weather happening here. Steve, the thing that occurred to me last week that i thought was interesting notable was when you had the retail sales number, you had the back revisions. Now, some of the december downward revision you could attribute to weather. What about november . November was colder, also. I have a quote what jim osullivan, said we have no doubt that harsher than usual Winter Weather was a major factor. In november doesnt make any sense. Youre right about that. Thats a factor. We brought down the holiday Sales Numbers. Right. Remember the general narrative was the consumer cushioned the purchases. Slowed in the second and third and it was supposed to pick up in the fourth and its not clear it actually did pick up. I think people are confused. One of the reasons they go back to weather is because Everything Else tells them for reasons you just gave us that the economy should be picking up. Right. You see it in the stock market. The stock market the Capital Spending numbers have gotten better, too. Thats a big factor. Credit has also gotten better, which is another thing weve been watching thats another thing thats pretty key. When you look at the downgrades, if we go to the gdp chart, doesnt look that bad. We did 4. 1 in the third quarter, we revised down from a 3. 2 initial to 2. 5 or 2. 4. People are expecting, you know, 3 plus in q2. Late last week you started to get a drop in numbers from almost everybody. Everybody came down mechanically or from an accounting identity. They say this number came in lower. Its a sense of what happened. We track the tracking now. Thats one of the things were doing, barry. Thats come down sharply over the course of the quarter. To what extent do you think what will you be looking for within the fed minutes that can help us understand how much weather is a real impact or not or what at least they believe it to be or not . I dont need to read the fed minutes, scott, to know the fed is intentionally interested in the weather effect. Theyre looking at things like population adjusted heating degree days. So they look at the temperature in the country. And they look at how much the colder than normal temperature affected what population. Theyre going to figure some stuff in there. Theyre going to look through that and then you have paul walsh on earlier. He said we expect a bounceback. Theyre going to look through that, too. Theyre not going to get too excited about the remount and how many pentup demand there is. Some sales you lose and you may not get it back. We were talking earlier about the fact that easter is later. Yes, we had thanksgiving later. We have bought a little bit of time with easter. Do you think that holiday for shoppers matters, and the timing of it . Kayla, im not going to get too uptight about that kind of stuff, the idea that easter is three days longer, what is it, two or three weeks later than it normal happens . The economy is growing in that 2 , 2. 5 range. The later easter could affect the data and make us feel differently about something at the moment. Its going to take a lot to shake me from the notion of 2, 2. 5. Id like to see 3 for an extended period. It seems like we cant get there and stay there. The equity mark set priced for an acceleration to 3 this year. All the way. Theres no question about that, right . We had brief periods where cyclicals outperform. Growth failed to launch. Same thing at 11, 12. Those cyclical stocks outperformed. You talked about that. Market is there, right . If it doesnt show up, if were stuck 2 to 2. 5, thats a that will make for a difficult period. When stuff like a weird easter comes in, look right through that and say im in this 2 , 2. 5 camp and im waiting for evidence if its 2. 5 or 3. Worried if it gets to 1. 5 to 2. Tune in for my interview with John Williams, San Francisco fed president tomorrow at noon. Hes also a good confidant of janet yellen. The workweek actually ticked up a little bit. It did not fall. Which you would have thought would have happened if let me throw you the evil counterfactor. What could have happened here . Thats part of the calculation as to whats going on. Steve, you have a good number of people who are hoping beyond hope that the fed tapers their taper. I mean, the reason why the market reacted the way it did when yellen was on the hill with a more hawkish statement and more dovish answers to some of the questions in the market perceived her to be more dovish. I think people misunderstood janet yellen. To me shes straight on with, basically she set a high bar, scott, for what notable change in the outlook is what she said. She didnt put a number on it. To be notable whats notable, a couple bad job reports, manufacturing reports. Its like saying, period. You keep your doctor, period. Put any qualifier on it you want. You dont think she could change her mind. She could. Thats all that matters. Everything after that is meaningless. Really, it is. No, its not in the sense that were talking about what the market heard and thought and what she believes. Just like weather. Dont you find it fascinating with all the economists and analysts perusing the data and all the models they cant give us a weather effect on data but yet they tell us about global and Climate Change, global warming, global cooling. The economists dont do that, rick. Youre mixing up the professions. Of course not. But im saying one profession with a small little effect is lost in space and then you look at the global picture with global scientists and they can figure that out. Theyre looking at data for Climate Change offer a period of decades. Were trying to figure out a period of weeks. What the weather effect has or hasnt been. Im trying to figure out next quarter. Next quarter . What about next week . I think scott, a point though, is that the equity Market Participants view yellen as dovish and think that if theres any down side risk like we talked about the various puts, the greenspan put, bernanke put, whatever, things go south, shell stop and that will cushion the downside. She said several times well look at the whole picture of the data that comes in between now and the march meeting. Weve seen mixed data so far. Do you think it all its not noh notable. Whatever that notable standard is, were not there yet. I also think that whats important, what barry said, is whatever yellen is, it matters significantly what the committee is. I dont see the committee as being significantly more dovish. Did you see the oped about europe . Theyre talking about draghi. Theyre so good at u. S. Economics now theyve decided to bring the franchise into advice and opinion on european economics. Well leave it there. Thank you, steve. Thanks to steve, rick. Guys, for your instant analysis there. Well have more squawk box after this break, including a weather update, what it means for retailers. Make sure you keep it locked to cnbc squawk on the street. Well have the beauties that grace the cover of Sports Illustrated swimsuit cover. Take a look at that. 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Now you and your ameripise advisor can get the real answers you need. Well, knowing gives you confidence. Start building your confident retirement today. Welcome back to squawk box. Another winter storm impacting the northeast this morning. Alex wilson from the Weather Channel joins to us break it all down. We have winter storm warnings, weather advisories once again stretched across the northeast, back into central pennsylvania and eastern ohio. Most of the action will be focussed into parts of new england today, that darker shade of blue is the winter storm warning that we have in effect for a lot of those counties. Weve seen new york begin to see that snowfall lighten up. It was particularly heavy a few hours ago. Things improving. Up into connecticut, the snow is falling and boston is going to be one of the big snowfall winters, especially parts off towards their west. We have heavy snow in the forecast for today up into parts of new england. Theyll have the heavy snow out there from portland towards bangor. We have snow further off towards the west with snow showers into parts of vermont and new york state. Accumulations shape up like this. 8 to 12 inches in to coastal maine, that darker shade of purple, the lighter shade of purple, 5 to 8 inches coming your way. Lesser amounts heading down towards new york. New york probably done with the snowfall for now. We were watching a second area but i think it will weaken and shift off to the north. It will be an impacter for parts of the northeast. Warmer days are ahead. Temps in the mid40s tomorrow and thursday, even 50s in washington, d. C. , by friday, 51 in boston. Heres the day, the snow thats on the ground will be melting as the temperatures warm. We also add rain into the mix. That could heighten the issues as far as floods goes. Well have to watch for that towards the end of the week, particularly on friday. The rain at this point the lesser of two evils. I think everybody is done with the snow. Theyre saying, okay, but with the rain and the warmer temperatures comes the melting snow and rain on top of it. Yes, break out the spring raincoats. Thanks for bringing us up to speed. Appreciate it. Sure. Has the cold winter put the consumer in a deep freeze where spending is concerned . Joining us now, dana telsey, ceo and chief Investment Officer of the telsey group. We spoke to paul walsh from the Weather Channel earlier this morning. He said were not out of the woods, we have at least two weeks, maybe a month left of this. How much worse could it get for retailers . I think it is worth for retailers. The month of january and february, were fortunate its a small portion of their overall sales. Theyll have to take markdowns, given that the first hit of spring merchandise is supposed to sell during president s day weekend. People dont necessarily want to be buying bikinis and resortwear when it is 10 degrees below 0 and theres three feet of snow on the ground. How does the inventory mix look when you go to the stores . Is there too much of it, is it the right mix. Most of the clearance merchandise for winter has been sold through. In the stores there is a lot of the spring merchandise, whether its the tshirts, jeans or dresses. Its lighter colors but also a lot of prints and patterns. Its getting into the spring mood with not a lot of winter goods left. Thats why were seeing accessories sell better than apparel. You mentioned discounting. Will retailers come in as weak as they were during the Holiday Season. You have a bit of march to be able to recover. Youll see accelerated promotions, deals and Loyalty Programs in order to drive people in the store. Traffic has been weak. Online hasnt been that much better. It certainly is a little bit better but we need demand to pick up. You would think traditionally if people arent able to go to stores, theyre curling up with ipads or laptops and shopping online for the things they still need to buy at least. Wian is the that happening. The consumer has a buy now, wear now mentality. Buy now, wear now when its slows like it is in the northeast and midwest, hard to buy the spring goods. The weather getting warm at the ened of the week, its amazing what sunshine does for people. I think we can see increase in traffic if we get some of the warmer weather. I dont get the online piece. I think people would be sitting at home clicking away. Even if all they want to wear pajamas. Conceptually, people talk about when youre stuck inside, people watch tv. Now they play on the internet, right . They do. One of the things theyre buying theyre not buying apparel. They may be buying hard goods or some of the items for computers, may be buying things for their homes. Weve been seeing durable sales up around midsingle digits compared to general merchandise and Clothing Sales up low single digits. Theres a real discrepancy. When you think about easter, dana, does it matter that easter as a holiday falls later in the calendar year . Like thanksgiving this year had a big effect on the length of the Holiday Season for retailers. Does easter matter . It typically does help that easter is later. Buy now, wear now. You can wear the goods youre buying. On average, the month in which easter is, theres a 300 to 400 basis point samestore sales lift. That should help us. Were not going to get apples to apples sales comparisons until you get through april. This weather is an impact. We need to see an increase in traffic in order to be able to see what the real sales cadence looks like. What are you buying these days . Listen, i go to stores all the time. If i see something i like, i want to buy it. Im looking for new. Thats what the search is on for. Dana, let me ask you quickly. The prospects for a jcpenney in the current environment, if you think it will be even more promotional Going Forward as a result of the weather weve been seeing. The stock is now back above 6 bucks. Whats the prognosis for jcp in the current environment . We touring some of the Jcpenney Stores in some of the most productive malls around the country last week. The home area which is going to get the new assortment in at the right price points in the month of march is probably going to be one ever the changing signs of how jcpenney is doing. Theyll compete on price, the gross margin will be under pressure, getting the brand news familiar in the store like st. Johns bay and home are really going to tell us if we can see a pickup in business as we head towards the middle of the year. You have had the exit of some hedge funds out of that name. I wonder what impact that will bring if you have big names exiting from perhaps helping to prop up the stock at all. I think one of the key things is fundamentals are what works. We need to see pick ups in sales and then youll be able to drive investor interest. Weak sales doesnt help anyone, whether its jcpenney or the other retail names. Dana, pressure time as always and your expertise. Thank you. Thank you for having me. Coming thank you. Thank you for having me. Coming up well play one of my favorite games, what would you do if you won the power ball lottery . Buy a mansion, give it to charity. Your chances and how much is the line 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. Welcome back. Take a look at futures and weve got green arrow across the board, not across the board, the dow looks like 8 1 2 points higher and the s p flipped around red to green and nasdaq up three points. Making headlines, dont let the snow keep you from becoming a multimillionaire. The power ball jackpot is now up to 400 million one of the largest prizes in lottery history. The next drawing is scheduled for tomorrow. Your chances of winning the big prize . Here it is. 1 in 175 million, so you got to feel kind of special. So, youre saying theres a chance . Theres a chance. Theres a chance there is a chance. You want to go in or no . Im in. Ill go in with you. Youim going to get my own. You arent going to throw me under the lottery bus, are you . Were good. Were good. Well get it together. 400 million but its after taxes is the other problem. Lump sum or yearly installments . Lump sum. Why not. The lump sum probably gets it to 30 or 40. If i physically buy them, do i get extra . Barry was noncommittal there. Is it us or something in the barclays policy . No, no. I never buy lottery tickets. I dont gamble, you know. During the commercial break when we were talking about what we did you said i dont know what id do if i won the lottery. Coming up market thoughts from our guest host and make sure you keep it locked to cnbc, squawk on the street will have the beauties who grace the cover of Sports Illustrated swimsuit issue. Squawk box will be right back. 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 tdd 18003452550 life inspires your trading. Tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. 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New at t mobile share value plans for business. Our best value plans ever. For example, you can get 10 gigs of data to share. And 5 lines would be 175 a month. Plus you can add a line anytime for 15 a month. Sharings never been better for business. Welcome back to squawk box. Well get final thoughts from barry knapp. This is the oped, the truth about the 1 , weve had so many conversations about inequality a and this piece suggesting actually that its not as unequal as others have suggested. By the way, myself. Theres a whole body of work about that, but we had a discussion with Steve Liesman that growth comes from the increase in stock of capital and labor or the thing that connects the two productivity. So, all of these programs that redistribute income and all create disincentives to work thats the whole cbo, obamacare controversy that came out a few weeks ago. Its not really a controversy, its good economics. Its an decrease in the stock of labor. You need to invest capital. People at the top invest their money so that gives you an increase in the stock of capital. You are just not going to have stronger growth unless we get back to investing. As the economic historian that you are, you dont believe longterm inequality becomes a problem or not. When you have big periods of innovation, you have that and over time the benefits accrue more broadly, that was the part of the book the great leap forward the depression masked a huge increase in productivity that extended for 30 years and Income Distribution that tightened a lot during that whole 40s, 50s, and 60s period. You wouldnt agree with Larry Summers who said its at risk from a Downton Abbey economy. I am not a keynesian economist. I have not been keeping up with Downton Abbey. Thank you for being here this snowy tuesday. This was a lot of fun. Make sure you join us tomorrow. Squawk on the street begins right now. s good Tuesday Morning. Hope you had a great long weekend. Welcome to squawk on the street, im Carl Quintanilla with sara and simon hobbs, and jim and david are off today. Were coming up with the first twoweek win streak of the year and the s p ten points from break even for 2014 and ipo news and m a and earnings and the tenyear note yield is 10. 73 and well get data and fed speak and overnight in japan the nikkei posting its best day since august as the bank of japan