Government calling for a execute session. Armed men have now seized two airports after taking a Parliament Building hours earlier. Russia denies its forces were involved. The region is home to russias black sea fleet. Jim maceda is in moscow. Jim, there have been a lot of stories circulating around about whether or not russia was involved. Thats right. Russia does deny it, as you say. But it didnt have to be their military. Because it was dozens of russianspeaking gunmen who stormed those two airports today. The main airport in crimeas capital as well as a smaller military airport. Now, it looks like a repeat of yesterdays incident, when those armed commandos seized crimeas government buildings. Again, they were not russian, per se. They were ethnic russians living crimea in ukraine. At the commercial airport today, eyewitnesss said the gunmen were looking for ukrainian guards, but where they couldnt find any, they simply left. However, a few vigilantes were left behind patrolling the airport perimeter, which theyre doing at this hour, but not disrupting flights. Meanwhile, at the balbec military airport, its really a standoff and thats continuing with russianspeaking gunmen outside the terminal, Ukrainian Military inside. The government in kiev has called two emergency sessions. One amongst their own security people and one at the u. N. Security council to try to deal with this matter. Now, becky, theres another source of tension because russia is harboring the ukraines fugitive ex president Viktor Yanukovy yanukovych. Who has been charged with mass murder. He is now in russia. In fact, hes going to be speaking at a press conference in less than a couple of hours, and clearly he is no under pressure protection. And that also, if you will, embarrasses the government in kiev. Back to you. Jim, it sure seems like putin is sending out some mixed signals. What do you make of that . True. Its a confusing and often contradictory situation with Vladimir Putin. On the one hand, you see the ratcheting up of tensions in an area that hes so influential in. The provocations in crimea, the war games going on. Its something out of an old soe soviet play book. But then you hear from the other putin, sounding quite consill story ordering his government to cooperate with the foreign and ukrainian partners, who develop trade and market relations. Thats been the problem for the west. Ive heard it many times from the former ambassador here. He would say that there are, in fact, two putins, the cold warrior, the modern statesman. You just never know which one would show up. Hopefully for ukraine, ultimately it will be the latter. But thats not a given. Becky. Jim, thank you very much. Again, jim maceda joining us from moscow. As he mentioned, Victor Yanukovych is expected to speak later this morning. Hes claiming that he is still the countrys legitimate head of state even though hes not there any more. Well have more on this with where William Taylor in a few moments. Is he at an undisclosed location . Do we know who he is . I would go to russia. Hes in russia. I dont know where. That is going to be a struggle. He woulve public zoo probably at this point. So hes either going to come back as a legitimate leader or be on trial for mass murder. And we need to be cooperating with the europeans and american and ukrainian leaders or hes harboring the guy who theyre calling a mass murderer. Hopefully its not 1960 or whenever that was where they decided were going to take this into our own hands. That would be the black swan. The s p 500, finally and weve been saying, you know, just as long as its by february. January and february so goes the market. Get a gain of four points for the year. One thing we can do, though, forever, we will know the 2014 can be based off of 1850 on the s p. So were either above for the year or below. I dont think im not that disheartened by this because we had a huge gain in 2013. That 5. 8 pullback that we saw, people were like, im looking for 10, im waiting. Im looking for 10. Should we . Now were doing four, then were going down eight. I know is i was so mad, i didnt so did anyone get a 6 discount on these stocks . Youre such an optimist. I love it. Well, we werent expecting it because the futures are down. Its now positive. Made it before match. Stocks rising as the fed chair janet yellen blamed the weather for some of the economic weakness. The dow added nearly 75 point is and the nasdaq closed at a 14year high, adding about 27 points to close at 4318. And the futures right now this morning, well take a quick look. Now, today, between your apartment, your incredible apartment and your incredible, like, stretch limo, whatever it is that youre in now, did you feel the chill in the air this morning . Oh, yeah. Ten years i mean, it was 10 degrees. B but 49 out of like 50 states are freezing. So i have some data. I have a chart now that explains a lot of how this works. I should have known. If you read this on the left, theres some cooling there. That is just whether you idiot denier. Then there was some warmer. Thats Climate Change. Then it went down a little and thats just whether you idiot denier. And then it goes back up which is attributed to Climate Change. Then it goes down and it cools a little which is just weather you idiot denier. Then it goes up and thats Climate Change. Andrew, you posited the west of the world could be warm and it could be cold here. Theres another side that schans this vor tess is what we can pekt. Identify heard that, too . Is it the weather, is it im not a scientist, though. The answer is c, its both. You think its both . Yes. Its weather and its caused and the polar vortex is caused by there are people who are much smarter than i am who i know you disagree with that we have Climate Change and the trend line suggests, i thought but not for 17 years. Even your paper has written about the right. On a yearly basis no, for 17 years, theres been no average rise in global terms. But there are a lot of ways to sdmran th explain that. Theres deep sea heating, no one postulates that maybe we overstated the sensitivity to 1 part and 10,000 parts co2. For me, this is a losing argument because i am not for me it is because you know how long its going to take before anything is he are solved . At least five years. And right now, youve got everything going your way. Its Climate Change. Every single thing that happens is due to this. Im going to be called an antiscience denier for five years. Well within well, i think the democratic is accurate. Its funny, the twitter accounts, they call me all these names and the next one is idiot gop, these bastards. Then they go on and talk about isa is next, then they Say Something about Michelle Odonnell or whatever. Every single one, theyre all the same people. Its so weird. This is a longer conversation and we have to get to some news. But its actually interesting because i dont know why it was bam politically divisive issue. But it does feel like its come down from a political decide as opposed to the huff post readers know a lot about invoking scientist, but they have a low level of its frightening. I go its just golfing 0. 2 and atmospheric at p 3 . I never joined rocks for jocks. Geology class. Lets talk about some Corporate News this morning. If it goes down do you want to show it again . Maybe you worked for who is now a big climate guy. We do have some Corporate News. Pepsi is not splitting up. Is it coke or pepsi . I saw it just down the line. Well, you know, theres others. The beverage and snack food giant has now officially rejected the latest proposal from activist investor, nelson peltz. The board saying its now in complete alignment rejecting his proposal. He sent a letter last week urging the company to spin off beverages and focus on salty snacks. Makes it easier to say talk to the hand when your stock is trading where it is. He has toukd folks that he is not trying to professionals will i have seen some other shareholders here in support of pepsi. I think right now, arguably, from what i want, i talked to some people yesterday who were involved in this that the math would suggest that nelson is on the losing side in this situation. I like nelson, but you know me. You think the synergy is wild. I like anything that ends in tos. If i reached for the free tfrits and reach for a pepsi, fritos, doritos, everything ends in tos. Fritos, tostillos. Those arent the same, though. The problem is its a counterfactall argument. Its an uphill battle. Do you get more shelf space if you have drinks there or in certain parts of the world, you do. What nelson has argued repeatedly is there are certain parts of the world where pepsi has effectively created licensing and deals with others such that the stuff doesnt go on the same truk today. They have more information. Anyway, we were fog to talk about clowing, be arm blen have ceased two airports in crimea. Russia is denying involvement. Mr. Ambassador, thank you for being here today. Thank you. Putin is sending out mixed signals about this. Do you think russia is involved with whats been happening in crimea right now . Russia cant help be involved one way or the other. But the signal weve gotten from mr. Putin today is a part of one. Hes instructing his government to interact with the new government and the interactive communicate as they put together a package that will do what ukraine needs to do . At the same time, identifying president i think that tells us nothing. Viktor yanukovych has been impeached. Hes wanted by current leaders in ukraine as a mass murder and putin is sheltering him. He is apparently in russia, that the. The important thing, though, is to get things stabilized. So this is something that you think ultimately we should let pass, dont worry about what yanukovych is doing, worry about the future of the country . Absolutely. Absolutely. Yanukovych is the past. He is history. What his future is this new government thats establishing itself in kiev. That is something that could be serious and the new government needs to be careful about that. We need to be careful about that. But they need to keep their eye on the ball of how to serve the people, awl people of russia, both east and west. Mr. Ambassador, that certainly sounds like the calm, cool and collected way of going about things. But you can understand how now that blood has been shed, now that there are people taking over buildings the, taking over airports in crimerai. You can understand how looking at it on paper is one thing. They they get it is another. You are absolutely right. There was blood spilled in the change to the runnup of the new government. But with the new government, as far as i can tell theres been no spillouts. These takeovers are probably independent. Theyve had a difficult time with russians and pro russians. Youre right about the economic are 230r78 of government. What did the best Case Scenario sdmp. The new government reform, todays incidencation from mr. Putin is that he would be a part of that economic package. Over the next six months, that can then stabilize the government. The government can establish itself, provide services to the people of ukraine all over, that is the people who voted for mr. Yanukovych and people who voted with his party. They need to be part of the solution, as well. And they will be part of the government. But that is what the next six months ought to look like. Mr. Ambassador, thank you very much for your time today. Thank you. Coming up, finding a place for your bitcoins, thats not so easy these days. How about your thats next in todays executive edge. Before you hit the road, 40 of u. S. Workers left paid Vacation Time unused last year. If they had used those days, it could have been given the economy a 160 billion boost. So how many Vacation Days did americans not use in 2014 . Find out, next. vo you are a business pro. Seeker of the sublime. You can separate runway ridiculousness. From fashion that flies off the shelves. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. And only national is ranked highest in car rental Customer Satisfaction by j. D. Power. natalie ooooh, i like your style. vo so do we, business pro. So do we. Go national. Go like a pro. Back now with todays travelers check, how many paid Vacation Days went unused in the u. S. In 2013 . 429 million. Welcome back. Tracking the Weather Forecast for you, the national forecast, we head to the west coast because we have a pretty potent system thats about to move in, moving in right now bringing in steady rain along the west coast. We need this rain, but its coming in ram yidly and heavily. That could lead to issues b here for us for the day. Across southern california, some of those burned areas with the wildfires, wildfires, 3 to 5 inches of rain possible. In the mountains, big time snow. Some spots here in the sierra, getting around two feet or more on. When this all marches away into the middle of the country, well see snow showers through the plains. As we head into sunday, a bit of a wintry mix and icing concerns will be in place in these spots. The northeast gets in on it, as well. Sunday well start to notice some of the snow showers. And then on monday, really getting going. Pittsburgh, new york, you could be in that sweet spot. There could be some significant accumulation in some of these locations. Im not listening, alex. Thank you very much. Alex wallace, well talk to him again soon. Right now, it is time for the executive edge. Mt. Gox, one the Worlds LargestBitcoin Exchange has reportedly filed for bankruptcy protection in tokyo. It has raised questions about the safety of the virtual currency. Every virtual wallet used to hold bitcoins has a unique number. If you record that on paper, on a thumb drive, it keeps it out of reach for criminals. The currency touted to one day produce cash could be stored money in a safe or under your mattress. This story confuses me even more. There is no such thing as a real bitcoin, right . Its these numbers that come on the virtual wallet . Thats my understanding of what this is. Basically, you have to print it all out and keep your numbers. Crazy. I thought about this recently because i just got a one of these things that said they were no longer going to send me statements any more for my account. What do you mean, send you paper statements . No more paper statements. I can ohm get electronic statements and if i wanted paper statements, id have to write them and request paper statements. I worry about that, too. What if one day the whole thing falls apart . Im like a weirdo like you, too. What was my coin that we had if we were oh, the kernency . The kernency. I dont understand bitcoin. But one thing i do understand that looks like its going to be bankrupt is quiznos. This is the one that have you been to a quiznos . This is i dont understand how you can how can you go bankrupt . When was the last time you had quiznos . I havent had im kidding. About six months. I love quiznos. And its too much debt, right . Apparently. Thats what happens. I leave that up to you. But this im going to delve into. Im still stuck on the bitcoin. Am i crazy enough to say this could be the future for everything, though . Its all going to be like that. But this is where were going. And the question is bitcoin is bitcoin that much worse than all these others . I dont know. Ichg its an early stage thing. I will admit, when you start hearing about the idea of a cyber attacker taking down the system, bringing down electric grids, messing with Bank Accounts, it does make me nervous. If your email went down, what would happen . I guess id get over the email thing. Id be more concern about my bank account. But i feel like so much so much of my life is now online. I hear you. All those jet setters and executives on the go listen up to this. First class perks have nothing to do with emails, drinks or seats. Global airlines are increasingly rewarding wealthy flyers with something more intangible. Physical distance between them and everyone else. The idea is to try and provide an exclusive experience. Inaccessible and ip invisible to those in coach. So privacy. I want to know how it works, though. Do you leave a big, empty space . I have tried to use the bathroom in first class before. And got kicked out . And people like you look at me like im going to do something in there. Are coach people dirtier or smellier than andrew . I dont know. I you come through that curtain and people turn around and its like i didnt know that were curtains. Have you really tried to bust in . I dont know what youre talking about. You interloper. Get back in that line. All right. Thats a weird the way we phrase that story, i moon, i can understand how someone would but the way we phrased it where basically were saying the people that want to sit there think theyre much better than dont look at me. It was the lady from knots landing, the blond lady. She had glasses on in first class. She was like, i wouldnt know you if you were i dont care who you are. Youre in a prime time soap opera. When squawk box returns, were going to check out the markets. The s p 500 turning 306 for the year. How much will be economy corporate . And later in the program, James Bullard will be our guest host. Well get reaction to yellens testimony. Well be right back. Is built for business. Built for your company. Your customers. Your. Sales department built from the ground up. For fast downloads. Fast uploads. For a. Built for tablets. For laptops. For. This. Built for saving money. Built for saving time. Built for architects. Built for. Sign up for internet and voice and find out how to get four weeks of internet for free. Comcast business. Built for business. Humans we are beautifully imperfect creatures, living in an imperfect world. Thats why Liberty Mutual insurance has your back, offering exclusive products like optional better car replacement, where, if your car is totaled, we give you the money to buy one a model year newer. Call. And ask an Insurance Expert about all our benefits today, like our 24 7 support and service, because at Liberty Mutual insurance, we believe our customers do their best out there in the world, so we do everything we can to be there for them when they need us. Plus, you could save hundreds when you switch up to 423. Call. Today. Liberty mutual insurance. Responsibility. Whats your policy . To manage your money. R guy around 2 percent thats not much, you think except its 2 percent every year. Go to e trade and find out how much our advice and guidance costs. Spoiler alert. Its low. Its guidance on your terms not ours. E trade. Less for us, more for you. Welcome back to squawk box this morning. The s p 500 closing at a record high on thursday following fed chair Janet Yellens congressional appearance. Richard steinburg, of steinburg global asset management. Hes in florida. Look at that. Its so hold on. No, that river is frozen. But its very is that a picture behind you there . Or is that real . No, this is a picture because i dont want joe talking about my yacht in the background again. Its just a picture. How many yachts can you ski behind, steinberg . How many do you need . Thank you, joe. Also on the fed here, steven rushido. Thank you both for being here. Are we too high on the s p . Is this going to last . I dont think were too high, but i think that investors yesterday took from yellen that its steady as she goes and lets the data continue to drive their decision. So i think, you know, were sticking with our 1930 target, but our Portfolio Managers are starting to take profits as certain stocks start to reach their target. And were creating a little bit of a cushion for ourselves so that if the data starts to weaken or weather creates opportunities for the us on the shortterm for certain companies, well be able to do some buying. Did you get caught out in january . No. Actually, we put some money to work at the 1750 level with some cash. And now were just deciding whether or not we have to put a hedge back on for part of the portfolio. Or just we tend to be target driven, like i said. So as things get close to our targets, we manage greed and take some money off the table on the way up. Steve, whats your target right now . Were looking for about a 7 to 10 rise in the s p 500 for this year. And were already 6 in . Correct. I think the problem with the market this year is the reality that expectations have gotten ahead of what the economy can actually accomplish. Last year was an incredible gain, it was a big multiple expansion. The question is whether you can get additional multiple excha e expansion this year. Probably a little bit. But thats still a good year. The problem is weve gotten our expectations too high. So if we only have 4 to go, how do you play that, effectively . Well, its hard. Its going to be a significant trading range environment. The market will correct back on a repeating basis. Well get a period where the market doesnt accomplish a heck of a lot. Thats all you should expect. You watched janet yellen yesterday. Did he provide the confidence that you would have wanted . And the reason i ask is because historically, if you just do the math, every time we get a new chair in this role, we usually have some form of a correction within six months. And the question that i keep wondering is whether we have that correction or its still to come. I think, you know, investors tend to react to the unexpected, not the expected. And yesterday, the messaging was steady as she goes. So i think for now, were in good shape. The march meeting, unless data falls off the cliff, investors will expect and will treat another 10 billion in tapering to occur. So i think we hand off from bernanke to yellen in this case may be a little different. Because she was pretty much on tune with the dovishness of the fed and there hasnt been a fumble to that football. Steve, where does the tenyearend . 2014, probably right around where it is right now in the 2. 75 area. We have a dip down towards 350 to 2. 25. And then we reverse back up. The economy just doesnt have the inflation potential. Look what happened in europe last use it. Does japan get out of inflation . Theres no reason for Inflation Expectations to rise. In fact, the reason for disinflationary pressures continue to share through and pull yields down. Is there someplace else in which you think is better . I wish there was. The economy is doing the exact same thing the u. S. Economy is doing. Its underperforming expectations. Thats why youre seeing these pockets. Its going to continue to happen throughout the year. There arent many safe places to go. What you wind up with is getting yourself into areas where you can expect expectations to give you a relatively low return. The only thing i would add to that is if you end up having some Dividend Income to your other guests, 4 return, you get to a 6 or 7 total return number from here. So i think as we get closer to kind of an okay year in the market, generation of income from dividends can really add another 50 to the price appreciation there. Again, its not a crazy great year, but certainly a solid year, especially for people spending our endowments, spending 4 to 5 of their principal. Okay. Well leave the conversation there. Steve and rich, that picture behind you i really i dont want to hang out there. I dont know why everybody is worried about weather. The weather is okay here. Thank you for coming in. The ice boats arent the ice cutters arent there. They are today. Thats a fake picture. No, theyre not. Do you think frozen did as well as it did in the theaters because of the that came out before. They were ahead of their time. I like the original frozen where the people are stuck in the chair lift. Oh, i never saw that. Did you actually see that . Yeah. One guy finally gives up theres a movie called frozen . They get abandon up there for the weekend and one guy finally takes it in his own hands and jump us, breaks both his legs because hes so high up and then the wolves come. Theres like six of them. Its just that would be a bad way to go. Happy that were inside. Theres a liam nielsen movie with wolves. The gray. Up next, another fall for chinas currency. We have a live report from beijing because this is a quick fall. Monday, Warren Buffett will be answering your questions. That starts at 6 00 a. M. Eastern time. Squawk box will be right back. Ameriprise asked people a simple question can you keep your lifestyle in retirement . I dont want to think about the alternative. I dont even know how to answer that. I mean, no one knows how long their money is going to last. I try not to worry, but you worry. What happens when your paychecks stop . 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They are down just slightly after the dow and the s p 500 closed at a new high yesterday. Nasdaq closed at a 14year high. The futures are down by about 14 points below fair value. S p is off by 1 points. We saw a weekly loss for chinas yuan. Lets get to eunice yoon live in beijing. Hey, twice. China capped off a very tough week for the chinese yuan. Today, the yuan actually declined by its biggest drop than weve seen since 2005 and the currency deval ewe onation when it pegged against the u. S. Dollar. It was down by nearly 1 . Most people at this stage believe that the government is really pushing to send a signal to the market ta the yuan will be trading in a wider trading ban. The currency is very highly controlled. Right now, it could rise and fall by about 1 . People are saying that we could see an announcement that the trading ban would be widened by 2 sometime next week when china has its own version of the state of the union address. Currently people are saying anywhere between march and june. Eunice, thank you. Coming up, finding opportunity in turmoil. Wilbur ross tells us where hes looking for investments rights now. And later, squawk box exclusive billionaire sam zell tells us about his latest activist campaign. Tdd 18886486021 out there. In here. Tdd 18886486021 out there, 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. Tdd 18886486021 call 18886486021 tdd 18886486021 or go to schwab. Com trading to learn how. Tdd 18886486021 our trading specialists can tdd 18886486021 help you set up your platform. Tdd 18886486021 because when your tools look the way you want tdd 18886486021 and work the way you think, you can trade at your best. Tdd 18886486021 get it all with no trade minimum. 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Just got back from ireland. Is that like here, wilbur, a lot of times transports lead everything else. Is there something youre seeing in that sector that makes you think europe is improving faster than people think . I spoke at a conference in hamburg the day before yesterday. And a lot of transportation people there, ocean shipping people, rail transport, all the logistics. They all say that they feel the european economy is getting better. To me, thats a very fundamental kind of currency indicator of the economy. Plus, Interest Rates dont act the way theyre theyre not allowed to theyre not able to raise money at these levels because bond market is pretty savvy and those have been much better behaved than a couple of years ago, too, right . It all seems to be indicating things are better. Soon to be. And then yesterday i was in dublin, of course, we had a Bank Board Meeting and it was very clear that the irish and british economies are getting stronger, as well. As i said, pretty good about europe this trip. So is this where you would be focusing right now . Because were also too far down the road in this country, that the opportunities are there now . Well, i think europe is going through some of the structural readjustment that it needs to make itself more viable. Needs more labor market flexibility, the needs a little better control of the fiscal situation in the various countries. So i think theres a lot of change at the moment. In terms of the u. S. , i share some of the pes nimp of the congressional budget office. I think the structural issue of so many people dropping out of the Something Like 37 age population neither has a job nor is seeking one. Thats a very heavy burden to lug along when youre seeking economic growth. Okay. Very good. We do have we have sam zell coming on a little bit later. Hes talked about the 1 er. I dont want you to say anything about the 1 getting picked on. Youre another billionaire. Youre going to Say Something about the people, the have notes sucking it up and working harder and look like a rich fat cat taking a shot at the have nots. Im not going to ask you about that. Unless you want to volunteer yourself. Ill move on to something else. Theres a guy we had him on. I dont know what you do at that secret meeting you have. I think you know what im talking about. Apparently youre all dressed up in terrible costumes. You are the Steven Wright of comedi comedians. You tell a joke and people will be in the aisles no matter what with your dead pan delivery. What goes on at these secret meetings of your fastly 1 percenters. Its a misnomer to call it a secret meeting. Its a private organization and it was having a private party. Seemingly, what some of the people from outside were complaining about was the theory that this was all people who had been vebailed out by the government and now they were making fun. I certainly didnt get bailout money. Chris williams, my predecessor as head of the organization who runs one of the larger minority investment firms in the country, he didnt get a bailout. My successors, the harriss, they didnt get a bailout. So i think theres been a little bit of hyperbole introduced into the equation. It is true that there were a couple of hundred members there. It is true they were spoofing each other for a couple of hours. And when you have that kind of environment, unfortunately, some people say some things that they probably wish they hadnt said. Yes. I wonder how many people have never said anything that theyd like to retract. I think very few. Yes. This guys sensibilities, kevin, he said it was absolutely awful. I actually we dont have the music. I was going to play some eyes wide shut. I dont know what went on during this super secret meeting that you had. There were no masks . There were no people in there was no devil worship, was there . No, nothing of that sort. Clearly nothing of that sort. What are you trying to do . Hes your buddy, right . Yes. Kevin had work at the time . At the time. This music was not okay. All right. Im wrong then. I was trying to think of a joke for you to tell wilbur. His delivery, youve got to admit. Hes done very well. He has. Im giving him a lot of credit right now. In terms of this country, wilbur, 3 this year, we had a little weather issue or is there some slowdown . Can any of your assets here, can you tell whether theres something more to this than just weather . Certainly weather was a big factor in the recent period. And that in turn led to some other kind of multiplier effects. I do think obamacare and its meaning that people dont need work in order to get health care is going to have a negative influence on the economy. You cant have more and more people making the decision not to work and expect the economy to keep growing. That i think is a very serious structural problem. And frankly, i dont regard it as a legitimate choice for an ablebodied adult to say, you know what, i prefer it not to work. So the rest of you should support me for the rest of my life. I have total sympathy for people who have disabilities for one thing or another. Right. But for someone who is able bodied and just chooses not to work, i dont think thats something that our society should foster. Its not you know, its no way to live either. There have been studies done about where happiness really comes from. Its not necessarily making a lot of money. Its earning success, feeling good, being up and being productive. I dont think anyone wants to sit home and watch soap operas. I think people need a purpose to life, a focus. I think its sad if they do not. I agree. For the record, there was no human sacrifice at that meeting that night that youre aware of . No. You didnt serve blood, no one was drinking blood . Absolutely not. We have a rule against vampires. Let me talk will you email your buddy and tell him. He categorically denies human sacrifice. Ill let him know. Will you let him know. Thank you, wilbur. Absolutely. Squawk taking fed matters into its own hands. We have a special guest host, st. Louis president James Bullard is here. Well talk to him about whether he thinks the weather is to blame for the slowing economy. Stick around. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Ill believe it when i [ both ] oooooh. [ female announcer ] as you get older, protein is an important part of staying active and strong. Ensure high protein. Fifty percent of your daily value of protein. Low fat and five grams of sugars. [ major nutrition ] ensure. Nutrition in charge low fat and five grams of sugars. Save you fifteen percent or more on car insurance. Ould yep, Everybody Knows that. Well, did you know the ancient pyramids were actually a mistake . Uhoh. Geico. Fifteen minutes could save you fifteen percent or more on car insurance. Welcome to squawk box. There is a special squawk newsmaker guest hosting today, st. Louis fed president James Bullard. On the agenda, will the economy survive the winter . Fed chair Janet Yellens vision of Monetary Policy. And creating jobs in america. Crisis in ukraine. An uncertain future for a government in transition. Should investors avoid investing in the region right now . All that, plus apple opens up to shareholders. The second hour of squawk box begins right now. Good morning, everybody. Welcome back to squawk box here on cnbc. Im becky quick along with joe kernen and andrew ross sorkin. Our guest host, st. Louis fed president jim bullard. Thanks for having me. First lets take a quick look at the futures. Yesterday, the s p pushed through the highs that it closed last year. 1854 is where it closed yesterday, pushing past 1850 for the first time this year. Dow futures down by 5. 5 points, s p futures off by just 1. 5. The tenyear note, the yield continues to hover around 2. 67 . That is still near a threeweek low for the yield on that. And tension remains high in ukraine. Especially in the crimea region where armed men have taken control of two airports. Ukraines government is describing it as an invasion and occupation by russian forces. U. S. Defense secretary hagel warned russia to respect ukraines sovereignty and avoid provocative action. Russia denied involvement in the airport seizures. This situation continues to be ugly and confusing. Mens apparel retailer jos. A. Banks says its talking to talk about a higher bid. Thats the first time any of these folks said they wanted to talk to each other at all. Mens warehouse raising from 57. 50 earlier this week and added it would consider increasing that offer to 65 if it was allowed to conduct limited Due Diligence. Hanging in the balance of all of this is eddie bauer which was maybe being played like a fiddle in trying to bring both of these guys back to the table. We always knew they wanted to do a deal of some sort. This merger makes sense. I would argue this makes more sense. These two companies should get together. If youre in your car you wont let them drive past the street where either one of these are located, right . You wouldnt wear a mens warehouse sock. Theres no way. You know what i think im going to do next week . Im going to dress head to toe in mens warehouse and the next day im going to do jos. A. Banks. Then im going to mix and match, considering the possibility of a merger. Who came in here who was wearing a tom ford suit. You knew immediately it was a 4,000 suit. Rancic came on this with beautiful suit. The second estimate of gdp growth in the Fourth Quarter comes out at 8 30. Sorry, steve. Bald jokes. There was no call for that. There wasnt. I didnt say anything. They dont even know youre here. They dont even know im here and youre making bald jokes. Gratuitous nastiness. 8 30 eastern, economist think the numbers will be revised down to 2. 4. We have the perfect person to ask. Jim bullard, we also introduced him. This is the question. Is this the weather thats impacting the economy or is there something here that things have slowed down . Well, i think weather is a factor and jerry allen said yesterday as much. It is hard to disentangle, thats for sure. I think thats because, even though we use seasonalized data, its very hard to get a sense of exactly where the weather is hitting. How much is that affecting retail . You think of Something Like this event in atlanta where it got all iced up, all these problems. You know. If you just use temperature data or Something Like that and try to take the weather out of the data, youre not going to see all that damage that was done to the economy in atlanta over that 24, 48 or 72hour period. So i think it is hard to disentangle. I do think that weather has been a factor here. Ill Say Something else. Lets suppose its not weather. Lets suppose we get this evision down to 2. 4 this morning. Well see. And we get kind of a First Quarter in the 2 range or Something Like that. Im not sure id be less optimistic about the rest of the year. I think id still be optimistic about 2014 even if all that happened and even if you prove to me that it had nothing to do with the weather. I think the outlook would still be pretty good for 2014 and i think i would still project that 2014 would have stronger gdp growth than 2013 did. And i would still project inflation would come back to target and other things ive got. I dont think this spate of soft data, the way im thinking about it right now, is going to be enough for me to revise my forecast. We havent done it yet. I reserve the right to do it. Well see. Some of the troubling things that pop up, if you look at some of the numbers, the housing numbers in california, thats where weather wasnt playing into things. How do you explain whats been happening there . People have been talking about housing, you know, the prices have changed. Theyre not as low as they used to be. Some of the prices in california are up quite a bit in some parts. But i still think, you know, Interest Rates are quite low. Housing overall is still in much better shape than it was. I think, you know, i think well still have a good year for the housing sector. It wont be probably as good as last year. But i think it will still be good. Jim, yesterday, janet yellen was speaking and the market seemed to at least interpret her remarks as saying if things slowed down precipitously from an economic standpoint, and it tornadoes out its not just weather, the fed could be in a position of slowing down the tapering for us. Maybe stopping, maybe even reversing. That seems to be why the market really pushed through to higher levels yesterday than weve seen all year. Is that the correct interpretation and is that your understanding . Only janet speaks for the committee. She said that the committee has protected its right to change the pace of tapering in either direction. It could speed it up. We could slow it down. Ill say this. If you look at what happened last summer, the june meeting we surprised markets on the hawkish side. We got a big reaction and the september meeting we surprised markets on the other side. We got a big reaction. That shows you, youve got to be careful. If youre going to make a decision like that, which we can do and we might do if the data pushed us in that direction. You have to be real sure you want to make that kind of a move. I think thats what she was reiterating at the hearing yesterday. It sounds like what youre saying, though, if it turns out to be not weather, that it doesnt change your outlook on growth, which would mean youre not really going to change outlook on policy. Yes. For this issue im saying, suppose down the line during the spring, you know, it becomes apparent that, okay, jim was wrong. Really is the economy is much worse than we thought. The committee has reserved the right to say, were going to, you know, change pause on the pace of tapering or even go in the other direction. But what you said earlier but for right now, assessing the current gdp data and this weather issue, i just wanted to throw this on the table. Its not clear to me that i would become less optimistic about 2014 because we got weaker gdp numbers in the First Quarter than the Fourth Quarter. One thing people have been saying is that theres been an inventory runup during the fall an some of that would have could come back out in the First Quarter. Are you grading the current stated Unemployment Rate . Are you ragrading that on curve do you take that as the number . I take that as a signal of strength in the u. S. Economy. Is it really 7. 5 . Its 6. 6. Okay. Youre not adjusting it for any of the weird things . I gave a speech on Labor Force Participation. And i reviewed a lot of the literature, its called the rise and fall of Labor Force Participation in the usa. I came away thinking, look, this Labor Force Participation is i trend phenomenon. It does not have a big cyclical component. If you look at the postwar era, in the 50s and 60s it was low, 59 . Peaked up, because of women coming into the labor force peaked at 67. 3 in 2000. Its got this hump shape. Its been coming down. You could raise fund rate a week from friday . Were at 63 now. What youve got is a big trend. We have demographic models that do a good job of explaining that trend. If we get to 6. 5 next friday those guys are not going to come off the sidelines, i dont think. As the economy continues to improve. Thats a good tactic. So what that means is you can take the signal from unemployment as a good signal. That means the economy has been getting stronger. I think it will continue to climb and well be under 6 by the end of the year. You could raise rates. Well see if this all involves the way im saying. By the way, st. Louis won the unemployment forecasting contest at the fomc. There is actually no contest but if there was, we got it. What numbers do they actually do they really talk about the number or is it we look at a brad variety of lab economic data. Hours worked, longtime unemployment as the chair emphasized in her testimony. All kinds of labor market indicators. When ben has talked about 6. 5 and 6 or did hes gone. I know hes gone. Who . I have to switch back on this. Economists see low wages, all these people working part time for economic reasons and they see very little signs of tightness which under your formula suggests we should be, as joes suggesting 6. 6 is still high. Whats the right rate . Whats the longterm rate do you think . The Committee Puts a central tendency on that. Which is in the 5 range. Im on the high end of that. Im at 6. Youre at 6. Ill give you my logic on that. Median unemployment in the United States over the past five years is 5. 8 . I dont think the labor market is as good as a lot of the labor markets that have been around in the u. S. Over that 50year period. Damage has been done by the financial crisis. There are other structural problems like the ones youre talking about. I think the natural rate is a bit higher than the median rate over the last 50 years. I put it at 6 . Were still above that. If we come down below 6 , that would be sort of overshooting of the natural rate. You have to think then that fed policy is close to being overly accommodative. In that youre half a point from your long run rate and according to what i told you, were closer on unemployment than we are on inflation. Inflation is running low, 1. 1 or so. So were 0. 9 away from target on that and 0. 6 away from the higher natural rate right now. If you look at the summary of Economic Projections, most of the members are lower, 5. 5, 5. 25 on unemployment. I dont believe it. Because of the reason i just told you. When do you peg the first rate rise . Well next friday. I actually have as of my december forecast i actually have it still in 2014. You do . Yes. I was one of two, i think. Im going to have to resit that and see if i want to keep it in 2014. Why did i have that . Its because i have a faster pace of unemployment decline than most people on the committee. I have a natural higher rate than most people on the committee. Im somewhat more optimistic that inflation will come back to target. Maybe other people might have a slower trajectory does everybody that walks in have a model like you do . Sure. Everybody sits there and debates the actual models themselves . That would be an overstatement. We have the transcripts. You can see what gets said. One thing is, we have our own staff. We push the staff pretty hard to tell us what to say and what to think. I think thats a great part of the fed. You get independent views across the system. I think this is pretty important. You were one of two people looking for Interest Rates to potentially rise in 2014. As of december. As of december. Right now you think you probably need to revisit that based on the economy. When we were talking about it in december. Should we put it in the First Quarter of 2015 or 2014 . Now when we review that in march the journal wrote a piece about two people. Were you one of the two. Yes, i was one of the two. I would have never thought it. I have to look this up. The summary of Economic Projections it gives that 2014, 2015, 2016. The quarter of 2014 is not that different than the First Quarter of 2015. You said it wasnt real and you didnt mean it anyway. That piece was stupid. Which piece . The piece about how theyre going to raise two people say were going to raise near term the market throws it out. You threw me out. St. Louis got the unemployment forecast right in 2013. You lost to the red sox in four games or something. Six games. Youre hanging your hat on what did you win in st. Louis . Contest. Imaginary contest. Instead of the world series, youre hanging your hat on this . The world series is past. I heard him say, st. Louis . St. Louis won what . They have a good basketball team, st. Louis. Basketball . Yes. All right. Youll be with us for the rest of the program. If you say. We have a lot to talk about. Coming up, what is am going to tell shareholders today . We have a preview of todays big meeting. And later, exclusive interview with billionaire and investor sam zell. Check out the futures this morning. Red arrows seem to be the case. Back in a moment. Lets say you pay your guy around 2 percent to manage your money. Thats not much, you think except its 2 percent every year. Go to e trade and find out how much our advice and guidance costs. Spoiler alert. Its low. Its guidance on your terms not ours. E trade. Less for us, more for you. Legendary investor Warren Buffett will be joining us live for three hours. Tweet us using the askwarren. Two have been brought in to take over some of the investing for berkshires portfolio. By the way, joe, that was ted that came up with devita. The three of them sitting down together, a rare appearance. I dont think hes talked ever. The three of them have never been on tv together. They havent wanted to talk. Theres been curiosity around them. By the way, tweet questions for those threes as well. All of this starts monday at 6 00 a. M. Eastern time. You get to go to nebraska for this. I do. Your job is im a little worried about the weather. Im looking at the snow on the way out and on the way back. Monday. It is. Snow sunday getting out there, snow monday getting back. This weird weather, im telling you. Coming up next, today is apples big meeting with shareholders. There he is, tim cook. Well tell you what investors want to hear from investor tim cook. Could the iphone 6 be coming sooner than first thought . That could be interesting. So i can react in realtime. Plus, my local scottrade office is there to help. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. Lemme just get this out of here. To go. Unlike some places, we dont just change your oil. Our oil offer comes with a fourtire rotation and a 27point inspection. And everything looked great. Actually, could you leave those in . Sure. Want me to run him through the car wash for you, too . No, no, i cant. Get a dexos 1, syntheticblend oil change, tire rotation, and inspection for just 39. 95 or less. Chevy certified service. Return on investment wall isnt a street. Isnt the only return im looking forward to. For some, every dollar is earned with sweat, sacrifice, courage. Which is why usaa is honored to help our members with everything from investing for retirement to saving for college. Our commitment to current and former military members and their families is without equal. Should i stay or should i go if you say that you are mine ill be here till the ended of time tgif, everybody. The latest edition of the talking squawk blog is now officially out and ready for your eyes to see. Squawk. Cnbc. Com. See it there. Ukraines president ial palace, we have pictures. You can also read about Kevin Olearys view about investing in marijuana and stock picks from billionaire ron barron. Apple kicks off its annual Shareholder Meeting at noon eastern time. What are investors looking for . Is it forte managing investor . The word to have a skill is actually forte. You have a forte. You have a forte. Forte is a musical thing. Theres going to be an iphone 6 announcement, tom . Well, i dont anticipate a new Product Announcement to that extent but i do anticipate tim cook will reiterate his prior comments that calendar 2014 will be a year of new products which we extrapolate to mean a watch and a television. A watch and a television. I saw a watch that i would i think use, not the samsung but it would do all different stuff. It wasnt bad looking. I saw it. You think there will be an apple watch this year, tom . I do. Is that the one to wait for . If you look at the market right now, no ones exactly killing it. I do think thats created an toon for apple to come in with a unique product and differentiate and take advantage. Will it be stylish . Will they partner up with a regular watchmaker that can charge a lot. If they partner up, i would say its more likely on an accessory front. Find a way to accessorize your iwatch. You think the bigger opportunity is tv, im assuming or the watch itself . The tv is definitely a bigger opportunity. Especially 23 you look at a price point. The watch right now in the market youre seeing around 199. Apple came in at 299 or 249. Youre looking for an opportunity to win the living room. That battle is still wide open. All right. They should make watches, tvs and teslas. What do you think about tesla . Tesla is fantastic but its hard to imagine a company that has historically hasnt made an acquisition greater than 1 billion would pay what it would take to acquire tesla. The Merrill Lynch guy yesterday reiterated his 85 price target. Thats good, isnt it . Well see what happens. Yes, but hes been a little off. Hes been out there. Coming up after the break, former ceo of. Lord john brown will join us to talk about the future of energy when we return in just a moment. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Predibut, manufacturings a prettin the United States do. Means advanced technology. We learned that Technology Allows us to be craft oriented. No ones losing their job. Theres no beer robot that has suddenly chased them out. The technology is actually creating new jobs. Siemens designed and built the right tools and resources to get the job done. Welcome back to squawk box, everybody. Im becky quick. We have your Morning Headlines today. Mt. Gox filed for bankruptcy protection. That announcement came at a tokyo News Conference at which mt. Gox ceo apologized for the Bitcoin Exchanges problems. He said mt. Gox may have lost nearly 500 million because of bitcoins because of a hacking into their system. Wow. You pulled a sorkin. I know. I saw you catch me. Is that what its going to be called, a sorkin. Skip the name. Skip the name. Say ceo. What difference does it make . Why are we hurting ourselves . Right. Nobody out there knows who he is. Investors have been unable to withdraw bitcoins for several weeks from mt. Gox. They handled more than 80 of trades in the virtual currency. Thats why youve seen such a huge amount of concern and have seen bitcoins valuation drop substantially. U. S. Automakers are extending their discount lure through march. Ford is offering 8,000 and more on the f150 while the Chevy Silverado is discounteded at about 9,000. And jos. A. Banks called the mens warehouse takeover offer inadequate. Mens warehouse raised its cash tender offer to jos. A. Banks shareholders to 63. 50 from 57. 50. It added it could increase the offer to 65 if it was allowed to conduct limited Due Diligence. Jos. A. Banks said on thursday it was prepared to provide mens warehouse with a limited amount of Due Diligence information under certain conditions. Lets get back it our guest host st. Louis fed president jim bullard. You watched once in a while. It would be too much to ask that you would have seen jim grant. Youve seen some of his mewesings in the past. Hes a purist. But hes smart and hes a purist. He makes the point that we still arent out of the woods in terms of the fed extricating itself from all the action, because whenever you basically set prices artificially, wages or prices, theres going to be dislocation somewhere and unbenounbe nons unbeknownst to you. Europe got so ineffective at managing their own economy that theres no inflation. The rest of the world allowed you to do all this. I think thats a good theory about what happened. We went into qe 3. I was expecting inflation, Inflation Expectations to go up. It didnt really happen. I think it was partly because europe went into recession. It was very im not going to use fortuitous. It was serendipitous that it coincided and happened at that time. Right . Look at the tenyear. You are tapering and its below where it was. I think thats fair. You were intimating that we were pulling back. You are pulling back. Depends on the date. Were still buying a lot of bonds. You have the promise about low Interest Rates in the future. Its no the that we stopped buying the bonds. Weve only tapered. Your promise is about when youre raising rates depends on the dates either. You just admitted. It depends on the economy. Yes. It depends on the economy and the outlook for the economy fluctuates. If we were if its not weather and there is something worse going on or something happening, its always hard to find cause and effect. But i cant think of anything in the world other than china that would have us worry. We should be happy right now. Europes better. We have a budget. Theres no wrangling, its quieted down. What would cause us to slow down. All the things that weve been worried about and complaining about over the last couple of years have dissipated. You have household deleveraging thats more or less run its course. You have wealth in the u. S. Because equities are up, you know, 30 , much closer to normal. Thank you for that, too. Housing values are coming back closer to normal. Theyre not up at those peak values they were in 2007. You have gdp growing in the second half of last year, 3. 5 . Well see what the revision says today. But right now, its 3. 5 for the second half of last year. I mean, these things look good. We worried about fiscal brinkmannship. Yes. That seems to be on a truce for at least this year. And europe, weve been worried about europe being in recession. Europe is out of recession, spain growing some, one of the worst cases in europe. So i think youve got a lot of things you can point to that look good. I think the deck has been cle cleared for u. S. Growth. Even if the gdp comes in weaker or the First Quarter gdp comes in weaker, id stay optimistic for 2014. The other thing is, like the bond market, a lot of money, big money, terminal pricing, if you had if it was that artificial where the tenyear was because of all the qe or because of where you put Interest Rates, you would figure it seems to be at 2. 6 on its own. It doesnt seem like what you did had that big an effect on where it would normally be, does it . Well, like i was saying earlier, i think those events from last sum der semer did see show certainly the markets care about qe. It does seem to affect rates a lot. When we had the taper tantrum last summer, that was worth, you know, 100 basis points on the tenyear. Thats a big move. So i think it is important. Let me get back to jim grant who i love. Talking about the artificiality of pricing and stuff. I want to push back against that a little bit. You know, anytime you have some kind of policy, the government lays down a policy. Heres the policy. The policy is interacting with markets. Guys in the markets are finding the prices, knowing what the policy is. Even if you had a Gold Standard or some other way to do monetary poli policy, that policy would inform how you go find your prices and get the right prices given that policy. Its all interrelated. You cant ever get away from that unless youll have no government at all, which is probably too much even for jim grant. So i think you always have to think, what are the tax arrangements, what are the future taxes . What does that look like . What is the monetary arrangement . What does that look like . Once i know what that apology is, i can go, jim cramer and others can go and say heres what the prices are. Thats interesting. I know its been talk around wall street that this is artificial pricing and stuff. Its inhaernt becauerent. As free as the market ever gets, still takes into account some you can have crappy policies and you can have good policies. Thats certainly true and fair to argue. Youre never going to get away from the idea that the policies are affecting the prices. More from fed president , st. Louis fed president jim bullard still to come. Lets take a check on energy prices. Oil prices have been climbing over the past month and nat gas has been on a tear this winter. Joining us now is lord john brown, former ceo of. Bp. Welcome to the broadcast, seven elements that changed the world is the name of the book. We thank you for being here. Pleasure. Lord brown, the question i have more than any, we talk about Climate Change, we debate Climate Change on this set. I know that you had i dont know if it was an epiphany or transformation at some point during your career when you were at bp, what was it after 25 years of being at bp that made you switch gears but not really . It happened about 20 years ago, i guess. It was all about the information and the projections for the future. Looked like there was a risk, a risk that we needed to take care of and the question was could we do it economically, practically and sensibly . And to my mind, the answer was yes, you could start doing it and carry on step by step. You have been a proponent of fracing. You say you want to do it responsibly. Can it be done responsibly in your mind given your concerns about climate . Absolutely. And actually thats the point about energy mix. Weve got to get it lighter in carbon. We dont have to get rid of all carbon. We have to get it lighter. Lord brown, do you mean carbon or Carbon Dioxide . If you mean Carbon Dioxide, carbon is an element. Its black and its sooty. Are you talking about the gas Carbon Dioxide or carbon, just so i know . Mostly about Carbon Dioxide. Thank you. Youre not talking about an elemental carbon. Then why not call it Carbon Dioxide . You can indeed. Its just shorthand, if you would. It seems to me that weve got to get Carbon Dioxide emissions down and we can do it by changing the mix of energies. After all, gas is lighter than oil than it lighter than coal. And gas is very good in the energy mix. Im a great proponent of fracing because i believe it can be done safely under the right regulations and policy. Heres a question for you. Im not a sicientisscientist. I dont know enough except what i read. Do you have any skepticism that Climate Change is real . What i have is, well never know for sure until its too late. Were dealing with probabilities. Theyre very difficult things to explain to everybody. My view is, take insurance out and try and push the technologies that we use to create energy, renewables, for example, to get them low cost, get them yubiquitous and get th energy mix changing at the time. I think thats very important. Lord brown, the only problem is youll have certain people take it to maybe a little bit too far. One of the reasons that the opponents of keystone bring up is that all that up in canada that were going to bring down, that should stay in the ground. Its hydrocarbons. We should leave it there. Because if we develop it, whats in the ground now will end up as co2 in the atmosphere. You have total groups of people that dont want to build any Hydrocarbon Infrastructure whatsoever, even if its, as you say, light co2. If you go logically all the way we dont want any co2 going up there. We only added one particle of co2 for 10,000 parts of the atmosphere. Thats been the total addition weve had. As a practical matter we are going to generate carbon diox e dioxide. The question is how much Carbon Dioxide do we generate for every unit of activity we undertake. True. We need to leave some exactly. Its better to produce gas, better to produce oil than it is to burn coal. Thats a fact. Getting that in peoples heads, i think is very important indeed. Where do you stand on a carbon tax . I think, again, we dont understand where our carbon cap should be. If it were a carbon cap for everybody, then it would be a very good thing. We need, i think, to have a balance so theres an incentive which is implied to everybody for carbon reduction. If its carbon cap for one and not another, its not going to do much for us. If we were to take out the insurance and even though theres some the 17year pause has even climatologists scratching their head and theyre trying to explain it in different ways because co2 emissions have increased. Lets say we cut off developing economies, our even our growth here in the u. S. Is slower than wed like it to be. We have a jobs problem. We have a jobless problem globally. What if its chasing a phantom . I understand what youre saying, it would already be too late. To take real action that will hurt developer economies, actually hurt people, based on this. Youre absolutely right. It means we need to invest in technologies that produce us energy at the right price and also reduce Carbon Dioxide. That is something which is happening, for example, around the world total renewable energy, electricity from renewables now exceeds that coming out of nuclear. And that hasnt happened by accident. Its happened by technologies improving over time. There are plenty of things we can do. Everybody wants clean air and clean water and china has a terrible pollution problem but to conflate it with an extra 100 parts per million of co2, rather than the real issue in china is particulate pollution. Its a horrible, disgusting pollution. Weve gone from 0. 3 atmosphere to 0. 4 and every single adverse weather event is attributed to this. Theres no scientist that would agree with that. Yet you see whats done. I agree. China has a very big lowlevel pollution problem. It needs to sort out traffic patterns. Its the way it generates electricity, burning coal close to cities is not a good idea. So all of those things need to be sorted out. Its both got a Carbon Dioxide and a carbon and particulate problem thats very big. Lord brown, the book, seven elements that change the world. Thank you for joining us this morning. Thank you very much. Up next, well bring you the latest on ukraine and talk to one man who has been investing millions of dollars in the country for the past 20 years. [ 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. Welcome back, everybody. Investing in ukraine was risky before the recent unrest. Ukraine is considered a frontier market. Michael, thanks for being here today. My pleasure. Thank you. What do you do now, double down, pull your money out, sit and wait . Watch very closely. Its very tense. Its exciting. Things that happened over the last three months, which is independence and people fight for freedom has been going on today as day 99. Its almost 100 days. But over the last two weeks, i think they have a significant success achieved. The country now is on the track to a much Better Future than the cabinet ministers was appointed yesterday. The new Prime Minister is a very promising man. I like him a lot. I know him. He is very well qualified. He used to be the head of the central bank of ukraine, hes an economist, as well as a lawyer by training. He was the speaker of the house. He was the foreign minister. Hes got a resume that is very, very impressive. And i think hes going to take the country in the right direction. Its european integration, signing the free trade agreement, more importantly. Which is ukraine badly needs. The ukrainian economy is in shambles. They need help from the west. In a week to six months they held from the west, this help will be a tug of war for ukraine. If it comes through the imf, it will come with big tags athat many along with it. Theyll have to put more pressure on their citizens and probably hurt the economy in the short term to reach the longer term prosperity. What happens to the markets and investments in the meantime . You are exactly right. There are some unpopular moves the new Prime Minister has announced hell be making. Yes, of course, there is significant conditionality. I do believe ukraine badly needs that. They need this economic reform. Weve been investing in the country for a long time. We have a significant amount of investment on the ground. We are excited about the prospects of ukrainian agricultural. The global Food Security crisis is a big issue for the next several decades. Ukraine is a possible solution, significant contributor to that. Ukraine has 30 million hectares of land. Theyre in fracing. There are so many areas where ukraine could do extremely well but they need Financial Support to get some macro economical situations in order. After that, investments in ukraine are still very promising. Im optimistic, even after 20 years of fairly tough investment environment in ukraine. Weve done pretty well. Certainly the opportunity is much greater. You say you have a few hundred Million Dollars in ukraine right now. Correct. Where are those investments. In agriculture and we also invest in the cable sector, the Largest Cable Company in ukraine. We invested in retail pharma. We invested in chocolate production. We invested in software development. There are a number of areas in ukraine that are quite interesting you need to keep in mind ukraine is expert oriented country. Its very open economy. Experts are 50 of ukrainian gdp. Agriculture certainly is the Third Largest exporter of Agricultural Products in the world. It has the potential to become the largest exporter of wheat in the world over the next decade or so. Thats an opportunity, to realize that and gain significant returns. When we come back, more from our guest host, st. Louis Federal ReserveBank President and ceo jim bullard. In the next hour, an interview with sam zell. Hell be joining us at the top of the hour. Squawk box will be right back. Checking the futures right now. We do have red arrows, the dow looking like it would open slightly down. The nasdaq would open about a 1. 5 points off. Well be watching shares of pier 1 importers. Ceo alex smith says the situation is frustrating, disappointing but expects to return to more typical results when the weather improves. We also have a quick alert, alert, alert, alert. The latest edition of the talking squawk blog is out, go to squawk. Cnbc. Com and see inside ukraines president ial palace and a lot more. Coming up next, an exclusive 30minute interview with sam zell, chairman. Well cover it all right after the break. E craft oriented. E craft oriented. No ones losing their job. Theres no beer robot that has suddenly chased them out. The technology is actually creating new jobs. Siemens designed and built the right tools and resources to get the job done. 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. At a special site for tv viewers; could save you fifteen percent or more on car insurance. S Everybody Knows that. Well, did you know that when a tree falls in the forest and no ones around, it does make a sound . Ohhh. Ugh. Geico. Little help here. I needthats my geico Digital Insurance id card gots all my pertinents on it and such. Works for me. Turn to the camera. Ah, actually i think my eyes might ha. Next Digital Insurance id cards. Just a tap away on the geico app. Some Brokerage Firms are but way too many arent. Why . Because selling their funds makes them more money. Which makes you wonder. Isnt that a conflict . Search proprietary mutual funds. Yikes then go to e trade. Weve got over 8,000 mutual funds and not one of them has our name on it. Were in the business of finding the right investments for you. E trade. Less for us, more for you. The funds prospectus contains its investment objectives, risks, charges, expenses and other Important Information and should be read and considered carefully before investing. For a current prospectus visit www. Etrade. Com mutualfunds. Another squawk box exclusive. Equity Group Investments chairman sam zell, the grave dancer, joins us for the next half hour. Well discuss the economy, washington and where hes putting money to work. Emerging markets taking the back burner. Last months move and the markets caught investors by surprise. We get you ahead of the emerging market story with templetons mark mobius. Now hes ready to speak publicly for the first time. Well bring you the latest on this ongoing battle for political and economic power as the final hour of squawk box begins right now. Welcome back to squawk box here on cnbc, first in business worldwide. Im joe kernen along with becky quick and andrew ross sorkin. In studio, st. Louis Federal Reserve president James Bullard. A lot to get to this morning, including famed Real Estate Developer sam zell. And the hobbit was called there and back again. That was the subtitle. Look who is here. Shes here. Five weeks youve been gone. In person. Yes. Did you have the brown water coming out of the faucets . No. We were in an ioc family hotel, International Olympic hotel. How about in ukraine . Ukraine we were in a soviet era hotel. It showed but the water was clean and the bed was fine. Are you beginning to venezuela . Whats next . We discussed the issue but venezuela, its tough to get a journalist to venezuela. When i first started going there ten years ago there was no such thing as a journalist visa. Its a long way to get to. Youre an international correspondent. I know. I know. Ive been away for five weeks. More than a month. Youre great. Lets get through some of the headlines this morning. Apples annual Shareholder Meeting taking place at the companys headquarters. Among the proposals on the table, carl icahns push for the company to increase its Share Buyback program. Apple is asking Share Holders to vote against all of those measures. Its a busy day for economic numbers on the final day of trading for february. Investors take a look at the first revision of the Fourth Quarter gdp at 8 30 eastern time. They are looking for 2. 4 , down from 3. 2 . Well also be getting the university of Michigan Consumer sentiment numbers at 9 55 eastern. And were keeping an eye on shares of deckers outdoor, the maker of the ugg boots and shoes. Investors are focusing on the report coming out today. Youre reminding me of my idol, richard engel. I sat next to him in russia at sochi. We were in the same hotel in ukraine. Wow. Really. Yes. Nothing happened. I could not guarantee nothing would happen. Between you and him. You have such a man crush on him. Hes so dashing. You were at that palace . Yes, i went to the palace. You saw all of it. It was amazing. You saw the zoo i didnt okay, i did not see the zoo or the ship in person because the estate is so huge to have walked to it, they dont allow you to drive a car. I had to get back to do the live shot. We got up, ran to the palace, shot as much as we could and brought back the video we could. Youre the only person i know thats been to that place, though. Its cool. I want to touch you before you leave. Viktor yanukovych, supposedly hes holding a News Conference that will begin. We may see headlines before we see him visually. For some reason they are doing tape delay of ten minutes out of russia. What . This is video of him last week. Viktor yanukovych who believes hes still the rightful president and legal president of ukraine will hold this News Conference in russia. We want to hear what he has to say. In the meantime, there are three european states that have frozen assets of him and his family accounts. We have lichtenstein friesen Bank Accounts at the request of the new government. In crimea, armed men have seized two airports in crimea. Russia denies involvement. The Ukrainian Interior Ministry says russians are are in control. The u. S. Has appealed to russia not to intervene. We have Regional Parliament that has been taken over by forces. Financially speaking, the country has started limiting dollar withdrawals, foreign currency withdrawals to maintain their pile of cash. Heres the new cabinet. The new Prime Minister and the secretary on the left. Thats improved the currency because if you dont worry about people sucking every dollar they can out of the system that will stabilize the situation. We are monitoring, waiting to see what yanukovych does and says when pears. As soon as he does, well bring it to you. Thank you, michelle. Thanks, michelle. All right. Touch my finger. Pull my finger. No, please dont. Thats what richard says. Real estate titan sam zell backing developer related and hedge fund core of excapital in an activist campaign. They want to unseat the board and management of commonwealth, an Investment Trust that owns more than 300 Office Buildings in the u. S. If successful, zell will take over as chairman of commonwealth. Joining us from sun valley. Nice. In an exclusive interview, sam zell, Investment Groups chairman. Im trying to figure out where you were and whether youre going to the pioneer tonight, have steak and lobster or something . Sun valley, great place, sam. Im envious. Yes, for sure. Whats your plan here and we defer to you on all things real estate, you buy low, sell high. What do you see here thats being mismanaged or thats attractive . First of all, this particular situation, the commonwealth situation, is a situation where a structural impediment results in shareholders having almost no voice. By virtue of an externally managed structure of which there are very few equity reits. All of the rest of them are selfmanaged and avoid conflicts that exist when an outside manager manages assets he doesnt own. And as far as our backing is concerned, this started badly a year ago. They felt strongly that this was both an undervalued situation and a situation where shareholders were being deprived of their right to vote and be represented. They came to me and said our interests are economic. We want to build out of this a great new company. Are you interested . I said, if you are successful, we would be prepared to take over the company and set up management operation very similar to what we did with the lp. So looking back at the last ten years or whatever, sam, you sold you didnt know why you were selling. It just seemed like a good time because of what people were offering you. Weve had you on since then and things have come back down to where they are attractive again in your view. Where are we right now with an improving economy . Youre interested in this deal. Is there inherent value in real estate everywhere . The stuff that you sold, is it back to where it was when you sold it at this point . No. I dont think that the Office Market is even close to where it was in 07. In this particular situation, i believe that you have roughly a 7 billion collection of assets. That have been misaligned or misstrategically run, because effectively, the incentive to the manager was keep buying assets because you get paid on number of assets under your control, not on the performance. All you have to do is look at the chart of eqr, eop and, over the last 15 years, theyre in a serious uptrend. Commonwealth is dead as a dead mans ekg. Somethings wrong. You sold your commonwealth shares before you agreed to be part of this related slate. Yes. And as part of this youre also going to receive 17 million of in the money options. Thats right . Thats correct. So does this not imply that you dont see additional upside in the stock . I mean, why wouldnt you hold your shares or take the stock at market price . Well, number one, we initially thought it was an interesting situation. We thought maybe we could build a position. We quickly found out that the liquidity of the stock in terms of its availability to build a position didnt seem likely at all. And consequently, rather than hold a minor share and have the Filing Requirements that go with that, we just eliminated the position. It was a very minor position. As far as the in the money options are concerned, the first thing i tell you is that, this stock a year ago was 15. As a result of the work done by corvex and related, the price has gone up to 26 or 27 on the anticipation that they might win. Having an option to buy stock the 22 something is hardly a serious economic incentive to me. For taking on this kind of responsibility. Were longterm holders. The 17 million is interesting but thats only relevant if we sell. And our history is were not sellers, were owners and buildings. One other related question to this, no pun intended on the related piece. You sit on about seven boards right no you, two of which are reits. Do you have time to actually be on this board . Number one, im not sure that i am on seven boards. I believe i am only on one, two, three, maybe three public companies. I would remind you that the number of companies im responsible for today is no different than the number of companies i was responsible for when we were running eop. This is we have a wonderful and Strong Alumni deal with eop and opr, many people have contacted us and said wed like to come try and build another company again. Okay. Real quick, the Company Commonwealth came out with earnings just yesterday or the day before. And did beat estimates. Seemed like it was an improving situation. Did you think it was an improving situation and how much more would it improve under the other i dont want to say ownership but control effectively . I think the question is very simple. If you own stock in a public company, you should have a right to vote. You should have a right to change. You should have all of the rights, the fiduciary responsibility to management should be the case. That has not been the case in this situation. Almost every antitakeover, antianything you can imagine was put into this company by the external manager to protect his position. Right. All i want is for the shareholders to have a clear vote as to the future of their capital. Its their capital. Its not the managers capital. I dont disagree with that. Well get on some other subjects after we take a quick break. So stick with us and well be right back. Of up to 10 independent Research Providers into a single score thats weighted based on how accurate theyve been in the past. Im Howard Spielberg of fidelity investments. The equity summary score is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. So our business can be on at ts network for 175 a month . Yup. All 5 of you for 175. Our clients need a lot of attention. Theres unlimited talk and text. Were working deals all day. You get 10 gigabytes of data to share. What about expansion potential . Add a line, anytime, for 15 a month. Low dues, great terms. Lets close new at t mobile share value plans our best value plans ever for business. 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. Lets get back to our special guest. We are joined once again from sun valley in an exclusive interview by sam zell. He is equity Group Investments chairman. Our guest host is st. Louis fed president jim bullard. Sam, weve been talking an awful lot about the economy this morning trying to get president bullards thoughts on this. Where do you see the economy right now . Benign. I dont see any animal aspirations. I think we have accepted a level of growth that over the long term is a real problem. And i think we have to refocus our efforts on growth. I dont know whether fed member bullard agrees with me, but i find it very difficult to believe that you can have Wealth Redistribution and growth at the same time. And i think that our taking the eye off the ball on growth is being reflected in the performance of the country. President bullard . Id certainly like to see better growth in the u. S. Economy. It has been weak since the financial crisis. A lot of people have attributed that to the reinhartrogoth hypothesis that countries grow slower after a financial crisis. Emphasizing growth, absolutely. And what kinds of policies would do that, you need more innovation, technology. That technology has to defuse through the whole economy. You need better capital. Im for all of those things but Monetary Policy doesnt directly affect those things. Sam . Im not sure i agree that Monetary Policy doesnt affect those things. I think if you took all of the issues you just mentioned, and they all kind of wrap together in levels of uncertainty. To the extent we create levels of untenty within our society, people are less willing to take risk. Thats really what growth is all about. No. Absolutely true. If im not mistaken, Ben Bernankes dissertation was uncertainty in investment and he was investigating exactly that. Im a big advocate that we need to have stable policies that keep uncertainty to a minimum. Above all, tax policy has to be stable and smooth so you can plan into the future but also Government Spending policies and also Monetary Policy. Thats why we talk in terms of Monetary Policy rules. It has not been as good a time for stable Monetary Policy in the last five years as i would like it to be. Hopefully we can get back to something more ordinary, more predictable in the next five years compared to where weve been after the financial crisis. We just had to come in with so many improvizations in the last five years, especially around the time of the financial crisis. That has upset the equilibrium in the u. S. Economy. Sam, where do you place the blame for where we stand right now . It seems like you think this is a much longer term structural problem, in the a cyclical problem were dealing with. I think that the current situation, i completely agree with mr. Bullard. But you know, in a way, in 2015 saying what happened in 2007 and 08 and 09 is still impacting us is a little bit like blaming bush for everybody that happened after he left office. So i guess all id say to you is that, consistency, transparency, predictability, thats what the future is all about. Thats what makes great countries function. I think the current environment has a massive amount of uncertainties that are making it very difficult for people who have the responsibility to take risk to take that risk and feel confident. Well, sam, i agree with you completely. I really do think its important to get to these stable policies. Just let me stress, i think everyone thats involved in Monetary Policy would really, really, really like to get back to a more normal Monetary Policy like the ones that we enjoyed in this country during the 80s and 90s and parts of the 2000s. And those in some way served us very well. If we could get back to that sort of environment, which was a more predictable environment, i do think wed get better investment and ultimately better growth in the u. S. Economy. In that sense, i agree with your hypothesis, that Monetary Policy can feedback to growth in that sense. But at the point youre referring to, the cost of capital was, quote, unquote, above the inflation rate. So we werent, quote, unquote, subsidizing capital below the inflation rate. Thats the part of this scenario i have a great deal of difficulty understanding. Because i think it destroys the animal instincts. Right. Theres a guy, jim grant who wrote an article about the shot clock in basketball. I think zero Interest Rates are like not having a shot clock in basketball. Sam, i wanted to change you certainly have investors saying, ive had a lot of ceos saying, wow, theyre in no hurry, they have a big investment theyre thinking about making. Theyre saying i dont have to be in any hurry, rates will be low for a long time, ill wait a year to make the investment. As the economy normalizes well get some of the people coming off the sidelines, maybe you included. Sam, real quickly well i just want to change topics. We dontly have a couple minutes with you left. A couple weeks back you made a couple comments related to tom perkins and the 1 . You were criticized as this seems to be the populous backlash against some of the comments he made and you made in support of him. What do you make of those people and what they were saying . You know, all i can tell you is what i said was that the definition of mortal sin is envy. Creating and perpetuating an environment of class conflict is neither part of american history, nor positive for our country. I think what mr. Perkins was saying was that this enormous emphasis on, quote, unquote, the disparity in incomes and the, quote, envy question had elements to it that were very negative. And i couldnt agree more. And you know, if you just want to be absolutely honest, sam, with what we need to do for jobs in this country, the single minded focus on the minimum wage by the administration, its clearly another wedge issue that a populous wedge issue that doesnt really scratch the surface of the steps that we need to take to address unemployment and yet its done for the precise reason that youre talking about right now. So perkins says one thing, well, on the other side, theyre manipulating the entire argument to their own advantage. Its just a frustrating environment to be in right now. Whats new about that . Thats been going on for six years now. Five years. Five and a half years. I know. But at this point, would you say in the past where regulation and uncertainty caused you to think that, you know, that the country was going to be stuck in neutral, do you think that at least now with a budget and with congress not wrangling and with europe doing a little better, america finds a way to work through a lot of head winds. Are we doing that right now in spite of the efforts of d. C. . Well, i think the environment is obviously a lot better today than it was a few months ago. Or a few years ago for that matter. But theres still a great deal of uncertainty out there. Look at your headlines this morning. Venezuela, syria, ukraine. What does that all mean . How do i make a bet on the future if theres going to be a cold war confrontation . Or, you know, a country like venezuela will come apart . I dont know the answers to those questions. But when you look around the world at all of the, quote, unquote, hot spots, it makes it generates caution. Now, maybe as somebody once said, you know, the United States is the bestlooking broad in the brothel, but that doesnt necessarily translate into a vibrant economy. We need to encourage risk. We need to generate certainty. We need to focus our country and the people in this country on making progress for the whole country. And not the divisive nature of what has been going on for the last five years. Broad is a word i havent heard on cnbc in a while, sam. It took you to would you like the translation . No, no, no, no. We have to go. Anyway, thanks. Thanks, sam. See you later. Great to see you. My pleasure. I want to correct something we said earlier this morning about 20 minutes ago about apple. Apple we said was going to be shareholders would be considering carl icahns proposal. Thats not true. He pulled that proposal weeks ago. We talked about that earlier and mistakenly spoke a few minutes ago. Heard from tim cook whos watching at home who pointed out he withdrew that proposal. Still no christmas card, tim, if youre watching. Its in the mail. You two got your nice no that youre bitter. Bitter party of one. Up next, update on Viktor Yanukovych, his News Conference taking place in southern russia. Then its gdp and market reaction. Well be right back. Return on investment wall isnt a street. Isnt the only return im looking forward to. For some, every dollar is earned with sweat, sacrifice, courage. Which is why usaa is honored to help our members with everything from investing for retirement to saving for college. Our commitment to current and former military members and their families is without equal. A steel cage death match of midsize sedans. The Volkswagen Passat against all comers. Turbocharged engines against. Engines. Best in class rear legroom against otherclass legroom. But then we realized. Consumers already did that. Twice. Huh. Maybe thats why nobody else showed up. How does one get out of a death cage . Vo hurry in and lease the 2014 passat for 189 a month. Visit vwdealer. Com today. Who found a magic seashell. It told him what was happening on the Trading Floor in real time. The shell brought him great fame. But then, one day, he noticed that everybody could have a magic seashell. [ indistinct talking ] [ male announcer ] right there in their Trading Platform. [ indistinct talking continues ] [ male announcer ] so the magic shell went back to being a. Shell. Get live squawks right in your Trading Platform with think or swim from td ameritrade. Welcome back to squawk box. We are seconds away from the first revision of gdp. Rick santelli standing by. We have Steve Liesman right over here. Lets take a quick look at the futures. Its been sort of back and forth all morning. The dow looks like it will open up two points higher. I call all of this virtually unflat. We are five seconds away. Rick . The numbers, please. Five seconds away. Our second look at Fourth Quarter gdp. Lets see if theres any sam zell animal spirits here. 2. 4. I guess there isnt. Right on. We were originally looking at 3. 2. The Third Quarter settled out at 4. 1. 2. 4, our second look would be the weakest since First Quarter of last year, 1. 1. It really does underscore one issue. Its called sustainability. Anybody can buy a vowel. Its how long the word goes on that really matters. You look at con summing, 2. 6. Thats light. You look at the price index, 1. 6. Thats actually 0. 3 heavy. The price index, moving in a way that might be counterintuitive to all the disinflation people, especially the ones screaming across europe. If you look at quarter over quarter, pce core, thats 1. 3. Thats also a couple of tenths hotter. We have more data to come today. Interest rates seem to be settling in the mid260 area, basically the lowest level since early february. The dollar getting its clock cleaned this morning. The euro is up a handle. The pound is up a handle. The yen is doing better. All Things Considered its hard for me to buy into the only reason Interest Rates are down is any kind of european or geopolitical flight to safety. Back to you. Thank you, rick, for that. Ill head over to steve here. Im going to zero in on the one good number which people have been waiting for. Interest investment revised up from 3. 8 to 7. 3. Thats big. Thats okay. Thats a pretty big number. The biggest jump was in quipt, up 10. 6 . Im going to get to jim bullard in just a second. Rick is right, inflation was revised higher but its still pretty low. Your core market based index is 1. Pce 0. 8. The price index overall is 1 from 0. 7. Its nice to have a whole number there. Its still pretty low. Well get jims take on that in just a second. The other thing which i find incredible, if i can get on my soap box for one time time here. Please. Government purchases revised down, 5. 6 to the negative side. Rick, thats not my issue here. You know we disagree on the issue of you agree. Thats a good thing. Thats not my issue. Why cant the government couldnt the what the government is doing . Why is there ever a revision . Why do we get revised government jobs numbers . Its one thing if you tell me state and local. If the federal government cant count what the federal government is doing they were talking about all this stuff, about using big data for the government data. Just get right what you do. Call the guy on the phone from the other agency. Steve as i understand it, china never revises its gdp. Thats the other way to do it. I want to get on my soap box on this issue here. Lets do one thing right, the government should be able to count the government. Its 20 of the economy. Jim, your thoughts on gdp today. Does it make you feel worse about the economy revised down friday initial 3. 2 to 2. 4. This still leaves the second half over 3 . It does. Thats, you know, fairly good for this economy, which has not grown at that pace. Like i was saying earlier in the day, im not sure this would make me any less optimistic about 2014. Weve got a good situation ahead of us for this year. Theres every reason to think the economy will grow rapidly in 2014, whether the Fourth Quarter was 2. 3 or 2. 4. This is a moderately large revision. Thats interesting. The investment number is interesting there. A lot of times a mix of this number is important. I didnt catch the inventory adjustment there. Ill get to that in a second. And also the inflation number, did i get it . Yearoveryear core inflation ticked up. Yearoveryear core, core pce was 1. 3 versus 1. 1. You didnt have these numbers . Come on. Ill Say Something like this. Business inventory was revised down. If core inflation moved up some, thats something that the committee has been predicting and been looking for. Thats been bottomed out for about nine months. That has ticked up a little bit. That would be consistent with people that have been saying, well, we think inflation will come back toward target. Theres a lot to digest here. But thats my off the cuff reaction. What about ricks idea, which i like, which is this notion that you cant get sustainability here. You do a good quarter. Theres every reason to believe, given how slow the economy is running, that youd have a couple sustained quarters in a row. You did a nice 4. 1, you can only follow it up with a 2. 4. Somebody said about that 4. 1, that there was an inventory component to it. Im not sure how that played out in this revision. Wed like faster growth, obviously, like faster growth, in the late 90s wed have 4 had the 4. 1 quarters one right after the other. Its been a long road to recovery in this since the financial crisis. Segue to policy real quickly. We havent had a chance to talk about one particular issue. 6. 5 . Thats the threshold for thinking about raising rates. Yes. Youre at 6. 6. Yes. What do you do with that language at the next meeting . Thats a great question. We knew when we set up these thresholds that at some point we would pass through one of the thresholds and probably the unemployment one. And thats exactly whats happening. Now well have to revisit the language. I dont know where the chair is going to come down. Rick wanted to get in and ask some questions. This is the whole discussion. I dont know where the chair will come down. It will be discussed and well see what she says. Were looking at it. You know thats what i was talking about before. When i said youll have to raise rates next friday because well be at 6. 5. My question is what are you going to do my question was different. Really . It was about changing the language and getting to a new place. Obviously theyre not going to raise rates next friday. If they get to 6. 5 i love we can have this conversation in front of mr. Bullard. Thats what i was saying earlier. Its not the same question. Oh, god. Thank you, steve, for being here. Thank you. Becky . Lets get to michelle carusocabrera. Shes been monitoring outed ukrainian president Viktor Yanukovychs press conference. Hes calm but defiant. At one point, a Reporter Asks him are you ashamed of anything. He said, yes, i am ashamed. I am ashamed i could not maintain stability in ukraine. No reference to any of the stuff that we have seen over the last several days about the amount of wealth hes amassed or where he lived. When i say hes defiant, he says nationalists and fascists have seized power, power has been taken over by radicals. He want the country to return to the terms of the february 21st agreement. That was the agreement that kept him in power. He says he intends to continue to struggle for the future of ukraine. He says he didnt flee. He was forced to leave because of security measures because at one point he was shot at, he says. He says the crisis in ukraine has to do with irresponsible western policy that indulged the protesters, indulge is his word. He says the Current Parliament is not legitimate. He also just said that he has spoken with Vladimir Putin by phone since riffed in russia and that there is going to be a meeting with him at some date in the future. It hasnt been set. Remember, hes in southern russia. In a city two hours east of the Ukrainian Border in the southern part of russia. Hes conducted this News Conference entirely in russian as well. He continues to field questions. Once again, very calm and yet very defiant. Hes also said he has not asked russia for any military intervention on his behalf in ukraine. Guys, back to you. All right. Thanks, michelle. When we return, we go global with mark mobius. Squawk box will be right back. K about the alternative. I dont even know how to answer that. I mean, no one knows how long their money is going to last. I try not to worry, but you worry. What happens when your paychecks stop . Because everyone has retirement questions. Ameriprise created the exclusive confident retirement approach. To get the real answers you need. Start building your confident retirement today. Up next, the greatest party on earth but can the sound of parades make you money . Well talk brazil and other emerging markets with templeton chairman mark mobius who happens to be in rio. Lucky him. Back in a moment. At schwab, wep 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. [ male announcer ] a car that is able to see, to calculate, to think and can respond to what it encounters. Even if that means completely stopping itself. Its the stuff of science fiction. Minus the fiction. The 2014 eclass. See your authorized dealer for exceptional offers through mercedesbenz financial services. See your authorized dealer for exceptional offers voseeker of the sublime. Ro. You can separate runway ridiculousness. From fashion that flies off the shelves. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. And only national is ranked highest in car rental Customer Satisfaction by j. D. Power. natalie ooooh, i like your style. vo so do we, business pro. So do we. Go national. Go like a pro. Mark mobius here to talk about emerging markets. There you can see how far back are we going there . Only a couple months. There was weakness. We might even call it a rout in the emerging markets. The index has recovered some ground since the big drop midjanuary. Brazil was a big piece of that puzzle. Its hosting the world cup for soccer, the summer olympics in 2016, brought to you by nbc. Could those events pay off in the end . Joining us now from rio, squawk master mark mobius from Templeton Emerging Markets group. Youre in rio. I love brazil. I love the other part of the world as well. Brazil, thats why youre there. And how should how would a normal person play brazil in why would a normal person want to go into brazil and what parts of the economy are most attractive . Well, first of all, brazil is the largest country in latin america. Its one of the largest countries in the world in terms of population area, in terms of exports, imports, et cetera. Youve got to be here. Of course youve got to pick where you want to be. Of course now with the world cup and the olympics coming along, you want to be in consumer oriented stocks. So the obvious candidates would be Companies Like ambev, the largest beer producer of soft drinks here in brazil. There are other companies here that are very attractionist for the consumer. So i would say now with the correction weve seen, its a good time to be in brazil. And connect it up, why the consumer . I would figure they have to build a lot of stuff, too, down there for the olympics, dont they . Yes. But the Unemployment Rate is very low here. Were looking at unemployment 5 or 6 . Of course theres a lot of unhappiness about inflation, but at the same time, theres more and more money in the hands of consumers. Then of course with the influx of visitors coming into the world cup and the olympics, that will also boost consumption. Theyll be a lot of holidays and that, of course, tends to increase consumption. I dont think i dont think we got to talk enough about china last time you were on. I think there was more for you to say. When you talk about china, youre almost talking about that entire area of the world because so many other emerging markets are dependent on china. Can you give us a future blueprint of what you expect to happen and whether it will be positive or negative for emerging markets . Well, i think well see a lot of bad news coming out of china in terms of companies. Some Companies Going bankrupt, some being merged. The whole trend in china is towards a more marketoriented economy. That means that youll see failures along the way. The government is very intent on merging and acquisitions in the statecontrolled area. Of course, there are some companies that just wont make it. Im not talking about state companies but private companies. But on the other side, we want to be in these private companies because thats where the profits are. The growth in earnings in these nonstate companies is much greater than the state area. Okay. The overall economy in china is i mean, its steady as she goes . You dont see any major disruptions to the growth story that is a secular one . No. I dont see any major problems. They are still going to achieve 7 , maybe if were pessimistic 6 . But 6 , an economy of that size, second largest economy in the world is tremendous. In dollar terms, its much greater than the growth they had when they were doing double digit growth rates. Because of the size now. Mark, we have breaking news on citigroup. Were going to try and have you on again as soon as possible. Well assume that thats positive, the china stuff, for other emerging markets. Have fun. Dont party too hard. I know what youre like. Take it easy. Thank you. Citigroup is adjusting lower its results for Fourth Quarter and fullyear 2013 Financial Results that it reported back on january 16th, lowering them by an estimated 235 million after tax, 360 million pretax as a result of fraud they found in a subsidiary in mexico. Lets go to michelle on this. Its bantamax at some point they extended 585 million worth of shortterm credits to a mexican oil services company. And then they have since discovered that the Mexican Oil Company isnt giving them any more contracts. Theyve been working with pemex, the Mexican Oil Company. And figuring out whats been happening here. They have receivables outstanding to this company that apparently looks like they may not get paid, hence why they are bringing down the earnings. A readjustment of the earnings stated, 235 million. Going from 13. 9 billion in net income to 13. 7 billion in net income for you believe that frd is exclusive to this one account, and michael korbat the ceo says that they have been responding with Law Enforcement to diskcovery of the misappropriated funds. I am going through the math, but i dont think it is a penny a share. It is not huge for sure. But it is a 150 billion company and 3 billion shares outstanding. Well, it may ask a broader question which is can mexico get the act together on certain things reference walmart and other controlled companies. And he is clearly upset about it, because he said, and this is corbat, there is going to be punishment for these who had this despicable crime, and oo either through the circumvention of the code or the misconduct, and it is going to be a punishment that sends a Crystal Clear action. And he said that about 3 billion in . This is imagine a whale. This is a plankton. And the receivables, and that is horrendous. And jpmorgan has 300 billion for the regulatory. But it is always good to be fraud. And becky, thank you for the news. Also as we go to the break, mens warehouse has sent its own letter to joseph a. Banks invitation to conduct Due Diligence, and we will get to that and citigroup and a lot more when we return. Are you stumped by to the todays markets and you want to hear from a billionaire before you put your money to work . Well, heres your chance. Monday is ask warren day. And send your questions to askwarren cnbc. Com. Or tweet to askwarren and we will give you three hours of squawk box with the oracle of omaha. Dont miss it. 0 thats a good thing, but it doesnt cover everything. Only about 80 of your part b medical expenses. The rest is up to you. So consider an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans, they could save you in outofpocket medical costs. Call today to request a free decision guide. With these types of plans, youll be able to visit any doctor or hospital that accepts medicare patients. Plus, there are no networks, and virtually no referrals needed. Join the millions who have already enrolled in the only Medicare Supplement insurance plans endorsed by aarp. And provided by unitedhealthcare insurance company, which has over 30 years of experience behind it. With all the good years ahead, look for the experience and commitment to go the distance with you. Call now to request your free decision guide. To the New York Stock Exchange with the freshest news, jim, from citigroup, and it is a kun are tri down country dow there in south america and there is fraud and do we blame the internal controls at citi or who do we we blame . Well, they have historically been a troubled company there, and when i looked at the news, i knew that something was wrong because the banks had frozen the credit line, and this is a company because it sounds substantial, because it is involved in the oil industry with pamex and it is not the historical record of credit, and they should have known better. Are you surprised that corbat has come out as strongly as he has and is this following the jamie dimon and the whale . Well, it is relevant, and when i used to meet with citigroup, we met and talked about the idea that they should do the annual meeting in mexico city, because it is a huge part of the emerging market, and this is a terrible story, a and maybe they should have known in 2008 that the company went belly up, and these are 12 loans and it is not loan shark, because mexico has a different loan system, but you should have known better corbat. Well, maybe puerto vallarta. Well, it is a big company. And thank you, jim. We will see you soon. And coming up soon, more from st. Louis ceo of the Federal Reserve, and the ceo of annies. To a fidelity ira. It gives you a wide range of investment options. And the free help you need to make sure your investments fit your goals and what youre really investing for. Tap into the full power of your fidelity green line. Call today and well make it easy to move that old 401 k to a fidelity rollover ira. 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Announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. Return on investment wall isnt a street. Isnt the only return im looking forward to. For some, every dollar is earned with sweat, sacrifice, courage. Which is why usaa is honored to help our members with everything from investing for retirement to saving for college. Our commitment to current and former military members and their families is without equal. Back to our guest host Kansas City Fed chairman fred bullard. And now after the transcripts of the 2008 meetings came out, was it fair . Well, no, i dont believe it was. You have to read the minutes and it is longer than tolstoy, but the crisis had been going on for a year and the fed had eased earlier in the year, and those two things in particular. Thank you, jim. That does it for us and it is time for squawk on the street. Good friday morning and welcome to squawk on the street. Im David Quintanilla with jim jameser and david faber. And s p 500 has cracked the alltime high, and the revised gdp came in lower on the science of creeping inflation, and more signs on the way, and in europe, the standoff in crimea is intens