Transcripts For CNBC Squawk Box 20140307

Of that somehow. It came across the bottom. It says yellen will do all she is capable of. I saw that, too. I read into that deeper. Apparently that was her swearing in speech. She swore as she said it . I will do anything i can do during her swearing in . The first one i saw that i said, what . And then i said, okay, okay. During her swearing in, okay. Like i promise to up hold the law type of thing. This ukraine thing, not getting settled. The crimea unanimous vote to join parliament. This is the same parliament all those guys that didnt have insignias on their uniform. This is the parliament that those guys herded together. Right. Whats going to be interesting is this idea of a referendum taking a vote to the people, which i think is supposed to happen in nine days. Although the new Ukrainian Government is saying, no way, thats an illegal referendum. You cant just decide to do that. But theyll probably vote to they kind of are russians, arent they . Anyway, the s p is actually up now. A definitive amount for 2014. You can see that were indicated up another 1. 57. I dont know what were going to see based on the jobs number. Anything bad is going to be attributed to the weather. And well look for a silver lining. But so far, the futures continue to do it was an interesting day yesterday as we it was i was surprised at how strong the market was. We just talked about what was it, 139,000 . I think thats high given what weve seen this week from adp and the ism. Under 100, i think people yesterday people were saying if you had high double digits, that wouldnt be a surprise. Theyre parsing it closely before we even see a number. The tenyear is what was it, over 2. 7 at this point . 2. 733 the . Stocks rallied earlier, finished a little off the best levels of the session on thursday. S p climbed to another alltime high. Up another three points to 1877. The dow finished higher, adding 51 points to close at 16,421. The nasdaq, though, lost six points on the day after setting a 14year high earlier in the session. But just seeing 4352, when weve had its been so long since we hit 5,000. There was a time when i thought that, you know, i was hoping that id live long enough to see 5,000 again on the nasdaq. Now who knows. Cant guarantee it. But were i think you will. You think i will . Yes. Singularity. I may be on i dont think youll need the singulairty point. I may be on a floppy disk, which you have to be careful saying. Right. You do. So this guy, if i invented bitcoin youd be Walking Around thumping your chest. Yeah. Thumping my moves. I would. If i was worth 600 million because i thought of yeah, but if you had a he said he was at six it was at 400 at different levels. But it was over 600 and he has a million of them, right . Id be happy, but he was very private. I feel bad about this. Thats weird that you feel bad for this guy. I do. Look, if you want your privacy, i can understand the situation. I dont know that this rises to a level of us necessarily needing to know. But the man outed by Newsweek Magazine is the creator of bitcoin is now denying that he is the found founder of the digital currency. Last week leah goodman debuted her story about tracking him down at his home in temple city, california. Hours after that story broke, reporters were outside his door surrounding his twostory house in southern california. And while walking down the street with cameras following him, he said he is not in bitcoin and he knows nothing about it. The 64yearold then got into a car with a reporter of the Associated Press and went to a sushi restaurant before heading downtown to los angeles. He told the news service that he had never heard of bitcoin until his son told him that he had been contacted by a reporter three weeks ago. I have nothing to do with bitcoin. I have nothing to do with developing. I was just an engineer doing Something Else. I just believe that somebody put that fictitious name in there. Hitoshi nakamoto and bitcoin. He did tell the ap that many were correct including that he once worked for a defense contractor. But he strongly refutes that he is the face behind bitcoin. The currencys creator has remained a mystery. The person or people bhand its founding have been known as hitoshi nakam. Newsweek says there was no confusion whatsoever about the context of our conversation, meaning her conversation with him when she traveled to california and his acknowledgement of his involvement in bitcoin. It was an interesting story. And theres certainly and she admitted herself theres no way to know for certain, but she did say she talked to him and he admitted it at that time. Yeah, but guys, if you read the story, which we all did, he never really acknowledged anything. I mean, i dont know, i its funny because i wanted to believe this story so much, but when you get to the bottom of the story one realize what she actually said to him and what he actually said to her. It was its hard to think its nor than not even an implicit acknowledgement. And then you look at him and im not saying just looking at him wouldnt suggest thats him but, you know yes doesnt look like the bitcoin guy . He doesnt look like the bitcoin guy. I told you late yesterday we showed a picture of the house. And i said, if you had 400 million, would you still be living in that house . I know i probably offended some viewers when i said that. You did. I got some responses saying that house isnt good enough for you, kernen . And i said, no, its not good for andrew. But if theres a guy here named arm hammer and theres baking soda called arm hammer, there are coincidences with names. Theres probably thousands nakamotos in tokyo. When we spoke with the reporter yesterday, she said, look, they had used the language analysis people at m. I. T. To help her try and track down some of those things and thats why she felt pretty confident with some of it. They went through some of his writings, some of the postings along with some of his writings, and they used language analysis to try and say the same guy wrote some of these things. So there was a lot of analysis. They went through all kinds of digging and digging and digging. Be dont you think they said she had gotten a call from his brother at one point. We asked if she was sure and she said, yeah, were sure its the brother. Dont we think if hes lying even if it is him, he doesnt want the publicity. And to have a picture of not only of you published in the magazine, but also of your house and then be surrounded by reporters right. Its weird, andrew, that guys like andreessen and establishment guys embracing the whole technology or the idea at least of a Virtual Currency down the road, its weird that its wrapped so much in that no one wants to admit that they invented it. Its not like a normal Technology Development where youd say, yeah, i did it. But the mindset of people who say, forget it, i think we need a new currency one that governments dont but bitcoin and are like the but the type of people who are early adopters of this and the person who probably invented it probably had to have enough of a mindset that you wouldnt be surprised they want to live a little off the grid. Given the irs issues right now i have to imagine, though, that we will know in the next week or two weather he is in or not because now every reporter in the country and the globe is going to try to figure out who hes connected to or not. Can you describe what your bitcoin person would look like . Can you draw him ar something or put together a composite . He would be younger, more dashing, what would he be, more for some reason, that guy just didnt i could be wrong. Save the tape when im wrong and we can replay it. Younger or older . Its not an age thing. I dont know. Smarter, geekier, nerdier, what would i dont know what youre looking for him. Youve got to give me something. Hey, joe . Yeah. Youll know it when i say it. Ive got mr. Harwood next to me and he wants to jump into this conversation. Joe, you know, the real question about this situation, you talked to that reporter yesterday, is this story going to exacerbate her career or not . You know, when they invented exacerbate, someone is mixing that up. People met this up all the time, john. I havent talked to you about duke. Jabari, will he leave after this year . Thats what i hate about college hoops. Theres a lot of hope that he will decide to play one more year with his buddy, jaleel elkafor. One more year. Hes a freshman. The guy could be the top pick of the draft. Can you imagine being coach k. Where you giant these guys like this and you imagine what he would be like there are questions about whether College Athletes should be better compensated. Coach k. Cant get any breaks. Did you see how many points the bear cats scored against memphis . How many . 97. Whoa. And sean, the guy second only to the big o scored over 30 points. It was senior night. It was really cool. Nice. Yeah. It was great. How did we get to that . I dont know. Were all over the place, but were now going to move to the ukraine because were going to go over and talk to Steve Sedgwick. He just wrapped up a big interview where the Prime Minister of ukraine. Steve. Yeah. It was very interesting. He came to the press conference with the cabinet offices to talk about the Economic Situation and how hes wrapped up an initial deal with the eu. But i managed to grab really i think pointed questions, i have to say what everyone is interesting about legitimacy. The russians are not recognizing at the moment. The legitimacy of the referendum vote which is going to be next sunday in the crimea, that cessation from the ukraine. I said look, youre getting no breakthroughs. Putin, obama, no break through weapons the russians wont even talk to you. He said look, dont be in such a hurry. Its not as bad as it could have been, not as good as we hoped it will be. I said, look, ethnically, most of the people in crimea call themselves russian. 60 of the population. And the reality is russian back forces or Russian Troops are dominating that region and this referendum looks like its going ahead. He was pretty robust in his response. Lets listen. There will be no referendum. It is absolutely and entirely no one will recognize this referendum, probably except moscow, syria or their ally. And i want to be very clear, crimea was, is and will be an integral part of ukraine. No concessions. And hes robust about the legitimacy of his own government. And i put that to him about weather the ousting of yanukovych was unconstitutional. Of course, theres no no elections since. Until we get that may 25th president ial election, we only have an intrimt president here, as well. He was very robust about how legitimate he was saying, look, the mps voted in, even members of yanukovych aes only party. Its fascinating stuff. Live situation, back to you guys. Steve in kiev, thank you for that. Great get on that sprue. We should know president obama spoke to russian president Vladimir Putin for about an hour on thursday. The two discussed the need to solve the situation diplomatically. I think thats the word in this case, addressing the need of russia, ukraine and the international community. They discussed direct talks. Putin set out his own statement saying russian u. S. Relations should not suffer over ukraine. Now lets bring cnbcs chief washington correspondent john harwood into the conversation. Youve already been weve been talking about duke this morning with you. We have. I just want to say as a post script of that conversation that you mentioned between putin and obama, you are exactly right. The diplomatic was a diplomatic word to use about it because you could see from the summary the white house put out, they said the president told the Prime Minister x, y and z. It does not indicate that they have any meeting. Thats what i was going to say. What did the president say and what did putin say back . We dont know. But you can draw the conclusion, you know, if it was a conversation where they had a meeting of the minds, they will talk about having been a constructive conversation or we agreed x, y and z. Instead, what you had is a statement from the white house saying the president told putin. If the crimean people want to go off with russia, what is our position going to be on that, ultimately . Well, our position is going to be that only ukraine can determine the future of ukraines boarders and that you cannot have a freestanding decision by a group of people within a country backed up by their neighbor, russia, to break off. So that within the ukrainian constitution, ultimately, yes, could what happen . Sure. But i think the United States position is going to be you cant simply declare the crimean area cant declare were going to have a referendum on it and break off. So ian puts out this note that says the people should be allowed the suggestion is that putin is not coearnsing these people, theyre doing what they want to do. What do you think of that . Well, look, ukraine is a country where theres a lot of division, right. . So in the crimea, there is 60 russian speakers. Therefore, you would think this may be what they want to do, ultimately. Right. You talk to rick perry, texas might like to be a separate country, too. Youve got the rule of law within a country and you have to act according to the constitution and make decisions collectively even though youre split or have different factions. You dont get to poll only the faction and ask them what they want to do. Exactly. And its a key strategic area of ukraine. I was yelling, my mike wasnt on, but texas wants to secede, too. We fought a war over, you know exactly. A horrific war because people wanted to secede. You dont just split off and all of a sudden, you know, have your own country. But you will go back and say this is the fall, that Vladimir Putin was more in fair of not trying to make ukraine decide whether it was going to go with the west or whether it was going to go with russia. He was more willing to come up with a financial solution. But it was the west that said wait a second, ukraine wrb before we start soaking billions into this thats what i cant defend putin. Im not trying to defend him, but the west was the one that was pushing that said before we put any money into this and thats the point in a way that trying to suggest. We have put this on putin. I dont want to be a but were saying that before we put money into it, and i understand that, too, we dont want to put money into this and say great, were going with putin and then youve lost 20 or 25 billion. Do we have a picture of that ukrainian guy again . Andrew, looking at that dude, i think he looks like he could be the guy that did bitcoin. Is that what your image of the bitcoin yeah, thats more in line with the bitcoin creator for me. That could be the guy who bigger, nerdy looking. Has anyone asked him whether he you know, i mean, if there was going to be one, thats what i think your composite would look like if you got a sketch artist to do it. Harwood, the number four, i dont know. Wake forest i know was at home, but have you noticed i wouldnt rank us number one right now. No, but everyone looses, louisville has lost and doesnt look like syracuse. Syracuse is sliding. You know who looks really strong, though, is florida, ive got to say. They have not been they got that one dude, patrick young, who is the man, he is like eight feet tall, he has biceps like this and he moves people out of the way. How do you pick these teams, though, john . Its hard. I pick with my heart. I pick duke to win. Its what im going to do even though im chasing my coming up, by the way. Not very flattering. Oh, sorkin. To hell with william cohan. What . To hell with him. Now duke. Sorkin, youve got this brotherhood with these journalist res that always tearing things down, goldman, whatever it is. By the way, when we come back, the other thing. Oh, yeah. Theres a paul ryan story that john is going to talk us through, which will also upset the waters. We have to talk later about the Goldman Sachs elevator guy. The elevators go up and they go down. Thats what goldman tweeted. Coming up, a landmark bond default in china. What could that mean for the economic powerhouse . First, though, more drama for newport beach, california. Pimcos bill gross accusing Mohamed Elerian of trying to undermine him. Oh, come on, guys, as the bond world turns. Next on squawk box. Both of them are way too rich to be snippy. Check out the futures as we head to break. Just waiting to be found. Tdd 18886486021 at schwab, were here to help tdd 18886486021 bring what inspires you 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. 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I have Something Else to do today, but well do it right here on the set. You were down 31 on friday and i didnt see you on friday. What happens when you trash talk, joe . Sometimes i lose. Choke. Anyway, pimcos cofounder bill gross is accusing mohammed elerian of seek to go undermine him. He said he had evidence that elerian wrote the february 24th article in the journal that describe the tensions between the two last year, including a show ondown in front of other pimco employees at the headquarters. Bill told reuters, quote, im stick of mohammed trying to undermine me. A pimco Spokesman Says mr. Gross did not make the statement reuters attributes to him. He categorically denied saying the firm ever listened in on mr. Elerians phone calls or mr. Elerian wrote any previous article. It stirred up things at the wall street journal saying thats a ridiculous accusation. Ridiculous that he wrote the article. The article says by the way that pimco does record all its phone calls or at least monitors them for compliance reasons. So i doubt, actually, that it was mohammed himself behind the piece, but i would imagine there were loyalists to employ hmoham elerian that reported it. Sources close to mohamed. Look, anytime you have very pape public interactions that are loud, you can imagine there are people watching and taking notes on that stuff. Its weird. In a perfect world, neither guy should dare how theyre portrayed after they should go their separate ways if thats what they decide on. Yeah. But you understand guys who have built reputations but it always seems to be out when theres hyper competitive guys. Gross is worth over 100 billion. Mohamed was making a little less than a but everybody that we have on our set, or what have you, it doesnt matter how much money you have in your bank account or what title you have on your business card. You have the same emotional feelings thats just about anybody else. And the thing is, when you go back to the human level on it, i would hate if somebody was listening to what they say to each other. And they do. Save me 100 million and i would sign something saying i will never saying about you andrew or becky. Ill never breathe a word. For 100 million . I wont even saying anything about harwood. Joe, im pretty sure if you and becky split up, the New York Post is going on to be right inside that thing. They would. But that would be because of the jumble bitterness that becky has for we do have an incredibly competitive relationship. And you are a good hitter in the national league. Youre batting about. 320. For a while, i was doing really well. No, he werent. It was more than a week. No, never. Youre just better at it because youre older. Youve seen more words. Thats not very nice. This is a nondisclosure. Now, you know what . Im going to leak something about you now. Ooh, scary. Anyway, the man behind the satiral twitter account just lost his book deal. Since acquiring john levieres straight to hell, touchstone has decided to cancel the publication of its work in a statement sent to cnbc. Andrew, youre the one who unveiled his identity in the new york times. I may be responsible for this, yes. What was it, you said he was never an employee of goldman and was never in the building. I didnt say he was never in the building. He had gone up and down in the elevator because he had a job offer at Goldman Sachs. The big question is who was lying . So when i was writing the piece, i went to the publisher and said the guy never worked at goldman. Did you know this . They said on the record categorically that they were supportive of the book and that he had been straight with them and told them everything. So now theyre saying that might have been a bit of a cover, i wonder. Look, if you look at his book proposal when he went out, he left them this impression on purpose about the fact that he had a job offer. He sort of tells the story of how he got this job offer at goldman and cuts it off the once he got the offer. So the assumption is that he works there. So the question was did he lie to them or did they lie about him potentially lying to them . I dont know. The other thing is, by the way, some people thought there was a parity account to begin with. I did. I landlords wonder just because he was unveiled or unmasked whether commercially there was a view that this book wasnt going to work, anyway. Who is going to buy this book . Do the occupy wall streeters, do they have libraries to every book thats written about a fassty wall street fat cat or do they just is that all they read . Didnt that other guy write the book already . Theyre going to theyve got the whole 99 to sell to. Thats right. Just like the ones that we can cut taxes for to get elected. Thats right. Forgot. Anyway, yesterday Goldman Sachs twitter account only had this to say. Guess elevators go up and down. I like those guys. They have you know, for a firm thats was pretty uptight, they had a little bit of fun with this. When we return, were going to talk about what you need to know for the jobs report and how the markets could react when the numbers are released. And what about Alan Greenspan think about blaming the sluggish economy on the weather . He will join us at 7 30 a. M. Eastern. 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. Coach calls her a team player. Shes kind of special. She makes the whole team better. Hes the kind of player that puts the puck, horsehide, bullet. Right where it needs to be. Coach calls it logistics. Hes a great passer. Dependable. A winning team has to have one. Somebody you can count on. Somebody like my dad. This is my dad. Somebody like my mom. My grandfather. Im very pround of him. Her. Them. Joivening us now is Jim Osullivan and chris rupke, chief financial economist at bank of tokyo mitsubishi. Well start, jim, with we look forward to these days and we get them once a month. We like that. It seems like everyone is important with the fed, you know, deciding what to do based mainly on this number. Today, because of the weather, i it could still be a really important number, but i just wish we couldnt attribute everything to weather, whether its good or bad. Yeah. I mean, i think theres a limit to how important it is. Not to our viewers, though. Its maybe more important than any certainly its going to be easy to dismiss the weak number because of the weather. We will look at the details and there are parts of the report that help gauge whether there big weather eks. Do you have the job but you were not at work because of bad weather . And when you see a big jump in that, its typically associated with a big plunge in weatherrelated payroll jobs. Weve seen that in the past. Thats something to look for in the details, but it wont be definitive by any means. Weve had people make the case that the one number that is not weather sensitive is Consumer Confidence and if there is a bit of a soft spell here, it is weather. And claims. Not that claims are completely incentive, but we saw a lower number yesterday after a higher number the week before. The fourweek average has been stable. To me, thats the most encouraging number out there that the underlying trend hasnt significantly changed. So even though yellen says ill do everything necessary, what are the odds that we have take a break from tapering 10 billion every meeting . I think the bar is pretty high to that. I think thats what new york fed president dudley said yesterday and he is on the dovish side. You know what really doesnt square a lot of times and we will have to see what yellen says more in the future, but there was a point where she put out research saying she didnt want to raise rates until september 2016. Where the committee is saying september 2015. You know, kind of risk getting more inflation. Yeah, its she put out some kind of research on it. In some speeches. She was so dovish, she wanted to wait even a year longer. 6. 5 , like just forget it, that doesnt matter any more . I hope it matters. I remember when bernanke told us that when it reaches 7 they would be done with qe. Now they just extending, extending. I think its a mistake. Do you think thats because they dont believe the number or what happened . Why did they well, when she was standing next to president obama, i mean, there does seem to be some political ideas coming into the fed. I dont want to say theyre more like social workers, but they seem to be very, very concerned or very attune to the plight of the unemployment. And they use that statistic as a measure of slack in the economy. Where other things, like industrial production, retail sales, theyre all at record highs. Business Capital Spending in the durable goods report, you know, very, very strong. It came off the a little of the latest month. But i mean, its come completely back to precision levels and yet the fed continues to try and keep these rates so low, which really hurts 145 Million People with jobs. And then, of course, since that optimal monetary control speech that you were referring to with yellen, the Unemployment Rate has fallen more than expected. Of course the fed has shifted more towards outcome based guidance and calendar guidance. To the extent tun employment rate continues faster than expected, that certainly should, other than result in earlier tightening, as well. Obviously, theyre not going to tighten in 2014. But the more unemployment that comes down here, the markets have to start figuring we are getting closer to the point of tightening in 20125. I hope youre right. Id like to push them in that direction, as well. I think shortterm rates are zero. I think the important things in todays data may not be just payroll jobs. It could be the number of people working parttime who want full time work. Theres 7 million of those people. If it doesnt keep coming down, they may point to that, the fed, and say the labor Market Conditions are not quite right. What if its at 6. 5 . Unemployment . Yeah. I think they think theyve covered that for now. They may ditch that at some stage, but they said you could go a wave below that and still have appropriate policy at zero. I think its pretty clear theyre going to probably drop that language at the next meeting in two weeks time, do what the bank of england has drop to reset it . No. Its going to be more qualitative away from this quantitative. Theyve already indicated that they dont expect to tighten until well after you go through 6. 5 . Its not going to be a new message, per se, but they clearly have to change the language. I havent asked someone this question, but ive seen the were conspear toral blogosphere. Supposedly, the fed knows something about trying to get out of the qe and theyre its going to be some type of issue that could really affect the entire economy. Theres supposedly some smoking guns somewhere about the negative affects of qe. When i look at the tenyear, it seems like things are going swimmingly. Theyve already start and had rates havent even gone up except for that initial bump back in the spring. Do you think theres something looming with trying to get out that we dont know about . I think maybe what theyre speaking to is how do they unwind. Not do they cut the purchases from 85 billion down to zero. Its how do they get the Balance Sheet down from 4 billion back down to normal . Right. Theyre not going to get rid of that quickly. We have to go, but these are the same people who are stocking up on water and ammo because of what supposedly is buying gold. Yeah, like german shepherd. I am. But i love them. I do. Anyway, thanks, guys. Andrew. Coming up, weve got a lot more coming on for the countdown to the jobs report. Weve got those numbers at 8 30 right here from d. C. Plus, how the financial landscape is changing in china and what it could mean for the global economy. A lot more coming up on squawk right after the break. So she could take her dream to the next level. So we talked about her options. Her valuable assets were staying. And selling her car wouldnt fly. 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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. Coming up this weekend, be sure to join us for on the money starring becky quick. Do you want me to read this . Yes, please. Because you dont want to toot your own horn. Right. I want you to do it for me. Toot away. Toot my own horn. Can the all Mighty Dollar do what military might and diplomacy cant in ukraine . One of the smartest guys in the room, richard haas, president of the council and former relations is going to be a guest. Why he says Vladimir Putin might want to check his wallet before he moves his troops and the why this conflict could have a positive effect on americas economy. This is a show that if you miss this show youve got to watch this. On the money sunday at 7 30 eastern on cnbc. Check your local listings or you can do it on your that thing on the b what channel is that on yours . I press a guide. I press guide, too. So find it. Find it and watch it. Thank you, joe. Ill take you that five bucks later. When we come back, a Major Development in china that could mean big changes for the powerhouse. By the way, its job friday. Who is hiring . One industry has a help wanted sign in the window. Right now, as we head to a break, take a look at the futures ahead of that number. Right now, dow futures are up about 20 points above fair value. S p futures up just over 2 points. Squawk will be right back. There is only one way to celebrate this unique similarity. Witness the cheesesteak shuffle. Cheesesteak, cheesesteak its the cheesesteak shuffle huh every day, all day, cheesesteak, cheesesteak every night, all night cheesesteak, cheesesteak 9 a. M. Cheesesteak 2 p. M. Cheesesteak 4 a. M. Cheesesteak any time ruh geico. Fifteen minutes could save you fifteen percent or more on car insurance. 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. China is suffering its First Corporate bond default and it could be a game changer. Michelle Caruso Cabrera and eunice yoon are both on the case. We want to start out with michelle this morning. A watershed moment in modern financial chinese history. A Corporate Bond defaulted. Its not that every Single Corporation was so profitable, becky, that it could always pay back its investors. Its that in the past when bonds have gotten into trouble, there have been forced bailouts by the government. Today, lets show you the basics, chaiorwu solar borrow 1 billion yuan, missed an Interest Payment today of 14. 6 million. The last 24 hours, everybody thought, no, no, the Chinese Government wag goes to come and bail it out. Initial coupon wab 9 . What are the implications here . Believe it or not, when you said suffer big news . Oh, my god, investors were cheering. They said god, i hope they let this thing go. In capitalism, some things fail. You cant believe youre always going to get bailed out all the time. However, it means youre going to likely see higher credit costs. Thats the way its supposed to be. There are concerns it might actually lead to a freeze. Theres been a lot of issues in china. Especially if there are things like the Wealth Management products that are shadowy. Weve seen ten bonds delayed in the last few days. Spreads start to widen between aaa and aa, which is how its supposed to be. You get paid for going into riskier things this way. You get paid to do your job this way. And its a much more efficient way to allocate capital to Higher Quality companies versus lower quality companies. Lets go to eunice yoon with more on the ground in beijing. Hey, michelle. Investors were pretty surprised by the fact that the government wasnt necessarily going to come in and be the white knight. In this situation, the local authorities would come in and try to make the company whole, they want to make the investors whole, because if youre worried about the economic fallout. But in this particular situation, nobody came in to rescue anyone. Thats been get rating a lot of talk among investors, people among the solar companies, as well. Any we cant make that assumption that the government would come in to bail out these companies. The view has been so far that this might not necessarily be a bad thing for china in the long run. A lot of people have been talking about how its a signal on the leadership that they are serious about these reforms and changing way the system runs. Now, the danger, of course, is as you had alluded to, as well, that nobody really knows what the trigger could potentially be for unraveling the Financial Sector. You know, that were definitely seeing the Financial Sector modernizing, but at the same time, there are a lot of inexperienced bankers here, there are a lot of inexperienced investors. And that is really what is leading people to investors. Thats really what is leading people to worry and one of the reasons why recently in a report you had been talking about as well, people are asking whether or not this could be a bear stearns moment. Suddenly you have people thinking differently about risk and could that lead to, you know, as the market starts to reassessthat risk could that lead to more bankruptcies, and then eventually to panic . And then what kind of implication could that have outside of the borders of this country. Thats interesting you bring up the idea of these growing pains. I guess we expect that as any economy matures. These are people who will have to learn a whole new way to do business. Inexperienced financial system. The things we take for granted, the transmission mechanism of Monetary Policy when they change Interest Rates doesnt feed through the economy in the same way as we think about it. Its still so new. Bottom line, the message is the government is saying we are going to start moving towards focusing more on stability. All right. Thanks, michelle. Eunice . The bull is on a fiveyear run, it turned out to be the turning point in markets in the wake of the financial crisis. What about the bulls . Will they keep charging even for another five years . And becky said the socalled face of bitcoin will be chased down after the newsweek story. He was. Hes denying the whole thing. The latest bitcoin plot twist, coming up next. 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. [ male announcer ] how could switchgrass in argentina, change engineering in dubai, aluminum production in south africa, and the Aerospace Industry in the u. S. . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 75 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Five years into the bull run. The financial crisis knocked the market to its knees but since march 9th, 2009, stocks have been off to the races. How much longer can the bulls stay in charge . Trouble is euphoria and fear. Former fed chairman Alan Greenspan providing his economic wisdom ahead of this mornings jobs report. The bitcoin mystery deepens. The socalled face of the Virtual Currency says its not him after being chased down by reporters outside his home. Squawk box begins right now. Good morning and welcome to squawk box on cnbc. Im joe kernen along with becky quick and Andrew Ross Sorkin who is in washington this morning. You just like being there, dont you, andrew . Look at the jacket. We have the jacket. Its lovely behind me. Its all, you know, but i miss you. Because i havent seen you for two days in the flesh, you know. So to speak. Not that youve ever seen me in the flesh. Apparently youve thought about it a little. You have like a lunch set up with six senators and a couple of cabinet members. Thats xushlly what you do when youre doing there. I have an acela train ride, thats my appointment, right after this program. Honestly. All right. I have an appointment with henry and max sorkin a little bit later. And Alan Greenspan. And with Alan Greenspan at 7 30. We will say when hes here, just turned 88 years old. 88 years young is what we should say. Yesterday was his birthday. God bless him. 88. Nowadays, thats well, well see. Hes still great, sharp as a tack for another 20 years hopefully. Thats great. The futures right now, andrew, are still up, even after another good day yesterday. Were up about 1. 5 , i figure on the s p. For the year. For the year . So if we did that was two months. Six times that wed still be okay. Yes. If you add in dividends. Youre back to thinking high single digits. I want three straight years of 30 . Ill take what we can get at this point. Go in the right direction. And 2. 7 , although as you saw in the journal today, people that own stocks are the ones that make money in times like this. It does not necessarily help the wealth of everyone but if you had to pick one or the other. No one doing better or hopefully the key is for Retail Investors sitting at home, if youre a longterm investor, if you hold through on a lot of the volatility, investor after investor, jim my dinan told us this yesterday, we heard this from warren buffett. Theres a lot more people in it than people that own stocks outright. Here are your morning headlines. About 0 minutes away from the erelease of the february employment report. Economists look for an additional numbers. The Unemployment Rate is seeing a ticking down to really that watershed mark of 6. 5 . Its not the watershed is used to be, obviously. No one thinks the fed is going to start doing anything with Interest Rates. Safeway is being bought by a unit of cerberus. That unit already owns albertsons, that supermarket chain. The combined chain together would be nearly as big as cincinnatibased kroger. When i was a kid, we always said lets go krogering. In indiana, too. In indiana, too. Is that where youre from. I used to go to kroger with my grandmother. Ive lived in new jersey longer than anywhere. You can say the same thing. You probably lived here longer than any place. Thats right. Pimco cofounder bill gross is accusing, departing ceo mohammed elerian of undermining him. He says he has evidence. Pimco, however, claims that gross did not make the statement attributed to him by reuters and that these guys, he said it, she said it, i didnt, then he called me this. It doesnt make anyone look good. No. By the way, you have to believe that bill gross did believe that mohammed elerian wrote that article even though he didnt write the article. He didnt mean wrote it. When reuters say he never said anything like that to reuters. Doesnt make sense. Lets agree never to do this, andrew. Becky . Youll send me 100 million, right . If you can deposit that in the account, the deal is were done. Theres three people in the world who would be interested in whether we had a falling out. Thats the difference. Its a little different at pimco. We have other news, perhaps with bigger implications. President obama speaking to russian president Vladimir Putin for an hour on thursday. They called this diplomatically addressing the need of russia, ukraine and the international community. They discussed direct talks between ukraine and russia with outside observers. Putin put out his own statement saying that russian u. S. Relations should not never over ukraine. Ukraines Prime Minister speaking out with our own Steve Sedgwick today about attempts to get crimea to secede from ukraine. There have been no referendum. It is absolutely and entirely no one will recognize this referendum, probably accept north korea, probably syria or and i want to be very clear. Crimea was, is and will be an integral part of ukraine, no concessions. Steve sedgwick will join us with more of this interview later in the broadcast. Becky . Andrew, thank you. The s p closed at another record high yesterday. The dow closed less than 1 from a record high. Obviously weve come a long way from the market bottom five years ago. How long does this last . Mark, lets start with you. Mark luschini. Is this something we should expect because we fell so far . The lows of 2009, the price earnings ratio, the s p 500 was about ten times. Typically, secular bull market started six to eight times earnings. Arguably we didnt go that deep. Ten is the new eight. Were five years hence from that. 187 above where we bottomed out in march of 2009, we arent yet the longest running bull market and we havent yet achieved the kind of appreciation in a longrunning bull market that others have had. I think were about fourth or fifth in terms of appreciation. So actually all in, we still think we have more to go. Granted multiples are full at this juncture. That doesnt necessarily mean the bull market needs to be snuffed out. Michael, what do you think . Hi, becky, i broadly agree with that. Most bear markets are associated with recessions. Not all of them but most of them. So it would stand to reason that this Business Cycle has at least a few more years to run, that the bull market is not over yet, although i would agree with the point that valuations are full. The rate of assent is probably going to be slower from here. Were looking at mid single digit gain, not a repeat of last years 20 to 25 upside. What would you be looking for as annanication that things are starting to get pricey . We can look at valuation levels, we can look at a whole host for forward indicators. Those look totally fine. Every single recession in the last century has been triggered by fed tightening with one exception in 1945 where it was a world war ii drawdown. It would be unlikely we slip into a recession without any fed tightening taking place. Thats probably a year plus at the earliest. As soon as the fed starts tightening, you look for a potential exit . Well, i dont i hopefully not. If the fed is sufficiently behind the curve things shouldnt fall apart right as they begin that process. At least since the mid1950s, youve had the kbungs of an inverted yield curve and negative inflation adjusted Monetary Base growth about a year before a cyclical peak. There are other signs you start to see at least six months in advance. Well be looking at a whole host of things in terms of when to get more cautious. Were not there yet. Some of the other things well be seeing, just the numbers from the jobs market, what do you expect to see from that . Weve had a series of numbers so far this year, none of which have largely met expectations. I think theres a couple legitimate factors contributing to that. One of course that i think were in the midst of an inconvenieve hangover and working out from the stockpiles, the other, of course, is the expiration of the Unemployment Compensation emergency benefits. That i think is dented Economic Activity and weather, the clear influence. All in, im expecting a number thats less than your consensus, around 150,000. I wouldnt be surprised to see the Unemployment Rate kick up a tenth of a percent or so. Market participate aerntz will give a hall pass to todays number like they have so many other economic reports so far this year. We if we get a really lousy number, 25,000 or less, does the market still give it a hall pass, you think . There would probably be an immediate negative reaction but there are still Strange Weather effects going on in the month of february. We might have to wait until march, april for a really clean set of data. The underlying trend, the 12month moving average, which is what i look at, is the best approximation for the underlying trend is about 185,000 on nonfarm payroll. Weve been way below that in the last two months. The forward indicators of labor market momentum claims the nfib data, all of them hitting cycle highs or continuing to improve gradually. It doesnt look like theres been a labor Inflection Point in the labor market. If somebody has been sitting on the sidelines and are nervous about what happened five years ago saw the market woes, maybe they sold a lot of their portfolio at that point, if they get back in now, will they be left holding the bag again . Are they getting in too late . What would you tell somebody, michael . Unfortunately, the vast bulk of the bull market in terms of percentage gains are probably in place now, probably 80 . Maybe even somewhat more than that. If one has been completely on the sidelines, thats unfortunate. That said, there are things investors places investors can go. High yield Municipal Bonds hit a terrible year last year. Theyre starting to do better. If you look at detroit. Detroit, puerto rico, the rising long rates. The fundamentals are improving for state and local budgets and those yields are at levels relative to treasuries and on a tax adjusted basis that should mean that sector outperforms we think it will outperform the s p 500 this year. And there are other sectors that investors can look at. Emerging markets are priced attractively right now. Everybody hates them but the valuations are compelling. There are things to buy out there. Michael, mark, thank you both for joining us today. Thank you. Andrew . Coming up, Alan Greenspan. Hell join us with this jobs friday and his economic wisdom. Where are the jobs . Well go inside an industry where the sky is literally the limit. And the bizarre twist in the story of the socalled face of bitcoin. We have a lot of mustsee tv straight ahead on squawk box when we return. The Associated Press talked to nakamoto for hours. I have nothing to do with bitcoin, nothing to do with developing. I was just an engineer doing Something Else. I just believe that somebody put that fictitious name in there. Satoshi nakam 0. And bitcoin. Since bitcoins birth in 2009, the currencys creator has remained a mystery. The person or people behind it have only been known as Satoshi Nakamoto, which many believed to be a pseudonym. There was no confusion about the context of their conversation and his acknowledgement of bitcoin was something that happened. There are a lot of people running after this at this point. Am i wrong on this detail, the newsweek author say yesterday that the son had called her . She said the brother. She said the brother had called her, not the son. Not the son. She said the brother called and then it wasnt even an interview. He said a lot of things and hung up on her. Are you sure it was the brother. She said yes. Im not sure how she was sure about that. I asked why the brother would call and Say Something like that. She said because there was bad blood between them. There are a lot of weird parts of the whole story. Its probably not surprising that the person or people who have been behind this have wanted to stay private, that they would still want to stay private at this point. If you were going to deny it and lie he also didnt look like a liar to me. Maybe im bad at that. He did say she said, he set up a time, yes, i was somebody behind it but ive turned it over to other people. She said thats what he told her at the time. Youd have to. Youd have the idea and then youd have a bunch of you probably cant be the one person to have done it. Always come back to the code. Where do these people come from who know how to do the code . There was no code offered when i went to school, learning it, you know . I still dont think he looks like the guy for some reason i dont know what that means. Im just saying. You want to be right and come back an say you knew that. What does that mean, he doesnt look like the guy. Thats not a normal most unpc thing. I dont known what that means. Youre right. I dont know. He could be thats not what im suggesting. Youre digging yourself in deeper. Take it from me. Just take it from me. Im going to zip it. Im going to zip it. Did you know ive seen that. I heard this today, the unplugging day. I dont know what that stands for. Anyway, did you know that today is the national day of unplugging . A day to encourage you to switch off your cell phone and computers and make real Life Connections with people around them. I think people could fast for 24 hours. You would rather not eat than turn off your cell phone . Not me. Not me. Its friday night. But it should not include watching squawk box. Its lent, too. You know what they say. What the jobs are, how about greensboro, North Carolina. Highflying industry thats hiring next. We are connected and were coming right back. I gave up drinking for lent. 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. 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. Coming up this weekend, be sure to join us for on the money. Can the alMighty Dollar do what military might and diplomacy cant in ukraine . The president of the council on foreign relations, why he says Vladimir Putin might want to check his wallet before he moves his troops and how this conflict could end up having a positive effect on americas economy. Catch that on the money on sunday at 7 30 p. M. Eastern time. Thats on cnbc or check your local listings and that, of course, hosted by the one and only becky quick. Even as efforts continue to boost employment, Many Industries say they cant find good workers they need to fill all the jobs they have available. Its part of our continuing series on where the jobs are. Mary thompson joins us now from greensburg, North Carolina at a look at the approach pimco is taking to prime the runway for future hires. The Aviation Business is booming and timco is part of that boom. Each plane must make about 30 days of service. Theyre brought in, essentially taken apart, all parts are inspected, repaired and replaced. Behind me, this engine will be inspected today, hned that, the tlush reverser. More will have to come here to be service. Timco would like to build the hangars to accommodate those planes if it could find the workers. More than the hangars. We would need 400 additional technicians and thats the tough part. Thats the headwind to our expansion. Kip blakley is twith timco. They would need to hire 350 workers a year for the next several. They cant just be anyone off the street. These workers need to be trained and certified by the faa before they can touch any out of 737s or 767s or other planes that are serviced by timco. Its a twoyear process to go to a Community College or aviation school. Once they get that certification and come to work, it will still be two to three years before they can be proficient and efficient on aircraft. Timco is basically priming the employee runway a number of ways. Its going to Elementary Schools to talk about aviation. Its recruiting at middle schools for fouryear program where a senior in high school will come out and be certified by the faa. Its working with a Community College on a twoyear program and reaching out to unemployed or underemployed adults. Getting them in on a 12week course where they can start working and earn money and work on that certification. How much is a worker expected to make in one of these jobs . Well, if youre an faa certified technician, the first year, they can make up to 30,000 a year with overtime. Keep in mind that does include both Health Insurance and other benefits like a 401 k . That is with overtime. How much does it cost timco to do this . In terms of the Training Programs and other things . I dont have the answer to that. Keep in mind, for example, the underemployed adults, the twoyear Training Program is done through a Community College the students would pay for. Timco helped develop that program. They worked closely at developing a program at an Aviation High School here in greensboro. While they wont pay necessarily for that training, they do have input and, again, they are working with them, for example, providing internships to some of the High School Students that come in here. Theyre trying to spark interest, tell people this is a place you can get a job and eventually have a longterm career. They may get unionized. Do they ever talk about unions there. This is not a union shop, no. Not yet. If theyre successful. Well see. But not right now. Thank you for that report. We appreciate it. Sure. We should tell you, we are an hour away from the february jobs report. We get that at 8 30 eastern time. Helping us with the countdown, the one and only Alan Greenspan. He is in the blame the weather camp when it comes to Economic Growth. Find out next what hes thinking. Lets take a look before we do that at the futures right now, we do have green arrows, of course, all that could change when we see the number at 8 30. Back in a moment. Get a leg up on the trading day with the morning squawk newsletter. Go to squawk. Cnbc. Com and sign up now. Whthis place . Whthis . Is is ere bri together thstest intern stest internet anthe be ntertainme. Itooks likthe fure fuher alytics are ss itooks likthe fure fuher alytics are ss thats my phone. Hey. [ female announcer ] the x1 entertainment operating system, only from xfinity. Tv and internet together like never before. Welcome back to squawk box, everybody. In the headlines this morning, the Labor Department will release the february employment report. Thats coming up at 8 30 eastern time. The economy is expecting nonfarm payroll to come in at 152,000. Although weve got lousy early reads this week from other job numbers. The Unemployment Rate is expected to tick down slightly to 6. 5 . Thats the level thats so important for the fed. Average hourly wages are expected to rise by 0. 2 . Cerberus is buying safeway for 9. 4 billion in cash and stock. The private equity join the will pay 40 a share for the grocery store. And an agreement is being signed with Shanghai Group and disney. Superhero film iron man iii debuted in china and included a chinese actress. Alan greenspan former Federal Reserve chairman and president of greenspan associates, he is also the author of the recent book the map and the territory. Risk, human nature and the future of forecasting. We need to wish you a happy birthday a day late. You are 88 years young. So wow. If we could all do that, wed be very happy. Theres a picture of you from yesterday. Did you see that . You had a cupcake at the office there. Thats typically what i do. Happy berth day. We have a lot to talk about. Ukraine and all sorts of issues going on in the economy. Because its jobs friday, let me ask you this. A lot of questions about the weather and whether we should care so much about the weather. Do you . Of course, because you have to basically look at anything which can affect the numbers. But you have to be careful interpreting these numbers. We, for example, in our office keep a weekly seasonal adjusted Production Index but associate it with inventory and consumption of industrial products. Once what that has shown, up until the very last week it was drifting down as inventory liquidation took hold because theres an excess of inventories earlier on. Last week its turned back up. Right. Now, you cant read the weather data in those numbers because you probably could get the inventory and liquidation in any event, which is extraordinarily high. The weather probably had some effect. Youd be able to tell better by looking at household data. Are you a believer that good news is good news and bad news is good news as well . The stock market you mean. Theres a sense if its good news, thats good news and if its bad news, well take it that the fed will slow down and that will be good news. Those types of views rarely, if ever, turn out to be accurate. Im not going to commit myself one way or another. I dont know if you saw this, keith hall says the weather effects, he thinks, have been way overstated. In part because if you look at hours worked rather than level of payroll, the average weekly hours have not changed little and that would be a signal. Hes correct. Its one of the signals. We dont know what happened last week. We will know in just about a half hour. Lets talk about ukraine. You have a take on whats going to happen. How does it play out . Its not so much a take on whats going to happen but the fact that diplomacy is far less important than the stock movements within russia. In short, weve reached other confrontations with the soviet union, there was no such thing as the stock market. Now it has a major effect on the russian economy, which you know is not doing well. And the ruble has been deteriorating and its been deteriorating in a way in which its clearly tied to potential problems within ukraine. I dont think i think those indicators are far more useful to me in determining how this particular diplomatic issue is going to come out from anything that is talked about by people who are doing the diplomacy. What do you think is going to happen . Im pessimistic, if you want to put it that way. I think what will happen eventually, lets face it, one of the great disasters of the 20th century was the demise of the soviet union. And its very obvious that hes trying to work its way back and maintain something similar to that sort of institution. Right. And i dont see that we have the capability of preventing it, except if we can affect their Financial Systems which creates major deterioration in russia, in which case there will be a response. But only in that case as far as im concerned. Last time we talked to you, we talked about inequality. There was a report just yesterday about, frankly, if you own stocks you did well over the past couple of years. If you didnt, you did less so. How much do you think we should worry about this issue or not . Is it overstated or understated . No, it is not understated. I think the issue of income inequality is one of the major social problems we have in society. Basically you cannot run a market economy effectively if there is a real pull within the social system. I take income inequality as a very serious is it income inequality or do you need to compress the top down or bring the bottom up or do you have to do both . It doesnt matter. For example, ive been arguing the issue of getting h1b. Immigration reform. Opened up so that in effect we could get the people like you and me who are being subsidized by the fact that theyre not letting our competition into the country. Were doing a lot better than we should be. If we have h1bs open up very significantly, there would be more competition at the upper echelons of the income strata. That in itself will push that down. As far as i can tell, there is no difference from a political or social or any other noneconomic way you want to look at it between weather or not we take the top down or bring the bottom up. Remember, 50 years ago 100 years ago, the top had a real standard of living which would be at the Poverty Level today by far. Okay. Well take a quick break, send it back to joe and well come back and continue this conversation. Thank you, doctor, appreciate it. Joe . Well have more with Alan Greenspan after the break. If youre looking for weekend reading go to squawk. Cnbc. Com, the blog has the whole week in review. The entire interview with warren buffett, hedge picks by jamie dinan. Check out the blog, squawk. Cnbc. Com. Well be right back. 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. Humans even when we cross our ts and dot our is, we still run into problems. Thats why Liberty Mutual insurance offers accident forgiveness with our auto policies. If you qualify, your rates wont go up due to your first accident. Because making mistakes is only human, and so are we. We also offer new car replacement, so if you total your new car, we give you the money for a new one. Call Liberty Mutual insurance at. 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Lets take a look at the futures. We are awaiting the jobs number to could bepling out. Its less than 50 minutes away. The dow futures are up 22 points, s p up by 2. 5. Weve had a fairly strong week for the markets. Well see what happens at 8 30 for the numbers. The estimate is 13 ,000 jobs. Well see if that happens, given the weakness weve seen in other jobs numbers. The tenyear note is yielding 2. 73 . Joining us is Alan Greenspan, former Federal Reserve chairman and president of greenspan associates. Looking at some of your comments that we glean from you already, im fascinated by your take on bubbles, how bubbles are inflated and whether we can either use the fed to try to, you know, try to not allow bubbles to be formed or to somehow let the air slowly out of them. I guess in your view, the fed is not the place to look for either inflating bubbles or dealing with bubbles or anticipating bubbles. I agree with that statement, whoever may have made that. I think it might have been you. Thats a reliable source. Look, what we say at the Federal Reserve, frankly, is that a necessary condition for the existence of members, is a period of longterm economic stability with inflation at a minimum. The reason we considered that a problem at the fed was that inevitably leads to bubbles. You cannot avoid it. You can try to defuse it, youll fail as we did. In 1994 we tried to defuse what is what we called bubbles back then and we failed for reasons i have discussed in my current book. But you cant break unless you break the back of the actual euphoria that generates the bubbles, youre bound to fail. And the result of that is something that is outside the hands of the fed and of issues i discuss in the book, there are other things we can and should do. Well, right now, we all think that you know, i think the people in the fed right now feel like the onus is on them for every aspect of our life. I think thats incorrect at this point. They certainly think theyre capable of running things and defusing bubbles. I think they think theyre capable of not causing bubbles. I dont know if they have a firm grasp on any of this. Im not in a position to answer that question. Chairman, do you read the minutes that came out from 2008 around the financial crisis . Yes. Whats your take on that . I dont comment on such issues. Chairman greenspan, it is five years since the market lows. Youre the person who first talked about irrachelleal exuberance way back then. Given how far weve come, do you worry were getting into that territory again. As far as the stock market is concerned, no. Thats not to say we may not be near highs but you dont get the buoyancy, the type of movements and what i would call the equity premium that characterizes a bubble or euphoria. Its no the that many years ago. Two or three years ago, we were at the highest level of equity premium, a rate of return on equity that the markets require. We had had the highest equity premium in 50 years. Its come down a bit. Andrew, andrew, hold on. Let me talk to him for a second. So you said theres other things that can be done then, youre not counting on the fed to defuse or to manage the bubbles. Some of the other stuff you told us is about dodd frank, for all that it was intended to do, it could have been done much easier by just raising capital at most of the banks. Is that the remedy if the fed cant help us, is that the remedy that can help us, making sure our Financial Institutions are well capitalized the next time something inadvertent happens . Theres nothing superior to that. The issue here is that dodd frank, as a concept, in my judgment, didnt do as required for a regular initiative. You have to first diagnose what the problem is. Having diagnosed the problem, then you determine what essentially needs to be done to correct it. And i think that coming from whats in dodd frank, the diagnosis is basically wrong, as ive put it in my book and ill be discussing this issue in further editions of the book, were getting into a situation where the problem is wholly in the capital era, because i dont know of a single thing that went wrong in the most recent boom and bust, an issue of the tightening of freud statutes, which i might add is a critical issue for the functioning of the Financial Market because a free market requires trust. And trust and fraud are interrelated. Just as important, if not significantly more so, is adequate capital and collateral requirements. We went into lehman brothers, wall street days with Lehman Holding 3 tangible capital, you cant function that way and that capital candice appear in a matter of hours and it did. When banks say that if you raise our Capital Requirements, its going to reduce lending, is that a real concern of yours . I frankly think not. And that the reason is the experience we had in the 19th century. Remember that Capital Requirements before the civil war are more than 50 . They were moving bound throughout the latter part of the 19th century. Yet the rate of return on equity, net income as a percent of equity was flat in the range of 5 to 10 , which is another way of saying that the ratio of income to assets offset that. I should think were looking at precisely the opposite pattern. I wouldnt be surprised to find that were going to get a significant Capital Requirements, that its going to be offset in large part by an increase in the rate of return on assets. Right. The bubble related question that joe was talking about. You lived through the dotcom bubble. Do you look at whats going on in silicon valley, facebook, y buying whatsapp, is there a buying bubble there . Bubbles are not the problem. Bubbles, by definition, will deflate. Its the institution which holds the toxic aoxic asset which is critical issue. For example, lets go back to the dotcom boom. We had a collapse in stock prices. Huge losses. But it was essentially in those types of institutions which were not leveraged. At the time, households, they werent. Other pension funds, mutual funds, they took a huge hit. But to get a crisis, you need serial default. We did not get serial default in that period. If you look at the affect on the gdp, it was virtually negligible. The same thing happened in 1987. In a more recent boom, it was a highly leveraged set pri ed sub market. You wrote the book on too big to fail. From that crisis we got dodd frank. I want you to be part of this. I think he just said, andrew, not only did it not address the problem with capital not being high enough, but i think hes saying its actually counterproductive in certain aspects, too . I mean, i would think youd either agree with that or disagree. Overall you think dodd frank was a positive, do you not . I said wholly positive on the margins. I argued that the most important thing thats happened has been the increase in Capital Requirements. You could argue theyre not enough. Is dodd Frank Holding us back and hurting gdp both, dr. Greenspan . I think so. I think that the difficulty is, when i was at the fed we had a few rulings a year. Those rulings were extended because you had to go through all sorts of loops and circles of discussing with your colleagues and regulatory area. And we managed to do that. Weve had many, many multiples of requirements in dodd frank. I dont think theres enough time to do it. And i dont think its going to work. In fact, i wrote an oped piece immediately after dodd frank carried on, i said this isnt going to work. And it hasnt. Before we let you go, weve been talking all morning about the unmasking of the potential founder of bitcoin. I dont remember you being committal one way or another. Do you see a day when electronic currency becomes a mainstream piece of the currency world. Im sufficiently with the notion of the behavior of economics these days to say that what fundamentally attracts money, people to hold it as a transaction currency is that it has intrinsic value, like gold and silver, or it is convertible, essentially into that. The dollar, for example, is the means by which everyone settles in a crisis, why . We have the most gold. Okay. Alan greenspan, thank you for being here this morning. My pleasure. Appreciate it very, very much. Ill send it back to you, becky. You know we can stir things up when we get dr. Greenspan to say he doesnt like dodd frank. You know the Huffington Post would love to write Something Like that. Doesnt like dodd frank. You know how that works. I do. Youre very clever at drawing that out, joe. I was trying to get you to do it, though. Andrew, thank you. Dr. Greenspan, thank you. Great talking to him. Well be back with andrew in just a minute. When we come back, it is all about jobs. Were counting down to the february employment report where some of the best in the business. White, bernstein, wieting and patterson will join us at the top of the hour. Squawk box will be right back. What is this place . Where are we . This is where we bring together the Fastest Internet and the best in entertainment. We call it the x1 entertainment operating system. It looks like the future we must have encountered a temporal vortex. Further analytics are necessary. Beam us up. Thats my phone. Hey. [ female announcer ] the x1 entertainment operating system, only from xfinity. Tv and internet together like never before. Coming up, well bring our jobs in America Panel back as we start the final countdown to the jobs data. Politicos ben white will join us, economist jared bernstein, Steve Wieting and Bessemer Trust chief Investment Officer, rebecca patterson, theyre all here. Futures at this hour, the dow looking like its up about 18 points higher. S p 500 and the nasdaq both up. 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For all of your Wealth Management and retirement goals, discover how pnc Wealth Management can help you achieve. Visit pnc. Com wealthsolutions to find out more. Its jobs friday. As squawk box is ready for the numbers and Market Reaction. Will the fed change course on its Bond Buying Program . What would investors take away from the data . Our expert panel is here to make you make sound Investment Decisions and get you ready for the opening bell on wall street. Its jobs friday and the final hour of squawk box begins right now. Working for a living. Working for a living im taking what theyre givin because im workin for a livin welcome back to squawk box here on cnbc, first in business worldwide. Im joe kernen along with becky quick and Andrew Ross Sorkin who is in washington today. Futures, 30 points away from the jobs report, up about 17 points. Theyve been up over 20. Theyve been up single digits. At this point, were waiting, watching after a pretty good week. Andrew . Thank you. Safeway being bought by cerberus, the unit of the owner rival chain albertsons, the deal worth 9. 4 billion in cash and stock or about 40 a share. Also this morning, fords Ceo Alan Mulally has award ee eed million in performance bonuses, which is restricted stocks. It will change to common stock in two years. The change in policy will affect new stock awards not ones that have already been granted. Becky, you have the story of the morning. This is the one weve been talking about today. The man outed by Newsweek Magazine as the creator of bitcoin is denying that he is the founder of the digital currency. Yesterday on squawk box, newsweek reporter lea Mcgrath Goodman debuted her story about tracking down Satoshi Nakamoto at his home. Hours after that story broke, News Reporters were at his door, surrounding his house in california. He was walking down the street with cameras following him. He said hes not in bitcoin and knows nothing about it. He got into a car with the Associated Press. They went to a nearby sushi restaurant before heading to ap offices in downtown los angeles. The press talked to nakamoto for two hours. He told the news service he never heard of bitcoin until his son told him hed been contacted by a reporter three weeks ago. I have nothing to do with bitcoin, nothing to do with developing it. I was just an engineer doing Something Else. I just believe that somebody put that fictitious name in there. Satoshi nakamoto and bitcoin. He did tell the Associated Press that many of the details in the newsweek report were correct, including that he once worked for a defense contractor but he strongly disputes the magazines assertion that he is the face behind bitcoin. Since bitcoins birth in 2009, the currencys creator has remained a mystery. The person or people behind its founding have been only known as Satoshi Nakamoto. Which observers believe to be a pseudonym. Mcgrath goodman says there was no confusion about the context of their conversation. She says his acknowledgement of his involvement in bitcoin, she says she is very sure of that. Again, guys, we have been talking about this quite a bit. You know about washington. You know how these you know how they are when their lips are moving. Can you judge whos lying. The nakamoto story . Hes convincing to me that he had nothing to do with it. He is . I have no idea whether he is or not. I get the sense were you watching earlier . Sorkin said he doesnt look like bitcoin. I dont know what that means. What does a bitcoin guy look like . I dont know. Hes treading and dangerous. Hes not what i expected. I cant tell you what the guy is supposed to look like. I can tell you that was not it. The ukrainian guy said he looks like him. I expected somebody that looked more like andrew, frankly. I dont know if its him or not. It could be that newsweek tracked down a guy with the same name who was an engineer. How much Satoshi Nakamotos are there . Not that many in the u. S. Could be he was an engineer who sounded like somebody who invented bitcoin. Its a fascinating story. I have no idea. If you search your google glasses right now, tokyo phone book, how many Satoshi Nakamotos probably a fairly common name. There are a number of them. Are you looking . Are you still looking at becky . Im working hard here. What if he changes glasses . That whole bit will be gone. Its so funny. Never gets old. That and my weight. Youre looking good. Thank you. Working hard. The markets but have you lost height . No. The markets will be focused on the job report this morning. Steven wieting is global chief investment strategist at citi private bank. Jared bernstein is a senior fellow at the center on budget and policy priority. In washington. And a cnbc contributor. Jared, how are you doing . Im well. Its been a while. Nice to hear you. How you doing . Im doin good. Youre in jersey, forget about it. Get out of here. Ben white is here also. Rebecca patterson, from Bessemer Trust. Are we on track for 3 if we take out the weather . Nothing worse going on here than weather . Or something i think we do better than 3 in the second quarter. You look at the Home Builders index. We have the worst decline in february in 35 years. Worse than 2008, 2009, the peak of the housing market. It was december through february. Maybe caught in this statistic, maybe not. We all said that Economic Growth had been ratcheted up for 2014. Were expecting these good things to happen. Were on course, were okay . I think a good deal that was priced in the markets, 32 return last year anticipates the future. I care about 2015 and setting the course in markets this year. How is that going to be . Is it going to be like 2014 . Is it going to be 3 in 14 and 15 . I think we can do that. Everywhere i go around the world youre talking about the market. Im talking about the economy. The economy can come close to that. Just be clear we are Digging Deeper into our resources. Its been a period where we stubbornly have zero Labor Force Growth and keep lowering the Unemployment Rate. You know, i could have a couple years of this and youre at a 5 Unemployment Rate where the economy on average has peaked since world war ii. I think theres more slack potentially out there but we cant take that for granted. Bernstein, i have backup since i havent seen you in a while. We have a lot to cover. We do. I saw a report the other night, these crappy looking Public Schools. Theyre falling apart. I understand this infrastructure thing. We agreed to the murray ryan budget and then when it comes out, you want to go 56 billion over. But we need to do something but isnt there anywhere that we can do it under the agreed upon number and put more towards infrastructure . Arent we blowing money somewhere . Yes. You want to keep spending and spending and spending . Id like to try to rearrange some things. Thats politically very challenging. By the way, im still interested in that youre focusing on the Public School infrastructure. I have a plan, f. A. S. T. , fix americas schools today. Im not just saying i just made this up. Its a bill in the senate and in the house. Its not going anywhere but what is, but its precisely that idea. We have a deteriorating stock of Public Schools across this country, a onetime slug of Infrastructure Spending could help them become more Energy Efficient and save resources in that regard and put a lot of people to work in the meantime. Interest rates are low. Exactly. Exactly. I dont know whats coming over me. Maybe its because i havent seen you in a while. It just sounds reasonable. Its the Larry Summers idea that rates are low. You have to let the building crumble to the ground before you do anything . This used to be a this was never a real partisan argument about for frr. About infrastructure. Youre blowing money somewhere. I no he that. Were spending too much. Im not giving you a blank check. All im saying is that it didnt used to be an argument between democrats and republicans where we had to be stewards. Business folks tell me all the time its actually important to have decent roads and Communication Systems and Water Systems and schools. Rebecca, can you help . Can i help on schools, infrastructure, the economy or markets, joe, where do you want to go . I guess we better stick to your knitting. I was trying to fix the world for a second there. You can just tell us whether is there anything other than weather which has you questioning whether we did have an uptick in Economic Growth expected this year . Are we on course for that . Im still pretty constructive for the year overall. I think the United States can see gdp growth close to 3, maybe even above 3 if we get a bounce back this spring. But i think right now its foggy. No one has a lot of clear i mean figuratively, not literally, you just dont have a lot of clarity. It probably will be a month or two. If you look at the leading indicators weve had recently, new orders out of Business Sentiment continues to go higher. Mortgage refis picked up again with Mortgage Rates going down. Inflation is still low. Theres a lot of Building Blocks that make me think we can come out of this softness in q1. Europe keeps trending better. A lot of s p multinationals, their biggest exposure is to europe. Just one question, joe. That is have we never had winter before . I feel like weve had a lot of winters in the past. Theres been predictions that the winters will start changing permanently, right . There have been a lot of people who said snow will become a thing of the past. It has not. The point is if you look at the hours worked, andrew pointed out earlier, they havent changed that much. Theres not an indication that the last two job reports were that hit by weather. A 0. 1 difference in employment is 130,000 jobs. When you have some of the country without heating, places like atlanta unable to move things from place to place. Did you walk outside today . I thought it was 45 degrees. It was 29. I was like, wow. Finally, spring is here. And before, 42 on the way in to this winter, 42 i thought, i cant get through this. Toughened us all up a little. Andrew . Well continue the jobs conversation. About 18 minutes before we get the number. Coming up, the Prime Minister of ukraine speaking to cnbc this morning. Ukraine says its ready for talks with russia but not until putin withdraws his troops. As we head to a break, check out the squawk box market indicator, all of which could change in about 18 minutes when we get the jobs number. Work hisp from busser to waiter to chef before opening a restaurant specializing in fish and game from the great northwest. Hell start investing early, hell find some good people to help guide him, and hell set money aside from his first day of work to his last, which isnt rocket science. Its just common sense. From td ameritrade. Afghanistan, in 2009. Orbiting the moon in 1971. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation. Because it offers a superior level of protection. And because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance quote. Usaa. We know what it means to serve. What is this place . Where are we . This is where we bring together the Fastest Internet and the best in entertainment. We call it the x1 entertainment operating system. It looks like the future we must have encountered a temporal vortex. Further analytics are necessary. Beam us up. Thats my phone. Hey. [ female announcer ] the x1 entertainment operating system, only from xfinity. Tv and internet together like never before. President obama spoke to russian president Vladimir Putin for about an hour yesterday. The two discussed the need to solve the situation in ukraine diplomatically, they say. They discussed direct talks between ukraine and russia with outside observers. Steve sedgwick talked to ukraines Prime Minister and joins us with more of that interview. Steve . We were talking about economic policy. We want to speak about legitimacy. Thats the issue here. The government doesnt recognize the Regional Assembly government in crimea. The crimean region have called for a referendum for next sunday, march 16th, where they could effectively seed from ukraine and join the russian federation. The president today, whos acting president for this country, says he doesnt recognize it in the first place. I put it to the Prime Minister, mr. Yatsenyuk. Theres ethnics in the majority to except the situation and move on and try and get a greater piece with this as part of it. He was adamant thats not the case. Lets listen in. There will be no referendum. It is absolutely and entirely no one will recognize this referendum except north korea, probably syria. And i want to be very clear, crimea was, is and will be an integral part of ukraine, no concessions. The real problem for him is that hes not having direct facetoface talks with no diplomacy. Moscow will not recognize this government, saying its unconstitutional as well. I said, look, lavrov and kerry, obama and putin is not happening. Diplomacy is failing. He wasnt that pessimistic. Listen. We started this process. There is progress, sir. There is no negative implications, i will say, not as bad as we expect. Not as good as we need to do. At the moment, offensively, becky, it seems for us outside as we cant see progress at all on this one as well. Is there something going on behind the scenes . He said lets be patient and lets see what happens. Its not as good as it could be but not as bad as some people think it could be. A continuing situation that well keep monitoring. When we come back with the jobs number just minutes away, what should you be doing with bank share this morning . Well take a look at this sector and how you should be adjusting your portfolio. Jobs report about 12 minutes away. Squawk box will be right back. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. [ male announcer ] how could a luminous protein in jellyfish, impact Life Expectancy in the u. S. , real estate in hong kong, and the optics industry in germany . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 75 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Its time to play detect the payrolls. Heres your host, becky quick welcome, everybody, to predict the payrolls. Im becky quick and ill be your host for our game show this morning. Right now we introduce todays contestants. Steve wieting, citi private bank. Ben white, chief economic correspondent at politico, jared bernstein, senior fellow. Rebecca patterson, chief Investment Officer at Bessemer Trust. The man who has the traders ears, Rick Santelli and last but certainly not least, steve liesman. Welcome, everybody and lets play. Steve. 135. 135. Ding, ding, ding. Ben white . What are you thinking . 115. No change in the Unemployment Rate. Jared bernstein, your predictions . 138 on the payrolls, unemployment ticks up a tenth to 6. 7 . Rebecca patterson, how about you. 130 on the payrolls, unchanged inemployment rate at 6. 6. Rick santelli, your guess . 120,000 on jobs and ill take the fifth on the Unemployment Rate. I definitely dont want to be viewed as acknowledging it has any significance. Steve liesman, your thoughts . 84. One more time. 84 . 84. I have a crazy motto about the private sector. I dont think theyll add much to it. Without going over . The price is right rules. Its got to be price is right rules. One job. Thats my prediction. I will wonder, half of your brought down your numbers given the numbers weve seen this week. Steve, 84,000, you adjusted that. Manufacturing employment, other employment was really week. Theyre both components in the model. When the government shutdown, it ended up being closer than 20. I probably should have stopped while i was ahead. Within 20, a couple months and it was okay. Ive been having fun with it. I probably should have deleted it but its there now and it spits out 84. Invest on it, folks. Quickly on the seasonal last month, around this month, im told theyre less difficult so we could get a bit of a bump from the seasonal adjustment february. That would tend to push it to the upside of the consensus. Do you have a model you plug things into as well . How does it work. I have a model thats mostly based on lag payroll data. It also includes uninsurance claim and the adp. The weak adp brought me down below consensus. Consensus is higher than pretty much all of us, even given the weather. Claims have been a lousy indicator of jobs, right . Thats a big part of your survey. It cant really happen. Its a small part of my survey. What i wait mostly, ive actually been doing pretty well. You can check. I put the forecast on my blog the night before. Ive been doing well. My model has been extensive. The recent trend in payroll. The downshift you see over the past few months, i could pick that up. I happen to think weather is a small part of the equation. Thats why ive been below consensus for the past few months. Its not my conscience but i have an angel and devil here. The devil wrote in, the fed shouldnt be spending any money on Public School infrastructure, local communities and municipalities and states should be doing it. If they can forget teachers unions and all the overfunded public pension employees problems they have. Quick shift in gears back to the earlier discussion about Public School infrastructure, i absolutely agree with the writer in terms of the ongoing upkeep of those buildings. What im talking about is a onetime plug to take the infrastructure from really lousy to better. And then get out of the way. Whose idea was the nine box . Who forgot we banned that . Greco . No, no, i dont like it. What time is it, 3 00 . Around the horn. Around the horn is back. There you go. Theres no need for a nine box. Drop him out, well have an eight box. Get me out of there. Lets take a look at u. S. Equity futures quickly. The futures have been relatively flat. Up 17 right now. Squawk will be right back. Theres this kid. Coach calls her a team player. Shes kind of special. She makes the whole team better. Hes the kind of player that puts the puck, horsehide, bullet. Right where it needs to be. Coach calls it logistics. Hes a great passer. Dependable. A winning team has to have one. Somebody you can count on. Somebody like my dad. This is my dad. Somebody like my mom. My grandfather. Im very pround of him. Her. Them. Welcome back, everybody. We are just seconds away from the employment report. The panel is here. Weve all been waiting. Weve gotten the numbers or at least their expectations of what to think. The broader consensus is for 139,000 job gains. Given the weakness weve seen, including adp which came in worse than expected and the employment section of ism, all those numbers were weaker than expected. Thats why some people have brought their numbers down ahead of that. Steve liesman coming in with the low on our panel, 84,000. Repeat that several times. Well see. If youre right youll thank me. The dow newts afutures up by 24, the s p futures up by over 2 points. Up 175,000. February nonfarm payroll increased by 175,000 jobs, 6. 7 is the Unemployment Rate. Average Hourly Earnings increase 0. 4 . Private sector job growth an increase of 162,000. Revisions to december and january, net increase of an additional 25,000 jobs than previously reported for those two months. Job gains in february, plus 79,000 professional and business services, 25,000 up in leisure and hospitality. Construction increased by 15,000. On the negative side, retail losing 4,000 jobs. The information industry losing about 16,000 jobs. Weather impacts on the february numbers. In february, according to the bls, 6. 855 Million People worked part time instead of full time. That compares to 692,000 in january and that number by the way, that 639855 million is the biggest since january of 1996 as far as the weather impact. In addition to that, an additional 601,000 people didnt work at all. Versus 262,000 in january. We got to that 6. 7 Unemployment Rate, basically the number of unemployed persons increased by 223,000 while the number of employed increased by just 42,000. Slight uptick in the longterm unemployment, increase of 203,000 to 3. 8 million, 37 is the rate for longterm unemployment. Back to you guys. Hampton. Definitely sounds like i asked not to be i do not want to be part of this nine box. Okay. Thank you. Im going to keep talking. The press box, thats hot. Thats not bad. Wieting, 3 , on track. This is a good number. Really good. Labor force growth and stronger employment. Eventually we would have got the unemployment. Labor force growth is really important. Its the potential to grow more in the future. I like these numbers and i think its good for the market today in the United States. Liesman, did you use the climate guys model for your 84 group . I predicted the warm winter which we didnt have. Because of climate change. Its really behind everything. You did see a little bit of weather in here. Construction 15 which is off the trend, joe. Retail minus 4. 1. 4,000. Transportation minus 3. Information which shouldnt be all that weather affected. Minus 16. We dont see a whole lot of weather in this number. You do the prior two months, being down 100,000 on average. Usually you can get a rebound right away. We probably havent seen a full recovery as we would have. Bernstein, you still have friends in the government, apparently. You nailed it, right . I didnt get the payroll right. Where were you on payroll . 138 on payroll. I was low on payroll. I did expect the Unemployment Rate to tick up a tenth. You are the highest, though. Youre at 140 without going over. Dont you know how this works. Oh, great. I want a tshirt or something. One thing here we havent mentioned. The 4 on average Hourly Earnings has not to be one of the higher increases weve seen in recent months. If that sticks, thats a good sign. This is a report thats reminiscent of the kind of reports we were getting four months ago before thedown shift in growth. This is much more on trend with the 175, 180,000 we were getting before the recent slowing. If this sticks, one month does not a new trend make. One thing thats worrying me about the economy is weak paycheck growth. Weak income growth, weak disposable income growth. This could help on the consuling side if it sticks. Anyone notice that the stock market seems to go up and we used to say it was the fed. And it gets to a certain point, it cant go any higher and Something Like this comes out, a total surprise. Does the stock market have an idea that theyre still on track . There has been something besides the fed here. Can we talk about the politics of this for a second . This is obviously a good report. Its good on the numbers and the labor force. Its a sigh of relief. Going into midterm elections where theyll probably lose seats anyway, they would lose a lot more if the economy was really tanking. Two things to point out, we saw the tenyear, yielding 2. 8 and the dow futures are up by about 75 points above fair value. They immediately took off. 2. 8 is a high yield. Im terribly worried. Its been crazy to see the pressure on yields to this point. You might have expected the yield would be moving up faster. You have a better number in bernstein, the better numbers for the election in 2014. If you like the plan you can keep it in 2014. Here are many months. There are a number of job reports between now and then. And lets not get too far off. Rick, this is lucky speaking here, i dont know whether you know the chihuahua. What do you have on this number . Do you believe it or do you figure that guy was asleep again and didnt check places he was supposed to check for employment . Probably the head of the census and the white house probably was working diligently this time around. I dont know. I would probably say the 6 1 2 week high that we jumped to at a 2. 81 yield, that would have been on a closing basis is already coming down. 2. 81, now 2. 79. No surprise, kneejerk reaction was a bit of a flood gate of selling against the strategic 2. 75. Which side is 2. 75 we close on will be very key. I think this number does underscore the notion that weather probably had an effect in a lot of areas but not nearly as large as many would say. Its supposed to be a good thing for stock, which will probably rally for a good chunk of today. In the bigger picture, its not a good thing for stocks. They got a bit ahead of themselves, handicapping the weather spread too wide. Obviously a good number today. One thing ive been looking at on the shorter term basis recently is how revision for u. S. Q1 gdp has come down. The beginning of the year they were 2. 5 for the quarter, now theyre 2. 1 . People have lowered the bar. This sort of number today helps start fuel sentiment towards growth Going Forward and that change in peoples expectations for growth, i think, is a bigger factor for equities than the absolute level of growth itself. I think this is good for equities Going Forward. Everything is good for equities. Before we miss the weather, steven, what about this tick down in hours . Went from 34. 3 to 34. 2. Yes. Is that a place where, a, it shows up when the weather shows up and less gdp. Its shown in a variety of terciary indicators. I believe this has been a disrupted period compared to a typical winter. The bump in parttime work that the bls told us about, those fingerprints are all over that hours number. I think that will change. Thats a weather function, i think. The economy doesnt care if one guy shows up and works 40 hours or two guys show up and work 20 hours from a gdp standpoint. Gerald, people are making more. Thats important. When you shift down from 33. 5 hours to 33. 3, how big a deal is that . Its a big deal if its fixed. Theres an index in there of aggregate hours. Ive always looked at that to get a beat on where the aggregates are going in gdp. I take the point that someone made earlier that that could actually put some downward pressure on q1 gdp rates. I dont think it will stick. I think thats probably a weather fingerprint. Im sorry to report the government added workers this time around. My prediction, lets say we have workers every month until the election. The Unemployment Rate goes up over 7 . I want to see janet yellen and the Federal Reserve point to fact that, well, hey, its going up. It really is good news unlike they did when it was going down and it wasnt at the last election. It is true, maybe ben wants to talk about this, the fed is at a loss for explaining. What is that now . What is it, joe . The fed is at a loss for sending slack to the market. It believes theres slack out there but cant provide us with a numerical gauge for what that slack is. They simply dont really seem to know. Obviously i dont think this number changes the fed plan at all. Theyll keep tapering. I have a question for you, though, that is the increase in wages, does that change the fed discussion at all about inflation in the wings, waiting for it, change the timing of a rate hike . Labor costs yesterday . It was all State Government that had workers. The federal conspiracy doesnt work there. Sorry. The federal decline. Those state workers and local workers will keep coming back. Revenues to a lot of states are picking up nicely now. Theres a lot of political pressure to bring workers back. I think thats going to be a net positive for the next several months at least. If it stays at a surplus. I think janet yellen believes that wages have a ways to run. Yes. I think she feels theres catchup in there, whether or not the market will let her get that catch up is an interesting question. You start seeing a situation where unit labor costs are not falling anymore, wages are rising strongly. She would argue theres a lot of catch up with the productivity thats been out there that has not gone as compensation to workers. Labor costs are not supposed to fall outright all of the time. Incomes are supposed to rise. Its supposed to be recycled back into the economy and fuel more growth and more investment. Look, it may not be the time where corporate profits get to leap relative to the rest of the economy for the next couple of years but i dont think weve actually needed that. I know we have to wrap but one other data, just so were not forgetting this problem thats out there, people who are unemployed for more than 27 weeks or longer ticking up to 3. 8 million from 3. 6 million. Thats an important point. Remember, steve, unfortunately, this is after weve allowed extended Unemployment Benefits to expire, which is a tough call for those folks. Our thanks to oh, look, look who i am. Two nuts walked into central park. One was assaulted. Oh, okay. Any crimea jokes . Too early. Thanks to becky this is easy. Thanks to becky, andrew, jeff, steven, jared bernstein, rebecca patterson, Rick Santelli and ed asner . Oh, im sorry. Steve liesman. Next. There we go. Thank you. We appreciate you joining us this morning. Still to come, we head down to the New York Stock Exchange to find out how cramers feeling about the jobs data. Also a programming note, join becky for on the money this weekend. Can the alMighty Dollar do what military might and diplomacy cant in ukraine . He talked to richard haass. Why he says Vladimir Putin might want to check his wallet before he movies his troops and how this conflict could have a positive effect on americas economy. Thats sunday at 7 30 p. M. Eastern on cnbc. Squawk box coming right back after this. Tall the building is, or how ornate the halls are. It doesnt matter if there are granite statues, or big mahogany desks. When working with an investment firm, whats really important is whether the people behind the desks actually stand behind what they say. Introducing the schwab accountability guarantee. If youre not happy with one of our participating Investment Advisory services, well refund your program fee from the previous quarter. Its no guarantee against loss and other fees and expenses may still apply. Chuck vo standing by your word, thats what matters the most. Welcome back to squawk box this morning. Take a look at futures after that jobs number seemed like a good one and the markets are taking it that way. The dow looks like it would open up 93 points higher, the s p close to 11 points higher and the nasdaq close to 20 points higher. Big lots reporting quarterly profit of 1. 45 per share, beating estimates by 5 cents with revenue also beating forecasts. Big lots is in the midst of a restructuring that its seeing exit the canadian market. Take a look at gap, its samestore sales dropped by 7 last month. That surprises some analysts who had been predicting an increase of nearly 1 . Gap citing the weather as the factor. The gap noting that the winter storms forced all of its stores to close down for one day but it added that sales began to improve as the month ended. H r block reporting a wider than expected loss for its latest quarter and revenue shortfall. The Tax Preparation Service cited a later opening to tax preparation by the irs. 277 million in revenue will be recognized in the current quarter. Finally, foot locker reporting Fourth Quarter profit of 82 cents per share, 6 cents above estimates, samestore sales rose a better than expected 5. 3 . Becky, over to you. Thank you. When we return, jobs, the fed and the taper program. How will the Banking Sector react to todays numbers . And what could it mean for Interest Rates . Well find out if names like wells fargo and citi should be in your portfolio. Squawk box will be right back. That are powered by the moon. She can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. In todays market, a lot can happen in a second. With fidelitys guaranteed onesecond trade execution, we route your order to up to 75 Market Centers to look for the best possible price, maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of fidelity investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Geico motorcycle. See how much you could save. Lets get down to the New York Stock Exchange and jim cramer joins us now. I dont think carl is there, we had lucky on, carl would say he is a good boy, jim. Just so you know. Lucky is a very good boy. Okay. So ive got that out of the way. So, that was a good number, wasnt it . Yes. Rebecca patterson had the best, straightforward, this is good news, you know, she didnt waiver, she didnt caveat it. I really like it. You shouldnt waver or caveat. I just wonder, jim, i tied something to, if you notice in the last 18 months or so, sometimes i think the market is over its skis and saying nothing can happen that will happen and Something Weird happens, why didnt i assume nothing would happen. I was thinking we havent lowered it enough because of the weather. Others around you were saying that. I think this is why the market has been rallying, people are thinking the last two numbers were false tells. This is why the s ps been going higher. Does the market sell off because the s ps been going higher and this is what they really want. Anything is possible. Thats certainly possible. Now we know why we were going to record highs. Thingers are better and march will probably be even better than this number and thats why its been happening. In a little bit of growth, you know, were already seeing some of the deficit issues become sort of less pressing. I think we still got a lot of work to do with entitlements, jim, what does instead of 2. 75 what does it do for our options and everything we need to try to do . It makes a huge difference for everything we try to do. Of course. Thats why i dont like the lookthrough numbers and i dont like to asterisk and say this is because of the fed or the weather because when we get a good one. This was not weather aided or subtracted. It does make you feel like if you get construction jobs doing better, residential and, of course, if you get commercial because that would be the biggest job generator. You talked about the government coming back. Look, this is why weve been going up and we discovered it and we should say, okay, now i get it. It wasnt all done with smoke and mirrors. Is that the bitcoin guy, jim . Gee, i dont know. That denial was so strong. I defer to Andrew Ross Sorkin on everything. Andrew says he doesnt look like the bitcoin guy. Well, if andrew says that who am i to argue. We think the ukraine guy looks like the bitcoin guy. I really want to send my kids to the ukraine to fight for that. Thats a terrific thing to fight for. Does anyone ever think about that, do you want your kid to fight in ukraine . For what . Ukraine was on the wrong side of history a lot if you want to talk about the side of had estry. All right, andrew. Thanks, jim. Now im going to andrew. Anyway. See you, jim. Let him talk let andrew talk coming up next, should you be banking on financials . Well take a closer look at that sector and the names that should be in your portfolio. And make sure you stay tuned to squawk on the street because on the opening bell and Market Reaction theyll give you the reaction to jobs date and plus labor secretary tom perez on a first on cnbc interview. L. 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. Welcome back, everybody. The fed using the jobs report as a tool to adjust its bondbuying program and with that comes a focus on Interest Rates that leads back to one of the most important sectors in our economy, the financials, lets find out what names should be in your portfolio. Joining us is marty mosby and you saw better than expected jobs number. Does that make you think higher Interest Rates come sooner rather than later . Well, were looking at in the bank sector is a long recovery of profitability. The first half was about getting the loss column behind them and now we need to see the returns improve and the profitability. The Economic Growth and the rise in Interest Rates is one of the two things that really is the next catalyst. The better employment number definitely starts to accelerate that and thats good for banks and the earnings catalyst were waiting on right now. Lets talk about your favorite names, wells fargo and suntrust and citigroup and key corp, what do the banks have in common . What they have is rate sensitivity, and they can definitely benefit as rates go higher, but they have shortterm catalysts while were waiting on on that to happen, if it doesnt show up immediately that the Feds Fund Rate will be going higher which we dont think is the case. We want to have some efficiencies. We want to have undervalued things in the business mix that we think can show some improvement over the next year. You also on the other hand, we have some names that are more rate sensitive lidge regions or Northern Trust when the rate rise does come, those are the ones youll be looking at there. Why are those two more sensitive to Interest Rates . If you look at regions, for instance, theyve got about 80 of their assets in the tactical pool which reprices in less than a year. And nornl trust has trust fees theyve been waiving as well as the duration on the Balance Sheet is less than a year and a half and they reprice the securities portfolio in less than a year and a half as the shortterm rates go up, they get the benefit. Weve been talking to strategists today that say we could have seen a lot of the bull market maybe something closer to 80 for the gains for the major averages. When you look at these stocks, what kind of growth do you expect from here. You put this in context and the banks lost over 85 of their shareholder value in the financial crisis and the recession. Weve only made back a little bit more than half of that. So, as weve seen the overburden from regulatory pressures. Weve derisked the Balance Sheets and increased capital, this will be a much longer recovery in banks. Probably a full decade before we get back to the full value. We think with Interest Rate rise and increase in Economic Growth as well as eventually getting to, like, we see in every year, more deployment of excess capital, those things bode well for the banks and we think we could see 15 upside over the next three to five years. Very quick answer, ten seconds or so, are there any stocks in the financials that concern you . Do you think overall the group is in decent shape . Theres only two categories there. One, too much rate sensitivity so thats all they have in the short run is the rate rise. And then others are some of the higherquality banks have run in to some stalling out because they dont have much recovery left in them. Marty, thank you so much for joining us today. Really appreciate it. From memphis. Thats right. Memphis scored 84 points last night and lost by 13. Ouch. Sorry, marty. Well, that does it for us this week. We have a lot going on. Andrew, you have a safe trip back here well see you on monday. Ill see you in Las Vegas Next week. Oh, my gosh. Vegasbound. Time for squawk on the street. Goodbye. On a bender. 175,000. Better than expected on this jobs friday. Good morning, welcome to squawk on the street im Carl Quintanilla and david faber and jim cramer. Futures extending gains after the jobs number. The dow begins 1 away from an alltime intraday high. In the meantime, the jobs number better than expected despite some worries about the weather the Unemployment Rate edges up to 6. 7 and average Hourly Earnings up 2. 2 and that slightly outpaces the last inflation read, jim, most of those internals look