Transcripts For CNBC Squawk Box 20140310

Germanys chancellor Angela Merkel speaking out calling crimeas referendum on joining russia illegal. Lets get to jim maceda of nbc news in moscow. We are looking at all the different ramifications and details. And one of them, jim, is the lock that russia has on energy in ukraine and the west would have to there eticly make up for that if they dont go with russia. So now we are looking at the details, and once again, a lot of it is about money when it comes right down to it. Reporter its about money, its about energy, and right now its about president Putin Holding all of the cards, joe. Were only six days away from the referendum you referred to in your lead. Taking place in crimea. But with those international monitors now prevented for the third time from entering the peninsula over the weekend, theres no reason to doubt that the final result will be a vote in favor of seceding from ukraine and becoming part of russia. Those russian or prorussian, if you will, troops continue to consolidate militarily. They are controlling crimea. The figures are astounding, 20,000 to 30,000 forces, thats two to three divisions now occupying at least 11 Ukrainian Border guard boast posts according to ukrainian sources. Even the stretch between crimea and ukraine proper, some reporters now seeing proRussian Troops laying fresh land mines to make the point, obviously, that crimea is defactor, no longer ukraine. Thats not sabre rattling, thats real stuff. But here in moscow the kremlin continues to assist. It has no control over those prorussian malitiamen. Clearly supports them with putin still insisting that ethnic russians are under dire threat from what he calls neofascist extremists in crimea. Today they are russian. The local government there is even about to issue or is preparing to issue russian passports for all those who wish to stay. As you said in your lead, did dplo macy is hitting a wall. Angela merkel, shes emerged as the one western leader putin seems to be able to trust or turn to. He speaks good german, she speaks fluent russian, but merkel said even after that weekend call in addition to what you quoted, she said, quote, hes relentless, referring to putin, in his logic and his goal to take crimea back. Of course, the analysts here we talk to say thats the price. Crimea is the price the west must pay for russias loss of influence and putins loss of face in kiev. Joe, back to you. Well, its an old expression i use and it sounds really important. It was actually from a tv show, but no one gives you power, jim, you have to take it. And if putin knows that theres nothing anyone can do, and its really what he feels is a strategic interest to keep crimea, the borders have been, especially in that area of the rld with, think of the soviet union. Borders get redrawn all the time, and i dont know how you stop this. At this point, would it placate the west if he didnt go any further, if it was just crimea, do you think . Reporter i dont think it would placate the west. I think the west would be extremely concerned about the precedence set in modern times of a violation of sovereignty and territorial integrity. I dont think the west will be placated but the west will continue to do what it can and it can lead to an economic sanctions war, which theres no reason to believe that putin once again wouldnt win. You recall back in 2009, there was the gas wars between ukraine and russia at the time. It wasnt all for territory, it was over ukraine not paying its bills, but the effect was that much of Eastern Europe didnt have gas in the height of winter. It didnt stop putin from turning off the taps. So at this point it doesnt seem even though it looks like its going to happen, it doesnt really seem that the west has any true recourse. It will not respond militarily and it just doesnt have the economic means to squeeze putin to the point where it really hurts russia. Jim, we can talk about whats happening just in terms of on both sides diplomacy trying to work this out, but theres a situation on the ground, too, where it could be out of the west and russias control if malitias or if activists on either side in ukraine, really, escalate tensions, correct . Reporter thats correct. You have about 40 of the population of ukraine who are either ukrainian, ethnic ukrainian, they are muslims or prorussians, not a love of them who want to see they dont want to see a splitting of the country, they think it is in the countrys worst interest to see that happen. And you have the numerically strong ukraine, but very much the majority on the peninsula of this strong ethnic russian belief that unless this happens in crimea and crimea splits from ukraine, the socalled neofascists in government and kiev will squeeze them. They are going to treat those prorussians or ethnic russians as a second class community. So, yes, theres a great threat now that just locally youll have these two sides, 60 40, 55 45 in terms of percentages going at each other. That said, ukrainians ethnically speaking, ukrainians dont tend to fight those who are in control, who are ruling. Because the ukrainians have seen this before. It was russian for two centuries and then became ukrainian for 50 to 60 years and now likely to be russian again. Crimea and the russians tend to get along. They are not considered like the polls and other parts of Eastern Europe, it is not likely well see a guerilla war as suggested by some leaders, but there will certainly be local tensions. Back to you. Thank you, jim. Lets get more details on what we know about the search for the missing Malaysia Airlines flight 370. Sri is in kuala lumpur and there seems to be so much that we dont know at this point. What do we know . Reporter thats right, becky, there are clearly more questions than answers at this stage. The latest press conference just wrapped up about an hour ago. And what we do know is that we are still really waiting for the results of lab tests on oil that was found floating on the waters off the coast of malaysia and vietnam. Two oil slicks were spotted a few days ago, about 15 kilometers long. Now what the authorities are trying to do is to establish whether theres a linkage to the Malaysian Airline jet that went missing early saturday morning. We have yet to get any conclusive evidence off debris, some material that forensic investigators can bring back to analyze and reconstruct the last moments of this flight. The other point to bear in mind is that this is very much a human story, and we have learned chinese diplomats are now here in kuala lumpur, the capital of malaysia, to assist with the chinese families of the passengers on the jet who are traveling here to help them as well and also to help on the security dimension here of the stolen passports. We also learned that boeing, Technical Assistance teams from the aircraft manufacturer, have arrived here. They are talking to the authorities. And the ntsb and the faa are talking to the authorities as well here trying to help in the investigation. Becky, joe, back to you now. Sri, thank you very much. Well have more updates on this developing story. Again, sri, joining us from kuala lumpur. I didnt understand the china story, but they are looking for up exports and said the lunar moon made forecasting difficult for whatever reason. Well look at markets and worries about chinas Economic Growth that hit the asian markets overnight. Chinese exports as i just said fell unexpectedly in february adding to fears of a slowdown. The markets in the region and the nikkei as you can see there falling sharply. There are concerns about china and the situation in ukraine pushing the markets lower across some parts of europe, but they are rebounding in the ftse and the cac now up, although germanys dax is down. U. S. Futures at this hour indicated down 12. I dont see this piece anywhere but the Financial Times, but seth carmen in a letter to clients kind of not very positive here. Concerns about the just tesla and netflix. Any year in which the s p 500 jumps 32 and the nasdaq goes up 40 with corporate earnings barely increasing should be a cause for concern. Seth carmen is somebody people Pay Attention to. Someone Warren Buffett cited to look to him. Using the bword there, not buffett, bubble. The bword. I dont know, well see whether that plays out, but people, a lot of times, you can be right but you can be early. Sure. So well see. Tesla irrational exuberance is an example of that. Where is netflix . Netflix is like in the fours, isnt it . 4. 48. Top billion net cap for netflix. In the meantime, well take a look at crude oil. The dollar in gold right now. Youll see crude oil prices that are down slightly. They are down 1. 25. Thats a drop over 1. 2 . 101. 34 is the latest for wti. The dollar this morning, the yen has been up broadly against some of the china news. The aussie dollar is under pressure. The dollar is up against the euro and the yen at this point. 1. 3874 is where the euro stands. Im staying at home this year. Not going to europe . No. Look at that. Not with these prices. Thats 1. 40. I dont understand that. I dont either. All we hear is how the banks here in such better shape here than over there. Stock prices have been turning around, though. Does it seem to be a calm place over there right now, europe . Not necessarily. Ukraine is next. Its in the neighborhood. Maybe some tensions there. People have looked at these things and brushed them off very quickly. As if germany can be objective. You can cut them off, too, cant he . Yeah. We talk about how the u. S. Could be a supplier, but youre looking at 2015 or 2016 before you could ever get anything set up and running because it is not easy to export natural gas. So if we want to if we want him not to take crimea, we have to say, please dont take it. Thats what we got. Thats it. When would putin respond to please dont do it . Gates says it is gone. Not bill, but secretary gates, over the weekend, said its already gone. I dont know what you would do in that situation. If youre not willing to go to war over it, i dont know how you can dial things back. No one gives you power. You got to take it. You know who said that . Jock ewing. The patriarch said that to bobby because it sounds much more, it sounds like churchhill or something. It does. In fact, i was trying to place who it was and it was not going to be the late jim davis. Lets take a look at gold prices, they are barely down by 3 this morning. 1,335. The New York Times reporting that safety regulators received 260 complaints over the last 11 years about General Motors vehicles that suddenly turned off while being driven. How would you like to be the new ceo . Geez, step into this. They declined to investigate the problem. Which gm now says is linked to 13 deaths and requires the recall of more than 1. 6 million cars worldwide. The paper says that federal regulators received an average of two complaints per month about potentially dangerous shutdowns over the past decade, but they repeatedly responded that there was not enough evidence of a problem to warrant a safety investigation. And my whole life, you remember when they designed the steering wheels that if you turn it off they would lock. If you did that when youre moving, that shouldnt happen. And this is happening by itself. Not only did it lock the brakes and the wheels, a lot of times it would deploy the air bags. And even the company regulators, two questions on this, the company knowing things a decade ago and never having the proper controls to get it to the top people and doing something about it, and second of all, the regulators, it was over 240 complaints, i think, that came in that if they had been looking at them more closely would have seen a pattern that had developed. Even barney frank got involved at one point as a congressman and sent a form letter back saying theres not enough frustrating. 13 people. Well talk to phil lebeau about this story later in the show. And he covers the airlines, too. So we have the dreamliner that had the landing because of an engine problem and this other Malaysian Airlines. Target has until today to submit documents to the House Oversight and Government Affairs committee about the Security Breach during the 2013 Holiday Shopping season. According to a letter sent to target from darrell issa, thats evidence supporting the possibility that target knew about the breach before the doj warned the company on december 12th. Hmm. Did you i havent watched, issa dancing. I have seen pictures. Im afraid to watch it because when you watch Something Like that, you cant unwatch it. Ive seen still frames of him dancing. What is this, a Microsoft Xbox dance game that hes practicing . Ive got it here now and im afraid, quite frankly, because i love shark tank, but mark cuban dancing, where they were all dancing at the same time, i have i think i have dreamt about that last night and woke up in a cold sweat biting down on my tongue. It was uhhuh. Let me see if ive got it here. You be the guinea pig and check it out. Dont make me do this. You do this homework before we come back from the next break. Are you playing it right now . No, ive got Something Else. It was it was a different it wasnt congressman issa, i got Something Else. Youre going to find this. In the meantime, well take a break. When we come back, landing on the front page of the New York Times today, part of this mornings executive edge. Well have more squawk in a moment. Weekdays are for rising to the challenge. Theyre the days to take care of business. When possibilities become reality. With centurylink as your trusted partner, our visionary Cloud Infrastructure and Global Broadband network free you to focus on what matters. With Custom Communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. Every day of the week. Centurylink® your link to whats next. Why are house repuretreating, ng, and privately saying theyd rather do nothing on Immigration Reform this year . Doing nothing puts jobs on ice. Forces us to lose out on revenue for roads and schools. And sends a message to millions of dreamers, who study hard and want to serve our country, they might as well dream on. No, nothing wont do. Call House Republicans today. Tell them weve waited long enough pass Immigration Reform. Welcome back. We are watching for the potential of another winter storm after a spring break. Youre going to be talking snow showers through parts of the midwest and the northeast heading into wednesday. Heres tomorrows forecast. You can see back into parts of the west and the plain states, we have the snow. Wintry mix through parts of nebraska and iowa. So minneapolis, snow. Omaha, keeping it rain showers, but that system will be causing some trouble into parts of the northeast. Not just wednesday, but also into our thursday. Thats the day that cities like boston will be getting in on the snow. Also, the wind. So we are not done with winter just yet. As far as accumulations go, heres the early look. Through thursday, looking at 5 to 8 inches through central illinois, indiana, ohio and western p. A. As well. Into the northeast, big winters will be interiors northeast from syracuse to the north of bangor. A foot to a foot and a half of snow possible. Bosto boston,3 to 5 inches. New york starts with rain to transition to snow showers. We could pick up 1 to 3 inches. In the meantime, we have a break tomorrow. Look at the highs, 60 in pittsburgh, 72 in washington. 60 in new york. By wednesday, we cool to around 50 in new york. 44 in boston. Still not bad, but thursday with the snow showers and the wind, well cut those highs just about in half for new york city. We go from 50 to 25. 50 off, not the kind we like to see. 25 the high in boston. 10 in binghamton. 15 in buffalo. We get a Little Spring teaser, but then the next winter storm and the cold comes back in a big way for wednesday and thursday. Becky . All right. Alex, thank you very much. Sure. Its not going to stick. Its not going to stick. You havent seen enough of this winter to think maybe . This right here. Please, i hope youre right. This is springtime. Spring is springing. I hope youre right. Did you see the snow melting over the weekend . I was like, thank you. Its still there, though. Even though it was 55 degrees, theres still a lot of yeah. You know, if you live in buffalo or syracuse, you thats your choice. Thats going to you should know what youre in for. Its going to happen for you, but not down here. Its time. Did you see the big snow pile out back . Theres a bed upstairs thats eventually going to completely melt. I wonder in my own yard when its going to melt. This stuff out here is still pretty high. Dont you people get jet lagged and feel the Daylight Saving time right now . Except for it brings me something to still have light at night. You didnt eat dinner because you didnt realize how late it was. In the fall, winter is coming, but you get the extra hour. Spring forward, fall back. Right now time for the executive edge. Another move in the data wars. At t cutting wireless data charges for individual customers who have no annual Service Contract. The move is compete with tmobile in the u. S. Customers having one smartphone with no annual Service Contract will pay 65 a month instead of 80 a month for the plan to include 2 gigabytes of unlimited data, Unlimited International texting. The latest plan follows price cuts that at t announced for families and customers who share data plans as well as the offer of 200 credit to customer who is switch to its network. Are we supposed to have an opinion on this . Yeah for the consumer lets put this in there. I got to do something. One thing i noticed is a lot of commercials on the family thing. This is an area right for competition. Anybody looking at this saying it is a monopoly, youre wrong. At t was supposed to buy t. Mobile or parts of it. Tmobile raised some prices. I dont have an opinion on this. Lets get to another story, the herbalife war making its way to the front page of the New York Times today. Bill ackman said herbalife is a fraud. He told his dinner companions that a democrat from california sent a let tore the federal trade commission the previous day calling for an investigation of the company. The commission has not yet stamped the letter as received nor had it been made public. But mr. Ackman who personally lobbied miss sanchez and stood to profit if the companys stock dropped as a result of the up query knew what it said and read a copy on his cell phone. When miss sanchezs Office Released a statement, it was backdated to the day before ackmans dinner talk. The amount is dwarfed by the 2 million herbalife spent as the nutrition and Weight Loss Company fought the billionaires investors claim that is it runs a pyramid scheme, but the question is, is this a case of him doing good for the people he thinks are wronged or is this a case of him lobbying to make sure that his bet pays off. Its funny because theyve got letters from one, two, three, four, five, six different people, no, five different people, and they all have the same language. Its amazing. Almost as if it was they all say a complex and abusive pyramid scheme. A complex and abusive pyramid scheme. A complex and abusive pyramid scheme. Ackman comes in and is persuasive, but when hes on a mission, hes on a mission. And senator markey has different individual who is have done this. I dont think he would do it if he didnt believe it was a pyramid scheme, so trying to alert regulators to something he thinks is illegal although some people said this trade has gone against him for so long. The only way hes not going to lose his shirt on it is if theres some sort of an investigation that comes into the company at which point that would knock the stock price down. Now did you see ari pits made a comment. If youre trying to spread the truth, thats okay, harvey pits said. If youre trying to move the stock price to indicate your philosophy, thats not okay. Harvey pit says this looks like an effort to move the spread of a price to two. Its very well reported. Theres also, they talked to brent wilkes, the National Director of the united latin american citizens, who says its not the latino groups helping bill ackman. Hes helping the latino groups. So it depends on which side youre sitting on. The idea at the very beginning where the idea that ackman would have information before others would, which is the suggestion with this letter from representative sanchez. Thats concerning. The idea he would know somebody who is so big to the stock, he would know this before others did. Thats concerning. Yeah. All right. When we come back, it has been five years since the markets hit the lows with the financial crisis. Well keep your goals going for the next five years. Heading to a break, take a look at last weeks winners and losers. About Business Internet . Ok, how about thirty seconds . At comcast business our internet is fast. Up to 5x faster than slow dsl from the phone company. And our phones better too. Sign up for internet and voice and find out how to get four weeks of internet for free. Time to make the call. 8005016000 comcast business. Built for business. Does it end after youve expanded your business . . After your companys gone public . And the capitals been invested . Or when your companys bought another . Is it over after youve given back . You never stop achieving. Thats why, at barclays, our ambition is to always realize yours. [poof ] [beep] [clicks mouse] nice office. How you doing . Good. Automatic discounts the moment you sign up. Sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Good morning. Welcome back to squawk box on cnbc. Im joe kernan along with becky quick. Andrew is off today. A rival rally is taking place in crimea ahead of the referendum on whether the region should become a part of russia. German chancellor Angela Merkel rebuked Vladimir Putin over the weekend telling him the referendum is illegal. ProRussian Forces have tightened their grip on the region taking control of the military airport in the area. And gasoline prices have jumped over the past two weeks. The latest lumberg survey shows the average price of a gallon of gas is up 10 cents to 3. 51, the highest average price. Thats in los angeles where it is 3. 94 a gallon. And you get, like, about 3 miles to the gallon in california because youre usually not moving. And then boeing discovered what it calls hairline cracks in the wings of some of its 787 dreamliner aircraft. Boeing says the cracks are only jets that are still in production and not in the ones that are already in use. A Spokesman Says the company is taking steps to correct that issue. Lets get a check on the markets this morning. Take a look at the futures. At this point, youll see that the futures are slightly lower. Dow futures down but only 11. 5 points. S p futures down by half a point. Nasdaq futures indicated up by 2. 5 above fair value. And in europe this morning, you will see at least at this point, well, mixed results. The cac in france is up by. 80 . The ftse is up by. 40 . The dax is down 15 points. And overnight in asia, youll see there were some significant losses, particularly the shanghai composite down by 2. 8 . Hang seng index down by. 75 . Part of this because of chinese export numbers that came in to show a loss in february versus the gain that had been expected. Oil prices this morning have also been giving up ground down by 1. 2 . 101. 34 is the last trade for wti. The tenyear note at this point is yielding 2. 795 . So youre looking at a yield back up around 2. 8 . The dollar has been stronger across the board this morning. Its up against the euro, still the euro at 1. 3875 against the r, ble and the dollar yen is at 1. 3333. Gold prices down to 1,335 dollars an ounce. Will stocks extend the rally after a record close for the s p 500 on friday . Well check in with barbara r reinhardt. Thank you for coming in today. We know the markets keep closing at the fiveyear highs, we are five years from the low, and this morning theres an article in the Financial Times to point out what seth carmen is saying, hes a wellrespected investor and people listen closely to him as he warns about the asset price bubbles. He wrote a lot of Different Things but said when the markets reverse, everything investors thought they knew will be turned upside down and insideout. It will be replaced with, what was i thinking . Anyone illprepared will know theres a long way to fall. Few, if any, will escape unscathed. Anthony, does this cause you concern . Any time people say Something Like that is a concern, but when you look at the fundamentals, you say, can markets continue to grow . At this point markets dont grow because of very low levels, now you have to depend on the organic growth of profits and dividends. And if corporate profits grow at 2 , minimum of 8 is reasonable. Inflation between 1. 5 to 2 is the sweet spot for multiple price expansions. My number would be somewhere in the neighborhood of 8 to 10 in 2014. Barbara, do you think stocks are expensive here . The bull market tends to die of three things, extended valuation and extender enthusiasm. We dont have any of those at this point. Valuations are a fair value, but they are far more attractive than what you see in the bond market. You can run higher but 2014 is far more volatile than 2013 was. Let me tell you what carmen says about this, on almost any metric, the u. S. Equity market is historically quite expensive. What do you see, anthony . I agree with barbara, they are fairly valued. One thing you know from history is when stocks are fairly valued, thats when you get the volatility barbara is talking about. Thats what i expect for 2014. A lot more volatility than we have seen in recent years. Volatility makes some people nervous. I look at the end point. At the end of this year and the end of the following year afterwards as more important than the volatility. The weekend wall street journal had, i dont know, there for five or six bull markets that had showed, played out, and this one here wasnt even halfway. It was steeper, so its moved more quickly than some of the others, but in terms of duration, it was like halfway through. He could be early on any of these things, but he says any year where the s p 500 jumps 32 , the nasdaq 40 , while corporate earnings barely increase should be a cause for concern. It came from really low levels. Yes. Youre seeing labor markets improving. Youre seeing the number of people working parttime for economic reasons that people complained about the last two months, that number has gone down sharply. Grant has been singing this its been like three of four years, hasnt it . My guess is people watching the markets do start to worry at this level. Maybe theres a longtime run before that, but after you see a big runup like this, you cant help but start asking questions. If you hear too much i dont think we have heard too much. Think about this youre hearing it from him and were talking about it today, so thats part of the bricks of the wall worry, too. Joe, you bring up an interesting point, we celebrated the fifth anniversary of the bear market low from 2009. The front cover of the wall street journal had it as a small chart. It was not a lead story on the cover. Investor enthusiasm is definitely not what we would say a bouillon at this point. Only 132 million has been committed to the u. S. Equity market or the Global Equity market. 1. 2 trillion has been put into bonds. Even though you had a big recovery, last year in 2013 was the first year you saw fun flows, positive going into equities. Thats very surprising. We both expect volatility, which i guess means you both expect dips and you would tell people to buy on the dips when they come . I would tell those people not in the market to average them in. When you expect markets to go high, average them in over several months. Dont go allin at any point in time. The last time we waited for a dip it was not past 5 , 6. 5 , you would tell people to buy on a dip of 3, 4, 5 , is that right . Youll pick up dips 3 , some 4 , but if you go back to 1980, dips average more than 10 at any given point in time. Thats average. When you have volatility, you can see that exacerbate even more. You would tell people to wait. I would tell them to average in. Nobody is smart enough to know exactly where that dip is going to end. Becky, we have to tell our clients to look for material value before the market. We are broadly neutral versus the benchmark, so we are still invested in the equity market. But to raise the allocations further, you need so see better material value in terms of regrowth accelerating or a pullback which is clearer in terms of more valuation to the upside. Anthony, do you get to the point where you tell people, not the broad indexes but maybe looking specifically for sectors . We like sectors more than others. We like the Financial Sector to the extent that we believe the Federal Reserve is going to continue its tapering. We have heard nothing to suggest otherwise. We know that longterm meals will gradually move higher after people dont worry about safety haven effects. And the short end will stay very low for quite some time. And that means that a steeper yield curve is very good for the Financial Sector. We also know the Health Care Sector is probably going to do a little bit better. And right now we are liking some of the cyclical sectors to the Global Economic recovery to intensify in 2014. 2013 this fund had 50 cash up from 36 in 2012. And returned seth carmens . Yeah. And returned a monkey could have done 30 . What is his track record . He is also saying that i would give him my money any day if we could invest with people. If he would take it, i would give him my money any day. Same with the guy last week. Diamond has 14 , so he was early. He missed 15 from a throwing dart. Well see what he does this year. If you think he can do a better record by investing . At this point i dont need to take what he says at face value. Its half as long as most bull markets. So we shouldnt bring it up . No, im staying long, thats all im saying. Joe, diversification really works in these environments. It took 48 months for the s p 500 to recover from the 2009 low. If you had just a plain vanilla Asset Allocation 60 equities, 40 fixed income, you cut your Recovery Time from the bear market low in half. And thats what a lot of investors forget. They forget that diversification can be their friend when the s p is moving to record highs. The fed has built a truman showstyle faux economy. So a lot of this has to do with the fed. I always talk about thats the wedge that goes in. A wedge for me i like with blue cheese. He hates bitcoin, too. Who was the other one who said mark cuban said bitcoin is like trading a stock, but then he did the dance where he goes like this. Anthony, barbara, thank you both for coming in. Thank you. All right. Yeah. We continue our bull run discussion at the top of the 7 00. Well have jim paulsen on. Jim paulsen has gotten more cautious. But the bull market is intact, i think he would say. And David Blitzer will tell us how strong the market could be for the next five years. As if he has any idea, but well listen to what he says anyway. If you have moderate to severe rheumatoid arthritis, like me, and youre talking to your rheumatologist about a biologic. This is humira. 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You should not start humira if you have any kind of infection. Take the next step. Talk to your doctor. This is humira at work. The search continues for mal malaysias flight that went missing a few hours into its flight from kuala lumpur to beijing. Eunice is standing live in beijing where a lot of questions are still being asked. Reporter there are a lot of questions weighing on the minds of the family members here. The family and the friends of the passengers are staying here. Some of them are preparing to leave tonight to malaysia where are that were told by Malaysia Airline Staff Members where they would be taken to the site of the aircraft when it is found. The vast majority are reluctant to go highly critical of the way the airline has handled the communication of this on the ground. They are concerned about their treatment once they get to kuala lumpur. They dont know the language in malaysia and dont know the lay of the land. This is where the criticism and anger of the relatives turned from Malaysian Airlines to the type of government. They said that the Chinese Government hasnt been forthcoming enough or able to handle this situation. And really, not giving them the support they need in terms of this trip. Back to you, becky. All right. Eunice, thank you. Look at the end of this letter here, which i like. Seth carmens letter. Where you say it here and it comes out there because he says, he quotes jim grant, from jim grant sitting right here like two weeks ago or three weeks ago. In his letter he says, as jim grant recently noted on cnbc, the problem is, and i remember when jim grant said it, it was not even two weeks, he said the fed can change how things look, but it cannot change what things are. Right. And he said it right here and then carmen used that in his he heard that from jim grant, but thats interesting. The idea that investors like seth carmen would pick up on that. And something on cnbc, too. Yeah. Why doesnt he come on . Have we called this guy . He tends to not he tends to shun publicity. He does . Yeah. This letter itself, you said it was out from a week ago just because he sent it to investors and somebody got their hands on it. If he had a chance to come on squawk box, he would probably jump at the ill put in a call today. I wouldnt be optimistic, but ill put in a call today. You have his contact . No, but ill find it. Star, star, producers produce. If we want him, well ask for him. I just did. Hes watching. Seth, remember that . Call me. Yeah. Anyway, that was in a political campaign. Didnt work out so well. Coming up, the s p 500 is up more than 175 since we hit the bottom in march of 2009. I can remember like ten people saying at 666 it was going lower. Should investors be worried we are at the market top . And the two sisters behind the ringling brothers talk to us about the big top, it really is the greatest show on earth. Thats next on squawk box. Ameriprise asked people a simple question in retirement, will you outlive your money . Uhhh. No, that cant happen. Thats the thing, you dont know how long it has to last. Everyone has retirement questions. So ameriprise created the exclusive. Confident retirement approach. Now you and your ameripise advisor can get the real answers you need. Well, knowing gives you confidence. Start building your confident retirement today. Peace of mind is important when so we provide it services you bucan rely on. With centurylink as your trusted it partner, youll experience reliable uptime for the network and services you depend on. Multilayered Security Solutions keep your information safe, and secure. And responsive dedicated support meets your needs, and eases your mind. Centurylink. Your link to whats next. 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. Why are house repuretreating, ng, and privately saying theyd rather do nothing on Immigration Reform this year . Doing nothing puts jobs on ice. Forces us to lose out on revenue for roads and schools. And sends a message to millions of dreamers, who study hard and want to serve our country, they might as well dream on. No, nothing wont do. Call House Republicans today. Tell them weve waited long enough pass Immigration Reform. The ringling brothers and barnum and bailey circus has been going strong for 140 years. Its not only a family show but a family business. The Third Generation to run the business is here. Who was it, your grandfather . Our grandfather, our dads dad. Were Third Generation. Our grandfather bought the circus from a ringling relative in 1967. He was working for them and supervising, then he bought it out. He was a rock n roll promoter. He was promoting the rock bands in the 50s and 60s. He also started poe moting ringling brothers. It got to a point where he thought he needed more control over the actual quality of the show. So he decided to bite it. Are one of you barnum and bailey . Were the sisters behind the ringling brothers. Exactly. What a brand. You think circus, you think ringling brothers. I hope so. Anytime youre going with your kids, its like days before youre already getting excited. With me, there are things i wish they wouldnt do, when i see them walking on the ceiling at the continental arena or that thing that goes around. Hes 80 feet up in the air. I get very, very uncomfortable with it. But thats what its about. I think that you need that blend of terrifying and exciting, you know what i mean . It has to be something you cant see anywhere else. I like seeing the poodles do flips. I can deal with that. They dont weigh that much. Ive seen them fall and everything is okay. But its not just now you told me marvel universe, what is that . Superheroes . We have a partnership with marvel. We have the largest arena spectacular to hit arenas coming this year with all the marvel characters. Its absolutely prototypical technology, start of the a stateoftheart stunts. Like who . The avengers. Thats expensive. Im amazed at how you can up the show every year. Its the largest financial undertaking our company has ever had. What are we talking in terms of money . It is multimillion dollar production. Wow. With prototypical technology. These are special effects that are happening before your very eyes. Its no cgi. Its not something that can be done in an editing room. Its really exciting. Its like movie style stunts but in person. Like theyre actually doing it. What does that mean for ticket prices, can you do it for the same price. Ticket prices varies mark tote market. This is the first show of its kind. So the ticket prices will reflect that. Theres a lot of demand. Business, is it up yearoveryear . During the financial crisis did people cut back on this a little bit . Absolutely. I think obviously when times are tough and money is tight, people have to make decisions, especially with their entertainment dollar. One thing we provide, which is great, its a escape for families and we are very affordable. Even though we might have a high ticket price, we also have a low ticket price. Were local. We come to you. You have red knock stuff, too. Moto cross, you bought that, too. I wouldnt call it that. You have monster jam. Supercross coming to met life stadium in new jersey for the First Time Ever which we are really, really excited about. Its going to be a huge event at the end of april. We are expecting crowds upwards of 40,000, 50,000 people. You know that you know your red neck, someone in your family died after saying hey, watch this . To me its not im from cincinnati. Its a positive. Its not pejorative. Youre wondering. Its not a red neck sport. Its the greatest show on earth. Can i end with that . Absolutely. Thank you. Is it bad . Arent you a red neck . Yes. Ive had my time. Ive spent my time where people could probably call us that. If you are one youre allowed to say it. Thank you both for coming. Thank you. Much more xb ask aheon squ coming up. How could a luminouser ] 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. With investment information, risks, fees and expenses geico motorcycle. See how much you could save. The war of words over ukraine. Russia defends crimeas right to secede. Thats creating a big issue for the west. We check out the possible potential for a wider military con flekt. Well have a live report from kuala lumpur. Can the pace of the market continue . Squawk box begins right now. Good morning, everybody. Welcome to squawk box on cnbc. Im becky quick along with joe kernen. Andrew is out today. The futures are lower this morning. You see the dow futures down by 14 points. It comes after an unexpected tumble in china exports last month. Also as investors are keeping an eye on the situation in ukraine, well have more on that in just a moment. The tenyear yield has been pushing back up towards 2. 8 , setting at 2. 792 . In our headlines this morning, the situation in ukraine is among the factors being cited for a 10 cent gain in gasoline prices over the next two weeks. The average price of gasoline is 3. 51 a gallon. Thats according to the latest lundberg survey. The author of the survey points out ukraine is a major corn exporter and nearly all of the ethanol in the United States is made from corn. William clay ford has died at the age of 88. He is the last surviving grandson of henry ford. He was the owner of the nfls detroit lions. Two deals in the news, Chiquita Brands is buying irish rifle fyffes. United rentals, the Worlds Largest Equipment Rental company is buying National Pump for 780 million. Its north americas second largest specialty pump rental company. So far, theres no signs of a missing Malaysian Airlines flight. The flight went missing a few hours into its trip from kuala lumpur to beijing. What can you tell us . The authorities and officials here in malaysia are simply not any closer to determining exactly why mh370 disappeared about three days ago now. What we do know is that the search is continuing. This is a very expansive search over an expansive body of water, the South China Sea and the gulf of thailand. It involves more than 70 aircraft and naval vessels from about nine different countries, including a u. S. Destroyer dispatched from the seventh fleet. And the problem here is that there have been a number of false alarms, which are clearly agonizing for the families of the passengers on mh370. The other factor here is that there have been some oil slicks. So far, that is the only real lead we have. Those traces of fuel are being analyzed and we should get some idea of whether they are linked to 370 or not. Possibly later on today. There is another press conference scheduled here in just under an hours time. If we do hear anything on that score, we will be bringing it to you. But the search does continue and they are not giving up on finding any traces of debris, they can take back, reconstruct and try to determine the last moments of flight 370. Becky, joe, back to you. Sri, i remember in long island they put the whole plane back together but flight 800. Normally when theyre looking for something if theyre using sonar and its way down deep in the ocean, they need something big. If it disintegrated at 35,000 feet, i dont even know is it possible that they never really locate enough pieces, sri . I dont know. Its unprecedented. This is the difficulty. This is the difficulty, joe. And that theory that you mentioned is one of many. The parallel that many aviation experts are drawing is air france 447 when it went down over the atlantic back in 2009. It took as much as a week to discover the smaller pieces of debris. It took almost two years, as i understand it, to find the main debris field, including the fuselage, the body of the plane, that was lying at the bottom of the ocean. And some experts have been telling us throughout the day here that it could very well be a similar situation with mh370. One thing is for sure, this will be a long, very painful and very painstaking process. Back to you. Sri, thank you very much. He was joining us from kuala lumpur. Russian president Vladimir Putin insists crimea has the right so secede as diplomatic efforts to diffuse the crisis in ukraine slowly move forward. Michelle carusocabrera joins us with more on this tense situation. Youre so optimistic. You look at this situation. Lets give you the diplomatic headlines. Angela merkel, the leader of germany weighing in, saying the referendum thats planned to are this coming sunday is illegal and against ukraines constitution. Ukrainian Prime Minister will travel to the United States and meet with president obama on wednesday. Theyre going to discuss political and Diplomatic Solutions to the crisis. Again, no mention of military, of course. International observers blocked from crimea over the weekend and also chinas president , xi jinping, getting involved as well, speaking with Angela Merkel and obama over the week, calling for political and Diplomatic Solutions. The russian ruble declined four weeks in a row more than 1 . As it becomes clear that putin is pretty determined here with crimea, lets see what happens with the ruble. Were showing you the dollar versus the ruble. As you see the chart go up, that suggests that the dollar is strengthening while the ruble is weakening. Lets show you one month of the russian stock market as well. Market cap back down to 1999 levels, folks. Its not just crimea but Vladimir Putins policies over the last decade or so. You can see this is what its doing today, pretty tough month for it as well. Look, diplomatically, no one can back down, right . Nobody can say theyre going to give up the territorial integrity of ukraine. But Market Participants can be more realistic. Whats being said among Market Participants, okay, it appears crimea is lost, this referendum is a foregone conclusion. What has after the referendum . Will there be violence and will Vladimir Putin be satisfied with just crimea . Thats what we want to know next. Were more than a week away from knowing the answer to that. At this point, Market Participant of participants say, forget it, crimea is gone. Absolutely. Short of military force, i dont exactly. I dont see a diplomatic solution. Were not doing that. Hes just going to say no. Exactly. We have not much to push him back down. Hes going to trot out this referendum result. Well never know if the results are truly reflective of what the population wants or not. Hes going to use democracy as a defense. And diplomacy as a way of saying, forget it. The u. S. Markets seem pretty good at this point. Thank you. Its been five years now since the markets hit bottom since the 2008 financial crisis. Lets get a sense of how far weve come and how close we may be. Chart master David Blitzer, chairman of the s p 500 index committee. Gentlemen, welcome. Jim, your ears might have been burning. We talked about you earlier when we were talking about seth carmen and saying by any measure that valuations are too high right now in the markets and that you can see the speculative froth and things like netflix and things like tesla. And you know, i pointed out last year, you know, he was probably more bearish than he should have been. He had a real high level of cash. But is there something to this, paulsen . I dont know. I put valuations just slightly above average, joe. You know, if you look at what we did with valuation ranges, we had 100year ranges that were very, very good. And continuous. Up until about the late 1980s. And in the last 25 years, weve been mostly above those historic 100year ranges now. And initially youd say, okay, its a highly valued market but after a quarter century of trading up here, you kind of wonder if theres been sort of an upward tilt in valuations going on. And i dont know the answer to that. But if were trading somewhere in the vicinity of 17 1 2, 18 times earnings, i think bull markets could end in the low 20s in terms of multiples. Weve seen in the last quarter century getting as high as the upper 20s. Im not i dont really think valuations are excessive. I think theyre not cheap any longer but i think we are going to spend some time, maybe this year as i said, having a flat market with rising earnings and maybe starting into 2015 with a little better valuation profile. David, the same question to you. Do you think were expensive or just above average for valuation . I would say a bit more expensive than the last comment. But not alarming yet. And i think that bull markets end with bangs, not with whimpers. I dont think its going to creep up to 19 or 20 times and just fade away. Something will happen and it will blow it up at that point. As long as theres no military action in the ukraine, i think were safe from the ukraine for the time being. But Something Else could come along. I guess theres a lot of nervousness about chinas growth and not growth as much as wed like or something of that sort. I would agree, we can certainly hang around 17, 18, 19 times. People get a little bit nervous but they probably wont take any money off the table because they seem to believe it always comes back no matter what. Jim, one of the points that seth carmen makes is the fed has created a truman, a jim carrey type truman faux economy and that the underpinnings arent really there fundamentally. Youve never really you wanted the fed to stop. Yes. Was that implying you were worried that it was getting to the point where we needed, you know, it was masking what was really going on . Why did you want them to stop so bad . Do you think theyve painted a prettier picture than is actually underneath . I dont. I think the quantitative easing thats been done has been largely insignificant as far as how its helped the fundamentals of the economy. We have 3. 5 trillion of excess Bank Reserves, no ones needed more reserves for a long time. Thats why its just built up in excess Bank Reserves held at the fed. We got liquidity coming out of players ears, we have so much of it. I dont think its done much. Jim, you just said it hasnt helped the economy. Thats not what i asked. Has it helped the stock market . No one is saying it helped the economy. What about the stock market . I dont think it did, joe. My feeling is, is that what it did do was very little help fundamentally in the economy. What it did do, every round of qe the fed did, the fed screamed at the top of their lungs, were very scared and you should be too. I think its interesting. Everyone felt that as soon as the fed started tapering, the market would fall. Its gone up even more. What theyre doing is showing confidence in the future of this economy themselves. I this i thats boosting private sector confidence and actually maybe more stimulative Monetary Policy has been going on right now. Do you think the fed has helped or hurt overall . First of all, the qe definitely pumped up the market. It was designed to pump up asset values, both home prices s is e market. Either we believe weather killed off the first q quarter or we believe weather is irrelevant and the economy is soft. The fed is voting that weather is 80 of the problem, the economy very good. Yes, its giving people some confidence. And i think for the moment, thats very positive. But i also think the fed is going to continue to taper. Theyre going to figure out a way to stop giving guidance because that gives them in trouble. We can forget about the 6. 5 Unemployment Rate. The number is not too meaningful for the fed at this point. They will continue to taper late this year, early next year, Interest Rates will go up. Maybe that could be the bang that would really shock this market a bit. Gentlemen, thanks, jim paulsen, David Blitzer. Thank you. The search for the missing Malaysia Airline continues. Who could pick up this investigation and how long before we learn anything . Well talk more about that, right after this. [ male announcer ] this is joe woods first day of work. And his new boss told him two things cook what you love, and save your money. Joe doesnt know it yet, but hell work his way up 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. The search continues for Malaysian Airlines. Joining us now is captain john cox, ceo of safety operating systems. He has 40 years of experience in the aviation industry, works as a captain for u. S. Airways for 25 of them. Sir, thank you very much for joining us today. Good morning. My pleasure to be here. I know theres an awful lot we dont know about this situation but from where you sit, with the few facts you do have, do you have any idea as to what might have happened . I think its way too early. We dont have a the lo of hard evidence. Until we start seeing things such as the debris field and locate the wreckage, its speculative to find out what happened at this early date. Theres been speculation that the plane disintegrated at 35,000 feet. Is that possible . It is possible but if that had occurred, i would expect a very large debris field with a lot of light objects to be floating on the surface of the sea. And we havent seen that so far. So im hess tan the to say that there was an inflight breakup. We dont have the physical evidence to support that. We have not heard from any terrorist group claiming responsibility for this. But there are some strange circumstances. The first being that there were two passengers on board who were using stolen passports, the second being there were five people who were checked into the flight and then never actually boarded the flight. And what should we make of that circumstance . Is that highly unusual . Is this something that you would be watching . What do you think . Well, the security people that ive talked to have shown a lot of interest in this. But because these individuals were traveling on stolen papers, it doesnt mean its a terrorist act. There are other reasons that people do utilize false passports, even something as benign as narcotics trafficking, that has nothing to do with a threat to the airplane. Its hard to draw a direct conclusion, but it is something, obviously, that the security people are digging into extensively. Is this unusually lax security to have things like this happening with interpol not being checked to see about any of these passports . Or is this kind of the way things happen . I was surprised to learn that the interpol passport validity check had not been done. In most parts of the world, that would have been a routine. I think that the security people in malaysia will have some questions about why that was not done. Because it is standard. Id also read the reports that Malaysia Airlines has had some trouble, i think its four quarters in a row of losses they had reported. They talked about difficult times coming up, but a boeing 777, you dont expect things like this to happen with an airplane like that. No, you dont. And also to be fair to Malaysian Airlines who i have flown on on a couple of occasions, theyre a very high quality airline. They received numerous awards. They have a good track record, good Safety Record and the boeing 777 has been in service for almost two decades. Its one of the more modern and safe jet airliners out there. It has millions of hours. So you have a high quality Airline Operating a very high quality airplane, that is another question mark about how Something Like this could happen. All right. Captain cox, thank you very much for joining us today. We do appreciate your time. My pleasure. Coming up, well have a couple of deals to tell you about this morning. First, check out the futures as we head to a quick break. Tdd 18886282419 searching for trade ideas that spark your curiosity tdd 18886282419 n take you in many directions. D 18886282419 you read this. Watch that. Tdd 18886282419 you look for whats next. 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With centurylink as your trusted partner, our visionary Cloud Infrastructure and Global Broadband network free you to focus on what matters. With Custom Communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. Every day of the week. Centurylink® your link to whats next. Welcome back to squawk box. Lets take a quick look at the dollar and whats happening this hour. Really amazing what weve seen in terms of the euro maintaining and actually adding to its strength against the green back. Theres the yen also which has been a pretty good trade overall for those short the yen. I didnt realize the ruble, the dollar has gone up 1 or more against the ruble every week for the last four weeks. Has it been new lows each time. I dont know. It must be. 1 a day. Yes. When we come back, well talk more about investor concern about the crisis in ukraine, russia not backing down in crimea. A war of words between washington and moscow. Now the markets are caught in the middle. Well have a volatility check right after this. How much did the polar vortex and the snow impact sale s at this home builder . I must begin my journey, which will cause me to miss the end of the game. The x1 entertainment operating system lets your watch live tv anywhere. Can i watch it in Butterfly Valley . Sure. Can i watch it in glimmering lake . Yep. Here, too. What about the dark castle . You call that defense . come on [ female announcer ] watch live tv anywhere. The x1 entertainment operating system, only from xfinity. Welcome back, everybody. A group of Newspaper Publishers putting cars. Com up for sale at a price of 3 billion. The classified ventures has retained Investment Bank models and company as anned avieder. Discussions have begun with potential bidders. United rentals which is the Worlds Largest Equipment Rental Company Buying privately held National Pump for 780 million. This deal marks United Rentals foret into the pump sector. Tapping into the shale gas boom in the United States. Speaking of the gas boom, the average price of a gallon of gasoline has jumped 10 cents just over the last two weeks. The latest lundberg survey shows that the price of a gallon of regular is 3. 51. Premium 3. 84. Los angeles has the highest average price in the nation. Gas at 3. 94 there. Jackson, mississippi, has the lowest at 3. 18. Russian president Vladimir Putin is defending breakaway moves by leaders in crimea. Lets see how this is affecting currency and energy. Joining us is boris schlossberg. What was it, schlossberg. You know this stuff. Russia didnt to do something during, disarmament or something, didnt they agree to leave the borders of ukraine . They signed something that said they would never meddle, didnt they . They did. This was only a couple years ago. They does. Youre not allowed to do that. Theyre not allowed to do a lot of things. Theyll break every rule. Thats what i was talking about last week when i was saying the respect for law, the respect of property law is very, very limited, which is why i think the ruble gets weaker, the russian assets still get weaker because the markets will punish russia until they start to join the civilized world in a sense. A lot of people, boris, are saying we need to go something to the oligarchs that have some sway. Is that possible . Heres the problem. The problem is all of their money is in uk banks. While we condemn them on one side, theres a tremendous amount of actual political resistance to do anything significant because they dont want to hurt the oligarch money sitting in western banks. Its a game of cat and mouse in some ways. But you know, overall, basically the sum of all of our fears has not yet come to bear fruit. All of the fears we had last week had not materialized. We had decent nfps, the ukraine situation remains tense but stable at this point. And overall, basically the world continues to operate more or less okay. I will say the one thing i think is starting to worry me a lot on the macro scale is the chinese situation. The trade balance came in very weak on the weekend. It was primarily skewed because of the new Lunar New Year holiday, there is serious concern that china could slow down much more materially than everybody thinks. In order for the Global Growth trade to take shape this year, you need all three things to happen, u. S. Continuing to recovering, europe continuing recovering and china continuing to grow at 7. 5 growth. How did the lunar what was it, the holiday, that wouldnt take you from plus 7. 5 to down 18 , would it . They front loaded all of the exports ahead of the new lunar year. Thats what theyre claiming. What they did, they imported quite a lot afterwards. Even if you average out the two months together, the numbers dont look quite good. Why has the euro been so strong . The euro is a rock. But i also think its a false rally in many ways. The yur ro he has been a rock for two reasons, one, the ecb refuses to ease any further and germany continues to pull everybody else in europe forward. I think at these levels, this is the other key thing, if china trips up, germany is a big exporter to china. All of these trades are vulnerable if we dont see continued recovery out of china going forward. Thats why a lot of these trades which are pretty much at yearly highs are close to topping out. Carl, larry, you know there are people that think we need to ramp up Energy Production here so we can i dont know, russia doesnt have so much power over the people it supplies to. Does that make sense . Yes. You know, thats the thing. Everybody is talking about gas, natural gas, going through ukraine to europe. Honestly, its a lot about the oil ports that we see down in crimea, even georgia, that was a big issue. Russia is the second largest exporter of Refined Products right behind the u. S. Which took number one last year. Theres going to be a lot of displacement of Refined Products if russia decides to continue with this issue in crimea or has economic sanctions. Really a lot of oil at risk here, more so than gas, i think. Why wouldnt which way should prices move if lets say the referendum obviously its going to pass. Lets say russia crimea becomes part of russia. Would that be positive or negative for prices in the Energy Complex . Well, for things like gas, oil, diesel fuel, jet fuel, thats a lot pushes out to china and europe and so those prices might, you know, stay high. I dont know if theyd go up if the referendum goes through, if economic sanctions went along with that. You know, if other countries decided its not the right thing, yes, those prices would really move. Natural gas not so much. You know, i mean, theres not much lng we ship out to europe, not much europe takes in from lng. The jet fuel prices, the diesel fuel prices will start to move higher. For the u. S. , maybe its a good thing if we can increase exports. Our demand is going up here domestically. Its hard to balance it out. There would be a shortage, prices would go up. We couldnt just flip a switch and start exporting natural gas to europe. Thats stuff that takes infrastructure and takes a lot of time. Yes. Again, but becky, thats what everybody is focusing on, the big gateway through ukraine of natural gas. Thats not what its about. Putin and russia are focused on oil. This was the issue back when they went into georgia. Crimea, theyre looking at the ports. What matters is the oil. So the reason that we see the Oil Prices Going up on this is because of the fear of sanctions. Yes, i think so. You know, russia is by and far the largest producer of crude oil. Saudi arabia 9. 8, 9. 9. Russia 0 is over 10 million. When it comes to what they use versus what they send out, its a big difference. Russias consumption is around 3 Million Barrels a day. The exports are up there because theyre producing 10 million. The u. S. Is producing more oil on a daily basis. But we consume so much. Its a hardballance. Russia is a major player in the oil markets. If theres economic sanctions thats where it would hit hardest. It never goes down. Doesnt matter what it is. You will tell me a reason why it will go up. Energy prices. The china thing this weekend is having an issue, im sure thats weighing on it more. That would help. Thats going to happen, yes. Boris, youre in demand, you know. You got that name, boris. People think you know all about russia. Im surprised youre not on all the morning shows. You know a lot about russia, dont you. More than i would like to admit. Vladimir, boris. Im a true Blue American these days. Okay. All right. All right. Sounds like youre trying to convince me of that. I didnt think you werent. Thanks, boris. See you. When we come back, home sales hit by the polar vorl tex. Well ask the ceo of pop mania about sluggish home sales to start 2014 and whether the industry is on firm footing. As we head to break, check out the futures. 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. Welcome back, everybody. Target has until today to submit documents to the House Oversight and Government Affairs committee about the Security Breach that took place during this past Holiday Shopping season. According to a letter sent to target by Committee Chairman darrell issa, there is what he calls anecdotal evidence supporting the possibility that target knew about the breach before they were warned on december 12th. Hovnanian reported a wider First Quarter loss as weather extended construction times and slowed demand. Hovnanian, we have the chairman and ceo of hovnanian enterprises. Thank you for being here today. Glad to be here. How big of an impact has the weather had and what does the situation look like as were finally heading towards spring. Weather was definitely a factor over the winter. Weve had recordsetting lows and cold throughout a lot of our areas. Thats on top of what was already a little bit of a choppy housing recovery. The good news is, its feeling better weatherwise and sales wise in recent weeks. When you say it was weather, i know you have a lot of houses in new jersey, delaware, ohio, pennsylvania, that got hit pretty hard this winter but you have places in florida, in texas, arizona, california. Were those areas, did you see sales continuing at a strong pace in the places where weather wasnt an impact . Houston and dallas are one of the hottest markets in the country. They havent been affect by anything. Overall, 2013 started out with a roar for Housing Starts and then it got choppy late in the summer which has continued. Weve had a few good months as an industry in our company and a few bad months. It seems to be back on a better role right now. Are higher mortgage prices having an impact on what consumers are willing to pay . Clearly the Mortgage Rate increase combined with housing increases this past year during the good market have caused some buyers to hold back a little bit. And hesitate a little sticker shock. But they havent really changed their house buying patterns yet in terms of size or price. People are still buying the same amount of house, theyre willing to just pay up a little more . Yes, id say thats the case. I mean, the prices were so low and rates were so low, that for a while, it was unbelievable how much house they could get for the money. Now they have to pay up a little bit but its much below normal standards. You just kicked off a National Promotional campaign called big deal days. Yes. What do you get for this big deal day . We found because the Housing Market was choppy, we needed to add incentive, we raised prices quite a bit as many of our competitors did. On select homes, especially the ones ready to close, weve added extra promotion. 1 more, 2 more on incentives, free appliances, it varies by different parts of the country. We just kicked it off and so far, it seems to be going very well. What other parts of the country do you have to offer more . Parts that have been affected by the weather we certainly feel it there a little bit more. Texas doesnt have as much promotion because its such a strong market. But most of the other parts were trying to do something on, some homes around that market. Every time weve talked to experts to try and figure out whats happening with the Housing Market, weve heard things back that its more than just the weather. If you look at Housing Starts and housing sales in california, its not a question of the whether there but things have been a bigger problem. What have you seen in california and what do you say to people who say, look, theres something more happening than just the weather . It has been more than just the weather. As i mentioned it started off with a roar at 13 and then got choppy. That was before the weather. Thats not unusual. If you look back to housing recoveries in 1981, 1991, it wasnt always a smooth trajectory. The market had a few good months, a few bad months, a few good months. It went back and forth. Were seeing that same kind of recovery. I have no doubt, frankly, that we are going to recover. Were still way below demographically supportable housing levels. I think it will come back. Where are you building the most . Houston is thankfully our biggest market . Well deliver about 1,000, 500 homes here this year. That has been rock solid. In terms of what you expect this quarter, last quarter was a loss you reported. What do you expect this quarter . We dont project quarters or the year for that matter but were clearly expecting a better quarter than what we just logged. We warned the market the First Quarter would be the weakest quarter. Thats often the case. Were increase iing, over 10 oo above last year. Were expecting a good year this year. The street is looking to are a gain of 5 cents this quarter. I know you dont project but is that in the right ballpark . We definitely are working hard to get into the positive territory. And the big earnings comes in the back half of the year for us. All right. Thank you very much for joining us. Thank you. We have a lot more squawk box to come this morning, including the latest on the missing Malaysia Flight and developments out of ukraine. Markets around the global watching both those situations. Well be right back. Gunderman group is a go. Yes not just a start up. An upstart. Gotta get going. Gotta be good. Good . Good. Growth is the goal. How do we do that . I talked to ups. Theyll help us out. New technology. Smart advice. We focus on the business and they take care of the logistics. Ups . Good going. We get good. Thats great. Great. Great. Great. Great. Great. Great. Great. Great. all great i love logistics. For tapping into a wealth of experience. For access to one of the top Wealth Management firms in the country. For a team of Financial Professionals who provide customized solutions. 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. Aflac, aflac, aflac [ both sigh ] ugh you told me he was good, dude. Yeah he stinks at golf. But he was great at getting my claim paid fast. How fast . Mine got paid in 4 days. Wow. Thats awesome. Is that legal . Big fat no. [ male announcer ] find out how fast aflac can pay you at aflac. Com. Which will cause me to miss the end of the game. The x1 entertainment operating system lets your watch live tv anywhere. Can i watch it in Butterfly Valley . Sure. Can i watch it in glimmering lake . Yep. Here, too. What about the dark castle . You call that defense . come on [ female announcer ] watch live tv anywhere. The x1 entertainment operating system, only from xfinity. 6 49 and its still almost dark. It will be driving in the dark. Weve been driving in the dark anyway. If you came in late enough sometimes theres first light. I love june. It makes me feel so much more human. I like it when its dark. I dont like people around. I like it when its light. I dont feel like a zombie. No one on the road. Dow component boeing, the company says hairline cracks were discovered in the wings of 787 jets that are still in production. Not affect any dreamliners already in service. Its taking steps to deal with the problem but its also dealing with the dreamliner had the landing. Whats the difference between the ones in production compared to the ones that are out there. They check those for cracks. Why is it happening to these . Did they change the production process. Composite. They were dealing with this a couple years ago. I do remember. We said take your time. Yes, please do. But youve seen them on the production line. Whats different about these versus the ones that are out there. I dont know. So that was boeing and that you know, youre thinking about where is that airliner . And free scale semiconductor, one of the companies affected here, 20 of its employees were on that flight, the Malaysia Airlines flight that went missing nearly three years ago. The workers were mostly engineers who were working to make the chipmakers asian operations more efficient. From what i can tell there was one american on the flight recently hired by ibm to do something. There were apparently three americans in total. Really . I thought only one was confirmed. Are there three . I see three original. I dont know who has more recent information, you or me. Bed, bath beyond is the latest retailer to say Winter Weather is affecting its sales. Fuel cell makers are adding to a recent rally this morning. Both fuel cell energy, plug power and Ballard Power Systems are all trading higher in premarket trading. The stocks have been rising on a growing demand for cleaner alternatives to traditional batteries. Plug power is up sixfold this year. It recently won a contract with walmart for fuel cells in the retailers warehouses. Should we go back to the article we saw this morning in the New York Times on bill ackman . New york times front page is laying out a big story, the lead story that looks at the bet bill ackman has made against herbalife. It takes a look at what was done in the back behind the scenes. Obviously both herbalife and bill ackman has spent time on this. Herbalife says it spent over 2 billion . Am i making that up . How much did he spend . He spent a couple hundred thousand. Maybe its 2 million. Its a 6 billion company. They must have spent 2 million. He must have spent 236,000. I think i added three numbers to each of those numbers. It lays out what ackman has done. He had dinner with linda sanchez, a democrat from california. She sent a letter to the federal trade commission. He apparently had some of that information the night before. Was showing people at another place, was show something of that the proovious day, call for this investigation. This leads into some of the ugly deals behind, how people are lobbying on both sides. Harvey pitt kind of raised the question, is this lobbying at this point lobbying on behalf of something he thinks is truly wrong or doing something to try to move the price of the stock . Hes been in before. As a business guy, really a capitalist, ive asked him, youre democrat, every one of these people is a democrat. Its probably not surprising given the cause. Youre looking for a cause that would be sometimes associated with democrats, too. Just anticorporate . No. On behalf of some of the latino groups that were there. Theyve been associated with the democrats, too. Theyre the ones who have been working with him on this. Right. But markey, senator markey, sanchez i think there were four other names of democrats. We had icahn on last week. We didnt even ask him about herbali herbalife. Carl is out of this situation. I thought he was. He had a lot to do with initially getting the stock up to a point where it got more and more painful for bill ackman. That was also between a personal dispute between carl icahn and bill ackman. Hes done well on a few acquisitions. I can name some that didnt go so well. Jcpenney. Target. The canadian train hes done very well. And the hong kong dollar. Right. Remember . And what i remember because i interviewed him for the delivering alpha conference, one of the questions is china were to slow to some extent and the chinese currency not it was not a given that it needed to rise, why do you think hong kong would allow its currency to float and rise at that point. What did he say . That obviously would be a problem but it never happened. All those for being the best trade, that was one that didnt work out. When we come back, well talk about mcdonalds. Its ready to serve up sales data. Well hear from the Worlds Largest hamburger train right after this. As we head to a break, entertainment news. The action film 300 rise of an empire battled its way to 45 million in ticket sales to win the weekend box office. Mr. Peabody and sherman came in second with 32. 5 million in sales. Last Weeks Box Office winner no noun st none stop was third. Huh, fifteen minutes could save you fifteen percent or more on car insurance. Everybody knows that. Well, did you know pinocchio was a bad motivational speaker . I look around this room and i see nothing but untapped potential. You have potential. You have. Oh boy. Geico. Fifteen minutes could save you fifteen percent or more on car insurance. Russia pushing its way through ukraines front door. Tensions in the region growing as Global Markets watch closely. An International Search continues for a missing Malaysia Airlines flight en route to beijing. The latest details just ahead. Its a fiveyear bull run. What was made and whats been lost . As the final hour of squawk box begins right now. Welcome back to squawk box. The futures at this hour have been flat for most of the session, down about 15 points or so after what was a good week last week. 1878 on the s p. We closed out last year about 1850. We are in positive territory for 2014. Mcdonalds, february sales just in, global comps were down, 0. 3 last month. Thats a smaller drop than some expected. U. S. Sales were down 1. 4 . European sales gained 0. 6 and the sales in the apnea region where i guess theres a lot of snoring. That would be apnea. This is apmea. Never mind. Nothing to do with snoring. They were down. 6 . This is really weird. U. S. Down 1. 4 . Apmea down 2. 6 . Europe up but only by 0. 6 but that managed to make it down 0. 3 . I didnt realize europe was such a major portion europe must be an outside we didnt mention middle Eastern Africa either and am pia w apmea was better. Thats the weird thing. I didnt realize europe had that big of an impact. U. S. Down 1. 4 , apmea down 1. 6 , europe up 0. 3 . Antarctica . Antarctica. Heres whats interesting. Those stuck in the ice boat are bringing in takeout. Mcdonalds cfo pete benson says they are global sales will affect earnings in the First Quarter. Europe was up 0. 6 , they said Strong Performance in the uk, positive results in france. Apmea, weakness in japan and to a lesser extent, the shift of timing in the chinese new year. The u. S. They say its a challenging industry dynamic and also the severe Winter Weather affected things. The white house says russia appears to step further on to their door step. Nbcs jim maceda joins us with more from moscow. Jim . Reporter were six days away from the referendum to take place on crimea. With international monitors still prevented from entering the peninsula over the weekend for a third time, they were pushed back, also the fact now that theres absolutely no nonrussian media on the airwaves. Its all been removed. Theres no reason to doubt the final result of that vote will be anything but a secession from ukraine. Overnight there was another Military Hospital and a Ukrainian Missile base that were taken over. Talking about 20 to 30,000 Russian Forces now. I mean, thats two to three divisions occupying at least 11 Ukrainian Border guard posts according to ukrainian sources. Even along the stretch between crimea and ukraine proper, some reports now suggest that Russian Troops have laid mine fields, fresh land mines along that stretch to delineate between crimea and ukraine. Thats how bad its getting. But the kremlin meanwhile here in moscow continues to say that they have no control over these socalled russian selfdefense force forces. They clearly support putin and the kremlin clearly support these people, however, insisting that ethnic russians are under dire threat from extremists, neofascists, nationalists, they call them in kiev. Crimea for all intents and purposes is now russian, in fact, krik crimeans are prepari get russian passports for those who choose to stay. The diplomacy is dragging along now. Its getting no traction, really, and hitting a wall. German chancellor Angela Merkel had another phone call with putin, her friend, over the same situation over the weekend. And after that, she said he still is, quote, relentless in his logic and his goal to take crimea back for russia. Analysts say that crimea has really become putins red line. Its the price that the west must pay, he says, for losing face and losing influence in the rest of ukraine. Back to you, becky. Sore sorry, back to you, joe. Either way. Thank you. We appreciate that, jim maceda. Relentless. And theyre still friends somehow. She called him out of touch with reality last week, too. She did. Anyway, the other story weve been following, vietnam sending helicopters to check out a yellow object, possibly a life raft spotted by a jet in vietnamese waters. Investigators continue to search for a missing Malaysia Airlines flight with 239 people aboard. Phil lebeau joins us. I thought the life raft wasnt. I thought we confirmed it wasnt. You here so many things. Whats the latest on the yellow object . Is it possibly a life raft from that plane . Weve got no indication that it is, joe. At this point theres no indication that they found any debris that has been linked with the Malaysian Air 370 flight thats been missing since friday. Its as much of a mystery today as it was on friday, exactly what happened with this flight. Lets bring you up to speed on the latest information. We have new details regarding the oil slick. Investigators continue to comb this area just off the coast of vietnam where they are looking for any sign of debris or indication of what might have happened with this flight. We learned within the last 15 minutes that malaysian authorities have said that the oil slick that they were focusing on and have been focusing on, theyve tested some of the oil from that oil slick, it is not linked with the Malaysian Air 370 plane. Heres the area theyre searching. Hundreds of miles. Youre talking about dozens of ships and planes from seven countries, including u. S. Assisting with this effort, in terms of searching this area, looking for some sign of flight 370. Investigators have not ruled out the possibility of terrorism. They are looking into two stolen passports that were used by passengers on that flight. Theyre not saying that this is terrorism. Theyre not saying its not. At this point all options are being investigated. Malaysian air mystery, three things theyre looking at this morning that have questions that need to be answered. First of all, did the flight turn around . Theres some indication that flight 370 was turning around and heading back towards malaysia. Also was there a catastrophic event seven miles in the air that prevented the crew from issuing a may day call at all . Was the catastrophic event so serious that there was no debris at all and came down floating on the surface of the ocean . And finally, theres no evidence of any wreckage. Thats the troubling aspect of this search, the fact that usually if theres some kind of an incident, especially in the water, eventually something starts to float to the surface but they found nothing. Take a look at shares of boeing. As we take a look at shares of boeing, keep in mind boeing has a Technical Team assisting the ntsb which also has investigators in malaysia. This is as much of a mystery today as it was when it first happened on friday. Phil, if youre up that high and lets say that theres a catastrophic explosion, even youre going 500 miles an hour and it breaks into small pieces to start with, when youre going that fast, do the small pieces get even smaller . Weve heard of things vaporizing. Did you know . No way of knowing, joe. No way of knowing. Look at the history of aviation crashes, the vast majority of them, overwhelming majority happen at takeoff or landing. Low enough to the ground that you have debris they can investigate. Id have to go back and look at the last time we had a catastrophic event that high in flight when theyre at cruising altitude, seven miles in the air. It is interesting, all these theories are out there. Im not sure anybody has hard evidence on that. Somebody was pointing ing i air France Flight 447 that the industry was using as an example. I guess that one took a couple weeks before they were actually able to find remember, becky, there was wreckage on the ocean, floating after a couple of days. It took them months, i think maybe even a couple of years before they found the data recorder and the cockpit voice recorder at the bottom of the ocean. Yes. I guess if theyre now suggesting the flight was turning around, i wonder if they had been looking in the wrong direction to this point. There are a lot of questions. Theres a lot more questions than answers at this point. Yes. More to talk to you about with gm, too. Well see you later in the show and talk about that then. Youre a busy man this week. Sounds good. The markets in focus, could rising Commodity Prices and a tightening jobs market lead to inflation . Well talk about that. Reaction to mcdonalds sales from an analyst who covers the stock. His takeaway from the numbers is just ahead. As we head to a break, check out the squawk box market indicator. Take a closer look at your fidelity green line and youll see just how much it has to offer, especially if youre thinking of moving an old 401 k to a fidelity ira. It gives you a wide range of investment options. And the free help you need to make sure your investments fit your goals and what youre really investing for. Tap into the full power of your fidelity green line. Call today and well make it easy to move that old 401 k to a fidelity rollover ira. We are looking at pfeiffer years that stocks have been in a bull run, the s p closing out the week with another record high. On set is john byner, cohead of Global Fixed Income and liquidity management, overseas more than 570 billion in assets. Also with us is peter bookmar. When we get done with these guys well be holding no stock, i imagine. You figure youre fixed income. Who wants to buy that stuff with where rates are right now . You would urge us to do that for safety . Owning mixed in a portfolio still makes sense. How snch not normal alications. 40 . Maybe not. Importantly is not so much the percentage but what you actually own. You want to own portfolios that arent going to be exposed with rising Interest Rates. We do believe the economy is on pretty good footing. We think the fed will move faster. Youll get hurt by rising Interest Rates. You can own credit portfolios, bank loans have been really very popular. What about stocks . You know, stocks, i dont know. Im a fixed income guy. I dont know. Stocks have had a great run. Fiveyear anniversary. The economy is improving. The way we look at it, you want to own assets that are going to benefit from growth and not own assets that are going to grow from liquidity. We think were moving away from this period of unbelievable liquidity. Yes, stocks are part of that. Sounds like you told me to get rid of bonds and buy stocks. You have to Pay Attention to what im saying. I know what youre thinking. You have him on your side . He says the fed created a truman, i dont mean harry, i mean jim carrey truman, type of faux prosperity. He even mentions jim grant that said the fed can i forget the quote. It can change the way things look but not the way things are. I agree with that sa, as you know. The point of the fed, they dont create new wealth or economic activity, all they do is pull it forward. Weve pulled forward a lot of activity both in the economy and certainly asset prices, particularly in stocks in a lot of fixed income areas. Therefore that then reduces the potential future return as they normalize policy. You think weve sort of eat more than we should have and well have to we wont be as much to eat. We stole a lot of future returns in this extraordinary policy theyve undertaken. So now that they plan on tapering, which i dont think theyll follow through because the market will trap them. Which market . Probably the equity market first. What will it do . If it drops 10 to 15 , you can guarantee the fed will taper. To me, im more worried about the fed than ukraine or russia or crimea. It went down 6 , not 10 to 15 . The case is that somehow the economy will be able to deal with the taper, the fed can somehow extrapolate themselves from printing a trillion dollars and well just be fine without it. Im not in that camp. I dont think theres a free lunch. I think there will be consequences to them pulling back. Even though longer term its a great thing theyre getting out of this. There will be shortterm panic while they do that will will stop them from tapering and prove to the world theyre trapped. The bond market has behaved pretty well so far. It went from one and change up to, you know, 2. 5, 2. 6. Now it staired around 2. 6, 2. 7. Will that head higher someday. We think so, with the fed moving away from the treasury market, we think well see more volatility. Weve been hanging in the range of 2. 5 to 3 on the tenyear. We think you punch that sometime late to middle of this year. The rougher data has allowed the market not to panic too much. Maybe theyll take the foot off the pedal in terms of tapering. We think theyre going to follow through and finish up by the end of the year. What we do think is the next step is for them to raise that shortterm rate. Theyre still saying its going to be a long way out. Theyll have a tough time holding out for a very long time. For you were looking for 10 to 15 , for you were looking for tapering to continue. By 2016 will we be at 3. 5 , 4 . We think so. We think well be at 3. 5 at 2014. This year . Tenyear note. Tenyear will hit 3. 5 this year . This year and 4 next year. The fed is even telling you theyll start to raise rates next year. And by the end of 2016, theyll be about 2 on fed funds. You think were at 3. 5 because the fed is telling us that theyll be raising rates or do you think were at 3. 5 because the Economic Growth warrants it. I think its more the latter. I also think the fed is going to now struggle in terms of what theyre going to tell you. Everyone is talking about poor guidance right now. They dont want to make explicit numbers. You get the Economic Growth, get the Unemployment Rate closing in on a 5 , 5. 9. Thats a big number there. And inflation, which isnt there today. We start to see Wage Inflation come in. The market will say, hey, how long are you going to wait to raise Interest Rates . Its not going to be the fed saying well raise Interest Rates soon. He just made the case that the fed orchestrated a nice recovery here, didnt he . I think temporarily they create the illusion of it. Again, theres always a flip side to what the fed does. Its easy for them to ease. Theres always the other side when they have to pull back. Its not going to be up to the fed. The market will force their hand. All right. Keep answering your phone book. Were going to need you when it finally happens. I know youll be back then. Youre waiting outside the building. Ill be back either way, trying to defend myself. Excellent. Thanks. Thank you. Up next, mcdonalds Sales Numbers and well get a red on the largest fast food chain. And then Martin Feldstein will join us to talk about jobs, the economy and much more. Squawk box will be right back. 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. Peace of mind is important when so we provide it services you bucan rely on. With centurylink as your trusted it partner, youll experience reliable uptime for the network and services you depend on. Multilayered Security Solutions keep your information safe, and secure. And responsive dedicated support meets your needs, and eases your mind. Centurylink. Your link to whats next. 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. Mcdonalds out with samestore sales at the top of the hour. Global Comparable Store sales were down by 0. 3 . That was better than analysts had been expecting. Joining us right now is morning star senior restaurant and retail analyst. Looking at the numbers was it better or worse than what you expected. Right about in line of what i expected. Were continuing to see a weakness in the u. S. , you have weather and Competitive Pressures in there. Europe looked reasonably pretty well, tend to see benefits from some of the reimaging and menu enhancement efforts theyve had there. Asiapacific was down. They had a couple things like a calendar shift as well as continued weakness in japan. All things considered, pretty much where i expected. The company did issue a bit of a margin warning for the First Quarter. Other than that it was right in line where i expected it on this one. As you pointed out, the cfo said because of the flat year to date global comp sales that will be pressuring margins in the First Quarter. Do you change your earnings estimate as a result . Ill take a look at that. That probably puts the quarterly operating margin number close to the 29 . They had about 29. 6 last year. Thats going to be something to take a look at. For the full year, youre looking at slight margin compression. Company was about 31 for the full year last year. That probably puts them in the mid30s range. There is earnings risk. Not expecting a lot of momentum the first half of the year especially as they do a lot of investments in new Product Customization efforts, some new Marketing Efforts as well. It was really about in line right there. The question is, what does 2015 look like . Do those changes start to pay off. What does that mean . Does that mean new menu items . What does that exactly mean . A little bit of both. Theyre pearing back on some of the more less popular, more complex items. What theyre doing is installing something called a high density prep table that gives them access to new ingredients that maybe they never used before, avocados, jalapenobased flavoring. Seeing things on the mcdonalds menu you havent seen before will add a new level of excitement to the mcdonalds menu, particularly in the u. S. That with not something youll see materialize until the second half of the year. We start to see improvement of top line, start to reverse the margin of contraction were starting to see. The u. S. Comps were down 1 the 4 and the asiapacific, middle Eastern Africa was down 6. 2 . In europe it was up by 0. 6 . The global comps came back to down by 0. 3 . Is europe outsized or is it all the other regions they dont mention, mexico, south america, canada, they were so much stronger, thats why you saw down only 0. 3 . The other segment that doesnt get reported in the monthly numbers, its been strong. That includes canada, mexico. That helps to balance some of the weakness youre seeing. I think that does have an impact on the numbers there. Europe is a large contributor to the overall Sales Numbers here, too. Thats actually one of the reasons why are fawe are fair b the name. So it does set up nicely for trade on that regard. That said, we do need to see more on the u. S. Side of the business before we really have ultimate conviction on this. It wasnt antarctica. No. You forgot mexico, canada, south america but you came up with antarctica. I remembered it before you did. So there. Thats true. When we come back, well take a closer look at fridays job numbers. Well get the latest numbers right after this. Squawk market master marty feldstefe feldstein will be joining us. And Audi Launches its allnew a3. Phil lebeau will take us for a test ride. Squawk will 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. Which will cause me to miss the end of the game. The x1 entertainment operating system lets your watch live tv anywhere. Can i watch it in Butterfly Valley . Sure. Can i watch it in glimmering lake . Yep. Here, too. What about the dark castle . You call that defense . come on [ female announcer ] watch live tv anywhere. The x1 entertainment operating system, only from xfinity. Welcome back to squawk box, everyone. Two Companies Involved in takeover deals rising this morning. Chiquita brands is buying irish rival fyffes for 526 million in stock. The combination will create the Worlds Largest banana buyer. And United Rentals is buying National Pump. The price, 780 million. Specialty pump demand from Energy Companies has risen thanks to the shale gas boom in the United States and United Rentals up by 1 even though it is the acquirer. Chemicalmaker fmc announced that its splitting into two separately publicly traded companies. The agriculture and health and nutrition segment is being called new fmc, the Minerals Unit will be part of a Company Called old fmc. No, no, no. Fmc minerals. Who is this . You kidding me . Andrew . An draws on the phone. It is. With some breaking news. Youre on vacation, arent you . What are you doing . Its early in the morning. Im on the west coast but i have breaking news because it will be announced in the next 20 minutes if not sooner which is that ebay is going to be putting out a statement rejecting carl icahns effort to put two of his own Board Members on ebays board. As you know, of course, weve talked about it a million times. Theyve been back and forth over whether they should spin off paypal. They have said no. Then he said he wants they will be recommending four new Board Members. Wed be recommending four current Board Members. Hes already not on this cycle. So this whole title is irrelevant. I should tell you because i have a piece of whats going to be put out a little bit later today. Ebays board saying the Corporate Governance to give serious consideration to the two employees of carl icahn to be members of the board. Including in particular that neither nominee has relevant experience or expertise. Each of them are on more thonn four boards and one of them is a coceo. One of the rules at ebay is you cant be on too many boards. Four theyre suggesting is too much. They are not expert, if you will, on Technology Issues like ebay. That is the breaking news. You know, andrew, the oscars were last weekend. Did you are you confused or something . Were you hanging out at the auditorium . Theres no red carpet. Isnt it gone . What are you doing . Im just standing on the red carpet right now with the telephone up to my head talking to you about ebay. Youre like rick who went to casablanca because of the water and they said its in the desert. He said i was misinformed. Oscar was last weekend. I didnt know. What are you doing out there now . Or would you have to kill me if you told me. I wouldnt have to kill you if i told you. Just on the west coast calling you about ebay. Its like a little mini vacation. The vacation is up now. On vacations you really shouldnt be calling into work and doing this. It sounds like you had a rough night, really. Well, its 5 30 in the morning here. Its more the voice than that. Then as you know, i will be seeing you on wednesday from las vegas. I think i warned you on friday that i was going to begin the bender. Thats sort of whats happening. Are you talking to celine deon in vegas . We may be talking to celine deon. Thank you for the tease. We already promoed it. Are you with her right now . Im not with her right now. Its 5 30 andrew. I know. I know. She sings that one better than you do, joe. That wasnt me. Liesman. You have quite a voice there. Andrew, thank you for getting up early with this news. This is big news. Thats the story. We will be watching it. Ill see you on wednesday from vegas. Thank you for the news update. Well be watching for that, too. News on ebay, formally rejecting, were expecting carl icahns nominees. Andrew had it first. Lets get to Steve Liesman who has a much less interesting life than hes probably out at that hotel. I dont go to hotels. I was busy this weekend solving my kids baseball on the west coast you wouldnt sleep on sunset boulevard . Im not going to San Francisco but nothing exciting like that. Heres the thing, lots of interesting commentary, guys. We sprung the calendars ahead. The economists are getting optimistic about the spring. I want to read you some goldman sachs, says growth is slow by about a percentage point since the fall. We attribute ruffly half the slowdown to the weather, the other half to the inventory correction. The weather effect should turn positive in the spring, we, therefore, expect growth of 3 plus starting in the second quarter. You guys know our friend ian shepherdson, looking for plus 350,000 in the next jobs report. You had hovnanian on. I thought that was the best economic comment of the whole morning. Lets remind people of what he said. Weather was definitely a fact over the winter. Weve had recordsetting lows and cold throughout a lot of our areas, thats on top of what was already a choppy housing recovery. The good news is, its feeling better weatherwise and saleswise in recent weeks. Recent weeks, getting snap back with the weather. If you have that chart in the back about the labor force, three of the last four months we brought people back into the labor force. That follows a huge decline in october that if you almost wipes out some of that gain afterwards. The trend has been pretty decent. That can be a sign of an improving labor market when people who have been out of the labor force come back in. Seeing some of the data showing its in the sweet spot of the 25 to 54yearolds. Returning to the work force. With the clocks ahead, were getting optimistic commentary after what has been a pretty harsh winter and data winter as well. All right. You have been you are back to regular economist. Youre not senior or chief. Why . Did i get demoted. Because of the jobs number. Because of the jobs yes. That is fair enough. If youre going to judge me on my model i should be senior, not even just regular. The model which had been good for three months went the other way. I said dont trade on this. Its closer to 50 or 60,000. Its what i have. People get all mad when i do it. Has the ipcc climate people called you to check in . They want your model. You want tweets is what you want. Im not going anywhere near that. Its all i can do to forecast the economy. The weather is another thing altogether. Steve, thank you. Thank you. Lets bring in another economics expert. Marty feldstein is economics professor at harvard university. Professor, thank you very much for checking in with us this morning. Steves with talking about how a lot of economists are starting to feel more optimistic. Are you . Yes. You know, a few months ago, back in, i this i, november, i said that after years of being skeptical about the forecast of three plus percent growth and continually warning people that we would be lucky to have 2 growth, i felt that 2014 was going to be a better year. We no longer have the fiscal drag that we had last year. And of course, households saw their wealth increase by 10 trillion. And so Consumer Spending is bound to be stronger. So you put all that together and i think 2014 will be a better year despite a very poor First Quarter. Does that mean you think the First Quarters problems were largely because of weather . It is weather and its inventory adjustment. So the First Quarter is not going to be a good number. But i think we will see much better numbers in the next three quarters after that. What do you expect for growth for the full year . The full year, i think were going to be closer to 3 than 2. So i think that the problems that held us back for the last few years are going to be behind us. I think that means that the fed can continue with its tapering. I think thats very good news. Because i think that means were not going to have abnormally low Interest Rates leading to all kinds of bad risk taking decisions. Marty, i think your optimism may be the biggest news story of the morning. It trumps ebay and everything out there. Its nice to see you smile, sir. Its not news, steve. In the sense that ive been saying it now for a few months. I still believe it despite the poor numbers we saw for january and february. Lets talk about how you think the fed gets out of this. It sounds to me like you think the Federal Reserve can taper and you can have a relatively orderly exit. Is that your outlook here . They can have a relatively orderly exit from the bond buying program, from the quantitative easing, but i think the big problem is that the commercial banks are going to find themselves with a couple of trillion dollars of excess reserves, parked at the fed. And when those commercial banks want to start increasing their lending, the fed is going to have to worry about whether thats going to be inflationary. So the real challenge is not getting out of the quantitative easing. The real challenge is making sure that that big buildup of commercial Bank Reserves doesnt trigger inflationary lending in the future. Just one more, marty. What about Interest Rates, where do they go from here and whats your outlook in terms of 2. 80, flirting with 3. Is that something that keeps the economy down. I think Interest Rates will rise. The markets know that the tapering will bring the bond buying to an end. In principle, its already built into the numbers. On the other hand, as the flow dimini diminishes, as the bond buying actually moves to stop, so that the government is borrowing more than the fed is taking in, i think we will see some further upward pressure on longterm rates. I think the tenyear rate will get back not this year but not that far into the future. Back to a kind of normal 2 real number. So 4 overall nominal tenyear treasury. Professor feldstein, thank you very much for joining us this morning. We really appreciate it. Well be looking for more optimism like you just talked about. Thank you, sir. Hope so. Thank you. 84,000. Checking youve got to go. Hours worked were down. That was 500,000 jobs. Thats what youre hanging your hat on. Its all ive got. You were further than anyone else we had on that day. Weve have Steve Liesman, our run of the mill economics reporter taking a futures oh, good. This is me again. I believe that joe, i know youre all about highend cars. Check this out. This is the audi a3, the latest in the battle over entry level luxury cars. Does it have the horses to catch the mercedes cla class . That story coming up on squawk box. For access to one of the top Wealth Management firms in the country. For a team of Financial Professionals who provide customized solutions. 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. The entry level luxury race is heating up. Audi launching its all new a3 in california this weekend. Will it have what it takes to dethrone mercedes clo class . I think it was an a6 i think it was. It was a really good car. Phil lebeau joins us with an exclusive interview with the head of audi of the americas. Before we get to that, you have an update on the gm recall for us, phil. Yes. Just to give you some rer spektive, the story New York Times in the yesterday regarding an analysis of complaints about the gm recall, going back to 2003, with the national Highway Traffic Safety Administration essentially New York Times saying, look, theres a pattern here. More than 240 complaints, they should have issued a recall long before earlier this year. We had say chance last night to reach out to the national Highway Traffic Safety Administration. The company the organization essentially saying were waiting for information from General Motors. In terms of when we get that information, well be able to say more. They said nhtsa uses a variety of tools to evaluate the complaints they receive each other. Including crash investigations, searches for similar complaints and comparisons for other vehicles. In this case, the Data Available to nhtsa at the time did not contain sufficient evidence of a possible safety issue. Thats the story regarding the gm recall. The reason were in San Francisco is because of this vehicle behind us and the gentleman standing behind me, youre unveiling the new a3 which goes on sale next month. Is this a game changer in terms of bringing you into the entry level segment even more. It is. This is where the growth will become. This segment will go up by nearly 400 between now and 2020. We feel we have the right product to compete. Youve packed a lot of Tech Knowledge and content into the vehicle. Thats what stands out. Fantastic when i was testing it out but this is an area where all automakers have struggled to make sure it works all the time. How do you convince the buyer that everything youre putting in here does work all the time . Phil, you painted us with a broad brush, all automakers. We know, audi, knows how to integrate this technology. We finished number three, stronger than mercedes or bm wrxt bmw. A lot of it weve done, weve done it in the a6. We feel confident we can do it. Who do you bring into a3 . I think it will be a combination. The big one is we spent so much time building these powerful luxury brands, theres a big market that wants to come in and enter luxury. For a car at 30,000, this is a price point to do that. Segment grows for the industry about four times faster than overall for the industry . Exactly right. If we look at the luxury segment overall this year, we see growth around 7 to 8 . If you look at this asegment, suvs and sedans, nearly 400 growth up to 2020. This is where the action is. Scott kehoe, a big day, guys. The a3 goes on sale next month. The starting price point, 29,900. When we come back, the fiveyear bull run. A look at what was made and last over the last five years. Squawk box will be right back. An upstart. Gotta get going. Gotta be good. Good . Good. Growth is the goal. How do we do that . I talked to ups. Theyll help us out. New technology. Smart advice. We focus on the business and they take care of the logistics. Ups . Good going. We get good. Thats great. Great. Great. Great. Great. Great. Great. Great. Great. all great i love logistics. Just take a closer look. It works how you want to work. With a Fidelity Investment professional. Or managing your investments on your own. Helping you find new ways to plan for retirement. And save on taxes where you can. So you can invest in the life that you want today. Tap into the full power of your fidelity greenline. Call or come in today for a free oneonone review. announcer scottrade knows our and invest their own way. With scottrades smart text, i can quickly understand my charts, and spend more time trading. Their quick trade bar lets my account follow me online so i can react in realtime. Plus, my local scottrade office is there to help. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. Save you fifteen percent or more on car insurance. Ould yep, Everybody Knows that. Well, did you know the ancient pyramids were actually a mistake . Uhoh. Geico. Fifteen minutes could save you fifteen percent or more on car insurance. No two people have the same financial goals. Pnc investments works with you to understand yours and helps plan for your retirement. Talk to a pnc investments Financial Advisor today. Its been five year is sense the bottom. What a run its been. Jane wells joins us with more. Jane . Reporter it was a scarey time, people losing retirements, homes, jobs. Five years ago this morning, it started to turn after mark haines called the bottom. All better now . Howard marks said last week, 1 may see recovery, everybody else is il traumatized. When you see people making a run in july of that year, thats a hard image to shake. A fidelity study found as the market collapsed 64 of investors are scared or confused, half lost significant assets, more than a third saw a large drop in income. Age loss 34 , 1 in 5 had one head of household lose a job. That job loss left them with no money to participate in the bull market since. Some who did fine still feel bruised. They lost so much. How much . I thought i could buy an as stin martin car, wit the money i lost i could have bought an astin martin. Mark jones runs a smile business in south carolina. He didnt druft wajust wall str. Cash and money markets are not going to cut it for retirement. No, im not in full with both feet, im in with one. Ive been skeptical of the information you get off the market and have believed in the longterm view of the mark. I think i still believe in that. Reporter fidelity says, five years later, half of investors are more informed, prepared and confident but Td Ameritrade tells us, in the current market, clients who are short really like their positions while those long, quote, are constantly nervous. Jane, thank you very much. Joining us is todd rosenbluff. And, todd, tell us, how did you feel then versus now about the markets. So we were more defensively oriented five years ago. We were favoring sectors like Consumer Staples and health care. We thought investors are should have more in cash back then where we are today. Now favoring more of the cyclical sectors, consumer discretionary, industrials, financials some sectors we like. We Like Health Care as one defensive sector that has a growth tilt with biotechnology. We are positive on the market. But weve had a strong run, and there will be some pullback. When you look back in history, obviously that was the best time to be buying, really harder to most of us even see that at the time because we had been through so much so quickly. But does it worry you at all youre feeling more bullish even after the huge run weve had. Yeah. Weve seen a big move, cumulatively, 178 gain from the bottom five years ago to where we are today. Thats the second strongest of the bull markets. We do think there will be a bit of a pullback. A 12month target price of 1940 on the s p 500. We think there will be opportunities. We think the growth oriented sectors are not being priced in as appropriately. Still looking for growth, though you expect potential pullbacks you say if thats happens, thats the time to jump . Thats the time to be mindful you get good buying opportunities in the space. Were not in with both feet. We think there will be upside in 2014, just nowhere near gains weve seen in the recent past and nowhere near the gains weve seen in a sixyear bull market. We think well see gains but not as strong as weve seen in the past. You like et ifs, name one. Vanguards. And thats one of the sectors we like at s p capital iq. Thank you for joining us today. Thank you. Great talking to you. Crazy logic. The longs are nervous with their positions but the shorts feel comfortable. You know what that means . Back in five years ago you think the longs were comfortable . No. You think the shorts were comfort able . Absolutely. That was a telling exactly. I know, i see it. I see it. Well get there. Mac. I miss you when youre gone, when you come back, youre all over me. In my face. Look how he does that. Seven, six, five, four, got it. Does it. Join us tomorrow. Thanks. Squawk on the street is next. Born on the bayou born on the bayou good monday morning, welcome to squawk on the street. Im Carl Quintanilla with kelly evans at the new york stock exchange. Cramer live on an oil rig in the gulf of mexico off to louisiana coast, fabers on assignment. Jim, hows the bayou . Beautiful down here. Im on a rig, built in 1985, working for energy 21. Probably find oil today for you. We cannot wait to hear more today, jim. Unbelievable. Thank you. Hard hat shot alone. You like, of course