Transcripts For CNBC Squawk Box 20140318

That and janet yet yellens first News Conference. Steve will have the cnbc fed survey results in just a moment. But as for todays data at 8 30 a. M. Eastern, well get two reports. One is the Consumer Price index for february. Thats expected to rise 0. 1 . Housing starts for february are also expected to rise by 3. 4 . A major improvement in the drop that we saw back in january. Building permits are expected to come in flat for the month and the markets are going to be looking for any weather related issues. Well have those reports coming in at 8 30 eastern time. Right now, futures are indicated slightly lower. Dow futures down by about 32 points. S p off by 4 points. On monday, the dow snapped a fiveday losing streak as concerns about ukraine subsided after sundays vote. And russias president Vladimir Putin will be speaking to Parliament Coming up this morning. Heads of reason in public groups will be in attendance. Putin is expected to address the integration of crimea. Many expect him to endorse annexation of the region. Also today, theyre expected to send a former request, moscow to join russia and, of course, well be monitoring the speech for any market moving comments. Take a look at the russian stock markets, see what happened overnight. Up, if you can believe that, given all the things that are going on. Were going to talk about all of this. Surprisingly. Its continue to go up. Take a look and see whats going on in europe overnight. We do have red arrows across the board, marginally down. The ftse 100, cac, dax, the dax perhaps the most pronounced having a little bit of trouble. As becky mentioned, the feds twoday meeting begins today. Steve has the result of the famous cnbc fed survey. Steve. Andrew, thank you. What youre going to do in this survey, up 41 market participants. Economists, fundamentalists and analysts, lets get right to the data here. What about the january meeting . 98 say theres going to be a taper. Who is that guy or girl who is not on board with that . Average taper of 10. 1 is billion. How about for all the meetings this year, 81 think theyre on this track essentially of tapering 10 billion. What about 2015 . Well, well call this quantitative uneasing in 2015. 2 say the fed will increase the Balance Sheets. But 39 see a reduction. 59 say it will be unchanged. Of those who say its a reduction, looking for the Balance Sheets for a small 900 billion. Fwal sheet right now, 400 billion and growing quite a bit. Theyre divide over how that ends. About half of the respondents expect a you in unemployment threshold. Half expect qualitative guidance to replace the special. Lets move on and take a look at the thoughts on the speed of the feds taper. 27 say they should taper faster. 10 say slower. How about do they have it just right . 59 say the current pace of tapering is just right. What about the risks to the forecast . I think its an interesting question. Employers say that the fed is more hawkish than they believe. A full third say theres a risk that it will be more dovish. And 40 say the risks are balanced. In general, for Interest Rates, 2015 looks like the liftoff point. The Third Quarter is the average. And you can see the year in 2015 fed funds forecast up to 0. 83. So thats a couple fed rate hikes built in for 2015 already. Thats about where weve been. Not a huge change there. Guys, were looking for better growth, but one of the things thats happened is increasing concern about the geopolitical situation. Russia, ukraine and china are more and more in the comments of those responding to the survey. Do you expect the fed will address any of those . I dont think theyve raised them to that level yet, becky. I dont think theres a clear conduit for those issues in the domestic economy. I think there was a clearer conduit in that domestic market that we had. Russia, ukraine and china and i think theres an expectation that what happens in china can kind of stay in china. I know guys say that because you dont have clear lending from outside. But it seems like most of the people who are on the hook in chinas default but what about export import activity. So that jpmorgan did a big study on the conduit of china. He found a very limited effect on the developing nations from a china slowdown. He said a 1 shock is equal to about that i agree, but what about that affecting economies and that in turn effects its not really direct because china says stuff in and sends stuff out. Its not really a consumer ending place. When you say and you have, by the way, yau setting effect in terms of lower prices. A china slowdown means lower commodities. Were not going to hear about china, were not going to hear about the ukraine and russia . That i imagine they wont talk about. But they could talk about china, right . I highly doubt it would appear in the statement at this point. You had a risk of financial consageon, getting into the statement is a big deal. Getting into the statement means theres consensus of 15 or 16 people out there that agree that its a problem. Were a long way from that with china or russia. It is now official, hertz is spinning off its Equipment Rental business. The Financial Times reported yesterday about the separation that would happen, talked about it on the program. That business will be split off into a separate publicly traded company. Hertz reported Fourth Quarter earnings of 26 pure share. Revenue fell as does its earnings forecast for 2014. But as we mentioned yesterday, i just remember that article. Theres a famous article in business week during the buyout boom and everyone thought in this company was going to be left for dead with all the debt thats on top of it. Its been one of those Great Success stories in lbl land. Rising price res putting it squeeze on consumers and companies dealing with the wall street economy. Forecasts estimating that Retail Prices may be rising as much as 3. 5 this year. The biggest annual increase in three years as a drought in parts of the u. S. And other producing regions drives up many prices. The bureau of labor statistics will release its latest monthly report on Consumer Prices for food and other products today. Much of the increase comes from meat and dairy prices. I heard that avocados are on the rise. Jim cramer said it yet. Can it you what the discussion is going to be . Yeah. We will see higher food prices, high higher additional. Yeah. What youre suggesting is the federationing rates will make it rain. If you read what you if you believe what you just read, andrew, its a droughtbased agricultural problem. Its because of a lack of rain. I thought you were going to go a different way. I thought you were going to say because food and energy dont count. They do count, but if its a droughtbased problem, then the fed is not going to make it rain through its Monetary Policy either way. I like having you here. I keep gives us this idea andrew that inflation is a generalized rise in the price level. But the fed might expect if people are paying more for food, theyll spend less on Something Else and that price would fall. So you wouldnt necessarily have an even price level, but it wouldnt rise as much as food. By the way, food is a big part of the backfield. This is the morning show. Price of coffee futures up 70 this year. Thats a drought. Im not sure if thats a drought. So many people watch squawk in the morning and theyre getting their cup of coffee, theres a demand, supply and balance. I hope thats the case, andrew, but i need to look into the reason for the coffee rise. What happens is, you know, if theres too much money out there, youre financing these price rises, youre monetizing them and that allows it to happen. Then theres a case of your mon talz policy being out of walk. I think the hog prices may be because of the feed that goes into it. Its just gotten more expensive, too. That will be joe. Bacon in the morning, yeah. Walmart isnt playing around when it comes to video game competition. The retail giant will now allow shoppers to trade in used video games for anything from groceries to electronics. It will become a giant player in the 2 billion preowned video game business. Gamestop, target and best buy currently offer tradeins for new games. Shares of game soip might be unchanged. Microsoft may soon be unveiling office for the ipad. This is outrageous. Its taken this long . Where have they been . I have spent too much time searching for office on the ipad only to find out that it wasnt there. Go ahead. You read it. Microsofts new ceo is going to be holding a news briefing on march 27th focused on the cloud and mobile. And that is where the what theyre now calling the nadella announcement. Including popular word, excel and powerpoint programs. Take a look at shares of microsoft. I want to see if im 1,000 with you in the greatest mistake that microsoft has made in the last five years is not if they had put office on board, they would have been able to protect their entire franchise from google and google docs. No question. Here is the thing. My understanding was microsofts failure to do that created a lot of innovation in that area. Huge opportunity. But did anybody really take hold . And have they really lost market share they will not be able to recapture . We spent last weekend trying to make powerpoint work, even work on the Apple Computer not even for ipad because the kids need it. Do you think going the has made huge inroads . I know so many people that use google docs. I think that whole business would have not thats interesting. And i think this whole Microsoft Office 365 sort of came so late, if they were there earlier market share. They will catch what blows afterwards been. Yeah. So i have now gone to the i pad with the with the keyboard. Soot apps and the microsoft offi office, ive worked around it in different ways. I use ever note now. I think im going to have to switch because of functionality. How much would you pay . Good point. Would you pay 20 for the app . Would you pay 80 for the app . Probably 100 for the suite. How many people now have an ipad . I would love to be able to say, tim, what does this mean . Does this mean that the innovation has happened in the sclus of mike roy soft go away or does some theyll never be able to get back. We feel the same way about this. This is a huge issue. Another personal problems that today were just a few hours away from disneys annual Shareholder Meeting where investors will be discussing the companys performance. Disney stock is up 240 . The ceo said bob iger, take a bow. By 20116, will the company find another boss . That is the question. Joining us now is tony whimble at Danny Montgomery scott. Good morning to you. What are we going to hear from mr. Iger today . Lots of questions about who is waiting in the wings in terms of succession. We hear a lot about execution. This company has built a tremendous number of brands. They had a lot going on in the parks and you also have a lot going on at espn. They continue to be a best in class franchise. Not to mention you have things like frozen out there continue to go build money in a lot of distribution channels. Everything from video games to tv. Can you gossip with me a little bit in terms of was going on over there. Theco chairman and sweeney did a Media Networks saying she was stepping down. Some people had put her on the potential list to take over after mr. Eager. This is now putting attention on is it is it r affaro . Yeah. Disney is great as processing management. Its really like five different organizations. Obviously, the theme parks is a large drive of growth, too. Who gets the job when it comes down to those two . Honestly, i hate to say at this point. Cheryl sandberg of facebook, is there any chance that she becomes the ceo of disney . Honestly, i think an intern candidate is best here because it is such a complex business and stuff is changing rapidly. You look at todays news about amazon having a set top box. That changes the whole dynamics. We have Webb Companies starting to sell content online. You have the consolidation of Companies Like comcast and time warner. I think you have to have somebody who is running with things daytoday. Theyll probably smooth that transition. Sony, there would be a couple of votes today, one on pay, another on proxy xwashlt r impacts. Yeah. Media continues to be one of the highest payers of ceos. In addition in the case of iger, this created a lot of value. We tend to professor viacom over disney here. But that stock has outperformed disney. Everyone wants contents. Contents is still going to be needed as you go into this new world and making the wrong decision can be disastrous in this area. So i think its really important to have the best management out there and pay is going to be a function of that. Tony, real quick, i understand disney passed through a price increase on its theme parks and had higher rev fle ee. Did more people go to the parks because the weather was lout lousy in other part of it is country . The bigger driver is all the investments theyve put into mrai. In the east coast, the Magic Kingdom has added a facially substantial area thats still being broadened out. In technology, i dont think that makes sense. Were constantly looking at the pricing and it continues to be favorable for these guys. We are hearing that 100 price point. We will watch that price point. Tony, thank you for vepg us preview it this morning. Mohamed elerian is now tweeting. The former ceo of pimco will be sending out his messages and views of the market in 140 fabulous characters, but will not be commenting on any of the drama regarding his fallout with pim pimcos founder bill cross. You can see find him at elerianm. Im writing on Business Insider, is that what i Business Insider. We have to get him writing for cnbc. Com. Speaking of which, go to cnbc. Com and see the full article on the fed survey. When squawk returns go right away. Is there a consumer backlash to amazon raising the prime rate . That story is coming up with the executive edge. I guess you can tell them how much you want to pay and it gives you a range of options to choose from. Huh . Im looking at it right now. Oh, yeah . Yeah. Whats the. Guest room situation . The name your price tool, making the world a little more progressive. Time now for the executive edge. Citigroup, goldman, jpmorgan and others are trying to kill a bank tax bill. Companies reportedly curtailing financing for gop law managers and warning of an economic hit. Behind the scenes, heres whats going on. Banks are renouncing policymakers regarding deep concerns about the bank tax saying it reddens Economic Vitality by reducing access to credit and curbing economic growth. Guys, not a lot of people on wall street not so happy about this. Does this make sense . Well, that depends on if you think the banks get a big advantage by having the government backstop. There have been competing views on this. Some say no, theyre at a disadvantage. Jim jim. Steve, is the subsidy real . The subsidy is real. I was confused by this story and im confused by the logic behind all of it. First of all, the issue is camp fine, saying they were going to beat this task like a mule. Theyre not in favorite of this, either. But thats what i dont get. This is a big bank tax. Its 5 billion and higher, so andrew, do you remember, ive read the reasoning for why hes opposed to it and why the banks in general say hes opposed to this whole thing. I have read his views on it. I thought the whole idea goes to this is basically a tax to suggest we dont want you to get too big. We will call and ask him. Yes. Has said that even though on this doesnt affect his membership, per se, hes absolutely so its a little bit of hypocrisy in all this. Some people say you shouldnt have these taxes on a specific industry. But those same people are fine with different subsidies that affect different industries. So it strikes me that you cant have it both ways. You should be okay with the tax on this because thats but to this point, the republicans have not been in favor of this. Dave camp, i believe, is saying that when this comes up as part of the larger overall, tax reform, that the banks will be some of the biggest winners in that outlook. And so he thinks this is fair. We had a couple owe other stories to get to. The empire states mansion tax is raking it in. According to the new York Department of state taxation, its a 11 levy on homes sold for 1 million. Reached a record 259 million in 2012, 1213 fiscal year one 22 from the Previous Fiscal Year and up 47 from the market bombach in 2009, 2010. This is a story from robert frank posted on cnbc. Com. Many argue that the mansion tax first imposed by governor mario cuomo in 2009 should be adjusted for real estate inflation. Brokers say a Million Dollar apartment back in 1989 would be sold for about 1. 9 million. Today in manhattan, it might be time to name it the lavish studio apartment tax. A Million Dollars sounds ridiculous, but it doesnt buy you what it used to stay. New york state is at least two different states. You have new york city and then you have other places that are very rural and even places like buffalo where 1 million is a very different house than a Million Dollars which is a in new york city. It should be based on an average sales price. Ian sent out a list the other day about the most expensive places to live and new york city didnt even make it in the top 25, which was hard to believe. The dollar per square foot is higher. I took a pay cut and when i moved back to new york, i lost that subsidy. All that security you traveled with was very expensive. No, there wasnt any security. And finally, this story is close to home, i think, for maybe everybody on the set this morning. Another story on cnbc. Com today, because theres a consumer backlash that may be happening to amazon, it just raised its prime might be price to 99 from 79 a year. I have prime boxes in front of my house every day. A survey by brand key survey it might be a shopper backlash that might have been more severe than expected. Brand engagement and customer loyalty, amazons rating fell from 93 the to 82 following the hike. I think those are still good numbers. Its a pretty big deal. You may be unhappy about it, but how many people are saying forget it, im not going to pay it. People think theres a lot of value in that product in the 20 bucks. I dont think people are going to get too upset about. I think 99 doesnt sound like all that much. I tell if it jumped up to 129 or 139, that would have been a bigger deal. Its like a rented they were surprised to see on the united front talking about that bank tax. And i think the theory is, this is a tax simply for the purpose of raising revenue. And that is what has bankers overall concerned. If you start looking at taxes that are arbitrary and targeting an industry, thats the concern. The cameras should have right. That theory that if you dont stand up for your brother guides, when we return, the luck of the irish rubbing off on the markets. Will the fed keep them moving forward . Well take a look at yesterdays winners losers. Back in a moment. 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. For what reality teaches you firsthand. In the face of danger, and under the most demanding circumstances. Experience builds character. Experience builds confidence. And experience. Has built this. Introducing the 2014 glk. The engineering and the experience of mercedesbenz. See your authorized dealer for exceptional offers through mercedesbenz financial services. Through mercedesbenz 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. Welcome back to squawk box this morning. Good morning. We are right here on cnbc. Im Andrew Ross Sorkin along with becky quick. Steve liesman, joe is off today. News involving car rental giant hertz global this morning Just Announced the spinoff of its Equipment Rental business. It will be receiving about 2. 5 billion as a result of all this. Plans to use part of the proceeds for a 1 billion Stock Buyback Program remain toes be seen today whether investors will pay more attention to that move or to the fact that hertz reported Fourth Quarter profit below street estimates and the downside is forecasting earnings for the full year shy of street predictions, as well. They take a look at dow component American Express because its also in the news. That company is selling half of its Global Travel business to a newly created joint venture. The business will operate under the American Express Global Business travel plans name. And im surprised a little bit about that because theyve always had that under their umbrella. Check out the website of Bitcoin Exchange mt. Gox. You will see something you have not seen in about three weeks. The ability to log in and check an account. That doesnt, however, mean any of the missing bitcoins have returned. Mt. Gox filed for bankruptcy protection last month. The site went down three weeks ago and since then has only occasionally checked the progress. So you can check your balance but theyre still listed at zero . My guess is theyre always wrong. Markets are breathing a sigh of relief. Joining us right now in the markets is lou breen and on set with us is michael hanson. Lou, lets start with you. Were saying that weve breathed a sigh of relief over the situation in ukraine. Could this co back to bite news a big way when we see the next steps . Im not exactly sure what the sigh of relief is about except maybe that the troops that were amassed on the border didnt go into ukraine. But it seems to me that it was about crimea, about the poll in particular that was the key to this all along and this real politic of putin has taken it over. Putin got what he wanted and the world is a little bit less good because of it in the sense that if a large neighbor can go and take over the sovereign property of someone else, then theres a problem. And i think that if were going to shift back into a cold war economics, you know, the econ y economies may be able to be around during that, but the shift into that could be problematic. So the sigh of relief, we went up yesterday. Im not sure it was so much ukraine that was sitting as a status quo. Maybe it was the possibility of china stimulus that the sigh of relief was about. Thats an interesting idea. Michael, how about you . Ukraine is hard to figure into any model thaw might be looking at at this point. Yeah. I mean, ukraine is very uncertain what the end game is there. And i think the markets still have a bit of volatility. Obviously, if we move into market reserve, a cold war environment probably would not be a positive. China is interesting. I heard you talking earlier about the spill over into the u. S. A lot of chinas problems are on a scale that doesnt threaten at this point the global economy. But theres a lot of nervousness. People have been looking for the dark spots in china if a for years. So if these start moving to the surface, i think you would see market reaction. Would you change any of your forecasts for u. S. Growth based on what you see out of china snap . At this stage, no. I dont think, again, that the spillover effect into the u. S. Is significant enough to have a Material Impact on the growth outlook. The trade channel is relatively small. Its larger than a closed economy. If football contagious effects is significant. But again, its relatively small. Lou, i dont know if you got to see the results of the fed survey, but tremendous agreement on policy for the rest of the year. 98 . 81 say the fed tapered by 10 billion. That kind of agreement makes me nervous. Is it really quite so whats going do happen the rest of the year for the on fed . Well, that certainly i think thats the fed intention. Maybe the survey is reflecting that, steve. I think the owner would rather be in the business of Forward Guidance and Forward Guidance on a qualitative way that she can control rather than having the data sort of point the fed towards the direction the fed should go in, such as the 6. 5 unemployment rate. But i think she would rather be done with the quantitative easing and moving move on from there with the Forward Guidance when she thinks is a more powerful form of policy. You know, whether that could be debated, but i think thats where shes coming from. What do you expect from yellen in the News Conference . I think shell do well. Shes ledgendsary for preparation. Obviously, she hasnt done pretty conferences before. I think shes doing a good job before congress, all things considered, so i think shell be fine. Lou, i know you think theres some interesting things into this rally five years. Whats interesting about this . It is interesting. I look back over the last three decades and not necessarily at the marks, the beginning and end of whats considered the bull market. But at the beginning, measuring five years out from a distinctive point, such at august of 1982, the beginning of the reagan rally. Once that went to august of 1987 when it started to roll over. Then in october, we had a very difficult time. Then the beginning of 1995, after a flat 1994, the markets started to go up to 20 or more minority next five years to the beginning of 2000. In march, the s p and the dow peaked in january of that year. We had october of 02 going up until the october of 07. So five years out, for whatever reason, is kind of interesting. And i think that, you know, now that we have to think about what russia and crimea means and is china doing something interested by widening the band and adding an extra to things, a lot of things that are coming together at this fiveyear juncture. Its not that it has to stop there, but at that juncture in the laugh three decades more than once. Coming up, the prophet, Marcus Lemonis joins the studio in just a few minutes. [ male announcer ] how can power consumption in china, impact wool exports from new zealand, textile production in spain, and the use of medical technology in the u. S. . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 75 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. I takbecause you cant beatrning for my frzero heartburn. N. Ses woo hoo [ male announcer ] prilosec otc is the number one doctor recommended frequent heartburn medicine for 8 straight years. One pill each morning. 24 hours. Zero heartburn. Welcome back to squawk box. It is it is time for the squawk planner. The Consumer Price index reloosed at 8 30 a. M. Eastern time. Along with Housing Starts. Disneys annual Shareholder Meeting will be kick off at 11 00 p. M. Eastern time. Oracle is expecting to report after todays closing bell. Thats todays squawk box planner. Standing right next to me is the profit, Marcus Lemonis is stand by me. Big challenge this week. Yes. What is the challenge . How not to run a business. Okay. Well get a full preview of tonights business rescue. Plus, hits opinion on how gm is handling the recall. Squawk box coming back right after this short break. [ girl ] my mom, she makes underwater fans that are powered by the moon. She can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. My mom works at ge. 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. Geico motorcycle. See how much you could save. Weve got a new episode of cnbcs hit series, the profit airs tonight. Here is a preview. Kind of looking like we havent, you know, done such a good job. I mean, weve done the best job we could. Go ahead and pat yourself on the back. One thing about me, i dont look at myself as one person. I look at myself as about 85. Why . Because each one of them guys out there probably have two to three kids. Theyre all depending on stop giving me lines that you think i want to hear. Everybody has not just you. I could care less if ithd any credit for any of this out here as long as its moving and going and making money. You make it sound like youre telling me that youre theres 4 million. I guess what it is, up until this point, ive been proud of what ive done in business. You come in here and make me feel like a piece of [ bleep ]. You say our inventory is off by 80 grand. I would beg to differ on that. Then go out and count it. We have to move forward. We cant rely on any one person to make sure that happens. Im replaceable and i can tell you for [ expletive ] sure that im replaceable. I love it when we can bleep stuff on Early Morning television. Joining us now, Marcus Lemonis. Marcus invests his own money in trying to help struggling businesses make a comeback. I dont know if youre a Business Expert or more of a psychiatrist or psychologist. This is an interesting business. Weve shot 14 episodes of this show and this by far was the hardest episode. Because youre dealing with youre dealing with a couple that has been together for 20 years, broke up three years ago. And you think that people that would sign up for the show would understand that theres cameras and people are going to catch things. They tell me about their personal lives, they tell me they dont want to pay taxes because the government is a big scam. Yeah. Here is the thing. Not everybody can have marcus lee moneyis visit their business. It seems like this idea of having somebody come in and unwind the craziness inside a business. You know, Small Business owners, they are playing every role in their business. So its hard for them to take a step back and see whats actually happening. In some cases, theyre open to it and you can make all the changes you want to. In other kcases, they tell you no, they dont want to do it. People look at this as their baby, this is their life and youre telling them their baby is not good looking. And thats something any mother would not appreciate. This is the rv business in particular, thats a tricky business. Before 2008, whats happened since then . This business was a little off. Prior to 2008, the rv business was fantastic. Its a combination of the Housing Market in the car business meshed together. So its definitely susceptible to a number of things. What is the percentage of businesses that you get involved with on the show have succeeded longterm, meaning and are you going to come back to these later . We did an update in episode two of this season of episode one of last season, which was car cash, which is doing wildly spectacular. We had one company that has not done so well. And then an Ice Cream Company out of new jersey called mr. Green tea which has gone from 2. 5 million to 6 million. So, you know, we like the fact that they dont always do well. I think thats more real for people. I think this episode you have a portfolio of companies and not any one company has to do well. Yeah. I pick up another six in season two that range from Key Lime Pie Company to a candy manufacturer to an auto dealership. And we try to pick up things like what is your relationship you have with these owners . I was late for dinner. I was sitting in a hotel glued to the tv. I couldnt believe it. We would get to a commercial and id say, ive got to go. And then you would tease the next part. Then i would wait and it would happen again and again. I had to wait until the absolute bitter end. And i thought, could i tivo it . But anyway, to your credit, it was remarkable. Its trying to keep a very good balance between entertainment and having people walk away with the business. Thats the montra of the show. Everybody has to leave each episode with one big lesson. We have to ask you about the automobile business. Gm is in a whole lot of hot water right now. How is she handling it, how are they handling it . Gm is in trouble right now. I think with Consumer Confidence finally coming around in the last several years, General Motors has a car that they can count on to now have to question it, its going to hurt them. Its going hurt them on monday what should she be doing . Full disclosure. If you were going in there as the profit and you were going toik to make some change, what would you do doing . Id rip the bandade off. Whats the bandaid . Everything that happens, that spran expiresed during the recall process, full disclosure. Be honest, this is what happened and this is what went wrong. People want news. I want the bad news. I can read the good news somewhere else. I think you need full disclosure, take ownership. Maybe the best thing out with there, without a doubt everybody manufacturer has some sort of recall. I can pull up the service record. Its become more elevated today. People are yelling at each other. What is the take away . This particular one is pay your taxes. With. Relationships go bad. And you have a situation is that true for marriage or just significant other . Or friends or family. You shouldnt work with people that youre friends with or married to. Thats a good thing none of us like each other. Partnerships breaking apart all across the nation at this hour. I have a dealership question. Are you following the tesla thing in new jersey. I am. Im more than following it. Do you you have a view. I do. I have an issue with an auto manufacturer being able to directly sell to the consumer. Its not because i dont believe in free enterprise. Seems free markety to do that. If you want to have an auto manufacturer when their core competency is making cars, not selling cars. Line up a multitude of dealers in the market and let them compete. How do you control margin and service after the sale . Love the car. I love tesla. I think its a fantastic car. I just dont like the way theyre selling it. It just seems crazy to me. I know were almost out of time. The idea if i make something i cant sell it directly to you. You can but theres an infrastructure in place that exit existed for 40, 50 years. Not with tesla. There were small hardware businesses, then home depot came along. If the cable thing doesnt come unitout, get into marriage counseling. Thats my advice. Everybody, watch the show. I will be glued to it. When we return, russian president Vladimir Putin is expected to speak in the next hour. Well be monitoring that speech for marketmoving comments. Whats next for the bulls after the st. Patricks day surge . Squawk box coming right back after this. 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. 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Before starting humira, your doctor should test you for tb. Ask your doctor if you live in or have been to a region where certain fungal infections are common. Tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. You should not start humira if you have any kind of infection. Take the next step. Talk to your doctor. This is humira at work. The new ceo of bnsf railway, carl ice. The train is pulling out of the station. Squawk box begins right now. Good morning and welcome to squawk box right here on cnbc. Im Andrew Ross Sorkin along with becky quick and Steve Liesman is here with us at the table. Joe is off today. Before we get cracking lets get you caught up on this mornings top stories. Take a look at the futures. The dow looking like it will open down 29 points, nasdaq down as well, 12 points off, the s p off 4 points for now. Lets get you through some of the headlines. The federal reserve, theyre beginning a twoday policy meeting starting today. Janet yellens first as fed chair, policy statement is due tomorrow afternoon followed by yellens News Conference. The central bank expected to continue its taper and cut. Its Bond Buying Program by another 10 billion by month. Well be getting the latest on Housing Starts and the Consumer Price index. Consumer prices are expected to match januarys 10 increase. Housing starts expected to rise 4. 6 after a 16 plunge in january. The story that never ends, unfortunately. The search for the missing Malaysian Airlines flight well into its second week. The investigators are focusing on why the plane appeared to have turned west off its original course. Tom costello is reporting that the move was programmed into the jets Computer System and was most likely programmed by someone in the cockpit knowledgeable about Navigation Systems who that was of course remains unknown. Steve and i and becky have been talking about another report thats out that the possibility of an electrical fire. Its a tweet by a guy that sounds like hes an experienced pilot. Its making the rounds on twitter that said lefthand turn made sense as a turn for an airport. It almost sounds like too easy to miss. It made sense if there was a fire on board, he speculated it could be something from a tire fire, electrical fire. As a pilot, you are told get to the closest airport. That lefthand turn would have put him on course for one that was there within 13,000 the discussion andrew and i just had, if you had a fire emergency would you program it into im not sure you stay in the air. It does explain the shutting down the circuits and the transresponders. He says one of the things you would have done it shut off Circuit Breakers in the event of a fire. Right. And then a fire like that, if it was a tire fire could be overwhelming and made everyone on board pass out. Thats why they would keep going for so long. Thats speculation. Thats all were left with at this point with the story. Another important story this morning, russian president Vladimir Putin will speak to both houses of the Russian Parliament this hour. Youre looking you should be looking at a live shot from moscow right now. You are moscow, steve. I am not moscow. Thats inside one of the kremlin buildings. It looks like to me, not the duma but maybe it is. Lets get a quick update on whats going on in ukraine right now. Steve sedgwick joins from us kiev. Good morning, steve. Reporter hey, steve, were watching the same pakts you are, trying to work out what hes going to say next. I can tell you one thing hell say. Vladimir putin signed an executive order on executing the agreement between the Russian Federation and the republic of crimea, basically saying about this having an administration of the republic of crimea into the Russian Federation. The west hoped that it was going to halt with the independence of crimea. It looks like he wants the full ascendancy of the crimea into the Russian Federation. There had been a hope that when we had tepid sanctions from the white house and the eu yesterday, that was an olive branch to the russians saying, look, these are mild sanctions. You come to the table with something. Clearly if that is the case, theyll get the succession into the Russian Federation. The republic no one else around the world actually acknowledges that crimea is an independent country now, clearly thats another leg forward in this. I can tell you politicians here in ukraine, ive spoken to the Prime Minister in the last 24 hours, two of the lead president ial candidates, including parshenko and klitschko. She feel it isnt just about crimea or eastern ukraine. It was said to me, russia wants kiev, it wants the whole country. Back to you. We are looking at pictures of Vladimir Putin coming out to address both houses of parliament known as the duma in russia. And what steve was just reporting is that putin has reported a Draft Agreement between russia and the crimea to make crimea to make part of russia. And the question becomes not what happens now but what happens next if crimea becomes part of russia. Does putin lose ukraine . The rest of what remains of ukraine . Is there a danger that putin moves further into ukraine taking the eastern provinces and undermining that country . Not just ukraine. Other baltic nations are looking at this with huge concern as well. I think theres thats definitely a fear. But less concerned about immediate concern about that with what is overall game plan is. Well have boris jordan on. One of the first guys i ever met when i moved to russia. One of the earliest investments. I think hell give you a russian perspective. We have u. S. Diplomats, even president obama saying, look, were still going to be negotiating and talking about this. But right now, putins going to be speaking and saying what he thinks happened. Are we negotiating as this is all taking place . I think thats right. I think the question becomes what the end game is here. I think that theres pretty good bloo ef that crimea belief ts lost. The question is what is the next process. Well talk more about that later this morning. In the meantime, the markets posting solid gains monday. But chris says that is more about the market short term more than anything else. Also joining us this morning is jim paulsen, chief investment strategist at Wells Capital management in minneapolis. Chris, explain what you mean, this is just about the churn. Well, yes, i think recently youve seen the market be exactly that, digesting the big gains weve had from last year. We had a strong q4. Were now 11 weeks into the new year and were flattish across most Major Industries in the u. S. As we look forward, its all about earnings. I think we have to digest earnings as well because we clearly had a difficult northeast weather situation. And clearly from dupont, all the way down to utx, weve talked about it. Business was soft, weather related. All right. Jim, lets talk about what you see happening. Ukraine, we saw this weird bounce for the markets yesterday. I know it was a foregone conclusion what was going to happen with the referendum. Do you think this is now off the radar screen . Well, i think, as steve said, i think it will hang around in terms of being headline risk for the market, becky. Its fluid and well have to see where hes ultimately going to take this. I think thats temporary, unless theres western military intervention here, i highly doubt that, i just dont think the west has the mindset to support or culture to support military action here. Unless you get there, i think this is going to be more headline and temporary risk how this plays out. I think the big event thats coming directly at us now is clean Economic Data off main street in the United States. We might get into the april here, maybe with the jobs report and finally starting to get some data on a read on what the momentum in the economy really is. And it might be what the market is starting to pick up with yesterdays better than expected, you know, manufacturing, Industrial Production report. We had a better claims number last week. To the extent that the economic momentum remains fairly solid, i think this market will go higher. I think it will go above 1900 towards 2,000 and that forwardlooking windshield view i think will be more important than the backwardlooking view at earnings for the first quarter. Jim, you had been less optimistic when weve spoken with you recently. This is something you think the economy is taking off. That will be the driving factor . I havent changed too much, becky. I think this year will be about good news, initially being good news for stocks. But ultimately good news becoming bad news for stocks because it starts to become bad news for Interest Rates and also for the fed and inflation. I have to give you information here. Jim paulsen was one of the respondents to our fed survey. Nobody believes the fed will reduce its assets more next year and will be tighter and do more qe uneasing than jim paulsen. Next year . Next year. By a factor of four. Jim, what does that mean . You think this will be a strong year for the markets but next year look out . Well, ive said this is going to be a volatile but flattish year. Weve already gone down on underheat fears early. I think weve head higher now over the next several months on better than expected economic reports and maybe the last half, becky, we start to get over heat fears, bond yields maybe go up 3. 5 to 4 . We get concerned about whether the fed is behind the curve or how much they may have to accelerate the tapering program. Maybe theres an uptick in inflation indicators. No one is noticing that the crb index is up 11 , 12 off january lows right now. We talk a little bit about that. Wage inflation ticked up a little bit. Im saying we could have a fear of that and that might cause a correction maybe in the stock market in the latter half of this year. Thats what im looking at. Chris, you think that capital expend tours Capital Spending will pick up significantly . Yes, we do. We think that will be a bright spot going forward. I wouldnt disagree with jim that theres pentup demand most likely in the works. If youre the northeast, youll be having to dig your house out of the snow and fix your fences, et cetera, over the next few months. For the most part, that pent up demand is not the steady state type of economy that well have. Where i do think as you referenced, a pick up in cap ex spending, Many Technology areas and industrial session millions. Multiple years since the Great Recession theres been a slow move by companies to deploy capital back into their businesses. But at this point of the cycle they are starting to do so. Weve talked to Many Companies who are waiting to do so. I think the story as we go throughout this year will be a slight shift in mind set by companies. The last couple years its been a return of capital to their shareholders in the form of share buybacks. Dividends, now it will be a review on return on capital which is capital deployment, potentially m a. We think its a big theme throughout this year as well. Thank you both for joining us. Jim, you have very well explained your thesis on this. You have in times past, too. I think i was getting confused myself. No problem, becky. Thanks. Mcgraw hill Financial Holding an investor day. President and ceo Doug Pederson will talk to us first on cnbc about new moves to boost shareholder value. Weve also been monitoring Vladimir Putins speech this morning. Well have an update on some of the mackettemoving comments in just a moment. Steve has been looking at that. That when when return. 7 30 a. M. Eastern, xerox ceo ursula burns. More coming up on squawk box in just a moment. Welcome back to squawk box. Checking the futures right now, they were down earlier this morning. Theyre down just about as much as they were. Down 35 points on the dow, 5 points on the s p 500 and 12 points on the nasdaq. Mcgrawhill had news for their Construction Unit as well as targeting at least 100 million in cost savings over the next three years. Joining us now on set, Doug Pederson, mcgraw hill president and ceo. Tell us about the new moves this morning. Thank you. Good morning. Mcgraw hill financial has positioned the company over the last three years after significant divestitures of education, publishing, broadcasting for 2. 7 billion. Weve invested in the meantime in some very small critical acquisitions for growth businesses. Were ready to now grow with the trends of very important trends of the markets, things you talk about every morning. Such as. The debt markets. The debt markets in the u. S. Are growing. Theres a very big backlog of finance markets that are required in europe. We see what will be the impact of the ltro and the asset quality reviews at the banks. We see implications going into the Capital Markets. We see the debt deleveraging will lead to more Capital Markets products. The trends of emerging markets and very importantly theres a huge Global Infrastructure need that has to be financed. You havent necessarily left behind yourselves the reputational problems coming from the financial crisis. We have invested significantly in our controls in our underlying foundation of compliance so that our entire organization is one that has taken the Lessons Learned from the financial crisis. We become regulated heavily. Just tell me how this next time it would be different. Next time would be different. Let me give you an example. We have a group called the Credit Conditions committee. Its made up of our chief economist, our economists around the globe that get together every single quarter by different regions, the asian regionia, the latin america region, the americas. They look the aeverything going on in the markets where we could see a credit bubble. One of the regions we identified is the chinese Real Estate Market. We were digging a lot deeper into the leverage of the chinese Real Estate Market and the overall, now informal, Financial Sector in the chinese market. Do you think the model is still conflicted . I mean, by default im going to you, im paying you and asking you to give me a Credit Rating agency a Credit Rating on my product. No, its not a flawed model. Our model is one that such the entire purpose of the model is to be transparent, to be paid independent from that rating. We have a solid, very high solid fire wall between all commercial activities. Have you ever looked at that model and said, that model is interesting . The model that people raise would be what if the investors pay. There was the investor pay model used to work in the prepenn Central Railroad bankruptcy. That was the model that was used. It turns out under the investor pay mod thatll you end up with the investors having a vested interest in the ratings and they also get selective disclosure. Whats the cloud right now to the extent there is one hanging over the Company Related to this government suit that is here. Lawsuit. This is the financial crisis lawsuit and you have come back by the way and you are youre not suing the government but claiming this is retribution. The government, the department of justice launched a lawsuit against Standard Poors last year in february. Right. Since then we have been going through the Traditional Court processes that any discovery goes through in a civil trial. And we have put it forth our 19 defenses of which one of them gets a lot of publicity. We believe fundamentally we have a strong case. That one being you believe because you downgraded the u. S. Government that this is retribution. That theres retaliation for that. You believe that . We are asking for the government to give us discovery and documentation related to that topic. One of the things youre looking for, youre trying to get a piece of Tim Geithners memoirs or at least the draft of his memoirs. What do you think is in these memoirs that will help you . We have a broad discovery quest which would allow us to take a look at all of the different aspects of the u. S. Governments decision around why they launched this lawsuit. There is a period of time where the government was pursuing multiple avenues and multiple rating agencies. If you take a step back and look at the opinions that were being issued in 2007, in the Financial Markets, you saw that there were the same opinions we were issuing as the government itself. The treasury was issuing opinions that the Housing Market was under control. Is it time to rethink the downgrade of the United States . You downgraded it, yields actually fell. We dont look at yields versus ratings. The market has a view. That view is expressed through the average yield on the security. And those yields actually went down after a downgrade. Our ratings of soverence theres been a deal in congress. Theres a deal but our ratings rate through a longer cycle. Theyre not rating based on dayt daytoday movements on credit default swaps. We look for a cycle. Weve changed our outlook on the u. S. Government from negative to stable. Were going through a review on a constant basis and formally on a quarterly, semiannually and ratings basis. Im not on the ratings committee. I dont know and i dont have influence over the ratings committee. I do assume theyre looking at it all the time. You hinted youll do deals, m a. What kind of things are you going to look for . Weve positioned ourselves for growth. We sold 4. 4 we sold 2. 7 billion worth of company. We returned 4. 4 billion to our shareholders. The next time we see a headline cross the tape, what kind of thing are we going to be reading about. Were continuing to shape our Portfolio One more step to shape it by selling our construction business. Right. Which is a u. S. Based data business. Today our businesses are built around globality, deep analytics and very strong brands. Youll see us investing in those capabilities. To be more international, have stronger bands thats the other thing. Were tough on doug but you all have sources, the key sources that we use for market intel and information. Thats very true. Thank you for being here. Good luck. Coming up, russian president Vladimir Putin addressing the parliament about ukraine and crimea. We have an update on the speech and market reaction. More squawk, next. 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. [ girl ] my mom, she makes underwater fans that are powered by the moon. She can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. My mom works at ge. My mom works at ge. 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. Im michelle carusocabrera. Breaking news desk where we are monitoring Vladimir Putins address to the duma which started about 25 minutes ago, the duma being the Russian Parliament. He has not officially annexed crimea yet. It certainly sounds like hes on path to do that. What he has started to build here is the historical case first, then he went into the legal case as well. Historically he says i dont understand why khrushchev handed over crimea in the first place. Maybe he was trying to hide some of his crimes for the 30s. Russians went to sleep in one country and woke up in another, they were handed over like a sack of potatoes, that crimea wasnt stolen, it was robbed. He goes on to make the legal case. He does not consider the Ukrainian Government to be legitimate. Its a bunch of rogues, things weve heard from him before. We are still waiting for him officially to announce what is widely expected to be the annexation of crimea. The tonality of this is similar to a state of the union, except everyone claps, not just one half of the aisle or the other side. When he walked in, it was quite imperial, trumpets sounds. A standing ovation as he came in. We will continue monitoring this with the help of our producer here that we have who speaks russian, thankfully. Back to you. Thank you for monitoring that. Im sure well talk to you again throughout the program. Next, we kick off the big squawk ceo call. We have a trifecta of continints this morning. We have the ceos of xerox, kpmg and bnsf. Squawk box returns after this. Welcome back to squawk box. Im Steve Liesman. Amazon. Com will reportedly start shipping its long awaited video streaming device in april. The wall street journal says it will be available through its website as well as retailers like best buy and staples. It will carry a variety of apps and run on a version of googles android software. Pricing remains unclear, though people familiar with the companys plans said the device would come with incentives available to amazon prime members. Microsoft may unveil an ipad version of the companys Office Software on march 27th. And to applause around this table, nadella will address the media and industry executives in san francisco. Investors have urged microsoft for years to adapt office for mobile devises from mobile and google rather than shackling it to windows as pc shares decline. Microsoft gives up 2. 5 billion a year in revenue by keeping office off the ipad, which has now sold almost 200 Million Units and not one of them has office on it. Walmart will allow shoppers to trade in used video games for anything from groceries to gadgets across its 3,100 stores. The tradein service will except games for popular consoles. Customers can in turn by anything at walmart and sams club, both in store and online. Traded in games will be refurbished and made available to buyers. I have a bunch of these games. Id like a bunch of bananas, please. That might be all you get. Theres a joke in there some place. Xerox has been making strides in the i. T. And Services Businesses ever since its huge acquisition of affiliated Computer Services for 6. 4 billion in 2009. That was shortly after ursula burns took the helm as ceo. Since then xerox stock is up more than 06 . Joining us now is ursula burns herself, shes the chairman and ceo of xerox and ursula, it is great to have you here today. Thank you very much. Great to be here. Thanks for having me. I know xerox is a very Different Company today. Could you tell us a little bit about what the Company Looks like versus five or six years ago. Yes, we still remain the leader in Document Technology as you said. We provide everything from printers to copiers, fax, multifunction machines, small to large, black and white to color. We expanded a couple years ago when we bought on the company affiliated Computer Services now called xerox business services. That section of our business provides over 55 of revenues now. Weve switched from a Technology Company it a services company. We manage everything using our Software Technology and business processes knowledge. Medicare systems, health exchanges, transportation infrastructures, Customer Care. Building back office systems. The back office function for them are managed by xerox. That has to be the Fastest Growing part of your business at this point, i would assume. It is. It is. Service is growing at somewhere around 5 to 10 a year. We continue to acquire, to expand our reach both globally and in different lines of business. Use our r d to expand our knowledge base. Use this big data we collect on behalf of our customers, analyze it and add more services, give them more services and provide more infrastructure for them. Ursula, theres a lot of talk among ceos about the trouble of finding skilled workers. Can you talk about whats happening at xerox and the ability to find the people you need to fill the positions you have. Its a challenge. One competing, particularly in the United States for skilled engineers and technology people. Math skills and engineering skills. Weve been able to actually balance that and succeed by accessing the talent from around the world. Policies, immigration policies and Better School systems and Training Systems and more interest in math and science in the United States would definitely help us more. Thats one of the big things that were focused on, xerox is focused on along with many other ceos and other companies. Another big story thats out there when it comes to the growth forecast is people thinking that this is a year when companies are going to really unleash their r d and cap exbud budgets. Can you talk about if thats true for xerox . Absolutely. Were doing two things in r d and cap ex, one, in r d were shifting and investing significantly more in the services base, big data analytics. In cap ex, acquisitions is our big play here. Acquisitions increase our footprint around the world and capabilities. It will acquire in areas that have partnered in the past. As i said, were acquire to actually increase our footprint around the world. Ursula, youre spending a lot of money in terms of r d on health care, which is something i havent traditionally thought of xerox as, including this thing called xerox Remote Sensing technology. What is that . Its an interesting new start for us. Its very exciting place. If you think about doctors and patients, theyre not always in the same place. Theyre not always in the same room. Often times youll call your doctor and say im not feeling well or literally, this ability for xerox to put sensors on people simply put sensors on people. You dont have to be a hightech person to do this. And sit with a doctor remotely so a doctor can sea you and give you a diagnosis about give the doctor information so they can give you a diagnosis about what you have to do next, particularly in heart areas, this is a big revelation in heart. So people have a large amount of technology in their bodies today, pacing technology, sensing technologies to manage their heart rhythm. Being able to do this remotely allows doctors to actually provide better care and lower cost. Its really exciting thing. We have it implemented in three hospitals, Health Systems around the world and were hoping to expand it. Speaking about that, is that hoping because of obamacare or in spite of it . Was this movement under way before the government. Totally independent of obamacare. It absolutely does help this Affordable Care act. The whole point of aca, and any Health Care Infrastructure movement today, is to provide higher access, outcomebased medicine. This will help you to lower your cost, literally to diagnose much sooner and actually diagnose as i said remotely. So you dont always have to go to your Doctors Office or to the emergency room. Both things rather expensive. It increases access and lowers cost. Are doctors more open to you today . You think of a small Dominican Republic and all the things he has to do as being a Business Owner and a doctor, some doctor offices have been consolidating. Does that help them reach for Technology Like this more quickly. This is absolutely a help for doctors. Easy diagnosis made remotely can help a doctor to focus on the more difficult situations that they have to. Having a crowded waiting room, either in emergency or the Doctors Office is not very helpful. It annoys both the doctor and the patient. This allows some of the diagnosis to actually be done remotely. Ursula, can you help us understand the economy from the xerox order book and what youre hearing from your clients about the year ahead here . Yes. You know, this is going to be what i call a more of the same economy from last year. We dont see big upticks anywhere around the world. We continue to see reasonably strong growth in the developing economies, much lower than the original expectations. Europe is coming up a little bit. Europe was a very, very tough environment in 2013 and 2012. We see some stabilization and slight growth. The United States, interestingly enough, is more of the same as i said. Not too bad. Low single digit growth in the United States in both Technology Business and our Services Business. We call i call it a little bit of a hohum Economy Today but one we know how to operate in and we feel comfortable in. Id like further growth, actually. What about emerging markets, which is a place a lot of companies have seen a lot of growth in, now theres concern they may be cooling off. As i said earlier, we call emerging markets developing economies. In those economies we see growth faster than anywhere else in the world but significantly lower than the original projections. Brazil has slowed down a little bit from an unbelievable movement two years ago to, you know, very low single digit movement. The asian economies are lower, latin is lower. Its growing. The emerging economies are growing faster than the more developed economies of western europe and north america. But they are significantly Slower Growth than the original projection that we had even planned. Disruption around the world is help something of that or hurting that. And just significant movement. Thats in every economy we do business in outside of the United States and western europe. Ursula, you are joining us from the simple at work event, the first of its kind for xerox. Tell us about what that is today. Yes. This is a celebration of the new xerox. Its a celebration for our customers of the new xerox. I talked about the fact we are the worlds leader in Document Technology but as i said earlier, its interesting what we do today. We do everything from manage toll infrastructure to automated parking to, you know, offstreet parking to automated parking. We do health care exchanges, Medicaid Information systems. We actually manage Customer Care for some of the Largest Telecom providers in the world. Our portfolio is very different than it was just five years ago. And this is the first time weve brought it all together to basically celebrate on behalf of our customers with be what we can do. Celebrate and sell a little bit. Explain to people what the new xerox is like. We are still a company that does copying and printing but we are more today of a company that manages back Office Infrastructure and services on behalf of our customers. We call it simple at work. Because we want our customers to focus on what they do best, great airplanes, great restaurants, whatever they great hospital systems. We will manage everything from your finance and accounting infrastructure, hr infrastructure, your Customer Care infrastructure, your data processing, Parking Systems and road Management Systems for governments around the world. Its a celebration of the new xerox. Before you go, i just had one question. I got an email in about this. In the month of march, the company has decided to furlough some workers for a week. Yes. I dont know if thats nationwide or not. I wanted to understand how you got to that decision, why you decided to pursue furloughs as opposed to laying people off perhaps or in terms of how you think about the staff and the employee base. We did this in a particular section of our company, the Services Business in particular. That business is one that is subject to seasonality, seasonal flows of work. If we see we have a very strong and clear focus on the margin expectations for that business. When we see volumes come down significantly, or movements in client base, losing a client, gaining a client, moving clients around the world, instead of laying off people, we try to lower the burden on our employees quite honestly and furlough them for a while. We will have a mixture of furloughs and continuing right sizing of our work force throughout 2014. We should expect more of that. Not to panic, not for our employees to panic but know in our Services Business in particular, we have to get that business on a more even keel and steady base. Ursula, i applaud you for pursuing it that way. I absolutely do. Thank you. Thank you. A couple quick headlines. Ursula burns. We want to thank her. Ceo of xerox. Thank you very much. Putin saying we dont want a partition of ukraine and thats not what russia is looking for. Thats what weve been waiting for, what putin would say about further divisions of ukraine. Not looking for further divisions. Do you believe . Thats what hes saying. Well get michelle up and talk about it. Coming up, putins comments to parliament. Much more on that. Michelle will bring us what shes been monitoring when we return. Back in a moment. Then, the global chairman of kpmg, hes going to talk about the top risk in the world when he comes up on the program in just a little bit. Back in a moment. In a world thats changing faster than ever, we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Gundyes n group is a go. 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. Welcome back to cnbc, im michelle carusocabrera. The breaking news desk, we are monitoring Vladimir Putins address to the Russian Parliament or the duma. Hes been speaking for 45 minutes. First he has said crimea must be a part of russia. Then he also said, dont believe those who say that its not just crimea that were after. We dont need it. That may be why the futures have turned around and gone positive. However, i caution you, remember, just a few weeks ago he sat in front of reporters and said we are not interested in annexing crimea and yet today he is planning on annexing crimea. Other things that he said, i believe the eu, particularly the germans, will trust me. Why would he signal out the germans . Then he goes on to say, we always supported german unity. And i hope they remember that. Because he sees a parallel of reuniting, in mize mind, crimea with russia. Additionally, when it comes to nato, the north atlantic treaty organization, military organization that defends its members, he said we dont mind working with nato, we just dont want them running around in your backyard. As he started to talk about bringing crimea into russia, some members of the audience starts to cry. Theres been a lot of clapping, et cetera, but once again, what may have turned around the futures is when putin said dont believe those who say we want more than crimea. But we have heard him say things before and do Something Else completely different days or weeks later. Guys, back to you. Michelle, this comment that were reading here from the wires is russia does not need further division of ukraine. We dont want to partition of ukraine. Right. We had a dramatic move, what am i looking at in the futures, we were down 35. Thats about an 80point swing in the dow. The question becomes can he get away with just having crimea . Some of the thinking, michelle, is that he took crimea to have a further say in the development of a Ukrainian Government. If he has crimea, does he have any more say or does ukraine go further away from russia in that regard . I think thats a great question at this point. The other thing to put into that equation is the minute he annexes crimea officially, we expect another round of sanctions from the west, from both the eu and the United States. How far will those go . Will the west do things that actually hurt themselves because russia is such a large economy . So i think theres a couple of things to add into the equation there about how far he goes and how much he can control. Michelle, in your relating of his tough talk on the west, theres also the other side of that where he says putin says will never seek to spark a confrontation with the west but will defend russias interest. Is there the slightest backing off of some of the tough talk here from putten . I dont know. I see that with incredible cynicism, thats all hes done since the beginning, right, is to try to encourage a confrontation with the west, whether its syria, iran, et cetera. I take that with a grain of salt. I just want to point out, not only have the u. S. Futures turned around but the european futures have turned around. I saw, michelle, another thing that russian stocks are up 2 . I men to the check to see if they were still open. Maybe we bring up an intraday or rts. The whole question is, do you take putin at his word . When he says he doesnt want further partition of ukraine beyond the crimea. You can take him at his word today. Tomorrow is a different day. The risk reward ratio. Thanks, michelle. Up next, whats keeping those in the Corner Office up at night . A look at risks in the Regulatory Environment with the new global chairman of audit firm kpmg. Squawk box will be right back. Michelle carusocabrera at the breaking news desk. Vladimir putin has wound up his speech in front of the duma, the Russian Parliament. Theyve begun a signing ceremony. His nearly final words, were i await your support of integrating crimea into the Russian Federation. He received a standing ovation. Members of the duma have come up to sign some sort of legal document. This will appear the official announcement by Vladimir Putin of the annexation of crimea into russia or at least the process of doing so. Back to you. Of course well be coming back with more on that. Ceos under a lot of pressure increasing regulation of businesses is causing a lot of concern in Corner Offices in the u. S. And around the world. We see many examples of how one misstep can cause permanent reputational damage. Joining us now, his first interview since he was named global chairman of kpmg. That just happened in the first week or two, john veihmeyer. It was incredibly smooth and straightforward. Big issue right now, just globally, you think i mean, youve bun talking about business regulation for a long time. What in particular is the issue that youre seeing clients frustrated or anxious about . You know, i think theres a lot of consistency on that issue. One of the great things i always tell people i have one of the great jobs in the world. I get to spend a lot of my time out with the ceos of some of the most important Global Companies in the world. Theyre all saying the same thing, i think, which is theyre concerned about dealing with the regulatory competition from various countries they operate in. Concerned about technology, as both a risk and opportunity. We can come back to that. And you know, i think this whole issue around talent that every single ceo i meet with is concerned about in their particular sector. Question for you now that youre the global ceo and chairman. Do you think there are enough Accounting Firms . Thats a great question. Theres a lot going on in europe right now with respect to the profession, regulation coming out of the european parliament. Right. That is largely focused not on the issue of can we do some things to try and improve audit quality. That whole effort has largely been focused on a concern and perception on the part of some politicians in europe that theres not enough competition. Right. I think there is concentration but all i will tell you, when a Major Company decides to put its audit out for tender, anybody involved in that process will tell you theres an awful lot of competition. I think there is a concentration. Theres less than a handful of firms that can do what we do with the breadth and scope of services. You say less than a handful, down to three or four now. Four. What do you think is the right number . You know, as i said, i think we certainly cant go to fewer than four. Yes. It certainly feels like at this point, again, back to this issue of when companies decide to tender their audit, is there adequate competition . The answer is absolutely yes. The real issue is do Companies Feel like they have an adequate number of professional Service Providers to support them in whatever their needs are . I think most Companies Feel like the answer is yes. I think it will be complicated by whats beginning on in europe on the restrictions, coupled with mandatory rotation. That will put stress and strain on companys ability to use firms the way theyd like to. About 20 seconds. Can you find the people you need for the jobs you have . Its becoming increasingly difficult particularly as we look for a broader range of folks. Were making a big investment in data and analytics and innovation. Finding the data scientists is tougher than ever. Squawk box coming right back with a very big hour in the 8 00 in just a moment. Pay my bill. Phone your account is already paid in full. Oh, well in that case, back to vacation mode. Boots and pants and boots and pants and boots and pants and boots and pants and boots and pants. Voiceenabled bill pay. Just a tap away on the geico app. Huh, 15 minutes could save you 15 or more on car insurance. Yup, Everybody Knows that. Well, did you know that some owls arent that wise. Dont forget about im having brunch with meagan tomorrow. Who . Seriously, you met her like three times. Who . Geico. 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. Welcome back to squawk box. Im Andrew Ross Sorkin, along with becky quick and Steve Liesman. Joe kernen is off. Hell be back soon. The nasdaq looking like it will open higher, 10. 5 points higher and the s p 500 up close to 6. 5 points higher. In less than 30 minutes well be getting cpi and housing data. That will impact what the futures look like and how the markets open as well. Getting a headline. Putin signs the treaty on making ukraine part of russia. He addressed the Parliament Within the past hour. Cnbcs Steve Sedgwick joins us from kiev with the latest on the big vote and the outcome. Reporter let me correct there. Making crimea part of russia. You inadvertently said ukraine part of russia. Crimea. We just listened to putin speaking for 55 minutes. He pulled out all the stops, comparing the crimea selfdetermination to the declaration of independence. He compared the selfdetermination to the reunification of germany as well talked about the example of kosovo as well. He added the fact that the west has behaved irresponsibly, lost their political sense. If you press the spring it cannot hold back any longer talking about the need to be respected as well. Said we do not want to insult the feelings of the people of ukraine. We respect territorial integrity. Do not trust those who say we want other territories. That could be significant. It could mean he doesnt have immediate aspirations for the east and the south of the ukraine because there are concerns there as well. He said what would have happened to the home to the black sea of russia if nato had taken over the crimea, would we would have had to be guests in our own port. He said there is still no legitimate power in the yaushg and no one to speak with. That is interesting because, of course, that means they still dont think theres anyone to have a diplomacy with here as well. Also pointing out that kiev being nominated by ultranationalists, russi russiaphobes, radicals and impostors. Most of the people i have been speaking to want to respect the russians rights and autonomy. One more point, the Prime Minister here yatsenyuk, it will be interesting to seer what he has to say. The headlines that moved markets this morning around the world, putin saying that russia does not need the further division of ukraine. We dont want the partition of ukraine. Do you believe him . Do they believe him there in kiev . If he wants to partition ukraine, is there anything ukraine can do about it or would do about it . I will recount to you faithfully from two of the biggest politicians here said to me yesterday. The Prime Minister yatsenyuk. Klitschko said to me, he felt that the russians didnt just want crimea or eastern ukraine. They wanted kiev, they wanted the whole country. Yatsenyuk said to me, he thought putin was trying to build a 21st century version of the russian empire. That is exactly pretty much what the guy said to me yesterday. They are two of the big three politicians. I spoke to paraschenko. He still hopes there will be dialogue. Theyre concerned about russian intentions. They have vowed to protect the human rights if there are violations of russians anywhere. That might not mean eastern crimea. That has sent alarm bells ringing in astonia, latvia as well. There are alarm bells all over central and eastern europe. The market seems to believe putin, they dont in kiev. Lou navalier, jack, do you first. Is this rally warranted. I dont think so, steve. The futures are telling us in the short term the markets want to believe putin. You have to judge him by his actions, not his words. At least i believe he would like to have the rest of ukraine. But i think hell let the international furor die down and integrate crimea first. And then look at moving further west. It seems like the biggest concerns with the market right now are not necessarily domestic ones. Theyre more foreign. If youre not going to worry about ukraine and russia and the crimea, youre going to worry about china. How much concern do you have for whats happening overseas lapping up on the u. S. Economic shores here . I really dont. I think it was a Short Covering yesterday and you know, i know everybody was worried about chinas exports. They had their Lunar New Year that was distorting the numbers. The bottom line is the spring thaw is coming. Business Consumer Spending will pick up, not only here but worldwide. Well have another round of good earnings. At the end of any earnings season theres consolidation. Theres some people are looking for excuses to take profits. But we have a new earnings season to focus on. The earnings will be great in china and elsewhere. Let me stick with you and ask you your opinion of whats going to happen with markets here and Interest Rates. Well, obviously the fed meeting is huge. And i would expect them to lower the unemployment target, because you know, last year the Payroll Survey was creating what looks like too many jobs. If somebody got two temp jobs they were double count. The fed has openly talked about that in their minutes in the beige book. We expect them to lower the unemployment target. I think that is going to be a huge, huge spark for the market. Jack, do you share louies optimism about the outlook for stocks and earnings and the economy . I do. We believe that intermediate and longer term its earnings and economic fundamentals that drive stock prices. And i dont think we have a problem here in that regard. This is shortterm noise. I think the biggest concern we have this year is how quickly russia will slow down i mean china will slow down. But i also agree with louie that i dont think rates will go sharply higher this year. I think the surprise was they went sharply higher last year and the surprise this year will be that they will be moderate. I think we can have a decent year. Does that change if we get towards the end of the year and gdp is much better than expected . Weve had some people say you could get a quarter, to 5 gdp growth. Does that make the market think the fed will step in sooner and raise rates. I dont think theyll step in and raise rate. I think thats a late 2015, early 2016 event. I also would be surprised if we saw a 5 gdp quarter unless it was all based on inventory building or Something Like that. Jack, weve had a number of people come on the program in the past week or two suggesting we might have a minor slowdown in terms of the markets and things pick back up. Something you hear over and over again. Is there any argument to be made to hang tight for a while and buy in later . Well, i would like to say there is. That strategy didnt work at all last year and was very painful for anyone who was looking for a dip last year to put money to work. Because the most we had was a 5 setback. So that can be a dangerous thing to try to pursue. I think youre safer to just move your money in readily over time throughout the year. Jack, louie, thanks for joining us this morning. Appreciate it. Thanks for having us, steve. The thing im wondering about is the ukraine, crimea situation. How does putin pivot from owning crimea to having a say in the future of ukraine. He has something figured out. That was their first offer when the west, when they were talking to him, how do we reach diplomacy . His thought was to let the regions have more autonomy and decide what they want to do. People pushed back, saying, no, no, no, thats your way of getting a foothold in more than just crimea. Now that hes got crimea, the market seems pretty confident that theres not more to come. Where does obama go . Theres a hundred questions. He has no cards. I dont think so. We have other headlines this morning. If you could, take a look at shares of video Game Retailer game stop. Theyre getting slammed this morning following the announcement that walmart will begin accepting used video games in exchange for walmart gift cards. Walmart will refurbish the games and resell them at a later date. The big question is how much the games will be worth. Steve and becky debating whether they can get a banana for an old copy of i dont know what on nintendo. Hertz will use the proceeds for a 1 billion stock buy back program. Hertz reported a Fourth Quarter frost of 26 cents per share, missing estimates by 6 cents. Eric schneiderman is calling for tougher regulations. This is interesting. Among them, being able to locate their computer servers within the trading venues themselves, providing ultrafast connections and other moves to get information to traders milliseconds ahead of the rest of the market. Snyderman says markets are catering to rather than curbing should everybody have the same access . Nobody should have the ability to locate their server closer to the exchange . This goes to the whole idea of the game being rigged. Right . And the idea that one guy has an advantage over the other guy. This is a technological advantage, if you pay more than i do, i somehow get it doesnt make sense. I did a story on this. I went to a location in new jersey that was close to the nyse servers. The real estate prices had gone up because there was a premium on the real estate that was close to these servers and these hedge funds. All it is is like a box. Thats all it is. A little box. You have to wire a little bit closer, reduce the traveling of the speed of light. These are the things that get people most anxious and nervous that the system is not fair. What would you do . I believe everyone has to get the information the exact same time. You should not be able to pay more but you cant physically do that. Somebody in california has to wait longer than somebody in chicago, has to wait longer than somebody in new york. Should it be the speed at which the person furthest from the server who wants to trade . You cant defy the physics, andrew. You could say everything has to be one or two seconds out. The luck of the draw. It will still be some amount of time. Its the speed of light. It takes time for things to travel. Is it the luck of the draw who gets to be able to buy access to get in faster . You know youll be trading off that. Or whats the alternative to not doing it with money . Right. I dont know. Its a good issue. Larger debate. We will continue to talk about it. Coming up, Warren Buffett on bnsfs railway. Theyre saying theyre beefing up the engine roster to handle heavy loads across the country. Were going to get ready and get a read on the economy and talk rails with the president and ceo of that company in his first interview since taking over the rail giant. Were back in a moment as we head to break. Check out the squawk box market indicator. 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. On buying a car for. When i was introduced to truecar,cess. I didnt have to second guess myself. I felt more confident. In what i was doing. Truecar made it very easy for me. To negotiate what i wanted, because i didnt really need to do any negotiating at all. I just knew from the getgo that i was. Flat out getting a good deal. When youre ready to buy a car, save time, save money, and never overpay. Visit truecar. Com my baby takes the morning train he works from 9 till 5 and then he takes another home again Railroad Traffic is very closely tied to gdp growth and the weather has been a huge head wind for both of these this quarter. Joining us right now is carl ice, the new ceo of Burlington Northern santa fe. This is his first press interview since taking the role in may. Thanks for being here. Thanks for having me on. We would like to find out the statistics and the data and find out whats happening on the railroad. What are you seeing right now . As you said, weather has been a problem. But we see growth. To put it in context for bnsf in 2013, the Railroad Industry grew by about 800,000 units. Bnsf handled 400,000 of that growth. In other words, we handled half the growth that the industry had. Then in the Fourth Quarter we saw surges in our commodity traffic, things like grain, energy, coal. That did strain our resources and then as you mentioned, the winter hit hard. Its been a very harsh winter. That slowed our velocity down on the railroad. That had a detrimental impact to our customers. Again, we see broad based growth. Weve had several good weeks this year despite the weather. We see positive momentum now. And were expecting to deliver improvement for our customers. The article from last week in the wall street journal suggested that the shipments, the Oil Shipments are slowing down things for other customers. That side tracked other industries. Is that fair . No. I dont think thats fair at all. All of our customers are important to us. We work hard to have good service for all them. Our team is focused on improving everybodys service. Certainly the Energy Segment is important to us. Its a growth segment but its also about 4 of our business. So i think the right balance is, its come to us in a place with volume that we havent always had this level of volume. Were investing to make sure we can handle that volume. Youll probably have questions about that in a moment. Were working hard for all of our customers. Lets talk about what were seeing if you try to strip out the impacts from weather. How would you gauge this economy . Are we looking at a 2 gdp economy or 3 gdp economy based on the shipments that you see from your customers . Im a railroader, not an economist. And youre right. Its hard to strip out the weather impacts. But a lot of people i think would suggest the economy is somewhere in the 2. 5 range, maybe a little more. We wouldnt argue with that. Again, on our railroad we see things a little differently because the energy comes a little stronger to us. Our coal shipments remain strong. Our part of the coal, the coal business, continues to grow and we think has strength there as well. And then certainly most of all, what we call consumer products. We work with Trucking Companies to move shipments of containers on flat cars. Thats a strong segment for us, too. Youve talked about a huge surge in oil coming out of the bakken region. Bnsf is there to take everything out. You recently made an announcement youll be buying 5,000 more Railroad Cars to take some of that and take it more safely. There have been concerns about how you move this stuff over the rails. How long does it take to get those orders of those 5,000 new cars on . Those new cars are actually what were calling next generation car. So theyre not even designed at this point. So they may be a little longer to come on. The Car Manufacturers have suggested to me that we may be pleasantly surprised. So we may see them early next year. Those cars are really just a part of our investment, though. As we look at what we need to do to drive our improved service, to make sure for the long term were there for our customers, were investing 5 billion in our railroad this year. That follows on a 4 billion investment last year. Both of those are unprecedented numbers. Go ahead, sir. Included in that are things like making sure we have a strong railroad. Its also capacity, more double track. If we look at the capacity of a railroad, basically it swings off four things, how many people we have, locomotives, freight cars and our infrastructure. Were adding all those. Were expecting to bring on 500 locomotives. Thats on top of the locomotives we brought on late last year. Were expecting to hire 5,000 people. 5,000 rail cars other than those 5,000 you just mentioned and then the 5 billion investment with about 900 million of expansion. Carl, what are the economics of buying those crude tanks . Traditionally my understanding and i apologize if im ignorant on this issue, i thought you owned the track and then you own the engines but less on the cars themselves. Then do you lease them out . How does it work . Youve got that exactly right. Many of the cars that run our railroad someone else owns. We do invest sometimes in cars that we think we have uses for a long time or have a general purpose. For instance, we bought grand cars over the years and have a large grain fleet. These tank cars, this investment, though, really is to drive safety. The movement of crude oil is important that it moves safely. Its a tremendous opportunity for our country. It highlights what railroads do, take things from where they are to where they need to be. But it has to move safely as well. So we work first and foremost on prevention. We do think crude needs to move in the right equipment. Will that increase the price of crude for those investors that will be leasing your tanks . Are your tanks going to cost more than them using their own . The new cars will cost more. Were not exactly sure how much more yet. Were sure theyll cost more. We think thats a cost that the crude can bear and, again, its what we think is necessary to make sure it moves safely. Let me ask you this. Have you decided who will be buying the cars from . When the news first came out, all of the companies that make those cars, their stock prices rose. We have not decided yet. We expect to hear back in the next month or so. Did you say youre hiring 5,000 people on the railroad this year. I did. To do what . All the things a railroad does, which is a broad spectrum. We run the trains, maintain our track, maintain our equipment, we have crew callers. Biggest number of them will be in train crews to make sure we have people in position to handle the trains. All right. Carl, we want to thank you very much for joining us today. And hope you come back again soon. Thanks for having me on. Thank you, thank you. Coming up, well talk about the is the fivesecond rule actually real . You may want to think twice about eating that chip that you dropped on the floor when you hear our next story. Its fivesecond rule works in our house but maybe not after this. Squawk box coming right back. 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. Welcome back to squawk box. This may be the most important story of the morning. The fivesecond rule, most people know at home, just might have science backing it up. Researchers at the Ashton University of england actually tested the theory about a chip going on the floor, what not, they treated an indoor floor with bacteria, then they dropped various foods on it. They let each piece sit on the floor for 3 to 30 seconds and then checked the food to see if the bacteria transferred to it. Researchers did find a link between time on the floor and infection risk. They also found food dropped on laminate or tile floor carry a higher risk than those dropped on carpet and moist foods are most likely to pick up anything. That is true. I thought it was the threesecond rule, not the fivesecond rule. In our house it could be up to the tensecond rule. Im sceeved out. Maybe thats why im sick. In my house theres one choice. Whether you want to pick it up and eat a dog hair. We make that choice. Even if you dont see the dog hair, theres a dog hair. Well call that the onesecond rule then. Coming up, a read an inflation with february cpi data plus, housing start numbers. Take a look at the futures at this hour. Well see what happens when we get the numbers in just a minute. But hell work his way p 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. Welcome back to squawk box. Just seconds away from cpi and Housing Starts data for february. We have Rick Santelli standing by at the cme in chicago and the professor Steve Liesman is in the studio. Rick, the numbers, please. We have a litany of data popping up, two, one, buzzer, please. Cpi for the month of february up 0. 1. Strip out the allimportant food and energy still up 0. 1. Yearoveryear headline up 1. 1. Cooler than 1. 6. Even cooler than some of the expectations for 1. 2. If we look at core yearoveryear, 1. 6. Which is exactly expectations, exactly matches our last look. And of course we do have a new calculus for this data series. We want to view how that all sifts through. Housing starts and other key data, this is about right. 907,000, close to expectations. Last months 880, moves up a bit to 909,000. Considering the revision, 909, 907, were off a witness kerrhi terms of percentages. Permits in february jumping over a million, 1. 108. That is versus a slightly upw d upwardless revised 947, moves to 945. Thats up 7. 5 , close to 8 on permits. Theres our data. We still have some of the most important data yet to come in the form of what are foreign interests think of investing in u. S. Dollar denominated assets. That will be out at 9 clng eastern. The inflation data seems to tame, the housing number, the permits, the look toward the future is a bit stronger. Lets be fair here. National association of Home Builders Sentiment Index yesterday still well under 50. This sector, you know, looking at wednesday to wednesday metrics, looks soft. Back to you. Lets take a look at the markets quickly which had a big balance after the putin announcement that he doesnt want to partition ukraine. S p down 5 points, so about a 10point swing in the s p. I know it was about an 80point swing, 24point swing in the nasdaq if im not mistaken. Down 12, now its up 12. The dow i remember was down 35 and now its up 50. 85 points there. Relief or taking putin at his word. Did anybody really think putin was going to say hed be invading eastern crimea today . Right. And whether or not once he says it, can you take him at his word. Lets bring in lisa emsworthmattingly. I want to point out about the numbers here, the housing numbers particularly, lisa, seems to be weather in here to some extent at least. In the northeast, starts were down 37. 5 . And thats a big swing. Yes. In the midwest we thr up 34. 5, in the west they were down 5. 5. You said wow when you said over a million in the permits. What do you make of the housing numbers . I think its a slow growth Housing Market. I think weather has certainly been an impact over the last few months. You have to remember what happened over the last year, which is you had a big spike in home prices and you had a big spike in mortgage rates. I think the markets digesting that. I think if we go a year from now, Housing Starts will be up, permits will be up. Its still a positive story, slow growth positive story out of housing. Lets talk quickly about the inflation story. There doesnt seem to be too much of it. Theres not a lot of inflation. I think this is the unsung story for the u. S. Consumer, that we have just at the front end of tightening of the employment market youre going to start seeing wage gains and as we see that come through, youre going to see real incomes rise, which we havent really seen in a big way out of the consumer. The u. S. Consumer is a big beneficiary of the current environment. What about the spike in food prices that is happening and it will be down the pike. That will be something that will pressure the consumer . Yes. You have white prices. You have some of the other factors like sugar, et cetera, going up. I dont think that that gets passed through into u. S. Food prices as readily as it is in other economies. You dont see it come through as fast. Rick, i just want to bring you in. Day one of yellens first meeting. Whats the market looking for from janet yellen, rick . Well, of course anybody with a 4. 2 trillion Balance Sheet who is the head of that organization, every trader will be listening intently. Steve, i have to tell you, this isnt necessarily a huge compliment but most traders on the floor think the fed has become more bureaucratic and that janet yellen seems to sound more like a bureaucrat. Theyre looking for continuation and couldnt knewty which was kind of a bragging point in beginning. They dont look at it in that regard. Continuity, sometimes means that youre going to stick with a strategy, maybe not bring a lot of free thinking. Theyre going to be looking for exactly that. Is she really going to say anything that will show us that she has her own personality to imprint on the fed or not . Lisa, what are you lacking for from janet yellen . You would say the big story over the next six months is real wages, wage increases and so shes going to be looking at that and taking it very seriously. And i think thats going to be the big story, what is the feds response to those wage increases going to be as we see them come through. Im going to add to that. I think a big story will be what the market wants the fed to do if you get to a place of higher wages and what yellen wants to do. I have a sense she wants to let it run. I have a sense she doesnt want to blink in the face of higher wages or even higher inflation. And theres going to be pressure from rick and his friends to take an act that shes not going to want to take. I think as you go through this next year, one of the stories that we think is very important for the u. S. Is whats happening abroad. So i think that youre going to get a lot more volatility out of japan, out of china. Maybe even out of europe. Of course whats happening in ukraine. As you get that story playing out, its going to keep the fed on the back of its on the back of the bar. Rick, to lisas point, allen sinai writes in to the fed survey, i quote here, the Financial Markets are too complacent over a tail risk that could turn into a new cold, economic and financial war. What do you think about whats happening abroad and how its playing out here in the states. I think whats playing out abroad in many ways isnt necessarily a good thing. But from the markets perspective, thats what i would continually look at, i think it pretty much speaks for itself. Whats going on there doesnt grab the the markets attention. I think its a little perverse that putin was responsible for a market rally today but he was. I look at it as a slowmoving part. Every day you look in front of the mirror, steve, you come your hair, look at yourself. I dont do that in front of the mirror, rick. Come on im sorry. Thats about the cheapest blow in six years of you coming at me, rick. No, no, what im saying is change is slow. When we look towards russia and putin, georgia was a number of years ago. Heres crimea. It will be that dynamic. I dont think theres going to be anything that is shocking or happens in a hurry with regard to the aftermath of the ukraine situation. Thats what i get from talking to traders and reading the market. Can that change tomorrow . Of course. I think the market price, a fat tail outcome to the ukraine about a week ago. I think i know where the extremes lie. Okay. Rick, thank you. Lisa, thank you. People keep telling me im ball. I dont know what theyre talking about. I dont know what theyre talking about either. I just want to know why the price of avocado is going up. The man who made moscows market, boris jordan the Sputnik Group. Hell join us next to talk investing in russia. Squawk box returns right after this. Welcome back to squawk box. The futures right now take a look and see whats going on. Sort of just came up on us so quickly like that. Dow jones looks like it will open 48 points higher, nasdaq up 10 points and the s p 500 up about 6 points. Steve, lets talk russia. Is it ready for an inflow of capital . Putins annexed the crimea, joining us now, boris jareden, Sputnik Group president and ceo. Hes also the president of renaissance insurance, along with our very own michelle carusocabrera. I should disclose ive known boris for more than 20 years. One of the first contacts i made in 1992. You were one of the pioneers of the western market. Do you support what putin has done here. I think pudens made a play. I think he lost crimea during the sochi olympics. He wasnt engaged enough to in ukraine. In ukraine. Sorry. He made a decision to get back at the negotiation table and use that to his advantage with crimea. How does this help him . First of all, what seemed to move the markets this morning was his comment that he doesnt desire a partition of ukraine. Do you believe him at that . I think thats the case. I dont think that putin wants to get much more engaged. I think economically this is not a germy situation. It would be too expensive for him to annex all of ukraine. Ukraine has major financial and economic difficulties. I do think, however, though, if theres a civil war and a tremendous amount of unrest and russians come under threat in ukraine, he will certainly be involved. At least diplomatically and maybe potentially militarily. How does he parlay his control of crimea into a say in the broader ukrainian election for president end of may . I think theres no question that you cant ignore russia being a very large country on the border of ukraine. Its also the largest trading partner of ukraine. Ukraine completely depends on russia from a Natural Resource perspective, including oil and gas. So theres they have to have a spot at the table. They will have a spot at the table. But i think this they felt that they were losing that spot when the coup detat took place. They needed to get back at the table. It certainly was a coup detat. It was an Illegal Transfer of power. Everybody was supposed to stand down and suddenly yanukovych steps down. They did not impeach the president of ukraine, they overthrew him. From that perspective it is illegal. Hedge funds, possibility of war be damned, the russian market is so cheap, theyre buying. Good idea . You have to look at other factors even before this situation with crimea. Devaluation of the ruble, just like weve seen in china and india. People are looking at the oil and gas sector in russia. Reuters this morning reported exclusively the Russian Central Bank says it has no plans to introduce capital controls to defend the ruble. This to me sounds like if you have to say that out loud, you have a real problem with capital flight when it comes to your currency. Should we read it that way . No question theres a real problem with capital flight in russia right now. There has been a tremendous amount of issues surrounding that for the last five years. Weve had a net exit of capital out of russia. But putins core position since he became president in 19992000 has been no capitol control. As a matter of fact, he was the person that brought in a removal of all capital control. I dont believe hed bring them back in. Thats a core position of his. We were talking on the phone the other day. You reminded me how much stuff youve been through over the course of investing in russia. Im surprised youre even still there. What a ridiculous toll it must take on ones life to be involved in the ups and downs over there. Put this in context. Is this one of ta minor threat of a threat. The two big things were the threat to democracy in 1996. That one be number one. This is probably the second biggest because more than the default in 98. More than default. More than kodakovski . I think in russia, the real issue with this event is the first time were seeing a major clash between the west and russia. And the real question i think for everybody in the future is, does this start a new cold war . Does this start an escalation of sanctions . I personally dont believe so. Do you fear as an american investor that you cant get your money back. We can. Youre not concerned this will develop in a way that you wont be able to get your money and ownership . No, i dont believe that. I think russias capitalist path is irreversible. You think basically the u. S. And europe stand down on this, putin is emboldened potentially to do anything else. Two things. Theres a limit to what he can do at some point that would be a very serious response. But at this stage, i dont believe europe or the United States, particularly europe, can afford to. You cant do sanctions like you can iran. This is the fifth largest economy in the world. One thing is iran. One thing is north korea to sanction the fifth largest economy in the world would be catastrophic for the global economy. They cant do it. These sanctions are irrelevant . Absolutely irrelevant. Theres a joke going around the Russian Parliament, why are you on the list . You obviouslien are the doing enough for your country. I think well have to have you back as this thing develops from here or from moscow. Are you increasing your investments over there now . Are you buying on the cheap here. We bought a little last week, absolutely. Thats what these guys do, theyre crazy. Not just him. Its like stomachs of steel. Or thats where the greatest fortunes are made. Boris, thanks for joining us. Michelle, thank you. Thanks for having us. After the break, jim cramer will be here. We also have a preview of disney, squawk box will be right back. Y across america, ive learned that when you ask someone in texas if they want big savings on car insurance, its a bit like asking if they want a big hat. scuse me. Or a big steak. Or big hair. I think we have our answer. Geico. Fifteen minutes could save you fifteen percent or more on car insurance. H and neutral. I think you need a bigger desk, pal. Another one . Traders love our trading patterns, now with options patterns. Whats not to love . They see what others are trading like the days top 10 options trades by volume and get ideas yea i have an idea how about trading that in for a salad . [ male announcer ] so come trade at the place thats all about options and futures. Optionsxpress. Open an account today and get a 150 amazon. Com gift card when you call 18883303137 now. Optionsxpress by charles schwab. And put this thing a little bit on the back burner. Every time we get one of these events it takes the spotlight off of how well america is doing. I think thats the spotlight we should be focused on. But also forecast the forecast did not match what the expectations were. Where do you you stand with her . I think they are worth between 4 billion and 5 billion. I had uir on mad money last week and thats an incredible company. The car business got competitive which is incredible given the fact that the Justice Department allowed so many mergers. I recognized theyre doing everything they can to bring out value and the stock is fairly valued where it will open this. We had the head of bsfm on, and they are increasing capital. Is that a play youre on so far . This is the year of nonresidential which is a gigantic market. People dont recognize when you want to put people to work you build big things. A lot of the companies i deal with say it is happening right now. I cant find a lot of banks that say its happening but a lot of Industrial Companies say it is happening. We cant thank you jim because it says joe is supposed to thank you. I want to thank Andrew Ross Sorkin for an amazing piece about the idea that you can blindly write about any company. This was a great article. I forgot about this lawsuit. Look, i think that i started thestreet. Com saying everybody had to disclose everything and now its going the other way. Theres no Journalism Police but it was a great piece. Thank you. It has huge implications for all us. Maybe the s. E. C. Should get involved with the idea that youre violating the 34th act but i know thats not the bailiwick anymore. Ooh. Ooh. On behalf of joe kern and the rest of the squawk wed like to thank you. Thank you. Find out if disneys wild ride can continue. And the most important interview of the morning is coming your way, kermit the frog ringing the opening bell yesterday and hes joining squawk on the street. The gang at post nine talks muppet business. Markets and more with the leanest, greenest frog on the planet. Squawk box the frog in the boiling water, back after a quick break. vo you are a business pro. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. And only national is ranked highest in car rental Customer Satisfaction by j. D. Power. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. 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. 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. Quick note on apple right now. Its discontinued the ipad ii and is selling a 16 gigabyte version of the fourth generation ipad. It costs 529 for a cellular version. Apple says this means the models replacing the e. Pad ii as the most affordable. Ipad i. We have the iii and a lot of them. It costs 99 for a day pass to disney world before taking any extra expenses into account. You buy fries its 200. How is disney able to maintain the theme park popularity even with such hefty prices . Here to talk about disney is michael morris. Disney has its shareholder day today. Michael, good to see you. Thank you. I want to talk about how theyre able to keep the margins and talk about the corporate suite and what will happen there because theres been a little bit of question about who will su succeed mr. Iger . Its a tossup right now. Most investors i believe assume it will be either tom stags the former cfo who now leads the parks group or it will be jay risula who is now is in the cfo office and both of those executives have both financial and operational experience in the companys most capital intensive business the parks business. I asked a peer of yours in the 6 00 hour and ill ask you, is there any chance that Cheryl Sandburg a name that has been speculated about somehow gets put into the mix in terms of successors . Well, you never say never. If you remember the original ceo search when bob iger who was an internal candidate became the ceo, there was an extensive search prior to him being named and i think we can look now and say that bob iger was arguably the right choice for the job. But it does speak to disney the boards willingness to take a holistic look at who they want in that seat. How long are they going to be able to keep up this remarkable increase in terms of margins on the theme park business . How much higher can they raise prices . I think they still have plenty of runway ahead of them. If you look attendance at the domestic, at the Florida Parks at the International Parks continues to be at record levels. To me that speaks to the Pricing Power that the company has. You spoke about the pricing increases in your opening remarks and that is focused on a singleday ticket a walkup ticket and what disney really wants is they want people taking the multiday packages and staying on property. Theyve been upgrading the parks. They upgraded the west coast two years ago and they are in the midst of an upgrade on the fantasy coast and they upgraded the magic bands, the wristbands, that helps keep people in the park. One of the issues at the Shareholder Meeting is going to be say on pay. A number of entertainment ceos and executives paid a lot of money perhaps more than most industries. Where do you stand on that . I dont have a terribly strong feeling about it. Certainly i would say the that the pay at disney is fairly comparable to the pay across the media industry. So to the extent that youre looking to attract and retain Senior Leadership thats capable, you look at these companies and theyre vast. They have a lot of moving parts. You really want the guest guy on the job. Got to leave it there. Thanks very much, michael. Make sure you join us tomorrow. Ill be seeing you from the d. C. Fed meeting. Squawk on the street is coming up next. And a good Tuesday Morning welcome to squawk on the street and im scott wapner and carl and david are off. Lets look at the futures this morning. Looking pretty decent. Theres the dow futures and an implied open up 44. And s p and nasdaq picking up where they left off yesterday. Take a look at the tenyear note yield and there it is at 269. The fed beginning a twoday meeting ahead of Janet Yellens big News Conference tomorrow her first as the chairman of the federal reserve. Europe green across the board. Only i