Transcripts For CNBC Squawk Box 20140403

We start giving that back a little bit. We did see some big gains across the board. If you check out currencies, youll see right now that the dollar is higher against the euro and the yen. Euro is trading at 11. 3764 and the yen is at 103. 94. And the tenyear note spoke of 2. 8 on wednesday. Thats the highest level its seen in just about two months. You can take a look and see its just below that at 2. 79 . Andrew has some of todays top corporate stories. News this morning, joe referenced it earlier, citigroup federal is under investigation in a criminal probe under their mexican unit banamex. The question for citigroup is whether investors ignored signs of money laundering. Theyre facing a civil investigation in the securities and exchange enforcement unit. Citi released earlier bamamex uncovered apparent fraud. So just when you thought is citigroup was out from under it, it has further reserve about its capital. Also now taking on tesla securities, a notice it intends to appeal new jerseys ruling that would stop it from selling its vehicles in the state. The notice was filed last week. Shares of tesla, you can see whats going on this morning given all of this. They are up marginally. They will keep the showrooms, but they wont be able to physically sell you the cars. So i know you saw that the other night. And remember they showed the tesla . I thought that was joke. No, it was i thought it was a joke. I did not know what a huge and scott pelli was like, yeah. But i heard it and i thought, thats funny because Everybody Knows theyre silent. But they said can we put in sound effects . They put in noise. It will be like your iphone where i have that list of things that i can choose from. Like the phone where you yes. You can put whatever sound you want in. Really on honestly, i was stunned when i read that, too. You know, this video we have of the tesla, i guess we didnt have an audio guy there. Lets put some we need to put some i cant hear this car. Lets put some sound in there. Can you imagine the idiot that did its classic. Its really funny. But it makes me feel a little better. 60 minutes. 60 minutes. It can even happen there. I love it. Makes me feel better about what we do all the time. I know, i know, yeah. Waynes world and compared to yeah. Were not in anyones basement, are we . Were in the global headquarters. Another record close for the s p yesterday, fourth straight day. The index climbing five points to top 18. 90. Thats 42 divided by 1848 is were up for the year, so i would say its a little over 2 or so. It had been as high as 1,893. Stocks getting a boost from the adp report. It was almost 200. The dow gained 40 points to finish at 16573. Just a few points shy of a record close and the nasdaq gained 8 points. There will be more Economic Data as there always is. You have confirmed it thursday, andrew . Thursday. Jobless claims coming up today. And trade deficit numbers at 8 30 a. M. Eastern. It does kind of all when you get up at 4 00, it seems like you know, i get up and im going bed again. The alarm is off again and im not sure what day it is. Not only do i not remember what day it is, i dont remember what everything is nor. I used to be able to remember, if it was a pink page, it was the financial times. If it was written in the certain times, it was the wall street journal. I dont know what i read from where. All i know is tuesdays because thats when the andrews column comes out in the New York Times. Thank you. You just realized the it this the way, too. You write a column for the New York Times, right . I was looking at ordering some cds yesterday. Online . Thats what i said. Im surging into the future basis buying cds online. You have to buy something online. You are at a point where its in the past, but this is residual . You dont think youre contagious . We have a camera over there set up. I know. Your eyes are watering. Youre taking like thats because im trying to hold the cough in. But do you think you should be here . Probably not. You look nice. Your hair looks the they did a good job today. Thank you. Thats gayle taking care of me. As much as i like andrew, the two of us you know, it helps. I missed you guys. I had to come in. We missed you. Yeah. She won the jumble on monday. I thought you were going to wait until next week so you could have a 110 win for the week. No. I told them i really wanted to be here for april fools day because i had planned out this things that i was going to get lets paper ahead of time and i was going to i would have noticed it. I would have won and you would have been really mad. Its like these are not words. I would have come up with maybe foreign words. Who is this . Oh, yesterday we were alternating each line when we were reading. Oh, that was nice. Can we do it three ways . Or we could just go ahead and introduce ross who happens to be standsing by in london with the Global Markets report. Ross, good morning. Hey, good morning, becky. Good to see you. Waiting for the ecb today to make its latest decision. It comes against the back drop of inflation hitting. 5 for the month of march. They have a rate of 2 . The imf is coming out and saying there is a case here for mormon tear easing, particularly in terms of the debt sustainability. You dont need deflation, just very low inflation making it incredibly hard for countries like italy to pay down their total levels of debt. The ecb might turn around and say we dont have a problem with inflation because it seems like energy and, of course, because weve got structural changes going on in the peripheral. Nevertheless, it is cranking up the pressure ahead of that. European stocks are weighted to the downside. Around about 5 4. We are down near the special lows at the moment. This is where we stand with the ftse 1100. Fairley flat. We have pmis today out of the uk. They were a touch lower, the composite number 58. 1. March 58. 6. But its still point quarter on quarter growth of. 7 . A sweet spot for the bank of england. They have lower inflation. The xetra dax and cac 40 are fairley flat. 53. 1, the flash is 53. 2. Germany, a little slower than it was for france fairley stronger. The important thing about that pmi number, though, is it speeds into the inflation story because firms are saying the best activity for three years but only at the expense of slashing pric prices. It all feeds back into whats going on with inflation. The ftse up 0. 5 . Down in terms of sectors in europe. This is where we currently are. There we go. The banks up 0. 3 . Insurance up 0. 2 . Retailers fairley flat at the moment. Utahs, basic resources, telecom res taking the weakest point of it, as well. Thats where we stand in europe. All eyes on the ecb. We do expect no action, but how dovish will mr. Draghi be in his testimony and will that start to take some pressure away from the what many regard as an overvalued euro at the moment. Back to you. All right. Thank you, ross westgate. Good to have you back with us every day. A shooting at ft. Hood, another one, has least six dead and 15 wounded. Jay gray joins us with more on this the story. Jay. Good morning. Shock, disbelief, a lot of people wondering how this could happen in the span of five years, that two soldiers here would open fire in this latest atta attack. The suspected gunman, 34yearold ivan lopez. He had only be at ft. Hood for about three weeks. Its the largest o post in any nation. 50,000 people live and work on this base. Look, this happened just after 4 00 local time yesterday afternoon. Shots rang out in the motor pool here. He apparently fired shots there and then got into his car, fired shots from the car. Moved on to a medical facility here on the post and continued to fire shots. He was confronted by military police and apparently, according to officials, turned the gun on himself. 16 people are jrinjured. This morning, at least three of those are still in Critical Condition and thats something officials are continuing to monitor as the investigation continues, as well. Federal agents, the fbi on hand here. Inside right now his apartment just off the base here. We talked with a neighbor who lives in that complex, said that she was with his wife at the time she found out that her husband was the one that was being suspected of carrying out this attack, that she broke down, was crying uncontrollably and didnt understand how this could be taking place. Shes with authorities and is said to be cooperating right now as are investigators, state and local police are trying to get to the bottom of whats happening here. Its reopened some wounds here and brought to the surface some emotions that this community has been dealing with for almost five careers. You will remember major nadal hasan killed 13, injured at least 30 in an attack here. And just late last year, his trial ended. Hes on death row right now. That was an act of terror across cord to go officials here. But what theyre telling us is this was not. It was an argument that obviously escalated. Theyll. Their investigation. Thats the latest live here at ft. Hood. Im jay gray. Becky, joe, andrew, back to you guys. That the first one took a long time to decide that was an act of terror, too. But this one looks a lot more clear cut, jay. Yeah. Thanks for your report. Feel bad for that not only did the lady lose her husband, but hes a perpetrator. Its just awful. Lets take a closer look at the u. S. Markets with the jobs report just a day away. Here with us now, chris redford, a coPortfolio Management of the niedhan growth funds. We keep an eye on the macro. You know, weve been through a pocket here in the last few weeks where we were kind of light on news. The market traded down, but were entering now april earnings season picks up next week. But, yeah, labor numbers are going to be what theyre going to be. We know that weather was terrible in the First Quarter. So if that is an anomaly, thats great. Maybe well see better numbers. If we see weaker numbers, the fed will still is there anything that would change your approach to investing based on job numbers when youre in a niedham Small Cap Growth Fund . I cant even imagine that its almost background to you. Exactly. Were longer term investors. So lets talk about the small cap. I think they outperformed in the last six months, the caps. They had years of outperformance and then some underperformance, right . About twoandahalf years of not great performance relative to larger caps. I think people went to liquidity, which is larger cap companies. Are we still in that period . We are in a bit. I think theres a value to liquidity. And i think, you know, around this whole story of this High Frequency trading, does it provide liquidity or not . I dont know. But its you know, for me as a small cap manager, im certainly looking at companies and what volumes they trade, whats my ability to get in and out. But in many cases, companies that do have low liquidity have great investment opportunities. A lot of other managers that are shorter term wont move into there. One thing about this story a lot, again, just i dont try to. It just pops into my head. Im convinced that circles on malaysian airlines. But actually, im interested in because its what we do, obviously. As far as free and fair markets, i have no doubt that in the United States you think our markets are rigged . Go to russia, go to china, go to emerging markets. And when you identify things that arent fair im not saying that. Im saying if you want to talk about something honestly thats rigged. Tell me, though, that the bond market is not rigged right now. With a straight face. You mean because of the fed . Yeah, because of the fed. Tell me that prices are not manipulated in the bond market. You can say that at any point because of the u. S. Government. The u. S. Government can step in and change the rules at any point. Thats the always been the case with any market. Not to this extent. Normally bond prices are allowed to find a more normal that has not been the case since the financial crisis. That is something jim chanos will talk about later on this morning. Even libor, compared to holing the ten year one goes to trust and confidence in the government, but theres one thing no, theres not. But im saying theres an established rule and this is something very different. The s. E. C. Established these rules. He thinks youre due for something. You may not Pay Attention to the jobs numbers, but would you Pay Attention to a broader macro issue like that. I think the fed has been supporting the market for years now. That goes without saying. Yeah. Theyve been impacting the yield curve on the short end and in the Mortgage Markets and so forth. But i really dont see that they can change the course that theyre on because even a slight uptick in Interest Rates has an impact on economic growth. I mean, yes, we had weather, but how much was the impact due to these higher rates here . And in reality, in the journals piece today, its never been cheaper for individual investors to tray stocks. It used to be i was a broker. It used to be 300 or 400 to trade 500 shares. Its now 700. These shares skimming that youre seeing with the htc, maybe theyre front running. Maybe they shouldnt be ahead of that. But in terms of it not being where individuals cant make money in the tock market because of this, thats well, they create this situation where its so cheap or could it be even cheaper if you actually took that youre getting close to zero. Its pennies at this point. Thats not going to make or thats going to the make you successful or unsuccessful in investing. And as you pointed out in your wonderful column, the people that the customers of the High Frequency traders are pensions and individuals and everything else. So it does get sticky. And i cant tell that bothers you. Because youre not really able to come down hard against these guys because you realize that its not its a gray area. Its a gray area because its not the guy on e trade against the guy in the helicopter . Its just not. Is that the guy with the helicopter . Why a helicopter . Because its a helicopter. Anyway, whats your favorite small cap stock, have you got a couple . Yeah. Were certainly looking for Small Cap Companies that are in growth. Have you got names . Or you dont do that. Well, i really dont throw them out there right now. But the larger cap names that we do in our growth fund the larger cap small caps . Youre not going to give us any names, just the larger cap small caps . Thats helpful. I think theres still an upgrade cycle in the optical world. You see a lot of players out there. Do you know what hes talking about . I dont know. Your broadband is growing faster and faster. Theres more data out on the marketplace. So who is in that like what company are you talking about . Theres Companies Like near foe tonic, a small capital company. Another larger one is called sinisar. But, again, you had a tough weather, you know, First Quarter and youre not out there installing equipment in the cold weather. So i would probably look to a better second half for a lot of these companies. You know, anybody that was outdoors working was probably impacted by the weather. Oil and gas services, were seeing a resurgence here. Youre not out drilling when fluids freeze up in north dakota, youre probably not drilling as much the. But we will see a recovery there this summer and in the second half. Thank you. Thank you. When we come back, two things you would never dream would be mentioned in the same conversation. Miley cyrus and russian sanctions. And as we head to break right now, economic out a stock thats been hit by a wrecking ball of its own. Yelp took a hit wednesday. Find out why, income. Out why,. Were going to continue to see these storms firing up as we go throughout the afternoon. These storms, a possibility we could see isolated tornados. Right now, we have a thunderstorm warning in place for parts of st. Louis. If youre in the red today, this is not good. This is where were going to see stronger storms, possibly retation out there. A lot of rain coming down. Severe weather extends into parts of the atlantic, towards the ohio valley down towards the gulf coast states. Now, the other part of the story, it says it is april on the calendar, but unfortunately were looking at more snow coming in across parts of the upper midwest. That includes minneapolis, fargo, and you want to know how much snow were talking . In some of these locations as we go through tomorrow, we could see a foot or more of snowfall. You can see see for areas of duluth, minneapolis, youre right on the cusp into the arrowhead of minnesota and marquette. It is april, but it certainly does not feel like it. Typically, they see about 2. 1 inches and some of those rotations are going to blow through that. Becky, back over to you. Right now, its time for the executive edge. By the way, this may be the first time that miley cyrus has made the cut. One of the venues in finland that she and pop star Justin Timberlake is going to own this spring controlled by a holding company. Those three russians happen to have been singled out by russias annexation. According to the wording, the u. S. Sanctions live nations should thee receipt cannily be barred from completing any Financial Transactions unless it first accepts special permissions from the u. S. Treasury. Guys, do you think Something Like this would ever have happened . I thinking back on miely, the maybe the what did she pay the guy that said do this with that thing . It was priceless. That was that, 100 million . Wrecking ball . No, i just mean that performance with the cat and the tongue and the twerking and all that stuff. It had to be worth 1 hup million. That, too. What i saw that i think is even more interesting than this is that skid more college is offering a course now on miley cyrus. Its called the sociology of the miley cyrus. Youre kidding me. Race, class, againer and the mead kra. You can study and get School Credit at the same time. And they talked, i think, one of the professors there. She provides rich examples for analyzing aspects of intersectional identities and media representation. And i think that i will say that is more legitimate than some college classes. Some examples of what you can learn, uses of culture across race, class and gender, bysexualitity. The rise of the disney princess, gender stratification, commodities of chideholdhood. This is a liberal arts school. And you wornder why we dont hae people able to go into the i. T. Area and get a job for 80,000. Theyre prepared here with liberal arts for this prepares them for what . I dont know. I dont did she need to . I think back, there was a wine making class, sex and literature was one of the courses, there was a class called bugs and dudes, which i think was really called man and insects. There were so many dumb i was all for literature. I mean, you dont want to that will help you with the but i cant believe youre saying that this makes sense, becky. Look, i honestly think that it is more relevant to what is happening today and to using the media to manipulate you, if they teach it the right way. And actually interest students. I think i get that. I think im understanding why you like this now because youre alma mater has a course on beyonce, which i think that might be i mean, beyonce look, when you dig through college courses, there is some ridiculous stuff offered. But theyre trying to get the kids in the class. I understand whats going on. Thats why we cant do anything. Becky, did you take this . Poe lit advertising buyon say is the name of the course. Youre kidding, right . No, i am not. It used youre making that up. My life, i have it right here. Youve got to be kidding me. Beyonce should have a course before miely. But youre just sad its rutgers. Really . Yeah. I cant believe the way everything converges and plays perfectly together here. Rutgers, becky. Like i said, i remember some of the classes that were offered and i took some of them and i would never let my kids take them. The entire Football Team is enrolled in this course. I dont think you have to work that hard, necessarily. Thats not true. You could use a little help with your Football Team. Yeah. But we keep the standards. Yelp shares taking a nearly 6 head in wednesdays trading. That reflected concern over a legal request for the identities of anonymous users on yelp. The journal says the review site gets about six reviews each month. Many stem from losses brought by Business Owners. The ftc says it got more than 2,000 complaints about yelp from 2008 through the beginning of this month. But the stock falling after that information was posted on the ftc website yesterday. Guys, i know ive talked to Small Business owner who say this is so unfair, i have a competitor in town, i think theyre the ones who are giving me these negative reviews. And there was a Harvard Business review that showed that your sales could actually be affected by your rating on yelp. Yeah. So im so conflicted on this. Theres part of me that likes the idea of anonymity online and that allows the free flow of information. And then theres part of me that realizes the damage that can do and to the extent that people can be anonymous, how dangerous that is. I dont know where i truly want to stand on this. I kind of want to stand with the folks on the other side of the review. I think because it affects the business directly like that, thats not good news. Anonymous, anonymity and the internet is a pretty hideous combination. All the time. But we have the whole universe covered. The people that hate you and people that hate the theyre haters. They have that in common. But weve got the whole gamut covered, right . I think they would hate under the wrong name, though. Youd rather have hate under their own name . I would like them to have hate under their own name. I see a lot of people write in on twitter, they created a twitter account just to send one hate message. Oh, really . Youve seen that, havent you . Zero followers and zero its the first tweet that theyve done and they send it. It mustnt be very hard to do that. Right. Im going to talk to costas about that. Anyway he will take your tweet. When we return, the issues facing the ecb as they chart the future policy of the euro scope. Plus, a first on cnbc report on Small Business confidence. Right now as we head to a break, take a look at yesterdays winners losers. At your ford dealer think . They think about tires. And what theyve been through lately. Polar vortexes, road construction, and gaping potholes. So with all that behind you, you might want to make sure youre safe and in control. Ford technicians are ready to find the right tires for your vehicle. Get up to 120 in mailin rebates on four select tires when you use the Ford Service Credit card at the big tire event. See what the ford experts think about your tires. At your ford dealer. 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. Woish elcome back to squaw box. Im joe kernen along with Andrew Ross Sorkin and becky quick. A busy day for us even as investors look ahead to tomorrow to the big jobs number report. Were going to get the labor departments weekly report on jobless claims. Were going to get february trade deficit. The ism nonmanufacturing index will be out at 10 00 a. M. Eastern. Elsewhere, San Francisco fed president John Williams says the Federal Reserve anything is on the Federal Reserve. The Federal Reserve should start raising rates in the second half of 2015. For the entire empire. But he says once that happens, rates should be raised only graduately, keep them well below normal levels going into 2017. Williams is not a vote onning member of the fomc this year, but he will be one next year. Obviously, a very busy man. And i dont think he knows he hasnt done anything lately with any movies. I think he can rest on his laurels. And a new look today for those who follow google shares. The google shares youre used to seeing are known as google class a. They will have the Ticker Symbol goog googl. The new nonvoting shares, known as google class c will get the old google ticker. So the one we need to follow is googl. Right. Why this change . Its able to keep the cofounders in control. They hold the majority of the b shares. Wait, a, b and c shares . I believe theres just b shares dont trade. Thats right. B shares dont trade. Theyre super voting all right. I get it. Lets take a look at the markets this morning. Futures are indicated slightly higher. This is happening, by the way, after the markets closed for the fourth day higher. This is the longest winning streak weve seen for stocks in nearly two months. You can see futures are up slightly this morning. Dow futures are up by about 16 points above fair value. And the nasdaq up by about 5 1 2 points. In europe, in the early trading, things are down, but just barely. Were talking about a couple of points on each of those major ipdsys. In asia overnight, youll ee the nikkei finished up by 0. 8 . The hang seng was slightly higher and the shanghai was slightly lower. Oil prices this morning look like theyre down by about 42 cen cents. Crude at 99. 20 a barrel. The tenyear note yesterday broke above 2. . This morning, the yeel is just below that at 2. 799 . The dow this morning has been stronger pretty much across the board. The euro is trading unchanged. Dollar yen is at 103. 96. Dollar is up against the pound, as well. Gold prices yesterday snapped the moving streak with a gain of just about 0. 8 . Youll see this morning that price is down by about 3. 90. 1,287. 90 an ounce. The New York Times plushed a letter without a persons name and do you remember well, thats a good comparison. Thats a good reference point. I just think that i just think that especially when youre talking about stuff, you can say i found a mouse in my pasta. There was a Harvard Business review that these yelp reviews had a big impact on sales. There should be less anonymity in this world. Otherwise, its just a libelous, slanderus mess. That is true. On the flip side you arent going to flip side me . I wont. Were going to go the across the pond. Annette is going to join us now from frankfurt. Good morning to you. Good day to you, as well. Everybody is expecting the ecb to go into quantitative easing will likely be dispa pointed. Mario draghi shows inflation stands at 0. 5 . He and the eurozone will not take any action according to all surveys out there in the market. What are they expecting . They are expecting at the Council Meeting taking place behind me in that building that theyre discussing the inflation reading in march. They have to have an assessment whether this is only a one off or whether this is a trend which is going to continue. They are about to discuss the credit dynamics in the eurozone, which is, of course, Major Concerns here when it comes to the economic recovery. In roughly two hours time at 8 30 eastern, at the press conference will start and mario draghi is likely to reiterate the statement about the solid footing of the economic recovery. He still sees slack in the economy and that is the reason why Interest Rates here in the eurozone will most likely stay a lot longer at lower levels than in the United States. Back over to you. Annette, thank you very much. When we return, squawk market master jim chanos is going to be other special guest host. Well get his feelings about china, the fed, and whether he thinks the markets are rigged. Well get his thoughts on how bearish hes filing right now. As we head to break, lets see how things are trading in the european markets. Switchgrass in argentina,marked change engineering in dubai, aluminum production in south africa, and the Aerospace Industry in the u. S. . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 75 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Because you cant beat zero heartburn. 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. 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Steve liesman, you are here early today. What do you have coming up . A legitimate piece of economic philosophy from a place that doesnt talk about Small Business. Excellent. Well get that next. At the top of the order, well bring our exclusive guest host to the table, jim chason of kynikos associates. Ates. I have low testosterone. There, i said it. How did i know . Well, i didnt really. See, i figured low testosterone would decrease my sex drive. But when i started losing energy and became moody. Thats when i had an honest conversation with my doctor. We discussed all the symptoms. Then he gave me some blood tests. Showed it was low t. Thats it. It was a number not just me. [ male announcer ] today, men with low t have androgel 1. 62 testosterone gel. The 1 prescribed topical testosterone replacement therapy, increases testosterone when used daily. Women and children should avoid contact with application sites. 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Change your number. Turn it up. Androgel 1. 62 . Welcome back. U. S. Equities, talking about the fed hes a voting member, isnt he . Joe, im out of the closet. Joe kernen is not out of the closet of being a Steve Liesman has come in. He was out yesterday. I had questions. You answered them today. Eclecti. Steve liesman has come but at least youre here out ye questions stuff, right. Im very excited. Nothings going to happen. Youe draghi stuff, right . Im very anything happens is when michelle is covering for. The only timerow, michelle fills in for me one mir me. I did 111 months what becky has i dont know. You sound weird. Im a little bit day that. Maybe this would be good. Do . I hope not. Maybe this would be good for your the this is like this . Andrews read. Andrew, take it away. Small Business Owners seeing a spring thaw according to results of pncs economic outlook. These were legitimate numbers, steve called them legitimate numbers numbers. We want to hear about the numbers. Steve is at the table. Take it away, tell us what this change is all about. Steve hoffman is with us. I think its legitimate. Weve been doing it for 13 years. It this is a survey of Small Business owners we conducted from late january through early march. Some of the worst of the winter weather. But we ask them to look ahead. 6 to 12 months and frankly, the Small Business owners were more optimistic, optimistic, about their company over the next 6 t to 12 months. Thats the best weve seen in ourv survey since before the recession began. About 12 were still pessimistic. Thats a pretty good spread between those who are positive and negative. Whats the rationale . Well, we dont have we have details. We look, we say how is that going to translate into intentions . Are these intentions going to translate into actions . We think they are. 22 said they intend to hire. Less than a handful are going to cut back. Thats thet best weve seen in two years. Theyre going to raise a third say theyre going to raise compensation. I think the numbers are pretty good. I think well get the first taste ofhe it tomorrow morning with the jobs report. Im at 225,000 drop in the Unemployment Rate to 6. 6 . In general, i think the Small Business survey of pnc supports, as you said, a spring thaw and better rest of this year. Guys, theres two ways to measure Economic Data, one is from the bottom since the crisis and the other one is from 07. Very few metrics we follow are back to their precrisis levels. Thats why i thought this was a legitimate piece of optimism, not that i was questioning your survey. But if you look at these numbers here, if you go back in terms of economic optimism, those who are optimistic about the economy getting up or near the 07 level, certainly taking out some of the lowest levels and even taking outn some of the highest in the recession, thats one. Two is when you look at sales expectations, the other thing. Three, you didnt talk about this yet but the notion of raises and salaries out there. Yes. Which is, i think thats maybe the biggest piece of actual econ data in this report, that theyll give raises to their employees. Onethird, mention is quickly, onethird say theyll increase compensation and a little smaller number say theyre going to increase hours worked. I dors think well see, you kno some more wage increases. We talk about that 22 , we talk about w fulltime employment. The results of a smaller increase in parttime employment but i think youre right. Some of the most optimistic numbers weve seen since late 06, early 07 and definitely some of the better numbers weve seen on pay raises, at least all this is planned. Well have to see if it comes to fruition. A good positive sign going forward. Stew, the other thing is that when you guys as a Small Business has been a big missing element from here. One of the things missing from Small Business has been t capit spending. Business have been doing okay, keeping up their end of the bargain but Small Business has been reluctant here. What are you hearing about the Capital Spending outlook, about their plans to invest and ability to get loans to do so . Another increase, we have 67 , twothirds that say theyll do capital investment. The last couple years that number t has been around 50 to 55 . Thats a significant increase. And then when we dig a little bit, we find technology, particular pcs, Computer Software and hardware. Thats where the money in technology will go. Two out of three plan to do investing in their companies when we ask them why, we find they think f their sales, as yo mentioned, are going to be up. It reflects the greater optimism about the outlook for sales and profits in their company. I can tell you from the feds point of view what theyd like. When we ask them about price hikes we still only see about 37 say theyre going to raise prices. Even of those almost half say 2 or less. So i dont see in this any signs of any acceleration in inflation or certainly nothing beyond what the feds 2 would tolerate, indeed maybe supportte the fed point of view theyd like to see more inflation as long as the numbers still isnt above 2. Very quickly quarterback your outlook for growth this year and when is the first rate hike from the fed . Our outlook is First Quarter growth is around 2 . We think it will be 3 , 3. 5 this quarter. Close to 3 the second half of the year, i think the fed keeps tapering, another 10 billion at the end of april. Our first rate hike is not until the Fourth Quarter of 2015. Okay. Thanks, stew. Thanks, steve. One other benchmark well ht this week, i think, almost any job growth at all, well get to the level of private Sector Employment in 07, the peek. Well finally surpass it. Weve been below it. Now well come back up to that level on friday. Well take that to the bank. Nice. Yes. There you go. Thats you, joe. You couldnt come up with this. Burgundy . Yes. Ive been doing time for t some other guys crime coming up next, jim chanos is our guest host for the next two hours. Get the short story on the market, china and High Frequency trading. How did edward jones get so big . Let me just put this away. Could you teach our kids that trick . [ male announcer ] by not acting that way. Its how edward jones makes sense of investing. Its how edward jones those little Cialis Tadalafil for daily use helps you be Ready Anytime the moment is right. Cialis is also the only daily ed tablet approved to treat symptoms of bph, like needing to go frequently. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. 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Welcome back to squawk box here on cnbc im becky quick along with joe kernen and Andrew Ross Sorkin. Weve been watching the futures this morning. After a fourday winning streak that culminated yesterday, the dow futures are indicated higher once again. The dow futures are up by 15 points. The s p up by 1. 5. The nasdaq up by 5. 5. The s p 500 closed at a record high wednesday while the dow fell about three points short of its record close since december 31st. The dow pushed above that level at one point during the session before pulling back close to the close. If you take a look at the tenyear note, the yield is at 2. 795 . Yesterday the tenyear yield pushed above 2. 8 for the first time in two months. Lets get a check on where the european markets stand ahead of the ecb policy statement which is due in 45 minutes time. The markets have barely budged awaiting the ecb decision. The ecb is widely expected to leave Interest Rates unchanged. After the decision the ecb president mario draghi will be holding a News Conference at 8 30 eastern time. U. S. Authorities have opened a criminal inquiry over a 400 million fraud at citigroups mexican unit, banimex. The inquiry is said to focus on whether weak internal controls contributed to the fraud. Well be watching Delphi Automotive today. Its been named in at least two lawsuits involving gms defective ignition switch and the subsequent recall. Delphi made the ignition switch thats been cited in a dozen deaths at this point. According to legal documents, gm set the spes ficks for the switch and approved the final design, still, delphi shares well keep on watch. The shares are unchanged. Guest host this morning is one of our very own squawk market masters and everyones favorite short seller, jim cha in. Os is president and founder of kiniko associates. I was kind of kidding about the malaysian airliner was a big tragedy. This is something that cnbc cannot overcover because of what happened on 60 minutes, its number one on amazon, Michael Lewiss book. Do you want to talk about this . Do you want to talk about china . I think i was channeling you earlier today. Maybe its a stretch to say that the fed rigged the equity markets. Maybe thats a stretch. But is it a stretch to say they rigged the bond market. Good morning. Its so rare you and i agree on something. Politically because youre a socialist . You want me to agree with socialism . Is that something that joe, joe lets agree to disagree. Lets celebrate what we have in common. Okay. Im not rich enough to be a limousine liberal. I think the that hft thing is a great story. Well get into it later, i think, in more detail. Im only halfway through michaels book. In the interest of full disclosure. It is a good story. Whats new is that theres a group of profit seeking people between traders and investors and the exchanges. Thats whats new here. But its not unknown. I sat at my trading desk this week, we know theyre there. We know theyre extracting a slight tax. We turn our portfolio over slowly, about once a year. For the half a penny or penny we may be losing out on transactions, its not material. However, it is there. I think that Michael Lewis raises the one good point, which is is this disclosed, are people giving up information . About clients that they shouldnt be giving up . I think that gets to the point of is there fraud upon the market. Jim one know theyre there. Im not sure Retail Investors knew that until 60 minutes this week. Do brokers have obligation to disclose this . That really at the end of the day and does it chip away at the macro policy story, does it chip away even further with Investor Confidence . Right. I have a different question. It looks like the fbi and others are now going to investigate this. Theyve been investigating for a year. Do you think that they should go back what might look to some retroactively and criminalize the process if in fact you do find people to frontrun the system . At the same time, at least within the industry, maybe not publicly, the last five years weve all understood this take place. The regulators clearly have. I leave that up to the fbi and justice department. Some might say they havent criminalized what already is criminal, apropos of todays article. Which is far more important than hft. And i would urge everybody to read it. If you dont have consistent prosecution on what i believe was wholesale fraud, during the financial crisis, going after this, i think might be seen by some, its there in front of us, we better look at it. The thing that bothers me is the idea that the exchanges can turn a profit by selling access. You can pay more to get to the front of the line. What Broadband Company doesnt, if you want faster or more data or access. Were not talking about the markets. You can if youre talking about watching a movie. Lets talk about the genesis. We have the specialist system. The specialists saw the orders. We all knew that. The specialist was supposed to act contra cyclically. They were supposed to sell in panics, buy in euphoria. They had a mission. They had a role. Therefore, they got to see the order book. Now people are seeing the order book really that are working procyclically. Thats one concern. Right. I think i sent this around to you. We did have an evolution of specialists and Market Makers and exchanges all of which sort of had these defined roles. I sent around a journal piece from 2000 about night trading and paying for order flow back then. We knew this has been around for a while. To me, you can make the argument like the journal does, its not as bad as it used to be. The idea you identify something that you know is not fair in the markets, you see it, do you allow it to continue . It seems crazy. Spreads have narrowed. Whats the contra argument to that . Would they be even more i dont know the answer. I dont either, actually. Were not a trading orient shop. The best we can do in our shop is create our own algorithms and know these guys are there and put them accordingly, try to best to cover our tracks. I dont think i blame the investor class whos participating in this so much as i blame the exchanges that allow this to happen, not only allow it but enable it. Its as if predators will always be there and youre letting this happen in the big game reserve in effect. Thats a valid point. To me, the valid point is, is our intent to deceive and are you disclosing this to all the parties . I think thats one of the real issues. Theyve built a system potentially for the deception to take place. Right, right. Thats the question. To get access. If someone wanted to pay for it, they could get there faster. But are they ab r rabr. Gi abrigating his duty to me. Is it people knowing theres a trade, they want to get in here, get 2 cents and sell it . Is there really 50 that is there fully. To me its madness. I dont see the longterm business model. These things tend to be competed away. I heard something that affects the revenues of the firms already down aquite a bit. These kind of trading things tend to be arbitraged away by their very nature. Virtue was supposed to go public this week. Timing could not have been worse. Part of their business goes to iex, are they virtuous. 75 of their business is not on iex. I dont know what that means. Is that a company that could live in the Public Markets . I dont know, andrew. I havent read their perspectives. Its hard to know some of the firms that are mentioned in the book have had their own trading glitch problems. So this whole area, i think, is notes afool proof as everybody thinks. But im puzzled by the ability of algorithms that just do this to make profits consistently unless they do feel they have some undisclosed edge or where a fiduciary duty is being abrogated. Well dig into this later. But i do want to get out there the idea that youre feeling more bearish right now than you have in quite a while. When we came on the show in 09, 2010, i think weve said that the u. S. Probably was the best spot to be in a world that was pretty uncertain. We were very, very negative on asia and china. Now what were telling clients and potential clients is its time to start at least hedging some of your risks in the u. S. Market. Things are getting a lot more extreme and are calling for what we do. Theres certainly many more opportunities in the states than weve seen in years and some of the measures we look at are starting to get flashing, if not red, certainly bright yellow. Were starting to see the activity in the marketplace at the end of 20132014 is getting speculative, whether its ipo activity. Did you say whether did you ever answer me . In terms of . Are the equity markets rigged by the fed to be higher than they should be . I think the world Central Banks, including the fed, are in unchartered territory. If hes able to call the other thing rig, this is definitely rig. Can i finish . Go ahead. Price discovery is being absolutely impeded or enhanced or whatever you want. No one seems to care because all of that is on the upside. Yes. Exactly. You care because youre a short youre mr. Shorty. Of course. Is that rigging . Ill let you define it. What about the bond market i said equity markets. If you think the bond mark set being rigged by this, i think all asset prices if you set where youre going to keep Mortgage Rates and even try to keep the tenyear, i mean, if you say im going to keep it here, isnt that rigging it . Its an attempt to rig it. What about fed funds . Can you call that rigging it . I think when you talk about its all semantics, isnt it . Fed funds and those reserve ratios, thats clearly within the fed mandate for policy. But targeting asset prices which is new, and is not in their mandate, that has taken us into a whole other part of the ocean. How many currencies in the world are rigged . All of them. I mean, im doing battle with an entire economy thats rigged over in asia. We need you know, you get money every time too big to fail says. On rigged. Everythings rigged. Thats a good title for a book, just rigged. Did you see he has a show on showtime. Were making a pilot for showtime. Were all trying to get some bit part. Hes going to be nice to you today. You were in wall street, too, abortion of a movie. That was the worst movie ever. You should have seen what it was originally going to be. It was going to be an insurance seller murdering ceos. Are you serious . Im serious. Youve never done that. I tried to oliver stone that usually makes stocks go up. It was counterintuitive. Jim will be with us for the rest of the show. We have a lot more to talk about. Also still to come, Higher Learning and hoops. The kentucky wildcats are going for the final four. The universitys president will talk to us about the big weekend and the sports business later this hour. First, though, pricewaterhousecoopers chairman bob morris is talking to us about his firm closing a major deal. The next chapter for his industry, plus the biggest risks facing Business Leaders right now. Hell sit down with us right after this on squawk box. Lets say you pay your guy around 2 percent to manage your money. Thats not much, you think except its 2 percent every year. Go to e trade and find out how much our advice and guidance costs. Spoiler alert. Its low. Its guidance on your terms not ours. E trade. Less for us, more for you. Welcome back, everybody. Pwc completed its acquisition of booz company this morning. Joining us is bob moritz, chairman and senior partner at pricewaterhousecoopers. Nice to be here. Tell us what this deal does mean. How will it change your business. You have to remain relative to stake holers. Theres two benefits, first and foremost for our nonaudit clients that need help, its strategy and execution. 70 some odd percent of the ceos we interview year after year have a concern about can i think about what my strategy should be and equal amounts have problems with how do i get the impact and the results . The acquisition gives us that strategy piece. Where before weve been in the consulting business. Its been more around the execution. Thats why weve changed the brand from booz co. The second piece is when you think about our audit business, we need to continue to invest. And the diverse fiction ificati revenues around that entire client base is where that helps. Even though were not able to bring those services in today. Why do you have to continue to change the strategy . Auditing is a great business right now. What weve talked about in the past, the trends that are out there, particularly around technology, data, et cetera, our business has got to be more relevant. To the investor, whats the data we should be providing assurance . How can we do it effectively and efficiently . What are the Big Investments that we gather data, do the analysis and give some appreciation in terms of what does that mean for investors . Thats a big cost. Our guest host today is jim chanos. I know you just met. One of the things he was talking about is it seems how things are getting, at least in some markets, frothier, if you look at ipos, other things. Do you any that in the trends you see . Youre looking in so many businesses and countries right now. Are people pushing limits they werent before. I absolutely agree with the commentary around the bridge that were getting close to crossing from an economics perspective, from a markets perspective, particularly when you look at the p es, somebodys transaction will come back to m a in a second. Theres a degree of confidence out there when you go to the small market as you reported a couple minutes ago, the private company sector, et cetera. The fundamentals and how theyre feeling is still pretty good. The question is am i willing to pay the m a activity, am i willing to take the risk of an economics perspective relevant to the market . The ceos are coincident confidence is an indicator as we know. Theyre never wildly bullish at the bottom. Theyre doing deals at the wrong time. Always. When we look at our ceo survey, the degree of confidence in the oneyear is cautiously optimistic. You look at ceo confidence over the three years, its human behavior. Theyre always optimisting. Thats remained the same, even with the economic crisis we just looked at. The m a activity, its up 10 or so as you look at the quarters. Yearoveryear . This is where it comes back to the business. The offer that were trying to provide here. 70 of them feel really good when they have an additive transaction. When you look at something thats accretive . Yes. The m a activity is more about that, from a technology perspective, perspective, i. T. Companies, heet cetera. Thats where you need help. The execution thereafter to get the real value. What do you compare that to . Its up 10 year over year. If you look at confidence, the number of deals, where do we watch up . Are we back to 2007 levels . Not yet. No, no, no, youre not there yet. The confidence level you talked about earlier from a Small Business perspective is getting there. Whether its justified and sustainable, another question. Especially if you look 15 into 16. You are seeing some decent trends from health care, no surprise, why . Consolidation in scale. When you look at the tech houses, particularly extrapolating out the echo system theyre operating in. When you look at the real estate organizations, weve probably seen the biggest increase in m a from real estate companys perspective as they try to consolidate as well. Thank you for being here. Again, bob moritz. Ill jump in as beckys coughing. Coming up, much more from our guest host, jim chanos. Amazon rolled out fire tv yesterday, the price tag for the set top box, 99. But there could be a shocker for customers looking for the device on the web. The music says it all. More squawk box right after this. Gunderman group. Gunderman group is growing. Getting in a groove. Growth is gratifying. Goal is to grow. Gotta get greater growth. Growth . Growth. I just talked to ups. Theyve got a lot of great ideas. Like smart pick ups. Theyll only show up when you print a label and its automatic. We save time and money. Time . Money . Time and money. Awesome. Awesome awesome awesome awesome awesome awesome awesome all awesome i love logistics. Could save you fifteen percent or more on car insurance. S Everybody Knows that. Well, did you know bad news doesnt always travel fast . clears throat hi mister tompkins. Todd . Youre fired. Well, gotta run. Geico. Fifteen minutes could save you fifteen percent or more. E financial noise financial noise financial noise financial noise welcome back to squawk box. This information has been kept secret for more than 30 years. On april 9th, the department of health and Human Services will release data on how much doctors get paid for certain procedures. A ban on the release of that information was lifted after. Well see who was the true beneficiary of all this. We have scratched the surface with jim chanos this morning. So much more ground to cover. Theres nothing like march madness. Are you a badger . My family i was the black sheep. The president of the university of kentucky talks final four and Higher Learning in the next half hour. You were university of havana . I was. More squawk right after this. At your ford dealer think . They think about tires. And what theyve been through lately. Polar vortexes, road construction, and gaping potholes. So with all that behind you, you might want to make sure youre safe and in control. Ford technicians are ready to find the right tires for your vehicle. Get up to 120 in mailin rebates on four select tires when you use the Ford Service Credit card at the big tire event. See what the ford experts think about your tires. At your ford dealer. Your chance to watch full seasons of tvs hottest shows for free with xfinity on demand. Theres romance, face slaps, whatever that is, pirates, helicopters, piratecopters. Argh hmm. Its so huge, its being broadcast on mars. Heroes. Bad guys. Asteroids. Available only on mars. Theres watching. Then theres watchathoning. Welcome back to squawk box, everyone. In our headlines this morning, the Economic Calendar becoming very busy over the next hour or so. Coming up at 7 45 eastern time, well be getting the European Central banks latest on Interest Rate decision and policy statement. Well have that for you as soon as its out. At 8 30 we get the latest numbers on the initial jobless claims here in the United States. Well also be getting the u. S. Trade deficit. Those are interesting numbers to watch for, especially initial jobless claims, ahead of tomorrows big jobs report. Tesla will be filing a legal challenge to that ruling that prevents it from selling cars directly to consumers in new jersey. Tesla says that it was unfairly targeted by the recent change in new jerseys regulations. Quickly take a look at the u. S. Equity futures this morning. After four days of gains youll see that the futures are indicated higher once again this morning. Slight gains for the dow which looks like it would be opening up by 16 points right now, s p up by 1. 3 points and the nasdaq up by 4. 5. Appreciate data on job cuts in some challenger, gray and christmas. Employers announced a little over 34,000 new job cuts last month, bringing the Fourth Quarter total to 120,000. Thats the lowest total in 19 years. Health care had the highest total during the month of march. Lets get back to our guest host this morning, jim chanos, founder and president of kynikos associates. Hes also a squawk market master. We like to talk about china. Its been three years for you. Four. Its been four years. I talked about it first here in december of 09. And i hesitate to say chinese water torture but its been drip, drip, drip. It never completely just imploded although that, i guess, people always think thats possible but most people say its not possible because they have too much control. Are you back . Everything all right with you . Everythings all right. I think youre sicker than i am. Hes not sick. Is it possible you ever go to the bathroom during a threehour show. Youve gone twice. I woke up so early this morning. We made this iced coffee in our house that we kept in the refrigerator overnight. Is it number one or two . Why do you keep leaving . Is this bladder or do you have some more seriousness . Good segue for china. Whats going on in china . China, the news of the week, two piece of news, this mini stimulus, the Financial Markets are back feeling better. China is the only major economy that knows its gdp for the year on january 1. I saw you said that. The fed has its own estimates for where it thinks our economy will be at the end of the year. Of course as things have stalled slightly from 7. 5 to maybe 7. 2, theyre panicking. Theyre putting another mini stimulus. Theyve done a mini stimulus every year that weve been talking about china. We will accelerate more on railroad investment, housing investment. The problem is, of course, thats the problem. Thats the model. The Obama Administration knew the unemployment numbers leading up to the last election, right . Huh . They set those. What is the trigger point that ultimately topples this if you think a toppling is in order . I mean, again, i want to point out that if you look at im a Financial Markets player. If you look at the Financial Markets, this has been nothing but pretty much straight down for four years. And people just say, well, you know, jim when are you going to be right . Well, okay, have you looked at the chinese market, looked at chinese stocks . Theyve dramatically underperformed. They are down on an absolute basis. They are down relatively hugely. So i think that one has to keep in mind if youre a western investor in stocks, bonds and china, you are participating in a scheme, not a market. This is important. You are basically providing capital to them and you may or may not see profits or dividends from it. I think the alibaba deal will be interesting. You dont own the corporate assets by and large. You say stay away from that . I have to see the deal. When you own shares in a chinese company, most of time you simply do not own the assets. You have an operating agreement. Isnt alibaba technically located in the Cayman Islands . They all are. Almost all of the Chinese Companies you can invest in in hong kong or new york, are based in the Cayman Islands. Its not in your favor at all. No. Putting it mildly. All those residential buildings in china, are they still empty . Depending, hard to get data, again, the most reliable sources we have, theres anywhere from three to six years of supply in everything but beijing and shanghai. A lot of sports stadiums waiting for teams. Sports stadiums empty. Chinese figures are based on production, not final sales. Putting up something thats empty counts to gdp. In a controlled economy, chickens might never come home to roost. The fallacy of that, joe, therefore, no economic nirvana will be a controlled economy where you control capital and barrow all the money you possibly can from your own citizens and put up crazy things. I think we can do that here, cant we . Our economy is a little bit different. We have 330 million actors acting separately. In china, its really the state, still. Anybody that thinks that cant collapse because of too much lending has not looked at economic history. Your portfolio is short Chinese Companies. Its slightly north of 20 , where its been, if you look at sort of the firstvative like the Iron Ore Companies caterpillar has done very well. Yes. Youre still short it. Absolutely. Absolutely. You read the eft yesterday, the oil industry, the Oil Companies are now saying we can buy chinese equipment we like down 40 and were trying to save money on cap ex because our investors are pressuring us not to spend so much money. There is deflation in not only Mining Equipment but oil and gas equipment, everything that they do, there is pressure. Just to put it in perspective, Capital Spending in the mining area, which is 5 billion a year, in the early 90s got to 15 billion a year in the early millennium. It got to 145 billion a year at the peak in 2012. Its now down to about 120 billion. People really do not understand just how much of a boom theres been in Capital Equipment ordering in the global commodity boom. And caterpillar was the number one beneficiary of that. Have you increased your shortened position . When the price goes up, becky, you automatically increase your short position. Did you cover all your shorts in medical equipment . Pretty much. Does it make sense that you covered . We covered them after we read the bill, after we read obamacare. If you look at the news today about opening up the books on medicare reimbursement, how many people will be in medicaid when this is all said and done . A lot. Arent there going to be immense cost pressures on all the suppliers. I think ultimately deflation has to come for a lot of reasons. But clearly when we read the bill, we were almost horrified. I think i said this at the time on squawk. What we read on just how much of a giveaway it was to get people to go along with it. Some might say that, i might even agree with you on that. That big a view . The fact of the matter was it was going to be very good pore for profits for the health care industry. Thats happened. Remarkably, i think the market, whatever you think of the politics of obamacare, whats happened is weve gotten to the upper bounds of what people can spend. Were seeing Health Care Costs as a percentage of flatten out, in some cases go down. That will happen whether we have obamacare or not. It was growing seven points more than the economy for years. I used to say if that happened for another 10, 15 years, it wasnt going to happen. I have a different washington question. There was a story New York Times in the two or three weeks ago about the big ackman herb. Herbalife fight. The piece was more of bill ackmans side. The role of an activist has also moved to the role of persuading regulators. What is your feeling about that in terms of your role or the role of big ackman in this case in terms of spending money in washington . Im not going to comment specifically on bill ackman and the herbalife situation. I would point out that article either mentioned obliquely or didnt mention that herbalife spent multiples of lobbying in washington. I think that hedge funds have been down in washington for a number of years. We were part of that effort early in the millennium. I think that increasingly, Hedge Fund Managers have made their positions known, not only to the marketplace but when asked or sometimes volunteering their views. We were vocal, for example, on the forprofit education space. We talked to people in washington about that. Im still negative on that space. Were still short that space. I think that is federal loan fraud. I think the degrees are sold to kids, theyre not earned. I think its not good Public Policy to saddle lower income kids and lower middle income kids with 40,000 of debt, 50,000 of debt and make them no plor employable. The Hedge Fund Industry may have had an impact there. So specifically on the multilevel marketing operations, its no secret that we side with the bears on this one. We think its a bad business. We think its predatory. Right. Whether it was handled correctly, ill defer all that. In terms of i know you have spoken in washington but in terms of spending money in washington, in terms of lobbying efforts, in terms of lobbying to have more regulations around a certain business to help a particular position if you will, even if its that we havent done. How do you feel about that . I think everybody has the right to do it. I think everybody if well be in a situation where its legal and that, trust me, the huj Fund Industry has had tons of money against it for at least a decade if not more, by all kinds of people. If someone wants to do it, its in their constitutional right. We dont do that. I will fight for their right to do it. On the other hand, i think it opens you up to certain criticisms as it opened up people in that situation. You have to make a business judgment. From a legal point of view, trust me, Corporate America is spending lots of money against certain aspects of wall street. Right. Okay. Well have much more from jim chanos throughout the program. When we return, the European Central bank expected to take a dovish tone following its policy meeting today. That Rate Decision is just a few minutes away. Well bring you the decision and analysis right after this. As we head to a break, take a look at the euro. Mine was earned in korea in 1953. Afghanistan, in 2009. Orbiting the moon in 1971. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation. Because it offers a superior level of protection. And because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance quote. Usaa. We know what it means to serve. Welcome back to squawk box. We are awaiting the latest Rate Decision by the European Central bank, due out in a couple minutes. In the meantime, lets talk about citigroup. Federal authorities have opened a criminal investigation into a recent 400 million fraud involving the banks mexican unit. The New York Times reporting that the investigation is focusing in part on whether holes in the banks internal controls contributed to the fraud. Michelle carusocabrera is on the set with us with more on this. The new headline today as New York Times reports, criminal investigation by the u. S. Feds into the mexico unit. The press release came out, we talked about what a large scale fraud it was, 400 million of unpaid or fraudulent receivables in mexico. Small considering the revenue that city group does in a quarter, 17. 8 billion is what they do every quarter, ecb leaves Interest Rates unchanged by the way. But the question was really raised about whether or not there are adequate controls in mexico and the mexico unit. That came up when the fed was looking at whether or not they would be increasing the number of shares or dividends. During the stress test. They didnt pass the stress test. Questions were raised about whether or not it had to do with mexico. Mike mayo was on the Halftime Report criticizing the cfo of citi. The guy who must be under intense scrutiny is man well medina mora. This man who i interviewed a couple years ago ran bantumx. He always remained in control and still oversees mexico. His pay was docked by more than a million dollars. It was because they found internal control issues. They were concerned about internal control issues in mexico in 2013. Does that suggest he was involved or he was lax . Im not suggesting he was involved but at minimum it will raise the question, whos overseeing the place and whats going on there . Bantumx has always had a great degree of autonomy. When sandy wild bought it way back when, he bought all kinds of stuff, right . Every single group he ever bought was renamed citi. Except banamex. If the crimes took place only in mexico, how does that relate them back to here . Are you asking whether or not the fbi has jurisdiction. Yes. I think they must. We certainly presume they do, right . But i think that will be one of the questions raised, how is it they have jurisdiction . Lost in the hft shuffle monday. High frequency trading. Was the tweet and press release by the u. S. Attorney in the southern district. I dont know if you all saw it, he put out a tweet saying you can expect a Major Financial Institution to be charged with felony or plead guilty to a felony. And it was in the context of a speech that he gave that day. The fact that they tweeted just that section out, i thought was fascinating. And telling. That theyre preparing you for something. I dont know if its in conjunction with banamex. I thought it was lost in the old hft brouhaha monday. Ive never seen the district say anything like that. I thought that was big news that came and went. That is huge. Michelle, you talked about how the ecb left rates unchanged while we were doing all of this. We dont have extraordinary measures. Im asking the control room. It was considered possible but not probable that they would do something more extraordinary because theyre worried about declining inflation and deflation. Lets look at eurozone inflation. It tells the whole story. Draghi has made clear, one he is concerned about longterm low inflation, one, when you see the eurozone inflation chart, youll see what the problem is. Two, what is critical in the last week is that a member of the bundesbank, the German Central Bank said it would be okay to do quantitative easing, Central Banks buying yet as long as it was private sector debt, not like we had done in the United States, Public Sector debt. It looks like theres no additional announcement. We do have an 8 30 press conference from mario draghi. Anything additional could be brought up at that point, too. The fact that somebody from the German Central Bank went as far as to say they could buy private sector debt, that has led to a change. Look what has happened to italian yields, greek yields, they have fallen dramatically on the expectation that eventually something bigger is coming from the ecb. Look at that. Thats extraordinary for countries who still have huge, huge amounts of debt on their books. Theyre the ones who are going to be the most in trouble if they have a problem with deflation. Jim knows a thing or two about whats happened with these. Youve watched it closely. The im marveling, the country of my people is borrowing at precirisis rates. I find that stunning. Amazing. And scary. With the ecb having nothing to fire about at this point. I wish them luck. They talked to you, didnt they . Trying to figure out what to do . Yes, yes. Its problematic economy. It still is as is a lot of southern europe. Youre a short seller. What do you tell them . Keep doing the same thing, we love it. Keep it up. No, joe, thats not what i told them. You wouldnt do that to greece. Told italy that. The final four hoops edition of our Higher Learning series. Kentucky, unbelievable, the twins making a strong run in the ncaa tournament after a lackluster season. They won last year, they con do it again. We talk athletics and academics with the universitys president , next. Uh, well we are fine tuning these small cells that improve coverage, capacity and quality of the network. It means youll be able to post from the breakroom. Great did it hurt . When you fell from heaven . awkward laugh . A little. laughs im sorry, i have to go. At t is building you a better network. Aflac, aflac, aflac [ both sigh ] ugh you told me he was good, dude. Yeah he stinks at golf. But he was great at getting my claim paid fast. How fast . Mine got paid in 4 days. Wow. Thats awesome. Is that legal . Big fat no. [ male announcer ] find out how fast aflac can pay you at aflac. Com. Which will cause me to miss the end of the game. The x1 entertainment operating system lets your watch live tv anywhere. Can i watch it in Butterfly Valley . Sure. Can i watch it in glimmering lake . Yep. Here, too. What about the dark castle . You call that defense . come on [ female announcer ] watch live tv anywhere. The x1 entertainment operating system, only from xfinity. Path to the final four is never easy but some are saying the kentucky wildcats had the toughest draw in history, although Wichita State did although they didnt fare as well. Joining us now to talk about what it means for the school is eli capilouto, the president of the university of kentucky. I dont know what you put in the twins water once the tournament started but great teams rise to the occasion, dont they . You did last year as well. Well, it has been a great run. Its a big run for the big blue nation. We like to call it the big blue family. Everyone takes great pride in this success. We have to touch on what well do with college athletics. Have you got the answer . At first i thought thats all we need. I was mad at the nlrb. I dont want them to destroy college sports. And then you hear 40, 50 hours a week they spend, how much money that comes in. Whats the right answer . How are we going to work this . Well, we have 400 student athletes at the university of kentucky. Were quite proud that over the last ten years their Graduation Rates have gone up every year. They, this year succeeded that for our general student population. We know when theyre at the university of kentucky, their studies are taken quite seriously. A couple of times ive traveled with our basketball team, Football Team. You get home at 2 00 in the morning, the last message they hear from their coaches, you be in class tomorrow morning at 8 00. And were going to check on it to make sure. Have you scouted this Wisconsin Team . We have a guy here, i dont know, apparently he has family members. Hes serving wisconsin cheese. Jim china nos jim chanos. Hes throwing down to you, sir. Do you want to respond . Was this really necessary, chanos . Hes a guest. Im counting on you there. Someone told me there was a kentucky fan. What do you have on . You know, i like i cannot believe that you have a Louisville Team actually louisville won last year, within miles of each other. I dont know whats in the water in kentucky for these guys. Im a bearcats fan, a rival of louisville. Im from cincinnati. I cant help you here although ive loved watching the twins. Its a great group of kids. When you get to follow them week in, week out, you spend time with their parents, a little bit their stories and how much the teams success and their success means to them. Were easily swayed here. The cheese looks really good. All the best chancellor but i felt in the interest of fairness in media, i should at least give a shout out to my friends and family back in wisconsin. Im serving them from wisconsins finest h esst horse Cheddar Cheese from wisconsin. What do you make in kentucky . I think you know what im talking about. We make a lot of adult beverages in kentucky. Thank you, sir. We appreciate it. Good luck. Cant wait to watch both of these games this weekend. Coming up, well have much more from our guest host jim chanos, some of this cheese as well. But did you know we also st hospitals using Electronic Health records for more than 30 million patients . Or that our Software Helps over 20 million smartphone users remotely configure email every month . Or how about processing nearly 5 billion in electronic toll payments a year . In fact, todays xerox is working in surprising ways to help companies simplify the way work gets done and life gets lived. With xerox, youre ready for real business. And life gets lived. 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. [ 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. [ male announcer ] help brazil reduce its overall reliance on foreign imports with the launch of the countrys largest petrochemical operation. When emerson takes up the challenge, its never been done before simply becomes consider it solved. Emerson. An exclusive interview with a legendary short seller. Its time to start hedging some of your risks in the u. S. Market. Jim chanos on the u. S. Economy, china and his latest bests on the market. Mario draghi, will he strike a more dovish tone . Well monitor and bring you the highlights. Your window ac unit is about to get a lot smarter. Corky partnering with ge to keep you cool more efficiently. Its freezing in here mr. Biglesworth. The ceo of corky will join us with the products inventor as the third hour of squawk box begins right now. I got a roof over my head the woman i love laying in my bed welcome back to squawk box here on cnbc, first in business worldwide, im joe kernen along with becky quick and Andrew Ross Sorkin. Our guest host, legendary short seller jim chanos, the founder and president of kynikos associates. We have not called you will you listen. You didnt like the i dont know why, you didnt like the name mr. Shorty. We used to call him mr. Shorty all the time. Hed be so mad. Thats gone. So im not going to call you mr. Shorty. I brought it up, didnt i . Lets get you through some of the headlines. The European Central bank left its key Interest Rate unchanged in a Decision Just a few minutes ago. Look at the european equities, see how things are doing across the pond. I would call it almost marginal. I would call this relatively unchanged. The dow looked like it opened up 3 points higher. Mario draghi will be holding a News Conference at 8 00. Well bring you the highlights. We have Corporate News this morning. U. S. Authorities have opened a criminal inquiry over a 400 million fraud at citigroups banamex, according to the New York Times. In february, they revealed the discovery of fraudulent loans. Joe whos eating a cracker and chee cheese. And a new look today. For those who follow google shares, the ones that youre seeing, that youre used to seeing are now known as google class a. They will have googl. The new nonvoting shares known as google class c will be the old one, goog. The complicated transaction was completed to hold the founders in control. They have extra voting power. Thats not the only stock like that, though. Someone else pointed out. The s p 500 has 501 stocks in it because it has both of these. Right. It has more companies than i dont know. More stocks only 500 companies but 501 stocks that are traded on the s p 500. Theres a first for you. A shooting at ft. Hood in texas left four dead and 16 wounded. The gunman ivan lopez went on a shooting industry, killing three people before turning the gun on himself. The iraq war vet was being treated for depression and anxiety. There are no indications this was an act of terrorism but authorities will not rule anything out until the investigation is complete. This is the second mass shooting at ft. Hood in five years. 13 people were killed at that base in 2009. Lets get back to our guest host this morning, jim chanos is the founder and president of kynikos associates. Hes known as a squawk market master as well. Weve talked about a lot of things this morning. One of the things you see as a big play for shorting is the death of the pc. Yes. It is a slow death but it is happening. Theres no Revenue Growth in this industry. A lot of the big pc companies are oriented even in their services business, their pc centric. Theyre tied to it no matter what happens. A lot of people have an erroneous view, if im in servers or services, im not tied to pcs but in fact some of the big vendors very much are. I should point out, were long the disruptive companies, specifically apple and samsung. Right. I find it interesting that people are willing to pay 10 to 12 times earnings for the companies that are not growing and not innovating but only 6 or 7 times for the companies that are. So i think its a very which companies arent . Arent innovating, the hewlettpackards and the ibms, the people tied to that area, disk drive companies. The companies that are showing great returns on capital, incredibly cheap, are showing Revenue Growth, samsung more than apple, are trading at half our multiple if not less. Dont you need servers for all the stuff were replacing pcs with. Servers are pcs. What drives isnt the cloud composed of servers . Do you know who makes google and amazon servers . Who . Google and amazon. They do. Okay. Youre talking about the conventional. Yes. Servers but not made by the people you think make them . Exactly. Thats the problem. Increasingly we see these Companies Using accounting games. For example, over half of hewlettpackards Free Cash Flow is from factory receivables. They dont bra ek it out on the cash flow statement. Its in the footnotes. Shockingly they changed one of managements metrics for valuation to Free Cash Flow. The value guys love it. Its 9 billion in Free Cash Flow. No, its not. Why is microsoft at 41 . Microsoft has been making a Successful Transition to the cloud. That i wouldnt be short. You would not. No. Its not going to be windows on a pc anymore . Windows will be problematic. They finally figured it out. When you look at some of the old guys who are selling iron, theyre stuck in the 90s in the millennium. When did you favoriirst tell you were short pc . I was chatted for caterpillar and hewlettpackard. We shorted hewlettpackard for a few years. We shorted autonomy. We were stunned that hewle hewlettpackard would buy that at a premium and not do due diligence. The stock has had a big run over the last it also had a big drop, becky. Looking back, 2012. We were short in the 30s. In the 30s. Okay. What do you think is happening . Dell is no longer a public company. Everybody fought at the end claiming he was robbing the shareholders . Ibm reinvented itself already. In the 90s. Different business model, different management team. An economy that was really dont they have to reinvent themselves again . I think they do. Can they . The other problem with these companies, it applies to ibm, h hewlett, they basically keep the revenues constant by acquisitions. Without acquisitions they would be declining. They believe companies expense their r d like samsung and apple are being penalized when held up against Companies Like hewlett, ibm and others that dont innovate internally. Does that apply to cisco. Cisco, oracle, the old tech companies. Theyre not only doing financial with buy backs but playing an accounting game by capitalizing their r d spending. The wrap was they had no earnings growth, they had earnings per share growth by moving stuff offshore and buy backs. If you actually for the value guys who are looking at these things as cash flow, the numbers are stunningly bad. Go back to what you said good hewlettpackard in terms of the accounting. They sell receivables normally companies will break that out sometimes in the financing side of their cash flow statement. They just netted out above the line. You have to find it in the footnotes. They sell receivables every quarter. The number now isnt material. Its over 4 billion on an annual basis. Wow. You think the street is valuing it wrong. First of all, hewletts numbers are on a gap basis are well below what they report on a gap basis, another problem with value be the sector. They pay a low tax rate. The real earnings here are stated, as fully taxed are 2 and something. If you go through the other accounting maturing ae ing atma get you a better number. It would be nice if you tell us the next enron or united. Do you have anyone thats really doing stuff with accounting that makes no sense. We have a few companies abroad that fit that mold that were not talking about. Wow, youre not talking about . Only to clients. I have to Say Something for the clients. How much would it cost for me to be your clean the . We can talk. We can figure something out. Dont you have to be a qualified investor . Im not a qualified investor. One other thing. If china is like this, then i would figure all the emerging markets that are dependent on china i would be worried about. People said tapering would take the fast money out of the emerging markets. Are the emerging markets the emerging markets seem to be monolith. Should they rush out. I dont know. We look at individual companies. Its a double whammy. Certainly the commodity based countries would be hurt pretty hard. So maybe we can become his client on a break and you tell us about the company. I could do it over crackers and cheese. Are they companies we heard of. Some of them are, yes, yes. All right. Well have much more. Andrew, will you cut some more cheese, please . I can cut some more cheese. I know you can. Much more from our guest host, jim chanos, still to come. Plus, comments from ecb president mario draghi. Google bought ness labs. Now, corky it teaming up with ge to Bring Technology to air conditioners. Up next, well tell you why you should be careful when you research amazons new fire tv. [ bagpipes play ] make it happen with fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Could save you fifteen percent or more on car insurance. S Everybody Knows that. Well, did you know bad news doesnt always travel fast . clears throat hi mister tompkins. Todd . Youre fired. Well, gotta run. Geico. Fifteen minutes could save you fifteen percent or more. Welcome back to squawk box this morning, among the stories were following, tesla taking on new jersey over its sales rule. The electric carmaker filed a notice that it intends to appeal new jerseys ruling that would stop it from selling its vehicles in that state. The notice was filed last week with the state appellate division. Shares of tesla, 228. 56, down marginally. Also, whats this story, joe . Yes, amazon. You know about this. Youll have one. Its a set top video box fired fire tv. You will, right . Right. Heres the complicated part. The device is available now on amazon for 99. The company says that it offers performance three times faster than roku iii, apple tv or googles chromecast. It gives users access to hulu plus, netflix and youtube. Correct. All of that i agree with. By the way, if youre going to look up fire tv online oh. Is it white house. Com or something . Be careful. Fire tv shares a name with a video on demand porn site. The porn site is spelled fyre. It bought domain firetv. Com. More information about the amazon product can be found on amazons website. Is that whenever you send me notes using the word fire its spelled with a y. How happy is that porn site that we just did this story and amazon called it that . Theyre thrilled. Bad joke to be made. Did you check it out yet . Did you look . Incognito. No, i did not. I did not. When you do your reviews on yelp. Im going to look right now. Its a business story, right. We get jobless claims at 8 30 eastern time. Of course its a business story. Youve seen inventions from quirky before but you have to check this one out. They are back with an invention that caught the attention of ge and sparked a partnership. Theres a saying around here, you stand behind what you say. Around here you dont make excuses. You make commitments. And when you cant live up to them, you own up, and make it right. Some people think the kind of accountability that thrives on so many streets in this country has gone missing in the places where its needed most. But i know youll still find it when you know where to look. E financial noise financial noise financial noise financial noise i came in like a wrecking ball welcome back to squawk box. Invention platform quirky bridges the gap between an invention and production. Aeros builds a schedule, powers itself down and can be controlled from anywhere in the world. Joining us now, one of the inventor, he invented this thing. Then ben kaufman who we had on many times before. Hes the founder and ceo of quirky. Tell us about this air conditioner. A lot of people have these things in the window. We do in our apartment as well. How is this different . Well, some of the major differences the biggest major difference is the smarts thats built within this product. Right. You can control this from your iphone. You can control it straight from your phone. You turn it on. The beautiful thing about it, the network in this place is funky but the beautiful thing about the unit is not only the difference in design of it, it looks unlike most window air conditioners. It understands when youre on your way home from work. How does it understand im coming from work . Location. Do i have to have the app open . No. It runs in the back ground. It actually understands your cost of energy and what your budget is for the month. It will turn itself on and off based upon the weather. The intelligence behind this thing is beautiful. Working with ge to get this out and are there ge patents in here . Theres a lot of ge baseline technologies in the kpes compre. How did you come up with this idea. The genesis of the idea came to me while driving around looking at apartment houses, commercial buildings, they had air conditioners hanging out of them. I thought, how were they controlling that. You have central air in your house. I have central air. My air, i use it almost like an on and off switch. I had to turn it up, down, leave it running all day long when i was not there, wasting money. Did you go on to the website and propose this idea . How did it happen . I came to quirky by watching ben on one of the latenight shows, jay leno show. I went on to quirky. Com, started looking at the site. It was very easy to put an idea out on the site. Was this a unanimous winner early . What happened was, we get 4,000 ideas a week on quirky. When he first submitted it, we missed it. Ge came in, air conditioners are a big thing, does anyone in your community have ideas for air conditioners . We looked back in the archives. How much does this retail for . About 300, a 50 premium. One size only. One size only. 8,000 btus this year. Well do more next year. One of the recent developments on this product, we announced it about a week and a half ago, a lot of the Energy Companies are calling us up saying its beneficial for us. There are 6 million window air conditioners in the city. They are talking about revamps. Well see what happens. You always advertise you can become a millionaire on quirky if not more because you get a royalty on every sale. Thats why people come to the site. They want to bring an idea to the fruition. Do you know how much youll get on every air conditioner . I have no idea what will be earned from this. Do you know . I do. Tell us. Garth will make i think your influence is 47 , 48 in the unit. We share 10 of our revenue back with the community. This is an expensive product. Its a 300 product. We think well sell tens of thousands of these this year which will net garth in hundreds of thousands of dollars. Good for you. Whats the margin on a product like this . You sell it 300 bucks retail. Yes. How much does it cost you to make . It costs us a bunch of manien to make it. I dont know. Do you usually Ask Companies what their margin is . Yes. We talk about margin all the time. We rushed this one out. We started it in december, were shipping in march. For the first season it will probably be in the 20s. But next year its significantly higher. Thats after we pay our community, after we pay all the people involved. Ge has been doing something with you with patents. They put their entire patent portfolio so people like garthen can find uses for their technologies. One quick plug. The air conditioner usually blows right on you. This is great. It blows up and whats going on here just so we know . Most air conditions blow air out of the front and sec out of the front. The front grill pulls air in and we throw the air up so it doesnt go back into the unit once its cooled. Congratulations, guys. Fantastic. I may have to get one for the apartment. Thank you. Ill talk to you soon. Joe, back to you. Ben, are you there . Yes. Have you thought about france . That would be total do they have air conditioners to start with . Are you going international. We have quirky in france. Theres a French Version of the quirky website. Window air conditioners are a bit different in europe. They use split unit which is have the expresser outside. About the aros algorithms can be applied to different technologies. The total number of units sold per year are 3. 8 million window air conditioners a year are sold. Wow. Do you have a patent . Were covered, man, dont worry. We have actual hard numbers on employment and trade data ahead of ohm tomorrows big report. Well be right back. And what theyve been through lately. Polar vortexes, road construction, and gaping potholes. So with all that behind you, you might want to make sure youre safe and in control. Ford technicians are ready to find the right tires for your vehicle. Get up to 120 in mailin rebates on four select tires when you use the Ford Service Credit card at the big tire event. See what the ford experts think about your tires. At your ford dealer. [ male announcer ] when fixed income experts. Work with equity experts. Who work with regional experts. Who work with Portfolio Management experts, thats when expertise happens. Mfs. Because there is no expertise without collaboration. Welcome back to squawk box. Were just seconds away from weekly jobless claims and International Trade numbers for february. Rick santelli has those numbers for us. February trade deficit became a bigger deficit. Were looking for a 38. 5 billion number, we ended up with 42. 3. Thats the trade balance. It is a deficit. Last month was revised from 39 billion and change to 39. 3. So a bit more on the deficit. This is a bit surprising. Lets be honest here, one of the big dynamics thats affected our trade numbers whether its current deficit is that we import less energy. Lets look at initial jobless claims. They jumped 16,000 from a slightly revised 310,000, originally 311,000 up to 326,000 and continuing claims, just a slight lat rat moeral move high 3. 1 to 2. 86. The press conference has most likely begun. I dont have an ear piece to listen to it. 1 137 1. 37. Are they going to lay additional stimulus on us . But there are several rubs. One of the rubs you know the marketplace is looking at is a lot of the paper that they might want to buy, specifically paper for the southern economies is kind of being use as collateral. It gets a bit interesting. Its always easier to talk down your currency than talk up your currency. If it trades under 1. 3740 it will be a onemonth low. It is very close to that level on its various lows today. Ill toss it back to you guys. As we hover at 2. 80 on a tenyear, close to 1. 80 on a fiveyear and the spread between our tenyear and the european tenyear is getting wide, wide, wide, wide as its been through the end of the last century. Back to you. All right. Rick, well get more from Steve Liesman. Rick, is the bond market rigged by the fed . You know what, rigged seems to be a word that everybody seems to have a problem with. I think manipulated, massaged. I like that word. You can put it anyway you want. I do think all these conversations need to be we still dont know if it will be a happy ending with the fed, though, thats the problem. We dont know about the happy ending. I like todays oped in the journal. The real issue, a lot of people at the Stock Exchange understand it, its that the structure is so fragmented, that even any type of suggestion to try to put speed limits on various activities to excel musquelch t skimming going on superfelous. I never really asked you that, steve. What . Not the equity you have to tell us about these numbers. The equity markets, you know, people candice agree on whether that was manipulated by the fed. When you set bond prices, yields, i mean, youre setting yields, are you not . The story is theyve always done this, joe. What youre talking about is the idea they have gone further out the curve. They did this in the 50s. They set the rate. There was qe in the 50s. Right. Theyve done more before and theyve done quite a bit less. They used to operate only in the overnight market which by the way was so powerful and effective that a lot of times the fed doesnt have to do anything. Do you think they ever targeted equity prices to this extent . I dont think theyre now targeting equity prices. We have not been nor now done that. I think its been an interesting in the development about i can see it. It started moving when you said that. Theres been an Interesting Development into the thinking of equity markets. Allen greene span pioneered this notion, how important the price level is to economic growth. This has been a reversal. It used to be it used to be a reflection of economic growth. Alan turned this around, the higher the level of market, theres a connection between market level and growth. This has changed the thinking of the fed over how much support. Its a contributor to growth. Because its selfreflecting confidence issue or . No, no. Its wealth effect spending is really what it is, you have this kickoff of Consumer Spending that comes from thats worked so well so far, right . I judge not, jim. Thats your job. I give you possibilities, you create probabilities out of them. Let me say this. People will be talking about this with the trade deficit. The japanese sorry, chinese imports fell 19. 5 . A big drop in trade with china. Our exports there fell by 4. 6 . And we dont know if thats reflective of the slowdown. February was a tough month. And rick, youre right sort of on the crude imports are down compared to a year ago in february and january. But theyre flat to up when you look at all Energy Related products. Im talking about the longterm trend. Were not having numbers in the 40s consistently anymore. Thats right. Im trying to figure out where we missed on this number here. It was about 3 billion more than the economists expected. There was some expectation for a decline in the chinese deficit here. Guys, overall, what were seeing, i want to mack a quick point, we are seeing, rick, that spring bounce back. Weve not gotten to the point where i think its as strong as people suggested. Overall, the numbers march through february have been higher. The thaw is on but the sun may be not out as much as people thought. Like doing 200, doing 190 on the adp, people expecting 200. Weve had eight of nine data points. Obviously tomorrow the key will be how much of a thaw we get in jobs. Would you say the adt numbers yesterday being a march number pretty much are back to normal, that the hiring pace, somewhat below 200,000, were seeing an accurate picture . Would you agree with that . I wouldnt. Ill tell you where i disagree. I would have hoped for much stronger, rick. I understand that. Youd hope we made up for losses. Looking at it for what it is. Its fine. Its a bounce back, higher than february, which is important but not as high as you might have hoped. Youre a good friend with sandy. People on the fla are that do a lot of their own Technical Research were upset of late with adp because they dont give out the metrics or the chars or the tables like bls. So people can kind of see the way they arrived at the data. Its pretty much you get the number and nothing else. Any idea why that is . I have a feeling if i got on the phone with mark in about 30 seconds he would give me what data i wanted. They may not publish if as a matter of course. My understanding is economists have had a chance to look at the methodology there and its not a black box to people. Its a white house meeting, if youre invited you get to see, if youre not, you dont. I think if kuo do a job as a reporter and get on the phone and make a call, mark would be happy to share the data. Hell be here tomorrow. Dont hit him, rick, just ask him. I think hed give him the data without violence. Just a love tap. Thank you both. Well be bringing you comments from marios draghis News Conference. Michelle carusocabrera is listening for a more dovish tone from the ecb president. We have more from jim chanos. And ted kaufman will be weighing in on High Frequency trading and debate surrounding that. She loves a lot of the same things you do. Its what you love about her. But your erectile dysfunction that could be a question of blood flow. Cialis tadalafil for daily use helps you be Ready Anytime the moments right. You can be more confident in your ability to be ready. And the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. 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My mom works at ge. Welcome back to squawk box, everyone. Michelle carusocabrera has been monitoring the News Conference from the ecb president , mario draghi. A couple of things that incredibly dovish, he says dont exclude further easing. Longterm, we see a period of prolonged low inflation. Do not rule out unconventional methods, things weve talked about, whether they would do negative Interest Rates or quantitative easing of some sort. Saying the risk to the economy are to the downside. Mario draghi, extremely dovish. We did see a rise in the euro. There was some possibility that they would announce unconventional methods today. Possible, not necessarily probable according to consensus in the markets. You see the reactions so far. Well keep monitoring it. Guys, back to you. Lets get back to our guest host, jim chanos, ceo and president of kynikos. Hes also a squawk market master. Ipos with negative with losses, posting losses, companies that are posting losses up 75 , what, in the last percent of ipos that are showing losses when we go public. I dont know if we can pull that one up. They put it in the stack as its called. Well get it eventually. Its indicative of the speculative fever. Well show the highest it was. You were getting excited. There it is. The one on the left was enterprise value divided by sales. Thats just basically the broad market. Again, the dotcom era skewed everything by a few stocks going absolutely into the stratosphere. The markets on that basis, its like schillers basis, its as expensive as its ever been. If you look to the right, its an indicator of speculative activity, ipos with losses going public. The public is buying this now. The animal spirit to use steve are there. I dont know if they can pull up the sothebys chart. The linkage is also between fed policy and what people are buying and getting spirits. Theres a chart of sothebys. Thats where people are buying. I guess that one on the righthand side, you were talking about this a year or two ago, sothebys. Yes, in fact theres been a double peak there. The 1 is people that are wealthy that are in the market may feel wealthier and may go out and spend. Its not trickling down to the other 250 million americans. And thats the issue. I think that transmission mechanism is the one we can talk about, whether you want to call it a rig or manipulation or whatever. Are asset prices part of the feds mandate . It seems they are. The fed chairman talks about it every time they mention it. They absolutely talk about it now. Which tells you its first and foremost in their policy discussions. When do they change that . And what do they do if asset prices dont adhere to their script . I mean, were in unchartered waters. Does it make it tough to be a short seller. Becky, its always tough to be a short seller. Is more difficult, though . Clearly. When everybody thinks the fed has their back, when theres a put option, ghobl lobally. We heard about draghis comments, the chinese will always stimulate. Globally the entire world thinks the government has their back. Generally speaking when everybody thinks something, you might want to take a few chips off the table. Say maybe thats not going to work out so that everybody will get rich. But i could be wrong. How much money do you keep long . We have a hedge fund, its basically long, our classic hedge fund. What we keep long on the book is cash. When we sell a stock short you get cash. For score keeping purposes were in effect long the market. Youve heard that before. You, jim chanos all my money is in my firm. Its all in the firm . Yes. You buy art, dont you . I own a couple pieces. Anybody that buys art should be looking to hedge it right now, though. The contemporary market what are you short, sothebys. The easiest way to hedge a portfolio. Short any portfolio you could short, sothebys, i dont want to pick on them. Is dan low i dont want to pick on dan. If hes successful, youre not. Probably. Steve cohen brought sothebys at 6. Id rather be buying it at 6 than 46. Whether or not they add value from the headquarters, thats been done two or three times in the last 30 years. At the end of the day, this is driven by art which is socially acceptable, conspicuous consumption. Its one of the ultimate barometers of the onetenth of 1 . Thats whats changed this cycle. If you go back to the 80s, they were buying impressionists. In the last ten years, they have been buying contemporary. As i like to point out to people, these people are still alive. Is there anything more subjective than art . No. Thats why i pine for the days where, you know, the classics, where you could tell he was a damn good painter because it looked real. Now you dont know what the hell it is. Its a line across a thing. Artists that were considered amazing 120 years ago, a lot of them didnt stand the test of time. Could rothco paint like the pilgrims landing at plymouth . Most of those artists actually can. I saw a picaso and he painted it when he was 9 years old. Monet couldnt see, obviously. He thought he was painting exactly he laughed the other day. I did laugh. I laughed at one of his jokes. When we had the people from wild wings. Wouldnt it be better if you had chickens that had six wings, gmo, jeannetgenetically modifie chicken from chernobyl farms. Someone else must have said something funny. No. Exactly. Anyway coming up, jim cramer will weigh in on stocks to watch ahead of the opening bell this morning. [ bagpipes play ] make it happen with fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. E financial noise financial noise financial noise financial noise acknowledgement there. Additionally they were focused on the exchange rate. Once again, the euro going to session lows on those comments from mario draghi. Back to you. Lets get down to the new york Stock Exchange. I have to i have to get a couple of views and the other jim chain knows is here. Citigroup, what do you make of the report . I think if you look at the news flow that came before they came clean on it, it was very clear that this outfit was dirty, so im not surprised at all that the government says, look, you know, this was ongoing and if its ongoing they got to try to figure out who let it be ongoing, so i under astand the government is correct to pursue it. Does it make the stock cheap and, therefore, you know, an opportunity or do you say its got room to drop from here . I think it has slowing business. Its not exactly where i want to be. I was listening to jim about the emerging markets. What i want is the bank thats in texas or the bank thats in florida, the bank thats in california. And i like the regionals more and if i have to have a money center bank, i think you got a lot of opportunity in jpmorgan because its viewed as being tainted and yet i dont think it is. Jim, are there any banks you like . Were long. Were long citi and a few others because we have them as against the our shorts in asia. Its a hedge. Its a hedge against our global bank shorts. But as a shareholder im pretty mortified by this latest set of revelations and coupled with the press release last tweet, you do know, have to wonder, just a whole litany of things, its dealing with drug dealers, dealing with all kinds of things and at some point is someone going to go after the banks themselves and it seems that hes raising this issue that they might. Thats a whole new level of scary if youre a bank investor, so were reval wait ievaluatre. Preet did say were not going with the Arthur Anderson worry. I dont want to imply anything about citi because citi can be a very wellrun bank. I totally understand the idea why you would want to own it, but the tweet that you mentioned and coupled with what he said has to make someone squeamish, we just dont know which one. You mentioned the International Banks and they are nowhere near as strong as citi. I think that makes a great offset. Jim, well see you in a couple minutes on squawk on the street. Appreciate it. When we come back, well talk more to jim chanos. And theres one question we must ask. Are you teasing because we should ask him. Well have jim chanos on with that. Lets talk about the long bets. One we havent mentioned is a stock you were long starbucks, why . Besides being a coffee addict i think you have to look at it again as to what we might be short and starbucks has been a pretty good offset to one of our shorts which is also in the coffee business. You going to tell us which one . Is it Green Mountain . Your viewers are pretty smart and can probably figure it out on their own. I have some guesses as for that. I think that starbucks is still sort of executing right. The company were short is not but has soda stream didnt it didnt you know, andrew, ive got a number of actually cold singleserve carbonated flavored beverages in my refrigerator right now, theyre cans of soda, and its a lot different from coffee which needs to be fresh. Right. Whereas cans of soda keep a long time. Keep a long time. Im turning into you. Off camera you said that bitcoin going to bitcoin . Doesnt have the sovereign ability to enforce contracts and law. Its basically a commodity like gold so the question is, is for a medium of exchange and all of the things that make it money, one of the things the sovereign governments have an ability to enforce contracts. Not yet. The Silicon Valley gets an army and air force and navy which its court system some are asking for, maybe a drone air force to enforce this. Im not an antitechnology guy. The technology works, im just not so sure its acceptable. Thank you for a great two hours. Make sure you join us tomorrow. Squawk on the street begins right now. Good thursday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer and david faber at the new york Stock Exchange. The bulls begin the morning looking for the first fiveday win streak for the dow and the s p. Futures are up at the moment. The tenyear has crept up, the 2 eight ahead of tomorrows jobs numbers and the claims came in on the high side at 326,000. And europe is