Transcripts For CNBC Squawk Box 20140416

Modest growth as new initiatives in mobile and other areas kick in. The stock went slightly crazy, got a huge boost after alibaba rolled its results. Forget what is happening at yahoo at this point. Its almost insignificant at this point. Yahoo owns 24 of the chinese ecommerce alibaba. They made more than double the amount they made for the same period a year ago. Revenue jumping 66 to 3. 1 billion. Alibaba plans to file paperwork as early as next week, thats what everyone is excited about, about this potential ipo offering on an american exchange. They are debating whether theyll go with the nasdaq or the new york stock exchange. The sale could be the largest ipo in American History if the companys valuation could reach, what some people are saying could be as high as 200 billion. Jerry yang of yahoo always gets a hard time because he is he the one that made this investment. People thought he screwed yahoo up forever. God bless jerry yang. He saved this company. Marissa meyer should thank him every single day. Maybe close to ten years ago, maybe longer, he made this investment. They met years ago, jerry yang decided this was the future. Great investment. Its the only thing that would give her a bit of a honeymoon, i would argue, to make some of the changes. Without alibaba there, im not sure shed have the flexibility. You said 51 . What was the 51 . That was the profit. My understanding it was the profit went up by 51 . How is that double . Thats a good question. Youre right. I listened to what you say. I read somewhere profit doubled yesterday. If profits doubled and went up 51 , i dont understand. Lets stick with profits doubled. Ill tell you what could happen, though. Whats that . If profits went down 50 , then it would double to get back to there. Maybe we could do a remedial math class after school. Maybe theres a different amount of shares so that maybe the overall net income number was different. Maybe they bought back shares or issued shares. I may have confused myself. I read somewhere this morning what . It was doubled. It was doubled. But it wasnt up 51 unless youre talking about yahoo . No. I may have confused myself. Lets go with doubled. Well do a math remediation class. Lets say it doubled. Thats much better than 51 . Thats true, too. Intel reported stronger than expected profits. Revenue is slightly below at 12. 76 billion. Wow. 27. Interesting. A programming note, intel Ceo Brian Krzanich is he the ceo now . Yes. No kidding. Hell be with john ford, exclusively at 12 30 p. M. Eastern time. I think stacey was on yesterday somewhere. Lets check on the markets this morning after a session that was, you know, had something for everyone yesterday, up, down, up. When you get a head fake and youre in a market like this where people are worried like a little scared and it starts up 100 and then its down 100, you think, oh, my god. If you looked at the nasdaq, that was crazy. It made a massive comeback. Hasnt done that in five years. On monday it had swings like that, too. It always looks like people are going to sell it off, people in those momentum stocks go, here it comes again. Thats a big time for big money to move in and move it back up. At the lows yesterday when they were down 2 on the day, the index was down 9. 7 . Its almost in correction territory. We havent seen nothing like that in the s p. Its been less than 5 . Were almost back for the up for the year. Not to confuse the issue. Just to explain myself. In the Third Quarter it had only gone up by 51 and that had actually scared people. Alibaba. Now its doubled. People are much happier. We believe these numbers even though theyre chinese numbers. Yes. This is the stuff they have to file for their ipo. This is the numbers that youre getting just before they file the prospectus. Its based in the cayman islands. Which youre familiar with in terms of your finances. Got to have a p. O. Box somewhere. I know. Great place by the way. Really nice. The caymans . Yes. Maybe we should do a week in the caymans, given all the companies that are based there. Thats where that tom cruise, thats where he went with gene hackman, remember, down to the caymans. Aruba, i want to take you to the yes. A little incident on the beach. Wasnt his fault. Did things that you dont do with a stranger. Youre thinking of that movie. I see. The firm. Im thinking of cocktail. You would. Thats seered in your mind, not that theres anything wrong with that. Wild swings saw the nasdaq trade in a 108point range. This isnt the dow. This is an index thats in the 4,000s trading in that kind of range is frightening. The 10 correction chatter started to sheet up. The index managed to come back and gained 11 points. Were back to 4,034. Once we got above 3,000, it ge s gets interesting. We built this 170 million beautiful headquarters and we almost topped out the nasdaq. We called it the nasdaq 5,000. The dow ended 89 points to end at 16,262. The s p gained 12 points. Liesman will come on and talk about this. It would have to fall another quarter percent in yield before it would come close to recession fears you know what i always say, the flat yield curve predicted ten out of the last three. I thought it predicted eight of the last four. Predicted eight out of the last four. Thats what ive been saying for a while. The tenyear was yielding at 2. 61 . I was in a car for 10 or 11 hours yesterday. I was doing nothing but checking markets. What were you doing . I went to ohio. Youre from ohio. I did live in Bowling Green for five years. Ohio, indiana, missouri, oklahoma. I was down by your territory, in mason, ohio. Mason. Right outside cincinnati. Did you bring me Skyline Chili . I didnt. You brought nothing. I brought nothing. Sorry. Bring me any i think its easier to ship it here. They keep it cold for you on the way. Reds pair paraphernalia. Schilling came on, housing, he thinks, the qe juiced the Housing Market above where it should have been. He said he wouldnt be surprised remember . I dont see any way we should do 3 . Even the tenyear not picking up at this point, you would think that would make Mortgage Rates more expensive and prices more expensive. You would. He wehavent seen it yet. Its good. When they go down, youre saying what does that say about the Global Economy . The tenyear as it goes down makes mortgages more affordable and housing more affordable. Peter sent out an interesting taking a look at what had happened with Foreign Ownership of u. S. Treasury notes. In 2013 there was only 10. 5 billion net of u. S. Treasury notes and bonds that were purchased. In february alone, 92. 5 billion. Belgium piled in, which doubled its numbers over the last six months. If its foreigners who are piling into the tenyear, maybe thats an indication that the low yield is looking the low yield is an indication of things around the globe. Do you know who will be with the bears today . Roach, when he comes on. Its interesting. He thinks that chinese consumers are optimistic and they have reason to be but u. S. Consumers are overly optimistic. Well have him here today and talk more about it . Whoop talk to him about china, too. Chinas growth slowing down to an 18month low of 7. 4 in the First Quarter. That was an 18month low but it was slightly stronger than had been expected. Lets get to eunice yoon. She has chinas growth story. Good to see you. Hey, becky, great to see you, too. The chinese economy is slowing down but its not as bad as everybody thought. The number came in for the First Quarter at 7. 4 . That beat consensus. Thats why we saw a market relief rally here. And it also is right around where the government has been saying it wants the economy to grow for the rest of the year, at around 7. 5 . The big takeaway from the economists has been that the government is probably not going to be coming in with any significant stimulus, at least in the short term. The indicators are in their favor. The wage growth and the employment figures held up. Now, in terms of the other side of the data that people were watching closely, the fixed Asset Investment figure was drawing a lot of attention. Thats because it missed expectations. So you had a lot of economists here today, basically saying this is a good thing. We are seeing a shift in the model in china. The retail Sales Numbers were rebounding. We were seeing more consumption, not as much investment. This is a positive sign. But then of course theres people who are saying, well, actually if you took apart the investment figure what was the weakest was the property sector. So theres a lot of concern because the property sector is so important to driving the economy and so those people were very concerned about just how quickly or slowly this economy is going to be, you know, moving along for the rest of the year. Guys . All right. Eunice, thank you very much. Well be watching this closely and talking about it a lot more with Stephen Roach. Well get you an update on whats happening in south korea. Officials say nearly 300 people are missing after a ferry disaster. Rescue teams are searching the waters off of the countrys Southern Coast. 459 people were on board. The crisis in ukraine intensifies. Russian president Vladimir Putin warning that ukraine could fall into a civil war if the conflict continues to escalate. Apparently ukraine had the unmitigated gull to try to push back against some of all these special forces that putin sent in that are taking over all the police stations and the airports. These guys finally said this was our country, we thought, maybe, you know, well take back an airport. Putin says, whoa its classic, this guy, isnt it . Ukrainian forces the nerve. Hes been doing this all along, bait them into a military response. The nerve. They took military action against prorussian militants who seized government buildings in several eastern citiey sciti. Youre right. Hes like, yes. Hes been trying to bait them, so he can say hes protecting russian citizens or russianspeaking citizens. Well do yahoo again here. This is all im going to say. Since were partners now. Yes. Do you think you could ever would you ever have noticed that i said something that was do you listen to anything i say ever . I dont. I dont. You dont listen to jokes. You dont listen to when i talk. You dont listen to discussions. Its easier that way. I know. I heard you say 51 i appreciate that. I listen. Listening is more important sometimes, especially in a relationship, listening is good. Is there any way youre willing to reciprocate on this or start to . Probably not. In fact youre not listening to what im saying right now. Yahoo posting Quarterly Results last night. Joining us to talk more about the numbers is rob sanderson, a Senior Analyst at mkm partners. Were these results any good at all, rob . Just on the operational level at yahoo . Well talk about alibaba in a moment. Yes, the operations, its in line. Were early in a turnaround, if there is one. Theyre starting to see stability. Youre starting to see some of the signs of product improvement and the like. Traffics turned. The revenue, its slight growth but far from what we need to see. Things keep moving, maybe later in the year we start to see more tangible signs of a financial surnaround. You look at the numbers and the symptom movement. Its all alibaba, right . Its completely alibaba at this point in terms of looking in the rear view of the appreciation of the stock. Its a pretty valuable asset. In terms of what theyre doing at yahoo because at some point this thing has to be valued on a stand alone basis for what theyre actually doing. You think its going to turn or not . I think its going to turn. I think were seeing the signs. One thing thats incredible if you visit yahoo campus, theres energy and enthusiasm. Its not been like that for a decade. Thats a prerequisite for a turnaround. That doesnt guarantee anything. They have a sticky audience. Its held on to users for incredibly well. Now youre starting to see a turn in traffic. The early signs are there but we have to get through this alibaba liquidity event which is very material. I think theres still upside there. Do you understand the strategy of getting into the entertainment business . It almost feels like going back to the terry days. I think theres an incredible amount of excitement and enthusiasm from the Entertainment Community for online outlets. Theres a lot of dollars that are moving quickly. People talk about yahoo how do you compete with yahoo or netflix or hulu. Theres a lot of inventory and dollars looking to reach consumers online. I think it makes a lot of sense for them to be moving in that direction. When you think about marissa meyer, one of the critiques is that she hasnt focused on revenue. Do you see that happening . Yes. I think you have to go much deeper to build a sustainable turnaround. Get people wanting to come to work. Have a cadence of strategy products. What unfolds in front of us is yet to be seen. Focusing on the core and the employees is and the products is where you have to start. In terms of alibaba, how do you see that playing itself out . In terms of them selling down the stake, in terms of the Tax Implications . Yes. Theres three things. One is the ipo valuation. Well get a prospectus as early as next week. Well have more granularly. The metrics are impressive, obviously. The second piece is what happens to the Public Market value after it prices. And yahoo is holding on to 60 of their stake after the ipo. The Tax Implications, as you mentioned. Very material swing, 7 to 10 plus depending on whether they can find tax efficiencies. Management is not saying a lot. This management team, unlike any previous management teams are saying there are theoretical possibilities for that. Its generating interest obviously. Thank you for joining us this morning. Take care. Looks sunnier and nicer in boca there. Its not a real picture. I think its a fake picture. But it is snowing here. It is snowing. Whats this guys name . Rob. Rob, do you live down there . Yes, im down here most of the year. Did you file your taxes yesterday . They were filed yesterday, yes. Did you have state income tax . Zero. What did it feel like . Did you rub that all over yourself . Does it feel good . Does it feel bad . How does the state do anything . Moving from california a few years ago, yes, it feels tremendous to not have to have state income tax. Bitter party of one over here, you file your 8. 9 or 9. 8 . What is it . Ive never looked at the number. The number is either 8. 9 or 9. 8 for new jersey. Thats why people are moving. We talked about would it matter doing the show down there for six months and one day a year . Would it matter on your bottom line . Would it matter on the quality of the show . I think we have an advantage being this close to new york city. We do everyone on remote. Not everybody. So youre a no . Yes. Look, i like it here. I do. You like digging your car out this morning . I didnt have to dig mine out. I plowed right through. You have a garage . No. There wasnt that much on my car. I prestarted the car. It melted everything off. When we come back, the dark side of bitcoin. Well check out the underbelly of the virtual currency. Thats coming up in the next half hour. First, fill phil lebeau at auto show. Well all about alphas return when squawk box comes back. [ man 1 ] were now in the approach phase, everything looking good. Velocity 1,200 feet per second. [ man 2 ] youre looking great to us, eagle. 2,000 feet. Still looking very good. 1,400 feet. [ male announcer ] a funny thing happens when you shoot for the moon. Ahh, thats affirmative. [ male announcer ] you get there. Youre a go for landing, over. [ male announcer ] the all new cadillac cts, the 2014 motor trend car of the year. Welcome back, everybody. Its time for the executive edge. Major wireless carriers and smartphone makers have agreed to introduce tells to enable users to lock their devices and wipe them clean of data if they are stolen. This is in response to pressure on the Telecommunications Industry to do more to stem theft. Starting in july 2015 all smartphones manufactured by the companies will come with free antitheft tools preloaded on the devices or ready to be downloaded. New York Attorney general and San Francisco District Attorney said it fell short of what they advocated to do to prevent theft. If a Smartphone Gets stolen, you should completely disable it and blow it up so that no criminal would ever benefit from ever stealing anything to try and bring down the numbers. In 2012, 1. 6 million americans were victimized for their smartphones. I dont know. I cant remember life without this stupid thing. I dont know whether thats good or bad. I have become addicted to the apps on my iphone. I have map quest, stock checking things. I finally got up on these things. Shes finally coming up on this. I am. You would have been proud of me. I cant believe im behind you. Thats pretty sad. Lets head to the auto show with a brand that is returning to the u. S. Market, lets get to phil in new york. I like the front, phil, i dont know, when you showed the side you lost me a little bit on the side. I dont know. You dont like the side, joe . I dont like the back of the car. It reminds me of sort of a i dont know. It just looks like a japanese car or something. Not that theres anything wrong with that. You like the back . The front looks like porschelike. The back is too high or square or anyway i like it. I like it. Im glad alfa is finally here. You cant fit your big toe in there. Stop it with me and my size. Get in there. Id climb on top of that thing. Sit in the back seat. You want me to get in the back seat . I do. The back seat, thats funny. Real quick, guys, let me tell you about alfa romeos return to the u. S. Weve only been talking about the eventual return of this italian sports car brand since the chrysler fiat marriage was put together in 2009. The 4c will be the first model seen sold here in the u. S. , probably more likely in the fall time frame. The price tag, they havent announced it yet but most are saying it will be in the 54,000, 55,000 range. I think its going to do well. Thats a sweet spot of the markets. I wouldnt call it entry level but its in an affordable price range, especially when you consider how many people have been waiting for alfa romeo to return. It hasnt been sold in the u. S. Since 1992. From their point of view, this is going to be one of the two Global Brands for chrysler fiat in the future. Theyll build around jeep and alfa romeo. If youre going to make alfa romeo a global luxury brand youve got to be in the u. S. Thats why theyre finally bringing it back here. I know youre not crazy about the back end but i have to tell you, since weve been here, they all stop and look and say thats a sweetlooking car. I do think theyll get interest. The red one looked good. Most of the angles were from the front, sort of approaching. Thats typical. Are you telling me sergio is saying only shoot the front of the car. Dont shoot the back end. From the front it looks like a 911 sort of. I liked the look of that red one driving around. Thats not as expensive as some of the competition. You see what i mean right there, phil, kind of high there. Just not what youre used to. Maybe its partly that. You dont like this . I like the red one and the way they shot it. Maybe the angle of this i think its just this angle. When you look at the back, its different. This bothers you right here . Yes. This is what brothers you . Yes, yes, kind of. I noticed you havent tried to get in it. He doesnt want to embarrass himself. Are you kidding me . I have wd40. Come back to me, ill climb in there. Contort my body. Get mazola, you could squeeze your way in there. Very funny. I bring you the porsche yesterday and this is how you repay me. I didnt get to drive that yesterday. There was a reason why. They said is joe going to drive . We said yes, they said, you know what, its not operational today. Does that car make a sound yesterday, the one that we had . It can. Its a hybrid. Yes, yes, yes. We added audio. Right. Its so weird that 60 minutes did that. They mentioned the exhaust is closer to your head than any other car ever. Really . Yes, where youd hear it. It would feel kind of cool. Yes. Thanks, phil. Im kidding. Yesterday we were about the same size in fact. I was a little taller yesterday standing next to phil. Youre not talling than me. Were you standing on a box. You are not taller than phil. Youre 511. I am 61, joe. Youre 61 with a shoe shine box. Youre welcome to bring it up the next time we do a shot. Can you find that . Bring up the tape. When we return to high school, we will follow the market swings, time to stay away from tech or buy the dip . That discussion straight ahead. Plus, the countdown to bank of america results. Well try to figure out whos taller. As we head to a break, a look at yesterdays winners and losers. Mine was earned in korea in 1953. Afghanistan, in 2009. Orbiting the moon in 1971. 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Serious, sometimes fatal events, such as infections, lymphoma, or other types of cancer, have happened. Blood, liver and nervous system problems, serious allergic reactions, and new or worsening Heart Failure have occurred. Before starting humira, your doctor should test you for tb. Ask your doctor if you live in or have been to a region where certain fungal infections are common. Tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. You should not start humira if you have any kind of infection. Take the next step. Talk to your doctor. This is humira at work. I dont always have timeh to eat like i should. Thats why i like glucerna shakes. They have slowly digestible carbs to help minimize blood sugar spikes. [male announcer] glucerna. Good morning and welcome back to squawk box here on cnbc. Im joe kernen along with becky quick and andrew ross sorkin. In the headlines, its a busy day for economic report which is are theyre always important. They seem more important because everyone is counting on 3 gdp now. At 8 30, march Housing Starts, economists looking for a 5. 8 jump. 45 minutes later, exactly, the fed is going to be out with march industrial production. Also important, expected to rise by 0. 5 . At 2 00 eastern, the fed will issue its beige book, a regionbyregion assessment of the nations economy. Speaking of nations, china is rejecting a white house warning that its currency is too weak. Chinese Officials Say the u. S. Needs to recognize that the country is still in the process of perfecting and regulating its Exchange Rate system. Yesterday, the administration had expressed that china was letting Market Forces guide the value of the yuan. And mt. Gox has given up plans to rebuild under bankruptcy protection. Mt. Gox is asking a tokyo Court Permission to liquidate. They filed for protection last month after it lost 850,000 bitcoins due to hacking. Mary thompson will be back later this half hour with much more on the bitcoin story. Futures are pointing to another positive open after stocks bounced back yesterday. Joining us now, jeffrey saught. Andrew, tom why would you ask me. I went back in and changed it. Were going to have a contest on who gets this right. Its digenan or digenan. Its digenan. I went back and changed it. Thats been hard. Has it been hard your whole life . Ive had a lot of difficulties my whole life. Tom has the u. S. Intrinsic value Global Management team. Irish . Its irish. That a boy. Did you get it right the first time. They put it in phonetically. I change things to your read all the time. I go in and change things. He changes them to his read. When i go in, sometimes i tha change things. You have to tell paul when you do it, otherwise it messes up when they do the wrong camera. Isnt it positive when you see blue chips and dividend stocks behave much better . You want the mark tote follow valuation. If any area got ahead of itself over the last year it was the high flyers, big growth stocks. Momentum stocks . Yes. Do you think this correction is over . Were in for volatility all year . Volatility is a normal thing. I think the correction weve had, we have this about three times a year. People see this, they get panicked. I think they have to just as an investor sit back and take opportunities here. This isnt always buy on the dip but the dispersion that happens. Irish, not a cubs fan. Not a cub fan. You want to make that clear. Very important. Got to be 80 last time they won anything. White sox . No, cubs. Why pick unless youre like a masochist. I lock the cubbies. Jeff, you heard that. Do you think this is healthy here . Does it indicate 2014 is going to be much tougher sledding to really make any money than last year . So far, its been tougher but in bull markets, joe, all the surprises come on the upside. Ever since the bottom in june of 2012, we have been up over 40 with no 10 correction pullback. The historic odds of that suggest you get a 5 to 7 pullback in the first three months and a 10 to 12 sometime over the course of the year. I continue to think that is when the construct of a secular bull market that has a lot higher to go. What do you the market always finds a reason to do crazy stuff. I guess that tenyear gave it a reason. What do you think was behind what no one really predicted that with the fed tapering, that wed go instead of going above 3 on the tenyear, weve started going back close to 2. 5 . What caused that . Im not sure that nobody predictioned that. I think it was misunderstood when bernanke first talked about reduction of tapering. And i think the message has been delivered pretty clear since then, that that doesnt mean a back up in rates. I think the bond market is worried about the slowing economic statistics. I do think its to a large degree because of the weather. I talked to a car dealer in atlanta that said last year in march they sold 62 cars. This year theyve sold 1 9 cars. Theres a lot of pentup demand out there. I think it will get released on the upside once the weather clears. It was snowing in toronto as well, yesterday. Toronto is in canada. Does it ever not snow up there . You think 3 in the gdp, jeff, next i dont think youll be at a 3 gdp for the year. I do think youll be at a 3 gdp at a run rate by the time you get to the end of the year. Weve had that before. Weve had that for a couple quarters once in a while. I think theyre saying for the year were prosed to do 3 . Thats what we need for the economy to justify a fedless stock market. We need 3 to justify 16,000. I dont think youll be at 3 for the year. I think it will be more like 2. 7 , 2. 8 . What do you think . Do you care . Or do you look at the stock market . Im looking more at the stock level. If theres a surprise, i think it will be on the upside, the second half. Im not a big, oh, its the weather. The weather was extreme. People didnt go outside. Thats why you see the big bump in march, whether its anecdote. Retail sales. Yes, i think youll start to see things move again. Youll hang in there but wont do 30 this year . 30 is abnormal. In the 90s. Yes. The market was pretty cheap last year. Id say its in the fair value range. Jeff, you agree with that . I think if the numbers are anywhere close to being right, were trading at 13. 7 , 13. 8 times next years earnings, not as cheap as we were but constructive on the overall mark pets. Okay. Thanks. See you guys. Constructive is one of those words. When we return, former new york city mayor, Michael Bloomberg making a pretty controversial investment. Find out which battle he plans to spend 50 million to fight. Thats coming up, next. 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And the nasdaq up close to 32 points. This comes after a day yesterday where we saw swings to the upside of 100 points, to the downside of 200 points. You could be looking at more volatility. Well see what happens as we get into the official trading day later this morning. Michael bloomberg making his first Major Political investment since leaving office. The New York Times is reporting that the former mayor plans to spend 50 Million Building a nationwide grass r t Roots Network to take on gun violence and the nra. Even democr hes spent millions trying to persuade members of coulden to support enhanced background check laws. These are issues that the Obama Administration has picked up with, theyve kind of stalled in congress, too. Weve debated this on the set. Im for more reform of gun laws. More reform. And more control. More gun control laws. Hes putting together something to take on the nra. Which is a weird the nra is a powerful lobbying organization. If you vote against it, a lot of times you will lose your seat. The latest thing the Obama Administration came up with is trying to take steps to tighten background checks to make sure you keep firearms out of the hands of the mentally ill. Which is something i think many people would agree with. Theres a lot of stuff that need to be done to help the mentally ill. Part of it is helping the mentally ill and part of it is making sure someone who is mentally ill is reported to the state. Its hard to argue against the free flow of guns part of it is information. My background check lasted eight months. That was because of sandy. It lasted eight months. And here the only thing i would say in this. He was also appointed by the u. N. Secretary general as a special envoy for climate change. And i just hope that this doesnt take away any of the time that he can devote to solving global warming. I know you dont believe i hope hes not spread too thin. And then youve got the, you know, the 32 ounce drinks, too. That has reared its ugly head again, too. God knows how many deaths thats causing. To the gun control issue, to the extent guns is something, i dont really weigh in on this. I dont weigh in on other social events either. I like mayor bloombergs quote at the end of the piece. This was on what he thinks hes done on gun control, obesity and smoking cessation. He says im telling you if there is a god, when i get to heaven im not going to be stopped to be interviewed. Im heading straight in. Ive earned my place in heaven. Its not even close. We all have different views on who deserves to get to heaven. I think he said it with a smile. Okay. It was tongue and cheek. This is a guy that said i will vote for im voting for president obama because of sandy was caused by climate change. Thats the mentality of this guy. Then you have the big drink. I know you love him. He wasnt my mayor. The dark side of virtual currency, cnbcs newest digital documentary, the bitcoin uprising gives us a look at a world the public rarely sees. That story when squawk box returns. Who work with regional experts. Who work with Portfolio Management experts, thats when expertise happens. Mfs. Because there is no expertise without collaboration. Mfs. 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. 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. There are some people proposing it was a fast finger error. It may have been a bad trend in procter gamble. This is very much 1997. Panic selling on the way dahran, all of a sudden it stopped. Its happening if real time motion. Motion. Ynbc news digital documentary, the bitcoin uprising. Mary thompson joins us now with a preview. What kind of fames did you kick around . The bitcoin uprising . Who come up with that . We had about four different names. I cant. All of them. They settled on that one . My producer came up with that. Uprising. Thats pretty good. It is good the documentary is good, too, i hope you all watch it. Lets tell our viewers, cnbc took a dive into the Digital Currency to see if it works, to understand its promise and its peril. In the last year, bitcoins grabbed head leans as much for the meter orrick rise if its price, experts lean to the online 81 world, if crime, including fraud, ponzi scheme and outright theft. The web is full of vendor was accept only exclusively bitcoin. Former u. S. Assistant attorney is talking about an online haven for criminals rarely seen by every day users of the internet. The dark web shining unwanted light on bitcoin last fall when the fed shut down the notorious online blakt bizarre called silk road. Over a twoandahalf year period, it allegedly sold 1. 2 billion worth of cocaine, sd, fake credit cards, licenses and illegal goods, all paid for with bitcoin. That, of course is one of the reasons so many people have heard about bitcoin along with its meteoric rise in price. We went to indiana to talk to one man and then we went to texas an met a young man actually working an breatheing bitcoin. He is basically paying for his grocery trips, all with the digital current sid and is work fork a bitcoin company. When did he start mining the bitcoin. At this point i thought it was hard, if you did it a while ago, you could mine them faster. You need more power, essentially. This man this indiana, he set up a mini Mining Operation in his basement. He actually rents space to a partner of his who lives in california, but the electricity is cheaper in valparaiso so his partner do they have a sebber farm in the basement . Essentially, yeah. How do you mine that . I dont understand that. They have certain computer, special computers, basically, that do it and what it is, is that these computers are in a race to solve complex math problems. So you need more and more Computing Power in order to solve the problems the more people mining for bitcoins. You are awarded it. If you or a group of computer, essentially, theyre combining mining power in order to solve the problems. So that group is awarded about 12. 5 pit coins every ten minutes. Have you ever bought any bitcoins . I did, actually, with steve, i bought 10 worth of bitcoins from him. I have 5 of bit cones. Watch online. Investigatessinc. Cnbc. Com. When we come back the countdown to bank of marc. Those numbers are expected after the break. Squawk master steven roach, hell break down the growth. What it could mean to the squawk right after this. Righ. Bank of america about to report. Will the financial giant impress investors with its results neighborhood, chinas economy slows to an 18 month low, its stronger than expected. Stephen roach on chinas growth and how it will impact the u. S. Economy. Kentucky wildcats coach John Calipari knows how to pick blue chip athletes. Now hes about to enter the squawk court as squawk box begins right now. Good morning, welcome to squawk box right here on cnbc. Im andrew. Take a look at the futures, see how the market is setting up on the wednesday morning, s p 500 looking higher, at the moment about 11 points higher. The nasdaq looks like it will open higher about 30 points higher as well. Also, lets take a quick look at the tenyear as we wait, we will see numbers in just about a moment coming across the wire 2. 646 is the number. We are looking at. Banc of america. The lots of a nickel. The estimate was for a profit of a nickel revenue at 22. 57 billion. Thats above the 22. 330 bele that people were looking, there is a litigation expense of 40 cents a share, depending whether analysts knew about that. If you added that back in, the company would have made 35 cents, i dont know. Digital, much beggar. Its not that much money, tow. Due to outstanding shares. 35 cents, its not a huge number. Whats the stock doing right now . Its up 6 cents, so the headline number is a loss of a next el a share. So thats what you will see in most places. But the metrics pence the report are probably going to be much more important for how you decide to trade the stock today. The actual posted loss 276 million. There were chargeoffs, 1. 39 billion. What their litigation involves all the mortgage stuff. The ceo, brian money hasnt saying the cost of resolving the mortgage issues hurt our earnings for the quarter. It generated resolve. We continue to return excess capital to our shareholders. Also some comments from bruce thompson, the cfo who said that expenses in our Legacy Mortgage Services Including litigation decline for a year to a quarter. What do we see on fixed income . We have been focused on these other guys. Im seeing on what theyre calling fixed physical currency commodity sales, trading revenue, excluding dba is 3 billion, 51 million or about 2 , that would be better than the other guys. Yeah. Theyre also, i guess they already previously announced theyre going up on the dividend and their 4 billion additional common stock. We purchased a program, credit quality continue to improve. Then they got, you know, they have, do any of you care about tier i equity issues . Some of them do. Its interesting, tow, there arent a lot of comments about helping the i dont have all economy. Generally, you look at bang of america with that. They have a Bank Relationship with one out of every two americans in the country. So it will be interesting in the Conference Call to get more color on how they see the economy at this point. But its hard to believe that people didnt know about this 6 billion in litigation extension, that was related to additional reserves. That was the 40 cents. You figure analysts were in there. For whatever reason the stock is trading higher. Its a nickel off. I dont know if you can compare that to where analysts were. Does it matter if you compare to analysts . Some of them, had it in. Half didnt. Maybe they had all of the charge. Some set himments have been reached. There are two outstanding. Sometimes it doesnt work just to do the analysts expectation and then the bottom lean number. But for whatever reason the expectation was for a nickel profit and they lost a nickel. All right. We have analysts. Sometimes thats more important. Revenue is above. We have an analyst coming up to break down bank of america in just a few minutes. Turning now to china, though, the country is experiencing a service led transition into the new economy. The sector continues to make up a larger competition of chinese gdp in comparison toing a culture and mining, which has plummeted in eent years, joining us is steven roach, the former chairman of mrgen stanley asia and author of the new book unbalanced, the codependency of america. We got the numbers overnight 7. 4 was a slow down compared to what some economists were expecting. What does the tell us . The gdp is less important than it used to be provided it stays in the range. You know 3r7s, the dynamic. The new chinese economy which is services, the underbelly of the consumer line growth modem. This has been a trend that under way for three years. It accelerated big time. Last 84 was the first year as you indicated that the Services Sector moved up above the combined manufacturing and construction sectors and the gap continued to widen in the data that just came out a few hours ago for the First Quarter this year. Services are key, they use more people. So if you have a given unit of services gdp in china, you generate 30 more jobs than you did with the old model, manufacturing construction. So you dont need to grow as rapidly to absorb the surplus labor, deal with poverty and expand household income. This is a key piece of the chinese story not appreciated in the west. I know you just came back from china. You spent some several weeks there. I know you were talking to several of the leaders there. But you start wondering, we had jim chano on last week have when was the last time he was in china . Never. I do think there is analysis. Just this week, we were looking at a story in the wall street journal or the fork times that looked at some of the empty cities be it in china. There are questions about whether the country will panic if growth starts to slow. Lets say down to 7. 1 , the leadership, lets see if they took extraordinary measures, if it were lower, a 7. 4 football today. By the way, do you even buy the numbers . Look. I think the numbers, the deceleration is a reasonable depiction, maybe not with great precision, you know, the same is true of our number, but back to my good friend, he is a good friend, jim chanos. Jim has had this ghost city fixation for as long as i can remember. But what he continues to miss is coin moves about 15 to 20 Million People a year from the countryside in the city. So they have to build in anticipation of the migration, so, yeah the wall street journal had this big picture of these empty apartments. Go back, newscast forward three or four years from now, people will be living there, the first dpoeft city i saw if coin was the new city on the other side of shanghai. It was a ghost city in the 1990s, now there are 5. 5 Million People living there. Its fully occupied. When you do urbanization, you cant wait until they arrive. Have you as to build in anticipation. Thats going on all over china. Some of the stories about seniors forcibly put there. They didnt want to be there, they want to be in the villages, its not a natural progression when you build it and force them. You can hear tales, any nation, any society, with we have probably forced relocation, seniors dont want to go to retirement homes, but life is full of things that are unsettling at first, but you do adapt. In china, when emove from the countryside to the city, per capita incomes go up by a factor of 3. So you find work for those people. You generate income and then if you provide support for the safety net, people spend it and the consumer comes to light. That itself teary and theyre making progress there. Now the things that hes been. She, joe, xi is a name, its not a roman fume zplal my mistake. Hes got, he has stated xi. Xi. Its a he but its a she. Xi. Whose on 1st . Yeah. Exactly. Well talk a little more about it. He does have a fine line, every 84 that passes by, the communist leadership has to navigate more and more treacherous waters in terms of, i mean, i would say twitter, facebook the internet, censorship, personal freedom, property rights, corruption and go on and on and on an on. And you dont see any day of reckoning . You think they navigate those waters . Look, its, when theyre changing the model from a producer model, which is really right in the sweet zone of the centrally planned organization to a consumer modem, which raises all these issues, freedom of expression, aspirational value system, those issues become more and more important. So the leadership has to adapt. It is absolutely imperatively, they have by far the largest Internet Community in the world. They censor it. Its still a community. They new york in ways never before. Could they put the squeeze on us if they were ill intent bus of how much treasury, how much they own of the United States . Its not in their best interest to unload treasuries. If we go after them. They can squeeze on us in other ways . Look, in my new book, unbalanced. I have a couple copies for you right here. I do have a bad dream scenario of a trade war, u. S. And china, where they play that card. Because we initiate like to them for currency manipulation, you know the treasury is rattleing that saber right now again this week. Again, did not call them currency manipulators. No, they cant quite get there. But they keep sticking the needle and twisting it. Dispute. Never use the word manipulate. He was uncomfortable and said chinese are not playing by our rules, whatever our rules are, yeah. Although, we have a separate reserve that is actively pushing our currency around, too. And then theyre not playing by the feds own rules. Its fine for us to set new rules t. Chinese just cant do it. You can talk with me at 8 . Consumer, u. S. Growth, gdp. Good luck. Thats what i want to talk to you at 8 00. Ill be here. Rollnig out results moments ago, coming up next, a financial analyst will give us an assess of those numbers for b of a. Later the university of kentuckys coach John Calipari. Calipari. Hes going to be joining us. He says the ncaa is crumbling like the soviet union. Coach cam joins us on the set with his game plan the next half hour. Squawk box comes back right after this. After this. So with all that behind you, welcome back to squawk box. Take a look at the futures. Banc of america results. We will talk about those in just a minute. We will put the future boards up there. We have the gren arrows. The market will open 92 points higher, nasdaq up 33 points. The s p opposite up about 12 points higher. Lets go back and talk about banc of america. They reported moments ago an overall loss of 5 cent per share, factoring out onetime items, 14 Cents Per Share, analysts had been predicting a 5 Cents Per Share. Anthony polini, bank analyst at raymond james. Give me your sort of quick head lean now you read through these numbers. I think this gives new definition to the word noisy. It looks like its in operating beat, but they got there probably like no one thought they would. There was a higher provision, slightly higher, fee income revenue, Balance Sheet expansion, it looks like they added some liquidity onto the Balance Sheet, which brought the margin down an kept spread income slightly below expectations, expenses, excludeing that litigation charge and whats normal these days. We know 40 Cents Per Share certainly isnt likely to repeat. It looks like theyre doing a food job at reducing core operating expenses. So in terms of the one time mortgage issue, brian money hasnt did talk about that in this release. We seen these type of expenses keep rearing their ugly heads, so how do you measure that . You look at the outstanding lawsuits and how much b of a, i think i lost count, theyre north of 40 billion in total emergency related legal and settlement expenses so far, the countrywide acquisition has not proven to be their best. I can understand. It certainly looks like the big charge settlements are behind them. We had the private label is still in limbo a little bit. That 8. 5 billion settlement. I think we are running out of big lawsuits going forward. So i would expect that expense, that litigation expense to actually be a big source of positive operating leverage over the next three years. What do you make of the fixed physical number . It seems to hurt j. P. Morgan in a big way last week. Fixed income was surprisingly strorngs given what we saw at citi and j. P. Where we had double digit declines. The trading account in total was pretty much inline with what we were looking for, then again, they didnt give us that intraquarter negative guidance that we got. What about 10s for gold man sax and Morgan Stanley . Those are the numbers we will be getting tomorrow. Its interesting, do they trade more like mer rim or more like j. P. . I would expect the results given if expectation were lowered, theyd probably have an upward bias. Stock is trading at 1523. What did you have on that stock . Did you have a change this morning . We did not change our target. We have a 20 target price. We are basing it off the core earnings power of the company. It doesnt look like these results will impact that outlook. Anthony, earlier, when we looked at it, the stock was up by more than 1 , now its down 1 . Any reason for that fluctuation . Its really hard. Each analyst is probably going to have a different operating number, depending on how they juggle the pieces here if what they call normal. Right. I would expect given what i have seen so far that, there would be a negative bias on the stock, because it was a miss on Net Interest Income and i think the fee income side, even they it was a lysle i little higher than we thought is probably not sustainable. Its probably some, a little bit of fluff in the income side. I would expect a slight negative buys on the stock. Anthony, we will leave it there. Thank you for joining us to help us break your numbers down. When we come back the International Auto show kicking off in new york today, we will find out what phil has for us. I have another high end sports coup that joe might be interesting in. Its the ftime. Its been out a while. So why is jaguar just now hitting the sweet spot on the market according to ceo . We will talk about that when squawk box returns. [ banker ] sydney needed some Financial Guidance so she could take her dream to the next level. So we talked about her options. Her valuable assets were staying. And selling her car wouldnt fly. We helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today. And tomorrow. So lets see what we can do about that. Remodel. Motorcycle. [ female announcer ] some questions take more than a bank. They take a banker. Make a my financial priorities appointment today. Because when people talk, great things happen. Without standard leather. You are feeling exhilarated with frontwheel drive. You are feeling powerful with a 4cylinder engine. [ male announcer ] open your eyes. To the 6cylinder, 8speed lexus gs. With more standard horsepower than any of its german competitors. This is a wakeup call. This is a akeup call. No matter what kind of business you own, at t Business Experts can help keep it running. Seamlessly. So you can get back to what you love. When everyone and everything works together, business just sings. Welcome back, everybody, lets go to phil lebeau at the International Auto show in new york. He has another goody for us. Show us what you got, phil. We have the jaguar ftype. We will talk about that as well as land rover. The ceo. The last time we talked, a couple years ago you guys were starting to say, this is going to be our vision for the future an sales have just taken off. Why do you believe you are just hitting the sweat spot when it comes to jaguar . I guess we have absolute focus on product and its a very compelling combination and product substance and a very attractive price to deliver sensation of the vehicle. Ftype, high power, high stiffness, its a sensational car to drive. This starts somewhere between 60 and 65,000. Thats becoming a kroulded space when you look at the high end luxury sports coup. You think there is plenty. The u. S. Is coming back. There is enough space there. And we are delivering special experience for our customers and special products. Not in volume, but really just a special product in there specialization. And this specialization pays off, therefore, jaguar is the fastest premium brand in the u. S. Shift us with land rover, which youve added new product. You have spent a fair amount of money on your marketing here in the United States. There still is a perception among many consumers lan rover is a high end brand that doesnt quite deliver when it comes to reliability. How do you tackle that . How do you change that . My customers protest it. Because in terms of quality, in terms of reliability, the it is very, very good. Is. Reporter you do realize some of the third Party Reliability studies do not lank land rover have high. All of these, always, and we are doing everything to improve from the study to the next wvenlt you see all the recalls. You see water been on, nobody is ready in the industry to say, yes, its quality. There is always something we can do better and we are really eager to go if that direction. Reporter drachl ralph spaeth the ceo of land rover, up more than 6 in sales this year, outpacing the industry. Jack wire up 33 . The industry as a whole is up maybe 2. 7 . They are in their opinion hitting the sweet spot of the market. You love that . I love that. But is there any room in the back seat of that, phil . Can you look at it like for kids . And again, joe, there is no back seats. Okay. You know that. There are no back seats. They say there is no back seats in a 911, but there is. Thats for insurance purposes. They dont fool around with that here. This is all about the driving experience. We do drive, three or four of us, three of us at sometimes, so i need a little bit of room back there. But that is, a i dont know about buying a jaguar, phil, does it hand him as good as a porsche, do you think . Reporter its a slightly different feeling to say the least. The biggest thing you noticed, you go back compare jaguar now where it was under the ford ownership, no comparison at all. That i have gone back to the roots of realizing people want driving performance. Thats not what it was under ford. It was far different unford. Thats why theyre noticing this trend. Beautiful lines, though. All right. Before you go, we have to get an answer to that burning question we had all morning, which one is taller, you or joe . We pulled up video from yesterday. I was not here, i missed this i have to take a look at this. We did see in this shot i will grant you joe is standing in the foreground, in the shot around the side, you guys look like you are about the same height. No, no, no, we will take our shoes off and stand backtoback. Thats good. Gentleman has his jackson five i got the same shoes on now. Can i show them to you. They are really hideous. They have nike, you know, i get a lot of gref from my fast people. Thats terrible. Anyway, thanks, coming up, well have a strategy from the great record. Record. Grie welcome back do squawk box, in our headlines, we are watching shares of bank of america grief we are looking alt those, earnings looks like they came out to 14 cents a share. If you were matching that up, that would compare to a 5 profit grief we spoke with an analyst antony polini grief he said if you ask, you will find out what the numbers are grief bottom lean is revenue did come in above consensus, though. The bank did record onetime losses of 6 billion with the fhfa grief right now, you can see the stock is down by 1. 4 grief another bank, pnc financial, First Quarter profit came to 1 and a quarter per share grief cost controls also help the results grief nasdaq is up by about 30 cents right now, just over a third of a percentage Point Mortgage applications rose last week, according to few figures from the Mortgage Bankers association, applications for few home purchases and new finance increased as Interest Rates decline. Checking on prices of gold, the precious metal had the greatest day, chinas growing middle class is a Huge Consumer if gold according to world gold council, there are more gold retail outlets in china, about 100,000 more than starbucks and subways combined in america. Lets discuss this with the senior fellow, a former chairman of Morgan Stanley asia, did you know that statistic . I have yet to see a profusion of gold outlets grief i see a lot of starbucks, though. Its a faux comparison. You think its a faux comparison . I do. Indians like gold more than the chinese, you definitely see that when you Wander Around lampbl cities in india grief in china, gold is not. Pearls in china . The old china, japan likes pearls. I will go a totally different direction grief ali baba. How important sit for the ali baba cheneys that want to go behind it . I think ali baba personifies this right now, they are doing the traditional shortcut and ebays platforms for commerce, for finance, ali pays that as well. They are explosive in their growth rate. It could be a catalytic force. What does it say, though, the ipo will take place in the United States, both the nasdaq and those are vikaing for this ipo its not happening in hong kong . The chinese started taking their publics and have been stressing analysting in International Exam marks to bring in a whered portfolio of investors in providing the exam for their company. Its a part of credibility. When i was in hong kong, maybe six months ago, people thought it was an indictment of the system in hong kong. It was an indictment of the hong kong exchange. It was an indictment of what people thought of the old way of thinking. You know, the hong kong powers that be are not thrilled to lose a headline offering like ali baba, no question about it. I was there last week the road show is global. There will be lenity of investors to participate t. Stockmarket, itself, did not get the listing, again, i think thats reflective of global saix of chinese companies. Flip it around, though, what do you think a company like google or facebook or one of the main lean u. S. Tech following companies that deals with social pedia and other things is going to return if they ever do to china . I think you will see that. I mean, there is appreciation i think of these large social networks that chinese have their own characteristics of communicating socially and they do involve censorship issues that go against the core of tear freedom of expression. But i think theyre willing to compromise to some exten. You saw google do that initially when they set up. They backed off, google message was never clear. I think Companies Like facebook, linkedif, th linkedin, that can hit this large mark are considering because the ali babas and the world and others will its possible. You know, a couple months ago my chinese friends faug rated me. Im now a a participant in we chat. Its a chinese like twitter. I get miamis from people i never heard of, so i dont respond. I get, you know, are multiling wal. Its a powerful platform for trading of video and pictures and all other types, its exactly what we you dont believe the innovation going on the coin wont come here in a meaningful way that ali baba that owns a space in china will compete against ebay or amazon here or a google . I think it will be tough for ali baba to transform its commercial btob type model into the u. S. But i think there is plenty of space to go around for both of these models, ali baba has huge dominant market share in china and i think thats going to keep ebay and the western counterparts oust of the chinese market. Stephen, you will be with us for the rest of the show. Bmw. We will head there next. What is hiding in its trunk and kentucky badge coach John Calipari is taking on the college sports. You compared the ncaas governance to the old soviet union, not necessarily like the communists. Just they may not be around that much longer. Talk about this and his new book much more on set squawk box will be right back. Ll be right. New york is ranked 2 in the nation for new private sector job creation. And now its even better because theyve introduced startup new york dozens of taxfree zones where businesses pay no taxes for ten years. Youll get a warm welcome in the new new york. See if your business qualifies at startupny. Com who would have thought masterthree cheese lasagna would go with chocolate cake and ceviche . The same guy who thought that small caps and bond funds would go with a merging markets. Its a masterpiece. Thanks. Clearly you are type e. You made it phil. Welcome home. Now whats our strategy with the fondue . Diversifying your portfolio . E trade gives you the tools and resources to get it right. Are you type e . We cant come up now. Calipari. Lets get to phil lebeau at the new york International Auto show now you got the starter bmw or something we will be interested in . So. Reporter i think you will be interested in it, joe, Ian Robertson from bmw, lets step aside, tell us about this m4 convertible. This is the m4 convertible. 13 in new york. 425 horse power, this is the market where convertibles are the smartest presence in new york. Reporter you will start this 35, 36,000 in that rain season. It is slightly more. M4 convertible is around 70,000. Reporter i was way off. They will bring down the roof. Are convertibles in demand or have we seen a plateau . Thats an interesting question, if 2008 the convertible market is down substantially all around the world, there are effectively four big market, United States the biggest, the united kingdom, germany and maybe italy. There is no asian demand for convertibles. Reporter they dont like them in china . Its hot and theingy, the atmosphere conditions maybe arent so great. Reporter when you look at this, you roll them in the show rooms later this year, right next to sit not as sexy, if not more important for bmw, thats the x4. We were in spartanburg when you started production. What is the early demand . This is going to be a great car. A few years ago, a lot of people said, is this a segment thats got potential . I can tell you, we got over 250,000 in its next generation. The x12k3w4r7 the x4 will open up a few segment. Not many that bought an x5, they came to the brandnew. Reporter you are increasing capacity. We were down if spartanburg. Its soon going to be the largest bmw plant in the world. When its completely up and running with the x7, where does production top out . At least if your projection . We did 30000 last 84. We were heading out to 450,000 when we reached the next sort of level. Thats about a billion dollars of extra investment. Thats on top 6 billion we have put in there. We seen the demand grow. It will probably launch before the x7. That is positive for the marketing total. Reporter having reached demand and fulfilling demand for upscale suvs in the u. S. . I think the interesting thing its is largest exporter of cars from fawn countries in the u. S. About 8 billion a year. So a lake george proportion, a heavy proportion is going for exports. So exports are all around the world and, of course, xproducts are in high demand and continue to be in high demand. Reporter ian robert zopp, board member for bmw as they show us the m4 convertible, hot and the icky in china, they will not boy it here, certainly if demand here, guys, back to you. We need paris hilton. Thats hot. You love that . Love it. Love, love, love. Reporter what you couldnt see is the look on the face of the young lady in there. She desperately was worried that roof was not going to come down on queue. She is glad it came down for you on squawk box. How many horse powers is that . 425. Thats a 120,000 car isnt it . No, only 70,000. Reporter hell make a deal for you. And ms i thought were much more, what are theled o, whats an m5 cost now, thats 100,000, isnt it . 83, thats back up there. I have a really stupid question, though, when i saw the top put down, there a trunk . There is a trunk. More importantly, there is a trunk that when the roof is down, can you actually elevate it up. So you can put your golf clubs in and all the other stuff and it drops back down on top. Its really easy. We can show you it, if you want. In the thing about that car, see, i think the carrera, the cabrolet, they dont have the lines of the formal 911, thats why i dont like them. It looks like a hard top, but it is the convertible, right . Thats right. You got a hard top as well as an open top when you want it. So its a coup or a convertible. You should get one. Hes closing the deal now. Get one of his cards, seriously. I ned to pay full price, though, even more than that, i just want to let you know that. Up front. Absolutely. Gentleman, thank you very much. We love seeing it. When we come back on squawk box, kentucky basketball coach John Calipari is going to talk to us about Player Development the broken ncaa system and how he thinks its crumbling like the soviet union. Its on his new book can the coaching from the pence out. He will join us on set right after the break. After the break. [ music playing ] you have to play the game. You beat yucon by how many points . 50 points almost . But that was a different team. Really good. John calipari is here, university of kentucky coach, even taking that job, because those fans down there, if you dont deliver. Well, let me say this, we lost that game, when we landed at the airport, there were thousands of fans that lined the streets from the airport to run arer rupp arena. Everybody said, you will lose, they will kill you. Yeah, they appreciate water happened for this program. Who was, there was a couple legendries, one left bus he couldnt fill the shoes of. Well, whoever was following a dofl rupp, coach rupp, which was gentleman hall, hes the one that took the brunt of he wasnt good enough. When you follow the he was there built a program out of nothing. The true leadership is within are you done, it keeps going. Let me talk about your book, coach. Today he joins us with his first book coaching from the pence out. He outlines plans to help fix the broken College Basketball system how many pages, it must be a to you pages. No. The book, though, joe, was written because people were coming to me and saying, how do you do this to get a group of freshmen every year, to have a new team every 84 teach what you have to teach. Part of it is is teaching them to grind, how hard it is, teaching them about leadership, which is really hard when every player on the team was the star. They never thought about anybody else. Now im asking you, please think more about everybody else than yourself. They got to trust. Theyre basically saying if you want me to do that, have you to have my back. You got to cover me. Then it goes on to one and done, different things. Ill give you an example, Michael Kidd Gilchrist comes to me before the championship game against vanderbilt in the tournament. Comes and says, i need to you start Darius Miller in my space. Why . Because he hasnt scored in this tour this weekend. We need him to win the National Title and he said, and you are killing him. So let him start. I start him. He gets 17 shots. Michael gets in foul trouble because hes not used to coming off the bench. We lose the game, but it wins us the ncaa tournament. That kind of service is what were trying to teach. Its in the book. Part of it is dealing with one and done, the other part is, there are some things with the ncaa that need to be fixed. I probably should have used the different term other than crumbling russia. They do. I mean, within i have so many questions for you that we need to talk about the difference, but you cant get used to losing but if i were you if those close games as a fan when im at home they have to be one of my 32 teams out of the 64. At the end, my heart is exploding. Sometimes i have to change it. You are a little bit of a basketball pan . How do you sit there and keep your cool . If its not about me, if im making it all about everybody else, the second thing, i learned early in this profession, if you lived and lost the there are a lot of time fate intervene, i will accept the results. Its a devastating loss. The unc, when he just remember with that call he got at the end where they took the time off the clock or whatever . Did you see him walk off . He said, im fine . Class. You are grieving, its another teaching lesson for your team, how am i going to handle it . Theyre watching, with grace, that you give credit to the other team, you take responsibility. You take it on. Yeah. So they can see, its okay to be wrong, so someone else can be right. So now tell me, theyre working 50 hours, some of them are taking. Longer than that. Some are taking, you know, communications course, maybe you dont have to show up. Is it a real degree . Is there thats not true. See. Theres one or two stories, or theres outlyers. That becomes college athletics. Not true. Theyll say, well, your kids, theyre only there a year, some of my kids are only here a year. It doesnt pine theyre not going to school. We have a 3. 0 grade point average as a team. Brandon knight got all as. I mean, he was in school and deserved to be on these there are liars. The thing that bothers me, we got to make every decision in the nba. Its about moving people. Heres food. They finally yesterday i have been talking about this for years. They dont have food. You can only eat certain meals at certain tiles. Can you not have stacks in between. Our children run home, open a refrigerator, either grab cereal or a sandwich. You cant do that. If you have money. On the college food plan, there are only certain times. But these kids are athletes that are trained. They need food all the time . You need food six times a day. If you give them peanut bit butter, you are going on violation. It will change now, yesterday, because shabazz came out and said we are starveing. Heres what he meant you go up for the the training people the last peel, you are not hungry, you just got done working out. You cant take food to your room . Why, why couldnt i take food to my room . Thats all changing. Ill give you another one, how about parents of these children thought being able to travel to the ncaa games . Tell me why, 11 billion contract, why . I gave a suggestion, where can you get the money . Make the media pay for their tickets. Do not different them meals, peanuts and crackers and a coke. If you want to have dinner, go buy it. Go buy it. We shouldnt be doing that. Use all that money now. Brandon knight, you remember we were in newark playing the game winner, he hit, parents werent there, they couldnt afford to be at the gym to get us to the final four. You have julius randalls mom leave early from the game. I think the cost oattendance, heres why. If you are middle, lower middle income, you get for the grant, you get for the financial need, aid, none of that. If are you really poor, you will get grants that can get you by but not those kids in that middle income and my thing is there is a cost aattendance, what is it 3 to 5,000 . I dont know what it is, these kids kids deserve that. I was at the college newspaper, i was there 40 to 60 hours a week i got paid. I dont see why they shouldnt. The student body, you get paid. Now heres im for let them do autographs. Now the mark comes into play. Heres the last thing, why shouldnt we give these kids two flight, one to come to cool, with unto go home, one after christmas. We need more time. I told you, im a free throw shooter. I am. Can i ask you something, joe . One out of 15. My guys, i thought, would see. I think if i put you out to shooting fouls. We got a lot going on. Squawk box is coming up in the 8 00 hour. Back in a moment. Back in a mome. With the launch of the countrys. Thats the thing, you dont know how long it has to last. Everyone has retirement questions. So ameriprise created the exclusive. Confident retirement approach. Now you and your ameripise advisor can get the real answers you need. Well, knowing gives you confidence. Start building your confident retirement today. Earnings shifteding momentum back to the bull. Can wall street shift its winning viet . We will find out what market pros, former Morgan Stanley executives Stephen Roach. Meanwhile, find out whats under the hood as the company unwraps its redesigned mirano. Data stock picks and sectorer go nomics. Everything you feed to know as the final hour of squawk box begins right now. Welcome back to squawk box here on cnbc. First on Business World wide, todays guest host the squawk market master steven roach, a senior fellow at yale and Morgan Stanley asia, we have a lot to cover with him in just a minute. First, though, andrew, drew, he likes druchlt he always wanted to be called drew. We had drew mattis on the show, i said i liked drew. You dont have to change completely. With understand in a while ill say drew. As a kid if camp, i tried to get drew going for a while. It never got going. My brother changed his name from bobby to rob. You used to be ross . No, thats, that itself not a madeup name. Look they put drew in the thank you for that, they put it there. Drew ross sorken or drew ross sorken sounds a little weird. I want drew ross. You know what im worried about with you, if we leave it in the prompter, then out of ten times its going to come up, we will be like this, you will go, oh, pretty much happened. When andrew is in there. Bank of america reported, if profit of 14 Cents Per Share. Thats excludeing a certain onetime item above estimates. They took a onetime charge of 6 billion for morning settlems. Intel bet estimates by a pen fi, a quarterly profit of 8 Cents Per Share. Investors are more encouraged by a better tan expected full year growth margin. Intel ceo will be joaning the fast money crew at 12 30 today eastern conference and we are about a half hour away from the latest figures on housing start and economists are expecting a betterthanexpected 5 rebound. The assess s of the economy. South korean Officials Say nearly 300 people are missing this morning after a ferry disaster. Rescue teams are searching the Southern Coast after the vessel capsized. Distress signals were sent out when the ship started leaning to one side. There were 459 people on board. The crisis in ukraine intensifying. Russian president Vladmir Putin warning ukraine could fall into a civil war if the conflict continues to escalate. Ukranian forces launched action against several eastern cities. This is ramping up that a lot of people have been worried about. Markets once again are bouncing nicely today and that happened yesterday after a very choppy session. Saw the nasdaq twerk with correction levels. In other words, it was almost down 10 today and yesterday. Joining us right now is the executive Vice President and chief executive officer in chicago. Our guest host Stephen Roach is still with us. Hes a former chairman of Morgan Stanley asia. Im start with you, jack, i guess our 2014 is going to be sort of characterized by what we saw in the First Quarter. Is that your view, tough to make headways . Kind of a consolidation year after the big gains in 20 lean . But nothing worse than that . Well, weve gone from a lousy winter. We have no earnings to speak of. Revenues are tepid and get the markets are muddleing along. Thats with all the geopolitical problems. So i think that we will have a little more upside as we move into the year. I think unless you sell pizza, a lot of the sales that you lost in january or february will likely occur in march or april. So i do think we will start to see earnings flow through. It appears we will see acceleration for higher gains in most stocks, i think small caps may struggle. Most stocks for the remainder of the year, single digit gains. We have been sort of focusing on two key issues i think for weeks now, steven and jack, listen to what the events, football one is, will we get an act sell racing if economic growth, 3 . And number two, does the market need that to happen to stay at these levels after qe is removed. There are people that say that the market was moved up based on qe . Im one of those people. They were hoping that the wealth effect would allow the economy to improve and you could handle it to the economy. Is that necessary for the market to stay where it is . You got to have the single transition. The acceleration will not hatch without the could have been seumer. 70 of the economy. The consumer for six years has grown one and a quarter ier in, year out. Its the weakest period of conis up shun bar none since world war ii. Things are bad so long, they got to get better. Consumers have a lot of debt. Both of those things have gotten better. They are still well off the charts. The consumer is facing a head wind. Job growth is lousy. Unemployment for long term unemployed is too high. This wealth effect, think about the wealth effect, what does that really mean . It means those wealthy enough to own stocks are benefiting the postfrom the feds qe. The problem is middle class america, they dont own stocks. The weekth effect is not for them. It might. They dont foe whats in their best interest. They are not benefiting from this fed induced wealth effect, which, if anything is actionacy baiting their inequality. They may feel better to by a house, low rates. They got a lot of debt they took on and theyre still servicing that debt. Admittedly to subsidize Interest Rates. We average 3 per year. I cant say no way, on a sustained basis, we are stuck closer to two or three. That will make it harder to get jobs back. Jack. There are a lot of tight job marketings, at least pockets of tightness in the job market. You got 40 or more of Small Businesses saying theyre having a hard time finding qualified workers. We are starting to see rage pressures in some of the Skilled Labor jobs and i find that, in fact the holiday inn in north dakota has higher rates than the ones down here in the loochlt i think we are starting to see some pressure in parts. We could see potentially high inflation as a result of it. But i agree with steven in a lot of indicates, to get Global Growth to grow, to act sell rate a little, we are going to need some sort of intervention. Whether it comes from china or mario draghi, i think one of the things ecb can look at, the Federal Reserve added to its Balance Sheet. We dont have much inflation. Inflation expectations have come down a bit. Programs they can use that as a free pass that starts adding wick widity too that system, bring the euro down. You put that altogether, that is the second largest economy. Qe didnt help us. Lord help us if qe helps what the fed did. We truly allowed us to lower the value of the dollar by 30 . Why are we having a manufacturing rebound here in this country largely due to qe and the devaluation of the currency. It has nothing to do with qe. We added 3 trillion to the feds Balance Sheet t. Nominal grew biby diminishing returns. We got very little for the efforts we put into qe. Well, i will say a part of the reason why we are moving to the side lines and this less paper is the fact that since this last qe, Inflation Expectations have come down and, of course, the fed wants to see Inflation Expectations rides. So i will say this last bout of qe did not work. I do think the first three did. Really . But whenever i hear someone say you can devalue your way into prosperity, that always seems to him co being. Somehow the negative effects always outweigh the positives, dont they . Yeah. I think you are right, joe, we are talking physicals versus solution. Are you right, if we are looking for solution, we cant look to the fed. We have to look to the fiscal government to rebalance things. Fortunately, walk politics the way they are, they are low to do anything. So in the pinetime, the fed has come in to try to fill that void. I think hay have done an ad mirable job. They got us to do risk taking back in 2009 and, you know, we were off to the races from there. You are right, for us to get a Sustainable Growth path, we are going to need some fiscal changes and, you know, some sort of balance in washington, which, you know, who knows when that happens. My favorite quote is that if the fed cant change the way things are. They can only change the way thing appear. And if, you know, things have appeared to be better and things are sort of markets better, Interest Rates, mortgages are lower. That implies something comes home to roots, will it eventually . Well, one of two things have to come home to roost, joe, the marks have to correct. The economy gets better. You cant continue to have this dichotomy. A wedge. And the markets. And, you know the markets, you asked me earlier. They were confident that the economy is going to get better. They are. Over the last several years. Most economists are as well. He and i work in the same places. Thats right. You both go with bones. Not at all. Isnt that a Yale Secret Society . I have been told, its secret, i cant talk about it. You cant. You have to kill me. All right. Tanks, jack. Thank you. And you will be with us. Was there anything at kornell, anything cool like that . There was, i wasnt a part of it. I dont know what it was. There was something where people did, you know, get like taken out of their beds in the middle of the night and taken somewhere. Were you ever in a frat . I was. Did you have a paddle in. I have a stamp, i was branded. You have a tramp stamp. That, too, but also you were branched. Thats a great thought. There is all sorts of squawk hazing that takes place, too. When we come back, nissan plans to remain competitive in america. A top exec five iti checktivee company will join us. Any will j. Welcome back to squawk box, everybody, we are watching the futures this morning. After a volatile session, you see they are up 89 points above value. The s p would close 12 points higher. Nasdaq looks look it would open up by 30 points. We did see big swings yesterday. We will see if they continue today. Someone andy is supposed to read the teleprompter. Andy andrew is too many syllables. Dil lebeau is at the fork International Auto show this morning. Zbrm to you, phil. Reporter hey, guy, speaking of andy, andrew, i have andy palmer, you guys are coming off the best month ever for nissan. You are outpacing the market. What is working right now . Everything is working now. The last fiscalier we sold almost 1. 3 million cars on a market 6. 5 . We saw the crossover segms practically doubling the industry. We have real momentum with alt ma, january and february, best selling Passenger Car in america. Can the alt ma pass up the camry in terms of being the best selling car in the u. S. This year . You know what, i dont think we care. We arent in the game of the buying mark share. We are in the game of the buying park share. Basically, we will not set out there being number one for the sake of being number one. So far, the trajectory is going well for us. Real quick on the v e. R. A. Na. The suv sales fell into a lull if you will in north america. Why where we seeing sivb sales peck up again . Certainly theyre a marker for the mark i guess. Certainly, i think the segm was in need of a little bit of extra tur be boost, probably bring in vehicles, my humble opinion, outstanding from a design point of view, start to stimulate that market again. We have been doing very well with path finder. We launched a new rogue. Obviously, this is the new murano. I want to shift to the leap. Heres a vehicles you cut the price last year, spurred sales, you are bumping it a little this year up 180. That ez market, especially the modest priced one. A lot of people look at it and say this is about as good as it gets. Do you agree with that . I dont actually. I think almost every month last 84 we saw an increase month on month. Last month, we did nearly 6,000 sales in the United States. So were having an outstanding time overall. 50,000 a. Little over 50,000 units last year globally. Reporter where do you hit this year in terms of leap sales in the u. S. . We were, i would say, i dont remember or dont recall the number for the u. S. Off the top of my head. We were a little over 50,000 for the year globally. One last question, the leap was involved with a recall almost a million vehicles. More than aple vehicles. Concerns about the airbag deployment. Are airbacks for the industry. Is this one of those touch points, where a lot of people say its great technology, but there are some problems there in terms of making sure the software is always working . I think its an area where you take noens kas, our whole recall process doesnt involve business, guys. If there is one single slightest doubt on anything we recalled, basically, we recalled irrespective of the impact on business. So were very methodical about it. Its an issue, we recalled. Reporter andy, coming off a big month. Guys, the leap, there was a time when carlos said theyre going to sell 40,000. They are seeing the growth pick up here in the u. S. Thank you both. When we return, the governments Housing Starts data. Then some names flying under the radar. Why Companies May be ready to take off. We have a funds manager who said says now is the time to buy. Well find out why. ll find out. announcer scottrade knows our clients trade and invest their own way. With scottrades smart text, i can quickly understand my charts, and spend more time trading. Their quick trade bar lets my account follow me online so i can react in realtime. Plus, my local scottrade office is there to help. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. [ dog barks ] [ male announcer ] imagine the cars we drive. Being able to see so clearly. 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Attorney Generals Office estimated 1. 6 million americans had them stolen in 2012. Small signs of inflation. There is cpi, maybe and trying to align us and he still supports we shouldnt hike rates until the second half of 2015. Chanos may be talking about he may be throwing down. Coming up, a read on the housing industry. Housing starts. Should we tell hem . This is addressed to you, the rest of the world, email jim chanos sent into the show. We have been talking all morning. Chanos says the rest of the world uses the linked quarterly method. Remind him china is the only country that knows there is annual gdp january 1st. He finishs with in your face roach. No, he doesnt. We will get to you should be investing today, not worrying about china. Worrying about what you are saying. Housing starts data, right after the brake. Take a look at u. S. Equity futures right now. I thought the nasdaq was fair value was down 12. Its up 18, thats like 30 points, which would be good. Welcome back to squawk box, everybody. We are a few minutes away from the Housing Starts in march. In the moontime, our guest host Stephen Roach. We just told you what jim chanos said. You said hes wrong. He said they use linked quarterly methods. Chosen knows the annual gdp the taim same year. Your response. The inaugural i National Bureau of statistics reported a few hours ago, the quarter was 5. 7 , below the annual target. Which means you got to act sell rate on a sequential basis. He doesnt get the full dump of data. They recognize that there is a lot in the economy, they prefer to look at the year over year increase. Its a smooth target. I dont know what hes talking about. There you go, there you have it. As we said, we are a couple minutes away from the data. We will take a quick look at the dow and the futures this morning. Yesterday was a volatile day for the markets. The dow features up 88 points, s p features up 11andahalf. The nax indicated higher by 30 points the incomes was down 2 at the end of the session. The map has five years since the nasdaq has made a come b. C. After being down 2 during the session. The dow is up 100 another point. So you have seen a lot of volatility moving through this mark. If you take a look right now whats been happening with then theier, the field yesterday at one point fell as low as 2. 61 . Thats when you saw the lows for stocks during the session. It has picked back up. That was a oneandahalf month low. Rick santelli is standing by in chicago. Steve leishman is right here in studio. Give us those numbers. Housing starts, a little light. 946,000. So based on that revision, whole call it up to close to 3 , what is it 2. 8 . 990,000. Well shy that million we are looking for to repeat actually. We process a significant psychological level last month. That 1 million 18,000 slightly retrograded. This number is down about twoandahalf percent. So we are a bit disappointing on both. What would have been the area of expectation and postfrom mr. Schiller on, a lot of smart people in housing think we will have a hiccup here. It certainly seems thats the case, you look at the data out today, i have to caution, if you believe Interest Rates will make a difference, if you are looking for a fixed mortgage, the lower long rates will help you out. An ad justable rate mortgage, its doing you no favors, back to you. Okay. Rick. Thank you, stephen leisman joins us, why dont you talk about this first . There is a Little Spring time snap back in these numbers. 65 increase in starts in the midwest. Which is kind of what you might be looking for. 30 in the feast. You were down in the south, down in the west. I guess there are questions about whether or not what you have, you have a lot of over building. You have investors come in, buy a lot of properties. That has stopped. So whether or not there are demand issues in those places dominated by investment. My thinking on this, its entirely taken from dont na olick, whose block you ought to read. She was way ahead about the spring stooim time swoon. Im not sure im ready to say the selling season is a bust just yet, certainly, the anecdotal information has been worrisome. The mortgage data better. Those are up. You might get help on the 30 years. I do want to talk about the flattening yield curve and how smart is the bond market . And it turns out its about 50 . There is the yield curve. Heres whats happened. Heres the flattening. 50 of the time. Half the time is right well ahead of a point in time when you could actually make money on it. Let me show you, there is the yield curve. Not predicting a recession . Look at the next start here, you see a pretty good dip where forward sexes have come anywhere from a year to two years out, they bottom out. They have to be at zero. It usually guess to zero before its a recession signal. Look at 84, look at 86, those two bumps there, those are negative session, we have another one around 94, it came down close to zero and there was no recession so what is that, four out of seven . Whats that . That is the worst year. It wasnt a recession signal. Right. So where are we now . Were 200 or 200some poepts above a point where we signal a next recession. The next is can i use flattenings and degridations . My reading is you cant. You cant say a little flattening. Theyre pay income zeros. Any move in the spread will go in the long end. They drive the shortened. That comes up. Thats what signals recession. Its totally different so cant you get recession without the bond market . Not in the last 40 years, you get that. Which suggests, you do the fed drives these recessions. We never had a fed with zero Interest Rates and quantitative easing. You were worried if we went down and you had a 2. 4 on a ten 84, then youd think maybe cheque was going to happen . That would be something. Youd want the shortened to come up. I dont know how you can get to zero in todays world with the fed pegging the shortened the way it has been pegging it. You cant. You have to raise rates. Maybe that means because when its manipulated. That doesnt work anymore. Thats possible. My only point is that the flattening seems to be coming down. If you put that chart back up, with a very high level. The yield curve was very steep. By the way, it remains on the steep side t. Pond market is smart. It is not all knowing. It is worth following. Are you saying the same about the feds . Thats exactly what i said. Not everyone would say that. What would they say . Not think the fed made the mark. So rick what do you make of that . I doubt if you will see an inversion of the zero kwufb, which is your yield line. Yes, we have five years of total absurd overemphasized crisis policy that makes any of these comparisons to history rather meaningless, but if were looking at the market saying its right 50 of the time, i would say on that scale the fed is wrong all the time. Hmm. Pretty much all i have to say. Listen,ing a gri gat behavior is going to be a better predictor than a dog in the hunt. Just look at tax policy, come on. We have influence peddleing up and count, to say anybody in power will make a decision better than the marketplace is absolutely utterly absurd. We is centuries of history to bear that out if europe. You see who is doing this next . Andre. Andre the giant. We will start doing perm mutations of the jambling. You are supposed to thank me. For the record, could you revow . Put that in joe jag its not. Gentleman tag. Thank you, steve. We appreciate it. Thank you, rick. How come it doesnt a, oh. Rick. He thanks rick. See. Coming up from andre, how important are International Markets for u. S. Companies . We will play sector nommics. Thats coming up next. Plus, why names are flying under the radar for investors as stock picks from a five star fund manage that you do not want to miss. Welcome back after this. E back. Huh, fifteen minutes e back. Could save you fifteen percent or more on car insurance. 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. Today is wednesday today, we greet you. Treat you. Care for you. Today, you can come to Cleveland Clinic for anything, everything or just to get that thing checked out. Big, small, and yes, the best heart care in the nation. Its here everyday, for everyone. Thats the power the power, thats the power of today. Cleveland clinic. Call today, for an appointment today. [ banker ] sydney needed some Financial Guidance so she could take her dream to the next level. So we talked about her options. Her valuable assets were staying. And selling her car wouldnt fly. We helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today. And tomorrow. So lets see what we can do about that. Remodel. Motorcycle. [ female announcer ] some questions take more than a bank. They take a banker. Make a my financial priorities appointment today. Because when people talk, great things happen. Welcome back to squawk box, our futures continue to show nice gains today, which would be a continuation of the rebound. We got nervous thursday and friday what monday can bring. Thursday turned out fine for the bulls. Today is starting out okay. We will see where it goes. Industrial growth can come from a lot of different places, but the emerging mark has been of course the big part of the picture, joining us to ta talknomics cnbcs domenic chiou. Reporter for a lot of companies in american, Global Demand a big part of the business. The numbers can be quite staggering. We decided to take a look at how much business the big players and discriminarys get from outside the u. S. For instance, take a look at this here. Ametek. They make measuring devices for aerospace companies. Over the last 12 month, it got 55 of its sales from outside the u. S. Aerospace, cater boeing gets 57 caterpillar heavy opinionry 61 up from outside north america. They lump it differently here. Then you got scotch tape and postit maker 64 of 3m sales, it gets threequarters of its sales internationally. One region in particular, a key focus, of course, thats ace 82 doing no small part. Boeing gets 16 of its sales from asia alone. Apetek a fifth of its seas, same thing for caterpillar as well 3m a third of its sales from asia. Expeditors half of its sales from china. Caterpillars group sales are into broader regions. Still, this goes to show you how much the International Story is a part of caterpillar 40 of its sales from north america, canada, the United States. Everything else comes from places like latin america, europe, asia pacific. For a lot of these industrial companies, a billing part of the story, why they leveraged to Global Growth footballs is they get so much of their business from outside the u. S. , being over to you. Thank you very much. We got questions of whats been working. Lets talk logistics. We have stocks in logistics, labels and supercomputers. A five star fund manager, including under the radar names. Mark heneman is the executive Vice President and has nearly 4 billion in asset manage . Good morning to you. Good morning. Why dont we Start Talking about logistics. You like ch robinson, why is that . Its pretty attractive. Its underperformed in the last years as our core business has gotten more competitive. Ch robinson, theyre very well positioned to service their high end clients with better services. They spend a lot on technology, the price is very attractive right now. They have 62 of analysts, maybe part is from the weather we have seen. You think that is something to lighten up in the spring . Weather certainly impacted their shortterm issues, long term, more expedition are what analysts are focusing on. They are losing sight of the longterm opportunities of c. H. Robinson, we think we will see somifies returns as that business gets less competitive and they focus on their higher value added customers. You look at shares of bemouth. Is that a part of the reason you like it . You think there are some things the markets will take notice of . Bemis results have been anything but exciting. We think going foefrd, thats all behind them, they can focus on more profitable growth. This is not a company, were expecting big double digit returns from. But for the valuationite now, we find it very attractive. Lets also talk about cray, a name of old. You think there is something people should be paying to what is the direction the stocks should be headed . Just in the last few weeks, the stock has come down a lot. With technology names. I think the mark has created a nice opportunity for us. Cray is, you are right, its an old company, all tow its got very new and exciting products and its very well positioned with dig data, companys organizations feed ways of interpreting that data. Cray has an excellent product line to support that, along with the fact that their biggest competitor is deemphasizeing the High Performance computing and super computeing. We think the outlook is excellent. We take advantage of the short term opportunity that presented itself. Thank you for your stock picks today. I. To wish you a happy birthday. How do we know that . Irs. Exactly. Mark, thank you. Before we go to break. You arrived it by saying one of our favorite, now its disingenuous. What are you talking about . This guy is one of our favorites. Who is that . Tony crencenzo. I believe this guy, hes a market master. Hes very smart. I want to read what he said about the yield curve. We have a shot of tony. Would you say it straight . They told me to do it. Hes from staten island. I want to do it. I told everyone how great he is. I need to imitate his voice. I understand what you say. The yield curve is one of the best predictors of the economy. Its better than the length of skirts the superbowl indicator, the stockmarket. You are compareing it to ridiculous. Those are all but two. There is a Great Research piece if you want to see it at the new york fed. Org. You can find out. Go physical, the bond market is better than the lipstick indicator . A lot of those are good. A lot are for recession. Recessions is caused by one, high inflation, one of the reasons two, high inventory, financial imbalances or exogenous influences. Recession is at least two years away the current expansion will be a lengthy one. With it already at five years, he says its got at least two to three to go. Thats what he sees. What the market sees. So whats the opportunity to miss that . Oh, yeah, i did. I went from tony creczenzi. One owe, i went from him for the david darth. Another one of our favorites. I work with david. You did . Your point is that the price into the market is the only surprise is for disappointment, not for upside. Ill get tony to come on soon. I dont want a recession. I cant believe the fed will be that great with orchestrateing this without problems. It sounds pretty smooth. When we come back. Thats the whole reason for doing it was then you tell me not to do the voice. I wanted to understand what you say. He enunciates a little more clearly than you do. That accent, Newport Beach working for him. You said he does blends. Its working for him. Its like being from paris for all those ladies out there. When we come back, jim cramer will sound off on this mornings earnings news what he is watching ahead of the opening bell, squawk box will be right back. Ht back. [ 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. Oh, that is a good point. Were on. Were on. Tv. Live on tv. Lets get down to new york stock exchange. Jim cramer joining us now. Bank of america, the analyst said its so noise y you cant figure out whats going on. Wasnt noisy at all. Ought to get Noise Cancellation headphones. The numbers were fine, four out of five businesses were good, litigations, i could argue its peaking, they cant say that because they still have the doj in front of them. I liktsds investment banking, 1. 5 billion. Retail banking. Global Wealth Management not as strong as i would have liked. Its in line if the stock werent up 44 cents yesterday it would have had a nice 10 cent move today. Have you ever told me whether is the market up where it is because of qe and does it need the economy to go into overdrive . Theres a bond shortage. Im not being political. The treasury or fed could sell a trillion dollars of bonds right here. It would be a terrific thing if they did that. More importantly what i tell you, this is all about profits. Only one quarter this period so far, jpmorgan, that was di disappoi disappointing. All the others have the possibility of their dividend. Im sorry i am a stock guy. I know i should be on another network, but i dont know what that would be. Top down is fun because you dont have to get up at 3 30 in the morning if its top down. Bottom up you have to do a huge amount of work and what you find is the profits are pretty good. So sorry, thank you, larry kudlow for teaching me these things by the way. Really . So if we watch just the thing with watching corporations is, that theyve been doing pretty well for years, and it it hasnt seemed to cause them to either expand or hire as much as they should have been. Its a technological revolution. We have people come on our air saying social mobile cloud. It means fire people will get more out of the people existing. Plus were we love globalization in this country. What is that about . Exporting our jobs to countries where they then export pollution to us. And they theres no agreement weve signed that has ever been a deficit for them and a positive for us. So i mean those things do hurt employment. Anyway, look, im sorry to be apolitical. Its the way i was taught to be. Okay. We didnt know you were. Anyway, thanks, jim. We will see you in a couple minutes. Okay. Hell tell us what he really thinks on squawk on the street. Coming up, jim chay nose right about starting starting to panic about growth. The chairman of Morgan Stanley air shah will sound off. Keep it locked on squawk on the street, ford coo mark fields will join phil lebeau from the auto show. Squawk box back after this. B. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. And only national is ranked highest in car rental Customer Satisfaction by j. D. Power. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. Why relocating manufacturingpany to upstate new york . I tell people its for the climate. The conditions in new york state are great for business. New york is ranked 2 in the nation for new private sector job creation. And now its even better because theyve introduced startup new york dozens of taxfree zones where businesses pay no taxes for ten years. Youll get a warm welcome in the new new york. See if your business qualifies at startupny. Com ameriprise asked people a simple question can you keep your lifestyle in retirement . I dont want to think about the alternative. I dont even know how to answer that. I mean, no one knows how long their money is going to last. I try not to worry, but you worry. What happens when your paychecks stop . Because everyone has retirement questions. Ameriprise created the exclusive confident retirement approach. To get the real answers you need. Start building your confident retirement today. Welcome back, everybody. Weve been speaking with our guest host, steven roach a senior fellow at yale school of management and former chairman of Morgan Stanley asia and has just come back from klein. Weve been talking about that at length this morning. You think theres a fundamental misunderstanding a lot of people have when it comes to china. They focus on gdp. Its hard not to when chinas gdp drives the Global Economy. China itself is not fixated on gdp. Theyre focused on changing the model from being a producer to consumer and more importantly, this is something people do not get about china right now, theyre changing the structure that manages the economy. What does that mean . Theyve set up coming out of this big policy meeting last november the socalled third, a new leading committee to guide the committee. This circumvents the old state Planning Commission dressed in new clothes called the National Development and reform commission. Theyre getting marginalized. This leading committee is guiding the economy, guiding politics, culture, the environment and social issues like inequalities in the income distribution. It exists at the central level, provincial level, local government level and in the big state enterprises. This is a revolution in governance in china that people dont quite get. The wrap on china they havent implemented and now theyre implementing through the new mechanism of governance and its a pretty dramatic break through. Though you are still talking about trying to guide a massive committee. Guiding much less than before. Their mantra the markets will play a decisive role in shaping the economy, moving to that in the currency market, the capital markets, through exchange between stocks in hong kong and shanghai is an indication that. They will open their capital account. Currency will be more volatile. Increasingly more toward convertibility. Do you have a problem at all, these guys are probably worth, 40, 50, 60 million apiece. The leaders. If the leaders accumulate excess wealth that is a serious problem. But they do. Some do, some dont. How much is s just like in this country. How much is president 11 worth . You would have to run it through the chinese irs. Im sorry shi. I have no personal knowledge of that. Okay. Were going to live it there. Thank you. Thank you andrew or drew or andrew. Andy. As you know i respond to lots of things. Ross. There you have it. Join us tomorrow, squawk on the street begins right now. Good wednesday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer, david faber at the new york stock exchange. The news is jam packed today. Earnings, China Economic data, janet yellen speaks in new york around lunch time. Futures are up after that impressive bounce on the nasdaq yesterday. Tenyear art cashin calls it the orchestra conductor to the market, the true fear gauge. Today it is back up to almost 2. 65. Europe solidly in the green except for the uk for the most part. Our road map w