Transcripts For CNBC Squawk On The Street 20140311

Morning. Its a busy morning for retail and well get some Quarterly Results from American Eagle, dicks and Urban Outfitters. Dupont saying the severe Winter Weather and the situation in ukraine will impact sales. And apple pushing Record Companies for exclusive first releases of songs through itunes. And all show long well bring you the best of softbanks interview, his criticism of Wireless Service in the u. S. And his thoughts on alibaba and yahoo and the 300year plan, carl. I know you like that. Think the long term. Its a long game. Jcpenney is a big gainer in the premarket. Citi upgrades the Department Store chain to buy from neutral. The firm says it believes pennys deliver positive comps in line with guidance as they fix their home and kid categories and takes out what they are calling inappropriate merchandise. The title of the report is american comeback story, gives. It fits and we feel it. And its not the first upgrade weve seen lately and, again, the squeeze will be on today. Its been interesting, of course, watching this for years now from the ascension of ron johnson and ackman into the boardroom and then that complete and total disaster that followed. To then mr. Olman coming in to a number of my Hedge Fund Guys in there all thinking it was going to be a big turnaround and it was easy to accomplish and watching the stock go to 5 and here were starting to see some momentum perhaps and those saying, well, liquidity issues are off the table for now and theyre generating cash or at least they may be. But theres still a lot of questions here. Thats the core point that citi is making, they believe the liquidity concerns are overblown that they will by the end of the year have 2 billion in the bank and the trough of 1 billion probably in the Third Quarter because theyre going to be able to push the comps higher and stay out of fashion, you know, thats the area that theyre not going to compete so much on much more the home side of things and indeed kids, you know. And a lot of this circles back to what they are calling space disrupt aion during the lt couple of years when it comes to home and kids which is about a quarter of the mix according to citi. And got earnings from American Eagle and Dick Sporting goods and Urban Outfitters. And Courtney Reagan at hq to break down the results. Good morning, carl. The headline for the most recent batch of retail earnings, could have been worse. Urban outfitters logging short on revenue. The retailers namesake chain falling 9 but comp sales surging 20 at urbans free people brand and 10 higher at anthropologie, and wells fargo thinks the market is focused too heavily at the weaker results and overlooking impressive results at the other brands. Issued a light warning saying customer reaction to spring merchandise at anthropologie and free people has been strong but given continued challenges facing the namesake brand the company remains, quote, very cautious about the current quarter. American eagle outfitters are surprising the street with both in earnings and a sales beat, though, the company did guide to the low end of the previous range so expectations werent particularly high. American eag ffles interim ceo noting difficult mac macro conditions but also saying merchandise and Customer Experience fell short of the companys expectations. Samestore sales fell 7 and the retailers conditions remain challenging adding Severe Weather has contributed to weak demand in the current quarter. Shares lower on the results in the premarket. Dicks Sporting Goods matching estimates and slightly beating on revenues and posting a strock 7. 3 gain in samestore sales and posting strong margins something few others can boost from the fourth quarter. The retailer believes it can post doubledigit Earnings Growth this year. Thats probably one of the retail standouts that were going to see today. Carl, back to you. Courtney reagan, thank you for that. For more on all things retail, lets bring in the cnbc retail analyst who always brings a fresh set of eyes to upgrades and downgrades. Does citi have a point on jcp . The street loves a great turnaround story and i think here certainly weve removed some of the nearterm liquidity issues, you know, certainly have things bottom, reassured vendors, yes. Do i believe that this story is really taking hold and really going to turn around . Not necessarily, look at the Competitive Landscape and look how theyve permanently scared away a good portion of their customers, but the Home Business has been a wreck. Its gone to 12 of the business to 20. Could it get a little bit better . Sure. Are positive comps good enough . How positive do they need to be in the remainder of the year . Theyre not. Think about the last two years of comps down huge so just to say that they will have positive comps and thats the driver, thats just not enough here. Weve really got to see an acceleration in the business. But there is surely with a brand of this size physically across the United States huge latent power. This was a stock that traded at 85 and more recently the peak was 42. Sure. You can make an awful lot of money with small gains at the bottom if you went in at this level. Sure. Certainly, again, i think a youll see a lot of upgrades just based on the fact that weve removed a lot of these nearterm frightening issues like liquidity could i double my money . Do you know what do you have a price target . No, i dont have a price target. I would stay away from jcpenney, if they do low singledigit comps and margins continue to decline, because the competitive environment is still incredibly tough and theyre going to still have to jam the coupons down consumers throats to get them back in the stores. American eagles in for a tough couple of quarters, right . Carl you and i three years ago stood here and had a conversation about margins being down almost 1,000 basis points in the teen space and were still having the same conversation today. There are too many stores. Were talking promotional environment. And i think that teen retailers are significantly underestimating the power of fast fashion. They are looking at for q1 sales down seven to nine. And inventory up seven to nine. And in an environment where its all h m, right . Exactly. Are they going to have to reposition the way hollister appears to be repositioning . Its interesting the teen space keeps saying to us, you know, were going to shorten lead times and get our fashion better but it just doesnt seem to happen. They are getting killed by fast fashion, who is nimible and quicker, thats where the consumer and dollar is going. How do the same stores being up 20 at free people or 10 at anthropologie, because clearly there they are doing something right. Why cant they bring it out to the entire business . If you look at Urban Outfitters, comps were down 9 but free people and anthro are doing well. They are fresh and interesting. So, there are stories that are working, you know, the footwork category is working incredibly well, but what the apparel players have to do is, a, reduce stores. The footprints are still too large and second become more like fast fashion and more nimble and give the consumer the freshness and what they want. You mentioned stories that are working, macys with an upgrade and dicks making good on its promise back in early february. The comps were up 7 at dicks and its all about footwear. Weve talked about that footwear is the new handbag, the new accessory. Thats where the consumer is spending their money. There are definitely spaces working out there, you know, accessories, footwear and certain apparel players that have differentiated concepts. Its a tough industry to get your head around. Nice to see you stateside, stacy. See you later on. Dupont is blaming the weather for a challenging first quarter, warning that storms and frozen temperatures have delayed the start of the planting season. It also says the political unrest in ukraine has delayed seed deliveries. Dupont runs a factory in the central part of the country. Its sticking by its 2014 earnings forecast of 4. 20 to 4. 45 a share. Apparently they produce maze seeds and Sunflower Seeds and rapeseeds in this factories. Who knew that globalization had taken us there . I have no idea. If jim is here, he loves to talk some dupont. Enjoys it very much without a doubt. Titanium dioxide. The toothpaste stuff . Yeah. Listen, you look at the stock and theres nothing to complain about. Theyve had a number of challenges along the way. But theyve been able to convince investors to go along for the ride here and it has been largely a good one over the last year as dupont has done any number of things. Well see whether this is a new challenge that means much of anything to shareholders. When we come back this morning david is bringing us a little present. The ceo of softbank, whose company the parent of sprint has a message for the u. S. When it comes to the wireless wars. Well hear what he told faber in a couple of minutes. One more look at futures trying to get some traction here but mostly futures are flat. Return on investment wall isnt a street. Isnt the only return im looking forward to. For some, every dollar is earned with sweat, sacrifice, courage. Which is why usaa is honored to help our members with everything from investing for retirement to saving for college. Our commitment to current and former military members and their families is without equal. Masayoshi son is the ceo of japans softbank. Its a company focused on the internet. It has 1,300 separate investments centered around the growth of that platform particularly in mobile. Such as a 37 stake in alibaba, 42. 5 of yahoo japan and an 80 ownership stake in sprint. Mr. Son is here in the u. S. This week as he often is but particularly in washington, d. C. , with a message. What is the richest man in the country of japan saying . Well, hes saying your speeds here in the u. S. When it comes to what youre delivering to the home and to the phone are nowhere near what they could be if you let me do my thing. Today in the state the Wireless Connectivity is, like, five megabits to ten megabits per second. The landline broadband is 20 to 30 megabit per second up to. Average is a little slower. But we would like to provide up to 200 megabit per seconds. 200. Yes. Tenfold what i may be getting on my current broadband connection. Yes. Thats the target we have. 200. Yes. Really . Up to. You believe that thats a real number . Yes, yes. We already have in japan today 20 to 60 megabits per second. And we have the Technology Already testing in the city of tokyo 700 megabit per second on the street, not in the laboratory. On the street, 700 . Yes. 700 . Yes. I can do anything with that. Yeah, yes. How many years could you make it happen . You could start having those in the next couple of years, but in the several years we will have nationwide coverage of that kind. Were in washington, d. C. , i would assume youre having this conversation with those who might make a decision about your desire for more scale. Theyve been pretty outspoken saying we like four, fours working well for us. Do you think you can change their point of view . American people will have to decide, you know, should we have the world Class Network and, you know, with the competitive price. U. S. Is the only country that post paid users Contract Price is going up. This is the only country. All the rest of the world the price is going down. Its very competitive market. The speed is high. The u. S. Is the only market the price keep on going up, going up in the hightech Industry Price keep on going up which is very unusual. And the speed is actually going down. Why is that, you know . America have to decide. Why is that. And whats the solution. Although it will be the department of justice and the fcc who decide not necessarily americans. Well, its a discussion that need to take place by american people. Do u. S. People realize the reality . You think you can win that argument . I dont know. I dont know. Im just throwing a stone into the pond. Right . So im just making a wakeup call. There it is, the wakeup call from mr. Son, of course, trying to win his way if you can through the american regulatory system. He wont say thats the case. Today a big speech in front of the American Chamber of commerce about what the world here in the states would be like if you were able to bring significantly greater speeds to bear both into the home and in to every device wherever you were. When we talk about scale and well have a lot more about this later in the program, were talking about his desire, no surprise, to buy tmobile or merge with tmobile. That is the focus. And this is simply i think his case trying to be made to change the tide if you will which has clearly gone against the idea that there will be there will be an allowance made by u. S. Regulators for four that was what i was talking about, four wireless carriers to go to three. The problem is the country is so big its very difficult on get a new entrant. And his argument works against him. As things stand with four theres the possibility either of the other two could muscle up and take on the larger two. If you go to three, game over. You dont have the possibility of new entrants doubling down. His argument will be and youll hear more of it, i dont have enough scale to make the investments i need to in my business and neither will tmobile or sprint separately. The Balance Sheets and capacity is simply not large enough. You have the two giant carriers in verizon and at t and why not create a third, this is their argument, that actually can bring to bear the resources both from the capital side and Everything Else to really put the money to work. If we can get speeds like hes talking about, that would change a lot. You would by the way, you get into the home, you know, you bring 50, 100 megabits into the home, forget 700 which hes saying they are delivering on the street in a test in tokyo, you are talking about a whole new world. Can he offer a Huge Investment and a price war at the same time . Come on. I asked that question. Its a great question. Im glad you brought it up. He said i want a reasonable return. Just a reasonable return. But it is a very valid question, sime been. I like the way he says theyre throwing a stone in the pond which has a Ripple Effect image and given his wealth on the forbes billionaires list he has a couple of stones in his pocket, so to speak. So to speak. And hes known as a guy who will keep coming. Unbelievable. New york times deal book with some breaking news regarding sac capital changing their name to point 72 Asset Management which is an illusion to their address 72 cummins point road in connecticut. Suggesting the times says they will not be changing locations. It was announced in a letter to employees and becomes effective on april 7th. When we come back, art cashin with his market words of wisdom ahead of the opening bell. One more look at the premarket and well get the opening bell in ten minutes when street signs comsquawk on the street comes right back. Comes right ba. No two people have the same financial goals. Pnc investments works with you to understand yours and helps plan for your retirement. Talk to a pnc investments Financial Advisor today. Is really what makes it slike two deals in one. He 1,000 fuel reward card salesperson 2 actually, getting a great car with 42 highway miles per gallon makes it like two deals in one. Salesperson 1 point is theres never been a better time to buy a jetta tdi clean diesel. Avo during the first ever volkswagen tdi clean diesel event get a great deal on a jetta tdi. It gets 42 highway miles per gallon. And get a 1,000 fuel reward card. Its like two deals in one. Volkswagen has the most tdi clean diesel models of any brand. Hurry in and get a 1,000 fuel reward card and 0. 9 apr for 60 months on tdi models. Apple is reportedly pushing Record Companies to offer new songs exclusively through its itunes store. The l. A. Times says such a move will make those songs unavailable at least at first through streaming Services Like spotfy and pandora. The paper says apple executives think those Ondemand Services are hurting download sales pretty interesting for the 16 billion business. And downloads are down so far this year, 12 , 13 between albums and singles. 80 of downloads are through itunes and also hiding behind the idea that its streaming their main attack. Of course, if they can make it exclusive to itunes it means its not downloadable on android and therefore you have albums exclusive to the iphone which i think is important. When i first heard about spotfy someone was explaining it meaning the ownership model is dead. You dont have to own a song. You can just stream it whatever you want, put it in. In fact, i have it and it is exactly that. Amazon is quietly has begun a music service. There is also some speculation that perhaps if the price of the prime service at amazon is raised, that will be incorporated within it. So, thats Something Else to watch as we sort of keep an eye on this entire ecosystem of music. Yep. By the way apple getting an upgrade that well talk about after the break. Opening bell a few minutes away. Squawk on the street is coming right back. Right back. My sinuses are acting up and ive got this runny nose. I better take something. Truth is, sudafed pe pressure and pain wont treat all of your symptoms. Really . Alka seltzer plus severe sinus fights your tough sinus symptoms plus your runny nose. Oh what a relief it is [ indistinct shouting ] [ male announcer ] time and sales data. Splitsecond stats. [ indistinct shouting ] its so close to the options floor. [ indistinct shouting, bell dinging ]. Youll bust your brain box. All on thinkorswim from td ameritrade. Youre watching cnbc squawk on the street live from the Financial Capital of the world. Opening bell in about three minutes. Interesting day shaping up. Some retail news, a couple of upgrades on that front. Nasdaq could fall potentially for the fourth day in a row something weve not done since august, simon. Lets bring in art cashin the director of floor operations with ubs. Good morning, art. Good morning. There are so many unresolved question the market is trying to grapple with and for the moment it seems trapped. Its caught within a pretty clear range so far and the s p its in resistance, 1883. 86 and support is down around 1865. 68 so weve got that little rectangular box thats holding us together. Have to see what we can break out. And the ukraine, is that event risk now off the table or are traders watching it . Because yesterday was a really low volume day. It was. And ukraine was not there. One of the best things for the viewers to check how deeply the market is concerned about the ukraine is to look at the yield on the ten year as a proxy for a flight to safety. And yesterday you could tell it was more about the chinese and Economic Data than about the ukraine. But i think youre going to begin to see that change as the week goes on. Nato is beginning to do reconnaissance flights. The ukraines calling up volunteers. Russia may be moving some troops back again near the border. So, id keep an eye on that ten year and see where were going. Gold is up a little. Plus, the referendum is sunday. Its almost a little bit like the marx brothers. The Ukrainian Parliament has threatened to unseat the Crimean Parliament. The Crimean Parliament has voted to secede from the ukraine and in preparation for the vote, so duck soup. It is duck soup, yes. What was the name of that country . Fredonia. Yes. There it is, thank you. Right. So well keep our eye on the ten year. You mentioned the ranges. Is the onus on the bulls or the bears . I would think the onus is on the bulls. Centerman trader found a really little odd thing today. We made a 52week high in the s p. We are now higher than that high, but in the four days we got higher the breadth was negative and thats only happened a few times since 1940. And in many of the times that resulted in a selloff. Now, the viewers can get a quick answer on this because it happens almost immediately, so if nothing happens over the next three days, you can throw it out the window. Beware the ides of march. Yes. Art cashin from ubs. And in a few seconds well get the opening bell on a tuesday morning. Good guidance from art to kick us off. The s p on the top of your screen. Sun coke energy hosting its investor day at the nyse and kera therapeutics celebrating its recent ipo. Did you know seven companies filed for ipos yesterday . Were beginning to see some bigtime move to the exits. And in the meantime in the last six days 70 billion of highquality corporate debt has been raised here in the United States so theres a big push by the corporations to make the most of where we now are. Yeah. My favorite stat comes out of the journal today. Threequarters of the companies with ipos in the last six months were not profitable which is the highest ratio since march of 2000. Which is fodder for obviously people who think we are getting close to some moment. Fodder for those conversations about overvaluation. It is interesting to note, though, with all of this new supply coming to the markets, the fact is that we still have fewer Public Companies than we have in a very, very long time. Got to remember how Many Companies have come out of the Public Markets through private equity, through buyouts, essentially, not to mention other purchases from other companies and ormergers and there may be a limited supply of growth companies. We see so Many Companies staying private longer and much of their growth phase, their great growth phase, even the case of a facebook you could make arguments about many other companies, carl, happens while they are private and then they come public and yet theres this incredible desire to own them because there is a dearth of true growth companies. Partly because ceos are underinvesting in the economy and all theyve done is driven the margins higher and borrow cheaply instead of getting out there and having the capital expenditure. Which is one of the great debates for the year. Some of the big movers are analyst driven. Im thinking of a macys today the number one s p component so far. Wells does take it to an outperform. Raises their valuation rake from the mid50s, 54 to 58, up to 66 to 70. And in their words macys has won battle of the midtier and there are some retail names that are working despite how difficult the overall environment is. And then apple also up almost a percent here. Pacific crest ups to outperform and price target goes to 635. They see the iphone driving estimates higher, the iphone 6 driving estimates higher later in the year and one of the key lines its a cheap call option on new product categories. Trading at five, six times earnings. A relatively cheap stock overall. And as you said, the iphone 6 is clearly the six times earnings, arent they backing out cash . 5. 7. They must on what . On the downside protected from the ongoing cash production. Conference call starts at 10 30. Wow. Thats not paying much when it comes to in a market that overall is trading 15 times earnings. Yeah. This is 5. 7, enterprise value over ebita, a little bit different but apple is trading at what, nine times. I dont know what the estimate is for next year. The fuel cell names the story will not go away. Fuel cell comes out today with a biggerthanexpected miss. Six cents. Misses. Revenues were slightly ahead. Its up 17 . Plug i think is up double digits as well. Ballard was up 10 earlier this morning. We talked with cramer about it yesterday, guys, the parabolic move in some of the names as, i dont know, its not like they suddenly turned profitable. Plug did have a Major Contract win getting its cells into forklifts at walmart. He was on squawk on the street on friday. That got the squeeze going, but for three Straight Days this has been going on. Extraordinary. Thats extraordinary. The stock was in pennies not that long ago, i believe, right . Yeah. Yeah. Thats amazing. I did want to take a look, come back briefly to a story, we dont have a lot of movement in the stocks but it was something that happened last week, the disney, dish deal. The new contract between if you will disney and the Satellite Company dish. A lot of people continue to think about that deal because while it was complicated at the time, although i think our own simon hobbs picked up on it, there was this overthetop offering that conceivably is now going to be able to be made by dish to its Customer Base that only has broadband. In other words, actually dish is going to be able to bring a series of disney channels if it were to package it over the top, meaning not with through their satellite but to customers or to anybody frankly that has a broadband connection. Verizon is also kind of reached a similar deal. And then theres our own Parent Company comcast and the Consent Decree that Nbc Universal signed and whether it will have to follow through. I bring it up because it was an important point that may have been missed in that. The thing that wed been talking about for so long finally seems to be happening, namely the content providers are starting to really think about and actually make deals to provide their content over the top. When we say that, we mean not via the cable model. Not via the cable into your home but via broadband. But the important thing with desny is its espn which is the glue that holds so many of those Cable Companies together. Its sports rights and the fact that so many people subsidize the sports rights in Everything Else they do and, therefore, the sports organizations need the Cable Companies bound in this pact to hold the whole thing together, very, very high valuation. Paying over five bucks a sub for espn, yeah, that makes a lot of it work and obviously creates an enormous amount of value for disney its 80 owner. Keep an eye on jcp, we mentioned the upgrade to a buy. Price target from 750 to 11. We always talk about how heavily shorted jcp is one of the most shorted names down here at the nyse but good for another 6 getting closer and closer to 9 as citi believes the company can continue to deliver positive comps in line with guidance through the rest of the year and, again, the more controversial point that the liquidity concerns really are off the table for now. But as stacy said, you want to be seen double digit she was much more bearish than you might expect. They were talking about survival and theyll be able to do it with the rump of the business and making changes without any dramatic. She has been to be fair she has been negative for quite some time on jcp for a large portion of the time except recently the stock has run significantly. Lets get Urban Outfitters, by the way, is down. They about deet by a nickel. Yes. Anthropologie comp up ten and urban the Namesake Stores down nine sort of take the wind out of those sales. They also mentioned snow days meaning store days that were affected by weather either all day or part of the day, went from 13 last january to more than 300 this january. I mean, thats some empirical evidence, i guess, right . Better than just saying its the weather. I suppose. As they put it a 100 increase. I wasnt here yesterday, of course, every day is a new chapter in the fight between ebay, its ceo john donahoe its director in particular Marc Andreessen and one carl ixawn and today is another day and, yes, we have another misive, if you will. This time it comes from mr. Andreessen in response to mr. Icahn perhaps it was yesterday. There he is saying carl icahns 2014 would look askance at carl icahns 1985 choice of a business partner. This is getting ugly. When ivan bosky is the first name its gotten down in the dirt. Suggested bosky look into the share of gulf and western, i wont go into the details of this point of the letter, you can find it on andreessens blog, his weblog at pmarket. Com. But suffice to say this continues to get even nastier. We got ebays response to icahns nominees summarily dismissing the two of them as not overqualified and overboarded meaning they are on too many boards to begin. And andreessen is on facebook and hp and ebays board, his argument would be, you want me on those boards in terms of my technical expertise, look who else is on many of the boards. Theres not the conversation going on in the room about whats happening in technology if im not actually there. And its quite common for them to kind of degenerate in this type of no, no. This is uncommon. No, no, no. Remember carl icahn talking about bill ackman in a very similar way. This between between icahn and one of the bestknown guys in technology and a director, no, this is this is new levels i have not seen. Oh, absolutely. This back and forth and him now quoting his great friend bosky . No, this is getting good. Raising eyebrows. Its a sign that Technology Companies are coming of age that icahn is targeting names that might have skipped his attention five years ago. And bringing up the idea should venture capitalists serve on Public Company boards, is there an inherent conflict perhaps in that activity or mr. Andreessens own words from one of his previous letters nothing more than having an activist shareholder on the board of a company such as mr. Icahn and that those kind of conflicts can always be overcome with recusal. Other people on boards would tell me its not as easy as that. The conversations that take place at boards go on for long periods of time. You can recuse yourself from one transaction and it doesnt mean you wont be understanding what is going on or part of the longer term conversation strategically but its an interesting question mr. Icahn hassed. Lets get to bob pisani on the floor to see whats moving. We were positive earlier and just went negative. Asia up nicely. Europe is on the mixed side. Put up some of the big tech names. Apple is up right at the open doing okay. Cisco, and seagate and hp and you mentioned the alternative energy stocks, theyve been on fire. Fuel cells earnings were in line but sales were terrific amongst growing demand for clean battery and its not really this board that you want to look at. Its the year to date chart, put up year to date, because youll see numbers in the multihundreds of percent gains for these companies so demand is just exploding right now and getting in really as early as the beginning of february is where most of the gains in these companies have occurred. Elsewhere its another disappointing day for retail. You were talking about jcpenney, but if you really look at American Eagles their earnings decline was nearly 90 even though it wasnt off the expectations it was down 90 . Same store sales down 7 . Bonton, down 7 . Urban outfitters revenues below expectations and a good point, carl, Urban Outfitters, the Flagship Store was only down slightly, but the Overall Company itself, the main stores, anthropologie did very, very well. Finally a very High Frequency trading firm is going public, guys, Virtu Financial is seeking to raise 100 million in the next few weeks. Theyre a big market maker in High Frequency trading firm and they make a market in thousands of stocks in many different countries. A lot of people have said to me this is the sign of a market top, a High Frequency trade going public. Number one, its not true. Getgo went public last year. And i think third goi in theyr to use the 100 million and make acquisitions. The one thing thats bothering people its going public on the nasdaq. Dick grasso is on the board of directors of this company. Its going public over at the nasdaq. A little bit of a disappointment down here. Whats up with that . Yeah. Yeah. Thanks, bob. Lets get over to chicago, a big day for the treasury market. Rick santelli is on the case there. Morning, rick. Morning, simon. You have a good memory. Auction week, threes, tens, 30s and start out with threes at 1 00 eastern. The intraday of tens kind bouncing off the mid277, 278 today but open the chart up and it does jump out. We held 2. 75 and thats the significant technical level and todays range so far is within yesterdays range so were compressing a bit. Open the chart up and you could see why weve compressed at these levels and especially above us. Lots of little resistance sites from 282 all the way up to 285. Now, if we consider whats going on, on the yield curve, lots of people talk about, hey, steep is good. Steep is good. That would have been a great comment about four or five months ago because you can clearly see on fives versus tens were close to 30 basis points off the 142 differential between fives and tens as we hover in the midoneteens. This is significant. Well probably not see huge spikes at the moment if we look at the spreads. Lets look at the bunds versus the u. S. Ten year. This is now the biggest difference between the two since the summer of 06 almost eight years. This is huge. Have to Pay Attention. This will alter capital flows on the arbitrage. If you look at the euro the last two days its come down a bit and the dax has gone up a bit. Yes, definitely we need to Pay Attention to the German Economy exports and the euro versus dollar, that long chart will remind you hovering very close to the best levels since the fall of 2011. Hobbs, simon hobbs, back to you. Thank you very much, Rick Santelli there in chicago. Its a rough open for industrial metals. Lets get to the new york merck. Good morning, simon. We are watching commodities very closely this morning and they are struggling to find direction. Lets start with the oil futures first. Were watching brent and west texas intermediate mixed this morning. Wti was managing to rebound off of the lows that it saw yesterday off of that china export data, but now back below 101 a barrel. Traders are eyeing tomorrows inventory report. They do think well see a build of about 2 Million Barrels and thats pressuring the price this morning. Py also want to talk about nat gas futures because we saw them higher earlier on. Traders saying they expect march to see record storage withdrawals because of colder temperatures to come but right now giving back some of those gains because here in new york city its a little balmy outside compared to what weve seen over the last few days and weeks. Finally, lets talk about the metals for a second because gold was higher on tensions in the ukraine. Its still higher actually but giving back a little bit off the 1350 level that traders have been eyeing really closely. Last but not least copper also seeing a bit of a rebound today. This is off of the lows that we saw from yesterday and the lowest prices on copper that weve seen actually since 2010. Thats mixed data out of china. Negative data point yesterday and positive news coming out this morning so traders eyeing copper very closely. Guys, back to you. All right, jackie, thank you so much. When we come back the white house meets the hangover. The president appears on Zach Galifianakis internet talk show between two ferns. Get ready to laugh at the results. And rick pitino, the louisville cardinals mens basketball coach, hes got a lot to say about cheating in schools and media and much more. Squawk on the street will be right back. Latte or au lait . Sunny or bubbly . Cozy or cool . Meow or woof . Wheels or wheeeels . Everything exactly the way you want it. 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The truth is that they can get coverage all for what it costs you to pay your cell phone bill. Is this what they mean by drones . The point is that a lot of young people they think theyre invincible. Did you say invisible . Because no, no, not invisible, invincible. Okay. Meaning that they dont think they can get hurt. Im just saying that nobody could be invisible if youd said invisible. I understand that. It brings us to this mornings squawk on the tweet where will president obama show up next to plug healthcare. Gov. No one does deadpan like zach. Or the president if he regretted the fact that he could do a third term. Its a good idea. If i ran for a third time it would sort of be like the hang over iii. How does it feel like being the last black president , no one can ask the president that except for zach i love that stuff. Its great. Is Walt Mossburg on cloud nine when it comes to one new product or not . Stick around to hear his review, but first lawmakers and doctors amongst those taking aim at the controversial painkiller which just hit the market. Theyre calling on the fda to reverse its approval of the drug. Find out why next. With all the opinions about stocks out there, how do you know which ones to follow . The equity summary score consolidates the ratings of up to 10 independent Research Providers into a single score thats weighted based on how accurate theyve been in the past. Im Howard Spielberg of fidelity investments. The equity summary score is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Phone your account is already paid in full. Oh, well in that case, back to vacation mode. Boots and pants and boots and pants and boots and pants and boots and pants and boots and pants. Voiceenabled bill pay. Just a tap away on the geico app. Huh, 15 minutes could save you 15 or more on car insurance. Yup, Everybody Knows that. Well, did you know that some owls arent that wise. Dont forget about im having brunch with meagan tomorrow. Who . Seriously, you met her like three times. Who . Geico. At a company thats bringing media and technology together. Next is every second of nbcuniversals coverage 0f the 2014 olympic winter games. Its connecting over one million lowincome americans to Broadband Internet at home. Its a place named one americas most veteran friendly employers. Next is information and entertainment in ways you never thought possible. Welcome to whats next. Comcastnbcuniversal. The controversial and highly potent painkiller zohydro hit the market over the weekend but numerous experts, state attorneys general and members of congress are urging the fda to reconsider its approval of that drug. Sheila has some details. Its a very controversial drug but i want to talk about zohydro itself. It is a painkiller marketed by a Small Company and the active ingredient is hydrocodone, the same stuff found in vicodin. But unlike vicodin, this is pure hydrocodone in a higher dosage form. Those are the positives of the drug. It makes it effect for those suffering from chronic pain and avoid some of the issues connected with acetaminophen, like liver damage. But its been controversial from the get go the fda approved it against the advice of its own advisory panel. Thats pretty rare only happens about 10 to 15 of the time and since getting that approval critics have been calling for the fda to reverse its decision. They are basically saying, look, we dont need another powerful painkiller on the market. The backdrop to all of this, of course, is the tremendous rise weve seen in painkiller addiction, abuse and related deaths. The cdc notes the Drug Overdose rates have more than tripled since 1990 and a big part of this is the prescription painkillers. Why did the fda approval it in the first place . Well, basically the agency was following its own rules. Despite the Public Health issues associated with painkillers its really tough for the fda to prevent a new one, a new drug that actually meets all of its own standards, without reexamining all the other ones that are already on the market. Now, analysts i spoke to said, look, its basically unheard of for the fda to technically reverse a decision unless theres new evidence about the drug out so for now it does look like zohydro is likely here to stay. Heres the interesting thing when you look at zogenix stock its up about 100 in the past year. There has been a little bit of weakness lately in the past couple of weeks as all of this controversy has swirled, but oppenheimer thinks this is now a Good Opportunity to buy the stock. Keep in mind this is a very Small Company, though, only about half a billion in market cap, simon. Okay, sheila, thank you very much. Coming up, Morgan Stanley chief adam parker, hes using the bword to describe some areas of the market. Find out what hes talking about next. And more, of course, of david fabers interview Masayoshi Son, the ceo i tried. Hes not going to like that. Like john travolta. Yeah. Thats ahead on the show. Stay with us. Ay with us. [ male ] here at optionsxpress, our clients really seem to appreciate our powerful, easytouse platform. No, thank you. We know youre always looking for the best fill price. And walk limit automatically tries to find it for you. Just set your start and end price. And let it do its thing. Wow, more fan mail. Hey ray, my uncle wanted to say thanks for idea hub. O well tell him i said youre welcome. He loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. Yea, and these ideas are across the board bullish, bearish and neutral. I think you need a bigger desk, pal. Another one . 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[ lowpitched scraping, thud ] [ whoosh ]. And beauty. That goes into what you do . [ camera shutter clicks ] a better web starts with your website. Create yours at squarespace. Welcome back. Markets a little bit lower on a tuesday morning. We did have some relative softness and retail results despite upgrades. No new policy from the bank of japan overnight. Europe has been mostly flat for most of the morning and, simon, as we talked about with art cashin, 1875 once again puts into play some of the support levels. The big picture is were very close to the record highs racked up last week. The key question is where do we go from here. What is the economy doing, Deutsche Bank suggesting we may not know truly until june. Rick santelli has data in chicago. Hey, rick. Hi. January wholesale inventories up 0. 6 a little larger than expected and last month was increased from 0. 3 originally released and stands it up 0. 4. Thats the inventory side. Sales side, sales for the month of january not nearly as optimistic down 1. 9 and im sure theres going to be implications on the weather side there. Its just we dont know how much. And last month, december originally released it up was diminished to 0. 1 of one percent. And were expecting january read on jobs opening and Labor Turnover we want to monitor that and separations and quits. But its running a bit late. Were looking for a 4 million number, and if you recall in november we had the first 4 million number since march of 2008. And when it comes out, ill call the control room and ill come back back to you. Oh, rick, thank you very much. Our next guest says by the end of the year well be at 2014 on the s p. Thats a gain of 7 or 8 from here. Adam parker is the chief u. S. Equity strategist from Morgan Stanley. Adam, welcome to the program. Hi, how are you . Im good. You are optimistic where the market will go. He have a 6 growth operating margins for the year and well get 8 corporate Earnings Growth in our base case so were pretty constructive still. A lot of people are still poring over what the dallas fed president Richard Fisher meant when he said he felt we were feeding imbalances as a result of qe similar to what happened before the financial crisis. He said some valuations are at eyepoping levels. Would you use the bubble word and if so at what asset class . Well, look, i think we all romanticize that well sniff out the bubble the day before everyone else and get rich and famous for it. But at the end of the day i dont think 15 1 2 times forward earnings for the s p 500 is in a bubble territory. I think theres been real changes to the market because of the quantitative easing and the number one most important thing, simon, basically companies have all pushed out their financial obligation for two or three years and the Balance Sheets are in great shape and the risk of bankruptcy is very low, thats been a big change over the last few years. Just to point out on the valuation, the average you said were 15 times earnings. The average over the past ten years is 13. 9. So, were pretty fully valued where we are, arent we . Forecasting that forward p e ratio is pretty tough, simon. Multiples that are way higher and when you compare it to other Asset Classes they may look attractive. One other important point there are a lot of other Companies Internet and biotech and software which are trading very expensive. But i want to let people know fastgrowing stocks that are cheap actually underperform fastgrowing stocks that are expensive. Because if you are the fastest 5 or 10 growers and you are already cheap, the market figured out somethings wrong with sustainability of your model. You dont want to use the p e ratio for the fastgrowing stocks thats counterproductive. To simons point on the bubble theme, i know you are looking across asset, adam, and junkrated puerto rico 8 yield investors are hungry for that. Look at some of the other offerings in the credit space. If you look at valuations of stocks like tesla and other internet stocks facebook and twitter. Something funky is going on here. Well, yeah, you can find isolated securities. When you look at the aggregate equity market its hard to say 15 change times is in a bubble. If were about to head into a bubble i think you want to be long for a while so, you know, i think Everyone Wants to call it and talk about it. I think its all about timing and if you want to call the top of a cycle, two things will be in place, the other is hubris the other is debt. Hubris meaning management arrogance done awry, capital management, hiring, inventory, costs put in place that are not merited. And i mentioned the debt point, how can you call the top of the cycle when very few companies in the s p 500 can even go bankrupt in the next two or three years . You can always have tactical corrections but making the big bubble top of the cycle call will be tough for a couple of years. To that point youll be aware that the bank of International Settlements put a figure of total debt around the world at 100 trillion over the weekend up 40 since the financial crisis in the last six days the Top Companies in this country have raised 70 billion. There are a according to bmy mellon an awful lot of individual who are working on a near zero rate threshold. They will be affected when Interest Rates rise, wont they . There will be chickens that come home to roost from the huge period of long, low Interest Rates. No doubt thats true. I think investing is all about timing, simon. If none of the debts due until 2017 or 18 you have to guess about when people will care in the equity market and by the way between now and 2017 youll gentlemen rate a lot more Free Cash Flow its not like the Capital Markets going to be closed. Its not a guarantee that things will be disrupted majorly in a fewiers. No doubt that debts a problem. I think ultimately down the road you have to be worried about inflation but i think in the near term thats not a big risk. The feds told you they are not going to move the front in and thats probably still supported. Well see if they have to move on that. Before we let you go. Bottom line it for us, whats the best idea . Whats the best area of the market to be in . Look, we have a balanced portfolio. We try to beat the s p. The top choice is health care, chemicals and growth tech. We really think thats the best balance to outperform the market and its been working so far, well stick with it. Good to see you. Be well. Morgan stanley chief u. S. Equity strategist. Retailers are under pressure after a tough winter, Urban Outfitters and dicks Sporting Goods, lets take a closer look at the impact with marcus lemonus hes the ceo of camping world and star of the cnbc series the profit. We could use the profit on the retail sector. American eagles, earnings down 80 and the ceo said the Customer Experience is not there. You dont want to hear that from a retailer. I dont know what he means the Customer Experience isnt there. Im buying off on samestore sales be a little bit lower and ill give it to weather and you are coming a january a year ago. Im not buying the margin compression. Is it from poor Inventory Management . Promotionary environment. You didnt know the weather was going to be bad. Its not that instant and there has to be an inventory problem in the system. What Customer Experience is he referring to . Hes referring to the fact that earnings dipped so far and so fast and its something were seeing in the teen retailers is this not the right bils anymore . What id like to see is how many stores they opened in the previous six or eight months and whats the drag on earnings from the new store openings the infrastructure build and whats his sgna look like . His top line isnt off enough for the earnings to be down that significantly. Doesnt make sense to me. If you are an abercrombie and you are up against the h ms and you reposition hollister to be more fast fashion, are you comfortable with that or is that such a big move that its hard to undo if it doesnt work out . I think its a hard move to undo. I dont know that you want to take the cataclysmic jumps and maybe you want to do it in a category, expand or add a new category but i dont think you want to reinvent yourself and be in trouble. The t. J. Maxxs of the world are setting an example. Do other retailers need to move into it or is it about knowing your customer and income group . I havent seen macys numbers its been outperforming. They have a great experience in store. Fantastic Inventory Management, they know who they are and they are not overpromotional. Inventory management is always the key, isnt it . Its the key in every retail business. It gets boring but thats where it goes. If you want to look at a Retail Company that outperforms over and over again it comes down to understanding their inventory and controlling the cash and youll see it in the margins and they can afford to take a dip in sales because they can make it up in margin. Camping world and specialty is helpful. You saw it with dicks. Marcus, always good to see you. And were into season two of the profits. Lets take a look at what you are working on. You are asking for 50 . Your are arguing with me at 50 but im providing the resources. Im letting my wife and life partner know what decision youre asking her to make right now. She knows. She can interpret, right . Okay. Can i think about it or do we no, you have to decide right now. You should ask for my two cents now. If youre going to offer it, go ahead. What do you want your name on her brownies . I have no problem not having my name on them. Why would your identity be on it . Because were partners thats why. Her identitys not on yours, on your place that youre partners. Come on, stop. But its not. Im not going to get into that. Im not going to get into a pissing match with you. Yes or no . Wow. Brutal, marcus. Hes a chauvinist in the beginning, not in the end. I wish our conversations were that dramatic. They can be. The tight shot of david kind of looking had the music behind would help. Bomb bomb bomb but you are taking up a retailer in this one. Im taking up a retailer but what i decided to do was invest in the health snack Food Industry which is a multibillion industry. The gym business is a Good Business but its a high failure rate. Curves was the fastest moving franchise five years running about three years ago and when you watch the episode youll see theres a curves angle. Gyms have a high failure rate . 95 . But when they succeed great business like a utility. 95 failure rate. Balis has filed bankruptcy three times so far, so the niche models the profit tonight on cnbc. Were down 14 on the dow. Lets send it over to Bertha Coombs for a market flash. Check out myriad genetics saying the u. S. Court has denied a rival from selling a similar version of their blockbuster roca gene test. As a result, thats a cancer test for breast cancer. The stock taking a hit right now. Currently trading down over 9 . Big hit there, sara. All right, thanks for pointing it out, bertha. Up next an early investor in uberand snapchat and what he thinks about the controversy around uber shares. And later shotbank ceo talking to our very own david faber about why the sprint deal absolutely has to get done more on that when squawk on the street comes back. Reet comes. In my world, wall isnt a street. Return on investment reet comes. Isnt the only return im looking forward to. For some, every dollar is earned with sweat, sacrifice, courage. Which is why usaa is honored to help our members with everything from investing for retirement to saving for college. Our commitment to current and former military members and their families is without equal. [ tires screech ] chewleys finds itself in a sticky situation today after recalling its new gum. [ male announcer ] stick it to the market before you get stuck. Get the most extensive charting wherever you are with the mobile trader app from td ameritrade. Startup uber has faced criticism this winter for the surge pricing model. It says it uses surge pricing as a way to assure supply at times when demand is high. Uber addressed concerns as a feature to its app to give passengers more information about when surge pricing is in effect and this morning one of Silicon Valleys most prominent investors bill gurley has a new blog post out defending the pricing model. Hes an investor and partner at benchmark and he joins us for a first on cnbc interview. Its great to have you back. Good morning. Good morning, carl. Its a great blog post and its almost a manifesto in its own way. You start out by saying the one thing we can all agree on people are passionate whether or not they appreciate the service and the pricing that comes with it or whether or not they hate the surge pricing in the first place. Yeah. This is one of the Fastest Growing companies weve ever been associated with and part of whats driving that is just huge, organic demand. People love the service. Jeff holden described it the other day as magical. Its something that people are very passionate about. You point out this new service that notifies people when surge pricing actually comes off. That seems like a bit of a recognition that maybe you needed to give people a little more than just suddenly surprising them with the price increase. Well, first, let me make a few comments about the surge pricing model because i think a lot of people dont understand. So, first of all, all the drivers on uber are independent contractors, so they either show up for work at their own accord so we have to make them incented to be there on the product. Two, 80 of all the money goes to the hands of the drivers. Three, surge pricings in effect less than 10 of the time. The rest of the time the companys working to lower prices. Its new uberx product is by far the largest product in their offering right now. The Fastest Growing and theyve worked to lower prices such that in many markets theyre 30 below taxis. So, you know, surge pricing is something that has to happen when demand greatly outstrips supply but its not something that the Company Wants to happen which is why you have products like surge drop where were trying to let people know how to avoid it if they can. You actually go back to a situation in boston basically the origin of surge pricing where drivers simply werent showing up at certain times of the evening. Basically what youre saying is surge is here to stay . Absolutely. So, what happened in boston was the drivers were clocking off at one oclock a. M. And the partygoers were staying out until 3 00 so we noticed this huge increase in unfulfilled requests between 1 00 and 3 00 a. M. So the team in boston came up with an idea of trying to offer more money to the drivers to get them to stay on later. It worked perfectly. We increased supply by 70 . The unfulfilled requests went away and since then weve studied and demand curves and theyre very elastic and were able to move supply and demand around greatly. Unfortunately when you have really big events like new years eve or a super bowl or really bad weather, the demand curve tends to go very quickly to the right. That happens in hotels and airlines and they also have dynamic pricing in those situations. What happens with this is even more intense because at the same time demands going up, supply goes down because those drivers dont want to be out in bad weather either. And so you have this huge economic shortage and if you adjust price you can bring things into equilibrium but without it you would see passengers without cars available. People say understand we the economics, but what about the pr hit. I think the pr hit would be way worse if 90 of riders were told we cant help you. Bill, you know better than i youre heading headon into i mean, most major cities around the world, the last great closed shop is the licensed taxi profession in that city. And clearly youre causing friction. Seattle i think is the latest overnight. Certainly its been a big issue here in new york city. How are you learning to expand the business and avoid the local politicians and the huge local pressure and an awful lot of local financing from capping what you do . Yeah. Look, i think this is the new reality for Silicon Valley. The technologies and tools are running into older industries where were greatly disrupting what they had in place and offering a far better product. Thats really no different than what teslas seeing out there, air b b, some of the Solar Panel Distributors have run into the same thing from the incumbent energy providers. And Silicon Valley is having to learn how to approach these type of regulatory environments. The good news is social media is helping in a big way because the consumers are all in favor of the new disruptive products and they are coming out to speak on behalf of these companies. Bill sorry. It doesnt answer the question, bill, are you going to organize . Are you going to mobilize . Lobby . How do you get to where you need to be . How do you actually push back rather than saying, well, consumers will Say Something . Well, no, i think i would go back to and say the consumers are actually the answer. In many of the cities that we operate in, when the taxi lobbies tried to put in laws to outlaw what were doing, the consumers who were very passionate about the product have come out in droves and let the constituency know that they find it to be a belter product, a safer product, a cheaper product and they dont want to it go away. Where is the latest round of funding valuing uber right now . It was over a year ago i think it was around 3. 7 billion. We can assume its above that if its over a year ago, correct . Private Company Valuations are hard to discern. Yes, they are. How long do you think theyll stay private . What is your advice to them about their growth curve and the public entrants . Its grown very quickly and what is really important to a company i think the numbers for the company are such that it could go public but you got to make sure you have all your policy ofs and all your processes in place in a strong and solid way before you go out. Hyper growth tends to work against that. Weve hired some amazing people who are working on locking those things down and when the time is right im sure the company will consider it but im sure its probably not this year. Id love you to weigh in on some of the questions carl icahn has raised on venture capitalists on Public Company boards. You serve on opentable. And he said the conflicts are insurmountable when you are on these boards. I talked to some other people who would at least say you are in the business of looking for disruption, looking for new ideas, looking for exits and somebody to fund those exits. Those conceivably are functions that are in conflict sometimes with the board of a company you may be on when its public. What do you say . Well, look, its a huge challenge because, you know, if you want to get a situation where theres clearly zero conflict whatsoever in your boardroom, my suspicion is youre going to have a whole bunch of people who dont under anything about your business. To go out and find somebody who has particularly insight in to what you are doing requires you to go get somebody who has worked in and around your industry or in and around a similar product offering, so its a difficult thing to kind of figure out. I think that this is a situation where, you know, hes trying to take advantage of some data points that i just dont think line up that much. What do you mean by that . Just that the people that are that are involved at ebay are very interested in seeing the right things happen for ebay and i dont think john donahoe or anyone else would allow anyone in that boardroom to do something that would take away from that. Lets not forget the fact that hes probably led the most impressive turnaround in the history of Silicon Valley, right . The stocks gone from 13 up into the 50s. So, this isnt, like, you sit there and go, hey, look, theyre not executing well. Theyre killing it. And so i really just think hes trying to take advantage of them because he found some stuff i mean, his own track records got those types of situations all over it. Dont think its i think hes trying to, you know, take advantage, get leverage, make money but i dont think theyre actually pointing at anything realistic. Were shocked. Shocked at those comments. Bill, its good to see you. Come back soon, well talk some grub hub. All right. Thank you. Bill gurley, general partner of benchmark joining us from palo alto. Up next on the program the very latest on the unsolved and some would say bizarre missing flight. Flight. Comes with a fourtire rotation and a 27point inspection. And everything looked great. Actually, could you leave those in . Sure. Want me to run him through the car wash for you, too . No, no, i cant. Get a dexos 1, syntheticblend oil change, tire rotation, and inspection for just 39. 95 or less. Chevy certified service. Iwe dont back down. We only know one direction up so were up early. Up late. Thinking up gamechanging ideas, like this dozens of tax free zones across new york state. Move here. Expand here. Or start a new business here. And pay no taxes for 10 years. With new jobs, new opportunities and a new tax free plan. Theres only one way for your business to go. Up. Find out if your business can qualify at startupny. Com in todays market, a lot can happen in a second. 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The search for a missing Malaysia Airline jetliner intensifying as the search area expands. We are joined live from kua kuala lumpur, hi, sri. Reporter hi, carl. Let me start off by addressing the security aspects of this because earlier on interpol identified two of the holders of the stolen passports that boarded mh370 the plane in question as iranian nationals but importantly they did say that they were unlikely to be affiliated with any terrorist organization and most likely were trying to get to europe as part of a people smuggling ring, so its important to bear that in mind. Having said that, though, i dont think that the malaysian authorities here have totally eliminated terrorism as a causal link to the disappearance of 370. The authorities, the police chief said, at least two avenues of inquiry that they are still exploring are number one hijacking and number two sabotage. So, its very much still an issue for them. Elsewhere youve got to bear in mind that these issues over the stolen passports, et cetera, while they may be a legitimate source of inquiry theyre pretty much academic for the families that continue to suffer really very agonizing wait for any evidence, any clues, that their loved ones who were aboard are still alive despite this very stringent search that is being conducted off the waters of malaysia. Very broad, very expansionive and involving the u. S. 7th fleet i might add. Its turned up nothing. Its an agonizingly long wait. Back to you. Were glued to the updates from you, thanks very much. More from davids interview from softbank ceo Masayoshi Son, why he thinks Wireless Service here in the u. S. Is, in his words, horrible. Were back after a quick break. Quick look at the weather. Nice day, beautiful tomorrow. Tomorrow is full of promise. We can come back tomorrrow. And we promise to keep it that way. Driven to preserve the environment, csx moves a ton of freight nearly 450 miles on one gallon of fuel. What a day. Cant wait til tomorrow. 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. Any way you want it has to the way you need it any way you want it it is no secret that Masayoshi Son the man that controls softbank that controls sprint wants to acquire or merge that company with tmobile, in a wideranging interview mr. Son did not say that outright but every point he made on the subject was designed to bolster his argument for scale and why americans are entitled to his belief at least a lot more when it comes to Wireless Service than theyre currently receiving. When you are living in, lets say, beijing, you know, the air polluted, you dont feel that much if you are living beijing all the time. But if you see from outside and see there, you know, you see the difference. So, americans who are living in the states every day dont feel that much about how bad, how bad, this network is here in the states. You really think its that bad . Bad. Its horrible. Its horrible. Horrible, you know . If you talk to tim cook, you know, who sells iphone and ipad worldwide, he admit, you know, my same product doesnt work, doesnt function well enough in the state. I use this in japan and here. And say same product does not function the way it should be. You will see the windmill kind of symbol yes. Right . You dont see that in japan. Well, why is the u. S. , then, in your opinion, find itself in this situation where, again, to use your words, service, our Wireless Service is horrible . Basically u. S. Is a duopoly, the big two, verizon and at t, has the very position position with the scale of subscribers and network and they are enjoying great Free Cash Flow. But most of the Free Cash Flow they are dividend back to their shareholders. So, instead of reinvesting into the next generation network, theyre enjoying a great profit and returning to their shareholders. So, the Competitive Landscape is somewhat wrong. So, their shareholders should be happy. But before they dividend back to their own shareholders, the shareholders value, which i dont, you know, criticize, but if there was more rigorous, more headtohead competition, they should reinvest into their network. If i were in their position, i would, you know, reinvest much more aggressively. Verizon would say that that is what weve done. Thats why we have the best network certainly in the u. S. Thats why we have always been able to beat at t in terms of these surveys and service tests and things like that. Between the limited competition, they have done the best, okay . They have they have got the Beautiful Network today. But i would like to raise the bar, you know, if they have been investing and be happy about it, i would like to raise the bar and say, hey, lets have the race in creating the worlds best network that we could be proud of. Can you do that at sprint without consolidating the industry, without a merger with tmobile . Well, it will be difficult without having a bigger scale. Okay . So, im not here to talk about specific margin of whatever. But the scale, if we have the scale, we have a much better chance to be able to reinvest into the next generation network. And if you dont have that scale . Its tough. Its tough. So if we dont have that scale, we have to do step by step which would be a long shot. A long shot. Yes. Meaning a long shot in terms of it may not happen or it will take a long time . Both. Famously in japan when you turned around the vodafone property, the iphone came along and you embraced it. Is there a new product that you conceivably could see down the road that would help sprint in the same way that, was it, telecom japan was helped . New product comes every year, and but iphone was a big leapfrog, you know, that when iphone was introduced, product were, you know, basically product and iphone was truly the first internet, you know, centric product, so were not going to have that kind of huge change every year. But we will have a stepbystep products, which would still improve our lifestyle. But every every once in ten years or so, you know, big leapfrog things i think will come. It sounds to me, without that leapfrog product that may not come for another eight years or who knows, and without consolidation, youve got a tough road ahead of you at sprint. Yeah. Its not easy. Its not easy. We can survive. We can survive. We can make a stepbystep progress but we cannot make, you know, super extraordinary thing. So, you wont be able to raise the bar . Its not easy. Its not easy. But, you know, i would say we will still be surviving and we still be making step by step but, you know, in the ideal situation we would like to have a level fight. A level fight. A message he is bringing throughout washington. Address in front of the chamber of commerce this morning as well talking about broadly speaking bringing much higher speeds to america if you will. And, you know, the idea, of course, being that you one day could conceivably compete in the home with the cable product that is there, with the broadband product that is typically provided by your cable operator. If the speeds he was talking about were brought to bear, 200 megabits which is tenfold what you are getting on your broadband pipe in your home. Other countries like germany said if you can give us that investment, well give you a competitive advantage, well give you a more consolidated industry as payback. When we were discussing comcast and the possibility of that deal going through some were suggesting they would attach conditions to it as well, its not inconceivable that he might succeed in that with that promise of investment, though . Right. He would certainly be a competitor of comcast which augments their argument its a competitive environment for us, well see, you know, the idea being, though, hes talking about bringing prices down and reinvesting enormous amounts of capital, that isnt necessarily a good recipe for making a lot of money. When i asked masa that question he said im willing to take just a reasonable return. Now, of course he can borrow at virtually nothing in japan. Hes almost got a zero cost of capital which helps, thats a competitive advantage, but well see. This is his argument. Hes trying to turn the tide clearly on what has been a very resistant Regulatory Regime and extraordinarily coming out before weve even heard there are any terms for tmobile sprint deal if there is to be one, well see whether he can succeed in that and perhaps they can go back and try and get a deal done. Yeah, interesting question on the regulatory front. It was a great wideranging interview special the part where he called the u. S. Service terrible. Horrible. The air pollution in beijing, you live with it for a long time you dont realize just how bad it is. All right. Its a great interview and more obviously on cnbc. Com. Meanwhile, weve got breaking news on puerto rico, chief International Correspondent Michelle Caruso cabrera has details. On the bond deal . Yes, sara, originally 3 billion but demand was so great theyve upped the offering to 3. 5 billion. Why when a commonwealth or an island has less than 4 Million People in 70 billion in debt would investors want to lend them more because the coupon is 8 and when you buy the bond youll get a discount so youll actually get 7. 8 and thats triple tax free so the rough equivalent of 12 to 13 . But once again pruk upping the offering by another half billion, 3. 5 billion. Remember, these are longterm bonds. Maturing out in 2035. Guys, back to you. I do have a quick question here, michelle. Is it the high yield that is attracting so much demand here . Is it the idea that the u. S. Government would be a backstop to puerto rico . High yield especially when its triple tax free in an environment where yields are still low even though weve seen a backup in rates when you look at treasuries. If you want to bet that the u. S. Government is going to bail them out, thats part of the betting thats going on here. Theres some people who think that but that is not absolutely consensus across the board. I think what you are talking about here are a lot of hedge funds who are eager for yields and dont plan on holding it all that long, certainly not to 2035. Importantly takes them out of the bond market for a very long time. Thats a very good point, david, right. This is about liquidity. Why on earth does an island with 70 billion want to borrow even more . Because they had a lot of shortterm debt coming due so this is to structure out much longer term and to reduce the nearterm payments to a lower, more manageable amount basically. All right, Michelle Caruso cabrera, thanks for giving us the details on the bond deal. Urban outfitters is the biggest decliner on the s p, down 5 . The retailer recorded weakerthanexpected quarterly revenues and issued a cautious outlook. Sac capital the firm named for its capital and Hedge Fund Manager steven cohen will reband itself as point 72 Asset Management and macys, facebook and aetna the stocks hitting alltime highs. When we come back former facebook executive Randy Zuckerberg joins us live at post nine and well talk about social media and not to mention her role on broadway when were back in a moment. Return on investment wall isnt a street. Isnt the only return im looking forward to. For some, every dollar is earned with sweat, sacrifice, courage. Which is why usaa is honored to help our members with everything from investing for retirement to saving for college. Our commitment to current and former military members and their families is without equal. My sinuses are acting up and ive got this runny nose. I better take something. Truth is, sudafed pe pressure and pain wont treat all of your symptoms. Really . Alka seltzer plus severe sinus fights your tough sinus symptoms plus your runny nose. Oh what a relief it is so our business can be on at ts network for 175 a month . Yup. All 5 of you for 175. Our clients need a lot of attention. Theres unlimited talk and text. Were working deals all day. You get 10 gigabytes of data to share. What about expansion potential . Add a line, anytime, for 15 a month. Low dues, great terms. Lets close new at t mobile share value plans our best value plans ever for business. From facebook to her own Media Company and an editor in chief, a bestselling author, now a broadway star, Randi Zuckerberg joins us here at post nine to talk about the latest in social media and, of course, her big debut on friday in rock of ages. Its good to have you back. Welcome. Great to be here. You just got back from west by southwest. I want to talk about that. Youve done touring companies in the past, right . This is my first real role. I kind of i was really into musical theater in high school and then i sort of just gave up on my dream. I thought this is not a realistic life dream for me, but do you know what i think its a great story because sometimes your dream comes back and finds you in roundabout ways. I gave a tent talk on how theater could enter the digital age a bit more and the producer saw me and thats how they invited me to do this role. Youll do two weeks, right . A twoweek run. Who will you play . I will play a character named regina, shes a hippie, berkeley protester. Shes not going to take it. Typecasting obviously. Exactly. Shes defending her beliefs. Were you a big fan of this show or hairbands in general . Do you listen to styx in your free time . I sing on the side for charity with a cover band. Its all current and former facebook employees. And we like to say we perform the worst of the 70s, 80s and 90s so i have a real sweet spot in my heart for 80s music and its been awesome. Its interesting to hear the subject of your ted talk, Silicon Valley meets broadway, potential Business Venture for you here in the future . Absolutely. If you think about it broadway is one of the only kind of holdouts in the Entertainment Industry where you physically have to go to new york city and spend 100 or more to enjoy that medium. Everything else, all other content, you can get via mobile, via television, via computer, but broadway is still i would say ten years back in that respect. I think theres a lot they can do to bring it to the masses. Thats not the point of it. Its the physical proximity that you cant actually translate through tech. Youre right in that respect. Theres something about the live theater and that experience that you miss out if youre not sitting in the theater. But then again, i mean, even when you look at the evolution of music, there are lots of ways that they encourage you, that they tease you through the radio, through digital downloads, through interaction with artists that drive you to in concert that broadway isnt quite doing yet. Thats a marketing argument. I can see a contract coming. You know, i think disney is probably best poised to do this of all the theaters because they have so many shows on broadway right now, they can use some of their shows. Well do a live stream of aladdin exactly. Talk about austin. What was most interesting . I thought a lot of interesting about the south by southwest festival, wearable technology, everyone is talking about, tracking everything. The maker movement. Just really incredible things people are doing with 3d printers from printing human organs to printing homes, cars. I was having a conversation with brett moren about how they were printing 3d rose bouquets for valentines day. On the other hand, you also have this interesting juxtaposition because were talking about everything that tech can do. And then theres this, of course, news about the missing airliner. Yeah. So at the same time you hear about, gosh, heres a problem tech isnt able to solve. And that relly put an interesting dichotomy over south by southwest. What do you make of whisper, secret, snapchat . Why is education being ephemeral. Thats interesting. Secret Just Announced on the eve on south of by southwest a huge financing round, and almost everyone is using that. Now, i dont know if you know, im very antianonymity on the web. I think that just like in real life where we have our drivers license, our passport, we are expected to be accountable for our actions, i think we need to be accountable for what we say online, too, it encourages bad behavior when people are anonymous. A rise in valuations what weve seen in Silicon Valley, what do you think about the eyepopping numbers, 19 billion facebooks acquisition . When youtube was acquired 1. 6 billion and its such an amazingly valuable part of googles portfolio, so i think these people are theyre making smart decisions. My brother and his Management Team theyre incredibly smart. No ones questioning the now. So i think time will tell. Randi, break away. Breck a leg. Well see you on broadway this friday. Rock of ages for the next couple of weeks. Still ahead on your show, do you backup your computer . If you do youre probably doing it wrong. Re code Walt Mossberg is here, with news you can use when wall street comes right back. [ male announcer ] how can power consumption in china, impact wool exports from new zealand, textile production in spain, and the use of medical technology in the u. S. . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 75 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. With investment information, risks, fees and expenses geico motorcycle. See how much you could save. At a company thats bringing media and technology together. Next is every second of nbcuniversals coverage 0f the 2014 olympic winter games. Its connecting over one million lowincome americans to Broadband Internet at home. Its a place named one americas most veteran friendly employers. Next is information and entertainment in ways you never thought possible. Welcome to whats next. Comcastnbcuniversal. Welcome back to squawk on the street. My guest today from the Santelli Exchange, ira harris. Thanks for taking the time. Obviously we have to start with the big p thats in the news, thats putin. Not so much from a Foreign Policy aspect. What does it mean for the markets . I see so many suggestions out there that we can take care of this with the world Capital Markets by either muzzling trade in the ruble or Capital Markets. I dont know. It doesnt seem like its going to gel. I dont think so. Putin has been hes so way ahead of everybody in this game. I ask a question, like wheres waldo, our question, where is gearhart schroeder. Chancellor of germany. Runs gazprom. This has all been done. Theres all kinds of pipelines. I went out and went as soon as this all broke, i went and reread petros state by Marshall Goldman who used to be the dean of russian hrss in his country. In his book he said all the pipelines laid out and how, in fact, russia seeks to dominate europe. All right. When it comes to europe, the German Economy stands out. Im going to talk on the Santelli Exchange about the cost of energy. But what about whats going on with the Euro Currency . Euro currency is hovering at the highest level since the fall of 2011. What does that mean for the europeans biggest economy in germany . Well, you know, the germans are actually comfortable right here, right now. And i think that thats why draghi if theyre comfortable, hes comfortable because it means that hes not behind the inflation curve in central bank. Currency is holding. He can say, see the policies are working. Now, theres a lot of traders looking for the euro to drop dramatically. It seems the higher the euro goes the lower the dax goes. Across 139 is when the volatility came. Next time you come back i want to talk about qe now in europe and how the southern countries own all of their debt. If you own all your markers, is the debt you have really appraised in the marketplace to on a mark to mark basis accurately. I dont think so. Your thought . Were going to find outgoing into that asset quality review. Thanks, ira. Sarah, back to you. Ill ponder that in the meantime. Meanwhile, its tweet time. President obama made an appearance on funny or dive. He answered questions ranging from health care to international policy. Is it going to be hard in two years when youre no longer president and people will stop letting you win at basketball . How does it feel having a threeircht vertical. Its a threeinch horizontal. So. The president playing ball. Were asking you, where or will president obama pop up next to plug health care. Gov which he did. Tweet us squawkstreet. Well read your answers live later on. Later on. Tdd 18003452550 trading inspires your life. Tdd 18003452550 life inspires your trading. Tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. Tdd 18003452550 at schwab, were here to help tdd 18003452550 turn inspiration into action. Tdd 18003452550 we have intuitive platforms tdd 18003452550 to help you discover whats trending. Tdd 18003452550 and seasoned market experts to help sharpen your instincts. Tdd 18003452550 so you can take charge tdd 18003452550 of your trading. Ido more with less with buless energy. Hp is helping ups do just that. Soon, the worlds most intelligent servers, designed by hp, will give ups over twice the performance, using forty percent less energy. Multiply that across over a thousand locations, and theyll provide the same benefit to the environment as over 60,000 trees. Thats a trend we can all get behind. No two people have the same financial goals. Pnc investments works with you to understand yours and helps plan for your retirement. Talk to a pnc investments Financial Advisor today. Welcome to squawk on the street. Heres whats happened so far. There are too many stores. Promotional environment. I think teen retailers are significantly underestimating the power of fast fashion. Keep on going up, which is very unusual. And the speed is actually going down. And why is that . You know . America have to decide. Why is that . And whats the solution . I think we all ro immigrant size that were going to sniff out the bubble the day before everyone else and get rich and famous for it. At the end of the day i dont think 15 1 2 times forward earnings for the s p 500 is in a bubble territory. It is 11 00 on the east coast. Heres what were watching this morning. Apple getting upgraded at Pacific Crest today with a new price target of 635. The reason may surprise you. Well explain in a moment. Plus, is it time to back it up, youre computer files that is. The one and only Walt Mossberg will detail the three ways you should be backing up your systems and the easiest way to do it. Soft bank ceos son rarely speaks, but when he does he always makes news. Well tell you what we told david faber about sprint and the horrible Wireless Service in this country. And louisville head coach rick pitino, defending champion in mens basketball. Why is he all fired up about social media . Rick pitino will be here to explain later this hour. Joining us as usual, Bertha Coombs with a market flash on the dow component. Check out bmcdonalds. Best percentage gain there morning. Up more than 3 . This morning it was speaking at a bank of america consumer and retail conference with disappointing news yesterday on the comps down for february. This morning it stated that its actively looking at ways to optimize the capital structure. While maintaining the longterm financial strength. Street seems to like that. Back to you. Interesting. Thats not far from the alltime tie. Thanks. Joining us this morn, jon steinberg, buzzfeeds president and ceo, notice how i know that by heart now. Jon fortt is joining us on the other side. Start with apple today. Pacific crest upgrading a to out perform. Higher priced to iphone 6 could renew growth in 2015 and push the stock price above 600 a share. My favorite line, jon, they call it a call option on new product categories. Of course, its been that way for a while, you can argue. Yeah. I dont know that i would personally get that excited about just an iphone 6 that maybe costs a built more though a loornlger screen would be interesting. You know, i think im interested also in the numbers that came out on itunes radio which you were just talking about yesterday. Turns out theyre beating spotify in the u. S. Growth momentum is there. Not anywhere near pandora territory but they have new features in ios 7. 1 that came out yesterday that could help to spur that growth on further. The Pacific Crest argument is basically with the new version of the iphone 6 it would go from a fourinch size to close to a fiveinch size. 4. 7 inch. This is smaller than the cross between the phone and the tablet but it would get 100 more to apple at the subsidized rate. The argument is if you have an ebitda multiple of 5. 7 on a with the 100 more for device you would make more money. Has apple come out, jon, against larger screen size . We know the tradeoffs with battery life and all that . They were against it before they were kind of for it, i think is the way to borrow a line from politics. Steve jobs was very much against larger sizes. Talked about that. Tim cook has walked that back over the last couple of years. We might do it. It had more to do with components. With some things like that in technology that they could definitely figure out a way around. 70 of the phones that are going to be sold in 2014 for apple are rebuys. 80 in 2015. They need something dramatic and exciting to be able to do that. Theres not that much growth in new people. Before we move on, what about the 5c . What about the fact that apple went after this market in some extent failed and we had john sculley of the former ceo on closing bell yesterday. Hes going after endy with a 250 price point. Is this going to be the growth or the higher end of the phone here . I dont think so, kelly. Apple never really went after that market. We talked about here going to come out with a lower priced phone. When they launch id it, this is t not a budget phone. It was really to shift the model of just selling the older phone. What was the 5c all about then . Selling a newer phone at a slightly lower price volume wise. Theyve done about as well as they did selling a year old phone. You would hope they would do better. From the moment unapologetically plastic at the launch, i wins. Youre apologizing. Theyre not in the junk business, jon. Dont you forget it. Its a big day for gamers and microsoft. Scifi combat game titanfall hit stores today. Theyre hoping it will give the boost to sales of the xbox one. In fact, a study said the playstation iv outsold the xbox by almost 21 margin back in january. We know some of the headwinds microsoft has. And sony is out saying theyre at 6 Million Units by the beginning of march. Microsoft does not come out with a number of units since the end of the year. Whats amazing is how Many Industries are hit driven. Netflix, house of cards to get the subs. Microsoft that needs titanfall much like they needed halo. Candy crush and onehit ipo. Media and content is really governing so Many Industries now. Film studios, so to speak, jon. There is that. Microsoft is trying to sell a Technology Experience with xbox one. The voice control. The online connection. Sony focused much more on the Gaming Experience which is especially key for that initial buyer group. And theyve done better. Titanfall is important because it loops in microsoft axur, uses Artificial Intelligence in the cloud to offload some of that processing task so that the actual console that you have in your Entertainment Center can focus on rendering amazing graphics. Its important because if this works, it could open up a really exciting Gaming Experience. If it fails, oh, my goodness and to jons point about the sound and graphics, this game is a little bit of degeeking of the console. Apparently the verge had an article out this morning. Even if youre a bad video game player there are rewards and incentives. That makes kelly feel better. Yes, no. Now im all over it. Oh, my goodness. Do we have to talk about the execution problem. How important this franchise is to thernlgs should be to them, and utsz so clear that they lost this round. I dont think its entirely clear yet that they lost the round. They lost the launch because it fumbled when it kams to Rights Management on the console to begin with. I think they fumbled in the pricing. They didnt make the case for it in the right way. They cant afford to really fumble this one. The game needs to work. They need to have enough axer servers up and running to get a smooth playing experience. If they do, the playoff that they will get technologiwise, experiencewise could be huge not just in gaming but the cloud in that xbox live experience. Thats an important dynamic to understand. Finally, the story, the president appearing on zachs web show between two ferns to promote obamacare. Check it out. Lets get this out of the way. What did you come here to plug . First of all, i think its fair to say that i wanted to be with you here today if i didnt have something to plug. Have you heard of the of foushdable care act . I heard about that. Thats thing that doesnt work. Why would you get the guy that created the zune to make your website . Healthcare. Gov works great now. So expresident s go on mike wallace. This is the new mike wallace, i guess, swron. I like that transition of titanfall to the zune content. Thats why microsoft needs to this work. The president does best, i think, in this format. I think he should do all of his press conferences in comedy form. I move any mike to the center of my shirt and homage to zach. Its branded content, basically. Its an advertisement for healthcare. Gov and now i moved it off. I got too clever. Its an advertisement for healthcare. Gov that actually is interceded t to the middle of the segment. They basically did this to a commercial to get after the young audience. Slapstick. I see it. Nice. The thing is this is maybe a blatant example but this is what so much i love between two ferns, i love the product. But whether youre a celebrity coming on to talk about your movie, at its core someone is always pushing something in this case its just obamacare. Funny or die does a lot of branded content. With buzzfeed weve done joint come pains with them, theyve run a campaign for pepsi and done a skit and its run on buzzfeed. They excel at this. Its amazeing the president is doing this platform to do this mini commercial. Look at what nancy pelosi tweeted earlier today. She said, number one, watch this interview with a link to the interview. Number two, getcovered. Number three, avoid spider bites. This is the new way to further political discussions for better or worse. Absolutely. I mean, when you think about the demographic thats watching online video, especially funny stuff, the fact that he got a message across. That the site does work. I guess well see, you know, if it continues to work. Maybe theyll get a surge of traffic. But, hey, its quite effective. You got a nancy pelosi tweet, youre a hit. Jon, your prediction. Will they get more views on this than he would have, say, going on a 60 minutes. Absolutely. Its a short clip you guys are able to segment out funny pieces out. Everything is basically a punch line. One thing they did wrong is healthcare. Gov commercial is basically right in the center. They should have interceded and switched it up from time to time. Getcovered is probably coming up on fallon soon. Brings us to this mornings squawk on the tweet. Where will the president pop up next to plug healthcare. Gov. Coming up, conventional wisdom holds you should back up the files on your computer in case of an emergency. That may not be entirely accurate. Walt mossberg says you should back up your computer in three different ways. And its easier to dothan ever. Hell join us to explain in just a moment. Plus, make sure you keep it here because softbanks ceo Masayoshi Son is here. Squawk on the street will be right back. Righ for retirement. But when we start worrying about tomorrow, we miss out on what matters today. At axa, we offer advice and help you break down your retirement goals into small, manageable steps. Because when you plan for tomorrow, it helps you live for today. Can we help you take a small step . For advice, retirement, and life insurance, connect with axa. For advice, retirement, voseeker of the sublime. Ro. You can separate runway ridiculousness. From fashion that flies off the shelves. 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. natalie ooooh, i like your style. vo so do we, business pro. So do we. Go national. Go like a pro. It took a lot of juggling to keep it all together. K. For some lowincome families, having Broadband Internet is a faraway dream. So we created internet essentials, americas largest lowcost internet adoption program. Having the internet at home means she has to go no further than the Kitchen Table to do her homework. Now, more than one million americans have been connected at home. It makes it so much better to do homework, when youre at home. Welcome to whats next. Comcastnbcuniversal. Welcome back. The s p 500 trying to rebound today after a loss yesterday that put it just below the closing high. One of the big losers utilities. Bertha coombs back at headquarters with more on this one. Kelly, yeah, not a huge sort of direction to the market today. Utilities today are the weak point on the s p. Could be some profit taking while the s p utilities index has been up about 5 year to date. Leading the way lower this morning, aes, followed by firstenergy, edison international, and nisource and Sempra Energy which has turned modestly positive here. Could still go the other way. Thanks very much. Well watch it. Backing up your files should come as Second Nature but most people dont until its too late and the files are gone. Back blaze is one way to back up the files and here with his weekly review, Walt Mossberg. Walt, its great to see you. I confess, im guilty. I have nothing backed up. Oh, my god i know. I know. But, you know, so much of it is web based or im getting on the train. Im getting on the train right up there to help you. What should we be doing . Heres the thing. This is kind of like, you know, floss your teeth or do all those things youre supposed to do and its kind of a pain. But its really easy now. I have a threeway system. First of all, the handful of files youre working with most often or that maybe matter to you the most, you should just put those on dropbox or a service like that which will keep them synced and put them on your other devices. But you cant use dropbox or a service of that type as a backup service for a huge number of file because its too expensive. Thats where two other methods come in. One is you need to keep a local backup in your house of your entire system so that you can actually restore your whole computer including the os. You can do that on a mac with time machine, on windows with something called system image backup. But the most interesting one to me is this blackblaze thing. Its a competitor of things like carbonite and mossy. Its really, really easy. It just backs up. All of your user generated files. All of them wherever they are in your computer. You dont have to know a thing about it. Continuously as you work on your computer, you dont have to look at it, you dont have to set any settings. Its 50 a year. Thats it. Its a limited number of data, unlimited file size. And it keeps backing up as things change. I think the industry really figured out this backup thing yet because it seems like, yeah, the top 5 most efficient of us, the a students back stuff up but the rest of us never really get around to it. On mobile its easier because there are a lot of Automatic Services but should there be a better model even on this one . I think the best one is apple and time machine if you use a mac. I know youre familiar with it, jon. It just works, like i said, about back blaze, it works in the background. It will work wirelessly over your network so you dont have to have a drive plugged in. Thats a pretty good model. Of course, it only works on macs. Microsoft has introduced one that back up your files in a similar way but not your whole computer. What attracted me to back blaze is for 50 bucks a year it just does it in the background. You dont have to set anything. You dont have to say, this folder or that folder. It just does it. I backed up 300 gigabytes, jon, from a mac book air in about 12 days and i used the macbook air all the time during that time and didnt b think twice about it until i got a message saying, hey, the backup is done. And after that, it just keeps adding, keeps monitoring. 12 days, incredible. Walt, when you think about a drop box or a box, are there things that differentiate those services from each other or are they essentially the same . Is it sort of a cokocome come motityized service . The main difference between drop back and box is that box is primarily aimed at companies. Dropbox is aimed at consumers. They overlap a little. Theres a consumer way to use box. Theres a corporate way to use dropbox. But to me thats the principle difference there. There are others. You know, google drive, Microsoft One drive. But again, those are not heavyduty cloud backup services. Your heavy duty ones are like backblaze and crash plan and carbonite and those kinds of things. Jon, i agree with you. The os guys should get into this themselves. It should just be part of the computer. So maybe maybe apple or microsoft should buy backblaze, i dont know. There we go. If we had a nickle for every time a sentence was started that way. When walt says it though. Maybe we should buy Walt Mossberg. Catch your train. See you in a couple of hours. Im newly inspired. I have no excuse for not having backed this stuff up. When we come back, Edward Snowden spoke from his exile in russia at south by southwest yesterday saying the nsa happening has hurt the u. S. Economy. Strong words but does snowden actually have a point . The former u. S. Chief Technology Officer will weigh . After a break. As we get closer to the ncaa tournament, louisville head coach rick pitino is fired up about social media. The coach of the reining National Champs here to explain a little bit later on this hour. [ indistinct shouting ] [ indistinct shouting ] [ male announcer ] time and sales data. Splitsecond stats. [ indistinct shouting ] its so close to the options floor. [ indistinct shouting, bell dinging ]. Youll bust your brain box. All on thinkorswim from td ameritrade. From td ameritrade. So ally bank has a that wont trap me in a rate. Thats correct. Cause im really nervous about getting trapped. Whys that . Uh, mark . Go get help i have my reasons. Look, you dont have to feel trapped with our raise your rate cd. If our rate on this cd goes up, yours can too. Oh that sounds nice. Dont feel trapped with the ally raise your rate cd. Ally bank. Your money needs an ally. For tapping into a wealth of experience. For access to one of the top Wealth Management firms in the country. For a team of Financial Professionals who provide customized solutions. For all of your Wealth Management and retirement goals, discover how pnc Wealth Management can help you achieve. Visit pnc. Com wealthsolutions to find out more. Edward snowden is speaking from exile in russia yesterday at south by southwest where he touched on National Security and the economy and shot back at the current nsa director general Keith Alexander who has accused snowden of weakening our National Security. Take a listen. And thats what were running into today. So when he says, you know, these things have weakened National Security, these are not improving the National Security, improving communication not just for americans but everyone in the world because we rely on the same standards. We rely on the ability to trust our communications and we without that we dont have anything. Our economy cannot succeed. Here to weigh in on this the former u. S. Chief Technology Officer, now Senior Adviser at the Advisory Board company. Aneesh, its great to have you back. Unbelievable teleconference. They ran it through seven proxy servers so no one would know exactly where he was and he was critical on the nsa, on anything you heard, did snowden have a point yesterday . Well, im not a big fan. I would say this. We didnt really hear a lot yesterday that was new. I think the most important thing to remember is that it is true, the internet is a great source of Economic Growth and a huge potential for the American Economy move forward. And it is important to understand that the internet is governed in a very unique way. It is a multistakeholder model. That brings all parties to the table to have these thoughtful conversations about privacy, security, and ongoing standards improvements. Im very proud of that framework. Et cetera somethi its something the United States has been a champion of and one of the reasons why the internet has been so successful. Aneesh, im interested on your take. This looked like a big pr black eye for the u. S. Government to me. Heres Edward Snowden with the constitution behind him speaking at a tech conference to a sympathetic audience of people who feel like their interests have been hacked, attacked by the u. S. Government. What should the government do here . Well, i think the president is doing the right thing. Now, remember, we have an independent comedy video. Well, let me react to the process. Weve got a very thoughtful review board who has come up with some pretty good recommendations and how do we protect privacy and lifl liberties while preserving our ability to protect our country. These are organizations that are put in place for this very purpose. They were constituted long before snowden took the actions that he did. And theyre provide that kind of input in terms of how we strike that balance. We already saw the independent review board come out against the collection of meta data on phone records as an example and there will be a process to review what alternatives there might be to preserve security while strength thenning the economy and internet in particular. Aneesh, to jons point though that sounds like a lot of policy talk where we know the real protagonist in this should be Edward Snowden revealing to the average american and to a lot of Tech Companies just the extent to which this stuff is going on. So from that point of view, he continues to drive the conversation because people feel like hes giving them more reliable information than they can get otherwise. I would have said, you know, he had plenty of options to present his feedback through more traditional and formal channels, to provide that kind of input to members of conversation, to the privacy and Civil Liberties Oversight Board and to the nsa itself and to the record thus far theres been no evidence he pursued the appropriate channels to bring his concerns to the attention. Look, it is certainly an important conversation to be had regardless about how we protect our Civil Liberties and privacy and security while continuing to see Economic Growth on the internet. That debate has been happening and im pretty confident were making a pretty good step in the right direction. Just take, for example, all the encryption standards but in place to protect Health Information and thats been going on in a multistakeholder way for the past couple of years. Were making great progress. It is unfortunate that this circumstance has led us to where we are. Under any circumstances would you be in favor of giving him amnesty, letting him come home . Im not a lawyer but it is pretty clear having gone through the security process that what he did was wrong and there are consequences for our actions. And he knew those consequences. I do think he had options to come out and share his concerns with people in the chain of command and processes that were available like the privacy and Civil Liberties board which is created as an independent entity for this very purpose. So, you know, i dont know anything about the Legal Framework but heres what i will say to my friends in the tech community. The good news is that theres an opportunity for us to continue to engage in policy to bhak sure that weve got a stroerng and more reliable internet for longterm Economic Growth. And if theres one area of concern that i have is, i will say weve got to pay special attention to the Cloud Computing providers in the American Economy who took a bit of a hit on a pr side as they grew in overseas markets. Weve got to do everything we can to make sure that our vibrant Cloud Computing industry has the support they need to be successful as they approach International Markets and im sure the administration will do more of that. Aneesh, always good to talk to me. Thanks for your time today. Former u. S. Chief Technology Officer. Thank you. Rick santelli in the meantime keeping an eye on markets this morning. Rick, after the s p 500, perhaps youre trying to reclaim a high. What are you keeping an eye on today . Im actually going to keep an eye on the German Economy from a different vantage point, cl cli change, Global Warming. I think germany is going to bring real science and brag mattic thought to Global Warming. You will want to see this. Capital to make it happen . Without the thinking that makes it real . Whats a vision without the expertise to execute it. And the financing to make it grow . Whatever your goal, it can change more than your business. It can change the future. Thats why, at barclays, our ambition is to always realize yours. Welcome back. Look at markets slightly higher across the board here. Shaking off weakness on conflicting board. Here onset to try and make sense of it all, welcome. Thank you. So weve had people starting to position you guys know it best. You have your economic surprise index. Great proxy for the s p 500. It fell substantially january and february. Now starting to make a rebound. Do you think there could be a break here . Im always cautious. Its a great indicator for fx strategies and thats what its designed for. People truly misinterpret what the data actually suggests. Its clearly been distorted by some of the weather data weve been seeing. So thats why it had that plunge. Youre going to get a bit of a bounce. Its really complicated, derivative calculus. We dont want to go down that path. I just fell asleep. I got confused. I got very confused. So i think the other issue and the better data is like Capital Spending data where we looked at 725 companies Capital Spending intentions. Theyre accelerating from where they were late last year. If you take out energy, its a Large Capital intensive nench but is a distorting factor. You remove that one and look at the companies. When youre sbreinterested in acceleration. To corporates are getting more confidence even. The Manpower Survey last night. When exxon pulls in cap x for the year that gets all the attention. Right. You have to strip that out. Yes. Again, we look at what companies are aggregate together. And we dont listen. Nobody is spending nine because thats not really whats going on. We are looking at fuel cell today. The squeeze on some of the fuel cell names. Richard fisher talking about eyepopping valuations. A lot of the ipos not profitable. How does that all play into your model . We are concerned about particularly our euphoria mode it generates a high probability of its in you forea mode . Yes. When was the last time it was in euphoria mode . In November December time frame. Its a one year lead indicator. Its not a onemonth lead indicator. It slipped briefly out of euphoria for about a week in february and came right back in. And this is measuring positioning in market outcome. This is worrisome. I would say there are certain areas, you worry about social media, biotech, the fuel cell stocks where there is some speculative froth going on. If europes forecast is right, up on the s p. The rally isnt over. It keeps getting over. What is your model going to look like in a couple hundred points now . Dave is out there and well have him on closing bell later this afternoon talking about 500 points left to go in this run. Its hard not to see a late hs 90s parallel. We dont. I mean, thats clearly not there. One of the things that happened last year, if you look at quarterly s p 500 ets and you look at biquarter to see whats trending and layer on the market back on top of it. In the late 90s and 2000 time frame, stocks were surging and earnings werent. In 2010 we started to see a change in earnings, 11, 12, Getting Better and better. Markets were not reacting. Worried about sovereign kred did risk and u. S. Fiscal policy problems, sequestration. Fiscal cliff, those kinds of things. By 2013, as those things subsided, market catch up to earnings. What you noeed now is the earnig growth to maintain to support markets. Look, i dont think were going to get valuation expansion anymore because of where the sentiment is. I dont necessarily disagree with a 500point view if you have it stretched out three or four years. That doesnt mean you dont get bad bumps along the way. Im trying to think of what sam zell told us a couple weeks ago that rates removed the shot clock from the basketball game. This is not really basketball that were all watching right now. Youve got to put this in hockey terms for me. Okay. Power play then. The fed is removing some of the excess liquidity through tapering. Kind of eindicated they might remove rates, 2015, 2016. When we value the markets we look at the tenyear bond yield. What do they believe bonds will look like in the next five years. Not where they are today. If youre going to do pes. Youve got to normalize that, too. When you do those analysis, 90 probability the market will be up in 12 months. Those are pretty powerful statistics. It is. It does make you think about the areas already where were seeing, carl, some of this. Tobias, thanks. Lets get to Rick Santelli in chicago with todays Santelli Exchange. Good morning, rick. Good morning, carl. You know, there are certain things that are easy to talk about. There are other things that just arent. We all know that old adage, you know, at the thanksgiving table when youre with family you want to stay away from politics and religion. Why . People get infuriated and you never really reach a good conclusion. As of late thursday, big topic that fall s under that same category. Global warming Climate Change. Weve had the president to the secretary of state talk about it recently in terms of the science is settled. Science is never settled. Thats why its science. Maybe economics gets settled once in a while but never scien scien science. I would be nervous when anybody that isnt directly part of the Scientific Community tells you science is settled because, see, governments have a big vested interest in Climate Change. The reason im talk ak it today is in the context of whats going on with russia and germany and ukraine. Its all about energy in many ways. Its about natural gas. Its about putin outmaneuvering much of europe. They need the gas. They need the natural gas. They need the energy. To that end, some interesting aspects have been ongoing with one of the biggest subsidizers of Renewable Fuels and thats germany. Something that caught my eye several weeks ago. Put it on the screen. The German Energy crisis is pushing the government to consider ending Green Energy Subsidies because they do little to fight Global Warming and only serve to make electricity more expensive. Now, lets just think about this in broad terms. Why is Climate Change such a positive for the governments of the world. Easy. Fear and greed. And greed is big. How do many governments get people to listen . A little bit of fear. Governments like a little bit of greed. If youre making any progress, there isnt any way to prove it. How can we prove if what were doing today is going to make a difference ten years from now, 20 years from now, 100 years from now . Take care of planet but prioritize where youre going with regard to energy because germany is a great lesson. If we dont prioritize, if the cost of their energy gets prohibitive, they end up with arrangements like whats going on in the ukraine. It would be much better to allow economics to educate the biggest abusers of energy, the developing countries that pollute a boatload. Youre not going to get them to use things that arent economically feasible. Lets the science and Technology Make renewables work. Financially and economically and they will work for all. Carl, back to you. All right, rick, thanks very much. We want to send it over here to Bertha Coombs for a quick market flash this morning. Sweet day for stock surging six times the normal trading. Granted, this is a microcap stock but the fda decided the sweetener enhancer is safe which will allow it to be able to sell it to customers like soft drinks makers which will reduce their use of sugar and other sugars substantive. It has a market cap of 480 458 million today, rather, and currently trading up there over 20 . Sweet day for them at a new high, carl. Watching pepsi as well on that. Thanks. When we come back, it is march and, of course, that means it is almost ncaa tournament time. We brought in louisvilles head coach rick pitino to talk about social media. Hell explain when squawk on the street comes right back. In the new new york, we dont back down. We only know one direction up so were up early. Up late. Thinking up gamechanging ideas, like this dozens of tax free zones across new york state. Move here. Expand here. Or start a new business here. And pay no taxes for 10 years. With new jobs, new opportunities and a new tax free plan. Theres only one way for your business to go. Up. Find out if your business can qualify at startupny. Com to appreciate our powerful, easytouse platform. No, thank you. We know youre always looking for the best fill price. And walk limit automatically tries to find it for you. Just set your start and end price. And let it do its thing. Wow, more fan mail. Hey ray, my uncle wanted to say thanks for idea hub. O well tell him i said youre welcome. He loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. Yea, and these ideas are across the board bullish, bearish and neutral. I think you need a bigger desk, pal. Another one . Traders love our trading patterns, now with options patterns. Whats not to love . They see what others are trading like the days top 10 options trades by volume and get ideas yea i have an idea how about trading that in for a salad . [ male announcer ] so come trade at the place thats all about options and futures. Optionsxpress. Open an account today and get a 150 amazon. Com gift card when you call 18882800154 now. Optionsxpress by charles schwab. Coming up at the top of the hour, is the tech sector in bubble trouble . Well break down the stocks that could be on the brink of bursting. Kind out what apples role could be in this . Has bill ackman gone too far this time . Harvey pitt is here to lay down the launchts if you love wine, listen up. We have a Portfolio Manager who trades in the liquid asset who says now is the time to get in. Its all straight ahead on the half. Carl, maybe well drink wine as well. I hope so. I told the producers, i hope so. Thanks, scott. See you soon. Its an exciting time of year for College Basketball. Fans across the country just a week away from the start of march madness. And on sunday we will learn which teams will qualify for the ncaa tournament. Joining us this morning is rick pitino, the the coach of the defending champion louisville cardinals, mens basketball team. Joins us this morning from louisville. Coach, its great to have you back. Good morning. Thanks for having me. Are you ready to defend your tight until. We are. We got a great group of guys to coach. Were excited about it. Its always youre talking to a business channel. Its a great time for us because a lot of our audience just devours sports but its also a huge time of the year for social media. And you did make some comments on espn radio not too long ago, calling it poison for athletes. What did you mean by that . For athletes and coaches. You know, i tell our guys, we have to say focus, what we calm between the lines. For those of you in the media that deal with technology, social media is an awesome thing. For leighs and coaches who really have to stay focused in on their job, sometimes too much praise from over the top really stunts ones potential. And then the obvious, in a town like louisville where we have a quarter of a million kentucky fans, it could get quite negative toward them and thats not good. So i try to tell our guys, stay between the lines. Stay away from social media, focus on your job at hand. Social media is a great thing. Its just not great for athletes and coaches. Think about the potential and how to develop it, part of it is social media, the daily distractions, part of it is this one and done model that seems to pervade College Basketball. Given the success youve had over decades with so many different teams, is it because you have a different philosophical approach to rekrauting around keeping talent and do you worry today that youre perhaps the last bullwark . One and done means its not even one. Its basically six or seven months of a college education. Right. So then you take online courses second semester and you move on and you go to the pros. Nothing wrong with that. Its like so many different ways of trying to be successuccessfu. I remember in nurturing athletes. I remember in building them emotionally, building them physical physically. Sixmonth relationship is not something that i want as a College Basketball coach. I have a feeling a lot of our viewers are going to try to win a billion dollars as buffett and Company Offers the reward for this bracket. I assume you are not you cannot do this. No. We cannot. Would you try if you could . Yes, but my wife a few years back said, im getting her best friend had a nail sweep. She was going in the office pool. She said im going to win it, its going to be worth 5,000. Can you give me teams i was a pro coach at the time and i gave her some teams. I said after the sweet 16, how did you do . She said, im at the bottom half. The person thats winning it is antonio who lived over from italy who has been in the country one year. I said, hoe knows nothing about basketball, how did he lead the pack . He chose joe, he thought it was an italian university. That is a great story, coach, right there. Leave it to the wives to keep us humble. You mention pro coach. Espn is report that phil jackson is close to take that gm deal with knicks. You know the team well. Im trying to find out whats in it for phil. But would you be surprised to see him take it . I wouldnt and it would be just awesome for the system. Im still, as an exknick coach, they need a head right now that can make some smart decisions and put this Team Together thats built to last. Right now its just a bunch of its a mixing of athletes, hoping theyll come together. And i think phil obviously knows the winner formula and he would be awesome for the knicks as well as the city. We would be remiss if we didnt ask you about the conference that youre currently in and the way in which its developing throughout college athleti college athletics. I cant keep track of it. The big east has no relevance anymore. Where is this all going and what is the better way forward . Well, i think its starting to stabilize. Obviously football is the driving engine for everybody. Its been difficult. You take a school like West Virginia who was in the big east, now its in the big 12. And they have to travel the closest school is 800 miles away. Well, for football and mens basketball thats okay. Theyre taking chartered flights. But for womens soccer, they probably have to drive to pittsburgh 45 minutes and then make three connections to get to ames, iowa. Its not so easy. It is starting to stabilize. Were going in the acc next year to join syracuse, pitt, notre da dame, other big east friends now in the acc. Were looking forward to the challenge. Its will be exciting. We started the conversation talking about social. My favorite tweet just now, rick pitino gives good interview. Coach, with that, thank you. Good luck in the tournament. Thank you. Up next, he rarely speaks but when he does he makes news. The richest man in japan, softbanks ceo joins us to talk about sprint, yahoo and horrible Wireless Service here in the country. Squawk on the street. [ male announcer ] how could switchgrass in argentina, change engineering in dubai, aluminum production in south africa, and the Aerospace Industry in the u. S. . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 75 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Welcome back. David faber joaning us here with more of his interview with softbanks ceo son. I should say softbank is a Japanese Company that holds a stake in sprint, 37. 5 of ali baba and 42. 5 of yahoo in japan. It is gentleman hoo japan. Its been a big player as well in the Internet Services business since the web began. In fact, before it all came crashing down with the dotcom bust its found eer was the richt man in the world. For three days i was richer than bill gates. And most people dont know that because we crashed before beam noticed. It went by fast. It crashed. The internet bubble peak. You know, softbank market cap was 200 billion. And i used to own 30 x so i became the richest for three days. But next year our share price reduced by 99 . Okay . So going from 200 billion to 2 billion, okay . At the bottom we start yahoo bb, which is our Broadband Initiative and that gave us 1 billion loss a year for four years. And you were willing to do that . Yeah. At the bottom, you lost 99 of your market value. At the bottom, after losing 99 in market cap, i decide to fight with the Biggest Company in japan, ntt, you know. Government still owns the biggest share of the company and they were, by then, at that time the by far the Biggest Company in japan. So its like a government Like Fighting with the whole government. And everybody call me crazy and this is finally the time that softbank is going bankrupt because we lost a billion dollars a year. With a market cap of 2 billion, you know i remember. Lose 1 billion, 50 of the whole market cap. Yeah. Of company. Crazy. Thats what people were saying. Coo coo. Still i decided to take the fight. And after four years of losing a billion dollars a year every year, you know, finally we we made it to the a little bit of profitability. And then i decided to make 20 billion investment for acquiring vodafone japan. Again, people call me crazy. People call me crazy all the time. Now i say, oh, thats a compliment. And it goes, of course, to what is a very tenacious fellow, mr. Son. And that is something that should not be lost on investors here or abroad, as he pointed out. 200 billion to 2 billion, lost a billion of year fighting with the Biggest Company in japan trying to bring broadband business of yahoo japan. He won. He bought vodafones business, wireless business, and took it yet again to the competitors, the incumbents, and now has a market share as large as theirs. He will be an interesting man to watch. Will his argument fly in washington . At this point it doesnt appear that it will work. But, of course, hearing what you vus heard, perhaps you need to think over the longer term. Maybe not 300 years, but over the longer term for mr. Mayasoshi son. Tweet time. The president made an appearance on between two ferns answering questions from health care to international policy. Take a listen. I have to know. What is it league to be the last black president. Seriously . Whats it like to be the last time you talk to a president. It must stink to learn three times. I think its a good idea. You know, if i ran a hird time, it would be like doing a third hankover hangover movie. It didnt work out well, did it . Where will president obama pop up next to plug healthcare. Gov . For tapping into a wealth of experience. For access to one of the top Wealth Management firms in the country. For a team of Financial Professionals who provide customized solutions. For all of your Wealth Management and retirement goals, discover how pnc Wealth Management can help you achieve. Visit pnc. Com wealthsolutions to find out more. Save you fifteen percent or more on car insurance. D Everybody Knows that. Well, did you know pinocchio was a bad motivational speaker . I look around this room and i see nothing but untapped potential. You have potential. You have. Oh boy. Geico. Fifteen minutes could save you fifteen percent or more on car insurance. I want to update our viewers on a story weve been watch for months now. The New York Times reported mens warehouse is close to a deal to acquire joseph a. Banks to 65 a share and cash and terminate the current deal joseph a. Bank has to acquire eddie bauer. It will be a combination of intriguing battle that actually began with joseph a. Banks making an acquisition proposal to mens warehouse only to have mens warehouse turn the tables on it and it would be a successful pacman defense, so to speak, when mens wearhouse unveils an our on its own. Expectation given they got Due Diligence about a week or so ago from joseph a. Banks that we might hear something. It does appear according to the times, not my reporting, the price is up from 63. 50 for mens wearhouse, might go to 65 the f. They got Due Diligence and the termination of the eddie bauer deal. More intriguing is the fact you have mens wearhouse stock up gann a again and the potential transaction. We will await word from the companies but wanted to share that with you given the stocks are moving higher. Joseph a banks not discounted much there at 64. 20. Well take time. Might be a tiny bit of antitrust. Not necessarily good for some people who rely on their advertising. Like newspaper . I cant imagine what youre talking about. Who knows. Consolidate an ad budget and yeah. On of the painful thing about mergers and buyouts. David, thanks for bringing it to us. Scott wapner, youre going to have lot to work with this afternoon. A lot of good stories today. Retail, bill ackman is a couple hours ago from his next presentation on herbalife. You guys had a great show. Have a great rest of the day. Heres the game plan. Bubble trouble with some parts of tech. Parting like its 1999 all over again. Is it time to worry . Ackman versus herbalife. He has another presentation. Has he gone too far in the bid to win his big bet . Former sec head harvey pitt answers that question. Liquid assets, why investing in wine can bring thirst quenching returns . Its doing that for one Portfolio Management here live. That jar